California State Automobile Ass'n v. Franchise Tax Board

Opinion

SMITH, J.

In this case of first impression, we grapple with the meaning of the phrase “co-operative or a mutual basis” as it appears in section 24405 of the Revenue and Taxation Code.

In 1973 defendant and appellant Franchise Tax Board (hereinafter, the Board) issued proposed additional assessments of taxes due from plaintiff-respondent California State Automobile Association (hereinafter CSAA) based upon the Board’s determination that for the years 1968 through 1971, CSAA improperly took a deduction pursuant to Revenue and Taxation section 24405 1 for income on business activities…