Appeal from the Order of the Board of Finance and Revenue in case of In Re: Fry Communications, Inc., Docket No. R-2378.
John M. Eakin, for petitioner.
Robert Patrick Coyne, Deputy Attorney General, for respondent.
President Judge Crumlish and Judges Mencer, Rogers, Craig and Palladino. Judges Blatt, Williams, Jr. and MacPhail did not participate. Opinion by Judge Mencer.
[ 61 Pa. Commw. Page 279]
Fry Communications, Inc. (petitioner) has appealed from an order of the Board of Finance and Revenue (Board) which upheld a decision of the Auditor General denying an exemption from capital stock taxation for certain assets of the petitioner. We affirm.
All of the facts have been stipulated by the parties. We adopt them as our findings of fact and shall discuss those facts which, in our judgment, are essential to the disposition of this appeal.
The petitioner operates a commercial printing business in Mechanicsburg, Pennsylvania. It is required
[ 61 Pa. Commw. Page 280]
by Section 602(a) of the Tax Reform Code of 1971 (Code)*fn1 to pay a capital stock tax on its capital stock of all kinds except that which is "invested in and actually and exclusively employed in carrying on manufacturing, processing, research or development within the State."
During the 1975 tax year, the petitioner accumulated some $700,000 which it invested in certificates of deposit. These certificates matured after the end of the 1975 tax year. They were treated as an exemption by the petitioner when it calculated its tax liability for the tax year at $196. The Auditor General disallowed the exemption and "settled" the petitioner's tax in the amount of $5,584.28. This appeal ultimately ensued.
The petitioner argues that it properly exempted the certificates in calculating its capital stock tax liability because the funds were later used to pay for an expansion of its physical plant, the purchase of three new printing presses, and the payment of federal income taxes. It is the petitioner's position that these items were all necessary to carrying on the printing business, and therefore the funds set aside to pay for them were also reasonably necessary to carry on business and should be exempted from taxation. We are unpersuaded by the petitioner's arguments.
In previous cases of this type, we have relied on the decision in Commonwealth v. Prudential Industries, ...