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HOFFMAN SEEDS v. COMMONWEALTH PENNSYLVANIA (08/28/85)

decided: August 28, 1985.

HOFFMAN SEEDS, INC., PETITIONER
v.
COMMONWEALTH OF PENNSYLVANIA, RESPONDENT



Appeal from the Order of the Pennsylvania Board of Finance and Revenue in the case of In Re: Hoffman Seeds, Inc. -- Petition for refund of franchise tax for year ended 6/30/81, Docket No. C-10,977, dated May 24, 1983.

COUNSEL

Robert W. Hallinger, Barley, Snyder, Cooper & Barber, for petitioner.

Eugene J. Anastasio, with him, Michael A. Roman, Deputy Attorneys General, and LeRoy S. Zimmerman, Attorney General, for respondent.

Judges Rogers, MacPhail and Palladino, sitting as a panel of three. Opinion by Judge MacPhail. Judge Barry did not participate in the decision in this case.

Author: Macphail

[ 91 Pa. Commw. Page 403]

Hoffman Seeds, Inc. (Hoffman) has appealed an order of the Board of Finance and Revenue (Board) denying its petition for refund of the capital stock tax. We affirm.

The parties submitted a stipulation of facts which we adopt as our own for purposes of this decision. Hoffman's primary business is the production and preparation of hybrid farm seed for sale to farmers, seed distributors and retailers. Hoffman engages farmers to grow the hybrid seed corn and provides the seed to the farmers. The farmer plants rows of foundation seeds for female plants; Hoffman employees plant pollinator plants every fifth row. Hoffman employees perform the roguing,*fn1 detasseling*fn2 and flying*fn3 of the seed crop. Although Hoffman decides when to harvest the seed crop, the farmers are responsible for harvesting the crop and delivering it to Hoffman.

Upon delivery, Hoffman conditions*fn4 and bags the seed for sale to customers. Seventy-five percent

[ 91 Pa. Commw. Page 404]

(75%) of Hoffman's seeds are sold directly to farmers, with the remaining sold to farm store retailers and distributors. All of Hoffman's assets are devoted to its business of producing, preparing and selling farm seed.

The parties contend that the only issue before us is whether at least seventy-five percent (75%) of Hoffman's assets are "devoted to the business of agriculture" for purposes of the family farm corporation exemption, Section 602.2 of the Tax Reform Code of 1971 (Code), Act of March 4, 1971, P.L. 6, 72 P.S. § 7602.2, added by the Act of October 17, 1980, P.L. 1077.

Section 602.2 of the Code provides that:

(a) The provisions of [the Capital Stock-Franchise Tax, Section 602 of the Code, 72 P.S. § 7602] shall not apply to family farm corporations. Family farm corporations shall ...


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