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DOYLE EQUIPMENT COMPANY v. COMMONWEALTH PENNSYLVANIA (06/09/88)

decided: June 9, 1988.

DOYLE EQUIPMENT COMPANY, PETITIONER
v.
COMMONWEALTH OF PENNSYLVANIA, RESPONDENT



Appeal from the Order of the Board of Finance and Revenue in the case of In Re: Doyle Equipment Company, No. R-10,798.

COUNSEL

Scott W. Irmscher, with him, J. Mark Munson, Meyer, Darragh, Buckler, Bebenek & Eck, for petitioner.

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

President Judge Crumlish, Jr., and Judges Craig, MacPhail, Colins, Palladino, McGinley and Smith. Opinion by Judge Smith. Judge Colins dissents.

Author: Smith

[ 117 Pa. Commw. Page 39]

Doyle Equipment Company (Petitioner) appeals from a decision of the Board of Finance and Revenue (Board) which sustained the Department of Revenue's assessment of Petitioner's 1984 capital stock tax under Section 601(a) of the Tax Reform Code of 1971 (Code).*fn1 The issue raised in this appeal concerns interpretation of the term "average net income" as defined under Section 601(a) of the Code. We affirm the decision of the Board.

Counsel for Petitioner and Respondent filed their Stipulation of Facts setting forth the procedural and factual background of this case which this Court adopts as

[ 117 Pa. Commw. Page 40]

    its findings.*fn2 On November 23, 1983, Petitioner was incorporated under the laws of Pennsylvania. Petitioner had no income for the tax year ending December 31, 1983; and $313,311 net income for the tax year ending December 31, 1984. For purposes of computing and reporting its 1984 capital stock tax, Petitioner calculated its tax by dividing Petitioner's 1984 income by two years for an average net income of $156,656. Petitioner calculated its total capital stock liability to be $9,075 which it paid for tax year ending 1984.*fn3

On March 6, 1986, the Department of Revenue mailed its settlement computation of Petitioner's tax report for 1984 which increased Petitioner's capital stock tax liability to $16,863. The Department determined that Petitioner's average net income for 1984 was $313,311, taking Petitioner's net income for 1984 and dividing by one year of activity rather than the two years used by Petitioner.

Petitioner requested a hearing, held in July 1986, before the Board of Appeals which issued a notice of resettlement reducing Petitioner's total capital stock tax liability to $15,360. The Department of Revenue credited Petitioner for the 39 days of corporate existence from

[ 117 Pa. Commw. Page 41]

November 23, 1983 to December 31, 1983.*fn4 Petitioner appealed the Department of Revenue ruling to the Board which issued its decision on May 1, 1987 sustaining ...


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