From the Indiana Lawyer:
Indiana Tax Judge Martha Wentworth granted summary judgment to Caterpillar Inc. Thursday, finding the company’s foreign source dividends are deductible in calculating its state net operating losses available for carryover as a deduction from taxable income in future years.
In Caterpillar, Inc. v. Indiana Department of State Revenue, 49T10-0812-TA-70, for tax years 2000 through 2003, when Caterpillar calculated its Indiana adjusted gross income tax liability for those years, it started with its federal taxable income, which did not include its U.S. source dividends under I.R.C. § 243(a). Caterpillar’s federal taxable income did include, however, its foreign source dividends. As a result, Caterpillar took the foreign source dividend deduction under I.C. 6-3-2-12 and reported Indiana net operating losses on a separate company basis in each of those years, referred to in the opinion as the loss years.
The company also amended its returns for 1996 through 1999 to carryback the unused Indiana NOLs reported on its 2000 through 2002 loss year returns. Caterpillar sought a refund for overpaid taxes.
Both sides filed for summary judgment. The Department of Revenue claimed that Caterpillar was not entitled to deduct its FSDs in calculating its Indiana NOLs because the NOL statute neither expressly incorporates the FSD statute nor specifically references deducting FSDs as a modification in I.C. 6-3-1-3.5. Caterpillar contended that the method of calculating Indiana NOLs necessarily triggered the statutory deduction of FSDs because its FSD income was included in its adjusted gross income in calculating its Indiana NOL for 2000 through 2003.
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See the full article here:
http://www.theindianalawyer.com/judge-rules-in-favor-of-caterpillar-in-tax-deduction-dispute/PARAMS/article/31095
