Eaton v. Limbach

Ohio Supreme Court

Eaton v. Limbach

603 N.E.2d 992, 65 Ohio St. 3d 305, 1992 Ohio LEXIS 3156

CourtOhio Supreme Court

DecidedDecember 14, 1992

DocketNo. 92-225

StatusPublished

Cited by2 cases

This text of 603 N.E.2d 992 (Eaton v. Limbach) is published on Counsel Stack Legal Research, covering Ohio Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Eaton v. Limbach, 603 N.E.2d 992, 65 Ohio St. 3d 305, 1992 Ohio LEXIS 3156 (Ohio 1992).

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Opinion

Per Curiam.

R.C. 5747.01(A), during the audit period, defined “adjusted gross income,” on which the Ohio income tax is levied (see R.C. 5747.02), as follows:

“ ‘Adjusted gross income’ means adjusted gross income as that term is defined and used in the Internal Revenue Code * * *, and excludes any amounts of income included in adjusted gross income by reason of Subchapter S, Chapter 1, Subtitle A, of the Internal Revenue Code, 26 U.S.C. 1371. *****

The Eatons argue that the statute allows them to deduct all Subchapter S income allocated to them and that this prevents double taxation of Subchapter S income. The commissioner contends that the statute limits the exclusion of Subchapter S income to only that amount included in federal AGI and that double taxation does not occur.

R.C. 5747.01(A) excludes from Ohio AGI only the amount of Subchapter S income included in federal AGI. Since the Eatons included only the net [307]*307amount in federal AGI, netting income and losses from the two Subchapter S corporations for federal tax purposes, they may only exclude this net amount from Ohio AGI. See Gibson v. Limbach (Nov. 19, 1990), Trumbull App. No. 89-T-4270, unreported, 1990 WL 178944; compare Westinghouse Elec. Corp. v. Lindley (1979), 58 Ohio St.2d 137, 140-142, 12 O.O.3d 158, 160-161, 389 N.E.2d 473, 475-476 (taxpayer may only deduct net foreign royalties from franchise tax income because only this amount was included in federal net income), and Pancake House v. Lindley (1980), 61 Ohio St.2d 151, 15 O.O.3d 180, 399 N.E.2d 1249 (taxpayer may only deduct net technical assistance fees from franchise tax income because only this amount was included in federal net income).

As to the double-taxation argument, the Eatons failed to present the franchise tax returns for the two corporations to illustrate any double taxation. Thus, we have no factual basis on which to address this argument.

Accordingly, we affirm the decision of the board because it is reasonable and lawful.

Decision affirmed.

Moyer, C.J., Sweeney, Holmes, Douglas, Wright, H. Brown and Resnick, JJ., concur.

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Per Curiam.

R.C. 5747.01(A), during the audit period, defined “adjusted gross income,” on which the Ohio income tax is levied (see R.C. 5747.02), as follows:

“ ‘Adjusted gross income’ means adjusted gross income as that term is defined and used in the Internal Revenue Code * * *, and excludes any amounts of income included in adjusted gross income by reason of Subchapter S, Chapter 1, Subtitle A, of the Internal Revenue Code, 26 U.S.C. 1371. *****

The Eatons argue that the statute allows them to deduct all Subchapter S income allocated to them and that this prevents double taxation of Subchapter S income. The commissioner contends that the statute limits the exclusion of Subchapter S income to only that amount included in federal AGI and that double taxation does not occur.

R.C. 5747.01(A) excludes from Ohio AGI only the amount of Subchapter S income included in federal AGI. Since the Eatons included only the net [307]*307amount in federal AGI, netting income and losses from the two Subchapter S corporations for federal tax purposes, they may only exclude this net amount from Ohio AGI. See Gibson v. Limbach (Nov. 19, 1990), Trumbull App. No. 89-T-4270, unreported, 1990 WL 178944; compare Westinghouse Elec. Corp. v. Lindley (1979), 58 Ohio St.2d 137, 140-142, 12 O.O.3d 158, 160-161, 389 N.E.2d 473, 475-476 (taxpayer may only deduct net foreign royalties from franchise tax income because only this amount was included in federal net income), and Pancake House v. Lindley (1980), 61 Ohio St.2d 151, 15 O.O.3d 180, 399 N.E.2d 1249 (taxpayer may only deduct net technical assistance fees from franchise tax income because only this amount was included in federal net income).

As to the double-taxation argument, the Eatons failed to present the franchise tax returns for the two corporations to illustrate any double taxation. Thus, we have no factual basis on which to address this argument.

Accordingly, we affirm the decision of the board because it is reasonable and lawful.

Decision affirmed.

Moyer, C.J., Sweeney, Holmes, Douglas, Wright, H. Brown and Resnick, JJ., concur.

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603 N.E.2d 992, 65 Ohio St. 3d 305, 1992 Ohio LEXIS 3156, Counsel Stack Legal Research, https://law.counselstack.com/opinion/eaton-v-limbach-ohio-1992.

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