VAS Holdings & Investments LLC v. Commissioner of Revenue
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The Supreme Judicial Court reversed the decision of the Appellate Tax Board in this case concerning the constitutional restraints on the Commonwealth's ability to tax a nondomiciliary corporation on the capital gain it repealed from the sale of its fifty percent membership interest in an in-State limited liability company, holding that the tax in question was invalid.
On appeal, the Commissioner of Revenue conceded that, under the unitary business principle as applied to the facts of this case, the capital gain at issue in this case was not taxable in the Commonwealth, but that the capital gain may nonetheless be taxed because it reflects the in-State entity's growth in the Commonwealth. The Supreme Judicial Court disagreed, holding (1) the capital gain could be subject to the Commonwealth's tax; but (2) the Commissioner lacked the requisite statutory authority to tax the capital gain.
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