Hegar v. Gulf Copper & Manufacturing Corp. (Opinion)Annotate this Case
In this dispute over the amount of franchise tax owed by a taxpayer the Supreme Court reversed in part the judgment of the court of appeals reversing in part the trial court's judgment for the taxpayer, holding that, with respect to the taxpayer's inclusion of certain costs in its "cost of goods sold" (COGS) subtraction, the calculation method accepted by the trial court was improper, and the taxpayer was not entitled to include the costs in calculating its COGS subtraction.
The Comptroller concluded that Gulf Copper and Manufacturing Corporation paid an insufficient amount of franchise taxes for the 2009 year. At issue was whether Gulf Copper could exclude certain payments from its revenue under Texas Tax Code 171.1011(g)(3) and include certain costs in its COGS subtraction under Texas Tax Code 171.1012. Gulf Copper paid additional taxes and sued to recover the disputed amount. The trial court rendered judgment in favor of Gulf Copper. The court of appeals reversed in part. The Supreme Court reversed in part, holding (1) the Comptroller incorrectly disallowed the revenue exclusion; (2) with regard to the COGS subtraction, the calculation method accepted by the trial court was improper; and (3) the taxpayer was not entitled to include costs under subsection 171.1012(i) in calculating its COGS subtraction.