Multistate Tax Alert: California – Enterprise Zone Sales/Use Tax Credit
Court of Appeal rules that expensed items don’t qualify
The California Court of Appeal recently issued its decision in Taiheiyo Cement U.S.A. INC. v. Franchise Tax Board. At issue in the case was whether the definition of “qualified property” includes expensed assets for purposes of the Enterprise Zone Sales and Use Tax (“EZSUT”) credit under Cal. Rev. & Tax. Code § 23612.2. In affirming the trial court’s decision in this matter, the Court of Appeal held that “qualified property” refers only to capital (and not expensed) assets and, therefore, expensed assets do not qualify for the EZSUT credit.
In the attached Tax Alert we summarize the California Court of Appeal’s decision in this case.