Title: Indiana Department of State Revenue v. Belterra Resort Indiana, LLC

State: indiana

Issuer: Indiana Supreme Court

Document:

ATTORNEYS FOR PETITIONER  
 
 
 
ATTORNEYS FOR RESPONDENT 
Gregory F. Zoeller 
 
 
 
 
 
Stephen H. Paul 
Attorney General of Indiana 
 
 
 
 
Jon B. Laramore 
 
 
 
 
 
 
 
 
Brent A. Auberry 
John D. Snethen  
 
 
 
 
 
Fenton D. Strickland 
Deputy Attorney General  
 
 
 
 
Baker & Daniels LLP 
 
 
 
 
 
 
 
 
Indianapolis, Indiana 
Matthew R. Nicholson 
Deputy Attorney General 
 
Timothy A. Schultz 
Deputy Attorney General 
 
Jennifer E. Gauger 
Deputy Attorney General 
 
Andrew W. Swain 
Deputy Attorney General 
Indianapolis, Indiana 
 
______________________________________________________________________________ 
 
In the 
Indiana Supreme Court  
_________________________________ 
 
No. 49S10-1010-TA-519 
 
INDIANA DEPARTMENT OF  
STATE REVENUE, 
 
 
 
 
 
 
 
 
 
 
Petitioner below, 
 
v. 
 
BELTERRA RESORT INDIANA, LLC, 
 
 
 
 
 
 
 
 
 
 
Respondent below. 
_________________________________ 
 
Petition for Review from the Indiana Tax Court, No. 49T10-0605-TA-49 
The Honorable Thomas G. Fisher, Judge 
_________________________________ 
 
October 5, 2010 
 
Rucker, Justice. 
FILED
CLERK
of the supreme court,
court of appeals and
tax court
Oct 05 2010, 11:16 am
 
 
2 
 
In this opinion we address the question of whether a contribution by a parent corporation 
to the capital of its subsidiary is automatically excluded from Indiana use tax.  We conclude it is 
not.  
 
Facts and Procedural History 
 
Belterra Resort Indiana, LLC (“Belterra”) is a Nevada corporation that owns and operates 
a hotel and riverboat casino in Switzerland County.  Pinnacle Entertainment Inc. (“Pinnacle”), a 
Delaware corporation, is Belterra‟s parent company.  Pinnacle contracted with Alabama 
Shipyard, Inc. of Mobile, Alabama to purchase and construct the Miss Belterra riverboat in 
September 1999, at the cost of $34,689,719.00.  See Supp. App. at 28, 32.  Alabama Shipyard 
then conveyed title and possession of the completed riverboat to Pinnacle on July 24, 2000.  
Pinnacle paid no Alabama sales tax on this transaction.  The following day, Pinnacle transferred 
title and possession of the riverboat to Belterra while in international waters off the Gulf of 
Mexico.  Thereafter the riverboat headed to its ultimate destination in Indiana.  Pinnacle owned a 
97% interest in Belterra at the time of the transfer.  Pinnacle subsequently acquired the remaining 
3% interest in Belterra in August of 2001. 
 
The Indiana Department of Revenue (“Department”) conducted a sales and use tax audit 
of Belterra in 2002 and issued a proposed use tax assessment against Belterra in the amount of 
$1,869,783.00 plus penalty and interest, due to its acquisition of the riverboat.  Belterra protested 
the assessment and after a hearing on the matter the Department issued a Letter of Findings 
denying Belterra‟s protest.  Belterra filed a timely appeal of the denial with the Indiana Tax 
Court.  The parties filed cross-motions for summary judgment.  After a hearing the court granted 
Belterra‟s motion for summary judgment and denied the Department‟s motion.  Belterra Resort 
Ind., LLC v. Ind. Dep‟t of State Revenue, 900 N.E.2d 513, 517 (Ind. Tax Ct. 2009).  The court 
reasoned that Belterra was not subject to use tax on its acquisition of the riverboat because it was 
a contribution to capital and not the result of a retail transaction.  Id. at 516.  We granted review.   
 
 
 
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Standard of Review 
 
 
The Indiana Tax Court was established to develop and apply specialized expertise in the 
prompt, fair, and uniform resolution of state tax cases.  State Bd. of Tax Comm‟rs v. Indianapolis 
Racquet Club, Inc., 743 N.E.2d 247, 249 (Ind. 2001).  This Court extends cautious deference to 
decisions within the special expertise of the Tax Court, and we do not reverse unless the ruling is 
clearly erroneous.  Ind. Dep‟t of State Revenue v. Safayan, 654 N.E.2d 270, 272 (Ind. 1995); see 
also Ind. Tax Court Rule 10.  We extend the same presumption of validity to Tax Court rulings 
on summary judgments and apply the same standard of review.  Ind. Dep‟t of State Revenue v. 
Bethlehem Steel Corp., 639 N.E.2d 264, 266 (Ind. 1994).  That is, when a summary judgment 
involves a question of law within the particular purview of the Tax Court, cautious deference is 
appropriate.  Id..  We will set aside the Tax Court‟s determinations of tax law on summary 
judgment only if we are definitely and firmly convinced that an error was made.  Id.. 
 
Discussion 
 
Indiana imposes an excise tax, known as the state sales tax, on retail transactions made 
within the state.  Ind. Code § 6-2.5-2-1(a).  A retail transaction occurs when, among other things, 
a retail merchant in the ordinary course of its regularly conducted trade or business acquires 
tangible personal property for the purpose of resale and transfers that property to another person 
for consideration.  See I.C. § 6-2.5-4-1(a), (b).  Indiana also imposes a complementary tax, 
known as the use tax, on the use, storage, or consumption of tangible personal property in 
Indiana.  See I.C. § 6-2.5-3-2(a).  The use tax is complementary to the sales tax because it 
ensures non-exempt transactions that have escaped sales tax liability are nonetheless taxed.  
Horseshoe Hammond, LLC v. Ind. Dep‟t. of State Revenue, 865 N.E.2d 725, 727 (Ind. Tax Ct. 
2007).  In fact, Indiana‟s use tax is primarily designed to reach out-of-state sales of tangible 
personal property that is subsequently used in Indiana.  Id. at 727 n.4. 
 
 
At stake in this case is whether the transfer of the riverboat from the parent company to 
its subsidiary corporation was a “retail transaction” within the meaning of Indiana Code section 
6-2.5-3-2(a).  The statute provides in pertinent part “[a]n excise tax, known as the use tax, is 
imposed on the . . . use . . . of tangible personal property in Indiana if the property was acquired 
 
 
4 
in a retail transaction.”  Id.  Belterra contends it is not subject to Indiana‟s use tax because the 
riverboat was not acquired in a retail transaction.  And this is so, according to Belterra, because 
no consideration was given in exchange for the riverboat.  See I.C. § 6-2.5-4-1(b)(2) (providing 
in relevant part “[a] person is engaged in selling at retail when . . . he . . . transfers that property 
to another person for consideration”).  Rather, Belterra argues that transfer of the riverboat was 
made as a capital contribution with no consideration given.  
 
 
In support of its contention Belterra cites Grand Victoria Casino & Resort, LP v. Ind. 
Department of State Revenue, 789 N.E.2d 1041 (Ind. Tax Ct. 2003).  In that case Grand Victoria 
was formed as a result of a merger between two companies: G.V. II, Inc., and GV LLC.  The 
facts of the merger apparently revealed that Grand Victoria received a riverboat as a capital 
contribution from G.V. II, Inc., and that the partners of Grand Victoria (who were previous 
owners of G.V. II, Inc.) received no cash or other property in connection with the capital 
contribution of the riverboat.  On a claim that Grand Victoria was entitled to a refund of sales 
tax, the Department conceded and the Tax Court held that “[b]ecause the capital contribution 
was a transfer of property without consideration, it was not a retail sale subject to sales tax.”  Id. 
at 1045.  Here, Belterra contends that it is similarly situated and thus is entitled to a 
determination that it is not subject to Indiana‟s use tax.  We disagree and make several 
observations. 
 
 
 
In the corporate context a capital contribution is a “transaction between a shareholder and 
a corporation whereby the shareholder transfers money or property to the corporation.  Instead of 
receiving additional stock, the basis of the shareholder‟s existing investment in the corporation is 
increased in proportion to the capital contribution.”  Hoang v. Jamestown Homes, Inc., 768 
N.E.2d 1029, 1041 (Ind. Ct. App. 2002) (Bailey, J., dissenting) (citing Black‟s Law Dictionary 
209 (6th ed. 1990)), trans. denied; see also J. William Callison & Maureen A. Sullivan, Limited 
Liability Companies: A State-by-State Guide to Law and Practice § 6:1 (2010) (“Capital 
contribution decisions typically are made based on the LLC‟s capital needs . . . .  In most states, 
members may receive membership interests in exchange for cash, property, and services 
contributions . . . .”).  However, not all capital contributions are created equally.  Indeed we see 
nothing inherent in such transactions that automatically exempt them from the reach of Indiana‟s 
 
 
5 
sales and use tax statutes.1  Thus, we do not read Grand Victoria as standing for the broad 
proposition that the fact of a capital contribution standing alone automatically means that no 
retail sale occurred.2  Instead Grand Victoria can best be understood as declaring that where a 
capital contribution is made “without consideration” then the transaction is not subject to sales 
tax.  Stated somewhat differently, if the capital contribution was made without consideration 
then there was no retail sale and thus no Indiana sales or use tax could be imposed.  
 
 
The issue in this case is whether the transfer of the riverboat from Pinnacle to Belterra 
was done without either side receiving consideration.  In an affidavit submitted in support of its 
motion for summary judgment Belterra declares as much.  Specifically, the Board of Director‟s 
Resolution declared, “[ ]the Company hereby approves the transfer of ownership of the 
Riverboat Miss Belterra from Pinnacle Entertainment, Inc. to Belterra Resort Indiana, LLC as a 
capital contribution and without consideration being paid to Pinnacle Entertainment . . . .”  Supp. 
App. at 105 (emphasis added).  However, this declaration is not dispositive.  Whether 
consideration is given is a question of fact for the jury.  NBZ, Inc. v. Pilarski, 520 N.W. 2d 93, 
                                                 
1 In contrast our research reveals that several jurisdictions have expressly provided that capital 
contributions are excluded from use tax.  See, e.g., Md. Code Ann. Tax – Gen. § 11-209(c)(1)(iv) 
(LexisNexis 2010) (“Transfers – (1) The sales and use tax does not apply to a transfer of tangible personal 
property:  . . . (iv) to a limited liability company only as a capital contribution or in consideration for an 
interest in the limited liability company.”); Mo. Ann. Stat. § 144.011(4) (West 2010) (sales and use tax 
provision declaring that “the definition of „retail sale‟ or „sale at retail‟ shall not be construed to include. . 
. [t]he transfer of tangible personal property to a corporation by a shareholder as a contribution to the 
capital of the transferee corporation”); see also Mo. Ann. Stat. § 144.617(4) (West 2010) (denoting “[t]he 
transfer of tangible personal property to a corporation by a shareholder as a contribution to the capital of 
the transferee corporation” as one exemption to the sales and use tax); N.Y. Comp. Codes R. & Regs., tit. 
20, § 526.6(d)(v) (2010) (declaring that the definition of a retail sale for sales and use tax purposes 
excludes “[t]he contribution of property to a partnership in consideration for a partnership interest 
therein” and stating that “[t]he transfers described in this paragraph between . . . corporations and 
stockholders, are excluded from the definition of „retail sale‟ because while the form of ownership of the 
property is changed, there is a continuity of interest in the property transferred”); Ohio Rev. Code Ann. 
§5751.01(F)(2)(o) (LexisNexis 2010) (defining “gross receipts” for purposes of the Ohio commercial 
activity tax to exclude “[c]ontributions to capital”). 
 
2  See, e.g., Hagan v. Adams Prop. Assocs., Inc., 482 S.E.2d 805, 807 (Va. 1997) (holding transfer of 
legal title to property as a capital contribution to LLC was in exchange for valuable consideration and 
constituted a sale of the property); Wolter v. Wis. Dep‟t of Revenue, 605 N.W.2d 283, 292 (Wis. Ct. App. 
1999) (holding transfer of capital accounts from a limited partnership to a LLC was valuable 
consideration for purposes of imposing state real estate transfer fee because the members received new 
rights and privileges).  But see Mandell v. Gavin, 816 A.2d 619, 625 (Conn. 2003) (holding that transfer 
of property to LLC involved “no consideration” for state conveyance tax purposes because it was a 
unilateral act and not the result of a bargained-for exchange). 
 
 
6 
97 (Wis. Ct. App. 1994).  However, whether consideration exists is generally a question of law 
for the court.  Russell v. Jim Russell Supply, Inc., 558 N.E.2d 115, 120 (Ill. App. Ct. 1990).   
 
 
The tax statutes do not expressly define the term “consideration” as used in Indiana Code 
section 6-2.5-4-1(b)(2).  However, the concept of consideration evolved from the law of 
contracts.  Monarch Beverage Co. v. Ind. Dep‟t of State Revenue, 589 N.E.2d 1209, 1212 (Ind. 
Tax Ct. 1992).  And in order to have a legally binding contract there must be generally an offer, 
acceptance, and consideration.  Id..  “To constitute consideration, there must be a benefit 
accruing to the promisor or a detriment to the promisee.”  Paint Shuttle, Inc. v. Cont‟l Cas. Co., 
733 N.E.2d 513, 523 (Ind. Ct. App. 2000) (quoting A&S Corp. v. Midwest Commerce Banking 
Co., 525 N.E.2d 1290, 1292 (Ind. Ct. App. 1988)), trans. denied.  A benefit is a legal right given 
to the promisor to which the promisor would not otherwise be entitled.  DiMizio v. Romo, 756 
N.E.2d 1018, 1023 (Ind. Ct. App. 2001), trans. denied.  A detriment on the other hand is a legal 
right the promisee has forborne.  Id.  “The doing of an act by one at the request of another which 
may be a detrimental inconvenience, however slight, to the party doing it or may be a benefit, 
however slight, to the party at whose request it is performed, is legal consideration for a promise 
by such requesting party.”  Harrison-Floyd Farm Bureau Coop. Ass‟n v. Reed, 546 N.E.2d 855, 
857 (Ind. Ct. App. 1989).  In the end, “consideration – no matter what its form – consists of a 
bargained-for exchange.”  Horseshoe Hammond, 865 N.E.2d at 729.  
 
 
By asserting that it “paid” no consideration to Pinnacle, Belterra implies there was no 
cash exchanged between the parties in consequence of transferring ownership of the riverboat. 
See Supp. App. at 105.  However, “Indiana has long held that consideration in the form of 
money is not essential to a binding contract.”  Monarch Beverage, 589 N.E.2d at 1212.  And as 
we have discussed, the concept of consideration encompasses any benefit – however slight – 
accruing to the promisor or any detriment – however slight – borne by the promissee.  We accept 
as true that Belterra paid no money to Pinnacle in acquiring the riverboat.  But this does not 
resolve the question of whether the exchange lacked consideration.  Was there any other benefit 
inuring to Pinnacle?  Was there some detriment borne by Belterra? 
   
We think these questions can best be answered by evaluating more closely the transaction 
between Belterra and Pinnacle.  In Indiana, the substance, rather than the form, of transactions 
 
 
7 
determines their tax consequences.  Mason Metals Co. v. Ind. Dep‟t of State Revenue, 590 
N.E.2d 672, 675 (Ind. Tax Ct. 1992); Bethlehem Steel Corp. v. Ind. Dep‟t of State Revenue, 597 
N.E.2d 1327, 1331 (Ind. Tax Ct. 1992).  “A transaction structured solely for the purpose of 
avoiding taxes with no other legitimate business purpose will be considered a sham for taxation 
purposes.”  Belterra, 900 N.E.2d at 517 (citing Gregory v. Helvering, 293 U.S. 465, 469-70 
(1935)).   
 
In this case the tax consequences of Pinnacle‟s and Belterra‟s acquisition and transfer of 
Miss Belterra must be analyzed under the judicially created “step transaction” doctrine to 
determine their substance.  The step transaction principle derives from the classic tax case cited 
by the Tax Court below, Gregory v. Helvering.  In Gregory, the Supreme Court‟s analysis of the 
tax effect of a transaction involved “[p]utting aside . . . the question of motive in respect of 
taxation altogether, and fixing the character of the proceeding by what actually occurred.”  293 
U.S. at 469.  The analysis revealed a transaction which the Court characterized as “an operation 
having no business or corporate purpose – a mere device which put on the form of a corporate 
reorganization as a disguise for concealing its real character,” id., and as “an elaborate and 
devious form of conveyance masquerading as a corporate reorganization, and nothing else.”  Id. 
at 470. The Court declined to “exalt artifice above reality” and affirmed the appellate court‟s 
holding that there had been no reorganization within the meaning of the statute.  Id. 
 
As the step doctrine has evolved, the courts have formulated two separate tests: the “end 
results” test and the “interdependence” test.  Under the end results test, “purportedly separate 
transactions will be amalgamated into a single transaction when it appears that they were really 
component parts of a single transaction intended from the outset to be taken for the purpose of 
reaching the ultimate result.”  Associated Wholesale Grocers, Inc. v. United States, 927 F.2d 
1517, 1523 (10th Cir. 1991).  The “interdependence” test requires an analysis of “whether on a 
reasonable interpretation of objective facts the steps were so interdependent that the legal 
relations created by one transaction would have been fruitless without a completion of the 
series.”  Id.. 
 
As to the end results test, the transactions engaged in by Pinnacle and Belterra appear to 
be component parts of a single transaction intended from the outset to reach the ultimate result of 
 
 
8 
avoiding paying Indiana use tax while maintaining 100% control of Miss Belterra.  The 
component transactions here were (1) Pinnacle‟s purchase of the boat from the manufacturer, (2) 
the contribution of the boat to Belterra in international waters, and (3) Belterra‟s operation of the 
boat as a casino in Indiana.  Once the boat was operating in Indiana, Pinnacle purchased the 
remaining 3% ownership interest in Belterra, thereby reacquiring 100% control of the boat 
through its 100%-owned subsidiary.   
 
Similarly, the substance of the transactions is equally vulnerable under the 
interdependence test.  Pinnacle‟s purchase of the Miss Belterra riverboat from the manufacturer, 
its contribution of the boat to Belterra, Belterra‟s operation of the boat in Indiana, and Pinnacle‟s 
acquisition of 100% control of the subsidiary owning the boat were so interdependent that it is 
unreasonable to conclude that any of the transactions would have been undertaken except with a 
view to completing the whole series of transactions. 
 
Because we apply the step doctrine to collapse Pinnacle‟s and Belterra‟s various 
transactions, we thus treat the acquisition of Miss Belterra from the manufacturer as a retail 
transaction subject to Indiana use tax.  I.C. § 6-2.5-3-2(a).  As such, the purchase price paid to 
the manufacturer by Pinnacle constitutes the consideration required by the statute.  I.C. § 6-2.5-
4-1(a), (b). 
 
Conclusion 
 
 
We reverse the decision of the Tax Court, and enter summary judgment in favor of the 
Department.   
 
Shepard, C.J., and Sullivan, J., concur. 
Boehm, J., dissents with separate opinion in which Dickson, J., joins. 
 
Boehm, Justice, dissenting. 
I respectfully dissent.  I believe the majority adopts a definition of contribution to capital 
that incorrectly assumes a contribution to capital is for no consideration, and then imports 
contract law notions of consideration to conclude that Belterra‟s transfer of this riverboat to its 
subsidiary was not a contribution to capital. 
The sales and use taxes are imposed on “retail transactions,” which are defined as 
“selling at retail.”  Ind. Code § 6-2.5-4-1(a) (2010).  A person is defined as “selling at retail” 
when: 
[I]n the ordinary course of his regularly conducted trade or business, he: (1) 
acquires tangible personal property for purposes of resale; and (2) transfers that 
property to another person for consideration. 
I.C. § 6-2.5-4-1(b).  Consideration is required before a transaction is a “retail transaction,” but it 
is not the test of a retail transaction.  The first and central requirement is that there be a “sale,” 
and a contribution to capital is not a sale. 
“Contribution to capital” is a well understood term in federal tax law and in accounting.  
It is not a “sale” at retail or otherwise, and is not in the “ordinary course” of a “regularly 
conducted” business.  It is a transfer of legal form of ownership from direct ownership of the 
assets to ownership of equity interests in a corporation or limited liability company that owns the 
same assets.  Comm‟r of Internal Revenue v. Fink, 483 U.S. 89, 94–95 (1987).  In this case we 
are dealing with a transfer by one corporation to its 97% owned subsidiary.  Among other things, 
neither corporation has taxable income under either federal or Indiana adjusted gross income tax.  
This is achieved by section 351 of the Internal Revenue Code, but that does not imply that there 
is no consideration to the contributing shareholder.  To the contrary, the transfer may be made 
tax free by one or more shareholders who collectively own at least 80% of the common stock of 
the receiving corporation.  In many if not most cases the transfer is in exchange for shares of the 
corporation.  The simplest example of such a contribution is incident to the formation of a new 
corporation in which the shareholders, often by contractual agreement, contribute assets to the 
new corporation in exchange for shares of its stock.  There clearly is consideration in this 
transaction as that term is used in contract law, but I think no one would contend that it 
constitutes a retail sale subject to the sales or use tax.  The only form of contribution to capital 
 
2 
that might (incorrectly in my view) be viewed as without consideration is a contribution of assets 
by a shareholder who owns essentially all of the equity shares in the corporation and does not 
take additional shares.  Even in that case, the shareholder gets consideration as that term is used 
in contract law because there is added value in the pre-existing shares in the amount of the value 
of the contributed assets.  In short “consideration” is a necessary, but not a sufficient condition to 
render a transaction “selling at retail.” 
As I see it, the only plausible claim to finding a retail transaction in this case arises from 
Pinnacle‟s having bought the boat for purposes of putting it to use in its subsidiary.  If Pinnacle 
had not created Belterra and had simply purchased the boat and brought it to Indiana, there 
would be a use tax when it was placed in operation in this state.  The same would be true if 
Belterra had purchased the boat and brought it into the state.  But the Department of Revenue did 
not claim that it could collapse the purchase of the boat, which was a retail sale in international 
waters, and the contribution to capital to regard this series of events as a retail purchase by 
Belterra for use in Indiana.  Nor did the Department advocate this application of the step-
transaction doctrine in the Tax Court.  Rather, its argument was presented as a “drop kick” 
transaction which commentators have suggested is subject to sales and use tax.  James P. Kleier, 
Mergers and Acquisitions: Sales and Use Tax Consequences, Tax Mgmt. Multistate Tax 
Portfolio (BNA) No. 1530.05, at 27–28 (Feb. 25, 2000).  In a “drop kick” a seller wishing to 
dispose of an item of personal property “drops” the asset into a newly formed corporation and 
sells (“kicks”) the stock of the new corporation to the buyer.  Although cast as a contribution to 
the capital of the subsidiary and a transfer of stock to the buyer, in substance the parent has sold 
the contributed asset to the third-party buyer.  Before the Tax Court, the Department tried to fit 
its contention into this mold, describing its step transaction argument as a “drop kick” and 
identifying the transactions it sought to collapse as “(i) the contribution of the riverboat to 
Belterra in international waters, (ii) Belterra‟s operation of the riverboat as a casino, and (iii) 
Pinnacle‟s purchase of the [3% of Belterra it did not own].”  It renews that contention in its 
petition to review.  But that is not what happened here.  Rather it is the reverse: the boat was 
purchased by the parent and then “dropped” into the subsidiary.  And as the Tax Court found, the 
acquisition of the outstanding 3% of Belterra‟s stock was independent of the purchase of the boat 
 
3 
and required by Belterra‟s incorporation documents.1  In short, by claiming the 3% minority 
interest amounted to a reacquisition of the “dropped” asset, the Department hinged its contention 
on a matrix of transactions that did not hang together, rather than simply collapsing the purchase 
of the boat and the contribution to the subsidiary and arguing the transaction was a purchase by 
the subsidiary that incurs a use tax in Indiana. 
Federal income tax law recognizes a “step transaction” doctrine that permits the courts to 
disregard the formal steps taken in a series of transactions if the “end result” of the transaction 
was from the outset the intended result of a series of transactions.  An alternative formulation is 
whether the transactions were so interdependent that each would have been “fruitless” without 
the series of steps.  Associated Wholesale Grocers v. United States, 927 F.2d 1517, 1523 (10th 
Cir. 1991).  Until now that doctrine had not been incorporated into Indiana tax law.  The only 
Indiana tax case cited by the Department to invoke this or similar reasoning was Mason Metals 
Company v. Indiana Department of State Revenue, 590 N.E.2d 672, 675 (Ind. Tax Ct. 1992), 
which in an entirely different context observed that “substance, rather than the form,” dictated 
whether the taxpayer was engaged in providing transport services.  Although the Department 
cited Mason Metals, the Tax Court found that the Department “did not develop this reasoning” 
and concluded that there was a valid business purpose for the parent‟s acquisition of the boat and 
its subsequent contribution to the subsidiary obviously had a valid purpose to permit the licensee 
to operate in Indiana.  Belterra Resort Ind. v. Ind. Dep‟t of State Revenue, 900 N.E.2d 513, 516–
17 (Ind. Tax 2009). 
Importing the step transaction doctrine into Indiana tax law should be done, if at all, on a 
more fully developed argument in the Tax Court.  I would affirm on this record, where the 
argument was not “developed,” and we therefore do not have the Tax Court‟s analysis of it. 
Dickson, J., joins. 
                                                 
1 Presumably if the 3% minority interest had not been acquired, Pinnacle would have received additional 
shares in Belterra to reflect the value of the boat that it contributed, unless the price to reacquire was fixed 
by agreement.  This seems irrelevant for our purposes.