There must be a flow of value between an investment and the activities that the state seeks to tax. Decision for Defendant rendered June 15, 2000. The department claims the investments were held for purposes of acquiring a unitary property and therefore served an operational function. This matter is before the court on stipulated facts and Plaintiff's Motion for Summary Judgment. Securities is the sole owner of taxpayer.
Taxpayer owns and operates a commercial office building in California.
As a result of their agreements, Securities held the trust's income units, which meant it received all of the current income from the trust. Taxpayer held the trust's capital units, meaning it received all the capital gains. Taxpayer's primary purpose for the capital so invested was to purchase additional commercial real estate when appropriate property was located. In 1993, taxpayer located an appropriate property in Portland, Oregon. Taxpayer redeemed the capital units from the trust and used the funds to buy the Portland building.