Opinion ID: 2127293
Heading Depth: 1
Heading Rank: 3

Heading: Medicine Shoppe's Missouri Income Tax Returns

Text: The income tax periods at issue are July 1, 1998, through June 30, 1999 (1998), July 1, 1999, through June 30, 2000 (1999) and July 1, 2000, through June 30, 2001 (2000). For 1998, 1999 and 2000, Medicine Shoppe's income was included in consolidated federal income tax returns that Cardinal Health filed. Medicine Shoppe filed separate Missouri returns and separate returns in other states. Missouri law, as noted, allows a corporation doing business within and without Missouri alternative methods to allocate and apportion its income for Missouri income taxation. On its 1998, 1999 and 2000 Missouri income tax returns, Medicine Shoppe calculated its taxable income by using the single-factor apportionment method of section 143.451.2(2)(b). Medicine Shoppe classified and reported the interest on its investments through its agreement with Cardinal Health as non-Missouri source income that was not subject to Missouri's taxation and, hence, was not included in the apportionment formula. The director of revenue disallowed the classification of the interest as non-Missouri source income and issued notices of deficiency for 1998, 1999 and 2000. Medicine Shoppe timely protested the notices of deficiencies and timely appealed the director's final decisions to the Administrative Hearing Commission. This Court has jurisdiction. Mo. Const. art. V, sections 3 and 18.