Opinion ID: 2381232
Heading Depth: 1
Heading Rank: 8

Heading: Was Silent Hoist's sales income correctly included in its tax base?

Text: The same reasons that impel us to find the taxpayer's portfolio income part of its unitary business apply with equal force to its sales income. Its New Jersey sales were more than $3,000,000, or almost 13% of system sales of $23,361,278. See supra (at 15). As such, they contributed significantly to the enhanced value of the unitary business. These sales were a significant source of the funds that enabled the taxpayer to acquire its property in New Jersey. We perceive the same factors at work as in the case of the portfolio income. The centralized one-man management team that coordinated the real estate operations in New Jersey, as well as the portfolio investments, oversaw the sales operation. Depreciation from the New Jersey operation played a role in the tax returns of sales activities. We find that there were transfers of value among the components of the enterprise, an umbrella of centralized management and controlled interaction, and a dependence and contribution among the operations creating a mutual benefit that each shared. Moreover, even were Silent Hoist's sales not considered part of its unitary business, there would be little doubt that there is an otherwise sufficient minimal connection with the state that warrants the assessment. See Tamko Asphalt Products, Inc. v. Taxation Div. Director, 5 N.J. Tax 446 (1983), aff'd, 6 N.J. Tax 342 (App.Div. 1984). In that case a Maryland asphalt roofing supplier contested a CBT assessment. Tamko did not advertise in New Jersey, had no bank account, inventory, plant or telephone listing and no identifiable office. Yet, the Tax Court found that its marketing activities in New Jersey distinctly exceeded the bare solicitation of orders for which the Interstate Income Act, Pub.L.No. 86-272, prohibits imposition of a state tax measured by income on corporations engaged only in the solicitation of orders within the taxing state. 5 N.J. Tax at 456. The court explained that Tamko's sales representatives, one of whom lived in New Jersey, not only solicited orders but also promote[d] Tamko products and service customer accounts by investigating, reporting and adjusting customer complaints. Id. It found Tamko to be subject to tax in New Jersey. Id. at 453-54. In view of the disposition that we make of the unitary business issue, we need not base our decision on these contacts although we note their similarity. Hence, because the sales income of Silent Hoist is part of its unitary business conducted in New Jersey through its real estate ventures, that sales income, fairly apportioned, is part of the taxpayer's entire net income.