Opinion ID: 2773129
Heading Depth: 2
Heading Rank: 7

Heading: Textron’s Appeal

Text: On appeal, Textron argues that the Superior Court erred in not addressing whether Acument‟s increase in basis constitutes a “tax benefit” for purposes of the Purchase Agreement. Textron also alleges that the Superior Court erred in construing “reduction” to mean “deduction,” thereby narrowing the circumstances under which the “Tax Benefit Reduction” provision is triggered. Textron claims not to appeal the Superior Court‟s holding that the tax benefit reduction required an actual net tax benefit to Acument, rather than a hypothetical one.56 Acument contends in response that it has not received a tax benefit because its increase in basis from payment of the contingent liabilities is offset by an equal decrease 53 Opinion at  n. 85, . 54 Opinion at . 55 Opinion at . 56 Opening Br. at 12, n. 4. 15 in basis from the indemnification. In other words, Acument argues that to determine whether a benefit occurred, all the effects of the transaction (positive and negative) must be taken into account. It urges us to reject Textron‟s contention that only one effect (the positive tax effect) is relevant, and we should ignore the corresponding (negative) effect, in order to produce a “benefit.” Because the net effect is in fact neutral, Acument argues that Textron is not entitled to be reimbursed for fulfilling its indemnity obligations under the Purchase Agreement. Acument points out that, contrary to Textron‟s argument on appeal, the Superior Court did consider Textron‟s argument below that Acument‟s increase in basis constituted a tax benefit, but rejected it. Acument also contends that the Superior Court correctly held that the benefit can be either a deduction or a reduction, but the distinction is irrelevant because the only benefit at issue is a deduction.