Court Opinion

ID: 6788583
Source: CourtListenerOpinion
Date Created: 2022-07-21 01:07:16.39825+00
Date Added: 2024-06-11T16:02:59.806063
License: Public Domain

Pfeifer, J.,
dissenting.
Jones Day and Charles M. Steines, for appellee.
Jim Petro, Attorney General of Ohio, and Richard C. Farrin, Senior Deputy Attorney General, for appellant.
{¶ 18} It was the best of times, it was the worst of times. But it was not the tale of two cities. It was two tales of one company on one day. February 1, 1992: a date when Federated Department Stores, $334,536,641 in debt (give or take a shilling), was struggling for its very survival. One can imagine the remaining management team in the gruel line in the company cafeteria: “More, please.” The other February 1, 1992: A shiny new Federated Department Stores, with $430,069,566 under its belt, looks forward with great expectations toward the future. Which story Federated tells depends on the audience. For the Tax Commissioner, it is tragedy. For the shareholders, it is triumph. Either way, it is fiction.
{¶ 19} The date we should be focusing on is February 4, 1992. That is the day that the reorganized Federated emerged from bankruptcy. The Federated of February 4, 1992 was not the same Federated that existed on February 1, 1992. As the majority writes, “[u]nder fresh-start reporting, the negative-equity position of the formerly insolvent entity that filed for Chapter 11 protection is eliminated, and the financial records of the ‘new1 entity reflect its new assets and liabilities, which are quite distinct from those of the former bankrupt company.” Since Federated made a fresh start on February 4, that day marked “the beginning of the corporation’s annual accounting period that includes the first day of January of the tax year.” R.C. 5733.05. The “fresh start” date marked the beginning of Federated’s fiscal year. Federated’s franchise tax should have been assessed as of that day.