3/1/2024 0 Comments Geoffrey toys r usThe trial judge upheld the Commission's assessment of taxes against Geoffrey. Geoffrey paid the taxes under protest and filed this action for a refund, claiming, among other things, that it did not do business in South Carolina and that it did not have a sufficient nexus with South Carolina for its royalty income to be taxable here. The Commission also held that Geoffrey was required to pay the South Carolina corporate license fee. The South Carolina Tax Commission (Commission) initially disallowed the deduction, but later took the position that Toys R Us was entitled to the deduction and that Geoffrey was required to pay South Carolina income tax on the royalty income. In 19, Toys R Us deducted the royalty payments made to Geoffrey from its South Carolina taxable income. Toys R Us began doing business in South Carolina in 1985 and has since then made royalty payments to Geoffrey based on South Carolina sales. The royalty payment is made annually via wire transfer from a Toys R Us account in Pennsylvania to a Geoffrey account in New York. The Agreement further grants Toys R Us a right to use Geoffrey's merchandising skills, techniques, and "know-how" in connection with marketing, promotion, advertising, and sale of products covered by the Agreement.Īs consideration for the licenses granted by the Agreement, Geoffrey receives a royalty of one percent "of the net sales by, or any of its affiliated, associated, or subsidiary companies, of the Licensed Products sold or the Licensed Services rendered under the Licensed Mark." Toys R Us reports the aggregate sales of all stores to Geoffrey in a single figure on a monthly basis. In 1984, Geoffrey became the owner of several valuable trademarks and trade names, including "Toys R Us." Later that year, Geoffrey executed a License Agreement (Agreement) that allows Toys R Us to use the "Toys R Us" trade name, as well as other trademarks and trade names, in all states except New York, Texas, Pennsylvania, Massachusetts, and New Jersey. It has no employees or offices in South Carolina and owns no tangible property here. (Toys R Us) incorporated in Delaware with its principal offices in that state. Geoffrey is a wholly-owned, second-tier subsidiary of Toys R Us, Inc. (Geoffrey), a foreign corporation, appeals from a ruling that requires it to pay South Carolina income tax and business license fees. Urban, Columbia, for respondent.Ĭertiorari Denied November 29, 1993. of Wyche, Burgess, Freeman & Parham, P.A., Greenville, for appellant.Ĭhief Deputy Atty. SOUTH CAROLINA TAX COMMISSION, Respondent.
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