Department of Revenue v. Oracle Corp.

          Certiorari to the Colorado Court of Appeals, Court of Appeals Case No. 16CA1316

         Attorneys for Petitioners: Philip J. Weiser, Attorney General, Terence C. Gill, First Assistant Attorney General, Noah C. Patterson, Senior Assistant Attorney General, Denver, Colorado

         Attorneys for Respondent: Silverstein & Pomerantz LLP, Neil I. Pomerantz, Mark E. Medina, Michelle Bush, Denver, Colorado

         Attorneys for Amicus Curiae Colorado Association of Commerce and Industry: The Poe Law Office LLC, Alan Poe, Rachel Poe, Centennial, Colorado

         Attorneys for Amicus Curiae Council on State Taxation: Holland & Hart LLP, Christina F. Gomez, Jonathan S. Bender, Denver, Colorado

         Attorneys for Amicus Curiae Multistate Tax Commission: Ruegsegger Simons Smith & Stern, LLC, Anthony E. Derwinski, Jeffrey C. Staudenmayer, Denver, Colorado, Bruce Fort, Washington, District of Columbia

         Attorney for Amici Curiae Professors David Gamage, Hayes Holderness, and Darien Shanske: Isaac L. Lodico, Denver, Colorado

         OPINION

         GABRIEL, JUSTICE

Page 1022

         [¶1] This case, like Department of Revenue v. Agilent Technologies, Inc., 2019 CO 41, 441 P.3d 1012, which we are also announcing today, principally requires us to decide two questions. First, we must determine whether the Colorado Department of Revenue and Michael Hartman, in his official capacity as the Executive Director of the Department (the "Director" and collectively with the Department, the "Department"), can require Oracle Corporation ("Oracle") to include its holding company, Oracle Japan Holding, Inc. ("OJH"), in its Colorado combined income tax return for the tax year ending May 31, 2000. Second, if the answer to that question is no, then we must consider whether the Department may nevertheless allocate OJH’s gain from the sale of shares that it held in Oracle Corporation Japan ("Oracle Japan") to Oracle in order to avoid abuse and to clearly reflect income.^[1]

         [¶2] For the reasons set forth in Agilent Technologies, we conclude that the pertinent statutory provisions and regulations do not permit the Department either to require Oracle to include OJH in its combined tax return for the tax year at issue or to allocate OJH’s capital gains income to Oracle. Accordingly, we conclude that the district court properly granted summary judgment in Oracle’s favor, and we therefore affirm the judgment of the division below.^[2]

          I. Facts and Procedural History

         [¶3] Oracle is a Delaware corporation headquartered in California, and it is the parent of a worldwide group of affiliated corporations.

         [¶4] OJH is a Delaware corporation and a wholly-owned subsidiary of Oracle. Oracle formed OJH in 1991, pursuant to the terms of a loan secured by Oracle from Nippon Steel, an unaffiliated Japanese entity. During the time period at issue, OJH owned no real or tangible personal property, had no payroll, and ...