Anglin Flewelling Rasmussen Campbell & Trytten LLP


	199 So. Los Robles Ave, Suite 600 Pasadena, CA. 91101 Tel:626.535.1900 Fax:626.577.7764 firm@afrct.com

Deduction limitation shot down
By Kevin Smith
Staff Writer

PASADENA - The Pasadena law firm of Anglin, Flewelling, Rasmussen, Campbell & Trytten LLP has won a major victory for California businesses.

Working on behalf of Farmer Bros. Co., a Torrance-based maker of coffee products, the law firm challenged the constitutionality of a state statute limiting the tax deduction for dividends received by a California corporate taxpayer to dividends paid out of corporate income generated within the state.

On Feb. 23, the United States Supreme Court declined to review a California appellate court ruling the statute is unconstitutional.

Not allowing tax deductions for dividends earned through interstate commerce is essentially a tax in itself, according to Robin Campbell, a partner with the Pasadena law firm.

"Local corporations as well as some of the larger corporations doing business in California will be benefited by this decision," Campbell said. "As a litigator, it has been exciting to be an advocate not only for our client, but also for the interests of area business in general."

The Supreme Court's decision not to reconsider the lower court's court ruling ensures Farmer Bros. will recover more than $1.6 million in tax overpayments and interest. It also means the state likely will have to pay an estimated $800 million in additional refunds to thousands of other corporate taxpayers.

John Simmons, treasurer of Farmer Bros. Co., said he was happy with the court's decision - a decision that was slow in coming.

"This has been a long, drawn-out case," he said. "The state has done everything it could to hold onto its tax position. The fact that this finally came about is a real relief."

Farmer Bros. employs 1,200 workers in more than 28 states.

The company manufactures and distributes a product line that includes roasted coffee, coffee-related products (coffee filters, stir sticks, sugar and creamers), teas, cocoa, spices and soup and beverage bases to restaurants and other institutional establishments that prepare food.

Farmer Bros.' products are sold in hotels, hospitals, convenience stores and fast-food outlets.