Home > Legal Library > Article

Join Matindale-Hubbell Connected

Arizona "Do-It-Yourself" Blues: Taxpayer Must Include Trademark Licensing Subsidiary's Income in Combined Return

Andrew D. Appleby
Sutherland Asbill & Brennan LLP - New York Office

Suzanne M. Palms
Sutherland Asbill & Brennan LLP - Atlanta Office

February 28, 2014

Previously published on December 17, 2013

The Arizona Court of Appeals held that Home Depot U.S.A., Inc. (Home Depot) was required to include in its combined Arizona income tax return the income of an out-of-state subsidiary that licensed the retailer’s trademarks. Relying on R.R. Donnelley & Sons Co. v. Arizona Dep’t of Rev., 229 P.3d 266 (Ariz. Ct. App. 2010), the court concluded the trademark subsidiary was a part of Home Depot’s unitary business because the operations of the two entities were substantially interdependent. The court found the subsidiary’s sole business was the management of Home Depot’s trademarks, and that without Home Depot’s continuing efforts to promote its brand, the trademarks that constituted the subsidiary’s only assets would have been worthless. The court also found that although the subsidiary had substantial income during the tax years in question, it had only four employees, which was indicative, in the court’s opinion, that the subsidiary’s income was generated solely by Home Depot’s marketing efforts. Home Depot U.S.A., Inc. v. Arizona Dep’t of Rev., No. 1 CA-TX 12-0005 (Ariz. Ct. App. Dec. 5, 2013).


The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.

View More Library Documents By...

Sutherland Asbill & Brennan LLP
New York Office
Atlanta Office
Atlanta Office
Sutherland Asbill & Brennan LLP Overview