Cases & Deals

Oil and gas company reaches settlement with Massachusetts DOR on unitary and debt-equity characterization issues

Clients Oil and gas refining, marketing, and transport company

Jones Day assisted an oil and gas refining, marketing, and transport company to reach a settlement with the Massachusetts Department of Revenue in Corporation Excise Tax proceedings relating to (1) the characterization of intercompany balances as debt or equity and (2) gain from the disposition of minority interests in non-integrated subsidiaries. The Department sought to recharacterize a subsidiary payable as a dividend in order to increase the capital-based portion of the Excise Tax and to increase the company's taxable income base through such "deemed dividends." The Department also attempted to characterize gain from the sale of minority interests as apportionable unitary business income. Jones Day leveraged its experience with the Massachusetts DOR in debt/equity matters and the unitary business principle to advise the client how to reach a quick and efficient resolution of the matter.