Skip to Main Content


Legal Ruling No. 410

January 16, 1979



Over 50 percent of the voting stock of each of three corporations (subsidiaries) is owned by a common corporation (parent). The three subsidiaries are engaged in a single unitary business conducted within and without this state. None of the subsidiaries are, however, engaged in a unitary business with the parent company. Therefore, the parent company is not a part of the unitary business conducted by the three subsidiaries and thus not includible with the three subsidiaries for combined reporting purposes.


Is the unity of ownership requirement for purposes of combining the three subsidiaries satisfied where the subsidiaries are owned and controlled by the same parent corporation and are engaged in a single unitary business, but none of which are unitary with the parent corporation?




In the case of Chase Brass & Copper Co. v. Franchise Tax Board, 10 Cal.App.3d 496, 87 Cal.Rptr. 239, appeal dismissed and Cert. denied, 400 U.S. 961, 27 Law.Ed.2d 381, 91 Sup. Ct. 365 (1970), the court was faced with the question of whether unity of ownership existed where it was found that two wholly owned subsidiaries were engaged in a unitary business but one had only a few unitary ties with the common parent company. The court held that unity of ownership was present, as the parent was the sole owner of the stock of both subsidiaries.

In the Appeal of Revere Copper and Brass Incorporated, Cal. St. Bd. of Equal, July 26, 1977, CCH 205-752, P-H 13,102-S, the Board of Equalization stated:

The ownership requirement contemplates an element of controlling ownership over all parts of the business;-

Generally speaking, controlling ownership can only be established by common ownership, directly or indirectly, of more than 50 percent of a corporation's voting stock. (Emphasis added.)


See also the Appeal of Standard Brands Incorporated, Cal. St. Bd. of Equal., October 18, 1977, CCH 205-789, P-H .

The language in the above case is consistent with the result reached by the court in Chase Brass and makes it clearly evident that all that is needed to satisfy the ownership requirement for combination purposes is the presence of the element of controlling ownership. There is no requirement that the corporation holding controlling ownership itself be unitary and combinable with the unitary group.

Is there something wrong with this page?

Help Us Improve Our Website

Don't include social security numbers or other personal/confidential information.

Feedback received: Thank you for your help.

If you need assistance, contact us.

Oops! Something went wrong.

We appreciate your feedback. Please try again later

Chat with an FTB Representative

You are leaving

We do not control the destination site and cannot accept any responsibility for its contents, links, or offers. Review the site's security and confidentiality statements before using the site.

If you have any issues or technical problems, contact that site for assistance.

Ahora está saliendo de

Nosotros no controlamos el sitio web al que se destina y no podemos aceptar ninguna responsabilidad por su contenido, enlaces, u ofertas. Revise las declaraciones de seguridad y confidencialidad del sitio antes de usar el sitio. Si tiene algún problema en general o técnico, comuníquese con ese sitio para obtener asistencia.

Si tiene algún problema en general o técnico, comuníquese con ese sitio para obtener asistencia.