California-Western States Life Insurance v. State Board of Equalization

SCHOTTKY, J. The Board of Equalization of the State of California and the individual members thereof appeal from a judgment in favor of the California-Western States Life Insurance Company by which the latter recovered the sum of $15,718.42, representing taxes paid under protest.

By the terms of article XIII, section 14 4/5, of the California Constitution an annual tax is imposed on each insurer doing business in this state. In the case of an insurer who does not transact title insurance business in California the basis of the annual tax is the amount of gross premiums less return premiums received by the insurer on its business done, other than premiums received for reinsurance and ocean marine insurance.

Subsection (e) of section 14 4/5 provides:

“Each insurer shall have the right to deduct from the annual tax imposed by this section upon such insurer in respect to a particular year the amount of real estate taxes paid by it, in that year, before, or within 30 days after, becoming delinquent, on real property owned by it at the time of payment, and in which was located, in that year, its home office or principal office in this State. ...”

On December 1,1952, the insurance company moved its home office from its building located at the corner of 10th and J Streets, in Sacramento, to a new building located at 21st and L Streets, in Sacramento. In its 1953 return (based on the 1952 premiums) the insurance company claimed as a deduction the real estate taxes paid on its old home office. In its 1954 return the insurance company claimed the taxes paid for the 1952-53 real estate tax year on its new home office on January 5, 1953, in the amount of $15,718.42, and the first installment of the 1953-54 real estate taxes paid in November, 1953, in the amount of $27,712.18. The State Board of Equalization [803]in 1955 decided that the company improperly deducted the $15,718.42 because according to the board this resulted in the company taking deductions of real estate taxes for the real estate tax year 1952-53 on both the old and new home offices. Accordingly, the sum of $15,718.42 was added to the 1955 assessment and this amount was paid under protest. The insurance company then brought this suit to recover the amount additionally assessed and paid under protest and recovered judgment in the superior court. The board has appealed.

The question presented is whether or not an insurance company which moved its principal office in December, 1952, may deduct real estate taxes for the year 1952-53, which were paid against its old property, in its 1953 return and taxes paid on the new home office for the year 1952-53 in its 1954 return.