Hunt-Wesson, Inc. v. Franchise Tax Board of California

Summary

The Court held that California's interest deduction limitation, which effectively taxes nonunitary income without proper allocation, violates the Due Process and Commerce Clauses. The rule limits deductions for unitary income based on the receipt of unrelated nonunitary income, amounting to an impermissible tax on that nonunitary income. The judgment of the California Court of Appeal is reversed.