Schlumberger Technology Corporation & Subsidiaries, Appellants v. State of Alaska Department of Revenue, Appellee

Summary

The court held that Alaska's corporate income tax scheme does not incorporate the federal rule limiting foreign corporations' taxable income to income effectively connected with a United States business because that rule conflicts with Alaska's formula-apportionment system and its specific 80% exclusion for foreign dividends. The water's-edge method limits which corporations are included in a combined return, not which categories of income those corporations must report. The court also held that the taxpayer withdrew its constitutional challenge through its agency-proceedings stipulation and therefore affirmed the superior court.