Jim Hudson

Summary

The court affirmed summary judgment for Murphy, holding that debt incurred for its one-time corporate spin-off was related to an extraordinary, nonrecurring event and therefore generated nonbusiness-income-related expenses allocable to Arkansas. The court further held that the statutory prohibition on deductions for expenses allocable to nonbusiness income applies only when the related income is not taxed by Arkansas, so it did not bar Murphy's interest deductions. The court also declined to deny the refund based on potential tax consequences in other states.