Fedders Financial Corporation, Plaintiff-Appellant v. Director, Division of Taxation, Defendant-Respondent

Summary

The Supreme Court of New Jersey reversed the lower courts, holding that indebtedness owed by Fedders Financial to its wholly owned subsidiary is not "indebtedness owing directly or indirectly" to its parent and therefore must be excluded from net worth and its interest fully deductible. The Court found the Director's regulations that automatically included such subsidiary loans to exceed the statutory language.