Today, the California Court of Appeal for the First Appellate District decided the General Mills case. The court ruled in favor of General Mills, concluding that "the full sales price of General Mills' hedging futures sales contracts are 'gross receipts' to be included in the calculation of the UDITPA sales factor." The court remanded the case to the trial court to determine whether a distortion adjustment under Cal. Rev. & Tax § 25137 (i.e., UDITPA § 18) is appropriate. To view a copy of the case and for access to briefs and related materials click here.
Taxpayers considering whether to file refund claims on this issue should consider the issues that are covered in detail in our presentation.
Meanwhile, hundreds of cases remain pending at the FTB and the SBE on this issue. Any settlement of those cases should take this General Mills decision into consideration.