Opinion
Submitted on Briefs December 10, 1997.
Decided January 7, 1998.
Appeal No. 153 F.R. 1993, from Board of Finance and Revenue, No. C-19, 641.
C. Andrew McGhee, Pittsburgh, for petitioner.
Kevin A. Moury, Harrisburg, for respondent.
Before COLINS, President Judge, and McGINLEY, SMITH, FRIEDMAN, KELLEY, and FLAHERTY, JJ.
Before this court are exceptions filed by Scott Electric Company (Scott) to this court's order of April 4, 1997, in which we affirmed the February 23, 1993 order of the Pennsylvania Board of Finance and Review (Board) denying Scott a refund request for taxes paid on the value of its capital stock. In affirming the Board's order, we concluded, contrary to Scott's position, that an S corporation may not assume the tax liability of its shareholders and then deduct that as an expense in calculating its annual net income for capital stock purposes. Scott Electric Co. v. Commonwealth, 692 A.2d 289 (Pa.Commw. 1997). We reasoned that, although such a deductuction may be in accordance with generally accepted accounting principles, it is specifically prohibited by section 155.26(g) of the Commonwealth Department of Revenue (Department) regulations, 61 Pa. Code § 155.26(g), the third provision of which disallows adjustments to income for Commonwealth personal income tax paid by the shareholders of corporations electing S corporation treatment. Id.
After oral argument and careful review, both of this court's opinion in Scott and of the exceptions filed to that opinion, we conclude that our decision in Scott is correct. Accordingly, we overrule the exceptions filed by Scott and affirm this court's order of April 4, 1997.
ORDER
AND NOW, this 7th day of January, 1998, we overrule the exceptions filed by Scott Electric Company and affirm the order of the Commonwealth Court of Pennsylvania, dated April 4, 1997.
LEADBETTER, J., did not participate in the decision in this case.