By Laura Mahoney
Sherwin Williams Co. wasn't engaged in a tax shelter when it pre-funded its employee stock purchase plan contributions in 2003 and 2004 to insulate employees from threats to the stock price, the California State Board of Equalization said ( In re The Sherwin Williams Co. , Cal. Board of Equalization, No 785285, hearing 2/22/17 ).
It was a win for the company, but the five-member elected board left open the amount of tax deduction the company can take for the transactions. The California Franchise Tax Board (FTB) must provide its own valuation of the stock in question before the SBOE will decide what the value, and therefore the tax deductions tied to that value, should be.
The SBOE said the FTB must complete an appraisal and allow Sherwin Williams to review it before the case comes for a final vote in about 90 days. At the two-hour oral hearing Feb. 22, board members also encouraged the FTB and the company to settle the case.