California Tax Tribunal Ruled Against Kimco Realty Corp
The state upheld tax assessments for the company after rejecting a dual-deduction strategy for intercompany dividends.
Updated on Oct. 5, 2026 in Taxes
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The California Office of Tax Appeals has ruled that Kimco Realty Corp. cannot use intercompany dividends to claim deductions on both state and federal tax returns. The tribunal affirmed tax assessments against the company for the 2014 and 2015 tax years.
Why it matters
The ruling prevents corporations from double-dipping on dividend deductions, ensuring that state taxable income is not reduced by offsets already utilized at the federal level. It reinforces the state authority to maintain clear boundaries between federal and California tax obligations.
The California Office of Tax Appeals upheld tax assessments of $203,748 for 2014 and $81,921 for 2015. The ruling affects how intercompany dividends are treated for state taxable income.
The players
California Office of Tax Appeals
This is the independent state agency responsible for reviewing tax appeals and resolving disputes between taxpayers and the Franchise Tax Board.
Kimco Realty Corp.
This is a real estate investment trust that owns and operates various shopping centers across the United States.
Franchise Tax Board
This is the state agency charged with administering personal and corporate income tax programs for the state of California.
Tommy Leung
He is an Administrative Law Judge who served as the author of the formal opinion regarding the corporate tax dispute.
Josh Lambert
He is an Administrative Law Judge who joined the formal opinion issued by the tax tribunal.
The details
Administrative Law Judges Tommy Leung and Josh Lambert issued the opinion, which the tribunal marked as pending precedential status. The decision confirms the validity of the assessment issued by the state Franchise Tax Board regarding the firm's dividend tax practices.
Timeline
The tax tribunal published the written opinion on October 5, 2026.
The 2014 tax year is subject to a $203,748 assessment.
The 2015 tax year is subject to an $81,921 assessment.
Market Dynamics
This ruling follows the existing legal precedent established by the California Revenue and Taxation Code regarding the classification of dividend income. It reflects a broader trend of state agencies strictly enforcing tax parity to protect revenue bases against complex corporate deductions.
This ruling highlights the aggressive stance California regulators take toward corporate tax strategies that mirror federal offsets. Investors in large corporations should be aware that state-level tax compliance remains a primary driver of corporate tax liability and bottom-line profit margins.
The takeaway
Taxpayers should ensure that their deduction strategies are legally distinct across federal and state filings to avoid retroactive assessments. Businesses are encouraged to review their dividend reporting practices to align with state-specific income definitions.
Further reading
For more information on state tax policies, visit California Taxes.
Source note: This article includes information reported by Bloombergtax.
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