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AS@b@ 0(A 0DA ABBB}C"AGil/ (`$.8dd8    ("  Z6Times New Roman Regular=.:i+003|x C:\PROGRA~1\COREL\WORDPE~1\TEMPLATE\CUSTOM~1\REVISE~1.WPTC:\Program Files\Corel\WordPerfect Office 2000\Template\Custom WP Templates\revised standard opinion.wpt U\\IB01S08\KNOXCLERK4,,,,0  RK<$      1    _WhilethiscasewaspendingintheTrialCourtanerrorwasdiscoveredinfavorof_Hollingsworth_Ԁintheamount  of$5,940.00and,asaresult,theamountnowindisputetotals$162,665.00plusinterestbasedonthedisallowanceof t baddebtstotaling$1,971,698.00.(TheDepartmentstatesthat_Hollingsworth_Ԁclaimedsalestaxcreditsonreturnsfiled 8 fortheperiodsofAugust1993throughSeptember1995inthetotalamountof$203,863.02basedontotalbaddebts L attributabletotheCourtSouthclubsintheamountof$2,471,067.00.TheDepartmentassertsthatitisprohibitedfrom  recoveringthis$203,863.02becausethestatuteoflimitationshasrun.)Level 1Level 2Level 3Level 4Level 5Level 1Level 2Level 3Level 4Level 5Level 1Level 2Level 3Level 4Level 5Level 1Level 2Level 3Level 4Level 5(#$  0  *+ (_2623  ..*G+G (_25   /%` ` hp x /23  ../%` ` hp x /   *8+8 (_24  ," hp x ,23  ..," hp x ,  *5+5 (_23 ` ) hp x )23  ..) hp x ) ` *2+2 (_22  &hhp x &23  ..&hhp x &  */+/ (_21  #p x #23  ..#p x #  *,+, (_20 h  p x 23  .. p x h *)+) (_19  pp x 23  ..pp x   *&+& (_18   x 23  .. x   *AA (_17  5+ ` hp x 523  Ԁ5+ ` hp x 5  *GG (_16   /%` ` hp x /23  Ԁ/%` ` hp x /   *88 (_15  ," hp x ,23  Ԁ," hp x ,  *55 (_14 ` ) hp x )23  Ԁ) hp x ) ` *22 (_13  &hhp x &23  Ԁ&hhp x &  *// (_12  #p x #23  Ԁ#p x #  *,, (_11 h  p x 23  Ԁ p x h *)) (_10  pp x 23  Ԁpp x   (&& &_9   x 23  Ԁ x   (AA &_8  5+ ` hp x 523  5+ ` hp x 5  (GG &_7   /%` ` hp x /23  /%` ` hp x /   (88 &_6  ," hp x ,23  ," hp x ,  (55 &_5 ` ) hp x )23  ) hp x ) ` (22 &_4  &hhp x &23  &hhp x &  (// &_3  #p x #23  #p x #  (,, &_2 h  p x 23   p x h - -()) &_1  pp x 23  pp x   &&& $_   x 23   x   0AA.Normal  5+ ` hp x 55+ ` hp x 5  <AA:Definition T  5+ ` hp x 55+ ` hp x 5  <AA:Definition L , 5+ ` hp x 5  5+ ` hp x 586Definition(hh&H1  5+ ` hp x 5      5+ ` hp x 5  (]]&H2  5+ ` hp x 5  5+ ` hp x 5  (]]&H3  5+ ` hp x 5  5+ ` hp x 5  (]]&H4  5+ ` hp x 5 XXX 5+ ` hp x 5  (]]&H5  5+ ` hp x 5  5+ ` hp x 5  (]]&H6  5+ ` hp x 5  5+ ` hp x 5  2DD0Address  5+ ` hp x 55+ ` hp x 5  8MM6Blockquote , , 5+ ` hp x 5   5+ ` hp x 5,*CITE,dl*CODEKQ<6X9`(Courier NewKSS\  `&Times New RomanS42Emphasis64Hyperlink    <:FollowedHype    4go2Keyboard KQ<6X9`(Courier NewKSS\  `&Times New RomanS <:Preformatted  /%  ,Kk %#/KQ<6X9`(Courier NewKSS\  `&Times New RomanS/%  ,Kk %#/  <:zBottom of 7F(X7    5+ ` hp x 5?T%2A`Arial?  SS\  `&Times New RomanS7Z(X75+ ` hp x 5  &  d dE)1dxd<:zTop of For7H(X7    5+ ` hp x 5?T%2A`Arial?  SS\  `&Times New RomanS7Z(X75+ ` hp x 5  E)2dxd0KS.SampleKQ<6X9`(Courier NewKSS\  `&Times New RomanS0.Strong 8dl6TypewriterKQ<6X9`(Courier NewKSS\  `&Times New RomanS42Variable: 8HTML MarkupB      2 0CommentB   !"#$% 35;AGMSY_11.1.1.1.1.1.1.1.(O$<6X9`(Courier New(|G2>$ !.8@5dd8         0  \  `&Times New Roman%2A`Arial(9 Z6Times New Roman Regular d3#37=CIQYag1.a.i.(1)(a)(i)1)a)(|3p$ !.8@5dd8     VVVV)!dxdx)!dxdx( $ Figure  1  Wi)^_X`YE<<CLevel 1Level 2Level 3Level 4Level 5(|3p$ !.8@5dd8     ($$   1  X[Z&OLE 2.0 Box <=8C HKKKK RK<$      3    _TheopinionalsoreferstothisbusinessasSandMountain.  RK<$      4    __T.C.A._Ԁ674805(b)(2)(C)(_i_)providesinpertinentpartthatthereshallbesubtractedfromtaxableincome [_a]ny_  netoperatinglossincurredforfiscalyearsendingonorafterJanuary15,1984, netoperatinglossbeingdefinedasthe t excessofallowabledeductionsovertotalincomeallocabletothisstatefortheyearoftheloss,andwhichmaybecarried 8 overandallowedinsucceedingtaxyearsuntilfullyutilizedinthenextsucceedingtaxableyearoryearsinwhichthe L taxpayerhasnetincome,butinnocaseformorethanfifteen(15)yearsafterthetaxableyearinwhichthenetoperating  lossoccurs.  RK<$      2    _Although_T.C.A._Ԁ676507(e)(1)authorizescreditsratherthanrefunds,afootnotein_Suntrust_recognizesthat  _T.C.A._Ԁ6711802allowsataxpayerwhoinitiallyfailstoclaimacredit,asdidthebank,toclaimarefundoftaxes t overpaidastheresultofsuchfailure. !.8@5dd8     _  @58XXdd8  @ O@5INTHECOURTOFAPPEALSOFTENNESSEE  @WW$ATKNOXVILLE#@5O #Ԉ &   July1,2003Session L XX@5 #@5XX#_HOLLINGSWORTH_,INC.,a.k.a.LONGHEALTHENTERPRISES,INC. J v.RUTHE.JOHNSON,COMMISSIONEROFREVENUE,STATEOF  ^ TENNESSEEXX@5  " r @@ AppealfromtheChanceryCourtforAndersonCounty " r @@No.99CH7998WilliamE._Lantrip_,Chancellor ^  FILEDNOVEMBER12,_2003_ 6  @@*AV) ` dE<` A "  @@TTNo.E200202561COAR3CV   AV) ` dE<` A     ThisappealquestionstheholdingoftheTrialCourtregardingtherightofacorporationtoclaimbad  debtcreditsforsalestaxremittedrelativetohealthclubmembershipcontractswhichwere  subsequentlydefaultedupon.Weaffirminpartandreverseanddismissinpart. x J Tenn.R.App.P.3AppealasofRight;JudgmentoftheChanceryCourtAffirmedinPart; P ReversedandDismissedinPart;CauseRemanded  <   #@5X#XX.@5HoustonM.Goddard,P.J.,deliveredtheopinionofthecourt,inwhichHerschelP.Franksand d D.MichaelSwiney,JJ.,joined. P PaulG.Summers,AttorneyGeneral&Reporter,andMaryBernadetteWelch,AssistantAttorney ( General,Nashville,Tennessee,fortheAppellant,RuthE.Johnson,CommissionerofRevenue,State  ofTennessee  GeorgeH._Buxton_ԀandHaroldP.Cousins,Jr.,OakRidge,Tennessee,fortheAppellee, !  _Hollingsworth_,Inc.a.k.a.LongHealthEnterprises,Inc. t"! q OPINION #@5XX#XX@5 L$# #@5XX #XX@5  0  $&t!%(#(#   PriortoFebruaryof1993,LongHealthEnterprises,Inc,(hereinafter"LongHealth")operated '`"& threehealthclubsinKnoxvilleunderthenameCourtSouth.MembershipcontractsbetweenLong 'L#' Healthandclubmemberstypicallyprovidedthatafteraninitialdownpaymentmemberswere (8$( obligatedtopaymonthlyduesforeitheroneyearorthirtysixmonthsandunderlifetime )$%) membershipcontractsthefeeformembershipwaspaidinfullwhenthecontractwassigned.All *&* stateandlocalsalestaxesdueonthemembershipcontractswereremittedbyLongHealthtothe +&+ DepartmentofRevenueatthetimethecontractsweresigned.(TheAppellant,RuthE.Johnson, ,', CommissionerofRevenue,StateofTennessee,willhereafterbereferredtoas theDepartment.) -(- _ԇ  InOctoberof1991LongHealthfiledforbankruptcyprotectionunderChapter11ofthe  BankruptcyCodeandinJanuaryof1993,withtheapprovalofthebankruptcycourt,theassetsof  LongHealth,includingtheCourtSouthhealthclubs,werepurchasedbyJosephA.Hollingsworth,  Jr.freeandclearofallexistingliensandclaimswithawarrantythatLongHealthhadpaid,orwould t adequatelyprovideforthepaymentof,alltaxes.InacquiringtheassetsofLongHealth,Mr. ` HollingsworthwasrequiredtoassumethedutiesofhonoringtheCourtSouthmembershipcontracts. L  AlthoughMr.HollingsworthpurchasedLongHealthsassetsatthistime,hedidnotpurchaseits 8  capitalstock $ t   OnFebruary16,1993,pursuanttoadocumententitledAssignmentandBillofSaleof  L  ContractRights,GeneralIntangibles,andAccountsReceivable,Mr.Hollingsworthtransferredthe  8  LongHealthassetspurchasedbyhimthepreviousmonthtotheAppellee,Hollingsworth,Inc. $  (hereinafter"Hollingsworth")forthesumof"OneDollar($1.00)andothergoodandvaluable   consideration."     Inthelatterpartof1993,Hollingsworth,determinedthatsomeofthemembershipcontracts   ithadassumedwerebaddebtsandbegantakingbaddebtcreditsonitsTennesseeStateandLocal p SalesandUseTaxReturns.Inconsequenceofthesebaddebtcredits,Hollingsworthcalculatedthat \ itowedzerotaxesonreturnsfiledforperiodsfromAugustof1993throughDecemberof1998. H   In1995theTennesseeDepartmentofRevenue(hereinafter theDepartment)conducteda  p salesandusetaxauditofHollingsworthfortheperiodofJune6,1993,throughDecember31,1994.  \ Theauditorfoundnoadjustmentsforwhichtomakeanassessmentandapprovedbaddebt H deductionsclaimedbyHollingsworthintheamountof$2,242,180.00basedonthebeliefthat 4 HollingsworthhadpurchasedLongHealthscapitalstockaswellasitsassets.     In1999anotherauditwasconductedbytheDepartmentfortheperiodsfromOctober1,  1995,throughDecember31,1998.Thisauditresultedinthedisallowanceofbaddebtdeductions  intheamountof$2,043,698.00claimedonreturnsforthoseperiodsuponadeterminationbythe  DepartmentthatHollingsworthwasnotthe dealerwhopaidthetaxesunderT.C.A.676507(e)(1) l Itisalsostatedintheauditreportthat [t]hebaddebtdeductionisbeingdeniedbecausethetaxpayer X  didnotbuythecapitalstockofLongHealthEnterprises,Inc.Inconsequenceofthedisallowance D! ofthebaddebtdeductionsHollingsworthowedtaxesintheamountof$168,605.00plusinterest. 0"    Hollingsworthpaidtheamountassessedandthenfiledaclaimforrefundwhichwasdenied $X" upondeterminationbytheDepartmentthatHollingsworthdidnotpurchaseLongHealthscapital $D # stockwhenitpurchasedLongHealthsassetsin1993#IXXA #XAXIԀandwasnotthedealerwhopaidthesalestaxes %0!$  asrequiredunderT.C.A.676507(e)(1).OnNovember16,1999,Hollingsworthfiledsuitinthe &"% ЀKnoxCountyChanceryCourtseekingarefundofthetaxespaid  #  1      ׀incompliancewiththe   Departmentsaudit.    AfterfilingsuitHollingsworthacquiredthecapitalstockofLongHealthandHollingsworth t andLongHealthexecutedadocumentwhichstatesthatitassignsthesalestaxcreditsatissueto ` Hollingsworthinconsiderationofonedollarandothergoodandvaluableconsideration.Thereafter, L  onMarch21,2001,HollingsworthmergedintoLongHealth,withLongHealthasthecorporation 8  survivingthemerger. $ t   OnSeptember10,2002,theTrialCourtentereditsopinionfindingthatthetransferofLong  L  HealthsassetstoHollingsworthduringthebankruptcyproceedingincludedtransferoftherightto  8  receivethebaddebttaxcreditsupondefaultofmembershipcontracts.Pursuanttothisfindingthe $  CourtorderedtheDepartmenttorefundHollingsworth$162,665.00plusinterest.Thereafter,the   Departmentfiledthisappeal.     Ourstandardofreviewinthisnonjurycaseisdenovoupontherecordoftheproceedings   belowandthereisnopresumptionofcorrectnesswithrespecttotheTrialCourt'sconclusionsoflaw. p Campbellv.FloridaSteelCorp.,919S.W.2d26(Tenn.1996)andT.R.A.P.13(d).TheTrialCourt's \ factualfindingsare,however,presumedtobecorrectandwemustaffirmsuchfindingsabsent H evidencepreponderatingtothecontrary.UnionCarbideCorp.v.Huddleston,854S.W.2d87(Tenn. 4 1993).#IXXA#XAXIInthematternowbeforeusthefactsarenotdisputed.Therefore,itisourdutytodetermine  p whethertheTrialCourterredinitsconclusionsoflaw.  \   Theissuepresentedforourreview,asrestated,iswhetherT.C.A.676507(e)permits 4 Hollingsworthtooffsettaxesitowesbyutilizingbaddebtcreditsresultingfromthedefaultof   membershipcontractsoriginallyenteredintobetweenLongHealthandmembersofitsCourtSouth   healthclubs.    T.C.A.676507(e)(1)permitsadealeracreditonhistaxreturnunderceratincircumstances  asfollows: l  Adealerwhohaspaidthetaximposedbythischapteronanysaleas D! definedin676102maytakecreditinanyreturnfiledundertheprovisionsof 0"  thischapterforthetaxpaidbythedealerontheunpaidbalancedueonaccounts #l! which,duringtheperiodcoveredbythecurrentreturn,havebeenfoundtobe $X" worthlessandareactuallychargedoffforfederalincometaxpurposes;provided, $D # thatifanyaccountssochargedoffarethereafterinwholeorinpartpaidtothe %0!$ dealer,theamountssopaidshallbeincludedinthefirstreturnfiledaftersuch  collectionandthetaxpaidaccordingly.    Neitherpartyquestionsthefactthatsalestaxesdueonmembershipcontracts#IXXAu%#XAXIԀwereremitted t totheStatebyLongHealthwhenthecontractswereenteredinto,thatsomeofthosecontractswere ` subsequentlydefaulteduponandthat,asaresult,baddebtsalestaxcreditsbecameavailable L  pursuanttotheabovestatute.However,theDepartmentdisagreesthatHollingsworthistheentity 8  entitledtoclaimsuchcredits. $ t   TheDepartmentarguesthatLongHealth,notHollingsworth,madethemembershipsaleson  L  creditandassumedtheriskofnonpayment.TheDepartmentnotesthatHollingsworthonly  8  purchasedtheassetsofLongHealthin1993anddidnotpurchaseLongHealthscapitalstockand $  assumetheliabilitiesassociatedwithownershipofthatstockuntil2001.TheDepartmentmaintains   that,becauseHollingsworthneverincurredtheexpenseofpayingthesalestaxdueonthedefaulted   contractsitisnotentitledtoclaimthebaddebtcreditsallowedunderT.C.A.676507(e)(1).The   DepartmentarguesthatHollingsworthisnot,inthewordsofthestatute,the dealerwhohaspaid   thetaxandthatcreditsfortaxesonuncollectedaccountsarelimitedtotheoriginalseller. p   Hollingsworthnotesthatthepartieshavestipulatedthat,inacquiringtheassetsofLong H Healthin1993,it wasrequiredtotakeovertheoperationofthree(3)healthclubs,performthe 4 membershipcontracts,receiveincomefromthemembershipcontracts,andprovidehealthclub  p servicesforallclubmemberspursuanttotheirmembershipcontracts.Hollingsworthnotesthatit  \ acquired11,000membershipcontractsfromLongHealthandthatitservicedallofthosecontracts, H includingthosecontractswhichweredefaultedupon.Hollingsworthmaintainsthattheargument 4 thatitneverincurredtheexpenseofpayingthesalestaxignoresthecostincurredinitspurchase   andassumptionofobligationsassociatedwiththehealthclubmembershipcontracts.Hollingsworth   arguesthat,byhonoringallthesecontracts,itprovidedvaluableconsiderationforanytaxcredits,  eventhoughitdidnotspecificallyidentifyanamounttobepaidforsuchtaxcreditswhenit  purchasedLongHealthsassetsin1993.    BothpartiesandtheTrialCourt,initsopinion,referenceSuntrustBank,Nashvillev. X  Johnson,46S.W.3d216(Tenn.Ct.App.2000).InSuntrusttheplaintiffbankenteredintofinancing D! agreementswithvariousautomobiledealerstoprovidefinancingforcustomersofthosedealers 0"  seekingtopurchaseanautomobileoncredit.Atthetimeofpurchasethedealerandpurchaserwould #l! customarilyenterintoaretailinstallmentsalescontractwiththeautomobileservingassecurity.This $X" retailinstallmentsalescontractfinancedtheunpaidportionofthepurchaseprice,dealerchargesand $D # allsalestaxdueasaresultofthesale.Afterthesalewascompletethedealerwouldthensellthe %0!$ retailinstallmentcontracttothebankatadiscountandassignthebankallitsrighttitleandinterest &"% inthecontractwithoutrecourse.Uponreceiptofthecontractthebankwouldpaythedealerthe '#& amountuponwhichtheyhadagreed,includingthetotalsalestaxdueonthesaleoftheautomobile (#' andthissalestaxamountwasthenremittedtotheStatebytheautomobiledealer.Underthefacts )$( inSuntrust,severalpurchasersofautomobilesdefaulteduponcontractspurchasedbythebankand, |*%) asaresult,thebankwroteofftheamountsoutstandingunderthosecontractsasuncollectiblebad h+&* debtandfiledaclaimwiththeDepartmentofRevenueforarefundofsalestaxattributabletothe  contracts.TheDepartmentdeniedtheclaimforrefundbaseduponTenn.Comp.R.&Regs.r.1320  51.52(3)whichdisallowssalestaxrefundstobankspurchasinginstallmentsalescontractswithout  recourse.ThebankthenfiledsuitagainsttheDepartmentinchancerycourtandthecourtdecreed t thattherefundshouldbedeniedbecausethebankwasnotthedealerthatpaidthetaxesatissueas ` requiredunderT.C.A.676507(e)e #  2      .Thisjudgmentwasaffirmedonappeal. L    HollingsworthassertsthatSuntrustandthepresentmatteraredistinguishable,contending $ t thatourdecisioninSuntrustwasbasedontheregulationsetforthatTennesseeComp.R.&Regs.  ` r.132051.52(3)(1990)anditsinterpretationbytheDepartment.#IXXA5,#XAXIԀHollingsworthalsonotesour  L  statementinSuntrustthatitis reasonabletoassumethattheGeneralAssemblyisawarethat  8  automobiledealerscustomarilyassignretailinstallmentsalescontractstobanksandotherfinancial $  institutions.HollingsworthsapparentargumentisthatourholdinginSuntrustpertainsonlyto   bankspurchasingretailsalescontractswithoutrecoursefromautomobiledealerships.Wedisagree.   #IXXATA#XAXIԀ     InSuntrustouranalysisofthebanksclaimforarefundbeganwiththefollowingstatement   onpage223regardingtheissueunderreview: p Wearecalledupontodeterminewhetherthepurchaserofaretailinstallmentsales H contractfromadealerwhoactuallyremittedthesalestaxresultingfromthesale 4 oftangiblepersonalpropertyisentitledtothesame baddebtsalestaxcreditthat  p thedealeritselfwouldhavebeenentitledtohaditnotassigneditsrights.  \ DD  Thereisnothinginthisstatementwhichlimitedtheissuetocontractswithoutrecourse 4 betweenbanksandautomobiledealerships.Thereafter,westatedthat [a]rrivingattheansweris   essentiallyanexerciseinstatutoryconstructionbecause[thebanks]rights,ifany,mustbefound   inTenn.CodeAnn.676507(e)(1)andotherrelevantportionsoftheRetailersSalesTaxAct.  WethenproceededtoanalyzeT.C.A.676507(e)(1)pursuanttorecognizedrulesofstatutory  construction,amongthemtherulethatacourtshouldassignstatutorylanguageitsnaturaland  ordinarymeaningunlessthecontextrequiresotherwise.Employingthisrule,wefoundassetforth l onpage225: X  Bythestatutesplainterms,thesalestaxcreditisavailableonlytothe dealer 0"  whohaspaidthetaximposedbythischapter.Thislanguageisunambiguousand #l! cannotreasonablybeconstruedtoincludetheassigneesofdealerswhohavepaid $X" thesalestax. $D #   Thisfindingwasnotlimitedinanywaytoassignmentsbetweenfinancialinstitutionsand &"% automobiledealers.Aftermakingthisfinding,basedupontheplainmeaningofthestatute,wewent '#& ontonotethatourinterpretationofthestatutewas buttressedbytheDepartmentslongstanding  interpretationofthestatueasreflectedinTenn.Comp.R.&Regs.r.132051.52(3)andthatthe  regulationwasconsistentwiththestatute,thebanksassertiontothecontrarynotwithstanding.In  viewofourfindingthattheregulationwasbaseduponareasonableinterpretationofthestatuteand t thattheregulation hadbeenconsistentlyadministeredbytheDepartmentwithoutchallengeover ` alongperiodoftimeweaccordedtheDepartmentsinterpretationofthestatute greatweight. L    OurprimaryfindinginSuntrustwasanunqualifiedfindingthatunderT.C.A.676507(e)(1) $ t salestaxcreditsunderthestatuteareonlyavailabletothedealerwhopaidthetax.Intheinstant  ` matteritisstipulatedthatLongHealth,notHollingsworth,remittedtotheDepartmentallstateand  L  localsalestaxdueonthemembershipcontracts.ConsistentwithSuntrust#IXXAC#XAXI,wedonotfindthat  8  T.C.A.676507(e)(1),whichmakesthesalestaxcreditsonlyavailabletoa dealerwhohaspaid $  thetaximposedbythischapter,allowstaxcreditstotheassigneeofadealerwhohaspaidthetax.     Hollingsworthassertsthatitassumedtheobligationofservicingallofthemembership   contractsassignedtoitbyLongHealth,includingthosecontractswhichweredefaultedupon,and   thatitwasrequiredtodothisbythebankruptcycourtasaconditionofpurchase.Hollingsworth p arguesthatthecostsincurredinservicingthesecontractsprovidedvaluableconsiderationforany \ taxcredits, eventhoughitdidnotspecificallyidentifyinitspurchasingagreementanamountpaid H ortoberefundedfortaxcreditsitwastolaterclaim.Hollingsworthreferencestheassignment 4 betweenthepartiesinSuntrustnotingthatinthatcasethebankwasnotassignedobligationsarising  p underthecontractsbetweenthedealersandautomobilepurchasers,whereasinthepresentmatter  \ Hollingsworthdidassumetheobligationtoservicethecontractsinquestion. H   Inthismatter,asinSuntrust,wefindnoexplicitassignmentoftherighttoobtainabaddebt   salestaxcreditunderT.C.A.676507(e)(1).AlthoughtherewasnosuchassignmentHollingsworth   evidentlyarguesthatitsrighttothebaddebtcreditscomesaboutasaresultofthefactthatitwas  requiredtoassumetheobligationsarisingunderthecontractsonwhichthetaxeswerepaid.The  TrialCourtfoundthat avalidassignmentofthetaxcredits[inSuntrust]wouldhaverendereda  differentresultinthatcaseandthatinthepresentmatter therighttoreceivethesecreditswere l effectivelytransferredinthebankruptcyproceedings.Werespectfullydisagreewithboth X  HollingsworthandtheTrialCourt.InSuntrustwerecognizedthat [o]neofthegeneralprinciples D! ofthelawofassignmentsisthattheassigneestepsintotheshoesoftheassignorwithregardtothe 0"  matterscoveredbytheassignment.However,wefurthernotedthat thetraditionalprinciplesof #l! statutoryconstructionapplicabletostatutesgrantingtaxcredits,deductions,orexemptions,should $X" prevailovergeneralassignmentprinciples.(citationsomitted)Statutesprovidingexceptionsfrom $D # taxationshouldbeconstruedstrictlyagainstthetaxpayer.Webelievethatthispolicyholdstrue %0!$ underthecircumstancesofthepresentcaseandwearecompelledtoconstruetheplainlanguageof &"% T.C.A676507(e)(1)againstHollingsworthnotwithstandingtheassertionthatitwastransferredthe '#& taxcreditsatissue. (#'   Hollingsworthalsoargues,inaccordancewiththeTrialCourtopinion,thatitsmergerinto |*%) LongHealthinMarchof2001entitlesittoclaimthesalestaxcreditsinquestion.Fromitspost h+&* mergerstanceasacorporateentitymergedintoLongHealth,Hollingsworthassertsthat Longisthe  newcompanyandstandsintheshoesofHollingsworthandLongHealth,andmayenforcetherights  ofthesecompaniesandbesubjectedtotheliabilitiesoftheassignedcontracts.Hollingsworthcites  twocasesinsupportofthisargumentLittleSixCorp.v.Johnson,anunreportedopinionofthis t courtfiledinNashvilleonMay28,1999,andInsuranceCompanyofNorthAmericav.Long,389 ` S.W.2d245(Tenn.1965).UX/A XXXA  #XAX XUX/Aa##IXXAQ#XAXI L    UnderthefactsinLittleSix,in1987theLittleSixCorporationbegananewbusinessentitled $ t ShortMountainc #  3      .In1989LittleSixmergedwithShortMountainwithLittleSixasthesurviving  ` corporation.AfterthemergerLittleSixattemptedtoclaimexcisetaxdeductionsunderT.C.A.674  L  805(b)(2)(C)(i)dT #  4      ׀fornetoperatinglosseswhichhadbeengeneratedbyShortMountainpriortothe  8  merger.TheDepartmentofRevenuedeniedthedeductionsbaseduponitsRevenueRule132061 $  .21(2)(d)whichprovidesasfollows:   Eachcorporationisconsideredaseparateentity;therefore,incaseofmergers,   consolidations,etc.nolosscarryoversincurredbythepredecessorcorporationwill   beallowedasadeductionfromnetearningsonthetaxreturnofthesuccessor p corporation. \ Ѐ  Thetaxpayerfiledsuitrequestingthatitbeallowedthelosscarryovers.Thetrialcourt 4 allowedthedeductionsbasedonfederalcaselaw,whichallowslosscarryoverdeductionaslongas  p thebusinessseekingtousethedeductionsissubstantiallythesamebusinessthatisresponsiblefor  \ thelossandtheprofitsitisseekingtooffset.ThetrialcourtalsorelieduponT.C.A.4821108 H whichprovidesthatthepropertyandliabilitiesofmergingcorporationarevestedinthesurviving 4 corporation.Thiscourt,however,reversedthetrialcourtnotingthatTennesseehasneveradopted   thefederalcontinuityofbusinesstestrelieduponbythetrialcourtandthattheexcisestatutesand   corporatemergerstatutesarenotinparimateriaandshouldnotbeconstruedassuch.Wenotedthat  therevenuerulerelieduponinthedenialofthelosscarryoverdeductionswaspromulgatedpriorto  T.C.A.674805(b)(2)(C)(i)andthelegislaturedidnotdraftthestatuteinsuchawayastorender  theruleinoperative,althoughitcouldhavedoneso. l   WeacknowledgedinLittleSixthathadLittleSixmergedintoShortMountainthenShort D! Mountainwouldhavebeenentitledtothededuction.Hollingswortharguesthat,havingmergedinto 0"   LongHealth,itisinthepositionthatLittleSixwouldhavebeeninhaditmergedintoShort #l! Mountain.Accordingly,Hollingsworthcontendsthatitisentitledtothesalestaxcreditsjustas  ShortMountainwouldhavebeenentitledtothelosscarryoverdeductions.Wedisagree.     FirstofallwearecompelledtopointoutthatouracknowledgmentthatShortMountain t wouldhavebeenentitledtothedeductionhaditsurvivedthemergerinLittleSixconstitutesobiter ` dictumand,assuch,isnotbindingprecedentialauthorityunderthedoctrineofstaredecisis. L  ShepherdFleets,Inc.v.OprylandUSA,Inc.759S.W.2d914(Tenn.Ct.App.1988).#IXXACb#XAXIInanyevent, 8  wedonotagreethatourdecisioninLittleSixisrelevantunderthecircumstancesofthepresent $ t matter.InLittleSixwewereseekingtodeterminethetaxpayersrighttonetoperatingloss  ` deductionsbaseduponananalysisofT.C.A.674805andRevenueRule132061.21(2)(d)neither  L  ofwhichisapplicableinthepresentmatter.Ourdecisioninthecasenowbeforeusiscompelled,  8  asdiscussedabove,byourconstructionofthespecificstatutorylanguageofT.C.A.676507(e)(1), $  notthelanguageofthelawwhichweanalyzedinLittleSix.TheargumentthatourdecisioninLittle   SixrequiresthatweallowHollingsworththesalestaxcreditsitseeksinthepresentcaseiswithout   merit.     Hollingsworthcontendsthatdiscriminatingbetweennetoperatinglossesandbaddebtcredits p andbetweensalestaxesandexcisetaxesconstitutestheemploymentofadoublestandard. \ HolllingsworthcitesWarnerTrambleCompany,Inc.v.Taylor,778S.W.2d440(Tenn.1989)forthe H propositionthattheDepartmentisprohibited fromapplyingonedefinitionfortaxingpurposesand 4 adifferentdefinitionforexemptionpurposes.InWarnerTrambleourSupremeCourtheldthatthe  p statecommissionerofrevenuecouldnottaxaserviceasa repairserviceundertaxingregulations  \ andthendenythatthesameservicewasa repairserviceforexemptionpurposesunderthe H applicablestatute.WedonotfindthattheCourtsholdinginWarnerTrambleisrelevantunderthe 4 circumstancesintheinstantmatterwherethereisnoattemptbytheDepartmenttoapplyvarying   definitionstothesametermforpurposesoftaxationandexemption.Therighttobaddebtcredits   forsalestaxesandtherighttoclaimexcisedeductionsfornetoperatinglossesaredifferentmatters  subjecttoseparateanalysis.    Finally,HollingsworthcitesInsuranceCo.ofNorthAmericav.Long,389SW2d245(Tenn. l 1965)#IXXAp#XAXIԀassupportforitsargumentthatitsmergerintoLongHealthentitlesit(Hollingsworth)to X  utilizethebaddebtsalestaxcredits.Specifically,Hollingsworthsetsforthatpage248thefollowing D! languagefromMillerv.Lancaster,45Tenn.514(1868): 0"  Wheresuchconsolidationandmergerofcorporationsaremade,andsuchtransfer $X" ofrightsandproperties,andassumptionofliabilitiesbetweentheoldandnew $D # companiesareeffected,thenewcompanystandsinthesteadoftheold %0!$ companies,andmayenforcetherightsoftheoldcompanies,andbesubjectedto &"% theirliabilities. '#&   Hollingsworthstatesthat,asthenewcompanyresultingfromthemergerinthepresent )$( matter,LongHealthnow standsintheshoesofHollingsworthandLongHealth,andmayenforce |*%) therightsofthesecompaniesandbesubjectedtotheliabilitiesoftheassigned_contracts. h+&* Ї  _Hollingsworth_ԀalsoreliesuponT.C.A.4821108(a)(2)whichprovidesthatwhenthereisa  mergerofcorporations [_a]ll_Ԁpropertyownedbyeachcorporation...thatisapartytothemergershall  bevestedinthesurvivingcorporationwithoutreversionorimpairment.    Wedonotagreethatthemergerin2001placedthesurvivorofthemergerinLongHealths ` positionasitwasin1993.Thearticlesofmergerenteredintobythepartiesinthiscasestatethat L   themergeristobeeffectivewhenthesearticlesarefiledbytheSecretaryofState.Therecord 8  showsthatthearticlesofmergersignedbyLongHealthand_Hollingsworth_Ԁwerereceivedbythe $ t SecretaryofStateonMarch19,2001.#IXXAz#XAXIԀT.C.A.4821108(a)(1)providesthat [_w]hen_Ԁamerger  ` becomeseffective...thecorporation...thatisapartytothemergeroriscreatedtherebyandis  L  designatedintheplanofmergerasanentitysurvivingthemergershallsurvive,andtheseparate  8  existenceofeveryothercorporation...thatisapartytothemergershallcease.Weconstruethe $  languageofthisstatuetomean,astheDepartmentarguesinitsbrief,thatuntilthemergeris   effectivetheseparateidentityofeachpartytothemergercontinuestoexistandeachcorporation   retainsitsseparateassetsandliabilities.Itisourdeterminationthatthebaddebttaxcreditsatissue   werenolongeravailableatthetimeofthemergerinMarchof2001and,therefore,cannotbe   claimedbythesurvivor. p   T.C.A.676507(e)allowsadealerwhohaspaidsalestaxesonworthlessaccountstotake H acreditforsuchtaxesonthetaxreturnwhichcoverstheperiodinwhichtheaccountwasdetermined 4 tobeworthlessandwasdeclareduncollectible.Alternatively,itappearsthatunderT.C.A.671  p 1802(a)suchdealercanclaimarefundoftheoverpaymentwhichresultedfromitsfailuretoclaim  \ thecredittowhichitwasentitled;however,thismustbedonewithinthreeyearsfromDecember31 H oftheyearinwhichthepaymentwasmade.Wehavedeterminedthatthedealerinthiscase,for 4 purposesofT.C.A.676507(e),wasLongHealth;however,LongHealthneverfollowedthe   requisiteprocedureforclaimingthebaddebtcreditsinquestion.     _Hollingsworth_Ԁarguesthatauditor_Marcum_s1995approvalofbaddebtdeductionsinthe  amountof$2,242,180.00amendedthetaxreturnsreviewedinthatauditbasedontheparties  stipulationthat [_a]n_Ԁauditisdeemedtoamendthetaxreturnswhicharethesubjectoftheauditif l changesaremadetothosereturnsasaresultoftheaudit._Hollingsworth_Ԁcontendsthat [_o]nce_ X  thesecreditswereauditedandintheDepartmentssystem,_Hollingsworth_,Inc.hadtherighttocarry D! themforwardforcreditagainstfuturesalestaxowedwithoutanylimitationperiod.Therefore,Long 0"  Health,thesurvivingcorporationofthemerger,betweenLongHealthand_Hollingworth_,Inc.,had #l! therightin2001toutilizethebaddebtcreditswhichhadbeenauditedin1995andplacedinthe $X" system.Wedisagree.Aspreviouslynoted,theauditorsapprovalofthedeductionsclaimedinthe $D # returnshereviewedin1995wasbaseduponhismistakenbeliefthat_Hollingsworth_ԀpurchasedLong %0!$ Healthscapitalstockin1993.Wehavedeterminedthat_Hollingsworth_Ԁwasnotthedealerwhopaid &"% thetaxesunderT.C.A.676507(e)andwasnotentitledtothecreditsclaimed._Hollingsworth_ '#& apparentlycontendsthatasaresultoftheauditorserroneousconclusionthatthedeductionsclaimed (#' shouldbeallowedtheDepartmentisforever_estopped_Ԁfromdenyingthebaddebtcredits.However, )$( itiswellsettledinthisstatethat thedoctrineofestoppeldoesnotoperateagainsttheStatewith |*%) respecttothecollectionofitsrevenue.MemphisShoppersNews,inc.v.Woods,584S.W.2d196 h+&* (Tenn.1979)._Hollingsworth_sargumentthatLongHealthretainsentitlementtothebaddebtcredits  inconsequenceiftheauditorsmistakeiswithoutmerit.      WeaffirmthejudgmentoftheTrialCourtinitsawardof$7,932.00representingmoniesthe t Departmentconcedes_Hollingsworth_Ԁisdueastheresultofanauditingerrordiscoveredduringthe ` pendencyoftrial.WeotherwisereverseanddismissthejudgmentoftheTrialCourtandremand L  thecaseforcollectionofthejudgmentandcostsbelow.Costsofappealareadjudgedagainst 8  _Hollingsworth_,Inc._aka_ԀLongHealthEnterprises,Inc. $ t #IXXA?#XAXI   `     h      `     h      `     h   _________________________________________ J     `     h   HOUSTONM.GODDARD,PRESIDINGJUDGE 6  #IXXAu#XAXI