Skechers Tells Wisconsin Court IP Strategy Wasn’t Tax Avoidance

Skechers USA Inc. is fighting a Wisconsin franchise tax bill of over $1 million, telling a state appeals court it had a legitimate, non-tax avoidance reason to hand over its intellectual property to a holding company.

Skechers urged the Wisconsin Court of Appeals to make clear that business dealings of economically viable subsidiaries can’t be disregarded. The state shouldn’t “punish taxpayers such as Skechers for reorganizing their corporate structure where the newly-formed entity has economic substance,” it said in a brief filed Wednesday.

Wisconsin courts have never ruled on the scope of the sham transaction doctrine, which flags transactions that ...