The California Court of Appeal, First Appellate District, recently issued an opinion against the taxpayer in River Garden Retirement Home v. Franchise Tax Board, 2010 Cal. App. LEXIS 1146 (2010). The case presented two primary issues, both of which may have important consequences for California taxpayers: (1) whether the Franchise Tax Board (the “FTB”) permissibly applied California’s post-amnesty penalty in section 19777.5 of the California Revenue & Taxation Code (“CRTC”); and (2) what is the appropriate remedy when a deduction is found to unconstitutionally discriminate against out-of-state entities in violation of the dormant commerce clause.