Opinion handed down June 11, 2013.
In 2005, Jonathan D. Eilian incurred a substantial net operating loss recognized under federal tax law. On his Missouri tax returns, Mr. Eilian used the negative amount owing to this net operating loss as the starting point for his state taxes. Therefore, Mr. Eilian’s income that was taxable under Missouri, but not federal law, was entirely subsumed in his federal net operating loss. Applying Brown Group, Inc. v. Administrative Hearing Commission as the rule of decision, the Supreme Court of Missouri held that Mr. Eilian used his federal net operating loss improperly to offset his Missouri taxable income and remanded the case for a final calculation of the taxpayer’s Missouri tax liability.