§237-20  Principles applicable in certainsituations.  A person or company having shareholders or members (acorporation, association, group, trust, partnership, joint adventure, or otherperson) is taxable upon its business with them, and they are taxable upon theirbusiness with it.  A person or company, whether or not called a cooperative,through which shareholders or members are pursuing a common objective (forexample, the obtaining of property or services for their individual businessesor use, or the marketing of their individual products) is a taxable person, andsuch facts do not give rise to any tax exemption or tax benefit except asspecifically provided.  Even though a business has some of the aspects ofagency it shall not be so regarded unless it is a true agency.  Thereimbursement of costs or advances made for or on behalf of one person byanother shall not constitute gross income of the latter, unless the personreceiving such reimbursement also receives additional monetary consideration formaking such costs or advances. [L 1957, c 34, §11(i); am L 1965, c 201, §24;Supp, §117-17.1; am L 1967, c 297, §2; HRS §237-20; am L 1985, c 303, §1; am L1986, c 340, §8]

 

Law Journals and Reviews

 

  Rule of Strict Construction in Tax Cases, a Question ofClassification or Exemption, Arthur B. Reinwald, 11 HBJ 98.

 

Case Notes

 

  Amounts received from manufacturer by taxpayer for warrantyservice work constituted, not reimbursement, but taxable gross income.  56 H.321, 536 P.2d 91.

  "Cost" means monetary amount paid out by taxpayerfor property or service furnished by a third party.  56 H. 321, 536 P.2d 91.

  Payments by joint venture to member for services renderedjoint venture were subject to general excise taxation.  59 H. 307, 582 P.2d703.

  Taxpayer partnership's provision of medical equipment andancillary services to its joint venture constituted "business" under§237-2 and was thus made subject to the general excise tax by this section.  93H. 267 (App.), 999 P.2d 865.

  The reimbursement provision of this section did not apply totaxpayer where taxpayer did not pay any costs or made any advances to thelandlords and the record did not indicate that the taxpayer received areimbursement of a cost or advance.  110 H. 25, 129 P.3d 528.