In the Matter of the Petition of Disney Enterprises, Inc. & Combined Subsidiaries

Dr. Shapiro was retained by the State of New York to opine on certain economic issues that arose in apportioning, for the purposes of computing corporate income tax due to New York, the corporate income generated by Disney given that it has sales, property, and payroll in several states. One of Dr. Shapiro’s findings was that the value of Disney’s intangible assets was not limited to the states in which title to the assets is held. As Dr. Shapiro explained in his expert report: 

An important aspect of some–if not most–of the intangibles that Disney owns is that their value resides in the mind of the consumer, not in the drawer of a desk where title to these assets may be kept. That is, what matters for the value of intangibles is how the public responds with their pocketbooks to those intangibles. As such, the value of the Disney intangibles in New York is directly related to the amount of money that New Yorkers spend in New York on Disney products and services.
(Paragraph 28)

The mere fact that the characters might be managed and controlled in Southern California does not justify siting their value only in Southern California when their extraordinary value is a result of success and sales in the marketplace, which would support their siting where their success and sales occur. In the persuasive words of Dr. Alan Shapiro, “value that a company creates is based on the products and services that it produces and sells in the marketplace” (tr., p. 717). It is this commercial success which produces the “intangible assets that have substantial value” (tr., p. 729).
(p. 52)

wherein, the [Tax Appeals] Tribunal relying upon the expert report of Dr. Alan Shapiro noted that an intangible asset ‘standing alone, has no intrinsic value’ and the taxpayer’s experts had thereby overvalued certain intangible assets held by a Delaware subsidiary with no nexus to New York.
(p. 54)

The full text of the decision can be found here.