WASHINGTON - In a major victory for states, the Supreme Court yesterday upheld California's method of taxing foreign and domestic multinational corporations, even though the method is at odds with federal policy.

The 7-to-2 ruling in Barclays Bank v. California is expected to help fiscal 1995 budget preparations by California, which has been relying on a favorable ruling to anticipate added revenue. The decision also paves the way for other states to adopt the potentially lucrative method used by California, the so-called "worldwide combined reporting" method of taxation.

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