In This Issue:
ALJ Disallows Combined Filing in Absence of Substantial Intercorporate Transactions; Court Rejects Constitutional Challenge to Tax Credit Deferral Legislation; New York City Loses Another Transfer Tax Case Involving the “Reconstitution” of a Housing Cooperative; and Insights in Brief
Excerpt from ALJ Disallows Combined Filing in Absence of Substantial Intercorporate Transactions -
In Matter of Knowledge Learning Corporation and Kindercare Learning Centers, Inc., DTA Nos. 823962 & 823963 (N.Y.S. Div. of Tax App., June 27, 2013), a New York State Administrative Law Judge held that, because the companies did not establish they had substantial intercorporate transactions, they could not file combined returns, and that an inquiry into distortion that might arise on separate returns was “not the proper analysis” after the statute was amended in 2007. While the conclusion regarding lack of substantial intercorporate transactions was very fact-based, and arose in substantial part from the judge’s concern about the absence of documentary evidence to support oral testimony, the second conclusion – that distortion is not the proper analysis – is not supported by the Department’s own regulations and pronouncements.
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