Tax News

CCH (cch.taxgroup.com) reports:

In a New York bank franchise tax case, the Tax Appeals Tribunal affirmed an administrative law judge (ALJ) determination that it was improper for the Division of Taxation to make a discretionary adjustment to a bank holding company's combined income by including the income of an investment company subsidiary, which had made a grandfather election to remain subject to the Article 9-A corporate franchise tax as a general business corporation.
The discretionary adjustment, if permitted, would effectively nullify the subsidiary's valid election and would also create a de facto combination, which was strictly prohibited under the Tax Law with respect to grandfathered Article 9-A companies. The Division also failed to establish that the holding company's transactions lacked a business purpose or lacked economic substance. Furthermore, the Division's argument that the subsidiary was set up solely for tax avoidance was rejected.
Premier National Bancorp, Inc., New York Division of Tax Appeals, Tax Appeals Tribunal, DTA No. 819746, August 2, 2007, ¶405-807
Other References:
Explanations at ¶14-017