Tax News

CCH (cch.taxgroup.com) reports:

In a New York corporate franchise tax case, the Tax Appeals Tribunal has reversed an administrative law judge (ALJ) determination that had held that a taxpayer was entitled to use certain net operating losses (NOLs) generated by its subsidiary.
The taxpayer had filed an election to reattribute the NOLs to itself on its federal corporation income tax return. The ALJ had ruled that the reattributed NOLs should be treated the same as the taxpayer's other losses, i.e. they were includible as part of its separate company losses for federal purposes and, accordingly, part of the starting point for calculating its New York NOL.
In reversing the ALJ determination, the Tribunal held that under the relevant regulations, corporations filing separate New York returns must compute their NOL deductions as if they had filed their Federal returns on a separate basis. Thus, in order to place the taxpayer in the same position as if it did not file consolidated Federal income tax returns, its use of the NOLs of its subsidiary should be denied. Instead, the NOLs should stay with the subsidiary as they would have if the subsidiary had filed separate Federal income tax returns.
Univisa, Inc. , New York Division of Tax Appeals, Tax Appeals Tribunal, DTA No. 820289, September 20, 2007, ¶405-846
Other References:
Explanations at ¶10-805