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New York State Renews the Three-Year Clawback for Gifts

New York State Renews the Three-Year Clawback for Gifts

Generally, Federal estate and gift taxes are imposed on a person’s right to transfer property to another person during life or upon death.  State rules may differ from the Federal regime, imposing either an estate tax, inheritance tax, or gift tax or some combination of these taxes.  New York State limits its taxation to an estate tax on the transfer of property at the time of death.  There is no gift or inheritance tax.  But, as of April 1, 2014, gifts made by a N.Y. resident between April 1, 2014, and December 31, 2018, were clawed back into the taxable estate if the gifts were made within three years of death.  The clawback has been extended to cover gifts made through December 31, 2025.  Rusudan Shervashidze and Nina Krauthamer explain.

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New Jersey Provides G.I.L.T.I Guidance

New Jersey Provides G.I.L.T.I Guidance

Federal tax law has introduced a new type of gross income: Global Intangible Low Tax Income (“G.I.L.T.I.”).  The provisions are designed to stop U.S. companies from shifting their profits to offshore jurisdictions, and states are given a choice to incorporate parts of Federal law in one of three ways.  New Jersey has chosen “selective conformity.”  Nina Krauthamer and Rusudan Shervashidze explain what this means for the state and for taxpayers.

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Insights Vol. 5 No. 8: Updates & Other Tidbits

Insights Vol. 5 No. 8: Updates & Other Tidbits

This month, Rusudan Shervashidze, Neha Rastogi, and Nina Krauthamer look at several interesting updates and tidbits, including (i) potential tax reasons for Cristiano Ronaldo’s move to Italy, (ii) a law suit brought by high-tax states against the U.S. Federal government in connection with the T.C.J.A. limitations on deductions for state and local taxes, (iii) the finding of the European Commission that the aid given to McDonalds by the Luxembourg government did not constitute illegal State Aid, and (iv) a successful F.A.T.C.A. prosecution against a former executive of Loyal Bank Ltd.

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Insights Vol. 5 No. 6: Updates & Other Tidbits

Insights Vol. 5 No. 6: Updates & Other Tidbits

This month, Neha Rastogi and Nina Krauthamer look at several interesting updates and tidbits, including (i) an I.R.S. notice that addresses legislative workarounds to limitations on deductions for state and local tax payments effective in 2018, (ii) new rules under Code §83(i), which allow a qualified employee to defer income attributable to stock received in connection with the exercise of an option or the settlement of a restricted stock unit (“R.S.U.”), and (iii) a call for guidance regarding cryptocurrency accounting.

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New York Resisting S.A.L.T. Cap Under Federal Tax Reform

New York Resisting S.A.L.T. Cap Under Federal Tax Reform

When the T.C.J.A. capped the deduction for state and local income and property taxes at $10,000 – more tax can be paid, but only $10,000 can be deducted – state governments did not take the provision lightly.  One proposal that has gained traction in Albany and other state capitals involves creating charitable funds that would raise voluntary capital for specific governmental purposes.  The goal is for taxpayers to claim the charitable contributions as a deduction for Federal tax purposes and, at the same time, benefitting from a substantial credit against their state income tax liabilities.  Another, less contentious proposal would utilize employer-side payroll taxes to offer employees a credit against state and local taxes.  Nina Krauthamer, Elizabeth V. Zanet, and Sheryl Shah assess the viability of these proposals and the likely impact of tax reform on New York State.  Opinions are not consistent.  Stay tuned.

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Economic Nexus Through Ownership and Use of Intellectual Property

Economic Nexus Through Ownership and Use of Intellectual Property

For many tax advisers outside the U.S., state corporate income tax is viewed simply as an add-on to the Federal tax.  This relatively simplistic view ignores the requirements of U.S. Federal and Constitutional law that an activity must have a connection – called a nexus – to a state before tax can be imposed on profits allocated to the state.  Alvan L. Bobrow of Akerman LLP in New York explains the concept of “economic nexus,” a way by which digital activity within a state may trigger exposure to state tax.  Companies that license marketing intangibles should be particularly wary.

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In the Matter of John Gaied - New York State's Highest Court Pushes Back New York Taxing Authorities

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New York State will tax as a “resident” of New York: a domiciliary of the State and a person treated as a “statutory resident.” A domiciliary is generally a person whose permanent and primary home is located in New York. A statutory resident is a person who is not a domiciliary, but maintains a permanent place of abode in this state and spends in the aggregate more than 183 days of the taxable year in New York. In other words, to be a statutory resident for New York tax purposes, the person must be present in New York for more than 183 days (in the aggregate) AND maintain a permanent place of abode in New York.

New York’s highest court was asked to determine what it means to “maintain” a permanent place of abode in New York. The New York State taxing authority’s position is that a person can have a permanent place of abode, which he or she does not necessarily have to own or lease, if the person can stay there whenever he or she wants, even if he or she stays there occasionally or not at all. Special rules apply to corporate apartments, college students, and the military.