Tax News: NJ Tax Case Petitioned for Review by SCOTUS
A monumental NJ tax court case involving a multi-state asset sale has officially petitioned for a writ of certiorari before the US Supreme Court.
The case, John M. Paz v. Director, Division of Taxation questions:
- Whether it is constitutionally permissible for the domiciliary State of a corporation engaged in a multistate unitary business to allocate to itself for taxation purposes the entire gain realized by the corporation on the sale of all the assets of the unitary business, given the fact that the corporation apportioned the gain among over 20 States where the business was conducted.
- Whether a nonresident individual taxpayer, as the sole shareholder of an S corporation conducting a multistate unitary business, may be personally taxed by the corporation’s domiciliary State on 100% of the gain realized on the sale of all the assets of the business, even though the same gain was taxed on an apportioned basis by the other States where the business was conducted and only 25% of the gain was apportioned to the domiciliary State.
Should SCOTUS accept the case, the legal implications on multi-state asset sales as well as corporations' decisions where to primarily domicile will be redefined.
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