You are here: / / Non-Resident Shareholders In an S Corporation Who Sold their Stock and...
, ,

Non-Resident Shareholders In an S Corporation Who Sold their Stock and Treated the Transaction as a “Deemed Asset Sale” Were Properly Assessed New York Income Tax on the New York-Source Aspects of the Sale

The Court of Appeals, in a full-fledged opinion by Judge Rivera, determined non-resident plaintiffs, shareholders in an S corporation who sold their stock and treated the transaction as a “deemed asset sale,” were properly assessed New York income taxes on the New York-source aspects of the sale pursuant to Tax Law 632. The court rejected the argument that the tax assessment violated Article 16 section 3 of the New York Constitution:

Based on the results of [an] audit, defendant New York State Department of Taxation and Finance assessed $167,000 in state income taxes on plaintiffs’ … transaction gains, relying on Tax Law § 632 (a) (2), which was amended in 2010 to provide, in relevant part, that “any gain recognized on [a] deemed asset sale for federal income tax purposes will be treated as New York source income.” Plaintiffs paid the taxes and thereafter demanded refunds, claiming that their corporate-derived income was obtained from the sale of … stock, which is considered intangible personal property and nontaxable.

After defendant rejected the refund demands, plaintiffs filed the instant declaratory judgment action against defendant and the Commissioner of the New York State Department of Taxation and Finance, challenging the tax as unconstitutional … . * * *

…. [T]here is no question that New York State’s Tax Law, including Tax Law § 632 (a) (2), as amended in 2010, contemplates the taxes that defendants assessed on the New York-source portion of plaintiffs’ deemed asset sale gains. * * *

Nothing changes the fact that plaintiffs sold something of value and reaped the benefits from that sale. Article 16, § 3 in no way supports plaintiffs’ attempts to avoid paying state taxes on those gains. Burton v New York State Dept. of Taxation & Fin., 2015 NY Slip Op 05624, CtApp 7-1-15

 

You might also like
ALTHOUGH DEFENDANT’S SUPPRESSION MOTION RELATED TO A THEFT ON OCTOBER 3 AND DEFENDANT PLED GUILTY TO A DIFFERENT THEFT ON OCTOBER 1 IN SATISFACTION OF BOTH, DEFENDANT WAS ENTITLED TO APPELLATE REVIEW OF HIS SUPPRESSION MOTION; THE APPELLATE DIVISION’S DENIAL OF REVIEW REVERSED (CT APP).
THE MARTIN ACT CLAIMS IN THIS DECEPTIVE PRACTICES ACTION INVOLVING RESIDENTIAL MORTGAGE BACKED SECURITIES ARE TIME-BARRED UNDER THE THREE-YEAR STATUTE OF LIMITATIONS FOR STATUTORY VIOLATIONS, BUT THE EXECUTIVE LAW CLAIMS MAY NOT BE TIME-BARRED IF THEY ARE BASED SOLELY ON THE ELEMENTS OF COMMON LAW FRAUD SUBJECT TO THE SIX-YEAR STATUTE OF LIMITATIONS (CT APP).
THE DEFENDANT’S MAXIMUM SENTENCE WAS 20 YEARS BUT THE JUDGE REPEATEDLY TOLD DEFENDANT HE WAS FACING 45 YEARS; THE MAJORITY DETERMINED THE GUILTY PLEA WAS NOT VOLUNTARILY ENTERED; THE DISSENT ARGUED THE ISSUE WAS NOT PRESERVED (CT APP).
THE APPELLATE DIVISION’S VACATION OF DEFENDANT’S FIRST DEGREE MURDER CONVICTION WAS AFFIRMED; THE PEOPLE DID NOT PROVE THE “RELISHING THE INFLICTION OF EXTREME PAIN” ELEMENT (CT APP).
In a Falling Object Case, the Device Which Failed Was Not a Safety Device—Defendant Not Liable
Plaintiff, Who Fell Through an Open Manhole, Entitled to Summary Judgment on Labor Law 240 (1) Cause of Action—Failure to Set Up Guard Rails Was a Proximate Cause–Liability Imposed Regardless of Plaintiff’s Own Negligence and Regardless of Whether the Owner, Contractor or Agent Supervised or Controlled the Work
THE DOCUMENTS RELIED UPON BY RETIRED NEW YORK CITY EMPLOYEES TO PROVE THE CITY PROMISED TO PROVIDE THEM WITH MEDICARE SUPPLEMENTAL INSURANCE COVERAGE FOR LIFE DID NOT DEMONSTRATE A CLEAR AND UNAMBIGUOUS PROMISE; THEREFORE THE RETIREES WERE NOT ENTITLED TO JUDGMENT ON THEIR PROMISSORY ESTOPPEL CAUSE OF ACTION (CT APP).
THE SO-CALLED TWO-HOUR RULE, REQUIRING THE REQUEST FOR A DWI BREATH TEST BE MADE AND THE REFUSAL WARNINGS BE GIVEN WITHIN TWO HOURS OF ARREST, DOES NOT APPLY TO THE ADMINISTRATIVE LICENSE REVOCATION HEARINGS HELD BY THE DEPARTMENT OF MOTOR VEHICLES (DMV); THEREFORE THE FACT THAT THE PETITIONER WAS ASKED TO TAKE THE BREATH TEST AND WAS GIVEN THE REFUSAL WARNINGS THREE HOURS AFTER ARREST DID NOT PRECLUDE THE DMV FROM CONSIDERING PETITIONER’S TEST REFUSAL (CT APP).

Categories

Sign Up for the Mailing List to Be Notified When the Site Is Updated.

  • This field is for validation purposes and should be left unchanged.

Copyright © 2026 New York Appellate Digest, Inc.
Site by CurlyHost | Privacy Policy

Parents of Children in Public Schools Had Standing to Seek Court Review of the... Motion to Intervene by Members of a De-Certified Class Should Have Been Granted—Class...