07430-22 Archit & Mona Amin v. Director, Division of Taxation
Tax
Dec. 31, 2024
Summary -
07430-22 Archit & Mona Amin v. Director, Division of Taxation
STATE TAXATION - GROSS INCOME TAX
Tax Court: Amin et al. v. Dir., Div. of Taxation, Docket No. 007430-2022; opinion by Sundar, P.J.T.C., decided December 31, 2024. For plaintiff – Kara M. Kraman, Esq., Irwin M. Slomka, Esq. (Blank Rome, LLP, attorney); for defendant – Anthony D. Tancini (Matthew J. Platkin, Attorney General of New Jersey, attorney).
Held: The court reversed defendant’s determination to include I.R.C. § 965 income as “deemed repatriation dividends” under N.J.S.A. 54A:5-1(f). The latter statute unambiguously defines “dividends” as “any distribution in cash or property made by a corporation . . . out of accumulated [or current] earnings and profits,” thus includes only actual payments or distributions to a shareholder. Here, the income realized by the controlled foreign corporations, was not actually or constructively distributed to plaintiffs (their shareholders), who were nonetheless mandated to federally report such income. The court also disagreed with defendant’s contention that plaintiffs should report such income because they did so federally and N.J.S.A. 54A:8-3 requires a taxpayer to follow the same federal methods of accounting for New Jersey Gross Income Tax purposes.