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New York City tax appeals tribunal finds subsidiary properly excluded from combined city bank tax returns

The New York City (NYC) Tax Appeals Tribunal has determined that a federal savings and loan association was not required to include a subsidiary corporation in its combined NYC bank tax returns for the 2006-2008 tax years. The Administrative Law Judge held that the subsidiary was not a sham corporation, intercorporate transactions between the subsidiary and its corporate parent were made at arm’s length, and there was no distortion of income caused by the exclusion of the subsidiary from the parent’s combined return. The tribunal rejected the NYC Department of Finance’s argument that the exclusion of the subsidiary from the combined return caused a “mismatch of income and expenses.”

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