According to this article in the New York Times, he says he lives in FL, but the evidence may indicate he lives in NY.
"New York State tax officials say that the Yankee star Derek Jeter claimed he lived in Florida to avoid paying city and state income taxes for several years, when he was actually living in New York, according to documents filed last week with an administrative law judge.
"Mr. Jeter, one of the highest-paid players in baseball, filed nonresident income tax returns to New York State between 2001 and 2003, claiming that he lived primarily at his off-season home in Florida, which, unlike New York, has no state income tax.
"But officials at the State Division of Taxation and Finance argued that Mr. Jeter’s primary residence during those years was in New York, where he owns an apartment in the Trump World Tower, near the United Nations, and has rented or owned other living space as well.
Mr. Jeter’s salary was $14 million in 2003, along with an unknown fraction of the signing bonus of $16 million he was to be paid between 2001 and 2008. New York State’s top personal income tax rate for residents was 7.7 percent in 2003, and the city’s was 4.45 percent, including a temporary surcharge imposed after the attack of Sept. 11, 2001.
"Among the evidence cited by officials were Mr. Jeter’s business ties outside Florida, the personal items “near and dear” he keeps in his New York apartment, and his “public statements regarding his desire to be in New York,” according to the filings. "
"According to the documents, state tax officials are not disputing that Mr. Jeter’s primary residence was in Florida before 2001 or after 2003. But they claim that Mr. Jeter established his home in New York at the beginning of 2001, the year he bought the apartment in the Trump World Tower for a reported $13 million. According to state officials, he lived there — for tax purposes, at least — for the next two years as well.
"Besides unspecified business ties and public statements made by the baseball star, state officials also cited “holidays spent in jurisdictions other than Florida” and the fact that Mr. Jeter was “immersed in the New York community.” "
We'll keep you posted.
Monday, December 17, 2007
It's Better When the Legislature is Out of Session
The Maryland Chamber of Commerce had an eye-catching headline on its website:
"Special Session Results in $800 Million in New Business Taxes"
When you hear your governor call for a "Special Session", grab your wallet! Here is the Chamber's summary of what the legisalture did to Maryland businesses and citizens.
"The General Assembly concluded its 3 week special session today by enacting $1.4 billion in new taxes, $400 million in possible future state budget reductions, and authorizing slots at up to 5 locations, if approved at referendum by the voters in November of 2008. The share of new taxes paid by Maryland businesses will exceed $800 million. The final package of 6 bills differs significantly from the Governor’s original proposals, but should resolve the projected state general fund structural deficit and pump over $400 million annually into state transportation projects.
Corporate Taxes
The corporate income tax rate would increase from 7% to 8.25% effective for taxable years beginning after December 31, 2007.
Although combined reporting was defeated, a 17-member Maryland Business Tax Reform Commission will study changes to the state’s business taxes over the next 4 years. The Maryland Chamber of Commerce will have the only business member on the Commission.
New, extensive and onerous reporting requirements will be imposed on corporations as part of their corporate tax return or for publicly traded companies with any minimal business activity in Maryland, effective for taxable years beginning after December 31, 2005 (see pages 40 - 49 of SB 2).
Sales Tax
Sales tax rate increased from 5% to 6% effective January 3, 2008.
Vendor credit limited to $500 per return from January 3, 2008 to June 30, 2011
Vendors would be allowed to assume or absorb the sales tax.
Sales tax imposed on certain “computer services” from July 1, 2008 to June 30, 2013 (see pages 24 - 25 of SB 2).
Individual Income Tax
New brackets of:
5% of income over $150,000 individual/$200,000 joint
5.25% of income over $300,000 individual/ $350,000 joint
5.5% of income over $500,000
Personal exemption is increased from $2,400 to $3,200, but phased-out at incomes above $125,000 individual and $175,000 joint.Transportation Titling tax increased from 5% to 6%, with a full trade-in allowance, for titles issued on or after January 1, 2008.
No gas tax increase.
Transportation to receive roughly 50% of the sales tax rate increase and other revenues for a total state transportation revenue increase of over $400 million annually.
The state share of revenues would be dedicated to funding education aid, school construction and higher education construction.
See the enacted bills at the following links:
HB 1 - Budget Reconciliation Act (pdf)
SB 2 - Tax Reform Act of 2007(pdf)
HB 5 - Transportation and Sales Tax Bill (pdf)
"Special Session Results in $800 Million in New Business Taxes"
When you hear your governor call for a "Special Session", grab your wallet! Here is the Chamber's summary of what the legisalture did to Maryland businesses and citizens.
"The General Assembly concluded its 3 week special session today by enacting $1.4 billion in new taxes, $400 million in possible future state budget reductions, and authorizing slots at up to 5 locations, if approved at referendum by the voters in November of 2008. The share of new taxes paid by Maryland businesses will exceed $800 million. The final package of 6 bills differs significantly from the Governor’s original proposals, but should resolve the projected state general fund structural deficit and pump over $400 million annually into state transportation projects.
Corporate Taxes
The corporate income tax rate would increase from 7% to 8.25% effective for taxable years beginning after December 31, 2007.
Although combined reporting was defeated, a 17-member Maryland Business Tax Reform Commission will study changes to the state’s business taxes over the next 4 years. The Maryland Chamber of Commerce will have the only business member on the Commission.
New, extensive and onerous reporting requirements will be imposed on corporations as part of their corporate tax return or for publicly traded companies with any minimal business activity in Maryland, effective for taxable years beginning after December 31, 2005 (see pages 40 - 49 of SB 2).
Sales Tax
Sales tax rate increased from 5% to 6% effective January 3, 2008.
Vendor credit limited to $500 per return from January 3, 2008 to June 30, 2011
Vendors would be allowed to assume or absorb the sales tax.
Sales tax imposed on certain “computer services” from July 1, 2008 to June 30, 2013 (see pages 24 - 25 of SB 2).
Individual Income Tax
New brackets of:
5% of income over $150,000 individual/$200,000 joint
5.25% of income over $300,000 individual/ $350,000 joint
5.5% of income over $500,000
Personal exemption is increased from $2,400 to $3,200, but phased-out at incomes above $125,000 individual and $175,000 joint.Transportation Titling tax increased from 5% to 6%, with a full trade-in allowance, for titles issued on or after January 1, 2008.
No gas tax increase.
Transportation to receive roughly 50% of the sales tax rate increase and other revenues for a total state transportation revenue increase of over $400 million annually.
The state share of revenues would be dedicated to funding education aid, school construction and higher education construction.
See the enacted bills at the following links:
HB 1 - Budget Reconciliation Act (pdf)
SB 2 - Tax Reform Act of 2007(pdf)
HB 5 - Transportation and Sales Tax Bill (pdf)
Friday, December 14, 2007
Michigan Backs Down on Service Tax -- Increases Income Tax Instead
According to CCH, the surcharge is to be based on a percentage of the taxpayer's liability before credits. For all taxpayers, other than financial institutions, the surcharge would be:
-- 32.9% for tax years ending after 2007 and before 2009; and
-- 27.3% for tax years ending after 2008.
For financial institutions taxpayers, subject to the franchise tax, the surcharge would be:
-- 27.7% for tax years ending after 2007 and before 2009; and
-- 23.4% for tax years ending after 2008.The surcharge would be capped at $2 million per year and would not apply to insurance companies subject to the gross direct premiums tax. The bill also would allow financial institutions to claim the compensation and investment tax credits.
Finally, the bill would revise the provisions that authorize a tax refund if the state collects taxes above certain threshold amounts. Half of the excess taxes would no longer be deposited into the countercyclical budget and economic stabilization fund and taxpayers would be eligible for pro rata refunds based on the amount of the surcharge.
The bill would be effective January 1, 2008, and would apply to all business activity occurring after December 31, 2007. The bill would repeal the new use tax on selected services.
-- 32.9% for tax years ending after 2007 and before 2009; and
-- 27.3% for tax years ending after 2008.
For financial institutions taxpayers, subject to the franchise tax, the surcharge would be:
-- 27.7% for tax years ending after 2007 and before 2009; and
-- 23.4% for tax years ending after 2008.The surcharge would be capped at $2 million per year and would not apply to insurance companies subject to the gross direct premiums tax. The bill also would allow financial institutions to claim the compensation and investment tax credits.
Finally, the bill would revise the provisions that authorize a tax refund if the state collects taxes above certain threshold amounts. Half of the excess taxes would no longer be deposited into the countercyclical budget and economic stabilization fund and taxpayers would be eligible for pro rata refunds based on the amount of the surcharge.
The bill would be effective January 1, 2008, and would apply to all business activity occurring after December 31, 2007. The bill would repeal the new use tax on selected services.
You Own a Farm/Ranch and Want to Deduct the Losses?
The question of "hobby-losses" come up frequently in income tax. So this issue is always an interesting one to watch. In this case, a couple in Alabama won their case at the administrative level against the AL DoR. Even though both of them had full-time jobs off the farm, they were able to show they were operating it for a profit. Here is the analysis performed by the ALJ considered in ruling for the taxpayer:
"The general test for whether a taxpayer is engaged in a "trade or business," and thus entitled to deduct all ordinary and necessary business expenses, is "whether the taxpayer's primary purpose and intention in engaging in the activity is to make a profit." State of Alabama v. Dawson, 504 So.2d 312, 313 (Ala. Civ. App. 1987), quoting Zell v. Commissioner of Revenue, 763 F.2d 1139, 1142 (10th Cir. 1985). To be deductible, the activity must be engaged in "with a good faith expectation of making a profit." Zell, 763 F.2d at 1142. As stated by the U.S. Supreme Court - "We accept the fact that to be engaged in a trade or business, the taxpayer must be involved in the activity with continuity and regularity and that the taxpayer's primary purpose for engaging in the activity must be for income or profit. A sporadic activity, a hobby, or an amusement diversion does not qualify." Commissioner v. Groetzinger, 107 S.Ct. 980, 987 (1987). But a taxpayer's expectation of a profit need not be reasonable. Rather, the taxpayer must only have a good faith expectation of realizing an eventual profit. Allen v. Commissioner, 72 T.C. 28, 33 (1979). Whether the taxpayer had an intent to make a profit must be determined on a case-by-case basis from all the circumstances. Patterson v. U.S., 459 F.2d 487 (1972)."
Treas. Reg. §1.183-2 specifies nine factors that should be considered in determining if an activity was entered into for profit.
Factor (1). The manner in which the taxpayer conducted the activity.
Factor (2). The expertise of the taxpayer in carrying on the activity.
Factor (3). The time and effort exerted by the taxpayer in conducting the activity.
Factor (4). The expectation that the assets used in the activity will appreciate.
Factor (5). The taxpayer's success in similar or related activities.
Factors (6) and (7). The taxpayer's history of profits and losses, and the amounts of any occasional profits.
Factor (8). The taxpayer's financial status.
Factor (9). The activity was for the taxpayer's personal pleasure and recreation.
"The general test for whether a taxpayer is engaged in a "trade or business," and thus entitled to deduct all ordinary and necessary business expenses, is "whether the taxpayer's primary purpose and intention in engaging in the activity is to make a profit." State of Alabama v. Dawson, 504 So.2d 312, 313 (Ala. Civ. App. 1987), quoting Zell v. Commissioner of Revenue, 763 F.2d 1139, 1142 (10th Cir. 1985). To be deductible, the activity must be engaged in "with a good faith expectation of making a profit." Zell, 763 F.2d at 1142. As stated by the U.S. Supreme Court - "We accept the fact that to be engaged in a trade or business, the taxpayer must be involved in the activity with continuity and regularity and that the taxpayer's primary purpose for engaging in the activity must be for income or profit. A sporadic activity, a hobby, or an amusement diversion does not qualify." Commissioner v. Groetzinger, 107 S.Ct. 980, 987 (1987). But a taxpayer's expectation of a profit need not be reasonable. Rather, the taxpayer must only have a good faith expectation of realizing an eventual profit. Allen v. Commissioner, 72 T.C. 28, 33 (1979). Whether the taxpayer had an intent to make a profit must be determined on a case-by-case basis from all the circumstances. Patterson v. U.S., 459 F.2d 487 (1972)."
Treas. Reg. §1.183-2 specifies nine factors that should be considered in determining if an activity was entered into for profit.
Factor (1). The manner in which the taxpayer conducted the activity.
Factor (2). The expertise of the taxpayer in carrying on the activity.
Factor (3). The time and effort exerted by the taxpayer in conducting the activity.
Factor (4). The expectation that the assets used in the activity will appreciate.
Factor (5). The taxpayer's success in similar or related activities.
Factors (6) and (7). The taxpayer's history of profits and losses, and the amounts of any occasional profits.
Factor (8). The taxpayer's financial status.
Factor (9). The activity was for the taxpayer's personal pleasure and recreation.
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