Taylor v. State Tax Commission
| Decision Date | 17 December 1981 |
| Parties | In the Matter of John A. TAYLOR et al., Petitioners, v. STATE TAX COMMISSION of the State of New York, Respondent. |
| Court | New York Supreme Court — Appellate Division |
Kelley, Drye & Warren, New York City (John A. Garraty, Jr., New York City, of counsel) for petitioners.
Robert Abrams, Atty. Gen. (Lawrence J. Logan, Asst. Atty. Gen., of counsel) for respondent.
Before MAHONEY, P. J., and SWEENEY, KANE, CASEY and WEISS, JJ.
Proceeding pursuant to CPLR article 78 () to review a determination of the State Tax Commission which sustained a resident trust income tax deficiency imposed pursuant to article 22 of the Tax Law.
William H. Taylor died a resident of New York State on August 26, 1950. By will, he placed the assets of his residuary estate in trust, naming his two sons and a predecessor corporation of Manufacturers Hanover Trust Company, as trustees. The trustees were given the power to hold, manage, control invest and sell any of the testator's property for the benefit of the income beneficiaries.
Included in the assets of the residuary estate was real property located in the State of Florida. Under Florida law, the trustee bank, a New York corporation, was prohibited from acting as trustee over Florida real property. Petitioners John A. Taylor and Robert H. Taylor, therefore, were appointed by the County Judge's Court of Dade County, Florida as the sole trustees of the Florida property.
During 1970, 1971 and 1975, certain parcels of the Florida property were sold. Payments for the property were received by petitioners John A. Taylor and Robert H. Taylor, as trustees, and placed in a separate account maintained at the Manufacturers Hanover Trust Company in New York "in an agency relationship." The proceeds were not placed in the trust account.
New York income tax fiduciary returns for the years 1970, 1971 and 1975, on which the capital gain income derived from the sale of the Florida real property was subtracted from Federal taxable income as a New York modification, were filed. Subsequently, in 1977, the Income Tax Bureau issued notices of deficiency for the years in question based on the disallowance of the modifications pertaining to the capital gain income from the sale of the Florida property. Following a hearing, respondent affirmed the deficiencies assessed against the trust. This proceeding ensued.
Sections 601, 605 and 618 of the Tax Law impose an income tax on all resident trusts, including testamentary trusts created by individuals who were New York domiciliaries at the time of their death. However, under the...
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