New York – ALJ upholds decombination based on failure to show substantial intercorporate transactions

July 2013


In a case of first impression under New York’s post-2006 combined reporting provisions, the decombination of two affiliated companies by the Division of Taxation was upheld by an administrative law judge where the companies failed to demonstrate the existence of substantial intercorporate transactions. The ALJ declined to consider arguments that combined filing should be allowed to avoid distortion. This case highlights the Division’s continued audit focus on combination and decombination, including situations where filing on a combined basis benefits taxpayers. [In the Matter of the Petitions of Knowledge Learning Corporation and Kindercare Learning Centers, Inc., NY Division of Tax Appeals, Nos. 823962 and 823963, 6/27/13]

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