89 A.D.2d 294 | N.Y. App. Div. | 1982
OPINION OF THE COURT
The facts of this case are not in dispute. Petitioner Byron S. Pardee was a salaried employee of the Chase Manhattan Bank (the bank) or its predecessors, primarily working in one of its New York offices from 1937 until his retirement in 1973. In 1952, the bank established an employee profit-sharing plan, qualified as such under the Internal Revenue Code, funded through a Federally tax-exempt trust to which the bank and its employees contributed, known as
Pardee, a resident of New Jersey throughout the pertinent period, retired in 1973. At that time, he was paid an
The issue thus presented is whether, upon lump-sum distribution of a nonresident’s share of a corporate, employee profit-sharing plan, the income and gains derived from a New York employer’s contributions to the plan are includable in New York State adjusted gross income. At the outset, we reject respondent’s contention that its determination in the instant case must be upheld if not totally irrational or unreasonable. The issue is not whether petitioners are entitled to a statutory exemption or deduction from income admittedly subject to taxation (see Matter of Grace v New York State Tax Comm., 37 NY2d 193); or the validity of an apportionment formula between New York and non-New York income under administrative construction of a broad statutory term (see Matter of Condé Nast Pub. v State Tax Comm., 51 AD2d 17, mot to dismiss app granted 39 NY2d 942); or the construction of a term for the purpose of computing a use tax (see Matter of Consolidated Freightways Corp. of Del. v Tully, 89 AD2d 270 [decided
Pardee’s gains on the investment of the bank’s contributions are not taxable under the first category. As the commission correctly found, apart from his employment at the bank, Pardee never engaged in any other trade, business, profession or occupation in New York State. Under the commission’s regulations, the income and gains derived from the bank’s contributions may then be included
Equally inapplicable is the statutory inclusion of income from intangible personal property (Tax Law, § 632,- subd [b], par [2]). This is expressly limited to instances where the property is “employed in a business, trade, profession, or occupation carried on in this state” (Tax Law, § 632, subd [b], par [2]). Moreover, the property referred to must be the taxpayer’s and not his employer’s (Matter of Linsley v Gallman, 38 AD2d 367, 369, affd 33 NY2d 863). The commission’s decision itself includes a finding that Pardee employed no property in any separate trade, business, profession or occupation in New York, and it is unrefutable that the investments attributable to the contributions were not in any way employed in the operation of the bank’s business or connected to the rendering of Pardee’s personal services. Once again, in terms of its income-producing character, Pardee’s allocation account was indistinguishable from his current deposit account, the gains from which the commission ruled did not constitute taxable income from intangible personal property used in a business, trade, profession or occupation carried on in New York.
Since there is no other arguable statutory basis for imposing the tax, the commission’s determination should be annulled, with costs, and the matter remitted to the State Tax Commission for further proceedings not inconsistent herewith.
Kane, J. P., Main, Mikoll and Weiss, JJ., concur.
Determination annulled, with costs, and matter remitted to the State Tax Commission for future proceedings not inconsistent herewith.