Question

You represent ABC Corporation, a New Jersey S-corporation that has 3 shareholders, Abbey, Bobby and Charlie. Abbey and Bobby are domiciliaries of New York. Charlie is a domiciliary of New Jersey. Charlie owns an apartment in New York which he purchased as an investment. Charlie spends approximately 200 days in New York per year. ABC Corporation sells sporting goods and sporting good equipment throughout the United States. All purchase orders are processed in New Jersey and shipped from a distribution warehouse located in the State where delivery of goods will occur using independent truck drivers. Each warehouse is owned and managed by an unrelated entity. The corporation does not have any stores, offices or employees in any other State other than New Jersey. However, ABC Corporation does keep its books and records in NYS with its accounting firm. In addition, ABC corporation occasionally sends independent salesman into a particular State, including New York, to market and sell their goods to box-store distributors such as Modells, Footlocker and Footaction. The independent salesman not only attempt to make sales but will occasionally pass product inquires and complaints of the stores to ABC, as well as, assist in displaying the sporting good products in the store. The corporation has the following questions:

Question 1:

If you were to have satisfied all criteria of PL 86-272, but you delivered goods using your own truck, are you protected or not?

Question 2:

Find what we believe whether the new budget rules for state for this transaction apply to city purposes. [rule for partnership activity - 1% or 1 Million rule-satisfied if corporation has 1% or greater interest in partnership or has basis in partnership of greater than 1Mill - then it has nexus thru partnership. (regulation also describes 9 other instances when a foreign corporation could be deemed to be behaving in partnership affairs.] This is NYS rule, unclear if NYC adopted this rule.

Question 3:

Allocation of S Corp income at Shareholder level. We know partnership can allocate if it has another office in another state. Find authority on when S Corp can allocate out of state.

**Note: I really need all these anwsered please, I would appreciate the courtousy........Thank you so so much !!!

Answer 1

Answer.a. Provision of the act

Personal Property -

Public law 86-272 protects only solicitaton of orders for tangible personal property.

Solicitation -

• Solicitation by employees of orders that are approved outside the state and shipped from outside the state.
• Solicitation by independent contractors if the sales are shipped from outside the state.

Exclusions

Public law 86-272 does not protect a corporation in the state where it is incorporated.Likewise,it does not protect sellers of services or intangibles.In addition it provides protection only from taxes measured by income.Taxes measured by net worth or gross receipts,or sales and use taxes,are not covered.

b.According to New York State rule - If yor business,trade,profession and occupation is carried on wholly within New York State, all of the items of income, gain, loss and deduction derived from or connected with the business,trade or occupation are included in New York Source Income.

Also, the rule of partnership activity is adopted by NYC because it is already a NYS rule.

Dear student i feel very sorry because i cuold not Solve the third part of your question but i hope that u will get the right and easy answer soon. Thankyou