New Jersey High Court Rejects Tax Shelter

Law360, New York (October 16, 2006, 12:00 AM EDT) -- The New Jersey Supreme Court has come down against the use of a popular corporate tax shelter, ruling that companies doing business in the state cannot protect profits from state corporate income tax by using out-of-state subsidiaries to hold their intellectual property.

In a ruling handed down on Thursday, six of the seven justices affirmed a lower court’s decision that New Jersey may constitutionally subject a foreign corporation to the Corporation Business Tax notwithstanding the taxpayer’s lack of physical presence in New Jersey.

Several state courts...
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