Question:
A nonresident taxpayer is employed as an IT technician for a company located in New York. The taxpayer earns $100,000 in salary for the tax year. The taxpayer''s job requires him to travel throughout the country to various satellite offices of the company to maintain their IT systems.
During the tax year, the taxpayer can show that he spent:
. One-hundred (100) days in the company''s New York office,
. Twenty-five (25) days in the company''s Miami office,
. Thirty-five (35) days in the company''s Chicago office,
. Forty (40) days in the company''s LA office, and
. Ten (10) days from his home in Connecticut using special IT equipment that his Employer could not afford, that further ensure the safety of the company''s network.
The taxpayer cannot demonstrate where he worked any of the other days of the year.
In addition to his salary, the taxpayer earned the following income
. $150,000 from the sale of stock of a California corporation which only held New York real property
. $4,000 in NY State lottery winnings
. $50,000 distribution from his pension plan
. $1,000 interest income from his savings account from ING
. $100,000 in gains from the sale of a painting located in Connecticut but sold while temporarily at a museum located in New York. The cost of the painting was $20.000.
Discussion Questions
1. To what extent, if any, is the income realized by the taxpayer other than his wages from his company are subject to New York taxation? Fully explain your answer.
2. To what extent, if any, is the wages the taxpayer earned subject to New York taxation? Fully explain your answer.
3. What is the taxpayer''s allocation formula to determine his New York source wages?
4. What is the allocation percentage to be applied to his "base tax" in determining his overall New York tax liability?
5. What is the taxpayer''s New York tax liability? Assume that the New York tax rate is 8%.