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Nonresident Corporate Partner Subject to NYC Tax on Sale of Partnership Interest

In Matter of Goldman Sachs Petershill Fund Offshore Holdings (Delaware) Corp., the New York City Tax Tribunal held that an upper-tier partnership’s passive corporate partner was subject to the New York City General Corporation Tax (GCT) on the upper-tier partnership’s sale of an interest in a lower-tier partnership that was doing business in New York City.

The GCT is imposed on the corporate partners of a partnership doing business in New York City. The administrative law judge rejected the corporate partner’s argument that the upper-tier partnership’s investment in the lower-tier partnership should be analogized to an investment in corporate stock; instead, the judge held that the corporate partner’s distributive share of capital gain from the upper-tier partnership’s sale of the lower-tier partnership (as well as its distributive share of pre-sale income, deductions, gains, and losses from the lower-tier partnership) was subject to the GCT.

Key Contacts

Adam Blakemore
Partner
T. +44 (0) 20 7170 8697
adam.blakemore@cwt.com

Linda Z. Swartz
Partner
T. +1 212 504 6062
linda.swartz@cwt.com

Jon Brose
Partner
T. +1 212 504 6376
jon.brose@cwt.com

Andrew Carlon
Partner
T. +1 212 504 6378
andrew.carlon@cwt.com

Mark P. Howe
Partner
T. +1 202 862 2236
mark.howe@cwt.com

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