Published Tax Court Opinions

Tax Court: Jaguar Land Rover North America v. Director Division of Taxation and Township of Mahwah; Docket No. 014046-2018; opinion by Bianco, J.T.C., decided July 29, 2022. For plaintiff – Joseph E. Bock, Esq. (Spiotti & Associates, P.C., attorney); for defendant Director, Division of Taxation – Anthony D. Tancini, Esq. (Matthew J. Platkin, Acting Attorney General of New Jersey, attorney); for defendant Township of Mahwah – Nylema Nabbie (Cleary Giacobbe Alfieri Jacobs, LLC, attorney).

In interpreting an exemption under the Statewide Non-residential Development Fee Act, N.J.S.A. 40:55D-8.1 to -8.7, the court found that an urban transit hub must be located within one-half mile radius surrounding the mid point of a New Jersey Transit Corporation, Port Authority Transit Corporation or Port Authority Trans-Hudson Corporation rail station platform area and be specifically delineated by the New Jersey Economic Development Authority (NJEDA). The court found that while the Subject Property was within one-half mile of a qualifying rail station, it was not specifically delineated by the NJEDA and thus was ineligible for the exemption under N.J.S.A. 40:55D-8.4(b)(4). Because the court found the Statute to be unambiguous and plain on its face, it declined to consult extrinsic sources in its interpretation of the statute.

Tax Court: Giant Realty, LLC v. Lavalette Borough; Docket No. 001063-20142014, opinion by Fiamingo, J.T.C., decided April 28, 2022. For plaintiff – Michael I. Schneck (Schneck Law Group, LLC., attorneys); for defendant - Dominic P. DiYanni (Eric M. Bernstein & Associates, LLC, attorneys).

HELD: Plaintiff moved to apply the provisions of the Freeze Act, N.J.S.A. 54:51A-8, for the judgment entered in tax year 2014 to tax years 2015 and 2016. Defendant opposed arguing that the issuance of a permit to develop the subject property under the Coastal Area Facility Review Act, N.J.S.A. 13:19-1 to -51 ("CAFRA"), constituted a change in value so that the Freeze Act should not apply. The court ruled that the issuance of a CAFRA permit in and of itself was insufficient to establish a prima facie case that an external change in the value of the subject property materialized which "substantially and meaningfully" increased the value of the property. Such change can only be demonstrated by showing the value of the property before and after the change. Having failed to make the required prima facie showing, defendant was not entitled to a plenary hearing on the applicability of the Freeze Act. Plaintiff’s motion to apply the Freeze Act was granted.

Tax Court: Twp. of Green v. Life With Joy, Inc.; Docket Nos. 009572-2016 and 009068-2018; Life With Joy, Inc. v. Twp. of Green; Docket Nos. 008566-2017, 013541-2019, 010728-2020; opinion by Bianco, J.T.C., decided March 24, 2022. For Life With Joy, Inc. – Jay J. Freireich (Freireich, LLC., attorney); For Twp. of Green – Robert B. McBriar (Schneck, Price, Smith, & King, LLP., attorneys).

In granting nonprofit status under N.J.S.A. 54:4-6.3, the court found that the Subject Property was actually used in furtherance of the nonprofit’s charitable purpose, to provide a living and learning center for young adults with developmental disabilities, and that any profit-making activity happening on the Subject Property pursuant to state designed and instituted programs was de minimis. The court dismissed the untimely 2019 appeal for lack of jurisdiction. In denying the township’s claim that the exemption must be denied in light of alleged zoning violations, the court revisited the current juxtaposition between municipal land use law and N.J.S.A. 54:4-6.3 presented by Soc’y of the Holy Child Jesus v. City of Summit, 418 N.J. Super. 365, 368 (App. Div. 2011).

Tax Court: Sylvester and Yongjie Touhy v. Director, Division of Taxation, Docket No. 013607-2018; opinion by Bedrin Murray, J.T.C., decided March 1, 2022. For plaintiffs – Sylvester Tuohy and Yongjie Tuohy (Self-Represented); for defendant – Miles Eckardt, Deputy Attorney General (Matthew Platkin, Acting Attorney General of New Jersey, attorney).

Held: Defendant’s motion for summary judgment seeking dismissal of a complaint challenging the assessment of New Jersey gross income tax ("NJ GIT") for tax year 2014 is granted. Plaintiffs contend that defendant improperly added back into their gross income the following: (1) dividends, (2) capital gains, and (3) wages withheld to fund a § 403(b) retirement plan. In addition, plaintiffs argue that defendant erroneously calculated their resident tax credit under N.J.S.A. 54A:4-1 for income subject to tax in other states or political subdivisions. As to the resident tax credit calculation, the court holds plaintiffs are collaterally estopped from relitigating this issue because they unsuccessfully litigated the same issue in the Tax Court for a prior tax year. Even if the principle of collateral estoppel was not applied, plaintiffs’ allegations are without merit based on statutory, regulatory, and case law. With regard to plaintiffs’ challenge to the addition of dividends, capital gains, and certain wages to their 2014 gross income, the court finds their arguments to be unsupported by statutory or regulatory law, or precedent. Thus, plaintiffs have failed to overcome the presumption of validity accorded to defendant’s interpretation of the relevant NJ GIT statutes. Therefore, summary judgment in favor of defendant is appropriate.

Tax Court: Branchburg Hospitality LLC v. Township of Branchburg, Docket No. 011494-21, opinion by Fiamingo, J.T.C., decided February 24, 2022. For plaintiff – Farhan Ali McCarter & English, LLP, attorneys); for defendant - Wesley E. Buirkle (DiFrancesco Bateman Kunzman, Davis, Lehrer & Flaum, P.C., attorneys).

HELD: Plaintiff timely appealed the decision of the County Board of Taxation which dismissed plaintiff’s petition pursuant to N.J.S.A. 54:4-34 (Chapter 91) for tax year 2021. Defendant moved before this court to dismiss plaintiff’s complaint for (a) lack of subject matter jurisdiction; (b) failure to pay taxes pursuant to N.J.S.A. 54:51A-1 and (c) failure to respond to a request for income and expense statement pursuant to Chapter 91. The court denied defendant’s motion to dismiss for lack of subject matter jurisdiction. The court found that plaintiff’s prior filing and withdrawal of a direct appeal as to which a judgment of dismissal was entered, did not bar plaintiff from filing an appeal at the County Board of Taxation for the same tax year, or from appealing the resultant decision of the County Board of Taxation to the Tax Court. The court however dismissed the complaint for failure to pay real property taxes as required by N.J.S.A. 54:51A-1(b) since plaintiff failed to produce sufficient proofs of the impact of COVID-19 on its ability to pay the taxes due. As a result, the court did not reach the merits defendant’s motion to dismiss for failure to comply with Chapter 91.

Tax Court: 3 University Plaza SPE, LLC/3 Univ. Plza SPE % Normandy RE P v. Hackensack City; Docket Nos. 005002-2014, 001670-2015, 003553-2016, 001163-2017, 003768-2018, and 012891-2019, opinion by Novin, J.T.C., decided February 24, 2022. For plaintiff – Michael J. Caccavelli and Grace Chun (Pearlman & Miranda, LLC, attorneys); for defendant – Kenneth A. Porro (Chasan Lamparello Mallon & Cappuzzo, P.C., attorneys).

The court found that no globally accepted practice has been adopted for the handling of tenant improvement allowances and leasing commission expenses under reconstructed operating statements. For local property tax valuation purposes, the decision to include or exclude tenant improvement allowances and leasing commissions, as stabilized operating expenses, is a function of context, the market, and the intended use of the appraisal report. The characterization of tenant improvement allowances and leasing commissions must be based on the appraiser’s examination of a property’s historical operations, and evaluation and analysis of market conditions. When tenant improvement allowances and leasing commission expenses are necessary to achieve economic or market rent, stabilize occupancy, and maintain a property’s value, they may be treated as operating expenses and deducted from effective gross income in calculating net operating income. However, an appraiser may reject certain expenses, including tenant improvement allowances and leasing commissions, when they are erratic, uncharacteristic, and not typical in the market or industry. Here, the court concluded that plaintiff’s expert’s approach, deducting tenant improvement allowances and leasing commissions as "above-the-line" stabilized operating expenses, was reasonable and supported by the trial record. The court further concluded that the Band of Investment technique provided the most accurate and reliable method of deriving a capitalization rate because it is not polluted or impacted by questions of how potential survey recipients perceived hypothetical transactional questions or how a market perceives an annually reoccurring operating expense. Finally, in reducing the property’s 2014 and 2015 tax assessments, the court found that the subject property’s 2019 sale was not credible evidence of true or fair market value. The court scheduled the 2016, 2017, 2018, and 2019 tax year matters for further proceedings.

Tax Court: Erez Holdings Urban Renewal, LLC, v. Director, Division of Taxation and Township of Lakewood, Docket No. 013941-2018, opinion by Sundar, P.J.T.C., decided February 1, 2022. For plaintiff - Catherine J. Bick (Giordiano Halleran Ciesla PC, attorneys); for defendants - Joseph Palumbo, Anthony D. Tancini (Andrew J. Bruck, Acting Attorney General of New Jersey, attorney); Harold H. Hensel (Secare & Hensel, attorneys).

Held: Plaintiff’s contention that the Non-Residential Development Fee (NRDF) imposed under N.J.S.A. 40:55D-8.4 should be computed by attributing $0 to equalized assessed value of the improvements because they are exempt from local property tax under the Long - Term Tax Exemption law, N.J.S.A. 40A:20-1 to -22, is rejected based on the plain language of the NRDF statute. The amount to be excluded for the parking lot when computing the NRDF is its value as determined under the accepted methods employed for valuing all real property in the local property tax arena (cost, income, comparable sales). The court’s standard of review of the assessor’s value determination of the parking lot for purposes of its exclusion when computing the NRDF, is the same as in local property tax matters. Thus, a presumptive correctness attaches to the assessor’s determination with the burden of proof upon the property owner to overcome the same and persuade the court that the exclusion amount should be different. Here, based on the evidence provided, plaintiff failed to persuade the court that the value of the parking lot to be excluded for purposes of calculating the NRDF should be $3,407,000. The court therefore affirms the final determination of defendant, Director, Division of Taxation, that the assessor of defendant, Township of Lakewood, correctly determined the NRDF.

Tax Court: New West Developers, LLC v. Township of Irvington, Docket No. 014704-2013; 010653-2014; 009474-2015; 014706-2013; 010648-2014; 009475-2015; Crown Real Estate Holdings, Inc. v. Township of Irvington, Docket Nos. 009727-2016; 009728-2016, opinion by Bedrin Murray, J.T.C., decided December 23, 2021. For plaintiff – Daniel G. Keough (Ventura, Miesowitz, Keough & Warner, PC, attorney); for defendant – Jarrid H. Kantor (Antonelli Kantor, PC, attorney).

Held: Defendant’s motions to dismiss plaintiffs’ complaints under N.J.S.A. 54:51A-1(b), which requires a taxpayer to satisfy certain local property tax obligations prior to filing an action in the Tax Court, are granted. While the requirement was previously jurisdictional, allowing the court no discretion in determining if a matter should proceed, the statute was amended in 1999 to provide for relaxation of the tax payment provision in the interests of justice. Plaintiff New West, owner of the 15 properties during tax years 2013 through 2015, offers no reason for relaxation. Plaintiff Crown, owner of the properties for tax year 2016, contends its difficulty in ascertaining arrearages owed for all tax years warrants relaxation of the tax payment requirement. The court rejects plaintiff’s argument, holding that the interests of justice would be subverted by allowing the complaints to go forward under the circumstances. In addition, plaintiffs argue that defendant’s failure to object to the non-payment of property taxes when these matters were before the county tax board bars it from raising the same objection in Tax Court. The court holds that while the county tax boards and Tax Court are governed by tax payment provisions under N.J.S.A. 54:3-27 and N.J.S.A. 54:51A-1(b) respectively, they are separate and distinct, and contain different payment schemes. Thus, the court concludes defendant is not barred from raising the objection in Tax Court.

Tax Court: Punish and Indu Malhotra v. Director, Division of Taxation, Docket No. 010788-2018; opinion by Orsen, J.T.C., decided December 16, 2021. For plaintiffs - Punish and Indu Malhotra (Self-represented); for defendant - Miles Eckardt, Deputy Attorney General (Andrew J. Bruck, Acting Attorney General of New Jersey, attorney).

Plaintiffs sought relief from penalties and interest after being assessed for an erroneous income tax refund due to an error on their tax return for New Jersey income tax withholding. Defendant filed a motion for summary judgment seeking recovery of the erroneous refund with applicable penalties and interest. Plaintiffs filed a cross motion for summary judgment requesting that penalties and interest be abated due to the lengthy passage of time for assessment.

The court first determined whether defendant had statutory authority to recover the erroneous refund pursuant to the applicable statute of limitations. Defendant argued that the statute of limitations to obtain the erroneous refund was either three years from the date the tax return was due or an extended five-year statute of limitations due to a misrepresentation of material fact on the tax return. Plaintiff argued that the mistake on the tax return does not qualify as a misrepresentation.

The court found that the three-year statute of limitations expired three years from the making of the refund and the five-year statute of limitations did not apply because plaintiffs’ mistake did not rise to the level of a misrepresentation. Accordingly, the court denied defendant’s motion for summary judgment to recover the erroneous refund. Plaintiffs’ motion for summary judgment was granted to abate the penalties and interest as there was no tax due and any payments made, or tax refunds withheld, were to be returned with applicable interest.

Tax Court: Cargill Meat Solution, Corp. v. Dir., Div. of Tax’n; Docket No. 008146-2018, opinion by Cimino, J.T.C., decided December 15, 2021. For plaintiff - Kyle O. Sollie (Reed Smith LLP, attorneys; Kylie O. Sollie and Matthew L. Setzer on the brief); for defendant – Joseph A. Palumbo, Deputy Attorney General (Andrew J. Bruck, Acting Attorney General of New Jersey, attorney).

Held: The Clean Communities and Recycling Grant Act imposes a user fee, commonly referred to as the litter tax. The fee is based upon the sales of litter-generating products by manufacturers, wholesalers and retailers. Wholesaler-to-wholesaler sales are exempt. While plaintiff admits it manufactures the products at issue, it also asserts the wholesaler-to-wholesaler exemption applies for sales it makes to wholesalers.

The court noted that under plaintiff’s argument, all manufacturers that sell to wholesalers would claim the exemption thus rendering the statutory reference to manufacturer sales superfluous. In addition, the court held that the plain language of the Act provides that the fee is based upon sales within the state, not whether the manufacturing occurred in-state. Moreover, the Legislature did not intend to put local manufacturers at a disadvantage. Finally, the longstanding regulations adopted by the Director provide that the location of where the manufacturing takes place is not determinative.

Tax Court: Ian M. Kunesch v. Andover Twp., Docket Nos. 007226-2013; 007942-2014; 003388-2015; 003298-2016; 000657-2017; 000823-2018; 002702-2019, opinion by Bianco, J.T.C., decided July 29,2021. For plaintiff – Jeffrey D. Gordon (Archer & Greiner, PC, attorney), for defendant – Fred Semrau and Robert J. Rossmeissl (Dorsey & Semrau, LLC, attorney).

Plaintiff, Ian Kunesch ("Mr. Kunesch"), timely filed local property tax appeals with this court for tax years 2013-2019, challenging the assessments imposed by defendant ("Township") on certain real property (“Property”) located in the Township. The Township moved to dismiss those complaints on grounds Mr. Kunesch is not an aggrieved taxpayer within the meaning of N.J.S.A. 54:3- 21, given that he executed a deed in lieu of foreclosure to the lending bank, which stripped him of standing to bring his tax appeals. The court determined that the Township’s motions were without merit, and that Mr. Kunesch has standing to proceed. The court concluded that the lending bank and Mr. Kunesch intended for Mr. Kunesch to remain the owner and in possession of the Property unless he defaulted, at which point the second of two Deeds in Lieu of Foreclosure executed would be recorded. Furthermore, the court found that the second Deed in Lieu of Foreclosure is more appropriately characterized as an equitable mortgage because it was in essence security for a loan. Finally, the court rejected the Township’s argument that Mr. Kunesch was judicially estopped from bringing these tax appeals by finding no miscarriage of justice in proceeding with these matters.

Tax Court: Senior Citizens United Community Services v. Dir., Div. of Tax’n; Docket Nos. 008789-2019 and 005999-2020, opinion by Cimino, J.T.C., decided July 1, 2021. For plaintiff – Dale W. Keith (Keith & Keith, attorneys).; for defendant – Jamie M. Zug (Gurbir S. Grewal, Attorney General of New Jersey, attorney).

Held: The Motor Fuel Tax and the Petroleum Products Gross Receipts Tax provide an exemption for special and rural transportation services provided by "autobuses." The parties disagree as to whether a definition of autobus found in Title 48 (Public Utilities) is incorporated into Title 54 (Taxation). Reviewing the legislative history as well as the wording of the amendments to the exemption statute over the years, the court held that the Legislature did not intend to incorporate the definition of autobus found in Title 48 into Title 54. As a result, the taxpayer qualifies for the exemption.

Tax Court: Michael J. Morley, III, Executor of Estate of Linda A. Cerritelli v. Director, Division of Taxation, Docket No. 007443-2020; opinion by Sundar, P.J.T.C., decided June 7, 2021. For plaintiff - Francis P. Maneri, Kristen L. Behrens, and Sarah Gremminger (Dilworth Paxson, LLP, attorney); for defendant - Heather Lynn Anderson (Gurbir S. Grewal, Attorney General of New Jersey, attorney).

Held: Amounts to be included in the decedent’s gross estate for purposes of New Jersey’s Estate Tax are the sums actually recovered under a survival claim action as provided under the New Jersey Transfer Inheritance Tax laws. The State’s estate tax and inheritance tax statutes can and should be read in pari materia because both laws address the same subject: the corpus or the estate of a decedent, and because assets includible in the estate for estate tax purposes are those which are transferred to a beneficiary for inheritance tax purposes. Therefore, the legislative intent to include the sums actually recovered under a survival claim action in a decedent’s estate for inheritance tax purposes also extends to their inclusion in the decedent’s estate for estate tax purposes. The recovered amounts are deemed to be the value of the survival claim action as of the decedent’s date of death.

Tax Court: R.O.P. Aviation Inc. v. Director, Division of Taxation, Docket No. 001323-2018; opinion by Sundar, P.J.T.C., decided May 27, 2021. For plaintiff – Leah Robinson and Brian Kittle (Mayer Brown LLP, Esq.); for defendant – Michael J. Duffy (Gurbir S. Grewal, Attorney General of New Jersey, attorney).

Held: Plaintiff’s partial summary judgment motion to void defendant’s audit adjustment to its carried forward net operating loss (NOL) deduction is granted and defendant’s cross-motion to amend its expert report to substantiate such adjustment is denied. The NOL deduction in the open (i.e., within the statute of limitations) audited tax years 2012-2015 derive from losses generated in 2007-2011, closed tax years because they were beyond the statute of limitations for audit under N.J.S.A. 4:49-6. Since the closed tax years were never audited by defendant, disallowing the carried forward NOLs from those years is tantamount to reopening and auditing the closed years and indirectly collecting additional tax that flows from the closed years. This is impermissible and time barred under N.J.S.A. 54:49-6. Defendant’s broad discretion under N.J.S.A. 54:10A-10 to determine a taxpayer’s fair and reasonable corporation business tax is nevertheless limited by the four-year statute of limitations under N.J.S.A. 54:49-6. Since the NOL adjustment is time barred, defendant’s cross-motion for partial summary judgment to have its expert’s report amended to substantiate the validity of such adjustment is moot and thus denied.

Tax Court: Ocean Grove Camp Meeting Ass’n of The United Methodist Church v. Township of Neptune, Docket No. 013693-2017; opinion by Sundar, P.J.T.C., decided April 20, 2021. For plaintiff – James M. McGovern, Jr. (Davison, Eastman, Muñoz, Paone, P.A., attorneys); for defendant – Gene J. Anthony (Law Offices of Gene J. Anthony, attorney).

Held: Defendant taxing district’s denial of plaintiff taxpayer’s local property tax exemption under N.J.S.A. 54:4-3.6 is reversed. There is no evidence that the subject property, plaintiff’s Christian retreat center, was leased to for-profit entities or used for non-tax-exempt purposes since the visitors and the activities on the subject property were religious or charitable oriented. That plaintiff did not provide its own religious program, and that it charged fees for overnight stays in its guest rooms does not endanger the tax exemption since N.J.S.A. 54:4-3.6 permits a non-profit charitable entity to be partly supported by occupancy fees, and there is no requirement that plaintiff must wholly occupy the subject property. For the same reason, the fact that plaintiff allows the property to be used by non-profit secular groups or occasionally by individuals does not disqualify the property from tax exemption.

Tax Court: Nicholas L. Gentile, Jr., et al. v. Dir., Div. of Taxation,;Docket No. 013601-2017; opinion by Bedrin Murray,J.T.C., decided March 26, 2021. For plaintiff – Nicholas L. Gentile, Jr. and Doreen A. Gentile (Self-Represented); for defendant – Jamie M. Zug (Gurbir S. Grewal, Attorney General of New Jersey, attorney).

Held: Defendant’s motion for summary judgment seeking dismissal of a complaint challenging the assessment of New Jersey gross income tax (“GIT”) as to an “innocent spouse” husband is denied. Plaintiffs, a married couple filing jointly, failed to report approximately $900,000 in income for tax years 2006-2010 that the wife, an accountant, attained from criminal activity unknown to her husband. Plaintiffs urge the husband should be relieved of joint and several liability attaching to joint GIT filers under N.J.S.A. 54A:8-3.1(c), citing the equitable remedy afforded to an “innocent spouse” in 26 U.S.C. § 6015. Defendant contends no such relief is afforded a taxpayer under New Jersey law; further, plaintiffs’ joint and several liability for GIT includes profit from criminal activity under N.J.S.A. 54A:5-1(o). An audit of plaintiffs’ tax returns resulted in an assessment and civil fraud penalty being imposed after expiration of the three-year statutory period for assessing GIT under N.J.S.A. 54A:9-4(a). As such, there must be a showing that “[a] false or fraudulent return [was] filed with intent to evade tax.” Ibid. The record is devoid of proof that the husband filed a false or fraudulent return for tax years 2006-2010 with an intent to evade tax, nor is any such claim advanced by defendant. Defendant’s reliance on the absence of innocent spouse relief under New Jersey law in support of the motion is misplaced. Joint and several liability of taxpayers filing joint GIT returns does not relieve defendant of the burden to prove the statutory exemption set forth in N.J.S.A. 54A:9-4(c)(1)(B). See Anita K. Leather v. Dir., Div. of Taxation, 31 N.J. Tax 285 (Tax 2019). As the record is unsettled in this regard, defendant’s motion for summary judgment is not ripe.

Tax Court: Nicholas L. DePace M.D. v. Dir., Div. of Taxation; Docket No. 013396-2019, opinion by Cimino, J.T.C., decided December 21, 2020. Released for publication: March 10, 2021. For plaintiff – Jack A. Myerson and Matthew L. Miller (Myerson & O’Neill, attorneys).; for defendant – Ramanjit K. Chawla, Deputy Attorney General (Gurbir S. Grewal, Attorney General of New Jersey, attorney).

Held: Under existing law, Gross Income Tax is due from both the qui tam plaintiff and the attorney representing the qui tam plaintiff on the portion of the award payable to the attorney as fees. Qui tam actions are brought by private citizens on behalf of the government alleging waste and fraud. The private citizen is entitled to an award which constitutes a percentage of the government’s recovery. While an argument can be made that only the attorney is liable for Gross Income Tax on the attorney’s fee portion of the award, a recent attempt to change the law to only tax the attorney was vetoed by the Governor. The court is constrained to respect the legislative process for which the Governor is a part.

Tax Court: Washington Shopping Center, Inc. v. Washington Township;Docket Nos. 005517-2016, 002869-2017, 006408-2018, opinion by Novin, J.T.C., decided February 11, 2021, and released for publication March 2, 2021. For plaintiff – Lawrence S. Berger (Berger & Bornstein, LLC, attorneys); for defendant - Martin Allen (Di Francesco, Bateman, Kunzman, Davis, Lehrer & Flaum, P.C., attorneys).

During trial, the court concluded that plaintiff could not compel the testimony of defendant’s proposed testifying expert against the proposed testifying expert’s wishes, or without his consent. Additionally, the court determined that plaintiff offered no evidence that defendant’s proposed testifying expert witness possessed superior knowledge of the facts or that his testimony would have elicited more meaningful insight into the property than plaintiff’s testifying expert. Accordingly, the court declined to apply an adverse inference charge. The court further concluded that post-trial briefs must be confined to the facts disclosed in the trial record, or those reasonably suggested by the evidence introduced during trial. In affirming the local property tax assessments, the court found plaintiff’s expert’s highest and best use analysis flawed and his conclusion that approximately sixty-one percent of the subject property’s building area should be demolished not credible.

Tax Court: Andrew & Laura Botwin v. Dir., Div. of Taxation, Docket No. 013411-2019; opinion by Bianco, J.T.C., decided February 23, 2021. For plaintiffs – Andrew Botwin (self-represented); for defendant – Miles Eckardt (Gurbir S. Grewal, Attorney General of New Jersey, attorney).

Plaintiffs, Andrew and Laura Botwin, sought to transfer the trade-in tax credit from the purchase of their first vehicle which was returned under the Lemon Law (N.J.S.A. 56:12-32(a)(1)), to a subsequent purchase of another vehicle from a different dealer. The court determined that the defendant, Director, Division of Taxation, was entitled to summary judgment under R. 4:46-2(c), finding that the Botwins did not qualify for a trade-in credit on the purchase of the second motor vehicle under the plain language of N.J.S.A. 54:32B-2(oo) and N.J.A.C. 18:24-7.4, because their purchase of the second vehicle and the use of their trade-in vehicle for a reduction in sales price did not occur at the same time as contemplated by the law. The court concluded that when the Botwins accepted a full refund for their first vehicle as their relief under the Lemon Law, as opposed to a replacement vehicle, they surrendered their trade-in credit on the purchase of a second vehicle from another dealer. The court also rejected the Botwins’ argument that they were double taxed because in this case there were two separate, taxable events under N.J.S.A. 54:32B-3(a), and they were reimbursed for taxes paid for the first vehicle.

Tax Court: Fifth Third Equipment Finance Co. v. Dir., Div. of Taxation,span> Docket No. 013380-2018, opinion by Sundar P.J.T.C., decided February 23, 2021. For plaintiff - Kenneth R. Levine argued the cause, Kyle O. Sollie, attorney of record and on the brief; Matthew L. Setzer, on the brief (Reed Smith, LLP, attorneys); for defendant - Michael J. Duffy (Gurbir S. Grewal, Attorney General of New Jersey, attorney).

Held: N.J.S.A. 54:10A-4(k)(6)(E) (Subparagraph E) disallowed a deduction of net operating loss (NOL) carryovers for tax years 2002-2005 (100% for 2002 and 2003, 50% for 2004 and 2005), but also extended the normal seven-year period of the carryover losses for a period commensurate with the suspension period(s) “if and only to the extent” the NOL carryover deduction was disallowed under Subparagraph E. Defendant’s construction that Subparagraph E does not permit extending the carryover period if in a suspension period there was no income to absorb an NOL carryover, is reasonable. Consideration must be given to the first-in-line, first-in-time sequence of using an NOL carryover specified in N.J.S.A. 54:10A-4(k)(6)(B) for purposes of implementing Subparagraph E. While plaintiff is incorrect in arguing that the extension period for NOL carryovers is four years for each NOL carryover that could have been used to offset income in the suspension year(s), the court agrees, in part, with plaintiff’s proffered computation of the NOL carryovers and extension periods under defendant’s construction of Subparagraph E. Although defendant did not apply its regulation, N.J.A.C. 18:7-5.17(c), in computing the extension period(s) and amount of NOL carryovers but followed a 2015 bench opinion of the Tax Court in this regard, the court finds the regulation invalid as it imposes a condition beyond the scope of the language and intent of Subparagraph E. The court affirms defendant’s denial of plaintiff’s refund claim attributable to the Alternative Minimum Assessment tax credits.