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Duly Noted

Dwelling Used By Parents Is Taxpayer’s ‘Abode.’ In an apparent change of longstanding practice, a New Jersey businessman became subject to tax as a New York resident because he maintained a Staten Island apartment for his elderly parents. New York’s Tax Appeals Tribunal reversed its own earlier decision in favor of John Gaied after granting the state a rare re-argument. The tribunal found, after it reconsidered, that the dwelling Gaied maintained for his parents should be considered his “permanent place of abode,” even though he kept no possessions there, had no bed of his own and only occasionally slept on the sofa to care for his ailing father. Because Gaied’s auto repair business on Staten Island meant he was inside the state more than 183 days in each tax year, having a permanent place of abode meant New York would tax him on his income from non-New York sources. In another unusual twist, the New York State Society of CPAs filed a brief on Gaied’s behalf arguing that the tribunal should follow the state’s longstanding precedent, which would not consider a taxpayer as having an abode in New York if the taxpayer never used the dwelling as such. Gaied’s parents lived in one apartment of a three-unit property owned by Gaied, in which he rented the other two units to non-family members. In the Matter of the Petition of John Gaied, DTA No. 821727.

X-Ray Technician Was Not A Professional Gambler. The Tax Court upheld an Internal Revenue Service assessment of taxes and potential penalties against a traveling X-ray technician who tried to deduct casino-related expenses on the theory that he was a professional gambler. Randy Moore of North Carolina worked 40 hours a week in 2006 as a technician, and gambled on his personal time, the Tax Court said. He reported winnings of $25,534 and wagering losses of nearly $41,000. Moore is entitled to deduct the wagering losses in an amount equal to his winnings, but only as itemized deductions because he did not show that he engaged in gambling as a business. He could not deduct travel and related expenses of his casino visits. Randy L. Moore v. Commissioner, T.C. Memo 2011-173.

Executors Must File Estate Returns To Claim Portability Benefits. Executors of individuals who die in 2011 and thereafter must file a federal estate tax return, Form 706, if a surviving spouse wishes to benefit from the deceased partner’s unused gift and estate tax exemption. Under new rules that took effect this year, each individual can transfer $5 million free of gift and estate tax, and a surviving spouse can claim the unused portion of a deceased spouse’s exemption. Form 706 is not generally required for estates below the exemption amount, but the Internal Revenue Service announced that the form must be filed anyway to claim the new portability benefit. Portability is not available for survivors of spouses who died in 2010 or earlier. Notice 2011-82.

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