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Duly Noted

Fed, N.Y. Tax Chiefs Give Leave For Sandy Donations. Employees and employers who want to donate accumulated paid leave to help victims of Hurricane Sandy can do so through the end of 2013 with favorable tax treatment. The Internal Revenue Service declared in Notice 2012-69 that although employees who donate their accumulated leave are not eligible to claim a charitable deduction for the donation, they need not report the donated leave as income - generally a more favorable result than reporting the income and then claiming the deduction. Employers can claim the donated leave as a business expense, rather than as a charitable deduction, which is also a more favorable answer for the employer. Following the IRS announcement, which was modeled on similar relief granted after Hurricane Katrina in 2005, New York tax officials said they would follow the same policies. 2012 STT 237-31.

Rhode Island Estate Tax Respects Same-Sex Marriages. Surviving spouses in same-sex marriages can claim the estate tax marital deduction in Rhode Island, even though that state does not authorize same-sex marriage and the marital deduction is denied under federal law. State Tax Administrator Daniel Sullivan ruled in favor of the surviving spouse of a couple who married in Massachusetts. Sullivan noted that Rhode Island’s civil unions law, enacted in 2011, states that parties to a civil union “shall have all the rights, benefits, protections and responsibilities under the law as people joined together in a lawful marriage,” and that Gov. Lincoln Chafee issued an executive order in 2012 directing state agencies to construe state law “in a manner that encompasses lawful marriages of same-sex couples.” Ruling Request No. 2012-02.

A House Divided Cannot Avoid A Mansion Tax. Michael and Frances Sacks thought they might avoid New York’s “mansion tax,” a 1 percent levy on purchases of single-family homes costing more than $1 million, when they bought two units in a Manhattan co-op in 2004. Apartments 34B and 34C had been connected by a previous owner and were joined by a passageway, and the two were listed for sale at $1.675 million. Michael Sacks purchased 34B for $900,000, and his wife purchased 34C on the same day for $625,000. State tax officials audited the transaction and assessed the tax anyway, a decision that was upheld by New York’s Tax Appeals Tribunal and the Appellate Division of the state’s Supreme Court. In The Matter of Michael Sacks et. al., 2012 STT 208-20.

If you enjoyed this article, be sure to check out Palisades Hudson’s books, The High Achiever’s Guide To Wealth and Looking Ahead: Life, Family, Wealth and Business After 55. Both are available in paperback and as e-books.