Matter of Cantor Fitzgerald Securities, New York City Tax Appeals Tribunal, ALJ Division, Case No. TAT (H)19 – 16(UB)
An administrative law judge for the New York City Tax Appeals Tribunal determined that a taxpayer-partnership, for purposes of computing its unincorporated business tax (UBT), could not: (1) include in its taxable income its distributive shares of income from subsidiary partnerships that did not conduct business in the City; and (2) include in its allocation formula any property, payroll, and gross income attributable to subsidiary partnerships that did not conduct business in the City. The taxpayer was a partnership that owned interests in several subsidiary partnerships; the taxpayer and the subsidiary partnerships collectively operated a financial-services business. Certain of the subsidiary partnerships conducted no business in the City (the “Non-City Partnerships”). The taxpayer computed its UBT using the “aggregate method”: it included in its allocable income and allocation formula the income and allocation factors of the Non-City Partnerships. The ALJ determined that this computation method was prohibited by the City’s Administrative Code and its Rules and Regulations, agreeing with the City’s Department of Finance that partnerships must compute their UBT according to the “entity method.”