A New York Tax Appeals Tribunal Administrative Law Judge (ALJ) recently determined that a federal savings and loan association was not required to include a subsidiary, which was formed as a Connecticut passive investment company, in its combined New York City bank tax return. In the Matter of the Petition of Astoria Financial Corporation & Affiliates, TAT(H) 10-35(BT) (Oct. 29, 2014, released Nov. 7, 2014). While it appears that the New York City Department of Finance audit focused on the three statutory criteria for requiring a combined return, it also raised a fourth criterion—whether the subsidiary or the savings and loan association’s transactions with the subsidiary were a “sham.”

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