In another taxpayer victory, the New Jersey Superior Court, Appellate Division held that an intangible holding company was not required to throw out any of its so-called “nowhere receipts” from an affiliated tobacco company in computing the denominator of its receipts factor. In Lorillard Licensing Company LLC v Dir., Div. of Taxation, the court held that New Jersey’s economic nexus standard must be applied to determine whether a corporation is “subject to tax” in other jurisdictions for purposes of New Jersey’s Throw-Out Rule. Further, the court held that it is irrelevant whether the corporation actually filed returns in or paid tax to those other jurisdictions. The Appellate Division agreed with the Tax Court that “New Jersey has no legitimate interest in considering the tax policy and practices of other States when determining whether to apply the Throw-Out Rule.”
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