Today, in a corporation business tax case handled by Reed Smith, the Appellate Division affirmed a 2014 Tax Court decision finding that Toyota Motor Credit Corporation (“Toyota Credit”) was entitled to recompute its tax by reducing gains on the sale of depreciated property. (A copy of the decision is available at the Appellate Division’s website). It’s unclear whether the Division of Taxation will seek review at the New Jersey Supreme Court.1
Type: Client Alerts
In a per curiam decision, the Appellate Division unanimously affirmed Tax Court Judge DeAlmeida’s ruling that Toyota Credit was entitled to increase its tax basis in leased vehicles to the extent that prior-year depreciation deductions had not produced any tax benefit. In the years leading up to the tax years at issue, Toyota Credit had taken depreciation deductions on the leased vehicles. Those depreciation deductions had not reduced its actual New Jersey tax liability. Because Toyota Credit had been in a loss situation, the deductions merely compounded Toyota Credit’s net operating losses for those years.