The last installment of this column discussed New York State and City’s express “decoupling” from certain changes to the federal tax law made by the CARES Act. A recent administrative law judge determination, Mars Holdings, Inc., TAT(H)16-14 (GC) (N.Y.C. Tax App. Trib., June 26, 2020), highlights the question of whether and how federal tax principles apply to New York state and city taxes in situations other than an express decoupling.

Mars Holdings, Inc. (“Mars”), a corporation organized and headquartered in New Jersey, was a partner in partnership “MN,” which, in turn was a limited partner in three partnerships (the “real estate partnerships”) including “106th Street Associates.” The real estate partnerships were engaged in “holding, leasing, and managing … real estate properties located in the City.” MN’s “sole contacts” with the City were its interests in the three real estate partnerships. None of Mars, MN, or an affiliate of either was directly or indirectly involved in the management of the properties.