Money made by the parent company of AIG to benefit Maurice "Hank" Greenberg and other top executives was improperly classified by state officials as "business" rather than "investment" income for tax purposes, a state administrative law judge has concluded. The ALJ, Dennis Galliher, ordered the state Department of Taxation and Finance to rescind its attempted reclassification of income made through AIG stock by C.V. Starr & Co., thereby invalidating a bill for unpaid taxes of some $2.2 million issued to Starr in 2010. His determination was made from Albany in Matter of the Petition of C.V. Starr & Co., 824121.
Galliher found that the stock shares were purchased by Starr with the expectation that they would be held to benefit Starr investors, not acquired for sale to customers in the course of business. That put the money within the statutory definition of investment capital, which is not subject to the higher business income taxes the state sought to impose, Galliher said.
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