Court Opinion

ID: 6043919
Source: CourtListenerOpinion
Date Created: 2022-01-13 14:07:33.864322+00
Date Added: 2024-06-11T08:51:28.087760
License: Public Domain

Mikoll, J. P.
(dissenting). I respectfully dissent.
I believe that the facts as found by the Administrative Law Judge and the Tax Appeals Tribunal constitute clear and convincing evidence that petitioner Kenneth Phillips (hereinafter petitioner) worked out of his home office out of necessity to his employer, and should have beén permitted to allocate his income accordingly.
In rejecting petitioner’s claim of necessity, the majority observes that the factual circumstances here are “nowhere near as compelling” as those presented in Matter of Fass v State Tax Commn. (68 AD2d 977, affd 50 NY2d 932) and opines that the offices of Lehman Brothers, Inc. could be reasonably adapted to serve petitioner’s needs. These observations, I believe, reveal a fundamental misapprehension of the broader principles enunciated in Matter of Fass. The first such principle is that work performed at an employee’s out-of-State home which could just as easily be performed at an employer’s in*931State office is clearly based on the employee’s convenience and not the employer’s necessity. The second such principle is that where out-of-State work is performed using highly specialized facilities, allocation of income should not be disallowed merely because such facilities could have been set up within the State. The inquiry, therefore, is not whether the nature and extent of the specialized facilities herein are as “compelling” as those in Matter of Fass, but rather whether application of the rationale on which allocation of income was there permitted is warranted here.
The Tribunal and the Administrative Law Judge found that petitioner’s work required him to monitor world markets and conduct transactions at all hours of the day and night, that he required a secure and confidential environment for his operations, and that Lehman closed its New York office from 6:00 p.m. to 6:00 a.m. or 7:30 a.m. for security reasons. There was no evidence that Lehman ever suggested establishing a suitable office for petitioner in its New York location. Its business decision to extensively equip an office in petitioner’s home, which it denominated as a Pennsylvania branch of its own operations, in the manner necessary to enable petitioner to perform the highly specialized services for which he was hired constituted a more practical and less expensive option. This is particularly so given the uncontroverted fact that petitioner was required to monitor world markets and be in a position to execute transactions at all hours of the day and night. As in the Matter of Fass (supra), allocation should not be denied simply because Lehman could conceivably have established the requisite facilities within the State.
Further, I see no parallel between the facts herein and those presented in Matter of Kitman v State Tax Commn. (92 AD2d 1018, lv denied 59 NY2d 603), relied upon by the majority. In that case, the petitioner, a television critic for the newspaper “Newsday”, was required to generate five columns weekly. He claimed that it was necessary to work at home because he was required to constantly monitor television programming, had four television sets which he frequently watched simultaneously and depended on input from his family when writing. In rejecting the petitioner’s claim of necessity, we observed that nothing in the record established that “vast renovations would be required to install four televisions and a video tape recorder at Newsday’s New York offices” (supra, at 1019), and noted that input from his family could easily be obtained via the telephone. Here, in contrast, the record establishes a myriad of legitimate reasons why the highly specialized facilities *932required for petitioner’s work could not have been practically established within the State.
Adjudged that the determination is confirmed, without costs, and petition dismissed.