Christy Pinheiro EA

Billionaire Julian Robertson just won a huge tax case that saved him 27 million dollars, by having an assistant actually track his days in the city. According to Forbes, the billionaire told his assistant to "track his days and warn him when he was using up days too quickly or nearing the 183-day limit."

The huge tax sum hinged on the clarification of just two days. The city argued that Robertson had actually exceeded the 183 day limit.

In 2005, city auditors got records, under subpoena, from his air charter company, showing his flight from Ireland landed at 1:30 A.M. July 24th. But a year later, the charter company clarified that the landing was at 1:30 A.M.  Greenwich Mean Time (a.k.a. Zulu Time) —so Robertson’s party had actually landed at LaGuardia at 9:30 P.M. July 23rd.

So the auditors actually took the time and trouble to argue this case all the way up to the New York State Tax Appeals Tribunal. Robertson won, and it was a coup for billionaires and millionaires everywhere who wish to avoid paying taxes by playing on razor-thin margins of residency.

I've got to hand it to his tax attorneys! That must have been one heck of a case to argue.

Question: I have a client who is a widower. His wife died recently, and the Husband moved out-of-state. Daughter (who doesn't want to move away and start a new school) moves in with grandma to finish high school. Father sends grandma support money each month to cover all of daughter's support. Can Dad take the deduction for the child, or is she a qualifying child of the grandma (who wouldn't benefit from the exemption)?

Answer: Father can claim the daughter under the temporary absence rules. I assume the daughter is a minor but even that doesn't have to be true, even if the daughter lives with grandma for years, the daughter may still qualify as a dependent of the father because of the relaxed rules for "temporary absences."

College students go away to school for years, and often never move back home, but that doesn't prevent the parent from claiming the child. Even a seemingly "permanent" absence can still count as "temporary" when the child is in school, hospitalized, or institutionalized.

Here's a relevant case: Hein vs Commissioner (1957) . Sister was institutionalized (permanently) the brother paid for her support, the brother claimed head of household and dependency exemption. Even though she had been in an institution continuously for seven years, and the courts were aware that she would be there for the rest of her life, the exemption and HOH was still allowed. In the Hein case, the court made a relevant distinction regarding the sister, that if she were "ever to move out of the institution, she would live with the brother" who claimed her as a dependent. I still think this case is on point.

If the daughter could no longer live with the grandmother, then she would live with the father, who is supporting her.


Best, Christy
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