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Taxation – Real Property – Non-Profit – ‘Ownership’ – Charitable Purpose – First Impression – Control Test (access required)

In re Appeal of Blue Ridge Housing of Bakersville LLC (Lawyers Weekly No. 14-06-078, 1 p.) (Per Curiam) Appealed from the Property Tax Commission. On discretionary review from the Court of Appeals. N.C. S. Ct. Holding: A unanimous panel of ...

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Taxation – Delegation Does Not Preclude Payroll Tax Liability (access required)

Johnson v. U.S. Although wife said she delegated to husband the daily operation of the “Koba Institute,” which she took over after husband failed to make payroll tax payments for the related “Koba Associates Inc.,” she was a “responsible person” who willfully failed to pay payroll trust fund taxes and is liable for the “100 percent penalty”; the 4th Circuit upholds summary judgment for the government requiring wife to pay $304,355.90 and husband to pay $240,071.12.

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Taxation – Civil Practice – Sovereign Immunity – Administrative Remedies – ‘Facilitators’ (access required)

Orbitz, LLC v. Hoyle Since plaintiffs do not pay the N.C. sales tax directly, G.S. § 105-241.17 does not provide them with an avenue to challenge the tax; therefore, plaintiffs can challenge the tax’s constitutionality directly. Defendants’ motions to dismiss are granted in part and denied in part.

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Taxation – State Income — U.S. Treasury Bonds – Market Discount Income – First Impression — Interest (access required)

Fidelity Bank v. North Carolina Department of Revenue Even though the N.C. Revenue Act uses the Internal Revenue Code to determine state net income, and even though the Code treats “market discount income” on U.S. Treasury bonds as interest for purposes of the Code, under the N.C. Revenue Act market discount income on U.S. Treasury bonds is treated as income rather than interest.

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Taxation – First Impression — Federal Bonus Deduction – State ‘Add Back’ – Corporate – Conversion – C to S (access required)

Bodford v. North Carolina Department of Revenue Once their C corporations converted to S corporations, the petitioner-shareholders could not take “add-back” deductions on their personal state income taxes that were based on accelerated federal deductions the C corporations had taken on their corporate income taxes before the conversion

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Taxation – Real Property – Non-Profit – ‘Ownership’ – Charitable Purpose – First Impression – Control Test (access required)

In re Appeal of Blue Ridge Housing of Bakersville LLC Even though non-profit Northwestern Housing Enterprises, Inc. (NHE) owns only a 0.1 percent interest in the Mitchell County low-income housing development of Cane Creek Village, since NHE controls Cane Creek Village and in all likelihood will buy the other 99.9 percent in a few years, Cane Creek Village is exempt from county real estate taxes.

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Taxation – Constitutional – Just & Equitable Tax Clause – Municipal – Licenses & Permits – 59,900 Percent Increase – Internet Sweepstakes Cafes – First Impression (access required)

IMT, Inc. v. City of LumbertonA tax increase of at least 59,900 percent on one type of business – internet sweepstakes cafes – violates the Just and Equitable Tax Clause of N.C. Const. art. V, § 2(1). We reverse summary judgment for the city and remand for further proceedings.

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