Jefferies Wins ‘Distortive’ NY Corporation Franchise Tax Case

Jefferies Group LLC convinced an administrative law judge that the state’s apportionment of the investment bank’s receipts to New York violated the US Constitution.

The state improperly sourced the company’s receipts based on the location of the institutional intermediaries rather than the underlying investors who are actually its customers, New York Division of Tax Appeals Administrative Law Judge Winifred M. Maloney held in an opinion released Thursday.

The Division of Taxation’s method was “very distortive because the Division’s calculation of the receipts allocation factor grossly overstated, by a factor of three or four times, the results reached using an allocation ...