STATE AND LOCAL TAXATION Facts: Arnold, Benny, and Charlie come to your office for NYS and NYC tax planning. Arnold, a resident and domiciliary of New Jersey, is an employee of a New York business, which is currently taxed as C-corporation. During the taxable year, the taxpayer performs services for the C-corporation both in New York and in New Jersey. Although the taxpayer performed services in New York on behalf of the C-corporation, the taxpayer did not spend more than 183 days in New York for the 2019 tax year. All other services performed on behalf of the C-corporation were performed at the corporation's satellite office in New Jersey. In addition to the income Arnold received as an employee of the C-corporation, Arnold also received the following income throughout the 2019 tax year: $150,000 from the sale of stock of a California corporation which only held New York real property $20,000 in losses from a moving business that Arnold conducts in New York $4,000 in NY State lottery winnings $50,000 distribution from his pension plan $1000 interest income from his savings account from ING $100,000 from the sale of an antique clock which he normally keeps in his home in New Jersey but sold while temporarily at an auction house located in New York. Charlie had a cost basis of $10,000 in the clock. The taxpayer also has two children. His youngest child, Benny, is a student at NYU. During the school year, Benny lives at the NYU dorms, and then moves home during his summer and winter breaks. During the school year, Benny works at NYU as a clerk in the financial aid office. During his summer and winter breaks, Benny works at the local video store near his home in New Jersey. Arnold's oldest child, his son Charlie, is an architect for a New York based architectural company. Charlie still lives at Arnold's home in New Jersey and commutes into and out of New York each day for work. The taxpayers request advice as to what extent the income, gain, loss and deductions they received during the years under audit is subject to New York taxation. In particular, the taxpayers ask you to explain the following: Questions 1. How are New York residents and nonresidents taxed on their income, gains, losses and deductions received during a tax year? 2. Is Arnold, Benny or Charlie New York residents or nonresidents for the 2019 tax year? Fully explain your answer. 3. Identify each item of income, gain, loss and deduction that each taxpayer received throughout the year and explain whether it is subject to New York tax. In particular, discuss the rules on allocation and apportionment of income and how this is affected by the "Convenience of the Employer Test" and whether and to what extent the "Convenience of the Employer Test" applies based on this fact pattern. 4. Identify two (2) ways Arnold and Charlie can minimize their exposure to New York taxes in future years. 5. Assuming a ten (10) percent tax rate, what does Arnold owe in New York State taxes in 2019