Johnson v. State Tax Commission

—Mikoll, J.

Appeal from a judgment of the Supreme Court at Special Term (Cholakis, J.), entered January 9, 1985 in Albany County, which partially granted petitioners’ application, in a proceeding pursuant to CPLR article 78, to review respondent’s determination imposing a personal income tax assessment under Tax Law articles 22 and 30.

The sole issue before us is the legality of exempting from taxation that portion of a lump-sum retirement distribution paid to petitioners, which represents earnings from interest on United States Government bonds. Respondent challenges Spe*868cial Term’s…