Walsh v. Director, Division of Taxation

Plaintiffs, Frank E. Walsh, Jr. and Mary D. Walsh, appeal from a Tax Court judgment which affirmed the Director, Division of Taxation’s disallowance of their deduction for a nonbusiness bad debt on their 1987 State income tax returns. Plaintiffs contend that although the New Jersey Gross Income Tax Act does not explicitly provide for a bad debt deduction, such a deduction is implicitly included in N.J.S.A. 54A:5-lc which allows the deduction of losses from the disposition of property. We affirm.

The parties stipulated the following facts. Plaintiff Frank E. Walsh, Jr. (plaintiff) was a…