Koch v. Director, Division of Taxation

The opinion of the Court was delivered by

GARIBALDI, J.

This appeal involves the tax treatment under the New Jersey Gross Income Tax Act, N.J.S.A 54A:1-1 to 10-12 (the “Act”), of a taxpayer’s gain realized from the sale of his partnership interest. The primary issue concerns the proper method for calculating a taxpayer’s cost basis for a partnership interest and, specifically, whether that cost basis should be the purchase price or the taxpayer’s federal adjusted basis (his purchase price less the losses deducted on his federal income tax returns). In addition to reducing taxpayer’s federal…