Costas v. Commissioner of Revenue Services

Citations

• 213 Conn. App. 719

Syllabus

The plaintiff taxpayers, J and B, appealed to the trial court from the decision of the defendant Commissioner of Revenue Services disallowing in part their claims for certain income tax refunds. The plaintiffs resided in Connecticut, but J performed services for his employer, U Co., in both Connecticut and New York. As part of his compensation for those ser- vices, J received stock options and restricted stock from U Co. For the 2005, 2007 and 2008 taxable years, the plaintiffs filed Connecticut resi- dent income tax returns on which they reported compensation that J had received from his exercise of stock options and the vesting of restricted stock that U Co. previously had granted to him. They also sought a credit for taxes paid to New York during those years for services J performed for U Co. that occurred both in Connecticut and New York. The commissioner allowed the credit pursuant to the applicable statute (§ 12-704 (a)). Following an audit conducted in New York, the plaintiffs paid additional taxes to New York for compensation that J had received from U Co. for the 2005, 2007 and 2008 taxable years. The plaintiffs filed amended Connecticut resident income tax returns for those years and sought a credit for the additional taxes they paid to New York. The commissioner disallowed in part the requested credit and the plaintiffs' claims for refunds of the taxes paid to New York for the subject taxable years on the ground that the plaintiffs were required to allocate income from the exercise of stock options and the vesting of restricted stock between Connecticut and New York in accordance with the relevant state regulations (§§ 12-711(b)-17 (c) and 12-711(b)-18 (c)). In determin- ing the apportionment and the credit to which the plaintiffs were entitled, the commissioner applied the methodology set forth in those regulations, which he construed as requiring a computation of the total compensation received by J during the relevant periods, including deferred compen