Reference no: EM133320616

Case: A partner in your accounting firm has asked that you advise his daughter, Miranda, concerning her state personal income tax. Miranda graduated from NYU on May 12 of this past year (which is located in New York City). She lived in an apartment in New York City while attending NYU, but lived at home with her parents during all school breaks

A partner in your accounting firm has asked that you advise his daughter, Miranda, concerning her state personal income tax. Miranda graduated from NYU on May 12 of this past year (which is located in New York City). She lived in an apartment in New York City while attending NYU, but lived at home with her parents during all school breaks (about 5 months each year). The lease on Miranda's New York City apartment expired on May 31.

Miranda began a new job on May 17 of this past year as an advertising executive at a prominent New York City advertising firm. Her office is located in New York City. On May 24, she purchased a home in New Jersey and moved there to be closer to her parents and brother, who live in New Jersey. Miranda worked from May 17 through December 31 at her advertising executive position. She held no other jobs during the tax year.

Miranda commutes to work in New York City 1 or 2 days per week. She spends 1 day per week at a client's office in Stanford, Connecticut and 2 or 3 days per week working from her home office in New Jersey. She earns a salary of $150,000 per year.

In addition to the earnings mentioned above, she owns two apartment buildings in Philadelphia, Pennsylvania, generating net rental income of $300,000 per year and her net investment income totaled $130,000 this year, all from dividends. Most of her investments are held by her on-line broker, E-Trade.

Question (a) Using the definition of residency, attached, is Miranda a New York resident for personal income tax purposes?

Question (b) Assuming New Jersey uses the same definition as attached, is she a resident of New Jersey?

Question (c) As part of your response for both (1) and (2) above, list any additional facts that would aid you in making a determination of Miranda's residency and explain why those additional facts would be helpful.

Question (d) Identify the states in which Miranda must pay tax on each item of her income and explain why.

Question(e) Discuss whether Miranda may be entitled to any tax credits relating to multi-state income taxation.