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Division of Taxation

Dantzler Decision

In Dantzler v. Director, 18 NJTax 490 (1999), the New Jersey Tax Court decided whether certain ordinary business expenses are deductible by a individual partner in calculating his distributive share of partnership income in accordance with N.J.S.A. 54A:5-1(k).

The following categories of deductions were treated in Dantzler thus:

  • Political contributions were not deductible as such.
  • Pension contributions by a partner are deductible to the extent that the pension contributions are to a 401(k) plan, but they are not deductible if they are in another type of pension plan.
  • Specific Medical Insurance premiums for the partner are deductible by the individual to the extent that they exceed the Gross Income Tax Act's two-percent requirement, but the partner may not deduct them from partnership income as such.
  • Interest expense on the capital contribution loan required for participation in the partnership is deductible.
  • FICA payments are not deductible by a partner.
With regard to this decision, the Division is currently reviewing the partnership regulations at N.J.A.C. 18:35-1.3. An additional update will be issued when the partnership regulations are revised.

Last Updated: Thursday, 02/20/20