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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.
Division of Taxation