PIM Pays Off Big Time - $27 Million

Wall Street Journal, 4 November 2009

"In Tax Case, 4 Days Save Robertson $27 Million"

This article might not be available to you if you aren't a subscriber (http://online.wsj.com/article/SB125729222815826639.html#mod=todays_us_mo...) so I'll summarize it.

New York City imposes income taxes (3.78%) on anyone who spends more than half his time in the city, where "half time" is defined so that "if you spend any part of any day" that counts as a day. So this billionaire hedge fund guy named Julian Robertson and his staff kept meticulous computerized records and he made a point of staying out of the city on weekends and on enough other days that he wouldn't hit half of 366 days in 2000.  His recordkeeping incorporated his personal calendar, phone call logs (from land lines, showing the origin), car (e.g. gas stations...) records, bridge toll receipts, private airplane takeoff and langing logs, notes from "witnesses" -- everything needed to document his physical wherabouts. An audit initially showed he had good evidence for 183 days out of town (exactly half a year), and he claimed that he had been in the state for additional days, but the state said he had only proved the 183 and thus thought it could tax his income - and the measly 3.78% tax that he would have owed came to $26,792,341 -- which means that his taxable income had been $700 million!

The case went to the Tax Court -- and in a 77 page opinion the judge ruled that Robertson's system for keeping track of his whereabouts was so well designed and so competently followed that the burden of proof shifted to the city, who needed to show that he was in the city on the disputed days.  Since the city doesn't do PIM for each of its residents, Robertson won his appeal.

bob glushko