Director

Taxpayer is entitled to interest abatement for 45 month period during which the protest was not worked because an auditor was not assigned to the matter. There are no grounds to abate remaining interest or tax.

Taxpayer cannot claim a deduction for a federal credit for mortgage interest if they claimed a mortgage interest deduction rather than a credit on their federal tax return.

The definition of Arizona gross income for tax year 2009 did not allow the federal exclusion for $2,400 in unemployment compensation because the definition of Internal Revenue Code in the Arizona statutes never included that portion of the federal American Recovery and Reinvestment Act of 2009.

Arizona subtraction for compensation received for active service as a member of the armed forces of the United States did not apply to compensation from the United States Public Health Service because the Health Service does not fall within the definition of the armed forces.

Because Taxpayer was an Arizona resident he was required to report income from all sources, including income from the sale of his California business, on his Arizona tax return.

Taxpayer did not demonstrate that he engaged in business for profit or that expenses were appropriate and necessary for the business to allow him to deduct the expenses on his Schedule C. Taxpayer also did not demonstrate that alleged contributions were allowable charitable deductions.

The proper calculation of the credit for taxes paid to other states or countries for 2002 tax year includes a pro-rata application of Arizona exemptions and deductions to the income from the other state or country. Where the laws of another state provide for a credit for taxes paid to Arizona but a taxpayer is unable to take the credit because of electing to file on a composite return in that state, the taxpayer is not eligible in Arizona to take a credit for taxes paid to that state.

Taxpayers cannot take an itemized deduction for health insurance premiums paid through an employer which deducted the premiums from the employee’s pay using pre-tax dollars.

Whether income is exempt under Article 19 of the tax treaty between the People’s Republic of China and the United States; whether Taxpayer is entitled to unsubstantiated deductions; whether Taxpayer is entitled to a deduction for moneys repaid to family members; and whether Taxpayer is entitled to a deduction for moneys paid into her 401(k) account.

Deductions for personal property tax, charitable contributions and medical expenses not substantiated; Taxpayer’s request for change in filing status was made too late.