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.

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.

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.

An offer–in–compromise applies only to the tax liabilities that exist at the time the proposed offer-in-compromise is received, and does not preclude the Department from issuing an assessment on a later discovered tax liability based on unreported income.

Audit Section properly denied Taxpayer’s claim for refund/offset where the Arizona tax return was filed more than four years after the return was due.

Taxation of royalty payments on reservation land.

Taxpayer did not establish abandonment of Arizona residency

Taxpayer was not entitled to the dependent/ancestor deduction because Taxpayer did not establish that he paid more than one-half for the support of the dependent.

Business expenses for home office and 179 deductions are limited to the amount of income derived from the business during the taxable year

Contributions used to purchase supplies for science experiments conducted in pre-school classroom do not qualify for the credit as contributions to a public school for the support of extracurricular activities or character education programs of the school.