In Matter of David L. Siegel, DTA No. 823107 (N.Y.S. Div. of Tax App., Aug. 18, 2011) the taxpayer, a New York resident, disposed of all of his shares in a corporation prior to its sale, gifting roughly half of the shares to his wife, a Florida resident, and contributing the other half to a newly formed S corporation in exchange for all of the S corporation’s outstanding stock. He argued that because he did not own the shares at the time of sale, he did not owe New York income tax on gain from the sale of the shares. The Administrative Law Judge found, however, that the taxpayer’s transfer of shares to his wife did not have any economic effect because he did not relinquish control of the stock, and that the transfer of shares to the S corporation lacked economic substance and was carried out for tax avoidance purposes. Accordingly, the ALJ declined to recognize the transfers for tax purposes, and held that New York income tax was owed on the gain.