Cruise could face tax woes, lose custody of Suri

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NEW YORK, June 30 (UPI) -- Katie Holmes filed divorce papers in New York City, something that could cost Tom Cruise more in taxes than if the filing took place in California, TMZ said.

Sources told TMZ Holmes filed the divorce documents in New York because she felt she'd have a better chance of winning sole legal custody of the couple's daughter Suri there than in California.

Cruise, however, is trying to move the divorce proceedings to California -- where the couple has a residence -- because the tax rates are significantly lower, TMZ reported.

The "Mission Impossible" actor has been trying to make it appear as though he and Holmes have not been living in New York, sources told the celebrity news Web site. Meanwhile, Holmes has been using a New York apartment Cruise deeded to her to establish residency in the city.