Page images
PDF
EPUB

able year, may not, in the aggregate, exceed fifty percent of the tax imposed under section six hundred one computed without regard to any credit provided for under this article.

[(C) In the case of a husband or wife who is required to file a separate return, the limitation provided for in subparagraph (B) of this paragraph shall be twenty-five percent in lieu of fifty percent, unless the spouse of the taxpayer has no carryforward of the credit allowable under this subsection to, and has no current year credit allowable under this subsection for, the taxable year of such spouse which ends within or with the taxpayer's taxable year.

(D) In the case of an estate or trust, the limitations provided for in subparagraph (B) of this paragraph shall be reduced to an amount which bears the same ratio to fifty percent as the portion of the income of the estate or trust which is not allocated to beneficiaries bears to the total income of the estate or trust. ]

(5) If the amount of the credit and carryovers of such credit allowable under this subsection for any taxable year shall exceed the taxpayer's tax for such year, the excess, as well as any part of the credit or carryovers of such credit, or both, disallowed by reason of [subparagraph (B), (C) or (D) of] the final sentence in paragraph four hereof, may be carried over to the following year or years and may be deducted from the taxpayer's tax for such year or years.

§ 43. Paragraph 2 of subsection (1) of section 606 of the tax law, as separately amended by chapters 333 and 442 of the laws of 1987, is amended to read as follows:

(2)(A) The credit allowed under this subsection for any taxable year shall not exceed the tax imposed by section six hundred one of this article for the taxable year, reduced by the credits permitted under subsections (b) and (c) of this section and sections six hundred twenty, six hundred twenty-one and six hundred thirty-five [of this article], nor may any unused credit be carried over to the following year or years. In addition, no taxpayer shall be allowed such credit, or such credits with respect to more than one year, taken in the aggregate, of more than one hundred thousand dollars. In addition, such credit may not exceed fifty percent of the tax imposed under section six hundred one [of this article] computed without regard to any credit provided for by this section.

(B) In the case of a husband or wife who is required to file a separate return, the [limitations] limitation provided for in subparagraph (A) of this paragraph shall be fifty thousand dollars in lieu of one hundred thousand dollars [and twenty-five percent in lieu of fifty percent], unless the spouse of the taxpayer has no credit allowable under this subsection for the taxable year of such spouse which ends within or with the taxpayer's taxable year.

(C) In the case of an estate or trust, the [limitations] limitation provided for in subparagraph (A) of this paragraph shall be reduced to an amount which bears the same ratio to one hundred thousand dollars, and to a percentage which bears the same ratio to fifty percent,] as the portion of the income of the estate or trust which is not allocated to beneficiaries bears to the total income of the estate or trust.

§ 44. Subsection (b) of section 607 of the tax law, as amended by chapter 28 of the laws of 1987, is amended to read as follows:

(b) Marital or other status. An individual's marital or other status under section six hundred one, subsection (b) of section six hundred six[] and section six hundred fourteen [and section six hundred thirtyfour shall be the same as his marital or other status for purposes of establishing the applicable federal income tax rates.

§ 45. Paragraph 4 of subsection (b) of section 611 of the tax law, as amended by chapter 28 of the laws of 1987, is amended to read as follows:

(4) If either husband or wife is a resident and the other is a nonresident or part-year resident, separate taxes shall be determined on their separate New York taxable incomes [on separate forms] unless such husband and wife determine their federal taxable income jointly and both elect to determine their joint New York taxable income as if both were residents.

§ 46. Paragraph 1 of subsection (c) of section 612 of the tax law, as amended by chapter 535 of the laws of 1986, is amended to read as follows:

EXPLANATION-Matter in italics is new; matter in brackets [ ] is old law

(1) Interest income on obligations of the United States and its possessions to the extent includible in gross income for federal income tax purposes; such interest income shall include the amount received as dividends from a regulated investment company, as defined in section eight hundred fifty-one of the internal revenue code, which has been designated as the amount of such interest income in a written notice to shareholders not later than [forty-five] sixty days following the close of its taxable year; provided that, at the close of each quarter of the taxable year of such regulated investment company, at least fifty percent of the value of its total assets, as defined in subsection (č)' of section eight hundred fifty-one of the internal revenue code, consists of obligations of the United States and its possessions. The aggregate amount so designated by the regulated investment company for its taxable year shall not exceed the amount determined by multiplying the total distributions paid by such regulated investment company to its shareholders with respect to that taxable year (attributable to income earned in that year), including any such distributions paid after the close of the taxable year, as described in section eight hundred fifty-five the internal revenue code, by the ratio that the interest income received in that taxable year on obligations of the United States and its possessions, after reduction for the deductions and expenses directly or indirectly attributable thereto, bears to the investment company taxable income of such regulated investment company for such taxable year, determined without regard to subparagraph (D) of paragraph two of subsection (b) of section eight hundred fifty-two of the internal revenue code;

of

§ 47. Paragraph 3-a of subsection (c) of section 612 of the tax law, as amended by chapter 1043 of the laws of 1981, is amended to read as follows:

at

(3-a) Pensions and annuities received by an individual who has attained the age of fifty-nine and one-half, not otherwise excluded pursuant to paragraph three of this subsection, to the extent includible in gross income for federal income tax purposes, but not in excess of twenty thousand dollars, which are periodic payments attributable to personal services performed by such individual prior to his retirement from employment, which arise (i) from an employer-employee relationship or (ii) from contributions to a retirement plan which are deductible for federal income tax purposes. However, the term "pensions and annuities" shall also include distributions received by an individual who has tained the age of fifty-nine and one-half from an individual retirement account or an individual retirement annuity, as defined in section four hundred eight of the internal revenue code, and distributions received by an individual who has attained the age of fifty-nine and one-half from self-employed individual and owner-employee retirement plans which qualify under section four hundred one of the internal revenue code, whether or not the payments are periodic in nature. Nevertheless, the term "pensions and annuities" shall not include any lump sum distribution, as defined in subparagraph (A) of paragraph four of subsection (e) of section four hundred two of the internal revenue code and taxed under section [six hundred one-C] six hundred three of this article. Where a husband and wife file a joint state personal income tax return, the modification provided for in this paragraph shall be computed as if they were filing separate state personal income tax returns. Where a payment would otherwise come within the meaning of the term "pensions and annuities" as set forth in this paragraph, except that such individual is deceased, such payment shall, nevertheless, be treated as a pension or annuity for purposes of this paragraph if such payment is received by such individual's beneficiary. [In the case of an estate or trust, the amount of New York adjusted gross income of an estate or trust for poses of this paragraph shall be determined as if the estate or trust were an individual. ]

pur

§ 48. Subsection (e) of section 612 of the tax law is amended by adding a new paragraph 3 to read as follows:

(3) New York S termination year. In the case of a New York S termination year, the amounts of the modifications required under this section which relate to the S corporation's items of income, loss, deduction and reductions for taxes (as described in paragraphs two and three of subsection (f) of section thirteen hundred sixty-six of the internal revenue code) shall be adjusted in the same manner that the S corporation's items are adjusted under subsection (s) of section six hundred twelve. § 49. Subsection (s) of section 612 of the tax law, as amended by chapter 190 of the laws of 1990, is amended to read as follows:

(s) New York S termination year. (1) General. In the case of a New York S termination year, [an equal portion of] the amount of any item of S corporation [items of] income, loss and deduction included in the shareholder's federal adjusted gross income and [the] any reductions for taxes (as described in paragraphs two and three of subsection (f) of section thirteen hundred sixty-six of the internal revenue code) shall be adjusted in accordance with the treatment provided in paragraph two or three of this subsection.

(2) Pro rata allocation. Unless paragraph three of this subsection applies, an equal portion of each S corporation item shall be assigned to each day of the S corporation's taxable year for federal income tax purposes, and each such item shall be reduced by the]. The portion of such item thereby assigned to the [period beginning on the day the election ceases to be effective, provided however, the portion assigned to such days shall be determined under normal tax accounting rules if paragraph two of this subsection applies] S short year shall be treated as an item of a New York S corporation, and the portion of each such item thereby assigned to the C short year shall be treated as an item of an S corporation which is a New York C corporation.

[(2)] (3) Normal_tax_accounting [rules shall apply under paragraph one of this subsection]. The portion of each S corporation item assigned to the S short year and the C short year shall be determined using normal tax accounting rules if:

(A) there is a sale or exchange of fifty percent or more of the stock in such corporation during the New York S termination year; or

(B) the corporation SO elects, in the manner the commissioner may provide. No election under this subparagraph shall be effective unless all persons who are shareholders during the S short year and all persons who are shareholders on the first day of the C short year consent to such election.

§ 50. Subsection (e) of section 615 of the tax law, as amended by chapter 606 of the laws of 1984, is amended to read as follows:

(e) [Partners] Modifications of partners and shareholders of S corporations. (1) Partners and shareholders of S corporations which are not New York C corporations. The amounts of modifications under subsection (c) or under [paragraphs] paragraph (2) or (3) of subsection (d) required to be made by a partner or by a shareholder of an S corporation [not subject to tax under article nine-a of this chapter, including but not limited to an] (other than an S corporation [for which the election provided for in subsection (a) of section six hundred sixty is effect] which is a New York C corporation), with respect to items of deduction of a partnership or S corporation shall be determined under section six hundred seventeen.

in

(2) Shareholders of S corporations which are New York C corporations. In the case of a shareholder of an S corporation which is a New York C corporation, the modifications under this section which relate to the corporation's items of deduction shall not apply, except for the modification provided under paragraph six of subsection (c);

(3) New York S termination year. In the case of a New York S termination year, the amounts of the modifications required under this section which relate to the S corporation's items of deduction shall be adjusted in the same manner that the S corporation's items are adjusted under subsection (s) of section six hundred twelve.

§ 51. Subsection (b) of section 616 of the tax law, as amended by chapter 28 of the laws of 1987, is amended to read as follows:

chapter 28 of and wife. If the New York income taxes of a husband and

wife are required to be separately determined but their federal income tax is determined on a joint return, each of them shall be separately entitled to [a] the New York [exemption, in the amount allowed pursuant to] exemptions under subsection (a) of this section[, for each federal exemption to which he or she] each would be separately entitled for the taxable year if their federal income taxes had been determined on separate paturraph 2 of subsection (a) of section 622 of the tax law, as separately amended by chapters 265 and 333 of the laws of 1987, is amended to read as follows:

returns.

(2) the tax on New York taxable income determined under section six hundred one for the taxable year, reduced by the sum of the credits allowable under [subsections (a), (c), (e), (f), (h), (i), (j), (k) and

EXPLANATION-Matter in italics is new; matter in brackets [ ] is old law

(1) of section six hundred six and sections six hundred twenty and six hundred twenty-one] this article, except for the credit under section six hundred seventy-three; and

§ 53. Subsection (d) of section 624 of the tax law, as amended by chapter 333 of the laws of 1987, is amended to read as follows:

(a) Definitions and special rules. For purposes of this section, the following [definitions and special rules] provisions shall apply, to the extent applicable to the taxpayer's federal tax on lump sum distributions [shall apply]: (1) the definitions and special rules as specified in paragraph four of subsection (e) of section four hundred two of the internal revenue code; and (2) the special rules relating to (A) individuals who have attained the age of fifty before January first, nineteen hundred eighty-six and (B) capital gains, as specified in paragraphs three, four, five and six of subsection (h) of section eleven hundred twenty-two of the tax reform act of nineteen hundred eighty-six as enacted by public law 99-514, but (i) in the event that paragraph three of such subsection is applicable, clause (ii) of subparagraph (B) of such paragraph shall be applied using a rate of five and four-tenths percent, and (ii) in the event that paragraph five of such subsection is applicable, the words "five" and "one-fifth" in subsection (a) of this section shall be read as "ten" and "one-tenth", respectively, and subsection (a) of this section shall be applied by using the rate of tax specified in subsection (f) of section six hundred two as such subsection was in effect for taxable years beginning in nineteen hundred eighty six 54. Paragraph 4 of subsection (b) of section 631 of the tax law, as amended by chapter 28 of the laws of 1987, is amended to read as follows:

(4) Deductions with respect to capital losses, passive activity losses and net operating losses shall be based solely on income, gain, loss and deduction derived from or connected with New York sources, under regulations of the [tax commission] commissioner of taxation and finance, but otherwise shall be determined in the same manner as the corresponding federal deductions.

§ 55. Paragraphs 1 and 2 of subsection (e)* of section 632 of the tax law are renumbered paragraphs 2 and 3 and a new paragraph 1 is added to read as follows:

(1) Α nonresident partner's distributive share or S corporation shareholder's pro rata share of items shall be determined under subsection (a) of section six hundred seventeen.

§ 56. Subdivision (b) of section 633 of the tax law, as amended by chapter 28 of the laws of 1987, is amended to read as follows:

(b) Special New York source rules. Deductions with respect to capital losses, passive activity losses and net operating losses shall be based solely on income, gains, losses and deductions derived from or connected with New York sources, under regulations of the tax commission, but otherwise determined in the same manner as the corresponding federal deductions.

§ 57. Paragraph 2 of subsection (a) of section 636 of the tax law, as amended by chapter 333 of the laws of 1987, is amended to read as follows:

(2) the tax on New York taxable income determined under section six hundred one for the taxable year, reduced by the sum of the credits allowable under this article, except for the [credits] credit under [subsection (b) of section six hundred six and] section six hundred seventy-three; and

$58. Paragraph 4 of subsection (b) of section 651 of the tax law, as amended by chapter 28 of the laws of 1987, is amended to read as follows:

(4) If either husband or wife is a resident and the other is a nonresident or part-year resident, they shall file separate New York income tax returns [on separate forms], in which event their tax liabilities shall be separate, unless such husband and wife determine their federal taxable income jointly and both elect to determine their joint New York taxable income as if both were residents, in which event their tax liabilities shall be joint and several except as provided in paragraphs five and six of this subsection and in subsection (e) of section six hundred eighty-five.

§ 59. Subsection (a) of section 657 of the tax law, as amended by chapter 65 of the laws of 1985, is amended to read as follows:

So in original. ("(e)" should be "(d)".)

it

(a) General. The [tax commission] commissioner may grant a reasonable extension of time for payment of tax or estimated tax (or any installment), or for filing any return, statement, or other document required pursuant to this article, on such terms and conditions as may require. Except for a taxpayer who is outside the United States or who intends to claim nonresident status pursuant to [subparagraphs (i),] clause (ii) [and (iii)] of subparagraph (A) of paragraph one of subsection [(a)] (b) of section six hundred five, no such extension for filing any return, statement or other document, shall exceed six months.

§ 60. Paragraph 1 of subsection (c) of section 658 of the tax law, amended by chapter 606 of the laws of 1984, is amended to read follows:

as

as

(1) Partnerships. Every partnership having a resident partner or having any income derived from New York sources, determined ́in accordance with the applicable rules of section [six hundred thirty-two] six hundred thirty-one as in the case of a nonresident individual, shall make a return for the taxable year setting forth all items of income, gain, loss and deduction and such other pertinent information as the [tax commission] commissioner may by regulations and instructions prescribe. Such return shall be filed on or before the fifteenth day of the fourth month following the close of each taxable year except that the due date for the return of a partnership consisting entirely of nonresident aliens shall be the date prescribed for the filing of its federal partnership return for the taxable year. For purposes of this paragraph, "taxable year" means a year or a period which would be a taxable year of the partnership if it were subject to tax under this article.

§ 61. Subsections (d) and (e) of section 660 of the tax law are relettered subsections (e) and (f) and a new subsection (d) is added to read as follows:

(d) New York S termination year. In the case of a New York S termination year, the amount of any item of S corporation income, loss and deduction and reductions for taxes (as described in paragraphs two and three of subsection (f) of section thirteen hundred sixty-six of the internal shall be adjusted in the same manner that the S corporation's items which are included in the shareholder's federal adjusted gross income are adjusted under subsection (s) of section six hundred twelve.

(freot of the ille

§ 62. Paragraph 1 of subsection (a) and paragraphs 1 and 2 of subsection (c) of section 671 of the tax law, paragraph 1 of subsection (a) as amended by chapter 28 of the laws of 1987 and paragraphs 1 and 2 of subsection (c) as amended by chapter 333 of the laws of 1987, are amended to read as follows:

(1) Every employer maintaining an office or transacting business within this state and making payment of any wages taxable under this article [to a resident or nonresident individual] shall deduct and withhold from such wages for each payroll period a tax computed in such manner as to result, SO far as practicable, in withholding from the employee's wages during each calendar year an amount substantially equivalent to the tax reasonably estimated to be due under this article resulting from the inclusion in the employee's New York adjusted gross income or New York source income of his wages received during such calendar year. The method of determining the amount to be withheld shall be prescribed by regulations of the [tax commission] commissioner, with due regard to the New York withholding exemptions of the employee and the sum of any credits allowable against his tax.

(1) The number of New York withholding exemptions which an employee receiving wages taxable under this article may claim shall not exceed the number of New York exemptions allowed pursuant to the provisions of section six hundred sixteen, whether the employee is a resident or nonresident, and such additional New York withholding exemptions as may be prescribed by regulations or instructions of the commissioner of taxation and finance, taking into account the applicable standard deduction and such other factors as he finds appropriate.

(2) The amount of each New York withholding exemption shall be the amount of the New York exemption allowed pursuant to the provisions of section six hundred sixteen[, whether the individual is a resident or a nonresident].

EXPLANATION-Matter in italics is new; matter in brackets [ ] is old law

« PreviousContinue »