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A05488 Summary:

BILL NOA05488
 
SAME ASNo Same As
 
SPONSORMaher
 
COSPNSRBrown E, Bendett, DeStefano, Lemondes, Brabenec, McDonough, Hawley
 
MLTSPNSR
 
Add §48, amd §§612, 209 & 601, Tax L
 
Establishes a farm savings account program.
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A05488 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          5488
 
                               2023-2024 Regular Sessions
 
                   IN ASSEMBLY
 
                                     March 13, 2023
                                       ___________
 
        Introduced  by M. of A. MAHER -- read once and referred to the Committee
          on Ways and Means
 
        AN ACT to amend the tax law, in relation to farm savings accounts
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:

     1    Section  1.  The tax law is amended by adding a new section 48 to read
     2  as follows:
     3    § 48. Farm savings accounts. 1. Definitions. (a) Qualified farmer. For
     4  purposes of this  section,  the  term  "qualified  farmer"  means,  with
     5  respect  to  any taxable year, any individual who, during such year, was
     6  engaged in the trade or business of farming.
     7    (b) Farm savings account. For purposes of this section, the term "farm
     8  savings account" means a trust created or organized in the United States
     9  as a farm savings account exclusively for the purpose of  making  quali-
    10  fied  distributions for purposes of farm sustainability, but only if the
    11  written governing instrument creating  the  trust  meets  the  following
    12  requirements:
    13    (i) No contribution will be accepted unless it is in cash.
    14    (ii) The trustee is a bank, credit union or other appropriate institu-
    15  tion  that  demonstrates administration of the trust in a manner that is
    16  consistent with the requirements of this section.
    17    (iii) The assets of the trust will not be commingled with other  prop-
    18  erty except in a common trust fund or common investment fund.
    19    (iv)  The  interest  of  an  individual  in  the balance in his or her
    20  account is nonforfeitable.
    21    (c) Qualified distribution. The term  "qualified  distribution"  means
    22  any  amount  paid from a farm savings account to the account beneficiary
    23  exclusively for purposes of farm sustainability.
    24    (d) Account beneficiary. The  term  "account  beneficiary"  means  the
    25  individual  or  business  on  whose  behalf the farm savings account was
    26  established.
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD09187-01-3

        A. 5488                             2
 
     1    2. Program description. (a) Deductions allowed. In the case of a qual-
     2  ified farmer, there shall be allowed as a deduction for the taxable year
     3  an amount equal to the aggregate amount paid in cash during such taxable
     4  year by or on behalf of such individual to a  farm  savings  account  of
     5  such individual.
     6    (b)  Contribution  requirement.  There  shall be no minimum or maximum
     7  contribution  requirement.  However,  aggregate  contributions  may  not
     8  exceed total income derived from farming during a given taxable year.
     9    (c)  Tax  treatment of accounts. A farm savings account is exempt from
    10  taxation under this chapter unless such account has ceased to be a  farm
    11  savings account.
    12    (d)  Termination  of  accounts.  If  the account beneficiary ceases to
    13  engage in the trade or business of farming, all farm savings accounts of
    14  such individual shall cease to be such accounts and the balance  of  all
    15  such  accounts  shall  be treated as (i) distributed to such individual,
    16  and (ii) not paid in a qualified distribution.
    17    (e) Tax treatment of  distributions.  (i)  General.  In  general,  any
    18  amount  paid  or  distributed  out  of  a  farm savings account shall be
    19  included in gross income.
    20    (ii) Additional tax on non-qualified distributions. (1) In addition to
    21  any other tax imposed by this chapter,  any  non-qualified  distribution
    22  from  a  farm  savings  account  shall  be  subject to a fifteen percent
    23  surcharge on the amount of such non-qualifying distribution.
    24    (2) Clause one of this subparagraph shall not apply if the payment  or
    25  distribution  is  made after the account beneficiary becomes disabled or
    26  dies.
    27    (iii) Rollover contributions. For purposes of this section, any amount
    28  paid or distributed from a farm savings account to the account benefici-
    29  ary shall be treated as a  qualified  distribution  to  the  extent  the
    30  amount  received  is paid into a farm savings account for the benefit of
    31  such beneficiary not later than the sixtieth day after the day on  which
    32  the beneficiary receives the payment or distribution.
    33    (iv) Transfer of account incident to divorce. The transfer of an indi-
    34  vidual's interest in a farm savings account to an individual's spouse or
    35  former  spouse  under  a  divorce  or separation instrument shall not be
    36  considered a taxable transfer made by  such  individual  notwithstanding
    37  any other provision of this section, and such interest shall, after such
    38  transfer,  be  treated  as  a farm savings account with respect to which
    39  such spouse is the account beneficiary.
    40    (v) Treatment after death of account  beneficiary.  (1)  Treatment  if
    41  designated beneficiary is spouse. If the account beneficiary's surviving
    42  spouse acquires such beneficiary's interest in a farm savings account by
    43  reason  of being the designated beneficiary of such account at the death
    44  of the account beneficiary, such farm savings account shall  be  treated
    45  as if the spouse were the account beneficiary.
    46    (2)  Other  cases. If, by reason of the death of the account benefici-
    47  ary, any person acquires the account beneficiary's interest  in  a  farm
    48  savings  account in a case to which clause one of this subparagraph does
    49  not apply:
    50    (A) such account shall cease to be a farm savings account  as  of  the
    51  date of death, and
    52    (B)  an  amount  equal  to the fair market value of the assets in such
    53  account on such date shall be included in such person's gross income for
    54  the taxable year which includes such date if  such  person  is  not  the
    55  estate  of  such  beneficiary;  or  if such person is the estate of such

        A. 5488                             3
 
     1  beneficiary, in such beneficiary's gross income  for  the  last  taxable
     2  year of such beneficiary.
     3    § 2. Subsection (b) of section 612 of the tax law is amended by adding
     4  a new paragraph 44 to read as follows:
     5    (44)  Any  non-qualifying  distributions  made  from  a  farm  savings
     6  account. This shall not include any distributions that are  exempt  from
     7  taxation  as  specified  in  paragraph (e) of subdivision two of section
     8  forty-eight of this chapter.
     9    § 3. Subsection (c) of section 612 of the tax law is amended by adding
    10  a new paragraph 45 to read as follows:
    11    (45) An amount equal to any qualified contribution to a  farm  savings
    12  account established pursuant to section forty-eight of this chapter.
    13    §  4.  Subdivision  4  of  section  209  of the tax law, as amended by
    14  section 5 of part A of chapter 59 of the laws of  2014,  is  amended  to
    15  read as follows:
    16    4.  Corporations liable to tax under sections one hundred eighty-three
    17  to one hundred  eighty-four-a,  inclusive,  corporations  taxable  under
    18  article  thirty-three of this chapter, any trust company organized under
    19  a law of this state all of the stock of which is owned by not less  than
    20  twenty savings banks organized under a law of this state, a captive REIT
    21  or  a  captive  RIC  filing  a  combined return under subdivision (f) of
    22  section fifteen hundred fifteen of this chapter, and  housing  companies
    23  organized  and  operating  pursuant  to the provisions of article two or
    24  article five of the private housing finance law and housing  development
    25  fund companies organized pursuant to the provisions of article eleven of
    26  the  private  housing  finance  law,  and farm savings accounts properly
    27  established under section forty-eight of  this  chapter,  shall  not  be
    28  subject to tax under this article.
    29    §  5. Section 601 of the tax law is amended by adding a new subsection
    30  (g-1) to read as follows:
    31    (g-1) Farm savings accounts. Any farm savings account properly  estab-
    32  lished under section forty-eight of this chapter shall not be subject to
    33  tax under this article.
    34    § 6. This act shall take effect immediately and shall apply to taxable
    35  years commencing after such effective date.
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