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A02170 Summary:

BILL NOA02170A
 
SAME ASSAME AS S00543-A
 
SPONSORDinowitz (MS)
 
COSPNSRThiele, Reyes, Mitaynes, Rosenthal L, Gallagher, Steck, Glick, Carroll, Fahy, Kelles, Mamdani, Kim, Burgos, Seawright, Cunningham, Raga, Cruz, Wallace, Otis, Solages, Shrestha, Hevesi, Septimo, Paulin, Shimsky, Epstein, Burdick, O'Donnell, Forrest, Levenberg, Gonzalez-Rojas, Anderson, Bores
 
MLTSPNSRSimon
 
Amd §§208, 612 & 1503, Tax L; amd §§11-602, 11-652 & 11-1712, NYC Ad Cd
 
Relates to treatment of gains from qualified opportunity zones in calculating taxable income; removes exclusion of gains on property in qualified opportunity zones in calculation of income.
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A02170 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A2170A
 
SPONSOR: Dinowitz (MS)
  TITLE OF BILL: An act to amend the tax law and the administrative code of the city of New York, in relation to treatment of gains from qualified opportunity zones in calculating taxable income   PURPOSE: To fully decouple NYS and NYC from the federal Opportunity Zone tax code.   SUMMARY OF PROVISIONS: Section one amends-paragraph (b) of subdivision 9 of section 208 of the tax law to add a new paragraph 28 to include that "entire net income" shall be determined without the exclusion, deduction or credit of the. amount of gain excluded from federal gross income for the taxable year by subparagraph (c) of paragraph (1) of subsection (a) of section 1400Z-2 of the internal revenue code. Section two amends subdivision 9 of section 208 of the tax law to add a new paragraph (u) which states that for tax years beginning on or after January 1, 2021, upon the sale or exchange of property with respect to which the taxpayer has made the election under subparagraph (c) of para- graph (1) of subsection (a) of section 14002-2 of the internal revenue code, the basis of such property under this article shall be determined as if the taxpayer had not made such election. Section three amends subsection (b) of section 612 of the tax law to add a new paragraph 43 to include that there shall be added to federal adjusted gross income the amount of gain excluded from federal gross income for the taxable year by subparagraph (c) of paragraph (1) of subsection (a) of section 1400Z-2 of the internal revenue code. Section four amends section 612 of the tax law to add a new subsection (y) which states that for tax years beginning on or after January 1, 2021, upon the sale or exchange of property with respect to which the taxpayer has made the election under subparagraph (c) of paragraph (1) of subsection (a) of section 1400Z-2 of-the internal revenue code, the basis of such property under this article shall be determined as if the taxpayer had not made such •election. Section five amends paragraph 2 of subdivision (b) of section 1503 of the tax law to add a new subparagraph (AA) to include that "entire net income" Shall be determined without the exclusion, deduction or credit of the amount of gain excluded from federal gross income for the taxable year by subparagraph (c) of paragraph (1) of subsection (a) of section 14002-2 of the internal revenue code. Section six amends section 1503 of the tax law to add a new subdivision (d) which states that for tax years beginning on or after January 1, 2021, upon the sale or exchange of property with respect to which the taxpayer has made the election under subparagraph (c) of paragraph (1) of subsection (a) of section 1400Z-2 of the internal revenue code, the basis of such property under this article shall be determined as if the taxpayer had not made such election. Section seven amends paragraph (a) of subdivision 8 of section 11-602 of the administrative code of the city of New York to add a new paragraph 17 to include that "entire net income" shall be determined without the exclusion, deduction or credit of the amount of gain excluded from federal gross income for the taxable year by subparagraph (c) of para- graph (1) of subsection (a) of section 1400Z-2 of the internal revenue code. Section eight amends section 11-602 of the administrative code of the city of New York to add a new subdivision 11 which states that for tax years beginning on or after January 1, 2021, upon the sale or exchange of property with respect to which the taxpayer has made the election under subparagraph (c) of paragraph (1) of subsection (a) of section 1400Z-2 of the internal revenue code, the basis of such property under this article shall be determined as if the taxpayer had not made such election. Section nine paragraph• (a) of subdivision 8 of section 11-652 of the administrative code of the city of New York to add a new subparagraph 18 to include that "entire net income" shall not. include the amount of gain excluded from federal gross income for the taxable year by subpara- graph (c) of paragraph (1) of subsection (a) of section 1400Z-2 of the internal revenue code. Section ten amends subdivision 8 of section 11-652 of the administrative code of the city of New York to add a new paragraph (u) which states that for. tax years beginning on or after January 1, 2024, upon the sale or exchange of property with respect to which the taxpayer has made the election under subparagraph (c) of paragraph (1) of subsection (a) of section 1400Z-2 of the internal revenue code, the basis of,such property under this article shall be determined as if the taxpayer had not made such election. Section eleven amends subdivision (b) of section 11-1712 of the adminis- trative code of the city of New York to add a new paragraph 40 to include that there shall be added to federal adjusted gross income the amount of gain excluded from federal gross income for the taxable year by subparagraph (c) of paragraph (1) of subsection (a) of section 1400Z-2 of the internal revenue code. Section twelve amends section 11-1712 of the administrative code of the city of New York to add a new subdivision (w) which states that for tax years' beginning on or after January 1, 2021, upon the sale or exchange of property with respect to which the taxpayer has made the election under subparagraph (c) of paragraph (1) of subsection (a) of section 14002-2 of the internal revenue code, the basis of such property under this article shall be determined as if the taxpayer had not made such election. Section thirteen sets the effective date.   JUSTIFICATION: The FY21 New York State Budget partially decoupled the NYS and NYC tax laws from the federal Opportunity Zone program, which will save the state hundreds of millions of dollars. However, it is imperative that the Exclusion (10 year) Benefit also be decoupled. Although this benefit has no fiscal to the State for several years, it is imperative that we fully decouple the program from our state's tax laws now.   LEGISLATIVE HISTORY: 2021-22: A.8081-A - Ways and Means / S.6800-A - Passed Senate   FISCAL IMPLICATIONS: The bill will prevent a loss in tax revenue to the state.   EFFECTIVE DATE: This act shall take effect immediately and shall apply to taxable years beginning on or after January 1, 2024.
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A02170 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         2170--A
 
                               2023-2024 Regular Sessions
 
                   IN ASSEMBLY
 
                                    January 23, 2023
                                       ___________
 
        Introduced  by M. of A. DINOWITZ, THIELE, REYES, MITAYNES, L. ROSENTHAL,
          GALLAGHER, STECK, GLICK, CARROLL, FAHY, KELLES, MAMDANI, KIM,  BURGOS,
          SEAWRIGHT,  CUNNINGHAM,  RAGA, CRUZ, WALLACE, OTIS, SOLAGES, SHRESTHA,
          HEVESI,  SEPTIMO,  PAULIN,  SHIMSKY,  EPSTEIN,   BURDICK,   O'DONNELL,
          FORREST, LEVENBERG, GONZALEZ-ROJAS, ANDERSON, BORES -- Multi-Sponsored
          by  --  M.   of A. SIMON -- read once and referred to the Committee on
          Ways  and  Means  --  committee  discharged,  bill  amended,   ordered
          reprinted as amended and recommitted to said committee
 
        AN  ACT  to amend the tax law and the administrative code of the city of
          New York, in relation to treatment of gains from qualified opportunity
          zones in calculating taxable income
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1.   Paragraph (b) of subdivision 9 of section 208 of the tax
     2  law is amended by adding a new subparagraph 28 to read as follows:
     3    (28) the amount of gain excluded from federal  gross  income  for  the
     4  taxable  year  by subparagraph (c) of paragraph (1) of subsection (a) of
     5  section 1400Z-2 of the internal revenue code.
     6    § 2. Subdivision 9 of section 208 of the tax law is amended by  adding
     7  a new paragraph (u) to read as follows:
     8    (u)  For  tax  years beginning on or after January first, two thousand
     9  twenty-four, upon the sale or exchange of property with respect to which
    10  the taxpayer has made the election under subparagraph (c)  of  paragraph
    11  (1)  of  subsection (a) of section 1400Z-2 of the internal revenue code,
    12  the basis of such property under this article shall be determined as  if
    13  the taxpayer had not made such election.
    14    § 3. Subsection (b) of section 612 of the tax law is amended by adding
    15  a new paragraph 44 to read as follows:
    16    (44)  the  amount  of  gain excluded from federal gross income for the
    17  taxable year by subparagraph (c) of paragraph (1) of subsection  (a)  of
    18  section 1400Z-2 of the internal revenue code.
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD01221-03-3

        A. 2170--A                          2
 
     1    §  4. Section 612 of the tax law is amended by adding a new subsection
     2  (y) to read as follows:
     3    (y)  Qualified opportunity zones.  For tax years beginning on or after
     4  January first, two thousand twenty-four, upon the sale  or  exchange  of
     5  property  with respect to which the taxpayer has made the election under
     6  subparagraph (c) of paragraph (1) of subsection (a) of  section  1400Z-2
     7  of  the  internal  revenue  code,  the basis of such property under this
     8  article shall be determined  as  if  the  taxpayer  had  not  made  such
     9  election.
    10    §  5. Paragraph 2 of subdivision (b) of section 1503 of the tax law is
    11  amended by adding a new subparagraph (AA) to read as follows:
    12    (AA)  the amount of gain excluded from federal gross  income  for  the
    13  taxable  year  by subparagraph (c) of paragraph (1) of subsection (a) of
    14  section 1400Z-2 of the internal revenue code.
    15    § 6. Section 1503 of the tax law is amended by adding a  new  subdivi-
    16  sion (d) to read as follows:
    17    (d)  For  tax  years beginning on or after January first, two thousand
    18  twenty-four, upon the sale or exchange of property with respect to which
    19  the taxpayer has made the election under subparagraph (c)  of  paragraph
    20  (1)  of  subsection (a) of section 1400Z-2 of the internal revenue code,
    21  the basis of such property under this article shall be determined as  if
    22  the taxpayer had not made such election.
    23    §  7. Paragraph (a) of subdivision 8 of section 11-602 of the adminis-
    24  trative code of the city of New York is amended by adding a new subpara-
    25  graph 17 to read as follows:
    26    (17) the amount of gain excluded from federal  gross  income  for  the
    27  taxable  year  by subparagraph (c) of paragraph (1) of subsection (a) of
    28  section 1400Z-2 of the internal revenue code.
    29    § 8. Section 11-602 of the administrative code of the city of New York
    30  is amended by adding a new subdivision 11 to read as follows:
    31    11. For tax years beginning on or after January  first,  two  thousand
    32  twenty-four, upon the sale or exchange of property with respect to which
    33  the  taxpayer  has made the election under subparagraph (c) of paragraph
    34  (1) of subsection (a) of section 1400Z-2 of the internal  revenue  code,
    35  the  basis of such property under this article shall be determined as if
    36  the taxpayer had not made such election.
    37    § 9. Paragraph (a) of subdivision 8 of section 11-652 of the  adminis-
    38  trative code of the city of New York is amended by adding a new subpara-
    39  graph 18 to read as follows:
    40    (18)  the  amount  of  gain excluded from federal gross income for the
    41  taxable year by subparagraph (c) of paragraph (1) of subsection  (a)  of
    42  section 1400Z-2 of the internal revenue code.
    43    §  10.  Subdivision  8 of section 11-652 of the administrative code of
    44  the city of New York is amended by adding a new paragraph (u) to read as
    45  follows:
    46    (u) For tax years beginning on or after January  first,  two  thousand
    47  twenty-four, upon the sale or exchange of property with respect to which
    48  the  taxpayer  has made the election under subparagraph (c) of paragraph
    49  (1) of subsection (a) of section 1400Z-2 of the internal  revenue  code,
    50  the  basis of such property under this article shall be determined as if
    51  the taxpayer had not made such election.
    52    § 11. Subdivision (b) of section 11-1712 of the administrative code of
    53  the city of New York is amended by adding a new paragraph 40 to read  as
    54  follows:

        A. 2170--A                          3
 
     1    (40)  the  amount  of  gain excluded from federal gross income for the
     2  taxable year by subparagraph (c) of paragraph (1) of subsection  (a)  of
     3  section 1400Z-2 of the internal revenue code.
     4    §  12.  Section  11-1712 of the administrative code of the city of New
     5  York is amended by adding a new subdivision (w) to read as follows:
     6    (w) For tax years beginning on or after January  first,  two  thousand
     7  twenty-four, upon the sale or exchange of property with respect to which
     8  the  taxpayer  has made the election under subparagraph (c) of paragraph
     9  (1) of subsection (a) of section 1400Z-2 of the internal  revenue  code,
    10  the  basis of such property under this article shall be determined as if
    11  the taxpayer had not made such election.
    12    § 13. This act shall take effect immediately and shall apply to  taxa-
    13  ble years beginning on or after January 1, 2024.
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