New York State Tax Rulings
Free plain-English summaries of state tax letter rulings and advisory opinions issued in New York, with full citations and the original source on every page.
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If a retired NYC teacher rolls 403(b) tax-deferred annuity funds into a private IRA, are later distributions from that IRA exempt from New York personal income tax?
Only partly. The portion of each IRA distribution that represents a return of the 403(b) contributions originally rolled over is a nontaxable return of principal, exempt under NYC Administrative Code …
If I roll over my SUNY pension into an IRA, what portion of my later IRA distributions is exempt from New York income tax?
Only the portion of each IRA distribution that represents a return of the pension contributions actually rolled over from a New York public pension (here, SUNY's Optional Retirement Plan accounts) is …
Can a New York resident deduct the amortization of premiums paid on out-of-state municipal bonds that pay federally tax-exempt interest?
No, not on these facts. Because the bonds were personal investments (not part of a trade or business) and the taxpayer took the New York standard deduction rather than itemizing, neither Tax Law § 612…
When a taxpayer moves into New York partway through the year, can she allocate her pro rata share of federal S corporation income based on the date the S corporation actually earned it, rather than prorating it day-by-day across her resident and nonresident periods?
No. New York requires a part-year resident's pro rata share of federal S corporation income, gain, loss, and deduction to be prorated between the resident and nonresident periods based on the number o…
When a New York S corporation shareholder moves out of state partway through the year, must her pro rata share of the corporation's capital gain be prorated between the resident and nonresident periods?
Yes. Following McNulty, Wertheimer, and Greig, the shareholder's pro rata share of the S corporation's income for the year residency changes must be prorated by the number of days in each period. The …
Are required minimum distributions from a New York City Teachers' Retirement IRC 403(b) tax-deferred annuity plan exempt from New York State personal income tax?
Yes. Distributions from a New York City Teachers' Retirement System IRC 403(b) tax-deferred annuity plan are exempt from New York State personal income tax under section 13-561 of the New York City Ad…
If a nondomiciliary long-term-leases a hotel room or buys an apartment in New York with no cooking facility, does that count as a permanent place of abode for statutory residency purposes?
Yes. The Department ruled that both the long-term-leased hotel room and the apartment with cooking facilities removed would be permanent places of abode, because both would be maintained year-round an…
Does New York's alternative fuels credit under Tax Law section 606(p) get reduced by nonqualified nonrecourse financing, or limited by the federal at-risk (IRC section 465) or passive activity loss (IRC section 469) rules?
No. The Department held that section 606(p) does not require the credit base to be reduced by nonqualified nonrecourse financing and contains no limitation comparable to the federal at-risk rules (IRC…
If a retired CUNY employee rolls over pension funds from the Optional Retirement Program into an IRA, is the entire IRA distribution still exempt from New York income tax?
Only in part. The portion of an IRA distribution that represents the original pension contribution rolled over from CUNY's Optional Retirement Program remains exempt from New York tax under Tax Law § …
Can a New York resident who won a slot machine jackpot at an Atlantic City casino and paid New Jersey tax on it claim a New York resident tax credit for that New Jersey tax?
No. The resident credit under Tax Law § 620(a) is only available for tax paid to another state on income actually derived from that state, and casual gambling winnings are not treated as derived from …
Does the $50-per-member annual LLC filing fee under Tax Law § 658(c)(3) apply to investors who hold only a non-voting contractual economic interest in a portion of a member's interest, rather than actual LLC membership?
No. Under Limited Liability Company Law §§ 102(q), 603, and 604, a person who merely holds an assigned economic interest through a Participating Contract - without being admitted as a member or becomi…
Do distributions from the New York State Deferred Compensation Plan, a governmental section 457 deferred compensation plan, qualify for New York's $20,000 pension and annuity exclusion starting in 2002, and can they be rolled over tax-free into an IRA?
Yes. Effective January 1, 2002, a federal law change (EGTRRA) reclassified distributions from governmental section 457 plans like the New York State Deferred Compensation Plan as pension and annuity i…
If someone becomes a statutory resident of New York City, is income they receive that year - like restricted stock, bonuses, and deferred compensation - taxable to the city even though it was earned in earlier years while they lived elsewhere?
Yes. Because Kenneth Freeman was treated as a statutory New York City resident for all of 1996 rather than someone who changed from nonresident to resident mid-year, the special accrual rules that let…
Are lump-sum distributions from a nonqualified deferred compensation plan to terminated nonresident employees exempt from New York personal income tax, and when must the paying company withhold tax on such distributions?
Yes - because the plan is a nonqualified deferred compensation arrangement under IRC § 3121(v)(2)(C) whose lump-sum payments meet the federal 'retirement income' definition, distributions to terminate…
Are retirement, thrift, and benefits-equalization plan distributions paid to Federal Reserve System employees exempt from New York personal income tax?
Yes. Because the Federal Reserve System is treated as a federal instrumentality, distributions from its Retirement Plan, its Thrift Plan (other than in-service withdrawals), and the related nonqualifi…
Is the severance pay a nonresident receives after leaving a New York job subject to New York State personal income tax?
It depends on what the severance pay is for. If it compensates the former employee for past services performed in New York, it is New York source income and taxable, allocated using the same working-d…
Are lump-sum payments from a nonqualified deferred compensation plan to nonresident former employees taxable by New York, and does the employer have to withhold tax on them?
No. Lump-sum distributions from The Limited's nonqualified deferred compensation plan to nonresident, nondomiciliary former employees are exempt from New York personal income tax under the federal pre…
When an Illinois partnership that does business both in and out of New York sells stock it held in an affiliated company, is a nonresident partner's share of that gain taxable as New York source income?
It's not a flat yes or no. The Department held that because the partnership carried on business both within and without New York, its income (including the stock-sale gain) must be apportioned, but wh…
Does the federal law shielding nonresidents' pension income from state tax (Public Law 104-95) cover a pension distribution a nonresident received back in 1995?
No. The federal preemption in 4 U.S.C. § 114(a) applies only to retirement income received after December 31, 1995, so a nonresident's 1995 pension distribution remains taxable New York source income …
If a family member with dementia or another serious illness is moved into a New York nursing home by a relative acting under power of attorney, does that make the person a New York resident for income tax purposes?
No. Because Rosa Schmitz's 1998 move into New York adult care facilities resulted from advanced Alzheimer's disease, bladder cancer, and breast cancer rather than her own voluntary intent to make New …
If a New York resident owns a Delaware LLC that only trades securities for its own account, and the LLC's other member is a trust with an out-of-state trustee, does New York tax the LLC or the trust?
Neither the LLC nor Petitioner (its NY-resident managing member) is 'carrying on a business' in New York, because trading and managing assets solely for one's own account under Tax Law § 631 doesn't c…
If a New York municipal bond mutual fund invests its short-term cash in a money-market mutual fund that also pays exempt-interest dividends, do those dividends stay exempt from New York State and City income tax as they pass from the money-market fund up to the bond fund and then out to the bond fund's own shareholders?
Yes. As long as each fund in the chain (the money-market "lower-tier fund" and the municipal bond "upper-tier fund") independently qualifies under IRC § 852(b)(5) to pay exempt-interest dividends, the…
New York Advisory Opinion TSB-A-96(5.1)I: Now that the federal Amtrak Reauthorization and Improvement Act (ARIA) exempts rail employees who work in more than one state from multi-state income taxation, which Metro-North job categories actually qualify for that exemption?
Only two categories of Metro-North positions: 'train and engine' positions (engineers and conductors) and 'Maintenance of Way' positions (track maintenance workers) - and only when the position is ass…
New York Advisory Opinion TSB-A-93(3.1)I: Now that the federal Amtrak Reauthorization and Improvement Act (ARIA) exempts rail employees who work in more than one state from multi-state income taxation, which Metro-North job categories actually qualify for that exemption?
Only two categories of Metro-North positions: 'train and engine' positions (engineers and conductors) and 'Maintenance of Way' positions (track maintenance workers) - and only when the position is ass…
New York Advisory Opinion TSB-A-93(11.1)I: Now that the federal Amtrak Reauthorization and Improvement Act (ARIA) exempts rail employees who work in more than one state from multi-state income taxation, which Metro-North job categories actually qualify for that exemption?
Only two categories of Metro-North positions: 'train and engine' positions (engineers and conductors) and 'Maintenance of Way' positions (track maintenance workers) - and only when the position is ass…
New York Advisory Opinion TSB-A-91(3.1)I: Now that the federal Amtrak Reauthorization and Improvement Act (ARIA) exempts rail employees who work in more than one state from multi-state income taxation, which Metro-North job categories actually qualify for that exemption?
Only two categories of Metro-North positions: 'train and engine' positions (engineers and conductors) and 'Maintenance of Way' positions (track maintenance workers) - and only when the position is ass…
If I move my home and domicile out of New York but keep working for my New York-based employer from my new state, is my pay still taxed as New York-source income?
No, not once you have actually relocated. New York's Department of Taxation and Finance concluded that a stockbroker who changed his domicile from Westchester County to Wyoming, stopped reporting to t…
How is a dividend that a New York S corporation receives from its foreign (alien) subsidiary sourced for a nonresident shareholder's New York personal income tax?
The dividend is New York source income only to the extent of the alien subsidiary's issuer's allocation percentage under Article 9-A of the Tax Law (Tax Law § 210.7 and § 210.3(b)(1)). Because that pe…
If a professional service corporation shareholder had to add back excess pension contributions to New York income before 1988, can later withdrawals from a rollover IRA be excluded from New York income until that add-back amount is recovered?
Yes. Because the taxpayer's entire aggregate section 612(b)(7) add-back could be recovered within three years, the Department applied the three-year rule from TSB-M-82(3)-I(Rev.): the amounts the taxp…
Do monthly payments a retiree receives for life under a former employer's non-qualified deferred compensation plan qualify as an 'annuity' eligible for New York's $20,000 pension and annuity income subtraction?
Yes. Because the retiree's monthly payments are paid in money, at a fixed percentage of his final average compensation, for life (or 10 years certain if longer) under a written employer plan, they mee…
If a nonresident is the sole general partner of a limited partnership that only buys and sells options for its own account through him as an AMEX Options Principal Member, is his distributive share of that income taxable as New York-source income?
No. Because Petitioner traded only as an Options Principal Member (OPM) - who may buy and sell options solely for the partnership's own account and can never act as a Specialist or execute customer/ag…
If a foreign bank employee is repeatedly transferred to New York for training and then assigned there open-endedly, in which years does he become a New York statutory resident?
He was not a New York statutory resident for 1993, 1994, or 1997, because although his New York City apartment became a 'permanent place of abode' once he leased it on October 1, 1997 (his assignment …
Does an open-ended, year-to-year-renewable program that temporarily transfers a multinational bank's foreign employees to its New York City branch make those employees New York State statutory residents under Tax Law § 605(b)?
It depends on the tax year. Because the transfer program has no fixed end date and the assignment's goal - enlarging an employee's knowledge of multinational banking - is a general purpose rather than…
If a family sets up a tiered limited partnership and LLC structure, run by New York-based employees out of a New York office, purely to trade securities for the family's own account, do the nonresident family members owe New York State income tax or the New York City nonresident earnings tax on their share of the trading income?
No to both. Because the petitioner, Portfolio LP, and the Series G and Series J LLCs only buy, hold, and sell securities and financial instruments for their own account - with no broker/dealer activit…
If a taxpayer claims to have changed their domicile from New York to Florida, will the Department confirm that change in an Advisory Opinion, and who has to prove it happened?
The Department would not decide whether, or when, the Coopers' domicile changed from New York to Florida — that is a factual question that depends on individualized circumstances and cannot be resolve…
If a taxpayer's spouse dies during the year while receiving a pension, can the surviving spouse claim two separate $20,000 pension and annuity subtractions on their final joint return?
No. Because Petitioner did not have her own separate qualifying pension or annuity in 1997 — she only received her deceased husband's TIAA annuities as beneficiary — the joint return is limited to a s…
If a New York City Police Department employee dies before collecting his pension and his surviving spouse rolls the full distribution into an IRA, is money later withdrawn from that IRA taxable as New York income?
Only in part. Because the deceased NYPD employee's pension is exempt from New York tax under N.Y. Const. art. XVI § 5 and Tax Law § 612(c)(3)(i), the portion of any future IRA distribution that repres…
Do employer-paid long-term disability payments count as an 'annuity' that qualifies for New York's pension and annuity income subtraction once the recipient turns 59 1/2?
Yes. Because the petitioner's long-term disability payments arose from her permanent, disability-driven cessation of active employment and formed one cohesive retirement-benefit scheme together with t…
Is a court-ordered liquidation fund taxed like a qualified settlement fund subject to New York franchise tax, State income tax, or New York City income tax?
No. A court-ordered liquidation fund that only holds proceeds, pays creditors, distributes to beneficiaries, and makes short-term investments is not conducting a business, so it is not a corporation u…
How is a New York corporation and its shareholders taxed when the shareholders of a federal S corporation make a section 338(h)(10) election on a sale of the company's stock?
The target corporation (X) is subject to Article 9-A whether or not it is a New York S corporation, and the section 338(h)(10) deemed asset sale is reflected in its franchise tax. X files two short-pe…
Is a court-created qualified settlement fund that only invests and distributes funds subject to the New York franchise tax or personal income tax?
No. A qualified settlement fund under IRC section 468B that only holds, invests, and distributes funds is not conducting a business, so it is not a corporation subject to the Article 9-A franchise tax…
When is a Metro-North rail employee's pay exempt from New York income tax under the federal rule for employees 'regularly assigned' to duties in more than one state?
It depends on the job description of each specific work assignment, not on how much an employee happens to travel or which roster the employee is eligible for. A Connecticut-based employee sent to fla…
If the person who created a trust was a New York domiciliary when the trust became irrevocable, but every trustee later becomes domiciled outside New York and the trust's assets and income have no New York connection, does the trust still owe New York income tax?
The trust is still technically a New York 'resident trust' under Tax Law § 605(b)(3)(C), because that status is fixed permanently by the grantor's domicile at the time the property was transferred and…
If I generate a federal net operating loss while I'm a New York nonresident, can I carry that loss back to reduce my New York tax from an earlier year when I was a New York resident?
Yes, potentially. New York has no independent NOL carryback rule of its own - the deduction rides entirely on Tax Law § 612, which starts New York taxable income from federal adjusted gross income. Un…
Is a testamentary trust a New York resident trust under Tax Law section 605(b)(3)(C), and subject to New York personal income tax under Article 22, when all of its trustees live in New York but the person who created it in her will died domiciled in Florida?
No. A trust created by will is a New York resident trust only if the decedent was domiciled in New York at death. Because Genevieve G. Harper died domiciled in Florida, the Harper Family Trust is a no…
If a high-income New York taxpayer's gambling losses are fully deductible up to gambling winnings for federal tax purposes, are those losses just as fully deductible on the taxpayer's New York return?
Not necessarily. Federal law (IRC § 165(d)) lets the taxpayer deduct gambling losses up to the amount of gambling winnings without any 2%-of-AGI floor or overall itemized-deduction cap. But New York T…
Can a New York resident estate that owns 100% of an out-of-state S corporation claim New York's resident tax credit for the income tax it pays to that other state on the S corporation's pass-through gain?
Potentially, yes. Tax Law § 620(a) and (d) let a resident estate claim New York's resident credit for tax it pays to another state on an S corporation's income, computed as if the estate were an indiv…
When a New York resident becomes a nonresident partway through the year and later receives a year-end bonus based on her whole year's performance, is any part of that bonus taxed as resident-period income, and how much of it counts as New York-source income?
None of the bonus accrues to the resident period (January 1 through February 28, 1990), because its existence and amount weren't fixed with reasonable accuracy until the company determined it at year-…
New York Advisory Opinion TSB-A-95(6)I: Issue raised by Petitioner, Heath Shuler, is whether, for purposes of Article 22 of the Tax Law, he can calculate his 1994 New York source income by allocating his pre-season and regular season football wages separately, basing each on the ratio of games played in New York to games played everywhere.
No. New York first confirms that nonresident professional team athletes allocate their income from playing games using a games-played-in-New-York over games-played-everywhere fraction, not the standar…
If a passive-investment limited liability company keeps its office, books and records, and securities depository in New York, is the interest income it distributes to nonresident members subject to New York personal income tax?
No, for a nonresident member with no other New York-source income. Under Tax Law § 601(f), the LLC (taxed as a partnership) isn't itself subject to Article 22 tax - only its members are, in their indi…
If my spouse rents a New York City apartment in her own name, pays for it herself, and I never use it or have a key to it, does that apartment make me a New York City statutory resident even though I also work in NYC and spend more than 183 days a year there?
No. New York City statutory residency under NYC Administrative Code § 11-1705(b)(1)(B) requires that the individual himself maintain a permanent place of abode in NYC. Where the wife alone rents the a…
If a nonresident donates valuable objects and volunteers uncompensated time to help build and equip a charitable museum located in New York, can those donations and activities be used as evidence that he is domiciled in New York?
No. Tax Law § 605(c), enacted in 1994, provides that charitable contributions, gifts, donations, loans, or uncompensated volunteer time given to a tax-exempt § 501(c)(3) organization cannot be used in…
If an out-of-state law firm partner signs a fixed 4-year agreement to serve as managing partner of the firm's New York office, keeps offices in both locations, spends over 183 days a year in New York, and uses a firm-paid New York City apartment, is he a New York resident for tax purposes during those four years?
No. Mr. A. remains domiciled in State X throughout the assignment, and because his four-year New York managing-partner role has a fixed and limited term after which he returns to State X to practice l…
If someone domiciled and living in Florida for 15 years buys a New York City co-op that they personally use only from June through September and leave vacant the rest of the year, will they become subject to New York State personal income tax?
It depends on the year, and the opinion doesn't decide it either way. Once purchased, the co-op will count as a 'permanent place of abode' in New York under 20 NYCRR § 105.20(e) even though it sits va…
If a nonresident's former-New-York-employer pension is paid out on a declining-balance schedule, a mortgage-style amortization schedule, or with interest that varies with the Consumer Price Index, does it still qualify as a non-taxable 'annuity' rather than taxable New York-source compensation?
Yes, in all four scenarios examined. New York taxes a nonresident's former-New-York-employment pension only if it fails to meet the regulatory definition of an 'annuity' under 20 NYCRR § 132.4(d)(2) -…
Can New York State withhold a wife's share of a joint personal income tax refund and apply it against a sales tax assessment owed individually by her husband alone?
No. Under Tax Law § 686(a), the Commissioner may only credit an overpayment against a liability owed by 'the person who made the overpayment.' Although Tax Law § 651(b)(2) makes joint filers' income t…
After moving away from New York and building a life in New Jersey for 14 years, does building a family home back in New York (where the taxpayer's spouse and children now live) mean the taxpayer has become domiciled in New York again for income tax purposes?
The Department would not say. It explained New York's full legal test for domicile and for changing domicile, but concluded that whether this taxpayer's 1986 New York house revived his New York domici…
After retiring from a New York job and moving out of state, is the investment income earned inside my IRA or employee savings plan still taxable by New York once I start taking distributions as a nonresident?
Yes, to the extent your original contributions trace back to New York employment. New York taxes IRA distributions (including the earnings inside the account) based on where the underlying job was per…
If a couple moves their domicile from New York to Connecticut partway through the year but their old, furnished New York City apartment doesn't sell and they still spend more than 183 days in New York that year, are they taxed as full-year New York residents?
Yes. Even assuming their domicile changed to Connecticut on July 7, 1989, the Rogaths were New York 'statutory residents' for the entire 1989 taxable year under Tax Law § 605(b)(1)(B), because they ma…
If I had to repay disability income after a retroactive Social Security disability award pushed it into 'claim of right' territory, and I took the federal standard deduction rather than itemizing, can I get any New York income tax relief for the repayment?
No. New York only provides claim-of-right relief for a repayment through the New York itemized deduction under Tax Law § 615, which is available only if the taxpayer's federal taxable income is also d…
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These are official tax letter rulings and advisory opinions issued by New York's revenue authority in response to questions from specific taxpayers about how the tax law applies to their facts. A ruling is binding on the department only for the taxpayer who requested it and cannot be relied on by anyone else, but it is strong evidence of how the state reads the law. Every ruling above has a plain-English question and short answer, plus a link to the full original source.