New York Advisory Opinion TSB-A-82(7)I: Can a New York resident use the resident credit for taxes paid to another state to offset New York's minimum income tax on a capital gain that both states taxed?

Plain-English summary

During 1981, one of the Ballous, a New York resident, realized a capital gain from selling assets of a New Jersey partnership. Both New York and New Jersey imposed minimum income tax on that same capital gain. The Ballous sought a refund of their New York minimum income tax, arguing that New York's resident credit for taxes paid to another jurisdiction - Tax Law § 620 - should apply to offset the New York minimum tax, since in substance both states were taxing the same income.

The Department explained the structure of Article 22 of the Tax Law: section 601 imposes the general personal income tax, while sections 601-A, 601-C, and 601-D impose additional, separate taxes layered on top - section 601-A being the minimum income tax specifically. Section 620 provides a resident-only credit against "the tax otherwise due under the article" for income tax paid to another jurisdiction, including another state. But section 622(d) directly defines what "the tax otherwise due under this article" means for credit purposes - and it explicitly states that the section 620 resident credit may NOT be applied against the section 601-A minimum income tax.

Given that explicit statutory carve-out, the Department found the Ballous' underlying argument - that both New York's and New Jersey's taxes on the capital gain were, in substance, taxes on the same income and therefore should offset - didn't change the result. The statute doesn't ask whether the two states' taxes are substantively similar; it flatly excludes the minimum tax from the resident credit's reach, so no credit is available regardless of any double-taxation concern.

What this means for you

New York residents who paid minimum income tax to another state on the same gain New York also minimum-taxed

Don't expect New York's resident credit (Tax Law § 620) to relieve double taxation of your minimum income tax specifically - section 622(d) expressly bars using that credit against New York's own section 601-A minimum tax, even though the credit does apply against the regular section 601 tax.

Taxpayers with capital gains connected to out-of-state partnerships

Be aware that New York's various add-on taxes (minimum tax under 601-A, and others under 601-C/601-D) may not all receive the same cross-state credit relief as the general income tax - check each specific tax's credit eligibility rather than assuming uniform treatment.

Accountants computing resident credits for clients paying tax to multiple states

Confirm which of a client's several New York tax liabilities (general tax vs. minimum tax vs. other add-on taxes) the section 620 resident credit can actually offset - the credit's scope is defined by section 622(d), and it doesn't automatically extend to every tax layered under Article 22.

Common questions

Q: I paid minimum income tax to another state on a gain that New York also subjected to its minimum tax - can I use New York's resident credit to avoid paying twice?
A: No. Tax Law § 622(d) specifically excludes New York's section 601-A minimum income tax from the section 620 resident credit, so that credit can't be used to offset the minimum tax, even though both states taxed the same gain.

Q: Does the resident credit apply to New York's regular income tax on the same income?
A: Yes, the section 620 resident credit generally applies against the tax imposed under section 601 (the general personal income tax) - the exclusion in this opinion is specific to the section 601-A minimum income tax.

Q: Does it matter that both states' taxes were, in substance, taxes on the same capital gain?
A: No. The Department found that argument doesn't overcome the explicit statutory exclusion in section 622(d) - the credit's unavailability against the minimum tax is a flat statutory rule, not one that turns on how similar the two states' taxes are.

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/income_ao_1982.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/income/a82_7i.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-82 (7) I
Income Tax
October 15, 1982

Taxpayer Services Division
Technical Services Bureau
STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. I820824A

On August 24, 1982, a Petition for Advisory Opinion was received from Alan S. and Billie
Ballou, 190 Haverstraw Road, Suffern, New York 10901.
The issue raised is whether the credit provided for by section 620 of the Tax Law is
applicable against the tax imposed under section 601-A of the Tax Law in the circumstances
described below.
During 1981, one of the Petitioners, a resident of New York, realized a capital gain upon the
sale of partnership assets associated with a New Jersey partnership. Minimum income tax with
respect to such capital gain was paid to both New York and New Jersey. Petitioners presently seek
a refund of their New York minimum income tax payment, based on the application to such tax of
the credit provided for under section 620 of the Tax Law.
Article 22 of the Tax Law imposes the Personal Income Tax. Section 601, contained in such
article, imposes the general personal income tax, while sections 601-A, 601-C and 601-D impose
separate taxes which are in addition to the tax imposed under section 601. Section 601-A impose the
minimum income tax. Section 620 provides for a credit, available to residents only, against "the tax
otherwise due under the article for any income tax imposed . . . "by, among other jurisdictions,
another state. Section 622(d) clarifies the meaning of the phrase "the tax otherwise due under this
article, " and concludes the issue herein against Petitioners, by explicitly providing that the resident
credit provided for under section 620 may not be applied against the minimum income tax imposed
under section 601-A. In light of the explicit statutory prohibition against the application of the
resident credit to the minimum income tax, Petitioners' contention, to the effect that both the New
York and New Jersey taxes on the capital gain are in reality taxes on income, warrants no conclusion
contrary to that expressed herein.

DATED: October 12, 1982

s/LOUIS ETLINGER
Deputy Director
Technical Services Bureau

ROBERT W. BOUCHARD, ACTING COMMISSIONER
LOUIS M. JACOBSON, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR
TP-8 (8/82)