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Category: New York

New York Subtractions from Income

ACRS deduction greater than NY

If you disposed of property in 2013 that was depreciated for federal purposes using ACRS, and if your total federal ACRS deduction exceeds your New York depreciation deduction for that property, then complete Part 2 of Form IT-399, New York State Depreciation Schedule, to compute the amount to include. See A-17. Submit Form IT-399 with your return.

 

Amortizable bond premiums

You may deduct expenses you incur to buy an obligation that generates investment income that is taxable to a trade or business. If you are including, on either line 20 or line 22, interest income that is federally tax exempt but taxable to New York State, and if those bonds were bought for more than their face value (i.e., at a premium), and if you did not reduce your federal AGI by deducting the amortization of that premium attributable to 2013, and if those bonds were owned by a trade or business carried on by you in 2013 (as opposed to personal investments), then include that amortization.

 

Assets acquired before 1960

New York State income tax laws prior to 1960 and current laws regarding depletion can result in a difference in the state and federal adjusted bases of certain assets. If you realize a federally taxable gain from the sale of an asset that had a higher adjusted basis for state tax purposes, you may make an adjustment to reduce your gain for state tax purposes. If your federal AGI included gain that was from either:

  • property that had a higher adjusted basis for NYS income tax purposes than for federal tax purposes on December 31, 1959 (or on the last day of a fiscal year ending during 1960); or
  • property that was held in connection with mines, oil or gas wells, and other natural deposits and that had a higher adjusted basis for NYS income tax purposes than for federal tax purposes when sold;

then include the lesser of the gain itself or the difference in the adjusted bases.

 

Note: If you divide gain with respect to jointly-owned property between you and your spouse, then you must also divide any subtraction for different adjusted bases between you and your spouse.

 

Build America Bond (BAB) Interest

Include any interest income attributable to a BAB issued by New York State or its local governments that you included in your federal AGI.

 

Business Exp connected with Fed exempt income

You may deduct expenses you incur to acquire or maintain income that is taxable to a trade or business. If you included, on either line 20 or line 22, income that is federally tax exempt but taxable to NYS, and if the expense you incurred to either produce or collect that income or manage, conserve or protect the assets that produce that income was not deducted for federal purposes, and if those expenses are attributable to a trade or business you carried on, then include that expense.

 

Certain disability income under IRC 105 (d)

Complete Form IT-221, Disability Income Exclusion, to compute your disability income exclusion if you were not yet 65 when your tax year ended, and you retired on disability, and you were permanently and totally disabled when you retired.

 

Contributions for Executive Mansion

Include contributions you made, not deducted elsewhere, (a) to preserve, improve, and promote the Executive Mansion as a New York State historical resource, or (b) to the Natural Heritage Trust to preserve and improve the natural and historical resources of NYS. Do not include amounts you deducted in determining federal AGI or New York itemized deductions.

 

Cost Depletion

If you are making addition A-13 for any percentage depletion, then include the cost depletion that IRC section 611 would allow on that property without any reference to either IRC section 613 or 613-A.

 

Death Benefits

Include any amount you included in your federal AGI that was received by any person as (a) an accelerated payment or payments of part or all of the death benefit or special surrender value under a life insurance policy, or (b) a viatical settlement, as a result of a terminal illness (life expectancy of 12 months or less), or of a medical condition requiring extraordinary medical treatment, regardless of life expectancy.

 

Distributions to a victim of Nazi Persecution

Include amounts you included in your federal AGI from an eligible settlement fund or grantor trust as defined by section 13 of the Tax Law (because you were persecuted or targeted for persecution by the Nazi regime), or distributions received because of your status as a victim of Nazi persecution, or as a spouse or heir of the victim (successors or assignees, if payment is from an eligible settlement fund or grantor trust).

 

Gain subtracted from sale of new business

If you reported a capital gain on your federal income tax return from the sale of a new business investment, as defined in NYS Tax Law section 612(o), that was issued before 1988 and was held at least six years, then include one‑hundred percent (100%) of that federal gain.

 

Income earned before 1960 and previously reported

Include any income (including annuity income) or gain you included in your 2013 federal AGI that you (or the decedent or estate or trust from whom you acquired the income or gain) properly reported to NYS prior to 1960 (or during a fiscal year ending in 1960).

 

Income related to a victim of Nazi persecution

Include items of income you included in your federal AGI attributable to, derived from, or in any way related to assets stolen from, hidden from, or otherwise lost to a victim of Nazi persecution immediately prior to, during, and immediately after World War II, including but not limited to interest on the proceeds receivable as insurance under policies issued to a victim of Nazi persecution by European insurance companies immediately prior to and during World War II, or as a spouse or heir of such victim.

However, do not include income attributable to assets acquired with assets as described above or with the proceeds from the sale of any asset described above. Also, do not include any income if you were not the first recipient of the asset, or if you are not a victim of Nazi persecution, or a spouse or descendant of a

Int Exp used to Buy Federal Tax Exempt Bonds

You may deduct interest expense you incur to buy an obligation that generates investment income that is taxable to a trade or business. If you included, on either line 20 or line 22, interest income from bonds or other obligations that is federally tax exempt but taxable to NYS, and the expense you incurred in buying the obligation is attributable to a trade or business you carried on, then include that expense.

 

Investment Income US Obligations

Include any interest or dividend income on bonds or securities of any U.S. authority, commission, or instrumentality that is exempt from state income taxes under federal laws (but that you included in your federal AGI).

 

IRC 168 (k) disposition adjustment

If you disposed of IRC section 168(k) property placed in service inside or outside New York State on or after June 1, 2003 (except for resurgence zone property, and New York liberty zone property described in IRC section 1400L(b)(2)), and your total federal depreciation deduction was more than your New York depreciation deduction for that property, then complete Part 2 of Form IT‑398, New York State Depreciation Schedule for IRC Section 168(k) Property, to compute the amount of the disposition adjustment to include. Submit Form IT-398 with your return.

 

Long term residential care deduction

If you were a resident in a continuing-care retirement community that was issued a certificate of authority by the NYS Department of Health, then include the portion of the fees you paid during the year that were attributable to the cost of providing long-term care benefits to you under a continuing care contract. However, do not enter more than the premium limitation shown for your age in the Limitation table below. If you and your spouse both qualify, you may each take the subtraction. However, you cannot claim any unused part of your spouse’s subtraction.

If your age at the

end of 2013 was: more than:

40 or younger................................................. $ 360

at least 41 but not older than 50..................... 680

at least 51 but not older than 60..................... 1,360

at least 61 but not older than 70..................... 3,640

71 or older...................................................... 4,550

Loss from sale of estate tax property

Note: This subtraction cannot be made for property acquired from decedents who died on or after February 1, 2000.

 

If you acquired a decedent’s property and, as valued by the executor, the estate was insufficient to require a federal estate tax return, and if a loss on the sale would have been realized if a federal estate tax return had been required, then include the amount of the loss.

 

Military Pay (Servicemembers Relief Act)

Based on the Servicemembers’ Civil Relief Act, military pay received by a nonresident, or received by a part-year resident during the part-year resident’s nonresident period, cannot be used to determine the amount of New York State personal income tax the nonresident or part-year resident military member (or the member’s spouse) must pay.

 

In addition, in the case of a part-year resident, military pay received during the resident period for active service as a member in the armed services of the United States in an area designated as a combat zone is not subject to New York State tax.

 

New York Higher Education Loan Program (HELP)

Include any interest you paid in 2013 on loans made to you under HELP.

 

New York organized militia income

Include income that you received as a member of the New York State organized militia for performing active service within NYS due to either state active duty orders issued in accordance with Military Law, section 6.1 or federal active duty orders, for service other than training, issued in accordance with Title 10 of the United States Code, that was included in your federal AGI. Do not include any income you received for regular duties in the organized militia (for example, pay received for the annual two-week training program). Members of the NYS organized militia include the New York Army National Guard, the New York Air National Guard, the New York Naval Militia, and the New York Guard.

 

NY 529 College savings deductions

If in 2013 you, as an account owner, made contributions to one or more tuition savings accounts established under New York’s 529 college savings program, then include that amount, up to $5,000 for an individual, head of household, qualifying widow(er), or married taxpayers filing separately, or up to $10,000 for married taxpayers filing a joint return, in the Federal amount column only. In determining the amount to enter on line 29, also include your share of contributions made by a partnership of which you are a partner.

 

Part-year residents only

 

Also include in the New York State amount column any such contribution(s) made while a resident of New York State.

 

NY 529 College savings distributions

If in 2013 you, as an account owner (or beneficiary), made a withdrawal (or received a withdrawal) from an account established under New York’s 529 college savings program, and part of the withdrawal was included in your federal adjusted gross income, then include that amount in the Federal amount column only.

 

NY depreciation allowed

If you claimed ACRS depreciation on your federal return for:

 

  • property placed in service during tax years 1981 through 1984 (except IRC section 280F property); or

 

  • property placed in service outside New York State during tax years 1985 through 1993 (except IRC section 280F property) and you elect to continue using IRC section 167 depreciation (see TSB-M-99(1)I);

 

then include the amount of your New York depreciation.

 

NYS Innovation Hot Spot Program

Complete Form IT-223, Innovation Hot Spot Deduction, and include any income or gain included in federal AGI that is attributable to the operations of a qualified entity at its location in, or as part of, a New York State innovation hot spot. Submit Form IT-223 with your return.

 

Professional service shareholders

If in a tax year ending after 1969 and beginning before 1988, you were required to add to your federal AGI deductions made by a plan acquired through membership in a professional service corporation (PSC), then include the portion of those deductions that can be allocated to pension, annuity, or other income you received from the plan, and were included in your 2013 federal AGI.

 

QETI

In general, you may defer the gain on the sale of QETI that are 1) held for more than 36 months, and 2) rolled over into the purchase of replacement QETI within 365 days from, and including, the date of sale.

 

However:

 

  • You must recognize any gain to the extent that the amount realized on the sale of the original QETI exceeds the cost of replacement QETI;

 

  • You must add back any deferred gain in the year you sell the replacement QETI; and

 

  • The gain deferral applies only to QETI sold on or after March 12, 1998, that was held for more than 36 months. If you elect to defer the gain from the sale of QETI, then include the amount of the deferred gain. This amount may not exceed the amount of the gain included in your federal AGI.

 

  • If the purchase of replacement QETI within the 365-day period occurred in the same tax year as the sale of the original QETI, or in the following tax year and before the date you filed your personal income tax return, then take the deduction on that return.

 

  • If the purchase of replacement QETI within the 365-day period occurred in the following tax year and on or after the date you filed your personal income tax return, then you must file Form IT-203-X, Amended Nonresident and Part-Year Resident Income Tax Return, to claim the deduction (see Other forms you may have to file).
  • If the deferred gain must be included in a subsequent year’s tax return because the replacement QETI has been sold, then include that amount as an addition to federal AGI (see A-10).

 

A QETI is an investment in the stock of a corporation, or an ownership interest in a partnership or limited liability company (LLC) that is a qualified emerging technology company, or an investment in a partnership or an LLC to the extent that such partnership or LLC invests in such companies. The taxpayer must acquire the investment as provided in IRC section 1202(C)(1)(B), or from a person who acquired it pursuant to that section. IRC section 1202(c)(1)(B) requires the acquisition to be original issue from the company, either directly or through an underwriter, and in exchange for cash, services, or property (but not in stock).

 

A qualified emerging technology company (QETC) is a company that is located in New York State, has total annual product sales of 10 million dollars or less, and meets certain criteria (see Form DTF-620, aapplication for Certification of a QualifiedEmerging Technology Company).

 

RailRoad Retirement Income

Include supplemental annuity or Tier 2 benefits received under the Railroad Retirement Act of 1974, or benefits received under the Railroad Unemployment Insurance Act that are exempt from state income taxes under federal laws (but that you included in your federal AGI).

 

Royalty payments made to related member

New York requires certain taxpayers to add back deductions they took on their federal return for certain royalty payments for the use of intangible property, such as trademarks or patents, and interest payments they made to a related member or members. Include the amount for any such payments you deducted on your federal return. See Tax Law section 612 (r).

 

S Corp disposition of Stock

If you reported a federal gain or loss because of the disposition of stock or indebtedness of an S corporation, and if that S corporation was a New York C corporation for any tax year beginning after December 31, 1980 (in the case of a corporation taxable under Article 9-A, general business corporation tax), or December 31, 1996 (in the case of a corporation taxable under Article 32, banking corporation franchise tax), then include the reduction in basis of the stock or indebtedness that is due to the application of IRC section 1376(b) (as in effect for tax years beginning before January 1, 1983) and 1367(a)(2)(B) and (C) for each tax year that the New York election was not in effect.

 

If, with respect to stock described above, you made any New York additions to federal AGI required under A-28, then include the total of those additions. See New York Tax Law section 612(b)(20).

 

S Corp pass through income

If you included in your federal AGI any S corporation pass-through income pursuant to IRC section 1366 and the corporation is a New York C corporation, then include the pass-through income.

 

Safe Harbor leases excluded in Federal AGI

Include any amount that you could have excluded from federal AGI (except for mass transit vehicles) had you not made the safe harbor election on your federal return for agreements entered into before January 1, 1984.

 

Safe Harbor leases included in Federal AGI

Include any amount you included in federal AGI (except for mass transit vehicles) solely because you made the safe harbor election on your federal return for agreements entered into before January 1, 1984.

 

Special Depreciation expenditures

You may carry over excess expenditures you incurred in tax years beginning before 1987 in connection with depreciable, tangible business property located in New York State to the following tax year or years, and deduct such expenditures in computing your New York AGI for that year or years, if the expenditures exceed your New York AGI for that year before the allowance of those expenditures. Complete Form IT-211, Special Depreciation Schedule, to compute the amount to include. Submit Form IT-211 with your return.

 

Sport Utility Vehicle Recapture

If you previously claimed an IRC section 179 deduction with respect to a sport utility vehicle that weighs more than 6,000 pounds, and you had to recapture any amount of that deduction in computing your federal AGI for 2013, and if you are not an eligible farmer as defined for the farmers’ school tax credit, then include the recapture amount. (See A-19 for the definition of a sport utility vehicle.)

 

Wage Expenses allowed as Federal Credits

If you took a federal credit for which a deduction for wages and salary expenses is not allowed under IRC section 280C, then include the amount of those wages you did not deduct on your federal return.