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S04482 Summary:

BILL NOS04482
 
SAME ASSAME AS A05092
 
SPONSORRAMOS
 
COSPNSRBENJAMIN, BIAGGI, BRESLIN, COMRIE, HOYLMAN, JACKSON, LIU, MAY, MYRIE, SALAZAR, SANDERS, SEPULVEDA, SERRANO
 
MLTSPNSR
 
Add §612-a, Tax L
 
Establishes a billionaire mark to market tax taxing residents with one billion dollars or more in net assets.
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S04482 Actions:

BILL NOS04482
 
02/05/2021REFERRED TO BUDGET AND REVENUE
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S04482 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          4482
 
                               2021-2022 Regular Sessions
 
                    IN SENATE
 
                                    February 5, 2021
                                       ___________
 
        Introduced  by  Sen.  RAMOS  -- read twice and ordered printed, and when
          printed to be committed to the Committee on Budget and Revenue
 
        AN ACT to establish the "billionaire mark to market  tax  act";  and  to
          amend the tax law, in relation to establishing a mark to market tax
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. This act shall be known and may be cited  as  the  "billio-
     2  naire mark to market tax act".
     3    §  2.  The tax law is amended by adding a new section 612-a to read as
     4  follows:
     5    § 612-a. Billionaire mark to market taxation.  (a)(1)  Notwithstanding
     6  any  other provision of law to the contrary, resident individual taxpay-
     7  ers with net assets worth one billion dollars or more  on  the  date  of
     8  December thirty-first, two thousand twenty, shall recognize gain or loss
     9  as if each asset owned by the individual taxpayer were sold for its fair
    10  market  value  on  that  date. Any resulting net gains from these deemed
    11  sales, up to the phase-in cap amount, shall be included in  the  taxpay-
    12  er's  income for the two thousand twenty-one tax year. Proper adjustment
    13  shall be made in the amount of any gain or  loss  subsequently  realized
    14  for gain or loss taken into account under the preceding sentence. At the
    15  taxpayer's  option,  any  additional  tax  payable  as  a result of this
    16  subsection shall either be payable along with any other tax owed for the
    17  two thousand twenty-one tax year or else shall be  payable  annually  in
    18  ten  equal  installments  beginning in the year of the effective date of
    19  this section and with all such installment payments commencing after the
    20  initial installment payment also being subject to an  annual  nondeduct-
    21  ible deferral charge.  The annual nondeductible deferral charge shall be
    22  set by the state comptroller at a rate that the comptroller estimates is
    23  equal  to the unsecured borrowing rate of the taxpayer for a loan repaid
    24  over a ten-year term in equal annual installments. The  comptroller  may
    25  estimate a single rate for all taxpayers subject to the deferral charge.
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD06600-02-1

        S. 4482                             2
 
     1  For  resident  individual  taxpayers  who would recognize net gains as a
     2  result of this subsection except for the operation of this sentence,  if
     3  the  taxpayer  can  show  that any portion of such gains was accumulated
     4  prior to the taxpayer becoming a resident individual of New York, and if
     5  the taxpayer can also show that such portion of such gains was previous-
     6  ly  taxed by any prior state or jurisdiction in which the taxpayer was a
     7  resident prior to becoming a resident individual of New York, then cred-
     8  it shall be provided in the amount of any such tax on such gains paid to
     9  any such prior states or jurisdictions in which the taxpayer was a resi-
    10  dent prior to becoming a resident individual of New York. Any credits so
    11  provided by this subsection, however, shall not exceed the lesser of the
    12  total tax owed under this subsection on such gains and the  tax  imposed
    13  on  such  gains by such other prior states or jurisdictions in which the
    14  taxpayer was a resident prior to becoming a resident individual  of  New
    15  York.
    16    (2) For the two thousand twenty-one tax year, whether an individual is
    17  a  resident  individual for purposes of this section shall be determined
    18  using the tests provided pursuant to paragraph one of subsection (b)  of
    19  section six hundred five of this article.
    20    (b) Subsequent to two thousand twenty-one, resident individual taxpay-
    21  ers  with  net  assets that are worth one billion dollars or more at the
    22  end of the last day of any tax year shall recognize gain or loss  as  if
    23  each  asset  owned  by such taxpayer on such date were sold for its fair
    24  market value on such date, but with adjustment made for tax paid on gain
    25  in previous years. Any resulting net gains from these deemed  sales,  up
    26  to  the  phase-in cap amount, shall be included in the taxpayer's income
    27  for such taxable year. Proper adjustment shall be made in the amount  of
    28  any  gain  or  loss  subsequently  realized  for gain or loss taken into
    29  account under the preceding sentence. To the extent that the losses of a
    30  taxpayer exceed such taxpayer's gains, such  net  losses  shall  not  be
    31  recognized  in such taxable year and shall instead carry forward indefi-
    32  nitely. For resident individual taxpayers who would recognize net  gains
    33  as  a  result  of  this  subsection  except  for  the  operation of this
    34  sentence, but who were not resident individuals for all of the preceding
    35  five tax years, solely for purposes of deemed  sales  pursuant  to  this
    36  subsection,  the  tax  basis  of each asset owned on the last day of the
    37  last tax year before the resident individual became a New York  resident
    38  shall be the fair market value of the asset as of that day.
    39    (c)  For each date on which gains or losses are recognized as a result
    40  of this section, the phase-in cap amount shall be equal to a quarter  of
    41  the worth of a taxpayer's net assets in excess of one billion dollars on
    42  such date.
    43    (d)  For  the  purposes  of  determining whether a resident individual
    44  taxpayer has net assets worth one billion  dollars  or  more,  the  term
    45  "assets"  shall  include  all  of  the following, but only to the extent
    46  allowable under the New York Constitution, the United  States  Constitu-
    47  tion,  and  any other governing federal law: all owned real or personal,
    48  tangible or intangible, property, wherever situated, (1)  owned  by  the
    49  taxpayer,  (2)  owned  by  the taxpayer's spouse, minor children, or any
    50  trust or estate of which the taxpayer is a beneficiary, (3)  contributed
    51  by  the  taxpayer  or any person or entity described in paragraph two of
    52  this subsection to any private foundation, donor advised fund,  and  any
    53  other  entity described in section 501(c) or section 527 of the Internal
    54  Revenue Code of which the taxpayer and/or any person or entity described
    55  in paragraph two of this subsection is  a  substantial  contributor  (as
    56  such term is defined in Section 4958(c)(3)(B)(i) of the Internal Revenue

        S. 4482                             3
 
     1  Code),  and (4) without duplication, all gifts and donations made within
     2  the past five years by the taxpayer or any person or entity described in
     3  paragraph two of this subsection as if such  gifts  and  donations  were
     4  still  owned  by  the  taxpayer.  For  the purpose of this section, "net
     5  assets" shall include the fair market value  of  assets  less  the  fair
     6  market value of liabilities of the taxpayer and, in appropriate cases as
     7  determined  by  the  commissioner,  liabilities  of  such  other persons
     8  described in the definition of assets.
     9    (e) (1) The fair market value of each  asset  owned  by  the  taxpayer
    10  shall  be  the  price  at  which such asset would change hands between a
    11  willing buyer and a willing seller, neither being under  any  compulsion
    12  to  buy  or  to  sell,  and both having reasonable knowledge of relevant
    13  facts. The value of a particular asset shall not be  the  price  that  a
    14  forced  sale  of  the  property  would produce. Further, the fair market
    15  value of an asset shall not be the sale price in  a  market  other  than
    16  that in which such item is most commonly sold to the public, taking into
    17  account the location of the item wherever appropriate. In the case of an
    18  asset  which  is  generally obtained by the public in the retail market,
    19  the fair market value of such an asset shall be the price at which  such
    20  item or a comparable item would be sold at retail.
    21    (2)  For  purposes of this section, any feature of an asset, such as a
    22  poison pill, that was added with the intent,  and  has  the  effect,  of
    23  reducing  the  value of the asset shall be disregarded, and no valuation
    24  or other discount shall be taken into  account  if  it  would  have  the
    25  effect of reducing the value of a pro rata economic interest in an asset
    26  below the pro rata portion of the value of the entire asset.
    27    (f)  (1) (A) The commissioner shall amend the New York personal income
    28  tax forms and amend or create any  other  forms  as  necessary  for  the
    29  reporting  of  gains  by  assets.  Assets  shall  be  listed  with (i) a
    30  description of the asset, (ii) the asset category, (iii)  the  year  the
    31  asset  was acquired, (iv) the adjusted New York basis of the asset as of
    32  December thirty-first of the tax year, (v) the fair market value of  the
    33  asset  as  of December thirty-first of the tax year, and (vi) the amount
    34  of gain that would be New York taxable income, unless  the  commissioner
    35  shall  determine  that  one  or more categories is not appropriate for a
    36  particular type of asset.
    37    (B) Asset categories shall include, but not be limited to, the follow-
    38  ing:
    39    (i) stock held in any publicly traded corporation;
    40    (ii) stock held in any private traded C corporation;
    41    (iii) stock held in any S corporation;
    42    (iv) interests in any private equity or  hedge  fund  organized  as  a
    43  partnership;
    44    (v) interests in any other partnerships;
    45    (vi) interests in any other noncorporate businesses;
    46    (vii) bonds and interest bearing savings accounts, cash and deposits;
    47    (viii) interests in mutual funds or index funds;
    48    (ix) put and call options;
    49    (x) futures contracts;
    50    (xi)  financial  assets  held  offshore reported on IRS tax form eight
    51  thousand nine hundred thirty-eight;
    52    (xii) real property;
    53    (xiii) art and collectibles;
    54    (xiv) pension funds;
    55    (xv) other assets;
    56    (xvi) debts and liabilities; and

        S. 4482                             4
 
     1    (xvii) assets not owned by the taxpayer but which count toward the one
     2  billion dollar threshold pursuant to subsection (d) of this section.
     3    (2)  The  commissioner  shall  specifically request the filing of such
     4  forms by any resident individual expected to have net assets  in  excess
     5  of one billion dollars. Such taxpayers shall include, but not be limited
     6  to,  (A)  taxpayers  listed  as billionaires on published lists, and (B)
     7  taxpayers with an adjusted gross income summed  over  the  previous  ten
     8  years in excess of six hundred million dollars.
     9    (g)  In  the event that any resident individual taxpayer becomes a New
    10  York resident subsequent to paying tax to another state as a  result  of
    11  recognizing gain or loss pursuant to any mark-to-market or deemed-reali-
    12  zation  regime  of  that other state, proper adjustment shall be made in
    13  the amount of any gain or loss subsequently realized for  gain  or  loss
    14  taken  into  account  under  such  mark-to-market  or deemed-realization
    15  regime of that other state for purposes of computing gain or loss  under
    16  subsection  (a)  or  (b)  of  this  section or under section six hundred
    17  twelve of this article.
    18    (h) In the event that any provision of this section  is  found  to  be
    19  invalid,  unconstitutional,  or  otherwise  unenforceable,  that finding
    20  shall not affect any other  provision  in  this  section  which  can  be
    21  enforced without the use of the offending provision.
    22    (i) No legal or equitable process shall issue in any proceeding in any
    23  court against this state or any officer thereof to prevent or enjoin the
    24  collection  of  the tax imposed by this section. Any action for a refund
    25  of the tax imposed by this section paid, with interest, based solely  on
    26  a  question of law involving the construction of the constitution of the
    27  state or of the United States shall be heard in the  court  of  appeals.
    28  All other claims for a refund, with interest, shall be maintained in the
    29  same manner as the personal income tax.
    30    (j)  The  commissioner  shall  promulgate  such  rules and regulations
    31  necessary or appropriate to carry out  the  purposes  of  this  section,
    32  including  rules  to  prevent  the  use  of  year-end transfers, related
    33  parties, or other arrangements to avoid the provisions of this section.
    34    § 3. This act shall take effect immediately.
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