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.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A3246
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 of the bill adds subparagraph 28 to paragraph (b) of subdi-
vision 9 of § 208 of the tax law 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 of the bill adds paragraph (u) to subdivision 9 of section
208 of the tax law to state 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 para-
graph (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 three of the bill adds paragraph 44 to subsection (b) of section
612 of the tax law 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 of the bill adds subsection (y) to § 612 of the tax law to
state that for tax years beginning on or after January 1, 2026, 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 prop-
erty under this article shall be determined as if the taxpayer had not
made such election.
Section five of the bill adds subparagraph (AA) to paragraph 2 of subdi-
vision (b) of § 1503 of the tax law 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 six of the bill adds subdivision (d) to § 1503 of the tax law to
state that for tax years beginning on or after January 1, 2026, 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 of the bill adds paragraph 23 to paragraph (b) of subdivi-
sion 8 of § 11-602 of the administrative code of the city of New York to
include that "entire net income" shall be determined without the exclu-
sion, 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 eight of the bill adds subdivision 11 to S11-602 of the adminis-
trative code of the city of New York to state that for tax years begin-
ning on or after January 1, 2026, upon the sale or exchange of property
with respect to which the taxpayer has made the election under subpara-
graph (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 of the bill adds subparagraph 24 to paragraph (b) of subdi-
vision 8 of § 11-652 of the administrative code of the city of New York
to include that "entire net income" shall not include 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 inter-
nal revenue code.
Section ten of the bill adds paragraph (u) to subdivision 8 of § 11-652
of the administrative code of the city of New York to which states that
for tax years beginning on or after January 1, 2026, 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 of the bill adds paragraph 40 to subdivision (b) of §
11-1712 of the administrative code of the city of New York 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 subpara-
graph (c) of paragraph (1) of subsection (a) of section 1400Z-2 of the
internal revenue code.
Section twelve of the bill adds subdivision (w) to § 11-1712 of the
administrative code of the city of New York to state that for tax years
beginning on or after January 1, 2026, 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 thirteen of the bill 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.
PRIOR LEGISLATIVE HISTORY:
2024: A.2170-B- Ways and Means/S.543 -Passed Senate
2023: A.2170-A- Ways and Means/S.543-B- Passed Senate
2022: A.8081-A- Ways and Means/S.6800-A- Passed Senate
2021: A.8081 -Ways and Means / S.6800 - Budget & Revenue
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, 2026.
STATE OF NEW YORK
________________________________________________________________________
3246
2025-2026 Regular Sessions
IN ASSEMBLY
January 27, 2025
___________
Introduced by M. of A. DINOWITZ, REYES, MITAYNES, ROSENTHAL, GALLAGHER,
STECK, GLICK, R. CARROLL, KELLES, MAMDANI, KIM, SEAWRIGHT, CUNNINGHAM,
RAGA, CRUZ, OTIS, SHRESTHA, HEVESI, SEPTIMO, PAULIN, SHIMSKY, EPSTEIN,
BURDICK, FORREST, LEVENBERG, GONZALEZ-ROJAS, ANDERSON, BORES, STIRPE
-- Multi-Sponsored by -- M. of A. SIMON -- read once and referred to
the Committee on Ways and Means
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-six, 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.
19 § 4. Section 612 of the tax law is amended by adding a new subsection
20 (y) to read as follows:
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD02005-01-5
A. 3246 2
1 (y) Qualified opportunity zones. For tax years beginning on or after
2 January first, two thousand twenty-six, upon the sale or exchange of
3 property with respect to which the taxpayer has made the election under
4 subparagraph (C) of paragraph (1) of subsection (a) of section 1400Z-2
5 of the internal revenue code, the basis of such property under this
6 article shall be determined as if the taxpayer had not made such
7 election.
8 § 5. Paragraph 2 of subdivision (b) of section 1503 of the tax law is
9 amended by adding a new subparagraph (AA) to read as follows:
10 (AA) the amount of gain excluded from federal gross income for the
11 taxable year by subparagraph (C) of paragraph (1) of subsection (a) of
12 section 1400Z-2 of the internal revenue code.
13 § 6. Section 1503 of the tax law is amended by adding a new subdivi-
14 sion (d) to read as follows:
15 (d) For tax years beginning on or after January first, two thousand
16 twenty-six, upon the sale or exchange of property with respect to which
17 the taxpayer has made the election under subparagraph (C) of paragraph
18 (1) of subsection (a) of section 1400Z-2 of the internal revenue code,
19 the basis of such property under this article shall be determined as if
20 the taxpayer had not made such election.
21 § 7. Paragraph (b) of subdivision 8 of section 11-602 of the adminis-
22 trative code of the city of New York is amended by adding a new subpara-
23 graph 23 to read as follows:
24 (23) the amount of gain excluded from federal gross income for the
25 taxable year by subparagraph (C) of paragraph (1) of subsection (a) of
26 section 1400Z-2 of the internal revenue code.
27 § 8. Section 11-602 of the administrative code of the city of New York
28 is amended by adding a new subdivision 11 to read as follows:
29 11. For tax years beginning on or after January first, two thousand
30 twenty-six, upon the sale or exchange of property with respect to which
31 the taxpayer has made the election under subparagraph (C) of paragraph
32 (1) of subsection (a) of section 1400Z-2 of the internal revenue code,
33 the basis of such property under this article shall be determined as if
34 the taxpayer had not made such election.
35 § 9. Paragraph (b) of subdivision 8 of section 11-652 of the adminis-
36 trative code of the city of New York is amended by adding a new subpara-
37 graph 24 to read as follows:
38 (24) the amount of gain excluded from federal gross income for the
39 taxable year by subparagraph (C) of paragraph (1) of subsection (a) of
40 section 1400Z-2 of the internal revenue code.
41 § 10. Subdivision 8 of section 11-652 of the administrative code of
42 the city of New York is amended by adding a new paragraph (u) to read as
43 follows:
44 (u) For tax years beginning on or after January first, two thousand
45 twenty-six, upon the sale or exchange of property with respect to which
46 the taxpayer has made the election under subparagraph (C) of paragraph
47 (1) of subsection (a) of section 1400Z-2 of the internal revenue code,
48 the basis of such property under this article shall be determined as if
49 the taxpayer had not made such election.
50 § 11. Subdivision (b) of section 11-1712 of the administrative code of
51 the city of New York is amended by adding a new paragraph 40 to read as
52 follows:
53 (40) the amount of gain excluded from federal gross income for the
54 taxable year by subparagraph (C) of paragraph (1) of subsection (a) of
55 section 1400Z-2 of the internal revenue code.
A. 3246 3
1 § 12. Section 11-1712 of the administrative code of the city of New
2 York is amended by adding a new subdivision (w) to read as follows:
3 (w) For tax years beginning on or after January first, two thousand
4 twenty-six, upon the sale or exchange of property with respect to which
5 the taxpayer has made the election under subparagraph (C) of paragraph
6 (1) of subsection (a) of section 1400Z-2 of the internal revenue code,
7 the basis of such property under this article shall be determined as if
8 the taxpayer had not made such election.
9 § 13. This act shall take effect immediately and shall apply to taxa-
10 ble years beginning on or after January 1, 2026.
