N.Y. Tax Law § 631: New York source income of a nonresident individual

§ 631. New York source income of a nonresident individual. (a)

General. The New York source income of a nonresident individual shall

be the sum of the following: (1) The net amount of items of income,

gain, loss and deduction entering into his federal adjusted gross

income, as defined in the laws of the United States for the taxable

year, derived from or connected with New York sources, including: (A)

his distributive share of partnership income, gain, loss and deduction,

determined under section six hundred thirty-two, and

(B) his pro rata share of New York S corporation income, loss and

deduction, increased by reductions for taxes described in paragraphs two

and three of subsection (f) of section thirteen hundred sixty-six of the

internal revenue code, determined under section six hundred thirty-two,

and

(C) his share of estate or trust income, gain, loss and deduction,

determined under section six hundred thirty-four and

(2) The portion of the modifications described in subsections (b) and

(c) of section six hundred twelve which relate to income derived from

New York sources (including any modifications attributable to him as a

partner or shareholder of a New York S corporation).

(b) Income and deductions from New York sources.

(1) Items of income, gain, loss and deduction derived from or

connected with New York sources shall be those items attributable to:

(A) the ownership of any interest in real or tangible personal

property in this state; or

(1) For purposes of this subparagraph, the term "real property located

in this state" includes an interest in a partnership, limited liability

corporation, S corporation, or non-publicly traded C corporation with

one hundred or fewer shareholders (hereinafter the "entity") that owns

real property that is located in New York or owns shares of stock in a

cooperative housing corporation where the cooperative units relating to

the shares are located in New York; provided, that the sum of the fair

market values of such real property, cooperative shares, and related

cooperative units equals or exceeds fifty percent of all the assets of

the entity on the date of sale or exchange of the taxpayer's interest in

the entity. Only those assets that the entity owned for at least two

years before the date of the sale or exchange of the taxpayer's interest

in the entity are to be used in determining the fair market value of all

the assets of the entity on the date of sale or exchange. The gain or

loss derived from New York sources from the taxpayer's sale or exchange

of an interest in an entity that is subject to the provisions of this

subparagraph is the total gain or loss for federal income tax purposes

from that sale or exchange multiplied by a fraction, the numerator of

which is the fair market value of the real property, and the cooperative

housing corporation stock and related cooperative units located in New

York on the date of sale or exchange and the denominator of which is the

fair market value of all the assets of the entity on the date of sale or

exchange.

(B) a business, trade, profession or occupation carried on in this

state; or

(C) in the case of a shareholder of an S corporation where the

election provided for in subsection (a) of section six hundred sixty of

this article is in effect, the ownership of shares issued by such

corporation, to the extent determined under section six hundred

thirty-two of this article; or

(D) winnings from a wager placed in a lottery conducted by the

division of the lottery, if the proceeds from such wager exceed five

thousand dollars; or

(D-1) gambling winnings in excess of five thousand dollars from

wagering transactions within the state; or

(E) gains from the sale, conveyance or other disposition of shares of

stock in a cooperative housing corporation in connection with the grant

or transfer of a proprietary leasehold by the owner thereof and subject

to the provisions of article thirty-one of this chapter, whether such

shares are held by a partnership, trust or otherwise; or

(E-1) in the case of an S corporation for which an election is in

effect pursuant to subsection (a) of section six hundred sixty of this

article that terminates its taxable status in New York, any income or

gain recognized on the receipt of payments from an installment sale

contract entered into when the S corporation was subject to tax in New

York, allocated in a manner consistent with the applicable methods and

rules for allocation under article nine-A or thirty-two of this chapter,

in the year that the S corporation sold its assets.

(F) income received by nonresidents related to a business, trade,

profession or occupation previously carried on in this state, whether or

not as an employee, including but not limited to, covenants not to

compete and termination agreements. Income received by nonresidents

related to a business, trade, profession or occupation previously

carried on partly within and partly without the state shall be allocated

in accordance with the provisions of subsection (c) of this section.

(2) Income from intangible personal property, including annuities,

dividends, interest, and gains from the disposition of intangible

personal property, shall constitute income derived from New York sources

only to the extent that such income is from property employed in a

business, trade, profession, or occupation carried on in this state or

from winnings from a wager placed in a lottery conducted by the division

of the lottery, if the proceeds from such wager exceed five thousand

dollars. Income from the disposition of intangible personal property

shall also constitute income derived from New York sources to the extent

such gains are from the sale, conveyance or other disposition of shares

of stock in a cooperative housing corporation in connection with the

grant or transfer of a proprietary leasehold by the owner thereof and

subject to the provisions of article thirty-one of this chapter, whether

such shares are held by a partnership, trust or otherwise.

(3) Income directly or indirectly derived by an athlete, entertainer,

or performing artist from closed-circuit and cable television

transmissions of an event (other than events occurring on a regularly

scheduled basis) taking place within the state as a result of the

rendition of services by such athlete, entertainer or performing artist

shall constitute income derived from New York sources only to the extent

that such transmissions were received or exhibited within the state.

(4) Deductions with respect to capital losses, passive activity losses

and net operating losses shall be based solely on income, gain, loss and

deduction derived from or connected with New York sources, under

regulations of the commissioner of taxation and finance, but otherwise

shall be determined in the same manner as the corresponding federal

deductions.

(5) In the case of a nonresident individual or partner of a

partnership doing an insurance business as a member of the New York

insurance exchange described in section six thousand two hundred one of

the insurance law, any item of income, gain, loss or deduction of such

business which is the individual's distributive or pro rata share for

federal income tax purposes or which the individual is required to take

into account separately for federal income tax purposes, shall not

constitute income, gain, loss or deduction derived from New York

sources.

(6) The deduction allowed by section two hundred fifteen of the

internal revenue code, relating to alimony, shall not constitute a

deduction derived from New York sources.

(c) Income and deductions partly from New York sources. If a business,

trade, profession or occupation is carried on partly within and partly

without this state, as determined under regulations of the tax

commission, the items of income, gain, loss and deduction derived from

or connected with New York sources shall be determined by apportionment

and allocation under such regulations.

(d) Purchase and sale for own account.-- A nonresident, other than a

dealer holding property primarily for sale to customers in the ordinary

course of his trade or business, shall not be deemed to carry on a

business, trade, profession or occupation in this state solely by reason

of the purchase and sale of property or the purchase, sale or writing of

stock option contracts, or both, for his own account.

(e) Military pay. Compensation paid by the United States for active

service in the armed forces of the United States, performed by an

individual not domiciled in this state, shall not constitute income

derived from New York sources.

(f) Husband and wife. If husband and wife determine their federal

income tax on a joint return but are required to determine their New

York income taxes separately, they shall determine their New York source

incomes separately as if their federal adjusted gross incomes had been

determined separately.

(g) Stock option grants, stock appreciation rights and restricted

stock. A nonresident taxpayer who has been granted statutory stock

options, restricted stock, nonstatutory stock options or stock

appreciation rights and who, during such grant period, performs services

within New York for, or is employed within New York by, the corporation

granting such option, stock or right, shall compute his or her New York

source income as determined under rules and regulations prescribed by

the commissioner.