N.Y. Comp. Codes R. & Regs. tit. 20 § 132.5

Current through Register Vol. 46, No. 22, May 29, 2024

Section 132.5 - Income from intangible personal property

Tax Law, § 632(b)(2)

(a) Items of income, gain, loss and deduction attributable to intangible personal property of a nonresident individual, including annuities, dividends, interest, and gains and losses from the disposition of intangible personal property, do not constitute items of income, gain, loss and deduction derived from or connected with New York State sources, except to the extent attributable to property employed in a business, trade, profession or occupation carried on in New York State. (See also section 3 of article XVI of the New York State Constitution.)

Example:

A, a resident of New Jersey, owns 100 percent of the stock of X Corporation, which operates a store in New York State. In 1980, the corporation pays A a salary of $20,000, all of which was earned in New York State, and a dividend of $2,000. A's income from New York State sources is his salary of $20,000, since the dividend is not income derived from New York State sources and thus not taxable for New York State personal income tax purposes.

(b) Generally, where a nonresident individual sells real or tangible personal property located in New York State and, as a result of such sale receives intangible personal property (e.g., a note) which generates interest income, such interest income is not attributable to the sale of the real or tangible personal property but is attributable to the intangible personal property. Therefore, such interest income to a nonresident does not constitute income derived from or connected with New York State sources. However, where the instrument used to generate interest income as a result of a sale of real or tangible personal property located in New York State is employed in a business, trade, profession or occupation carried on in New York State, such interest income does constitute income derived from or connected with New York State sources.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 132.5