N.Y. Comp. Codes R. & Regs. Tit. 20 §§ 3-4.5

Current through Register Vol. 46, No. 45, November 2, 2024

Section 3-4.5 - Definition of investment income

(Tax Law, section 208(6))

(a)

(1) Gross investment income is income from investment capital, to the extent included in entire net income (ENI). It includes dividends from investment capital, interest from investment capital, capital gains in excess of capital losses from the sale or exchange of investment capital and other income from investment capital.

(2) Investment income is gross investment income less either:

(i) interest deductions directly or indirectly attributable to investment capital or gross investment income determined in section 3-4.7 of this Subpart; or

(ii) the safe harbor reduction amount determined in section 3-4.8 of this Subpart.

(3) Investment income cannot exceed ENI minus other exempt income.

(b) The following ordering rules shall apply when determining the make-up of investment income in a given taxable year when the investment income is subject to the gross investment income limitation as described in subdivision (c) of this section:

(1) income from constitutionally protected investment capital;

(2) income from actual investment capital; and

(3) income from presumed investment capital.

(c) Gross investment income limitation. The limitation on investment income provided for in this subdivision does not impact the value of investment capital. Gross investment income is limited to the greater of the following amounts:

(1) income from constitutionally protected investment capital; or

(2) 8% of the taxpayer's ENI or, in the case of a combined group, 8% of the combined group's ENI.

N.Y. Comp. Codes R. & Regs. Tit. 20 §§ 3-4.5

Adopted New York State Register December 27, 2023/Volume XLV, Issue 52, eff. 12/27/2023