N.Y. Comp. Codes R. & Regs. tit. 20 § 112.6

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

Section 112.6 - New York adjusted gross income of a husband and wife

Tax Law, § 612 (f)

Where a husband and wife determine their Federal income tax for a particular taxable year on a joint Federal income tax return, but are required to determine their New York State personal income taxes separately, they are then required to compute their New York adjusted gross incomes separately; that is, in the same manner as if the Federal adjusted gross income of each spouse had been determined on separate Federal income tax returns filed by them. Several of the various special situations arising from these different methods of filing income tax returns under the two laws are discussed in this section.

(a) Election to expense certain depreciable business assets. Under section 179 of the Internal Revenue Code, a taxpayer may elect to treat the cost of certain business property as an expense which is not chargeable to a capital account and such cost shall be allowed as a deduction for the taxable year in which the property is placed in service. Where a husband and wife are required to file separate New York State personal income tax returns, the provisions of section 179(b)(4) of the Internal Revenue Code shall be applicable in determining such husband's and wife's separate New York adjusted gross incomes.

(b)Individual Retirement Arrangement (IRA) Deduction.

Where a husband and wife file a joint Federal income tax return, but are required to file separate New York State personal income tax returns, the individual retirement arrangement deduction allowable on the separate New York State personal income tax return of each spouse is the amount of such deduction which would be allowable if a separate Federal income tax return had been filed by each spouse for the taxable year involved (see section 219 of the Internal Revenue Code).

(c)Net operating loss carryover.

A net operating loss carryback or carryover results in a recomputation of Federal adjusted gross income for the prior or succeeding years. Such net operating loss carryback or carryover is, therefore, reflected in New York adjusted gross income for the taxable year involved. Where a husband and wife are required to file separate New York State personal income tax returns, the benefit of the net operating loss carryback or carryover may be claimed only by the spouse who sustained the loss.

(d)Income from jointly owned property.

A husband and wife who file a joint Federal income tax return and who are required to file separate New York State personal income tax returns must each report his or her share of income from jointly owned real estate, stocks, bonds, bank accounts and other property, in the same manner as if their Federal adjusted gross incomes had been determined separately. The rules for determining the manner of reporting this income depend upon the nature of the ownership interests and, in general, may be summarized as follows:

(1) Joint tenants. A husband and wife owning property as joint tenants with right of survivorship (a common example of which is a joint bank account) should each report one half of the income from the property when separate New York State personal income tax returns are required to be filed.

(2) Tenants by the entirety. A husband and wife should each report on separate New York State personal income tax returns one half of the income from real estate held by them as tenants by the entirety.

(3) Tenants in common. Income from property held by husband and wife as tenants in common is reportable by them in proportion to their legal ownership interests in the property, which will generally be equivalent to their ratable contributions to the investment in such property.

(e)Capital loss carryover.

(1) Where a husband and wife file a joint Federal income tax return but are required to file separate New York State personal income tax returns, the capital loss carryover allowable on the separate New York State personal income tax return of each spouse is the amount of capital loss carryover which would be allowable if a separate Federal income tax return had been filed by each spouse for the taxable year involved.

Example:

H and W file a joint Federal income tax return, including therein H's short-term capital gain of $10,000 and W's short-term capital loss of $9,000. On their joint Federal income tax return, a net short-term capital gain of $1,000 would be reportable and there would be no capital loss carryover for Federal income tax purposes, regardless of whether H and W file a joint or separate Federal income tax return in the subsequent taxable year. On their separate New York State personal income tax returns, H would include his capital gain of $10,000 and W would report a capital loss which would be limited to the maximum amount of capital loss allowed a married individual filing a separate Federal income tax return. W would not be allowed a capital loss carryover on her subsequent New York State personal income tax return since she cannot claim a capital loss carryover on her subsequent Federal income tax return whether a joint or separate Federal income tax return is filed.

(2) The New York State capital loss carryover of either spouse is determined solely by the amount that would be allowable for Federal income tax purposes if separate Federal income tax returns had been filed. No adjustment or modification may be made on the basis of any New York State capital loss carryover from a year when article 16 of the Tax Law was applicable. See section 112.3(d)(5) of this Part.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 112.6