N.Y. Comp. Codes R. & Regs. tit. 20 § 132.7

Current through Register Vol. 46, No. 25, June 18, 2024

Section 132.7 - Deductions with respect to capital losses, net long-term capital gains and net operating losses

Tax Law, § 632(b)(3)

(a) The deductions entering into the Federal adjusted gross income of a nonresident individual with respect to (1) capital losses, (2) 60 percent of the net capital gain on sales and exchanges after October 31, 1978 (50 percent of the net capital gain on sales and exchanges before November 1, 1978), and (3) net operating losses, are included in the computation of his New York adjusted gross income only to the extent that the items of income, gain, loss and deduction entered into his Federal adjusted gross income and are based solely on items of income, gain, loss or deduction derived from or connected with New York State sources.

(b) The amount of any deduction under this section must be computed as it would be computed for Federal income tax purposes if the New York items of income, gain, loss and deduction were the only items making up the corresponding Federal items of income, gain, loss and deduction for the particular year.

(c)

(1) Any deduction computed under this section may, by way of carryback or carryover, affect the computation of New York adjusted gross income for other years as long as such carryback or carryover is based solely on items of income, gain, loss and deduction from New York State sources.

Example:

Taxpayer A, a nonresident of New York State for the entire taxable year 1982, had a long-term capital gain from sources without New York State (from the sale of securities) of $20,000 on his Federal income tax return. A also included on his Federal income tax return a long-term capital loss of $8,000 from sources exclusively within New York State (from the sale of owned rental property). For Federal income tax purposes, A has a gain from the sale or exchange of property of $12,000 ($20,000 minus $8,000). On his New York State nonresident personal income tax return, A has only a long-term capital loss of $8,000 as this is the only capital item derived from New York State sources. A is allowed to claim a maximum capital loss deduction of $3,000 on his 1982 New York State nonresident personal income tax return and is allowed a $2,000 long-term capital loss carryover for the following year for New York State personal income tax purposes even though his 1983 Federal income tax return will show no capital loss carryover.

(2)

(i) Except as otherwise provided for in subparagraph (ii) of this paragraph, a nonresident individual who incurs a net operating loss for New York State personal income tax purposes but does not incur a net operating loss for Federal income tax purposes is required first to carryback such net operating loss to each of the three taxable years preceding the taxable year of such net operating loss and then to carry such net operating loss forward to each of the 15 years following the taxable year of such net operating loss, to the extent not absorbed. However, such net operating loss may not be carried back or carried forward to a taxable year in which the nonresident individual was or is a resident of New York State.

(ii) Where a nonresident individual incurs a net operating loss for New York State personal income tax purposes but does not incur a net operating loss for Federal income tax purposes, such nonresident individual may make an election for New York State personal income tax purposes to forego the entire three-year carryback period and to carry such net operating loss forward to each of the 15 years following the taxable year of such net operating loss, to the extent not absorbed. This election must be made by filing a New York State nonresident personal income tax return for the year of the net operating loss and attaching thereto a statement indicating that this election to forego the three-year carryback period is being made. This election must be made by the due date of the New York State nonresident personal income tax return (including extensions of time granted under Part 157 of this Title) for the year of the net operating loss. Once an election under this subparagraph to forego the three-year carryback period is made, such election may not be revoked.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 132.7