N.Y. Comp. Codes R. & Regs. tit. 20 § 132.22

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

Section 132.22 - Compensation received by nonresident professional athletes

(a)

(1) General. The New York source income of a nonresident individual (see section 631[a] of the Tax Law) who is a member of a professional athletic team includes that portion of such individual's total compensation for services rendered as a member of a professional athletic team during the taxable year which the number of duty days spent within New York State rendering services for the team in any manner during the taxable year bears to the total number of duty days spent both within and without New York State during the taxable year.

(2) Special rule. Travel days that do not involve either a game, practice, team meeting, promotional caravan or other similar team event are not considered duty days spent in New York State. However, such travel days shall be considered in the total duty days spent both within and without New York State.

(b) Definitions. For purposes of this section:

(1) The term professional athletic team includes, but is not limited to, any professional baseball, basketball, football, soccer or hockey team.

(2) The term member of a professional athletic team shall include those employees who are active players, players on the disabled list and any other persons required to travel and who travel with and perform services on behalf of a professional athletic team on a regular basis. This includes, but is not limited to coaches, managers, and trainers.

(3)

(i) Except as provided in subparagraphs (iv) and (v) of this paragraph, the term duty days shall mean all days during the taxable year from the beginning of the professional athletic team's official pre-season training period through the last game in which the team competes or is scheduled to compete. Duty days shall be included in the allocation described in paragraph (a)(1) of this section for the tax year in which they occur, including where a team's official pre-season training period through the last game in which the team competes, or is scheduled to compete, occurs during more than one tax year.

(ii) Duty days shall also include days on which a member of a professional athletic team renders a service for a team on a date which does not fall within the aforementioned period (e.g., participation in instructional leagues, the "Pro Bowl" or promotional "caravans"). Rendering a service includes conducting training and rehabilitation activities, but only if conducted at the facilities of the team.

(iii) Included within duty days shall be game days, practice days, days spent at team meetings, promotional caravans and preseason training camps, and days served with the team through all post-season games in which the team competes or is scheduled to compete.

(iv) Duty days for any person who joins a team during the period from the beginning of the professional athletic team's official pre-season training period through the last game in which the team competes, or is scheduled to compete, shall begin on the day such person joins the team. Conversely, duty days for any person who leaves a team during such period shall end on the day such person leaves the team. Where a person switches teams during a taxable year, a separate duty day calculation shall be made for the period such person was with each team.

(v) Days for which a member of a professional athletic team is not compensated and is not rendering services for the team in any manner, including days when such member of a professional athletic team has been suspended without pay and prohibited from performing any services for the team, shall not be treated as duty days.

(vi) Days for which a member of a professional athletic team is on the disabled list and does not conduct rehabilitation activities at facilities of the team and is not otherwise rendering services for the team in New York State, shall not be considered duty days spent in New York State. However, all days on the disability list are considered to be included in total duty days spent both within and without New York State.

(vii) The provisions of this paragraph can be illustrated by the following examples:

Example 1:Player A, a member of a professional athletic team, is a nonresident of New York State. Player A's contract for such team requires A to report to such team's training camp and to participate in all exhibition, regular season, and playoff games. Player A has a contract which covers seasons that occur during yr.1/yr.2 and yr.2/yr.3. Player A's contract provides that A receive $500,000 for the yr.1/yr.2 season and $600,000 for the yr.2/yr.3 season. Assuming player A receives $550,000 from such contract during taxable year 2 ($250,000 for one-half the yr.1/yr.2 season and $300,000 for one-half the yr.2/yr.3 season), the portion of such compensation received by player A for taxable year 2, attributable to New York State, is determined by multiplying the compensation player A receives during the taxable year ($550,000) by a fraction, the numerator of which is the total number of duty days player A spends rendering services for the team in New York State during taxable year 2 (attributable to both the yr.1/yr.2 season and the yr.2/yr.3 season) and the denominator of which is the total number of player A's duty days spent both within and without New York State for the entire taxable year.

Example 2:Player B, a member of a professional athletic team, is a nonresident of New York State. During the season, B is injured and is unable to render services for B's team. While B is undergoing medical treatment at a clinic, which is not a facility of the team, but is located in New York State, B's team travels to New York State for a game. The number of days B's team spends in New York State for practice, games, meetings, etc., while B is present at such clinic, shall not be considered duty days spent in New York State for player B for that taxable year for purposes of this section, but such days are considered to be included within total duty days spent both within and without New York State.

Example 3:Player C, a member of a professional athletic team, is a nonresident of New York State. During the season, C is injured and is unable to render services for C's team. C performs rehabilitation exercises at the facilities of C's team in New York State as well as at personal facilities in New York State. The days C performs rehabilitation exercises in the facilities of C's team are considered duty days spent in New York State for player C for that taxable year for purposes of this section. However, days player C spends at personal facilities in New York State shall not be considered duty days spent in New York State for player C for that taxable year for purposes of this section, but such days are considered to be included within total duty days spent both within and without New York State.

Example 4:Player D, a member of a professional athletic team, is a nonresident of New York State. During the season, D travels to New York State to participate in the annual all-star game as a representative of D's team. The number of days D spends in New York State for practice, the game, meetings, etc., shall be considered to be duty days spent in New York State for player D for that taxable year for purposes of this section, as well as included within total duty days spent both within and without New York State.

Example 5:Assume the same facts as given in example 4, except that player D is not participating in the all-star game and is not rendering services for D's team in any manner. Player D is instead travelling to and attending such game solely as a spectator. The number of days player D spends in New York State for such game shall not be considered to be duty days spent in New York State for purposes of this section. However, such days are considered to be included within total duty days spent both within and without New York State.

(4)

(i) The term total compensation for services rendered as a member of a professional athletic team means the total compensation received during the taxable year for services rendered:

(a) from the beginning of the official pre-season training period through the last game in which the team competes or is scheduled to compete during that taxable year; and

(b) during the taxable year on a date which does not fall within the aforementioned period (e.g., participation in instructional leagues, the "Pro Bowl" or promotional "caravans").

Such compensation shall include, but is not limited to, salaries, wages, bonuses as described in subparagraph (ii) of this paragraph, and any other type of compensation paid during the taxable year to a member of a professional athletic team for services performed in that year. Such compensation shall not include strike benefits, severance pay, termination pay, contract or option year buy-out payments, expansion or relocation payments, or any other payments not related to services rendered for the team.

(ii) For purposes of this paragraph, "bonuses" included in "total compensation for services rendered as a member of a professional athletic team" subject to the allocation described in subdivision (a) of this section are:

(a) bonuses earned as a result of play (i.e., performance bonuses) during the season, including bonuses paid for championship, playoff or "bowl" games played by a team, or for selection to all-star league or other honorary positions; and

(b) bonuses paid for signing a contract, unless all of the following conditions are met:

(1) the payment of the signing bonus is not conditional upon the signee playing any games for the team, or performing any subsequent services for the team, or even making the team;

(2) the signing bonus is payable separately from the salary and any other compensation; and

(3) the signing bonus is nonrefundable.

(c) This section is designed to apportion and allocate to New York State, in a fair and equitable manner, a nonresident's total compensation for services rendered as a member of a professional athletic team. It is presumed that application of the foregoing provisions of this section will result in a fair and equitable apportionment of such compensation. Where it is demonstrated that the method provided under this section does not fairly and equitably apportion such compensation, the department may require such member of a professional athletic team to apportion and allocate such compensation under such method as the department prescribes as long as the prescribed method results in a fair and equitable apportionment. A nonresident member of a professional athletic team may submit a proposal for an alternative method to apportion such compensation where such nonresident member demonstrates that the method provided under this section does not fairly and equitably apportion such compensation. The proposed method must be fully explained in such nonresident member's New York State nonresident personal income tax return.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 132.22