senate Bill S3276

Amended

Establishes a deduction for stock options

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 31 / Jan / 2013
    • REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 08 / Jan / 2014
    • REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 24 / Jan / 2014
    • AMEND AND RECOMMIT TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 24 / Jan / 2014
    • PRINT NUMBER 3276A

Summary

Establishes a deduction for stock options.

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Bill Details

Versions:
S3276
S3276A
Legislative Cycle:
2013-2014
Current Committee:
Senate Investigations And Government Operations
Law Section:
Tax Law
Laws Affected:
Amd ยง208, Tax L
Versions Introduced in 2011-2012 Legislative Cycle:
S6885

Sponsor Memo

BILL NUMBER:S3276

TITLE OF BILL: An act to amend the tax law, in relation to the
deduction for stock options

PURPOSE: This legislation would specify that the deduction can only
be based on the price of the stock at the time of issuance of the
option, not the price of the stock when sold.

SUMMARY OF PROVISIONS: The Tax Law is amended by adding a new
paragraph 21 to paragraph (b) of subdivision 9 of section 208.

JUSTIFICATION: Currently, there is a loophole in the Federal Tax Code
which allows for a corporation to take a tax deduction based on the
price of a previously given stock option when it is sold, rather than
the price when it was issued. Specifically, many corporations have
given stock options at a set value to executives within their company
instead of cash bonus payments. If the stock increased in value and
the compensated executives sold their stocks at a higher price than
the original value, the corporation would then be eligible for a tax
deduction based on the higher price rather than the lower original
price. As with. many taxes, New York State is currently coupled with
the Federal Tax Code on this issue. It is unclear how much New York
State is currently losing because of the loophole.

The legislative solution to this loophole, is to specify at what term
in the issuance of the stock options a corporation may take a
compensation deduction.

FISCAL IMPLICATIONS: The current tax loophole is estimated to cost
the Federal Government approximately $2.5 billion annually which would
increase New York State revenue by an undetermined amount.
Additionally, the fiscal impact of this legislation may greatly
increase in the future as the compensation packages on Wall Street
rely less on cash bonuses and more on stock options.

EFFECTIVE DATE: This act shall take effect immediately and shall
apply to taxable years beginning on and after January 1, 2013.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  3276

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                            January 31, 2013
                               ___________

Introduced  by  Sen. KRUEGER -- read twice and ordered printed, and when
  printed to be committed to the Committee on Investigations and Govern-
  ment Operations

AN ACT to amend the tax law, in relation  to  the  deduction  for  stock
  options

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Paragraph (b) of subdivision 9 of section 208  of  the  tax
law is amended by adding new subparagraph 21 to read as follows:
  (21)  IN  THE  CASE  OF PROPERTY TRANSFERRED TO A PERSON IN CONNECTION
WITH THE PERFORMANCE  OF  SERVICES,  ANY  DEDUCTION  RELATING  TO  STOCK
OPTIONS PURSUANT TO THE INTERNAL REVENUE CODE SECTION 83(H) FOR PROPERTY
DESCRIBED IN SUBSECTION (A) OF THAT SECTION, IN EXCESS OF THE AMOUNT THE
TAXPAYER  WAS ALLOWED TO TREAT AS COMPENSATION COST WITH RESPECT TO THAT
PROPERTY IN THE YEAR  THE  STOCK  OPTION  WAS  GRANTED  UNDER  GENERALLY
ACCEPTED  ACCOUNTING  PRINCIPLES FOR THE PURPOSE OF ASCERTAINING INCOME,
PROFIT, OR LOSS IN A REPORT OR STATEMENT TO  SHAREHOLDERS,  PARTNERS  OR
OTHER PROPRIETORS (OR TO BENEFICIARIES).
  S 2. This act shall take effect immediately and shall apply to taxable
years beginning on and after January 1, 2013.




 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD01846-01-3

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