senate Bill S3276A

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:S3276A

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 corpo-
ration 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, 2014.

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

                                 3276--A

                       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 -- recommitted to the Committee on Investigations  and
  Government  Operations  in  accordance  with  Senate Rule 6, sec. 8 --
  committee discharged, bill amended, ordered reprinted as  amended  and
  recommitted to said committee

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 a 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, 2014.



 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD01846-03-4

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