senate Bill S3276A

2013-2014 Legislative Session

Establishes a deduction for stock options

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Archive: Last Bill Status - In Committee


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

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jan 24, 2014 print number 3276a
amend and recommit to investigations and government operations
Jan 08, 2014 referred to investigations and government operations
Jan 31, 2013 referred to investigations and government operations

Bill Amendments

Original
A (Active)
Original
A (Active)

S3276 - Bill Details

Current Committee:
Senate Investigations And Government Operations
Law Section:
Tax Law
Laws Affected:
Amd §208, Tax L
Versions Introduced in 2011-2012 Legislative Session:
S6885

S3276 - Bill Texts

view summary

Establishes a deduction for stock options.

view 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.

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                    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

S3276A (ACTIVE) - Bill Details

Current Committee:
Senate Investigations And Government Operations
Law Section:
Tax Law
Laws Affected:
Amd §208, Tax L
Versions Introduced in 2011-2012 Legislative Session:
S6885

S3276A (ACTIVE) - Bill Texts

view summary

Establishes a deduction for stock options.

view 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 full text
download pdf
                    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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