S T A T E   O F   N E W   Y O R K
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                                 7085--A

                       2015-2016 Regular Sessions

                          I N  A S S E M B L Y

                             April 23, 2015
                               ___________

Introduced  by M. of A. MAGEE -- read once and referred to the Committee
  on Ways and Means -- recommitted to the Committee on Ways and Means in
  accordance with Assembly Rule 3, sec. 2 -- committee discharged,  bill
  amended,  ordered reprinted as amended and recommitted to said commit-
  tee

AN ACT to amend the tax law, in relation to farm savings accounts

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

  Section  1.  The tax law is amended by adding a new section 42 to read
as follows:
  S 42. FARM SAVINGS ACCOUNTS. 1. DEFINITIONS. (A) QUALIFIED FARMER. FOR
PURPOSES OF THIS  SECTION,  THE  TERM  "QUALIFIED  FARMER"  MEANS,  WITH
RESPECT  TO  ANY TAXABLE YEAR, ANY INDIVIDUAL WHO, DURING SUCH YEAR, WAS
ENGAGED IN THE TRADE OR BUSINESS OF FARMING.
  (B) FARM SAVINGS ACCOUNT. FOR PURPOSES OF THIS SECTION, THE TERM "FARM
SAVINGS ACCOUNT" MEANS A TRUST CREATED OR ORGANIZED IN THE UNITED STATES
AS A FARM SAVINGS ACCOUNT EXCLUSIVELY FOR THE PURPOSE OF  MAKING  QUALI-
FIED  DISTRIBUTIONS FOR PURPOSES OF FARM SUSTAINABILITY, BUT ONLY IF THE
WRITTEN GOVERNING INSTRUMENT CREATING  THE  TRUST  MEETS  THE  FOLLOWING
REQUIREMENTS:
  (I) NO CONTRIBUTION WILL BE ACCEPTED UNLESS IT IS IN CASH.
  (II) THE TRUSTEE IS A BANK, CREDIT UNION OR OTHER APPROPRIATE INSTITU-
TION  THAT  DEMONSTRATES ADMINISTRATION OF THE TRUST IN A MANNER THAT IS
CONSISTENT WITH THE REQUIREMENTS OF THIS SECTION.
  (III) THE ASSETS OF THE TRUST WILL NOT BE COMMINGLED WITH OTHER  PROP-
ERTY EXCEPT IN A COMMON TRUST FUND OR COMMON INVESTMENT FUND.
  (IV)  THE  INTEREST  OF  AN  INDIVIDUAL  IN  THE BALANCE IN HIS OR HER
ACCOUNT IS NONFORFEITABLE.
  (C) QUALIFIED DISTRIBUTION. THE TERM  "QUALIFIED  DISTRIBUTION"  MEANS
ANY  AMOUNT  PAID FROM A FARM SAVINGS ACCOUNT TO THE ACCOUNT BENEFICIARY
EXCLUSIVELY FOR PURPOSES OF FARM SUSTAINABILITY.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD07647-03-6
              

A. 7085--A                          2

  (D) ACCOUNT BENEFICIARY. THE  TERM  "ACCOUNT  BENEFICIARY"  MEANS  THE
INDIVIDUAL  OR  BUSINESS  ON  WHOSE  BEHALF THE FARM SAVINGS ACCOUNT WAS
ESTABLISHED.
  2. PROGRAM DESCRIPTION. (A) DEDUCTIONS ALLOWED. IN THE CASE OF A QUAL-
IFIED FARMER, THERE SHALL BE ALLOWED AS A DEDUCTION FOR THE TAXABLE YEAR
AN AMOUNT EQUAL TO THE AGGREGATE AMOUNT PAID IN CASH DURING SUCH TAXABLE
YEAR  BY  OR  ON  BEHALF OF SUCH INDIVIDUAL TO A FARM SAVINGS ACCOUNT OF
SUCH INDIVIDUAL.
  (B) CONTRIBUTION REQUIREMENT. THERE SHALL BE  NO  MINIMUM  OR  MAXIMUM
CONTRIBUTION  REQUIREMENT.  HOWEVER,  AGGREGATE  CONTRIBUTIONS  MAY  NOT
EXCEED TOTAL INCOME DERIVED FROM FARMING DURING A GIVEN TAXABLE YEAR.
  (C) TAX TREATMENT OF ACCOUNTS. A FARM SAVINGS ACCOUNT IS  EXEMPT  FROM
TAXATION  UNDER THIS CHAPTER UNLESS SUCH ACCOUNT HAS CEASED TO BE A FARM
SAVINGS ACCOUNT.
  (D) TERMINATION OF ACCOUNTS. IF  THE  ACCOUNT  BENEFICIARY  CEASES  TO
ENGAGE IN THE TRADE OR BUSINESS OF FARMING, ALL FARM SAVINGS ACCOUNTS OF
SUCH  INDIVIDUAL  SHALL CEASE TO BE SUCH ACCOUNTS AND THE BALANCE OF ALL
SUCH ACCOUNTS SHALL BE TREATED AS (I) DISTRIBUTED  TO  SUCH  INDIVIDUAL,
AND (II) NOT PAID IN A QUALIFIED DISTRIBUTION.
  (E)  TAX  TREATMENT  OF  DISTRIBUTIONS.  (I)  GENERAL. IN GENERAL, ANY
AMOUNT PAID OR DISTRIBUTED OUT  OF  A  FARM  SAVINGS  ACCOUNT  SHALL  BE
INCLUDED IN GROSS INCOME.
  (II) ADDITIONAL TAX ON NON-QUALIFIED DISTRIBUTIONS. (1) IN ADDITION TO
ANY  OTHER  TAX  IMPOSED BY THIS CHAPTER, ANY NON-QUALIFIED DISTRIBUTION
FROM A FARM SAVINGS ACCOUNT  SHALL  BE  SUBJECT  TO  A  FIFTEEN  PERCENT
SURCHARGE ON THE AMOUNT OF SUCH NON-QUALIFYING DISTRIBUTION.
  (2)  CLAUSE ONE OF THIS SUBPARAGRAPH SHALL NOT APPLY IF THE PAYMENT OR
DISTRIBUTION IS MADE AFTER THE ACCOUNT BENEFICIARY BECOMES  DISABLED  OR
DIES.
  (III) ROLLOVER CONTRIBUTIONS. FOR PURPOSES OF THIS SECTION, ANY AMOUNT
PAID OR DISTRIBUTED FROM A FARM SAVINGS ACCOUNT TO THE ACCOUNT BENEFICI-
ARY  SHALL  BE  TREATED  AS  A  QUALIFIED DISTRIBUTION TO THE EXTENT THE
AMOUNT RECEIVED IS PAID INTO A FARM SAVINGS ACCOUNT FOR THE  BENEFIT  OF
SUCH  BENEFICIARY NOT LATER THAN THE SIXTIETH DAY AFTER THE DAY ON WHICH
THE BENEFICIARY RECEIVES THE PAYMENT OR DISTRIBUTION.
  (IV) TRANSFER OF ACCOUNT INCIDENT TO DIVORCE. THE TRANSFER OF AN INDI-
VIDUAL'S INTEREST IN A FARM SAVINGS ACCOUNT TO AN INDIVIDUAL'S SPOUSE OR
FORMER SPOUSE UNDER A DIVORCE OR  SEPARATION  INSTRUMENT  SHALL  NOT  BE
CONSIDERED  A  TAXABLE  TRANSFER MADE BY SUCH INDIVIDUAL NOTWITHSTANDING
ANY OTHER PROVISION OF THIS SECTION, AND SUCH INTEREST SHALL, AFTER SUCH
TRANSFER, BE TREATED AS A FARM SAVINGS ACCOUNT  WITH  RESPECT  TO  WHICH
SUCH SPOUSE IS THE ACCOUNT BENEFICIARY.
  (V)  TREATMENT  AFTER  DEATH  OF ACCOUNT BENEFICIARY. (1) TREATMENT IF
DESIGNATED BENEFICIARY IS SPOUSE. IF THE ACCOUNT BENEFICIARY'S SURVIVING
SPOUSE ACQUIRES SUCH BENEFICIARY'S INTEREST IN A FARM SAVINGS ACCOUNT BY
REASON OF BEING THE DESIGNATED BENEFICIARY OF SUCH ACCOUNT AT THE  DEATH
OF  THE  ACCOUNT BENEFICIARY, SUCH FARM SAVINGS ACCOUNT SHALL BE TREATED
AS IF THE SPOUSE WERE THE ACCOUNT BENEFICIARY.
  (2) OTHER CASES. IF, BY REASON OF THE DEATH OF THE  ACCOUNT  BENEFICI-
ARY,  ANY  PERSON  ACQUIRES THE ACCOUNT BENEFICIARY'S INTEREST IN A FARM
SAVINGS ACCOUNT IN A CASE TO WHICH CLAUSE ONE OF THIS SUBPARAGRAPH  DOES
NOT APPLY:
  (A)  SUCH  ACCOUNT  SHALL CEASE TO BE A FARM SAVINGS ACCOUNT AS OF THE
DATE OF DEATH, AND
  (B) AN AMOUNT EQUAL TO THE FAIR MARKET VALUE OF  THE  ASSETS  IN  SUCH
ACCOUNT ON SUCH DATE SHALL BE INCLUDED IN SUCH PERSON'S GROSS INCOME FOR

A. 7085--A                          3

THE  TAXABLE  YEAR  WHICH  INCLUDES  SUCH DATE IF SUCH PERSON IS NOT THE
ESTATE OF SUCH BENEFICIARY; OR IF SUCH PERSON  IS  THE  ESTATE  OF  SUCH
BENEFICIARY,  IN  SUCH  BENEFICIARY'S  GROSS INCOME FOR THE LAST TAXABLE
YEAR OF SUCH BENEFICIARY.
  S 2. Subsection (b) of section 612 of the tax law is amended by adding
a new paragraph 43 to read as follows:
  (43)  ANY  NON-QUALIFYING  DISTRIBUTIONS  MADE  FROM  A  FARM  SAVINGS
ACCOUNT. THIS SHALL NOT INCLUDE ANY DISTRIBUTIONS THAT ARE  EXEMPT  FROM
TAXATION  AS  SPECIFIED  IN  PARAGRAPH (E) OF SUBDIVISION TWO OF SECTION
FORTY-TWO OF THIS CHAPTER.
  S 3. Subsection (c) of section 612 of the tax law is amended by adding
a new paragraph 44 to read as follows:
  (44) AN AMOUNT EQUAL TO ANY QUALIFIED CONTRIBUTION TO A  FARM  SAVINGS
ACCOUNT ESTABLISHED PURSUANT TO SECTION FORTY-TWO OF THIS CHAPTER.
  S  4.  Subdivision  4  of  section  209  of the tax law, as separately
amended by section 2 of part FF-1 of chapter 57 of the laws of 2008  and
section  5  of  part  A of chapter 59 of the laws of 2014, is amended to
read as follows:
  4. Corporations liable to tax under sections one hundred  eighty-three
to  one hundred eighty-five, inclusive, corporations taxable under arti-
cle thirty-three of this chapter, any trust company  organized  under  a
law  of  this  state all of the stock of which is owned by not less than
twenty savings banks organized under a law of this state, a captive REIT
or a captive RIC filing a  combined  return  under  subdivision  (f)  of
section  fifteen  hundred fifteen of this chapter, and housing companies
organized and operating pursuant to the provisions  of  article  two  or
article  five of the private housing finance law and housing development
fund companies organized pursuant to the provisions of article eleven of
the private housing finance law,  AND  FARM  SAVINGS  ACCOUNTS  PROPERLY
ESTABLISHED  UNDER  SECTION  FORTY-TWO  OF  THIS  CHAPTER,  shall not be
subject to tax under this article.
  S 5. Subdivision 4 of section 209  of  the  tax  law,  as  amended  by
section  5  of  part  A of chapter 59 of the laws of 2014, is amended to
read as follows:
  4. Corporations liable to tax under sections one hundred  eighty-three
to  one  hundred  eighty-four-a,  inclusive,  corporations taxable under
article thirty-three of this chapter, any trust company organized  under
a  law of this state all of the stock of which is owned by not less than
twenty savings banks organized under a law of this state, a captive REIT
or a captive RIC filing a  combined  return  under  subdivision  (f)  of
section  fifteen  hundred fifteen of this chapter, and housing companies
organized and operating pursuant to the provisions  of  article  two  or
article  five of the private housing finance law and housing development
fund companies organized pursuant to the provisions of article eleven of
the private housing finance law,  AND  FARM  SAVINGS  ACCOUNTS  PROPERLY
ESTABLISHED  UNDER  SECTION  FORTY-TWO  OF  THIS  CHAPTER,  shall not be
subject to tax under this article.
  S 6. Section 601 of the tax law is amended by adding a new  subsection
(g-1) to read as follows:
  (G-1)  FARM SAVINGS ACCOUNTS. ANY FARM SAVINGS ACCOUNT PROPERLY ESTAB-
LISHED UNDER SECTION FORTY-TWO OF THIS CHAPTER SHALL NOT BE  SUBJECT  TO
TAX UNDER THIS ARTICLE.
  S 7. This act shall take effect immediately and shall apply to taxable
years  commencing  after  such  effective  date; provided, however, that
section five of this act shall take effect on the same date and  in  the
same  manner  as section 27 of part S of chapter 59 of the laws of 2014,

A. 7085--A                          4

takes effect.  Effective immediately, the commissioner of  taxation  and
finance  may  add,  amend, or repeal any rule or regulation necessary to
timely implement the provisions of this act on its effective date.