S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   10292
 
                           I N  A S S E M B L Y
 
                              April 15, 2020
                                ___________
 
 Introduced  by M. of A. STECK -- read once and referred to the Committee
   on Ways and Means
 
 AN ACT to amend the tax law, in relation to changing the  allocation  of
   the  QEZE tax reduction credit to reflect business activity within the
   QEZE
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section  1.  Paragraph  2  of subdivision (f) of section 16 of the tax
 law, as amended by section 14 of part CC of chapter 85 of  the  laws  of
 2002,  and  clause  (ii) of subparagraph (B) as amended by section 34 of
 part A of chapter 59 of the laws of 2014, is amended to read as follows:
   (2) Sole proprietors, partners and  S  corporation  shareholders.  (A)
 Where  the  taxpayer  is  a  sole  proprietor of a qualified empire zone
 enterprise, the taxpayer's tax factor  shall  be  that  portion  of  the
 amount  determined in paragraph one of this subdivision which is attrib-
 utable to the income of  the  qualified  empire  zone  enterprise.  Such
 attribution shall be made in accordance with the ratio of the taxpayer's
 income  from  the  qualified empire zone enterprise allocated within the
 state, entering into New York adjusted gross income AS REPORTED  ON  THE
 TAXPAYER'S  INCOME  TAX  RETURN,  OR to the taxpayer's New York adjusted
 gross income[, or in accordance with such other methods as  the  commis-
 sioner  may  prescribe  as  providing  an apportionment which reasonably
 reflects the portion of the taxpayer's tax attributable to the income of
 the qualified empire zone enterprise]  AS  REPORTED  ON  THE  TAXPAYER'S
 INCOME TAX RETURN. In no event may the ratio so determined exceed 1.0.
   (B)(i)  Where  the  taxpayer  is  a member of a partnership which is a
 qualified empire zone enterprise, the taxpayer's  tax  factor  shall  be
 that  portion of the amount determined in paragraph one of this subdivi-
 sion which is attributable to the income of the partnership. Such attri-
 bution shall be made in accordance  with  the  ratio  of  the  partner's
 income  from the partnership allocated within the state to the partner's
 entire income[, or in accordance with such other methods as the  commis-
 sioner  may  prescribe  as  providing  an apportionment which reasonably
 reflects the portion of the partner's tax attributable to the income  of

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
              

                       [ ] is old law to be omitted.
                                                            LBD14799-02-0

 A. 10292                            2

 the partnership] AS REPORTED BY THE PARTNER ON SUCH PARTNER'S INCOME TAX
 RETURN. In no event may the ratio so determined exceed 1.0.
   (ii)  For  purposes of article nine-A of this chapter, the term "part-
 ner's income from the partnership" means partnership  items  of  income,
 gain,  loss  and deduction, and New York modifications thereto, entering
 into business income and the term "partner's entire income" means  busi-
 ness  income allocated within the state. For purposes of article thirty-
 three of this chapter, the term "partner's income from the  partnership"
 means  partnership  items  of  income, gain, loss and deduction, and New
 York modifications thereto, entering into entire net  income  or  entire
 net  income  plus  compensation  and  the term "partner's entire income"
 means entire net income, or entire net income plus  compensation,  allo-
 cated within the state. For purposes of article twenty-two of this chap-
 ter,  the term "partner's income from the partnership" means partnership
 items of income, gain, loss and deduction, and  New  York  modifications
 thereto,  entering  into  New  York  adjusted gross income, and the term
 "partner's entire income" means New York adjusted gross income.
   (C) Where the taxpayer is a shareholder of a New  York  S  corporation
 which  is  a  qualified  empire  zone  enterprise, the shareholder's tax
 factor shall be that portion of the amount determined in  paragraph  one
 of  this subdivision which is attributable to the income of the S corpo-
 ration. Such attribution shall be made in accordance with the  ratio  of
 the  shareholder's  income  from  the S corporation allocated within the
 state, entering into THE SHAREHOLDER'S New York adjusted gross income AS
 REPORTED ON THE INCOME TAX RETURN OF THE S CORPORATION,  to  the  share-
 holder's  New  York  adjusted  gross income[, or in accordance with such
 other methods as the commissioner may prescribe as providing  an  appor-
 tionment  which reasonably reflects the portion of the shareholder's tax
 attributable to the income of the qualified empire zone  enterprise]  AS
 REPORTED  ON  THE  SHAREHOLDER'S  INCOME TAX RETURN. In no event may the
 ratio so determined exceed 1.0.
   (D) FOR THE PURPOSES OF CALCULATING THE AMOUNT DETERMINED IN PARAGRAPH
 ONE OF THIS SUBDIVISION WHICH IS ATTRIBUTABLE TO THE INCOME OF THE QUAL-
 IFIED EMPIRE ZONE ENTERPRISE, TO THE EXTENT THAT THE  APPLICABLE  INCOME
 TAX RETURN FOR THE QUALIFIED EMPIRE ZONE ENTERPRISE DOES NOT PROVIDE FOR
 AN  ALLOCATION  OF INCOME WITHIN AND WITHOUT NEW YORK STATE, THE TAXPAY-
 ER'S INCOME FROM THE QUALIFIED EMPIRE ZONE ENTERPRISE  ALLOCATED  WITHIN
 THE STATE SHALL BE: (I) THE FEDERAL ADJUSTED GROSS INCOME OF THE TAXPAY-
 ER,  (II)  ADJUSTED FOR THE NEW YORK MODIFICATIONS, (III) LESS INCOME OF
 THE QUALIFIED EMPIRE ZONE ENTERPRISE  ACTUALLY  TAXED  IN  JURISDICTIONS
 OUTSIDE  NEW  YORK.  FOR PURPOSES OF THIS SUBPARAGRAPH, A CALCULATION OF
 THE BUSINESS APPORTIONMENT FACTOR UNDER SECTION  TWO  HUNDRED  TEN-A  OF
 THIS  CHAPTER  DOES  NOT  PROVIDE FOR AN ALLOCATION OF INCOME WITHIN AND
 WITHOUT NEW YORK STATE.
   § 2. This act shall take effect immediately and  shall  be  deemed  to
 have  been  in  full  force  and effect on the same date and in the same
 manner as section 2 of part GG of chapter 63 of the laws of  2000,  took
 effect, and shall apply only to any matters not precluded by the statute
 of limitations as of the date this act shall have become a law.