Senate Bill S3340

                                 
BILL NUMBER: S3340

SPONSOR: GIANARIS
 
TITLE OF BILL:

An act to amend the tax law and the administrative code of the city of
New York, in relation to treatment of gains from qualified opportunity
zones in calculating taxable income

 
PURPOSE:

To fully decouple NYS and NYC from the federal Opportunity Zone tax
code.

 
SUMMARY OF PROVISIONS:

Section one of the bill amends paragraph (b) of subdivision 9 of § 208
of the tax law to add a new paragraph 28 to include that "entire net
income" shall be determined without the exclusion, deduction or credit
of the amount of gain excluded from federal gross income for the taxable
year by subparagraph (c) of paragraph (1) of subsection

              

(a) of § 1400Z-2 of the internal revenue code.

Section two of the bill amends subdivision 9 of § 208 of the tax law to
add a new paragraph (u) which states that for tax years beginning on or
after January 1, 2026, upon the sale or exchange of property with
respect to which the taxpayer has made the election under subparagraph
(c) of paragraph (1) of subsection (a) of § 1400Z-2 of the internal
revenue code, the basis of such property under this article shall be
determined as if the taxpayer had not made such election.

Section three of the bill amends subsection (b) of § 612 of the tax law
to add a new paragraph 44 to include that there shall be added to feder-
al adjusted gross income the amount of gain excluded from federal gross
income for the taxable year by subparagraph (c) of paragraph (1) of
subsection (a) of § 1400Z-2 of the internal revenue code.

Section four of the bill amends § 612 of the tax law to add a new
subsection (y) which states that for tax years beginning on or after
January 1, 2026, upon the sale or exchange of property with respect to
which the taxpayer has made the election under subparagraph (c) of para-
graph (1) of subsection (a) of § 1400Z-2 of the internal revenue code,
the basis of such property under this article shall be determined as if
the taxpayer had not made such election.

Section five of the bill amends paragraph 2 of subdivision (b) of § 1503
of the tax law to add a new subparagraph (AA) to include that "entire
net income" shall be determined without the exclusion, deduction or
credit of the amount of gain excluded from federal gross income for the
taxable year by subparagraph (c) of paragraph (1) of subsection (a) of §
1400Z-2 of the internal revenue code.

Section six of the bill amends § 1503 of the tax law to add a new subdi-
vision (d) which states that for tax years beginning on or after January
1, 2026, upon the sale or exchange of property with respect to which the
taxpayer has made the election under subparagraph (c) of paragraph (1)
of subsection (a) of § 1400Z-2 of the internal revenue code, the basis

of such property under this article shall be determined as if the
taxpayer had not made such election.

Section seven of the bill amends paragraph (b) of subdivision 8 of §
11-602 of the administrative code of the city of New York to add a new
paragraph 23 to include that "entire net income" shall be determined
without the exclusion, deduction or credit of the amount of gain
excluded from federal gross income for the taxable year by subparagraph
(c) of paragraph (1) of subsection (a) of § 1400Z-2 of the internal
revenue code.

Section eight of the bill amends § 11-602 of the administrative code of
the city of New York to add a new subdivision 11 which states that for
tax years beginning on or after January 1, 2026, upon the sale or
exchange of property with respect to which the taxpayer has made the
election under subparagraph (c) of paragraph (1) of subsection (a) of

§ 1400Z-2 of the internal revenue code, the basis of such property under
this article shall be determined as if the taxpayer had not made such
election.

Section nine of the bill paragraph (a) of subdivision 8 of § 11-652 of
the administrative code of the city of New York to add a new subpara-
graph 18 to include that "entire net income" shall not include the
amount of gain excluded from federal gross income for the taxable year
by subparagraph (c) of paragraph (1) of subsection (a) of § 1400Z-2 of
the internal revenue code.

Section ten of the bill amends subdivision 8 of § 11-652 of the adminis-
trative code of the city of New York to add a new paragraph (Li) which
states that for tax years beginning on or after January 1, 2026, upon
the sale or exchange of property with respect to which the taxpayer has
made the election under subparagraph (c) of paragraph

(1) of subsection (a) of § 1400Z-2 of the internal revenue code, the
basis of such property under this article shall be determined as if the
taxpayer had not made such election.

Section eleven of the bill amends subdivision (b) of § 11-1712 of the
administrative code of the city of New York to add a new paragraph 40 to
include that there shall be added to federal adjusted gross income the
amount of gain excluded from federal gross income for the taxable year
by subparagraph (c) of paragraph (1) of subsection (a) of § 1400Z-2 of
the internal revenue code.

Section twelve of the bill amends § 11-1712 of the administrative code
of the city of New York to add a new subdivision (w) which states that
for tax years beginning on or after January 1, 2026, upon the sale or
exchange of property with respect to which the taxpayer has made the
election under subparagraph (c) of paragraph (1) of subsection (a) of §
1400Z-2 of the internal revenue code, the basis of such property under
this article shall be determined as if the taxpayer had not made such
election.

Section thirteen of the bill sets the effective date.

 
JUSTIFICATION:

The FY21 New York State Budget partially decoupled the NYS and NYC tax
laws from the federal Opportunity Zone program, which will save the
state hundreds of millions of dollars. However, it is imperative that
the Exclusion (10 year) Benefit also be decoupled. Although this benefit
has had no fiscal impact to the State for several years, it is imper-
ative that we fully decouple the program from our state's tax laws now.

 
LEGISLATIVE HISTORY:

2024: S543-B (Gianaris) PASSED SENATE / A2170-B (Dinowitz) died in ways
& means

2023: S543 (Gianaris) PASSED SENATE / A2170 (Dinowitz) died in ways &
means

2022: S6800-A (Gianaris) PASSED SENATE / A8081-A (Dinowitz) died in ways
& means

2021: S6800 (Gianaris) died in Budget & Revenue / A8081 (Dinowitz) died
in ways & means

 
FISCAL IMPLICATIONS:

The bill will prevent a loss in tax revenue to the state.

 
EFFECTIVE DATE:
This act shall take effect immediately and shall apply to taxable years
beginning on or after January 1, 2026.