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This entry was published on 2014-09-22
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SECTION 1301-B
City separate tax on the ordinary income portion of lump sum distributions
Tax (TAX) CHAPTER 60, ARTICLE 30
§ 1301-B. City separate tax on the ordinary income portion of lump sum
distributions. (a) Imposition of separate tax. The city separate tax on
the ordinary income portion of a lump sum distribution imposed pursuant
to the authority of this article shall be imposed for each taxable year
on the ordinary income portion of a lump sum distribution of every
resident individual, estate or trust of such city which has made an
election of lump sum treatment under subsection (e) of section four
hundred two of the internal revenue code.

(b) Amount of separate tax. The amount of tax imposed pursuant to the
authority of subsection (a) for any taxable year shall be an amount
equal to five times the tax which would be imposed at the rate set forth
in paragraph three of subsection (a) or (b) of section thirteen hundred
four of this article, whichever may be applicable, if the recipient were
an individual referred to in such subsection and the city taxable income
referred to were an amount equal to one-fifth of the excess of:

(1) the total taxable amount of the lump sum distribution for the
taxable year, over

(2) the minimum distribution allowance.

(c) Minimum distribution allowance. For purposes of this section, the
minimum distribution allowance shall be that which is calculated
according to subparagraph (C) of paragraph one of subsection (e) of
section four hundred two of the internal revenue code.

(d) Liability for tax. The recipient of a lump sum distribution shall
be liable for the tax imposed pursuant to the authority of this section.

(e) Multiple distributions and distributions of annuity contracts. For
purposes of this section the rules concerning multiple distributions and
distributions of annuity contracts as specified by paragraph two of
subsection (e) of section four hundred two of the internal revenue code
shall be applicable, except that references to the "tax imposed by
paragraph (1) (A)" shall be deemed to be references to the city separate
tax on the ordinary income portion of a lump sum distribution authorized
by this article, and except that only lump sum distributions (or
portions thereof) and distributions of annuity contracts subject to the
city separate tax on the ordinary income portion of lump sum
distributions authorized by this article shall be included, and except
that references to the secretary shall be deemed to be references to the
tax commission.

(f) Definitions and special rules. For purposes of this section, the
following provisions shall apply, to the extent applicable to the
taxpayer's federal tax on lump sum distributions: (1) the definitions
and special rules as specified in paragraph four of subsection (e) of
section four hundred two of the internal revenue code; and (2) the
special rules relating to (A) individuals who have attained the age of
fifty before January first, nineteen hundred eighty-six and (B) capital
gains, as specified in paragraphs three, four, five and six of
subsection (h) of section eleven hundred twenty-two of the tax reform
act of nineteen hundred eighty-six as enacted by public law 99-514, but
(i) in the event that paragraph three of such subsection is applicable,
clause (ii) of subparagraph (B) of such paragraph shall be applied using
a rate of one and seventy-two hundredths percent, and (ii) in the event
that paragraph five of such subsection is applicable, the words "five"
and "one-fifth" in subsection (b) of this section shall be read as "ten"
and "one-tenth", respectively, and subsection (b) of this section shall
be applied by using the rate of tax specified in subsection (a) of
section thirteen hundred four as such subsection was in effect for
taxable years beginning in nineteen hundred eighty-six.

(g) Credits. The credits against tax authorized under this article,
except for the credit under subsection (a) of section thirteen hundred
ten, shall not be allowed against the city separate tax on the ordinary
income portion of lump sum distributions imposed pursuant to the
authority of this article.