Bill Text: NY A03252 | 2023-2024 | General Assembly | Introduced


Bill Title: Establishes a billionaire mark-to-market tax taxing residents with one billion dollars or more in net assets.

Spectrum: Partisan Bill (Democrat 25-0)

Status: (Introduced) 2024-01-03 - referred to ways and means [A03252 Detail]

Download: New_York-2023-A03252-Introduced.html



                STATE OF NEW YORK
        ________________________________________________________________________

                                          3252

                               2023-2024 Regular Sessions

                   IN ASSEMBLY

                                    February 2, 2023
                                       ___________

        Introduced by M. of A. KELLES -- read once and referred to the Committee
          on Ways and Means

        AN  ACT  to  establish  the "billionaire mark-to-market tax act"; and to
          amend the tax law, in relation to establishing a mark-to-market tax

          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:

     1    Section  1.  This  act shall be known and may be cited as the "billio-
     2  naire mark-to-market tax act".
     3    § 2. The tax law is amended by adding a new section 612-a to  read  as
     4  follows:
     5    §  612-a. Billionaire mark-to-market taxation.  (a)(1) Notwithstanding
     6  any other provision of law to the contrary, resident individual  taxpay-
     7  ers  with  net  assets  worth one billion dollars or more on the date of
     8  December thirty-first, two thousand twenty-two, shall recognize gain  or
     9  loss as if each asset owned by the individual taxpayer were sold for its
    10  fair  market  value  on  that  date.  Any resulting net gains from these
    11  deemed sales, up to the phase-in cap amount, shall be  included  in  the
    12  taxpayer's  income  for  the  two thousand twenty-three tax year. Proper
    13  adjustment shall be made in the amount of any gain or loss  subsequently
    14  realized  for  gain  or  loss  taken  into  account  under the preceding
    15  sentence. At the taxpayer's option, any  additional  tax  payable  as  a
    16  result  of  this subsection shall either be payable along with any other
    17  tax owed for the two thousand twenty-three tax year  or  else  shall  be
    18  payable  annually in ten equal installments beginning in the year of the
    19  effective date of this section and with all  such  installment  payments
    20  commencing  after  the initial installment payment also being subject to
    21  an annual nondeductible  deferral  charge.    The  annual  nondeductible
    22  deferral charge shall be set by the state comptroller at a rate that the
    23  comptroller  estimates  is  equal to the unsecured borrowing rate of the
    24  taxpayer for a loan repaid over a ten-year term in equal annual install-
    25  ments. The comptroller may estimate a  single  rate  for  all  taxpayers

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD05077-01-3

        A. 3252                             2

     1  subject  to  the deferral charge.  For resident individual taxpayers who
     2  would recognize net gains as a result of this subsection except for  the
     3  operation of this sentence, if the taxpayer can show that any portion of
     4  such  gains  was  accumulated  prior to the taxpayer becoming a resident
     5  individual of New York, and if the taxpayer  can  also  show  that  such
     6  portion  of such gains was previously taxed by any prior state or juris-
     7  diction in which the taxpayer was a resident prior to becoming  a  resi-
     8  dent individual of New York, then credit shall be provided in the amount
     9  of any such tax on such gains paid to any such prior states or jurisdic-
    10  tions  in which the taxpayer was a resident prior to becoming a resident
    11  individual of New York. Any credits  so  provided  by  this  subsection,
    12  however,  shall  not  exceed the lesser of the total tax owed under this
    13  subsection on such gains and the tax imposed on such gains by such other
    14  prior states or jurisdictions in which the taxpayer was a resident prior
    15  to becoming a resident individual of New York.
    16    (2) For the two thousand twenty-three tax year, whether an  individual
    17  is  a  resident  individual for purposes of this section shall be deter-
    18  mined using the tests provided pursuant to paragraph one  of  subsection
    19  (b) of section six hundred five of this article.
    20    (b)  Subsequent  to  two  thousand  twenty-three,  resident individual
    21  taxpayers with net assets that are worth one billion dollars or more  at
    22  the  end of the last day of any tax year shall recognize gain or loss as
    23  if each asset owned by such taxpayer on such date were sold for its fair
    24  market value on such date, but with adjustment made for tax paid on gain
    25  in previous years. Any resulting net gains from these deemed  sales,  up
    26  to  the  phase-in cap amount, shall be included in the taxpayer's income
    27  for such taxable year. Proper adjustment shall be made in the amount  of
    28  any  gain  or  loss  subsequently  realized  for gain or loss taken into
    29  account under the preceding sentence. To the extent that the losses of a
    30  taxpayer exceed such taxpayer's gains, such  net  losses  shall  not  be
    31  recognized  in such taxable year and shall instead carry forward indefi-
    32  nitely. For resident individual taxpayers who would recognize net  gains
    33  as  a  result  of  this  subsection  except  for  the  operation of this
    34  sentence, but who were not resident individuals for all of the preceding
    35  five tax years, solely for purposes of deemed  sales  pursuant  to  this
    36  subsection,  the  tax  basis  of each asset owned on the last day of the
    37  last tax year before the resident individual became a New York  resident
    38  shall be the fair market value of the asset as of that day.
    39    (c)  For each date on which gains or losses are recognized as a result
    40  of this section, the phase-in cap amount shall be equal to a quarter  of
    41  the worth of a taxpayer's net assets in excess of one billion dollars on
    42  such date.
    43    (d)  For  the  purposes  of  determining whether a resident individual
    44  taxpayer has net assets worth one billion  dollars  or  more,  the  term
    45  "assets"  shall  include  all  of  the following, but only to the extent
    46  allowable under the New York Constitution, the United  States  Constitu-
    47  tion,  and  any other governing federal law: all owned real or personal,
    48  tangible or intangible, property, wherever situated, (1)  owned  by  the
    49  taxpayer,  (2)  owned  by  the taxpayer's spouse, minor children, or any
    50  trust or estate of which the taxpayer is a beneficiary, (3)  contributed
    51  by  the  taxpayer  or any person or entity described in paragraph two of
    52  this subsection to any private foundation, donor advised fund,  and  any
    53  other  entity described in section 501(c) or section 527 of the Internal
    54  Revenue Code of which the taxpayer and/or any person or entity described
    55  in paragraph two of this subsection is  a  substantial  contributor  (as
    56  such term is defined in Section 4958(c)(3)(B)(i) of the Internal Revenue

        A. 3252                             3

     1  Code),  and (4) without duplication, all gifts and donations made within
     2  the past five years by the taxpayer or any person or entity described in
     3  paragraph two of this subsection as if such  gifts  and  donations  were
     4  still  owned  by  the  taxpayer.  For  the purpose of this section, "net
     5  assets" shall include the fair market value  of  assets  less  the  fair
     6  market value of liabilities of the taxpayer and, in appropriate cases as
     7  determined  by  the  commissioner,  liabilities  of  such  other persons
     8  described in the definition of assets.
     9    (e) (1) The fair market value of each  asset  owned  by  the  taxpayer
    10  shall  be  the  price  at  which such asset would change hands between a
    11  willing buyer and a willing seller, neither being under  any  compulsion
    12  to  buy  or  to  sell,  and both having reasonable knowledge of relevant
    13  facts. The value of a particular asset shall not be  the  price  that  a
    14  forced  sale  of  the  property  would produce. Further, the fair market
    15  value of an asset shall not be the sale price in  a  market  other  than
    16  that in which such item is most commonly sold to the public, taking into
    17  account the location of the item wherever appropriate. In the case of an
    18  asset  which  is  generally obtained by the public in the retail market,
    19  the fair market value of such an asset shall be the price at which  such
    20  item or a comparable item would be sold at retail.
    21    (2)  For  purposes of this section, any feature of an asset, such as a
    22  poison pill, that was added with the intent,  and  has  the  effect,  of
    23  reducing  the  value of the asset shall be disregarded, and no valuation
    24  or other discount shall be taken into  account  if  it  would  have  the
    25  effect of reducing the value of a pro rata economic interest in an asset
    26  below the pro rata portion of the value of the entire asset.
    27    (f)  (1) (A) The commissioner shall amend the New York personal income
    28  tax forms and amend or create any  other  forms  as  necessary  for  the
    29  reporting  of  gains  by  assets.  Assets  shall  be  listed  with (i) a
    30  description of the asset, (ii) the asset category, (iii)  the  year  the
    31  asset  was acquired, (iv) the adjusted New York basis of the asset as of
    32  December thirty-first of the tax year, (v) the fair market value of  the
    33  asset  as  of December thirty-first of the tax year, and (vi) the amount
    34  of gain that would be New York taxable income, unless  the  commissioner
    35  shall  determine  that  one  or more categories is not appropriate for a
    36  particular type of asset.
    37    (B) Asset categories shall include, but not be limited to, the follow-
    38  ing:
    39    (i) stock held in any publicly traded corporation;
    40    (ii) stock held in any private traded C corporation;
    41    (iii) stock held in any S corporation;
    42    (iv) interests in any private equity or  hedge  fund  organized  as  a
    43  partnership;
    44    (v) interests in any other partnerships;
    45    (vi) interests in any other noncorporate businesses;
    46    (vii) bonds and interest bearing savings accounts, cash and deposits;
    47    (viii) interests in mutual funds or index funds;
    48    (ix) put and call options;
    49    (x) futures contracts;
    50    (xi)  financial  assets  held  offshore reported on IRS tax form eight
    51  thousand nine hundred thirty-eight;
    52    (xii) real property;
    53    (xiii) art and collectibles;
    54    (xiv) pension funds;
    55    (xv) other assets;
    56    (xvi) debts and liabilities; and

        A. 3252                             4

     1    (xvii) assets not owned by the taxpayer but which count toward the one
     2  billion dollar threshold pursuant to subsection (d) of this section.
     3    (2)  The  commissioner  shall  specifically request the filing of such
     4  forms by any resident individual expected to have net assets  in  excess
     5  of one billion dollars. Such taxpayers shall include, but not be limited
     6  to,  (A)  taxpayers  listed  as billionaires on published lists, and (B)
     7  taxpayers with an adjusted gross income summed  over  the  previous  ten
     8  years in excess of six hundred million dollars.
     9    (g)  In  the event that any resident individual taxpayer becomes a New
    10  York resident subsequent to paying tax to another state as a  result  of
    11  recognizing gain or loss pursuant to any mark-to-market or deemed-reali-
    12  zation  regime  of  that other state, proper adjustment shall be made in
    13  the amount of any gain or loss subsequently realized for  gain  or  loss
    14  taken  into  account  under  such  mark-to-market  or deemed-realization
    15  regime of that other state for purposes of computing gain or loss  under
    16  subsection  (a)  or  (b)  of  this  section or under section six hundred
    17  twelve of this part.
    18    (h) In the event that any provision of this section  is  found  to  be
    19  invalid,  unconstitutional,  or  otherwise  unenforceable,  that finding
    20  shall not affect any other  provision  in  this  section  which  can  be
    21  enforced without the use of the offending provision.
    22    (i) No legal or equitable process shall issue in any proceeding in any
    23  court against this state or any officer thereof to prevent or enjoin the
    24  collection  of  the tax imposed by this section. Any action for a refund
    25  of the tax imposed by this section paid, with interest, based solely  on
    26  a  question of law involving the construction of the constitution of the
    27  state or of the United States shall be heard in the  court  of  appeals.
    28  All other claims for a refund, with interest, shall be maintained in the
    29  same manner as the personal income tax.
    30    (j)  The  commissioner  shall  promulgate  such  rules and regulations
    31  necessary or appropriate to carry out  the  purposes  of  this  section,
    32  including  rules  to  prevent  the  use  of  year-end transfers, related
    33  parties, or other arrangements to avoid the provisions of this section.
    34    § 3. This act shall take effect immediately.
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