Bill Text: NY A05092 | 2021-2022 | 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 47-0)

Status: (Introduced) 2021-02-11 - referred to ways and means [A05092 Detail]

Download: New_York-2021-A05092-Introduced.html



                STATE OF NEW YORK
        ________________________________________________________________________

                                          5092

                               2021-2022 Regular Sessions

                   IN ASSEMBLY

                                    February 11, 2021
                                       ___________

        Introduced  by M. of A. DE LA ROSA, REYES, SIMON, EPSTEIN, HEVESI, DAVI-
          LA, SEAWRIGHT, GOTTFRIED, CARROLL, NOLAN, NIOU,  GLICK,  L. ROSENTHAL,
          HUNTER,  CRUZ,  BRONSON, ROZIC, KIM, JEAN-PIERRE, RODRIGUEZ, PICHARDO,
          CAHILL, THIELE, RAMOS, FERNANDEZ, TAYLOR, RICHARDSON, PERRY,  SOLAGES,
          O'DONNELL,  DINOWITZ, WALKER, WEPRIN, BICHOTTE HERMELYN, QUART -- 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, shall recognize gain or loss
     9  as if each asset owned by the individual taxpayer were sold for its fair
    10  market  value  on  that  date. Any resulting net gains from these deemed
    11  sales, up to the phase-in cap amount, shall be included in  the  taxpay-
    12  er's  income for the two thousand twenty-one tax year. Proper adjustment
    13  shall be made in the amount of any gain or  loss  subsequently  realized
    14  for gain or loss taken into account under the preceding sentence. At the
    15  taxpayer's  option,  any  additional  tax  payable  as  a result of this
    16  subsection shall either be payable along with any other tax owed for the
    17  two thousand twenty-one tax year or else shall be  payable  annually  in
    18  ten  equal  installments  beginning in the year of the effective date of
    19  this section and with all such installment payments commencing after the
    20  initial installment payment also being subject to an  annual  nondeduct-
    21  ible deferral charge.  The annual nondeductible deferral charge shall be

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD06600-02-1

        A. 5092                             2

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

        A. 5092                             3

     1  other entity described in section 501(c) or section 527 of the  Internal
     2  Revenue Code of which the taxpayer and/or any person or entity described
     3  in  paragraph  two  of  this subsection is a substantial contributor (as
     4  such term is defined in Section 4958(c)(3)(B)(i) of the Internal Revenue
     5  Code),  and (4) without duplication, all gifts and donations made within
     6  the past five years by the taxpayer or any person or entity described in
     7  paragraph two of this subsection as if such  gifts  and  donations  were
     8  still  owned  by  the  taxpayer.  For  the purpose of this section, "net
     9  assets" shall include the fair market value  of  assets  less  the  fair
    10  market value of liabilities of the taxpayer and, in appropriate cases as
    11  determined  by  the  commissioner,  liabilities  of  such  other persons
    12  described in the definition of assets.
    13    (e) (1) The fair market value of each  asset  owned  by  the  taxpayer
    14  shall  be  the  price  at  which such asset would change hands between a
    15  willing buyer and a willing seller, neither being under  any  compulsion
    16  to  buy  or  to  sell,  and both having reasonable knowledge of relevant
    17  facts. The value of a particular asset shall not be  the  price  that  a
    18  forced  sale  of  the  property  would produce. Further, the fair market
    19  value of an asset shall not be the sale price in  a  market  other  than
    20  that in which such item is most commonly sold to the public, taking into
    21  account the location of the item wherever appropriate. In the case of an
    22  asset  which  is  generally obtained by the public in the retail market,
    23  the fair market value of such an asset shall be the price at which  such
    24  item or a comparable item would be sold at retail.
    25    (2)  For  purposes of this section, any feature of an asset, such as a
    26  poison pill, that was added with the intent,  and  has  the  effect,  of
    27  reducing  the  value of the asset shall be disregarded, and no valuation
    28  or other discount shall be taken into  account  if  it  would  have  the
    29  effect of reducing the value of a pro rata economic interest in an asset
    30  below the pro rata portion of the value of the entire asset.
    31    (f)  (1) (A) The commissioner shall amend the New York personal income
    32  tax forms and amend or create any  other  forms  as  necessary  for  the
    33  reporting  of  gains  by  assets.  Assets  shall  be  listed  with (i) a
    34  description of the asset, (ii) the asset category, (iii)  the  year  the
    35  asset  was acquired, (iv) the adjusted New York basis of the asset as of
    36  December thirty-first of the tax year, (v) the fair market value of  the
    37  asset  as  of December thirty-first of the tax year, and (vi) the amount
    38  of gain that would be New York taxable income, unless  the  commissioner
    39  shall  determine  that  one  or more categories is not appropriate for a
    40  particular type of asset.
    41    (B) Asset categories shall include, but not be limited to, the follow-
    42  ing:
    43    (i) stock held in any publicly traded corporation;
    44    (ii) stock held in any private traded C corporation;
    45    (iii) stock held in any S corporation;
    46    (iv) interests in any private equity or  hedge  fund  organized  as  a
    47  partnership;
    48    (v) interests in any other partnerships;
    49    (vi) interests in any other noncorporate businesses;
    50    (vii) bonds and interest bearing savings accounts, cash and deposits;
    51    (viii) interests in mutual funds or index funds;
    52    (ix) put and call options;
    53    (x) futures contracts;
    54    (xi)  financial  assets  held  offshore reported on IRS tax form eight
    55  thousand nine hundred thirty-eight;
    56    (xii) real property;

        A. 5092                             4

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