Now in the heart of tax season, we are reminded about many of New York’s tax credits and deductions still available to taxpayers despite federal deductions being eliminated with the passage of the Tax Cuts and Jobs Act (TCJA) in December 2017. Over the past year, there has been a flurry of activity as New York legislative bodies and federal regulations drafters have offered up various SALT “workarounds,” to deal with the $10,000 SALT cap. But recent reporting out of the New York budget office (from New York State Comptroller Thomas P. DiNapoli’s February 27 report on the proposed executive fiscal budget for 2020 (the “Report”) (see page 25-26)) suggests that these workarounds aren’t really working.
A few months ago, we wrote about the recent guidance that the Tax Department issued about itemized deduction decoupling (TSB-M-18(6)). The guidance addresses New York State’s decoupling from the federal treatment of deductions for individuals, but it was not initially clear whether these changes also apply to trusts and estates.
As reported here last month, a recent purchase of a $238 million apartment in New York City has re-sparked a debate among New York officials about taxing second homes owned by nonresidents. As New York’s lawmakers look to finalize a budget by April 1st, and to find new ways to fund New York City’s subway system, the pied-a-terre tax is viewed as a new quill in the arsenal. (The Assembly Budget Proposal is A. 2009-B).
This article originally appeared in Law360 and is reprinted with permission.
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