A 7016: Relates to expanding New York's manufacturing tax incentive to S corporations which are qualified New York state manufacturers.

  
  STATE OF NEW YORK ________________________________________________________________________ 7016 2025-2026 Regular Sessions  IN ASSEMBLY March 18, 2025 ___________ Introduced by M. of A. STIRPE -- read once and referred to the Committee on Ways and Means AN ACT to amend the tax law, in relation to expanding New York's manu- facturing incentive to S corporations The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Paragraph 22 of subsection (c) of section 612 of the tax 2 law, as amended by chapter 606 of the laws of 1984, subparagraph (A) as 3 amended by chapter 28 of the laws of 1987, and subparagraph (B) as 4 amended by chapter 190 of the laws of 1990, is amended to read as 5 follows: 6 (22) In the case of a shareholder of an S corporation (A) where the 7 election provided for in subsection (a) of section six hundred sixty of 8 this article has not been made with respect to such corporation, any 9 item of income of the corporation included in federal gross income 10 pursuant to section thirteen hundred sixty-six of the internal revenue 11 code, [and] 12 (B) in the case of a New York S termination year, subparagraph (A) of 13 this paragraph shall apply to the amounts of income determined under 14 subsection (s) of this section, and 15 (C) in the case of distributions as defined by sections three hundred 16 one and thirteen hundred sixty-eight of the internal revenue code from 17 corporations described in subparagraph (A) of this paragraph, and that 18 are qualified New York manufacturers as defined by subparagraph (vi) of 19 paragraph (a) of subdivision one of section two hundred ten of this 20 chapter, received during the tax year of the shareholder, the lesser of: 21 (1) the shareholder's combined separately stated items of income, 22 loss, or deduction, described in paragraph two of subsection (a) of 23 section thirteen hundred sixty-six of the internal revenue code and 24 regulations promulgated thereunder, that are includable in, or deduct- 25 ible from, a shareholder's federal taxable income, multiplied by the EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD10131-01-5 
 A. 7016 2 1 highest marginal federal tax rate for individuals in section one of the 2 internal revenue code, in effect for the shareholder's tax year, 3 provided, however, that if there is more than one such rate in effect 4 during such year, a blended rate, considering each rate and the number 5 of months in effect, shall be used, and 6 (2) the amount of actual distributions made to the shareholder during 7 the shareholder's tax year. 8 § 2. Paragraph 2 of subsection (e) of section 612 of the tax law, as 9 amended by chapter 166 of the laws of 1991, is amended to read as 10 follows: 11 (2) Shareholders of S corporations which are New York C corporations. 12 In the case of a shareholder of an S corporation which is a New York C 13 corporation, (A) the modifications under this section which relate to 14 the corporation's items of income, loss and deduction shall not apply, 15 except for the modifications provided under paragraph nineteen of 16 subsection (b) and paragraph twenty-two of subsection (c) of this 17 section, and 18 (B) the modification for corporate distributions described in subpara- 19 graph (C) of paragraph twenty-two of subsection (c) of this section 20 shall apply. 21 § 3. Paragraph 2 of subsection (a) of section 631 of the tax law, as 22 amended by chapter 170 of the laws of 1994, is amended to read as 23 follows: 24 (2) The portion of the modifications described in subsections (b) and 25 (c) of section six hundred twelve of this article which relate to income 26 derived from New York sources (including any modifications attributable 27 to [him] such individual as a partner or shareholder of a New York S 28 corporation), provided, however, that modifications for corporate 29 distributions described in subparagraph (C) of paragraph twenty-two of 30 subsection (c) of section six hundred twelve of this article shall be 31 limited to the amount of the distributions which relate to income 32 derived from New York sources and are included in the shareholder's New 33 York adjusted gross income. 34 § 4. This act shall take effect on the first of January next succeed- 35 ing the date on which it shall have become a law and shall apply to all 36 tax years commencing on or after such date.