I have a H/W CT residents who have owned a partnership operating in NY for a few years. In 2007 both sold 100% of the partnership interests to an outside corporation. That sale of their interests as well as the dissolution of the partnership impact a number of areas on their joint 1040. As I'm preparing their personal returns, when I'm on the NY NR return, is that capital gain on their Sch D from the sale of their interest taxable in the NY column? I'm guessing the answer will be the same for everything else sale related, such as the recapture of depreciation. Thanx for any guidance.
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NY Queston
Since the partnership interests are New York source income, everything associated with it it taxable to New York.Uncle Sam, CPA, EA. ARA, NTPI Fellow -
Thank you
That was my take from reading instructions and searching NY's web site. But with a couple of percent higher tax rate and LOTS of money involved, I didn't want to subject my clients to higher taxes if there was some way to call it passive income earned while CT residents (like a sale of mutual fund shares). They didn't own the real estate, just rented. They haven't been active for several years since getting day jobs in CT; hired people to run the business (conversion of books to electronic media). Own no inventory in NY, company provided a service. Was hoping for a loophole to treat this more like a stock sale (it is a sale of their partnership interests, after all) than the sale of a business. Thanks for your time.Comment
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However you treat it on the federal return is how you treat it on the NYS return.This post is for discussion purposes only and should be verified with other sources before actual use.
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Ok
Yeah, got that. But, many capital gains, dividends, interest, etc., get taxed only on the CT return for CT residents. Was just looking for a way to keep it there with the lower tax rate. But, since it's a sale of their interest in a company that operated in NYC, I think I have to show it on the NY side of the column on the NY NRPY return.Comment
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NYS taxes CG as ordinary income.
Interest, div, etc are residents state issues only if paid by banks, brokerages, etc. If the interest or div has to do with the partnership it is NY source income.Last edited by BOB W; 04-14-2008, 03:20 PM.This post is for discussion purposes only and should be verified with other sources before actual use.
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