Re: Non-Resident Estimated Income Tax Extended To Cover Coop Units

To: All Chicago Title Customers
From: Carol DiLaurenzio
Date: September 1, 2004

Pursuant to Part H of Chapter 60 of the Laws of 2004, Sections 631 and 663 of the New York Tax Law have been amended to require the payment of estimated personal income tax on the gain realized on the sale, conveyance or other disposition of a coop unit by a non-resident transferor. Prior to the amendments, the tax had been applicable only to the sale of real property by non-resident individuals, estates and trusts.

Any estimated personal income tax that may be due must be paid within 15 days after the delivery of the instrument affecting the transfer, which, for purposes of the amendments, shall mean the date of the instrument affecting the transfer.

The amendment will be applicable to coop unit transfers that take place on or after November 18th, 2004. A copy of the amendments are attached for your information.

As additional information becomes available on this change, we will advise you. In the meantime, if you have any questions, please contact Company Counsel.

CHAPTER 60, LAWS OF 2004
PART H

Section 1. Subparagraph (D) of paragraph 1 of subsection (b) of section 631 of the tax law, as added by chapter 586 of the laws of 1999, is amended and a new subparagraph (E) is added to read as follows:

(D) winnings from a wager placed in a lottery conducted by the division of the lottery, if the proceeds from such wager exceed five thousand dollars{.}; OR (E) GAINS FROM THE SALE, CONVEYANCE OR OTHER DISPOSITION OF SHARES OF STOCK IN A COOPERATIVE HOUSING CORPORATION IN CONNECTION WITH THE GRANT OR TRANSFER OF A PROPRIETARY LEASEHOLD BY THE OWNER THEREOF AND SUBJECT TO THE PROVISIONS OF ARTICLE THIRTY-ONE OF THIS CHAPTER, WHETHER SUCH SHARES ARE HELD BY A PARTNERSHIP, TRUST OR OTHERWISE.

S 2. Paragraph 2 of subsection (b) of section 631 of the tax law, as amended by chapter 586 of the laws of 1999, is amended to read as follows:

(2) Income from intangible personal property, including annuities, dividends, interest, and gains from the disposition of intangible personal property, shall constitute income derived from New York sources only to the extent that such income is from property employed in a business, trade, profession, or occupation carried on in this state or from winnings from a wager placed in a lottery conducted by the division of the lottery, if the proceeds from such wager exceed five thousand dollars. INCOME FROM THE DISPOSITION OF INTANGIBLE PERSONAL PROPERTY SHALL ALSO CONSTITUTE INCOME DERIVED FROM NEW YORK SOURCES TO THE EXTENT SUCH GAINS ARE FROM THE SALE, CONVEYANCE OR OTHER DISPOSITION OF SHARES OF STOCK IN A COOPERATIVE HOUSING CORPORATION IN CONNECTION WITH THE GRANT OR TRANSFER OF A PROPRIETARY LEASEHOLD BY THE OWNER THEREOF AND SUBJECT TO THE PROVISIONS OF ARTICLE THIRTY-ONE OF THIS CHAPTER, WHETHER SUCH SHARES ARE HELD BY A PARTNERSHIP, TRUST OR OTHERWISE.

S 3. Subsection (a) of section 663 of the tax law, as amended by section 1 of part P of chapter 686 of the laws of 2003, is amended to read as follows:

(a) Upon the sale of real property within the state by a nonresident taxpayer, the nonresident shall estimate the personal income tax liability on the gain, if any, from such sale or transfer. IN ADDITION, UPON THE SALE, CONVEYANCE OR OTHER DISPOSITION OF SHARES OF STOCK IN A COOPERATIVE HOUSING CORPORATION IN CONNECTION WITH THE TRANSFER OF A PROPRIETARY LEASEHOLD BY THE OWNER THEREOF AND SUBJECT TO THE PROVISIONS OF ARTICLE THIRTY-ONE OF THIS CHAPTER, THE NONRESIDENT SHALL ESTIMATE THE PERSONAL INCOME TAX LIABILITY ON THE GAIN, IF ANY, FROM SUCH SALE, CONVEYANCE OR OTHER DISPOSITION.

S 4. Paragraph 3 of subsection (c) of section 663 of the tax law, as amended by section 1 of part P of chapter 686 of the laws of 2003, is amended and a new paragraph 4 is added to read as follows:

(3) The transferor or transferee is an agency or authority of the United States of America, an agency or authority of the state of New York, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, or the Government National Mortgage Association, or a private mortgage insurance company{.}; OR (4) THE PROPRIETARY LEASEHOLD BEING TRANSFERRED IN CONNECTION WITH THE SALE, CONVEYANCE OR OTHER DISPOSITION OF THE SHARES OF STOCK IN A COOPERATIVE HOUSING CORPORATION IS A PRINCIPAL RESIDENCE OF THE SELLER OR TRANSFEROR WITHIN THE MEANING OF SECTION 121 OF THE INTERNAL REVENUE CODE;

S 5. Section 663 of the tax law is amended by adding a new subsection (i) to read as follows:

(I) THE ESTIMATED PERSONAL INCOME TAX LIABILITY ON THE GAIN, IF ANY, FROM THE SALE, CONVEYANCE OR OTHER DISPOSITION OF SHARES OF STOCK IN A COOPERATIVE HOUSING CORPORATION SHALL BE PAID TO THE COMMISSIONER NO LATER THAN THE FIFTEENTH DAY AFTER THE DELIVERY OF THE INSTRUMENT AFFECTING SUCH SALE, CONVEYANCE OR OTHER DISPOSITION. FOR PURPOSES OF THIS SECTION, THE DATE OF THE INSTRUMENT AFFECTING SUCH SALE, CONVEYANCE OR OTHER DISPOSITION SHALL BE PRESUMED TO BE THE DATE OF DELIVERY OF SUCH INSTRUMENT.

S 6. This act shall take effect immediately; provided, however, that sections one and two of this act shall apply to taxable years beginning on or after January 1, 2004; and sections three through five of this act shall take effect on the ninetieth day after this act shall have become a law and apply to sales, conveyances or other dispositions occurring on or after such date.