Form Tsb-M-06(4)i - Supplemental Summary Of Personal Income Tax Legislative Changes Enacted In 2005 And Expiring Provisions - Office Of Tax Policy Analysis Technical Services Division Page 4
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TSB-M-06(4)I
Income Tax
April 12, 2006
written agreement expressing his or her intent to eventually purchase the property, and (b) the
owner(s) has given the taxpayer a document stating that the owner(s) is waiving his or her right
to claim the credit, if any, on the qualified agricultural property that is subject to the written
agreement. The taxpayer can claim the credit for the property that is subject to the written
agreement and the waiver even if the taxpayer did not actually pay the school district property
taxes on the qualified agricultural property.
The written agreement does not have to be in any particular legal form but it must be
signed by all parties to the agreement and must have been in effect for at least part of the tax year
to which the credit relates. The waiver document does not have to be in any particular form, but
it can be for only one tax year and must include (1) the name of the owner(s), (2) the name of the
relative with whom the owner(s) has entered into a written agreement to sell his or her qualified
agricultural property, (3) a statement that the owner(s) is waiving his or her right to claim the
farmers’ school tax credit, (4) the tax year to which the waiver applies (e.g., 2005), (5) the date
the agreement to sell was entered into, and (6) the signature of the owner(s). The waiver
document must be given to the taxpayer even if the owner(s) does not qualify to claim the
farmers’ school tax credit on the property. Once the waiver is made for a tax year, it cannot be
revoked for that tax year, but the owner(s) may decide whether or not to issue a waiver for any
subsequent tax year.
The second enhancement provides that for tax years beginning on or after January 1,
2006, the definition of federal gross income from farming will also include gross income from a
commercial horse boarding operation as defined in section 301 of the Agriculture and Markets
Law.
(Tax Law, section 606(n))
Exception to recapture of the empire zone investment tax credit
Section 606(j) of the Tax Law has been amended to provide for an exception to the
recapture provisions of the empire zone investment tax credit (EZ-ITC). In general, a recapture
of the EZ-ITC must be made when the qualified property for which an EZ-ITC has been claimed
is disposed of or ceases to be in qualified use prior to the end of its useful life. The sale or other
disposition of a partner’s interest in a partnership is considered a disposition for purposes of the
recapture provisions.
As a result of this amendment, the EZ-ITC recapture provisions do not apply with respect
to manufacturing property where a partner disposes of the partnership interest, or the partnership
disposes of the manufacturing property, if:
• the basis of the manufacturing property (or a project that includes such property) was
$300 million or more for federal income tax purposes at the time it was placed in service
by the partnership in the empire zone, and
• the partner owned the partnership interest for at least 3 years from the date such property
was placed in service by the partnership in the empire zone.
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