S T A T E   O F   N E W   Y O R K
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                                  5627

                       2011-2012 Regular Sessions

                          I N  A S S E M B L Y

                            February 24, 2011
                               ___________

Introduced by M. of A. MURRAY -- read once and referred to the Committee
  on Ways and Means

AN  ACT  to  amend  the tax law, in relation to establishing the capital
  gains modification

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Section  612  of  the  tax law is amended by adding a new
subsection (w) to read as follows:
  (W) CAPITAL GAINS MODIFICATION.
  1. FOR THE PURPOSES OF  THIS  SUBSECTION,  THE  FOLLOWING  DEFINITIONS
SHALL APPLY:
  (A) "CAPITAL GAIN" MEANS THE GAIN OR PROFITS REALIZED FROM THE SALE OF
ANY  NEW  COMPANY,  AS  THAT TERM IS DEFINED BY SUBPARAGRAPH (C) OF THIS
PARAGRAPH, OR THE GAIN FROM THE INITIAL  PUBLIC  OFFERING  OF  STOCK  BY
EARLY-STAGE INVESTORS OR COMPANY FOUNDERS OF ANY NEW COMPANY.
  (B)  "LIQUIDITY  EVENT" MEANS THE SALE OF A NEW COMPANY OR THE INITIAL
PUBLIC OFFERING OF STOCK OF ANY NEW COMPANY.
  (C) "NEW COMPANY" MEANS ANY CORPORATION OR  PARTNERSHIP  ORGANIZED  OR
FORMED  UNDER  THE LAWS OF NEW YORK STATE AFTER JANUARY FIRST, TWO THOU-
SAND TWELVE AND LOCATED THEREIN. ANY CORPORATION  OR  PARTNERSHIP  SHALL
CEASE  TO  QUALIFY FOR THE EXEMPTION PROVIDED FOR IN THIS SUBSECTION IF,
BEFORE THE LIQUIDITY EVENT, AS THAT TERM IS DEFINED BY SUBPARAGRAPH  (B)
OF  THIS  PARAGRAPH, THE PRINCIPAL PLACE OF BUSINESS OF SUCH CORPORATION
OR PARTNERSHIP MOVES OUT OF NEW YORK STATE.
  2. THE TAXPAYER MAY SUBTRACT FROM HIS OR HER  FEDERAL  ADJUSTED  GROSS
INCOME ANY CAPITAL GAINS AS DEFINED BY SUBPARAGRAPH (A) OF PARAGRAPH ONE
OF  THIS  SUBSECTION  (BUT NOT AN AMOUNT THAT WILL REDUCE THE PORTION OF
SUCH GAIN INCLUDED IN HIS OR HER NEW YORK INCOME BELOW ZERO).
  S 2. This act shall take effect January  1,  2012,  provided,  however
that  effective immediately, the department may prescribe such rules and
regulations as may be necessary to carry out the purposes of this act.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD08382-01-1