S T A T E   O F   N E W   Y O R K
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                                   3252
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 2, 2023
                                ___________
 
 Introduced by M. of A. KELLES -- read once and referred to the Committee
   on Ways and Means
 
 AN  ACT  to  establish  the "billionaire mark-to-market tax act"; and to
   amend the tax law, in relation to establishing a mark-to-market tax
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  This  act shall be known and may be cited as the "billio-
 naire mark-to-market tax act".
   § 2. The tax law is amended by adding a new section 612-a to  read  as
 follows:
   §  612-A. BILLIONAIRE MARK-TO-MARKET TAXATION.  (A)(1) NOTWITHSTANDING
 ANY OTHER PROVISION OF LAW TO THE CONTRARY, RESIDENT INDIVIDUAL  TAXPAY-
 ERS  WITH  NET  ASSETS  WORTH ONE BILLION DOLLARS OR MORE ON THE DATE OF
 DECEMBER THIRTY-FIRST, TWO THOUSAND TWENTY-TWO, SHALL RECOGNIZE GAIN  OR
 LOSS AS IF EACH ASSET OWNED BY THE INDIVIDUAL TAXPAYER WERE SOLD FOR ITS
 FAIR  MARKET  VALUE  ON  THAT  DATE.  ANY RESULTING NET GAINS FROM THESE
 DEEMED SALES, UP TO THE PHASE-IN CAP AMOUNT, SHALL BE  INCLUDED  IN  THE
 TAXPAYER'S  INCOME  FOR  THE  TWO THOUSAND TWENTY-THREE TAX YEAR. PROPER
 ADJUSTMENT SHALL BE MADE IN THE AMOUNT OF ANY GAIN OR LOSS  SUBSEQUENTLY
 REALIZED  FOR  GAIN  OR  LOSS  TAKEN  INTO  ACCOUNT  UNDER THE PRECEDING
 SENTENCE. AT THE TAXPAYER'S OPTION, ANY  ADDITIONAL  TAX  PAYABLE  AS  A
 RESULT  OF  THIS SUBSECTION SHALL EITHER BE PAYABLE ALONG WITH ANY OTHER
 TAX OWED FOR THE TWO THOUSAND TWENTY-THREE TAX YEAR  OR  ELSE  SHALL  BE
 PAYABLE  ANNUALLY IN TEN EQUAL INSTALLMENTS BEGINNING IN THE YEAR OF THE
 EFFECTIVE DATE OF THIS SECTION AND WITH ALL  SUCH  INSTALLMENT  PAYMENTS
 COMMENCING  AFTER  THE INITIAL INSTALLMENT PAYMENT ALSO BEING SUBJECT TO
 AN ANNUAL NONDEDUCTIBLE  DEFERRAL  CHARGE.    THE  ANNUAL  NONDEDUCTIBLE
 DEFERRAL CHARGE SHALL BE SET BY THE STATE COMPTROLLER AT A RATE THAT THE
 COMPTROLLER  ESTIMATES  IS  EQUAL TO THE UNSECURED BORROWING RATE OF THE
 TAXPAYER FOR A LOAN REPAID OVER A TEN-YEAR TERM IN EQUAL ANNUAL INSTALL-
 MENTS. THE COMPTROLLER MAY ESTIMATE A  SINGLE  RATE  FOR  ALL  TAXPAYERS
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD05077-01-3
              

 A. 3252                             2
 
 SUBJECT  TO  THE DEFERRAL CHARGE.  FOR RESIDENT INDIVIDUAL TAXPAYERS WHO
 WOULD RECOGNIZE NET GAINS AS A RESULT OF THIS SUBSECTION EXCEPT FOR  THE
 OPERATION OF THIS SENTENCE, IF THE TAXPAYER CAN SHOW THAT ANY PORTION OF
 SUCH  GAINS  WAS  ACCUMULATED  PRIOR TO THE TAXPAYER BECOMING A RESIDENT
 INDIVIDUAL OF NEW YORK, AND IF THE TAXPAYER  CAN  ALSO  SHOW  THAT  SUCH
 PORTION  OF SUCH GAINS WAS PREVIOUSLY TAXED BY ANY PRIOR STATE OR JURIS-
 DICTION IN WHICH THE TAXPAYER WAS A RESIDENT PRIOR TO BECOMING  A  RESI-
 DENT INDIVIDUAL OF NEW YORK, THEN CREDIT SHALL BE PROVIDED IN THE AMOUNT
 OF ANY SUCH TAX ON SUCH GAINS PAID TO ANY SUCH PRIOR STATES OR JURISDIC-
 TIONS  IN WHICH THE TAXPAYER WAS A RESIDENT PRIOR TO BECOMING A RESIDENT
 INDIVIDUAL OF NEW YORK. ANY CREDITS  SO  PROVIDED  BY  THIS  SUBSECTION,
 HOWEVER,  SHALL  NOT  EXCEED THE LESSER OF THE TOTAL TAX OWED UNDER THIS
 SUBSECTION ON SUCH GAINS AND THE TAX IMPOSED ON SUCH GAINS BY SUCH OTHER
 PRIOR STATES OR JURISDICTIONS IN WHICH THE TAXPAYER WAS A RESIDENT PRIOR
 TO BECOMING A RESIDENT INDIVIDUAL OF NEW YORK.
   (2) FOR THE TWO THOUSAND TWENTY-THREE TAX YEAR, WHETHER AN  INDIVIDUAL
 IS  A  RESIDENT  INDIVIDUAL FOR PURPOSES OF THIS SECTION SHALL BE DETER-
 MINED USING THE TESTS PROVIDED PURSUANT TO PARAGRAPH ONE  OF  SUBSECTION
 (B) OF SECTION SIX HUNDRED FIVE OF THIS ARTICLE.
   (B)  SUBSEQUENT  TO  TWO  THOUSAND  TWENTY-THREE,  RESIDENT INDIVIDUAL
 TAXPAYERS WITH NET ASSETS THAT ARE WORTH ONE BILLION DOLLARS OR MORE  AT
 THE  END OF THE LAST DAY OF ANY TAX YEAR SHALL RECOGNIZE GAIN OR LOSS AS
 IF EACH ASSET OWNED BY SUCH TAXPAYER ON SUCH DATE WERE SOLD FOR ITS FAIR
 MARKET VALUE ON SUCH DATE, BUT WITH ADJUSTMENT MADE FOR TAX PAID ON GAIN
 IN PREVIOUS YEARS. ANY RESULTING NET GAINS FROM THESE DEEMED  SALES,  UP
 TO  THE  PHASE-IN CAP AMOUNT, SHALL BE INCLUDED IN THE TAXPAYER'S INCOME
 FOR SUCH TAXABLE YEAR. PROPER ADJUSTMENT SHALL BE MADE IN THE AMOUNT  OF
 ANY  GAIN  OR  LOSS  SUBSEQUENTLY  REALIZED  FOR GAIN OR LOSS TAKEN INTO
 ACCOUNT UNDER THE PRECEDING SENTENCE. TO THE EXTENT THAT THE LOSSES OF A
 TAXPAYER EXCEED SUCH TAXPAYER'S GAINS, SUCH  NET  LOSSES  SHALL  NOT  BE
 RECOGNIZED  IN SUCH TAXABLE YEAR AND SHALL INSTEAD CARRY FORWARD INDEFI-
 NITELY. FOR RESIDENT INDIVIDUAL TAXPAYERS WHO WOULD RECOGNIZE NET  GAINS
 AS  A  RESULT  OF  THIS  SUBSECTION  EXCEPT  FOR  THE  OPERATION OF THIS
 SENTENCE, BUT WHO WERE NOT RESIDENT INDIVIDUALS FOR ALL OF THE PRECEDING
 FIVE TAX YEARS, SOLELY FOR PURPOSES OF DEEMED  SALES  PURSUANT  TO  THIS
 SUBSECTION,  THE  TAX  BASIS  OF EACH ASSET OWNED ON THE LAST DAY OF THE
 LAST TAX YEAR BEFORE THE RESIDENT INDIVIDUAL BECAME A NEW YORK  RESIDENT
 SHALL BE THE FAIR MARKET VALUE OF THE ASSET AS OF THAT DAY.
   (C)  FOR EACH DATE ON WHICH GAINS OR LOSSES ARE RECOGNIZED AS A RESULT
 OF THIS SECTION, THE PHASE-IN CAP AMOUNT SHALL BE EQUAL TO A QUARTER  OF
 THE WORTH OF A TAXPAYER'S NET ASSETS IN EXCESS OF ONE BILLION DOLLARS ON
 SUCH DATE.
   (D)  FOR  THE  PURPOSES  OF  DETERMINING WHETHER A RESIDENT INDIVIDUAL
 TAXPAYER HAS NET ASSETS WORTH ONE BILLION  DOLLARS  OR  MORE,  THE  TERM
 "ASSETS"  SHALL  INCLUDE  ALL  OF  THE FOLLOWING, BUT ONLY TO THE EXTENT
 ALLOWABLE UNDER THE NEW YORK CONSTITUTION, THE UNITED  STATES  CONSTITU-
 TION,  AND  ANY OTHER GOVERNING FEDERAL LAW: ALL OWNED REAL OR PERSONAL,
 TANGIBLE OR INTANGIBLE, PROPERTY, WHEREVER SITUATED, (1)  OWNED  BY  THE
 TAXPAYER,  (2)  OWNED  BY  THE TAXPAYER'S SPOUSE, MINOR CHILDREN, OR ANY
 TRUST OR ESTATE OF WHICH THE TAXPAYER IS A BENEFICIARY, (3)  CONTRIBUTED
 BY  THE  TAXPAYER  OR ANY PERSON OR ENTITY DESCRIBED IN PARAGRAPH TWO OF
 THIS SUBSECTION TO ANY PRIVATE FOUNDATION, DONOR ADVISED FUND,  AND  ANY
 OTHER  ENTITY DESCRIBED IN SECTION 501(C) OR SECTION 527 OF THE INTERNAL
 REVENUE CODE OF WHICH THE TAXPAYER AND/OR ANY PERSON OR ENTITY DESCRIBED
 IN PARAGRAPH TWO OF THIS SUBSECTION IS  A  SUBSTANTIAL  CONTRIBUTOR  (AS
 SUCH TERM IS DEFINED IN SECTION 4958(C)(3)(B)(I) OF THE INTERNAL REVENUE
 A. 3252                             3
 
 CODE),  AND (4) WITHOUT DUPLICATION, ALL GIFTS AND DONATIONS MADE WITHIN
 THE PAST FIVE YEARS BY THE TAXPAYER OR ANY PERSON OR ENTITY DESCRIBED IN
 PARAGRAPH TWO OF THIS SUBSECTION AS IF SUCH  GIFTS  AND  DONATIONS  WERE
 STILL  OWNED  BY  THE  TAXPAYER.  FOR  THE PURPOSE OF THIS SECTION, "NET
 ASSETS" SHALL INCLUDE THE FAIR MARKET VALUE  OF  ASSETS  LESS  THE  FAIR
 MARKET VALUE OF LIABILITIES OF THE TAXPAYER AND, IN APPROPRIATE CASES AS
 DETERMINED  BY  THE  COMMISSIONER,  LIABILITIES  OF  SUCH  OTHER PERSONS
 DESCRIBED IN THE DEFINITION OF ASSETS.
   (E) (1) THE FAIR MARKET VALUE OF EACH  ASSET  OWNED  BY  THE  TAXPAYER
 SHALL  BE  THE  PRICE  AT  WHICH SUCH ASSET WOULD CHANGE HANDS BETWEEN A
 WILLING BUYER AND A WILLING SELLER, NEITHER BEING UNDER  ANY  COMPULSION
 TO  BUY  OR  TO  SELL,  AND BOTH HAVING REASONABLE KNOWLEDGE OF RELEVANT
 FACTS. THE VALUE OF A PARTICULAR ASSET SHALL NOT BE  THE  PRICE  THAT  A
 FORCED  SALE  OF  THE  PROPERTY  WOULD PRODUCE. FURTHER, THE FAIR MARKET
 VALUE OF AN ASSET SHALL NOT BE THE SALE PRICE IN  A  MARKET  OTHER  THAN
 THAT IN WHICH SUCH ITEM IS MOST COMMONLY SOLD TO THE PUBLIC, TAKING INTO
 ACCOUNT THE LOCATION OF THE ITEM WHEREVER APPROPRIATE. IN THE CASE OF AN
 ASSET  WHICH  IS  GENERALLY OBTAINED BY THE PUBLIC IN THE RETAIL MARKET,
 THE FAIR MARKET VALUE OF SUCH AN ASSET SHALL BE THE PRICE AT WHICH  SUCH
 ITEM OR A COMPARABLE ITEM WOULD BE SOLD AT RETAIL.
   (2)  FOR  PURPOSES OF THIS SECTION, ANY FEATURE OF AN ASSET, SUCH AS A
 POISON PILL, THAT WAS ADDED WITH THE INTENT,  AND  HAS  THE  EFFECT,  OF
 REDUCING  THE  VALUE OF THE ASSET SHALL BE DISREGARDED, AND NO VALUATION
 OR OTHER DISCOUNT SHALL BE TAKEN INTO  ACCOUNT  IF  IT  WOULD  HAVE  THE
 EFFECT OF REDUCING THE VALUE OF A PRO RATA ECONOMIC INTEREST IN AN ASSET
 BELOW THE PRO RATA PORTION OF THE VALUE OF THE ENTIRE ASSET.
   (F)  (1) (A) THE COMMISSIONER SHALL AMEND THE NEW YORK PERSONAL INCOME
 TAX FORMS AND AMEND OR CREATE ANY  OTHER  FORMS  AS  NECESSARY  FOR  THE
 REPORTING  OF  GAINS  BY  ASSETS.  ASSETS  SHALL  BE  LISTED  WITH (I) A
 DESCRIPTION OF THE ASSET, (II) THE ASSET CATEGORY, (III)  THE  YEAR  THE
 ASSET  WAS ACQUIRED, (IV) THE ADJUSTED NEW YORK BASIS OF THE ASSET AS OF
 DECEMBER THIRTY-FIRST OF THE TAX YEAR, (V) THE FAIR MARKET VALUE OF  THE
 ASSET  AS  OF DECEMBER THIRTY-FIRST OF THE TAX YEAR, AND (VI) THE AMOUNT
 OF GAIN THAT WOULD BE NEW YORK TAXABLE INCOME, UNLESS  THE  COMMISSIONER
 SHALL  DETERMINE  THAT  ONE  OR MORE CATEGORIES IS NOT APPROPRIATE FOR A
 PARTICULAR TYPE OF ASSET.
   (B) ASSET CATEGORIES SHALL INCLUDE, BUT NOT BE LIMITED TO, THE FOLLOW-
 ING:
   (I) STOCK HELD IN ANY PUBLICLY TRADED CORPORATION;
   (II) STOCK HELD IN ANY PRIVATE TRADED C CORPORATION;
   (III) STOCK HELD IN ANY S CORPORATION;
   (IV) INTERESTS IN ANY PRIVATE EQUITY OR  HEDGE  FUND  ORGANIZED  AS  A
 PARTNERSHIP;
   (V) INTERESTS IN ANY OTHER PARTNERSHIPS;
   (VI) INTERESTS IN ANY OTHER NONCORPORATE BUSINESSES;
   (VII) BONDS AND INTEREST BEARING SAVINGS ACCOUNTS, CASH AND DEPOSITS;
   (VIII) INTERESTS IN MUTUAL FUNDS OR INDEX FUNDS;
   (IX) PUT AND CALL OPTIONS;
   (X) FUTURES CONTRACTS;
   (XI)  FINANCIAL  ASSETS  HELD  OFFSHORE REPORTED ON IRS TAX FORM EIGHT
 THOUSAND NINE HUNDRED THIRTY-EIGHT;
   (XII) REAL PROPERTY;
   (XIII) ART AND COLLECTIBLES;
   (XIV) PENSION FUNDS;
   (XV) OTHER ASSETS;
   (XVI) DEBTS AND LIABILITIES; AND
 A. 3252                             4
 
   (XVII) ASSETS NOT OWNED BY THE TAXPAYER BUT WHICH COUNT TOWARD THE ONE
 BILLION DOLLAR THRESHOLD PURSUANT TO SUBSECTION (D) OF THIS SECTION.
   (2)  THE  COMMISSIONER  SHALL  SPECIFICALLY REQUEST THE FILING OF SUCH
 FORMS BY ANY RESIDENT INDIVIDUAL EXPECTED TO HAVE NET ASSETS  IN  EXCESS
 OF ONE BILLION DOLLARS. SUCH TAXPAYERS SHALL INCLUDE, BUT NOT BE LIMITED
 TO,  (A)  TAXPAYERS  LISTED  AS BILLIONAIRES ON PUBLISHED LISTS, AND (B)
 TAXPAYERS WITH AN ADJUSTED GROSS INCOME SUMMED  OVER  THE  PREVIOUS  TEN
 YEARS IN EXCESS OF SIX HUNDRED MILLION DOLLARS.
   (G)  IN  THE EVENT THAT ANY RESIDENT INDIVIDUAL TAXPAYER BECOMES A NEW
 YORK RESIDENT SUBSEQUENT TO PAYING TAX TO ANOTHER STATE AS A  RESULT  OF
 RECOGNIZING GAIN OR LOSS PURSUANT TO ANY MARK-TO-MARKET OR DEEMED-REALI-
 ZATION  REGIME  OF  THAT OTHER STATE, PROPER ADJUSTMENT SHALL BE MADE IN
 THE AMOUNT OF ANY GAIN OR LOSS SUBSEQUENTLY REALIZED FOR  GAIN  OR  LOSS
 TAKEN  INTO  ACCOUNT  UNDER  SUCH  MARK-TO-MARKET  OR DEEMED-REALIZATION
 REGIME OF THAT OTHER STATE FOR PURPOSES OF COMPUTING GAIN OR LOSS  UNDER
 SUBSECTION  (A)  OR  (B)  OF  THIS  SECTION OR UNDER SECTION SIX HUNDRED
 TWELVE OF THIS PART.
   (H) IN THE EVENT THAT ANY PROVISION OF THIS SECTION  IS  FOUND  TO  BE
 INVALID,  UNCONSTITUTIONAL,  OR  OTHERWISE  UNENFORCEABLE,  THAT FINDING
 SHALL NOT AFFECT ANY OTHER  PROVISION  IN  THIS  SECTION  WHICH  CAN  BE
 ENFORCED WITHOUT THE USE OF THE OFFENDING PROVISION.
   (I) NO LEGAL OR EQUITABLE PROCESS SHALL ISSUE IN ANY PROCEEDING IN ANY
 COURT AGAINST THIS STATE OR ANY OFFICER THEREOF TO PREVENT OR ENJOIN THE
 COLLECTION  OF  THE TAX IMPOSED BY THIS SECTION. ANY ACTION FOR A REFUND
 OF THE TAX IMPOSED BY THIS SECTION PAID, WITH INTEREST, BASED SOLELY  ON
 A  QUESTION OF LAW INVOLVING THE CONSTRUCTION OF THE CONSTITUTION OF THE
 STATE OR OF THE UNITED STATES SHALL BE HEARD IN THE  COURT  OF  APPEALS.
 ALL OTHER CLAIMS FOR A REFUND, WITH INTEREST, SHALL BE MAINTAINED IN THE
 SAME MANNER AS THE PERSONAL INCOME TAX.
   (J)  THE  COMMISSIONER  SHALL  PROMULGATE  SUCH  RULES AND REGULATIONS
 NECESSARY OR APPROPRIATE TO CARRY OUT  THE  PURPOSES  OF  THIS  SECTION,
 INCLUDING  RULES  TO  PREVENT  THE  USE  OF  YEAR-END TRANSFERS, RELATED
 PARTIES, OR OTHER ARRANGEMENTS TO AVOID THE PROVISIONS OF THIS SECTION.
   § 3. This act shall take effect immediately.