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NYS INSTALLMENT SALE AND CHANGE OF RESIDENCE

  • 1.  NYS INSTALLMENT SALE AND CHANGE OF RESIDENCE

    Bronze Most Valuable Member
    Posted 11 days ago
    If a NYS shareholder of an S corporation sells his or her shares to his or her partner on an installment basis and then moves out of NYS are the payments received after they leave NY taxable to NYS. This S corporation does not own real estate.

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    Gabriel Bentovim
    HOFFMAN & BENTOVIM, CPAs PC
    Commack NY
    631-499-1500
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  • 2.  RE: NYS INSTALLMENT SALE AND CHANGE OF RESIDENCE

    Bronze Most Valuable Member
    Posted 10 days ago
    Gabriel,
    NYS has an accrual rule.  According to NYS Publication 88:
    If you had a right to receive income without restriction or contingencies at or before the date of the change of residence, this income would be accruable at the time you changed your residence, even if the income is actually received after you move out of New York State. Examples of accruable items of income are:
    the unrealized income from an installment sale made while you were a
    resident.

    One might question whether the client had the right to receive income at or before the date of change in residence when the contract of sale requires payments over a period of time; however it is clearly the position of NYS Tax that it is accruable to the resident period.  See Example below.


    Example: If an individual sells his business at a gain, under contract whereby the purchase price is to be paid in installments, and later changes his resident status from resident to nonresident, he must accrue on the New York State personal income tax return for the resident period the entire amount of the gain remaining unpaid from the installment obligations, regardless of the method of accounting he normally uses in reporting transactions.

    Brian Gordon


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    Brian Gordon CPA
    President
    State Tax Audit Representation
    626 RXR Plaza
    Uniondale, NY 11556
    516-510-6041
    bgordon@statetaxauditrep.com
    www.StateTaxAuditRep.com
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