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  • 1.  Sale of NYC property by an partnership

    Posted 04-21-2022 05:25 PM
    Hi Everyone,

    Hope you survived tax season!

    I have a client who sold rental real estate in NYC.  The property was held in a partnership.  Not an LLC.  And the partners are out of state residents.

    According to form NYC-204 instructions, rental activity is not taxable in NYC.   No NYC-204 reporting requirements.  I am assuming you agree with this.

    Is the gain on the sale of the property taxed in NYC?  The instructions seem to indicate no but I want to be 100% sure.  I am looking at page 3, (6).

    If no capital gains tax on form NYC-204 then the taxpayers escape taxation in NYC completely?

    Thank you in advance for your reply, hopefully while you are sitting somewhere having Pina Coladas.

    Paul

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    Paul Tusa CPA
    TUSA & ASSOCIATES, CPA, PC
    N Bellmore NY
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  • 2.  RE: Sale of NYC property by an partnership

    Posted 04-22-2022 09:20 AM
    You are looking at the form for UBT.  The NYC tax would not be UBT in this instance.  The NYC tax would be the city's personal income tax.  The income is sourced to New York City.

    ------------------------------
    Matthew E. Rappaport, Esq., LL.M.
    Vice Managing Partner
    Chair, Taxation Group
    Falcon, Rappaport & Berkman PLLC
    (516) 558-3377
    mer@frblaw.com
    ------------------------------



  • 3.  RE: Sale of NYC property by an partnership

    Posted 04-22-2022 01:01 PM
    Hi Matthew,

    Thank you for reply but as I mentioned, my clients are out of NYS so there is no provision, that I see, for them to pay any NYC taxes on the gain on their personal tax returns. Or am I missing something?

    Thank you

    Paul


    ------------------------------
    Paul Tusa CPA
    TUSA & ASSOCIATES, CPA, PC
    N Bellmore NY
    ------------------------------



  • 4.  RE: Sale of NYC property by an partnership

    Posted 04-22-2022 01:12 PM
    The situs of the property being sold is in NYC, so it's New York-sourced income.  Notwithstanding the idea the owners are out-of-staters, the income is sourced to NYC because of the property being located there.

    ------------------------------
    Matthew E. Rappaport, Esq., LL.M.
    Vice Managing Partner
    Chair, Taxation Group
    Falcon, Rappaport & Berkman PLLC
    (516) 558-3377
    mer@frblaw.com
    ------------------------------



  • 5.  RE: Sale of NYC property by an partnership

    Posted 04-22-2022 03:24 PM
    So if I am not reporting it on form NYC-204, where am I reporting it?  They don't live in NYS so the only form available would is the IT-203 which does not have any NYC tax computation on it unless you are a part-year resident.

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    Paul Tusa CPA
    TUSA & ASSOCIATES, CPA, PC
    N Bellmore NY
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  • 6.  RE: Sale of NYC property by an partnership

    Posted 04-22-2022 04:04 PM
    IT-203 is for both part-year residents and non-residents.  The instructions are helpful and can be viewed here: https://www.tax.ny.gov/pdf/current_forms/it/it203i.pdf

    On page 5 of the instructions, it provides sale of New York real property is New York-sourced income, so non-residents would need to pay PIT on those sales.

    ------------------------------
    Matthew E. Rappaport, Esq., LL.M.
    Vice Managing Partner
    Chair, Taxation Group
    Falcon, Rappaport & Berkman PLLC
    (516) 558-3377
    mer@frblaw.com
    ------------------------------



  • 7.  RE: Sale of NYC property by an partnership

    Posted 04-27-2022 10:34 AM
    So, an update: I bumped into Fred Weinstein, who works down the hall from me, who said he saw this thread and suspected I was incorrect.  As it turns out, I am incorrect.

    Implied in Section 11-1701 of the NYC Admin Code is the idea that the City cannot impose the PIT on non-residents; it can only impose the GCT, UBT, or RPTT on businesses and real property as applicable.  Therefore, although it shocks me personally, non-residents would not pay PIT on these sales, even though the income is sourced to NYC.

    Sorry, everyone, for any inconvenience posed by my original answers.

    ------------------------------
    Matthew E. Rappaport, Esq., LL.M.
    Vice Managing Partner
    Chair, Taxation Group
    Falcon, Rappaport & Berkman PLLC
    (516) 558-3377
    mer@frblaw.com
    ------------------------------



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The opinions expressed are the views of the author alone and should not be attributed to any other individual or entity and shall not constitute an accounting opinion.