New York State recently released Frequently Asked Questions regarding its conformity with various tax provisions under the federal Coronavirus Aid, Relief and Economic Security (CARES) Act for personal income tax purposes.
New York state has adopted the following provisions:
- Forgiven Payroll Protection Program (PPP) loans will be excluded from New York adjusted gross income if the same loan is excluded from the federal adjusted gross income.
- Expenses associated with the PPP loans will be deductible and automatically excluded from the New York adjusted gross income if the same loan expenses are deducted from the federal adjusted gross income.
- Federal stimulus payments will be excluded from the recipient’s New York adjusted gross income.
- Required minimum distributions (RMDs) will be waived for retirement plans for the 2020 tax year including the extended rollover period for these distributions into a retirement account.
- Coronavirus-related distributions from an eligible retirement plan will be allowed to be included in adjusted gross income over a three-year period.
New York State has decoupled from the following provisions:
- The federal CARES Act temporarily removes the 80% of taxable income limitation in calculating Net Operating Losses (NOLs) for taxable years beginning before 2021. Additionally, the CARES Act allows a five-year carryback of any NOL generated in a taxable year beginning after 2017 and before 2021. However, New York State has not adopted this provision and instead requires taxpayers to calculate NOLs subject to the 80% limitation and only provides a three-year carryback for NOLs incurred after 2017.
- The federal CARES Act made changes to the depreciation of qualified improvement property (QIP) placed in service after 2017, adopting a new class life of 15 years under MACRS and 20 years under ADS depreciation, and thus eligible for 100% bonus depreciation. However, New York State has not adopted this provision and instead requires taxpayers to capitalize on this property over 27.5 or 39 years.
Please feel free to contact your WG advisor if you have any questions or concerns regarding how your tax situation may be affected by COVID-19.