N.Y. Comp. Codes R. & Regs. Tit. 20 § 137.2 - Special rules as to New York State sources
Tax Law, § 637(b)
(a) In determining the sources (as either
within or without New York State) of a nonresident partner's share of
partnership income, no effect is given to a provision in a partnership
agreement which characterizes payments to a partner as salary or other
consideration paid or distributable for services rendered to the partnership by
the partner, or as being interest or other consideration paid or distributable
for the use of capital of a partner.
(b) Likewise, except where otherwise
authorized in accordance with section
137.4 of this
Part, no effect is given to a provision in a partnership agreement which
allocates to a nonresident partner, as income or gain from sources outside New
York State, a greater proportion of his distributive share of partnership
income or gain than the ratio of partnership income or gain form sources
outside New York State to partnership income or gain from all sources. For
example, if the total distributive share of a nonresident partner from all
sources is $5,000 and 60 percent of the partnership's income is from New York
State sources, the nonresident partner is required to report on his New York
State nonresident personal income tax return $3,000 (60 percent of $5,000) as
his distributive share of partnership income, even though, under the
partnership agreement, his share of the total New York income of the
partnership may have been fixed at less than $3,000.
(c) Likewise, except where otherwise
authorized in accordance with section
137.4 of this
Part, no effect is given to a provision in a partnership agreement which
allocates to a nonresident partner a greater proportion of a particular
partnership item of loss or deduction connected with New York State sources
than his proportionate share for Federal income tax purposes of partnership
loss or deduction generally. For example, if the share of a nonresident partner
of partnership losses in 50 percent for Federal income tax purposes, he is not
permitted to deduct on his New York State nonresident personal income tax
return more than 50 percent of any particular partnership loss or deduction
connected with New York State sources, regardless of any special provision of
the partnership agreement assigning a larger percentage of the specific loss or
deduction to him.
Notes
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