N.Y. Comp. Codes R. & Regs. Tit. 20 § 154.13 - Rule for combining amounts included in lump sum distributions

(a) Where an individual or a trust elected lump sum treatment for Federal income tax purposes (i.e., the special 10-year averaging method under subsection [e] of section 402 of the Internal Revenue Code) for the taxable year in which the taxpayer changed resident status, and such taxpayer received two or more lump sum distributions during the taxable year (one of which was received in or accruable to each of the separate periods of residence and nonresidence), the combined amount (see subdivision [b] of this section) of each of the following items (where applicable) attributable to the separate periods of residence and nonresidence must be reported on form IT-230 or IT-230.1 (whichever is applicable) in determining the taxpayer's separate tax on the ordinary income portion of such lump sum distributions for the taxable year:

(1) the capital gain portion;

(2) the ordinary income portion;

(3) the death benefit exclusion; and

(4) the current actuarial value of the annuity.

(b) The combined amount of each item listed in paragraphs (a)(1)-(4) of this section is the sum of:

(1) the amount of such item attributable to the resident period determined as if the taxpayer's taxable year for Federal income tax purposes were limited to the period of resident status; and

(2) the amount of such item attributable to the nonresident period determined as if the taxpayer's taxable year for Federal income tax purposes were limited to the period of nonresident status, but only to the extent of the amount of such item which is derived from or connected with New York State sources. The amount of such item derived from or connected with New York State sources during the nonresident period is the amount of such item attributable to the nonresident period multiplied by the fraction determined in accordance with section 142.1(c)(1) of this Title.

(c) The separate tax on the ordinary income portion of the lump sum distributions is computed on such combined amounts in the manner set forth in subdivisions (b) through (f) of section 124.1 of this Title. The following examples illustrate the application of the provisions of this section:

Example 1:

A single individual was a resident of New York State from January 1, 1980 to May 31, 1980 and became a nonresident on June 1, 1980. For several years prior to January 1, 1980, the taxpayer was employed simultaneously by two New York State employers (A Corporation and B Corporation) and was covered under a qualified plan by each employer. On February 15, 1980, the taxpayer retired from A Corporation and received a lump sum distribution from A Corporation's plan on March 15, 1980 of $30,000, consisting of a capital gain portion of $24,000 and an ordinary income portion of $6,000. The taxpayer continued to work for B Corporation until his retirement on November 30, 1980. He received a lump sum distribution from B Corporation's plan on December 15, 1980 of $41,000, consisting of a capital gain portion of $31,000 and an ordinary income portion of $10,000.

The taxpayer filed his 1980 Federal income tax return on a calendar-year basis. He elected to use the special 10-year averaging method for Federal income tax purposes with respect to the ordinary income portions (but not with respect to the capital gain portions) of the lump sum distributions. He combined the capital gain portions of the lump sum distributions for the taxable year and the ordinary income portions of the lump sum distributions for the taxable year (pursuant to section 402(e) of the Internal Revenue Code) in computing his Federal tax on the ordinary income portion of the lump sum distributions. He also filed his 1980 New York State resident and nonresident personal income tax returns and forms IT-220 (together with form IT-360) for the respective periods of residence and nonresidence. The taxpayer determined that 95 percent of the capital gain portion and the ordinary income portion of the lump sum distribution received during the nonresident period was derived from New York State sources (see paragraph [b][2] of this section). Therefore, the taxpayer filed one form IT-230 for the taxable year in accordance with the provisions of subdivision (a) of this section and reported thereon the following combined amounts:

Combined amounts to be reported on form IT-230
Capital gain portion:
Resident amount	$24,000
Nonresident amount
(95% of $31,000)	$29,450	$53,450
Ordinary income portion:
Resident amount	$ 6,000
Nonresident amount
(95% of $10,000)	9,500	15,500
Total	$68,950

The taxpayer's separate tax on $15,500, the combined ordinary income portion of the lump sum distributions, computed in accordance with the provisions of Part 124 of this Title (see also subdivision [c] of this section) is $570 (rounded off to the nearest whole dollar amount).

Example 2:

The facts are the same as in Example 1 except that the taxpayer received the lump sum distribution from A Corporation's plan on June 16, 1980. Although the taxpayer received this distribution during the period of nonresident status, he is required to accrue such distribution to the period of resident status in accordance with section 154.12 of this Part. Accordingly, pursuant to the provisions of this section, he is required to combine the capital gain portions of the lump sum distributions attributable to the respective periods of residence and nonresidence and the ordinary income portions of such distributions attributable to such periods in the manner provided in Example 1.

Notes

N.Y. Comp. Codes R. & Regs. Tit. 20 § 154.13