or other assets. The payment of such tax and interest thereon may be enforced in an action brought by the commissioner of taxation and finance in any court of competent jurisdiction. § 10. Paragraph 2 of subsection (b) of section 991 of the tax law, as added by chapter 190 of the laws of 1990, is amended to read as follows: (2) Where an additional tax is imposable because of the provisions of subsection (c) of section nine hundred fifty-two or subsection (c) of section nine hundred sixty of this article, interest at the rate set pursuant to subsection (j) of section six hundred ninety-seven of this chapter shall be charged and collected on the additional tax from the date of the final determination of the United States estate tax, provided, however, if such additional tax is paid within sixty days after the date of such determination no interest on such additional tax shall be charged or collected. § 11. Subparagraph (B) of paragraph 4 of subsection (a) of section 996 of the tax law, as added by chapter 190 of the laws of 1990, is amended to read as follows: (B) the warrant under section [nine] six hundred ninety-two of this [article] chapter may be issued at any time after the election provided for in section nine hundred fifty-four-a or section nine hundred fiftyeight-a of this article is made and before such additional tax is paid or a deficiency is assessed against the lien, provided, however, that in such case, the warrant shall bear the notation that it is a special lien for additional estate tax imposed by section nine hundred fifty-four-a or section nine hundred fifty-eight-a of this article, whichever is applicable. § 12. Subsection (e) of section 997 of the tax law, as added by chapter 190 of the laws of 1990, is amended to read as follows: (e) Election. The election under this section shall not be allowed unless a similar election was made and allowed with respect to the federal estate tax return required to be filed under the provisions of the internal revenue code. If such election was made for the purposes of the federal estate tax, the time for making the election under this article shall be the same as is required under the federal estate tax. Where no federal estate tax return is required to be filed, the election with respect to the tax imposed under this article shall be made no later than the date prescribed for the filing of the return under this article ([without regard to any extensions of time to file] including extensions thereof) or any time thereafter as the commissioner of taxation and finance may by regulation prescribe. § 13. Paragraph 2 of subsection (a) of section 2032A contained in section 2 of chapter 1013 of the laws of 1962 amending the tax law, relating to the imposition of a tax on the transfer of estates of certain decedents, as amended by chapter 916 of the laws of 1982, is amended to read as follows: (2) [LIMIT] LIMITATION ON AGGREGATE REDUCTION IN FAIR MARKET VALUE.– The aggregate decrease in the value of qualified real property taken into account for purposes of this chapter which results from the application of paragraph (1) with respect to any decedent shall not exceed [the applicable limit set forth in the following table: § 14. Subsection (c) of section 2036 contained in section 2 of chapter 1013 of the laws of 1962 amending the tax law, relating to the imposition of a tax on the transfer of estates of certain decedents, is repealed and subsection (d), as relettered by chapter 190 of the laws of 1990, is relettered subsection (c). § 15. Subparagraph (C) of paragraph 3 of subsection (d) of section 2056 contained in section 2 of chapter 1013 of the laws of 1962 amending the tax law, relating to the imposition of a tax on the transfer of estates of certain decedents, as added by chapter 190 of the laws of 1990, is amended to read as follows: EXPLANATION-Matter in italics is new; matter in brackets [ ] is old law (C) such surviving spouse dies and the estate of such surviving spouse is subject to the tax imposed by this chapter, the Federal estate tax paid (or treated as paid under section 2056A(b)[(6)](7)) by the first decedent with respect to such property shall be allowed as a credit under section 2013 to the estate of such surviving spouse and the amount of such credit shall be determined under such section without regard to when the first decedent died and without regard to subsection (d)(3) of such section. § 16. Paragraph 4 of subsection (d) of section 2056 contained in section 2 of chapter 1013 of the laws of 1962 amending the tax law, relating to the imposition of a tax on the transfer of estates of certain decedents, as added by chapter 190 of the laws of 1990, is amended to read as follows: [(4)] (5) REFORMATIONS PERMITTED. — (A) IN GENERAL. -In the case of any property with respect to which a deduction would be allowable under subsection (a) but for this subsection, the determination of whether a trust is à qualified domestic trust shall be made (i) as of the date on which the return of the tax imposed by this chapter is made, or (ii) if a judicial proceeding is commenced on or before the due date (determined with regard to extensions) for filing such return to change such trust into a trust which is a qualified domestic trust, as of the time when the changes pursuant to such proceeding are made. (B) STATUTE OF LIMITATIONS.-If a judicial proceeding described in subparagraph (A)(ii) is commenced with respect to any trust, the period for assessing any deficiency of tax attributable to any failure of such trust to be a qualified domestic trust shall not expire before the date 1 year after the date on which the Secretary is notified that the trust has been changed pursuant to such judicial proceeding or that such proceeding has been terminated. § 17. Paragraph 1 of subsection (a) of section 2056A contained in section 2 of chapter 1013 of the laws of 1962 amending the tax law, relating to the imposition of a tax on the transfer of estates of certain decedents, as added by chapter 190 of the laws of 1990, is amended to read as follows: (1) the trust instrument (A) requires that at least 1 trustee of the trust be an individual citizen of the United States or a domestic corporation and (B) provides that no distribution (other than a distribution of income) may be made from the trust [may be made without the approval of such] unless a trustee who is an individual citizen of the United States or a domestic corporation has the right to withhold from such distribution the tax imposed by this section on such distribution, and § 18. Subparagraph (A) of paragraph 10 of subsection (b) of section 2056A contained in section 2 of chapter 1013 of the laws of 1962 amending the tax law, relating to the imposition of a tax on the transfer of estates of certain decedents, as added by chapter 190 of the laws of 1990, is amended to read as follows: (A) IN GENERAL.-If any property remaining in the qualified domestic trust on the date of the death of the surviving spouse is includible in the gross estate of such spouse for purposes of this chapter (or would be includible if such spouse were a citizen or resident of the United States), any benefit which is allowable (or would be allowable if such spouse were a citizen or resident of the United States) with respect to such property to the estate of such spouse under section 2011, 2014, 2032, 2032A, 2055, 2056, or 6166 shall be allowed for purposes tax imposed by paragraph (1)(B). of the § 19. Subsection (b) of section 2056A contained in section 2 of chapter 1013 of the laws of 1962 amending the tax law, relating to the imposition of a tax on the transfer of estates of certain decedents, is amended by adding two new paragraphs 14 and 15 to read as follows: (14) COORDINATION WITH TERMINABLE INTEREST RULES.-Any interest in a qualified domestic trust shall not be treated as failing to meet the requirements of paragraph (5) or (7) of section 2056(b) merely by reason of any provision of the trust instrument permitting the withholding from any distribution of an amount to pay the tax imposed by paragraph (1) on such distribution. (15) NO TAX ON CERTAIN DISTRIBUTIONS.-No tax shall be imposed by paragraph (1) on any distribution to the surviving spouse to the extent such distribution is to reimburse such surviving spouse for any tax imposed by subtitle A on any item of income of the trust to which such surviving spouse is not entitled under the terms of the trust. § 20. Subsection (d) of section 2056A contained in section 2 of chapter 1013 of the laws of 1962 amending the tax law, relating to the imposition of a tax on the transfer of estates of certain decedents, as added by chapter 190 of the laws of 1990, is amended to read as follows: (d) ELECTION. -An election under this section with respect to any trust shall be made by the executor on the return of the tax imposed by section 2001. Such an election, once made, shall be irrevocable. No election may be made under this section on any return if such return is filed more than one year after the time prescribed by law (including extensions) for filing such returns. § 21. Subsection (a) of section 1000 of the tax law, as amended by chapter 190 of the laws of 1990, is amended to read as follows: (a) Dates. -For purposes of this article, any reference to the internal revenue code means the United States Internal Revenue Code of 1986, with all amendments enacted on or before [December nineteenth, nineteen hundred eighty-nine] November fifth, nineteen hundred ninety, and any reference to December thirty-first, nineteen hundred seventy-six or January first, nineteen hundred seventy-seven contained in the provisions of such code which are applicable to the determination of the tax imposed by this article shall be read as a reference to June thirtieth, nineteen hundred seventy-eight or July first, nineteen hundred seventy-eight, respectively. § 22. Subsection (c) of section 1004 of the tax law, as added by chapter 190 of the laws of 1990, is amended to read as follows: (c) Marital deduction where spouse not United States citizen. -If an election to treat the donee spouse as a citizen of the United States is made by the donor and donee spouses in such manner as the commissioner of taxation and finance shall prescribe, subsection (i) of section 2523 of the internal revenue code shall not apply under the tax imposed by this article and a marital deduction shall be allowed under and pursuant to subsection (a) or (b) of this section as if such donee spouse were a citizen of the United States. In making such election, such spouse shall consent to be deemed a citizen of the United States for purposes of determining whether a marital deduction is allowable under this article and whether such spouse is a resident or nonresident for purposes of this article or article 26 of this chapter when he or she transfers the property received from his or her spouse by a transfer as to which a marital deduction was allowed pursuant to this subsection. An election under this subsection, once made, shall be irrevocable. If an election permitted under this subsection is not made, then paragraphs (1) and (3) of subsection (i) of section 2523 of the internal revenue code shall apply for purposes of this article. No election may be made under this subsection on any return if such return is filed more than one year after the time prescribed by law (including extensions) for filing such returns. § 23. Subsection (d) of section 1004 of the tax law, as amended by chapter 190 of the laws of 1990, is relettered subsection (e) and amended and a new subsection (d) is added to read as follows: (d) Qualified payment election under special valuation rules. Any election referred to in subparagraph (C) of paragraph three of subsection (c) of section two thousand seven hundred one of the internal revenue code shall not be allowed under this article unless such election was made with respect to the federal gift tax return required to be filed under the provisions of the internal revenue code. If such an election was made for the purposes of the federal gift tax, then such election must also be made with respect to the tax imposed under this article and the time for making such election shall be the same as is required under the federal estate tax. Where no federal gift tax return is required to be filed, the elections referred to may nevertheless be made with respect to the tax imposed under this article. Any election under this subsection, once made, shall be irrevocable. Any such election shall be made in such manner as the commissioner of taxation and finance_shall prescribe. (e) For provisions of the internal revenue code which, extent they are inconsistent with the provisions of this pertinent to the computation of New York gifts, New York and the tax under this article, see except to the article, are taxable gifts EXPLANATION-Matter in italics is new; matter in brackets [ ] is old law Sec. 2513. Taxable gifts for preceding years and quarters. Valuation of gifts. Gift by husband or wife to third party. Treatment of generation-skipping transfer tax. Sec. 2515. Tenancies by the entirety in real property (as in effect before repeal by the Economic Recovery Tax Act of 1981). Sec. 2515A. Tenancies by the entirety in personal property (as in ef fect before repeal by the Economic Recovery Tax Act of Sec. 2524. Sec. 2701. interests in Sec. 2702. in trusts. Sec. 2703. Sec. 2704. Extent of deductions. Special valuation rules in case of transfers of certain Special valuation rules in case of transfers of interests Treatment of certain lapsing rights and restrictions. Sec. 7872. Treatment of loans with below-market interest rates. § 24. Paragraph 2 of subsection (b) of section 1007 of the tax law is renumbered paragraph 3 and a new paragraph 2 is added to read as follows: (2) Gift tax on certain gifts not shown on return. Notwithstanding subsection (a) of section six hundred eighty-three of this chapter, as made applicable to the tax imposed by this article pursuant to paragraph one of this subsection, or any other law to the contrary, if any gift of property the value of which is determined under section two thousand seven hundred one or two thousand seven hundred two of the internal revenue code, (or any increase in taxable gifts required under subsection (d) of such section two thousand seven hundred one) is required to be shown on a return of tax imposed by this article (without regard to subsection (b) of section two thousand five hundred three of the internal revenue code), and is not shown on such return, any tax imposed by this article on such gift may be assessed at any time. The preceding sentence shall not apply to any item not shown as a gift on such return if such item is disclosed in such return, or in a statement attached to the return, in a manner adequate to apprise the commissioner of taxation and finance of the nature of such item. 25. Subsection (i) of section 2523 contained in section 1009 of the tax law, as added by chapter 190 of the laws of 1990, is amended to read as follows: (i) DISALLOWANCE OF MARITAL DEDUCTION WHERE SPOUSE NOT CITIZEN.-If the spouse of the donor is not a citizen of the United States (1) no deduction shall be allowed under this section, (2) section 2503(b) shall be applied with respect to gifts which are made by the donor to such spouse and with respect to which a deduction would be allowable under this section but for paragraph (1) by substituting "$100,000" for "$10,000", and (3) the principles of sections 2515 and 2515A (as such sections were in effect before their repeal by the Economic Recovery Tax Act of 1981) shall apply, except that the provisions of such section 2515 providing for an election shall not apply. This subsection shall not apply to any transfer resulting from the acquisition of rights under a joint and survivor annuity described in subsection (f)(6). § 26. Section 1009 of the tax law is amended by adding a new section 2701 to read as follows: § 2701. SPECIAL VALUATION RULES IN CASE OF TRANSFERS OF CERTAIN INTERESTS IN CORPORATIONS OR PARTNERSHIPS. (a) VALUATION RULES.-(1) IN GENERAL.-Solely for purposes of determining whether a transfer of an interest in a corporation or partnership to (or for the benefit of) a member of the transferor's family is a gift (and the value of such transfer), the value of any right (A) which is described in subparagraph (A) or (B) of subsection (b)(1), and (B) which is with respect to any applicable retained interest that is held by the transferor or an applicable family member immediately after the transfer, shall be determined under paragraph (3). This paragraph shall not apply to the transfer of any interest for which market quotations are readily available (as of the date of transfer) on an established securities market. (2) EXCEPTIONS FOR MARKETABLE RETAINED INTERESTS, ETC.-Paragraph (1) shall not apply to any right with respect to an applicable retained terest if in (A) market quotations are readily available (as of the date of the transfer) for such interest on an established securities market, (B) such interest is of the same class as the transferred interest, or (C) such interest is proportionally the same as the transferred interest, without regard to nonlapsing differences in voting power (or, for a partnership, nonlapsing differences with respect to management and limitations on liability). Subparagraph (C) shall not apply to any interest in a partnership if the transferor or an applicable family member has the right to alter the liability of the transferee of the transferred property. Except as provided by the secretary, any difference described in subparagraph (C) which lapses by reason of any federal or state law shall be treated as a nonlapsing difference for purposes of such subparagraph. (3) VALUATION OF RIGHTS TO WHICH PARAGRAPH (1) APPLIES. (A) IN GENERAL.-The value of any right described in paragraph (1), other than a distribution right which consists of a right to receive qualified payment, shall be treated as being zero. (B) VALUATION OF QUALIFIED PAYMENTS.-If a (i) any applicable retained interest confers a distribution right which consists of the right to a qualified payment, and (ii) there are one or more liquidation, put, call, or conversion rights with respect to such interest, the value of all such rights shall be determined as if each liquidation, put, call, or conversion right were exercised in the manner resulting in the lowest value being determined for all such rights. (4) MINIMUM VALUATION OF JUNIOR EQUITY.— (A) IN GENERAL.-In the case of a transfer described in paragraph (1) of a junior equity interest in a corporation or partnership, such interest shall in no event be valued at an amount less than the value which would be determined if the total value of all of the junior equity interests in the entity were equal to 10 percent of the sum of (i) the total value of all of the equity interests in such entity, plus (ii) the total amount of indebtedness of such entity to the transferor (or an applicable family member). (B) DEFINITIONS.-For purposes of this paragraph (i) JUNIOR EQUITY INTEREST.-The term "junior equity interest" means common stock or, in the case of a partnership, any partnership interest under which the rights as to income and capital are junior to the rights of all other classes of equity interests. (ii) EQUITY INTERESTS.-The term "equity interest" means stock or any interest as a partner, as the case may be. (b) APPLICABLE RETAINED INTERESTS.-For purposes of this section(1) IN GENERAL.-The term "applicable retained interest" means any interest in an entity with respect to which there is (A) a distribution right, but only if, immediately before the transfer described in subsection (a)(1), the transferor and applicable family members hold (after application of subsection (e)(3)) control of the entity, or (B) a liquidation, put, call, or conversion right. (2) CONTROL.-For purposes of paragraph (1) (A) CORPORATIONS.-In the case of a corporation, the term "control" means the holding of at least 50 percent (by vote or value) of the stock of the corporation. (B) PARTNERSHIPS.-In means the case of a partnership, the term "control" (i) the holding of at least 50 percent of the capital or profits interests in the partnership, or (ii) in the case of a limited partnership, the holding of any interest as a general partner. (c) DISTRIBUTION AND OTHER RIGHTS: QUALIFIED PAYMENTS.-For purposes of this section EXPLANATION-Matter in italics is new; matter in brackets [ ] is old law |
