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Discussion:Do they have to file a New York tax return

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Discussion Forum Index --> Advanced Tax Questions --> Do they have to file a New York tax return


Discussion Forum Index --> Tax Questions --> Do they have to file a New York tax return

Taxaddict1 (talk|edits) said:

19 March 2014
Taxpayer is New York non-resident. They have a rental property in New York though. But the rental is a loss. Are they still required to file a New York income tax return.

The instruction says "you may also have to file a New York State return if you're a nonresident of New York and you have income from New York State sources."

Well, the taxpayer in this case did receive New York rental income. But after paying all the rental expenses, they had a rental loss so they did not have "net" rental income in 2013. Do they have to for?

Taxaddict1 (talk|edits) said:

19 March 2014
Do they have to file?

Sorry for the typo.

Supdat (talk|edits) said:

19 March 2014
I think it would be beneficial to file, because, upon the sale, the client is going to want the benefit of the NY Source carryover losses to offset the NY Source gain.

Dennis (talk|edits) said:

19 March 2014
NY uses Federal numbers. If there is no Federal NOL there is no NY NOL.

Nilodop (talk|edits) said:

19 March 2014
In any case, isn't the correct answer to the OP "No"?

Taxaddict1 (talk|edits) said:

19 March 2014
On schedule E, it calls both the rent received (before rental expenses) and the rental activity profit (after rental expenses) as "income".

So, strictly speaking, does "rental income" refers to the total rent collected before or after rental expenses?

Nilodop (talk|edits) said:

19 March 2014
This is from the instructions: "New York State nonresidents and part-year

residents You must file Form IT-203 if you meet any of the following conditions: • You have income from a New York source (see below and page 6) and your New York AGI (Federal amount column) is more than your New York State standard deduction. Complete Form IT-203, lines 1 through 31 and compare the line 31 Federal amount to your standard deduction from the table on page 33 of these instructions." (Emphasis added).

Seems clear to me that your client's NY AGI is less than the NY standard deduction, because it is a negative amount.

Also, as to the NOL, page 51 of those instructions says : "It is possible, because of the above rules, for a nonresident to have a New York State NOL without having a federal NOL, or to have a New York State NOL that is larger or smaller than the corresponding federal NOL. A nonresident individual claiming a NOL for New York State purposes but not for federal income tax purposes must file Form IT-203." That, to me, makes the point that Supdat made above - client may want to file just to have on record the NOL for future use.

Ckenefick (talk|edits) said:

19 March 2014
So, what if guy buys 2 rentals, one in NY, one not in NY. Both are passive. NY one shows a loss every year, the non-NY shows an equivalent profit every year. So, each year on the fed, they wash out. No fed passive loss c/f. Ditto for the state resident return.

When he sells the NY one for a gain, does he pay full NY tax on the gain, when in fact, he never rec'd any NY benefit from the NY operating losses over the years? Does he have a NY "NOL" carryforward b/c of the operating losses? Does he have a NY passive loss c/f, because of the operating losses?

Or, in a more simple situation, what if he only owns one rental and it's in NY one and losses are passive each year and can't be used and simply carryforward on the fed? If we later sell for a gain, it will all net out on the Fed. Does this mean we just take the net Fed number and put it on the NY return? Or can we not do this if we haven't file any NY returns along the way?

Nilodop (talk|edits) said:

19 March 2014
I don't know. But does the existence or non-existence of NY carryovers (whether NOL or passive or ?) depends on filing in OP's situation, the file. Otherwise, he can wait until it becomes necessary to establish the carryovers in some future year. At least, that's how Fed. would work, right?

DebP (talk|edits) said:

19 March 2014
I would always file the NY return in this situation. I don't see a down side at all, except for maybe a fee for connecting to a different state for your software program. I have a couple of clients who have passive losses connected to several states, and there was a huge gain last year in one of those states and it was perfect to have those loss carry-forwards handy.

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