N.Y. Comp. Codes R. & Regs. tit. 20 § 105.23

Current through Register Vol. 46, No. 45, November 2, 2024

Section 105.23 - Resident estate or trust

Tax Law, § 605(b)(3)

(a) A resident estate or trust is:

(1) the estate of a decedent who at such decedent's death was domiciled in New York State;

(2) a trust, or portion of a trust, consisting of property transferred by will of a decedent who at such decedent's death was domiciled in New York State; or

(3) a trust or portion of a trust, consisting of the property of:

(i) a person domiciled in New York State at the time such property was transferred to the trust, if such trust or portion of a trust was then irrevocable, or if it was then revocable, and has not subsequently become irrevocable; or

(ii) a person domiciled in New York State at the time such trust, or portion of a trust, became irrevocable, if it was revocable when such property was transferred to the trust but has subsequently become irrevocable.

(b) For purposes of subdivision (a) of this section, a trust or portion of a trust is revocable if it is subject to a power, exercisable immediately or at any future time, to revest title in the person whose property constitutes such trust or portion of a trust, and a trust or portion of a trust becomes irrevocable when the possibility that such power may be exercised has been terminated.

(c) The determination of whether a trust is a resident trust is not dependent on the location of the trustee or the corpus of the trust or the source of income; provided, however, no New York State personal income tax may be imposed on such trust if all of the following conditions are met:

(1) all the trustees are domiciled in a state other than New York State;

(2) the entire corpus of the trust, including real and tangible property is located outside of New York State; and

(3) all income and gains of the trust are derived or connected from sources outside of New York State, determined as if the trust were a nonresident.

(d)Examples. The following examples illustrate the provisions of this section.

Example 1:

Taxpayer A who is domiciled in New York State and taxpayer B who is domiciled in New Jersey together create an irrevocable trust. The portion of such trust attributable to property transferred by A is a New York State resident trust and the portion of such trust attributable to property transferred by B is a New York State nonresident trust.

Example 2:

Taxpayer C creates an irrevocable trust while such taxpayer is a domiciliary of New York State. Subsequent to the creation of such trust, C moves and becomes a domiciliary of California and transfers additional property to such irrevocable trust. The portion of such trust attributable to property transferred while C was a domiciliary of New York State is a New York State resident trust and the portion of such trust attributable to property transferred while C was a domiciliary of California is a New York State nonresident trust.

Example 3:

D, who is domiciled in Canada, creates an irrevocable trust with the X Trust Company in New York City as trustee. The entire corpus of the trust consists of securities of American corporations, which are actively traded by the trustee on the New York Stock Exchange. The beneficiaries of the trust are all New York State residents. Regardless of whether the trust is held to be a resident of the United States for Federal income tax purposes, it is, for New York State income tax purposes, a nonresident trust.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 105.23