Ted wrote:

- quote -

To be on the safe side, I'd suggest you call the NY
Department of Revenue and ask whether any recapture will be
required. Make sure they understand that you still hold the
stock and are writing off the investment only because it has
become worthless.

Katie in San Diego

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

"Katie" <katiej_1958[at]yahoo.com> wrote:
- quote -

Thanks much

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Ted wrote:
- quote -

See NY TSB-M-00(2)(I), 9/27/2000

There is no basis adjustment for the credit. Your state
basis in the stock is $100,000.

If you sold, transferred, or otherwise disposed of the stock
more than 48 months (4 years) but not more than 72 months (6
years) after the close of the year when the credit was
allowed, you would be required to add to your tax liability
for the year of disposition 60% of the credit, or $12,000.
If the disposition occurred more than 72 months but not more
than 96 months after the close of the year when the credit
was allowed, you would be required to add to your tax
liability for the year of disposition 40% of the credit, or
$8,000.

Since you did not sell, transfer or otherwise dispose of
your stock, I can find nothing in the law or in the TSB that
requires the recapture of any part of the credit.

Katie in San Diego

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

"Katie" <katiej_1958[at]yahoo.com> wrote:
- quote -

I understand; but suppose I invested $100,000 and got a
$20,000 credit. My federal basis is $100,000; but is my
state basis $100k or $80k?

- quote -

yes, I still own the stock. The text on the NY is
ambiguous, at least to me!

Thanks much

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

- quote -

I looked my old return up, and it didn't call it income. By
eliminating my NYS taxes, I lost the deduction. That is
essentially the same as calling it taxable, isn't it? Not
that I am complaining!

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Ted wrote:
- quote -

No, it isn't a basis reduction for NYS purposes; it's a
partial recapture of the credit. In other words, you'd
calculate the Schedule D loss the same as federal, but you'd
have an ordinary income addition in the amount of the
recaptured credit.

However, if you still own the stock, and are just writing it
off because it has become worthless, I'm not sure the credit
recapture applies. I'd have to look into that a little
farther.

Katie in San Diego

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

"Katie" <katiej_1958[at]yahoo.com> wrote:
- quote -

That is correct, a QETC.
So you are telling me it reduces the basis for my NYS
return, but not for my Federal return; right?

The company only lasted 6 years. Do I lose part of the
credit? Doesn't seem fair, since I never sold it; but the
law isn't always fair.

I will have to look up my old tax return, maybe my
recollection is wrong.

Thanks.

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Ted wrote:

- quote -

I'm assuming this was the credit for capital contributions
to emerging technology companies (NYTL Sec. 606(r)).

The credit provision doesn't require you to reduce your
basis in the stock, but it does recapture the credit to the
extent you held the stock less than 108 months (9 years)
after the close of the tax year in which you acquired the
stock. The recapture is proportionate to the time the stock
was held.

In general, state tax credits are not taxable income for
federal income tax purposes. While the basis of property
that is eligible for certain federal credits is reduced by
the amount of the credit, those reductions are not effective
for state income tax purposes. Similarly, tax credits
allowed by states may reduce the basis of the property for
state income tax purposes, but do not affect the federal
basis. I don't know why the credit would have been included
in your federal taxable income in the year you purchased the
stock, but whether it was or not, I don't believe it has any
effect on your basis in the stock for federal purposes.

Katie in San Diego

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

I owned stock in a small company that is no longer. When I
invested, NYS was kind enough to give a 20% tax credit.

Is my basis what I invested, or 80% of what I invested?
If I recall correctly, the tax credit was treated as income
for the Federal Tax return, so I don't see why it should
reduce my loss now; but you never know...

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >