[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"detail-sidebar-cat-1-en-105":3,"doc-detail-304773-en":53,"doc-seo-304773-105":74},{"code":4,"msg":5,"data":6},0,"success",[7,14,19,24,29,34,39,44,49],{"id":8,"doc_module":9,"doc_module_name":10,"category_name":11,"show_sort_weight":12,"slug":13},11,1,"Template","Presentations",90,"presentations",{"id":15,"doc_module":9,"doc_module_name":10,"category_name":16,"show_sort_weight":17,"slug":18},12,"Resumes",80,"resumes",{"id":20,"doc_module":9,"doc_module_name":10,"category_name":21,"show_sort_weight":22,"slug":23},14,"Invoices",70,"invoices",{"id":25,"doc_module":9,"doc_module_name":10,"category_name":26,"show_sort_weight":27,"slug":28},15,"Posters",60,"posters",{"id":30,"doc_module":9,"doc_module_name":10,"category_name":31,"show_sort_weight":32,"slug":33},16,"Social Media",50,"social-media",{"id":35,"doc_module":9,"doc_module_name":10,"category_name":36,"show_sort_weight":37,"slug":38},17,"Forms",40,"forms",{"id":40,"doc_module":9,"doc_module_name":10,"category_name":41,"show_sort_weight":42,"slug":43},18,"Letters",30,"letters",{"id":45,"doc_module":9,"doc_module_name":10,"category_name":46,"show_sort_weight":47,"slug":48},21,"Paper Templates",5,"papers-templates",{"id":50,"doc_module":9,"doc_module_name":10,"category_name":51,"show_sort_weight":4,"slug":52},158,"General","general-158",{"code":4,"msg":5,"data":54},{"doc_id":55,"user_id":56,"nickname":57,"user_avatar":58,"doc_module":9,"category_id":40,"category_name":41,"doc_title":59,"doc_description":60,"doc_content":61,"file_id":62,"file_url":63,"file_type":64,"file_size":65,"view_count":47,"is_deleted":4,"is_public":9,"is_downloadable":9,"audit_status":9,"page_count":47,"language":66,"language_code":67,"site_id":68,"html_lang":67,"table_of_contents":69,"faqs":70,"seo_title":71,"seo_description":60,"update_tm":72,"read_time":73},304773,5909877438554,"Maeve","https://ap-avatar.wpscdn.com/avatar/5600025385ad2bf12a7?_k=1778553567797529272","Refundable New York State Investment Tax Credit","Chief Counsel Advice from the Office of Chief Counsel of the Internal Revenue Service addresses whether the refundable portion of the New York State Investment Tax Credit (NYITC) received by an investor holding an LLC treated as a partnership is taxable as ordinary income or should instead be treated as an item increasing outside basis or as a deemed distribution subject to capital gain rates. The memorandum reviews NYITC rules, related New York filings, and the taxpayer’s two alternative arguments, and frames the central tax treatment issue under partnership tax principles.","Office of Chief Counsel Internal Revenue Service  \nMemorandum  \nNumber: 201421016  \nRelease Date: 5/23/2014  \nCC:PSI:02:RSmith  \nPOSTS-145204-13  \nUILC: 731.00-00, 702.05-00, 705.00-00 date: February 20, 2014  \nto: Anne Melzer  \nAssociate Area Counsel, Buffalo (Small Business/Self-Employed) Attn: John Janusz, Attorney  \nfrom: Melissa Liquerman  \nChief, Branch 2  \n(Passthroughs & Special Industries)  \nsubject: Refundable New York State Investment Tax Credit  \nThis Chief Counsel Advice responds to an email request for assistance dated October  \n25, 2013. This advice may not be used or cited as precedent.  \nLEGEND  \nA  \nX  \nYear  \n1  \nYear  \n2  \n=  \n=  \n=  \n=  \nFACTS  \nThe taxpayer, A , is an individual passive investor in X, an LLC that is treated as a partnership for federal tax purposes. Taxpayer has zero basis in his partnership  \nPOSTS-145204-13 2  \ninterest. In Year 1 , the LLC purchased equipment that qualified for the refundable New York State Investment Tax Credit. The taxpayer claimed the credit on his Year 1 personal income tax return and received a “refund” in Year 2 because the credit exceeded his state income tax liability; this payment is not an actual refund of any amount previously paid by the taxpayer or the LLC.  \nThe New York State Investment Tax Credit (New York Code § 210. 12, hereinafter NYITC) is a credit that corporations may claim against the New York Franchise Tax (New York Code Article 9-A) and individuals who are business owners of partnershipsand S corporations may claim against the New York Personal Income Tax. The credit is only allowed in the year the property is placed into service. In general, if a business (ora previously described individual business owner) cannot claim the NYITC because the NYITC is more than the New York State tax less other credits, it may carry over the unused amount to future tax years. A new business (or previously described individual business owner), however, may claim a refund of the unused credit rather than carrying over the unused amount to a future year.  \nPartners and partnerships file New York State Tax Form IT-212 relating to the NYITC. A partnership must file Form IT-212 to show the partnership’s total investment in qualified property with its Form IT-204, Partnership Return. Form IT-204 includes a section entitled “Partner Credit Information” which calculates the amount of the credit for each partner and refers the partner to Form IT-212. Partners also file Form IT-212 in order to claim the NYITC, including their refund, if applicable. The partnership has no right to the refund.  \nIt is the taxpayer’s position that the refundable portion of the credit is not ordinary income. Examination’s email dated October 25, 2013 states that it believes therefunded portion of the NYITC is taxable as ordinary income and cannot be offset by flow through loss due to the fact that the taxpayer does not have basis to claim the loss.  \nThe taxpayer argues that there are two possible scenarios under which the taxpayer can avoid ordinary income treatment as a result of receiving the NYITC refund. First, if receipt of the NYITC refund creates outside basis in the taxpayer’s interest in the LLC, then the taxpayer’s LLC losses are no longer limited by § 704(d), and the taxpayer argues he should be allowed to offset his income from the refundable portion of the NYITC with losses from the LLC. Second, the taxpayer asserts that the NYITC refund is a deemed distribution of money in excess of basis and therefore subject to capital gain rates under § 731.  \nISSUE  \nAlthough the NYITC refund is not a distribution from the LLC to the taxpayer, the taxpayer would have no right to the NYITC refund but for his investment in the LLC and his interest in its underlying activities. Therefore, should the refundable portion of the  \nPOSTS-145204-13 3  \nNew York State Investment Tax Credit paid directly to the investor in an LLC be treated as an item that increases the taxpayer’s outside basis or as ","cbCainmsL30sOjvD","https://ap.wps.com/l/cbCainmsL30sOjvD","pdf",61070,"English","en",105,"# Facts\n## Issue\n## Law\n## Analysis (implicit)","[{\"question\":\"What is the main tax question in the memorandum?\",\"answer\":\"Whether the refundable portion of the New York State Investment Tax Credit paid directly to an investor in an LLC should be treated as increasing the investor’s outside basis or as a deemed distribution.\"},{\"question\":\"How does the investor claim the NYITC and receive the payment?\",\"answer\":\"The taxpayer claims the credit on his Year 1 personal return and receives a payment in Year 2 because the credit exceeds state income tax liability; the memorandum explains this is not an actual refund of prior amounts paid by the taxpayer or the LLC.\"},{\"question\":\"What arguments does the taxpayer use to avoid ordinary income treatment?\",\"answer\":\"The taxpayer argues either (1) the NYITC refund creates outside basis so LLC losses can offset the refundable portion, or (2) the NYITC refund is a deemed distribution in excess of basis subject to capital gain rates.\"}]","Refundable New York State Investment Tax Credit | PDF",1789817147,2,{"code":4,"msg":75,"data":76},"ok",{"site_id":68,"language":67,"slug":77,"title":59,"keywords":78,"description":60,"schema_data":79,"social_meta":134,"head_meta":136,"extra_data":138,"updated_unix":139},"refundable-new-york-state-investment-tax-credit","",{"@graph":80,"@context":133},[81,96,116],{"@type":82,"itemListElement":83},"BreadcrumbList",[84,88,90,93],{"item":85,"name":86,"@type":87,"position":9},"https://docshare.wps.com","Home","ListItem",{"item":89,"name":10,"@type":87,"position":73},"https://docshare.wps.com/template/",{"item":91,"name":41,"@type":87,"position":92},"https://docshare.wps.com/template/letters/",3,{"item":94,"name":59,"@type":87,"position":95},"https://docshare.wps.com/template/refundable-new-york-state-investment-tax-credit/304773/",4,{"url":94,"name":59,"@type":97,"image":98,"author":103,"headline":59,"publisher":105,"fileFormat":108,"inLanguage":67,"description":60,"dateModified":109,"datePublished":110,"encodingFormat":108,"isAccessibleForFree":111,"interactionStatistic":112},"DigitalDocument",{"url":99,"@type":100,"width":101,"height":102},"https://docshare.wps.com/thumbnails/refundable-new-york-state-investment-tax-credit/304773.png","ImageObject",442,249,{"name":57,"@type":104},"Person",{"url":85,"name":106,"@type":107},"DocShare","Organization","application/pdf","2026-09-28","2026-09-19",true,{"@type":113,"interactionType":114,"userInteractionCount":47},"InteractionCounter",{"@type":115},"ViewAction",{"@type":117,"mainEntity":118},"FAQPage",[119,125,129],{"name":120,"@type":121,"acceptedAnswer":122},"What is the main tax question in the memorandum?","Question",{"text":123,"@type":124},"Whether the refundable portion of the New York State Investment Tax Credit paid directly to an investor in an LLC should be treated as increasing the investor’s outside basis or as a deemed distribution.","Answer",{"name":126,"@type":121,"acceptedAnswer":127},"How does the investor claim the NYITC and receive the payment?",{"text":128,"@type":124},"The taxpayer claims the credit on his Year 1 personal return and receives a payment in Year 2 because the credit exceeds state income tax liability; the memorandum explains this is not an actual refund of prior amounts paid by the taxpayer or the LLC.",{"name":130,"@type":121,"acceptedAnswer":131},"What arguments does the taxpayer use to avoid ordinary income treatment?",{"text":132,"@type":124},"The taxpayer argues either (1) the NYITC refund creates outside basis so LLC losses can offset the refundable portion, or (2) the NYITC refund is a deemed distribution in excess of basis subject to capital gain rates.","https://schema.org",{"og:url":94,"og:type":135,"og:title":59,"og:site_name":106,"og:description":60},"article",{"robots":137,"canonical":94},"index,follow",{"doc_id":55,"site_id":68},1790233526]