What's happening
This bill exempts from state tax all capital gains from selling stock of a New York corporation to qualifying employee-owned enterprises.
Why it matters
Encourages employee ownership. By exempting capital gains taxes for sales to employee-owned enterprises, the bill incentivizes business owners to sell to their employees, potentially increasing workplace democracy and wealth-sharing.
Targets in-state economic benefits. The exemption only applies if the employee-owned enterprise is headquartered (“commercial domicile”) in New York, aiming to keep jobs, corporate decision-making, and profits within the state.
Aligns with federal rules for ESOPs. If the buyer is an Employee Stock Ownership Plan (ESOP), it must meet strict federal definitions and requirements, ensuring these transactions are legitimate forms of employee ownership and not tax avoidance schemes.
May affect state tax revenues and business transitions. While possibly reducing short-term state tax collections, the bill could encourage more business owners to consider employee buyouts, supporting business continuity and local economic stability.
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No Tax on Employee Buyouts
Plain English, a few words. Used as the page title.
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History
- Referred to ways and means
- Referred to ways and means
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Exempt Capital Gains for Employees
In Senate Committee · Budget And Revenue · Sponsor Kenneth P. LaValle
Full text
1 pageUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
S. 3727 A. 5520
2019-2020 Regular Sessions
SENATE - ASSEMBLY
February 13, 2019
IN SENATE -- Introduced by Sen. LAVALLE -- read twice and ordered printed, and when printed to be committed to the Committee on Budget and Revenue
IN ASSEMBLY -- Introduced by M. of A. THIELE -- read once and referred to the Committee on Ways and Means
AN ACT to amend the tax law, in relation to a capital gains exemption from the sale of stock from a New York corporation to an employeeowned enterprise as defined by subdivision five of section eighteen hundred thirty-six-b of the public authorities law
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subsection (c) of section 612 of the tax law is amended by adding a new paragraph 44 to read as follows:
(44) One hundred percent (100%) of the capital gains from the sale of stock from a New York Corporation to an employee-owned enterprise, as defined by subdivision five of section eighteen hundred thirty-six-b of the public authorities law. In order to qualify for such modification as described in this paragraph, such employee-owned enterprise must have its commercial domicile in New York. If the employee-owned enterprise is an "employee stock ownership plan," it must comply with federal requirements as such plan is defined in 26 U.S.C. § 4975(e) (7).
§ 2. This act shall take effect immediately.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD03278-01-9
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.