What's happening
This bill exempts 100% of capital gains taxes on sales of New York corporation stock to employee-owned enterprises based in New York.
Why it matters
Encourages Local Employee Ownership. By eliminating capital gains taxes on sales of New York corporation stock to employee-owned enterprises based in New York, the bill makes it more financially attractive for business owners to sell to their employees rather than outside buyers or private equity.
Promotes Retention of Businesses and Jobs in NY. Requiring the employee-owned enterprise to have its commercial domicile in New York ensures that the financial benefit applies only if the business—and thus its jobs and economic activity—remain rooted in the state.
Supports Federally-Compliant ESOPs. The bill extends the exemption to Employee Stock Ownership Plans (ESOPs) that meet federal requirements, providing a clear path for business owners to transition to widely recognized, regulated employee ownership structures.
Potential to Reduce Wealth Inequality. By making it easier and more tax-advantageous for employees to become owners, the bill could help spread the benefits of business ownership more broadly among working New Yorkers, supporting local wealth-building and community stability.
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Who cares
Headline styles
Exempt Capital Gains for Employees
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to budget and revenue
- Referred to budget and revenue
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.
No Tax on Employee Buyouts
In Assembly Committee · Ways And Means · Sponsor Fred Thiele
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.
Sponsor's memo
Title of bill
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 employee-owned enterprise as defined by subdivision five of section eighteen hundred thirty-six-b of the public authorities law
Purpose
Qualifies employee owned enterprises whose commercial domicile is in New York to a 100% exemption from capital gains from the sale of stock from a New York corporation to such employee owned enterprise.
Summary of provisions
Subsection (c) of section 612 of the tax law is amended by adding a new paragraph 44 relating to modifications to the adjusted gross income of a resident individual. Provides that 100% of the capital gains from the sale of stock from a New York corporation to an employee owned enter- prise, as defined by subdivision 5of section 1836 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 commer- cial domicile in New York. If the employee owned enterprise is an "employee stock ownership plan", it must comply with federal require- ments as such plan as defined in 26 U.S.C. section 4975(e) (7).
Justification
The purpose of this legislation is to promote the creation of worker cooperatives to help support a vibrant Main Street in our communities by qualifying employee owned enterprises whose commercial domicile is in New York to a 100% exemption from capital gains from the sale of stock from a New York corporation to such employee owned enterprise.
Legislative history
2017-18 S.4601/A.5970
Fiscal implications
TBD.
Effective date
Immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.