STATE OF NEW YORK ________________________________________________________________________ 5488 2023-2024 Regular Sessions IN ASSEMBLY March 13, 2023 ___________ Introduced by M. of A. MAHER -- read once and referred to the Committee on Ways and Means AN ACT to amend the tax law, in relation to farm savings accounts The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. The tax law is amended by adding a new section 48 to read 2 as follows: 3 § 48. Farm savings accounts. 1. Definitions. (a) Qualified farmer. For 4 purposes of this section, the term "qualified farmer" means, with 5 respect to any taxable year, any individual who, during such year, was 6 engaged in the trade or business of farming. 7 (b) Farm savings account. For purposes of this section, the term "farm 8 savings account" means a trust created or organized in the United States 9 as a farm savings account exclusively for the purpose of making quali- 10 fied distributions for purposes of farm sustainability, but only if the 11 written governing instrument creating the trust meets the following 12 requirements: 13 (i) No contribution will be accepted unless it is in cash. 14 (ii) The trustee is a bank, credit union or other appropriate institu- 15 tion that demonstrates administration of the trust in a manner that is 16 consistent with the requirements of this section. 17 (iii) The assets of the trust will not be commingled with other prop- 18 erty except in a common trust fund or common investment fund. 19 (iv) The interest of an individual in the balance in his or her 20 account is nonforfeitable. 21 (c) Qualified distribution. The term "qualified distribution" means 22 any amount paid from a farm savings account to the account beneficiary 23 exclusively for purposes of farm sustainability. 24 (d) Account beneficiary. The term "account beneficiary" means the 25 individual or business on whose behalf the farm savings account was 26 established. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD09187-01-3

A. 5488 2 1 2. Program description. (a) Deductions allowed. In the case of a qual- 2 ified farmer, there shall be allowed as a deduction for the taxable year 3 an amount equal to the aggregate amount paid in cash during such taxable 4 year by or on behalf of such individual to a farm savings account of 5 such individual. 6 (b) Contribution requirement. There shall be no minimum or maximum 7 contribution requirement. However, aggregate contributions may not 8 exceed total income derived from farming during a given taxable year. 9 (c) Tax treatment of accounts. A farm savings account is exempt from 10 taxation under this chapter unless such account has ceased to be a farm 11 savings account. 12 (d) Termination of accounts. If the account beneficiary ceases to 13 engage in the trade or business of farming, all farm savings accounts of 14 such individual shall cease to be such accounts and the balance of all 15 such accounts shall be treated as (i) distributed to such individual, 16 and (ii) not paid in a qualified distribution. 17 (e) Tax treatment of distributions. (i) General. In general, any 18 amount paid or distributed out of a farm savings account shall be 19 included in gross income. 20 (ii) Additional tax on non-qualified distributions. (1) In addition to 21 any other tax imposed by this chapter, any non-qualified distribution 22 from a farm savings account shall be subject to a fifteen percent 23 surcharge on the amount of such non-qualifying distribution. 24 (2) Clause one of this subparagraph shall not apply if the payment or 25 distribution is made after the account beneficiary becomes disabled or 26 dies. 27 (iii) Rollover contributions. For purposes of this section, any amount 28 paid or distributed from a farm savings account to the account benefici- 29 ary shall be treated as a qualified distribution to the extent the 30 amount received is paid into a farm savings account for the benefit of 31 such beneficiary not later than the sixtieth day after the day on which 32 the beneficiary receives the payment or distribution. 33 (iv) Transfer of account incident to divorce. The transfer of an indi- 34 vidual's interest in a farm savings account to an individual's spouse or 35 former spouse under a divorce or separation instrument shall not be 36 considered a taxable transfer made by such individual notwithstanding 37 any other provision of this section, and such interest shall, after such 38 transfer, be treated as a farm savings account with respect to which 39 such spouse is the account beneficiary. 40 (v) Treatment after death of account beneficiary. (1) Treatment if 41 designated beneficiary is spouse. If the account beneficiary's surviving 42 spouse acquires such beneficiary's interest in a farm savings account by 43 reason of being the designated beneficiary of such account at the death 44 of the account beneficiary, such farm savings account shall be treated 45 as if the spouse were the account beneficiary. 46 (2) Other cases. If, by reason of the death of the account benefici- 47 ary, any person acquires the account beneficiary's interest in a farm 48 savings account in a case to which clause one of this subparagraph does 49 not apply: 50 (A) such account shall cease to be a farm savings account as of the 51 date of death, and 52 (B) an amount equal to the fair market value of the assets in such 53 account on such date shall be included in such person's gross income for 54 the taxable year which includes such date if such person is not the 55 estate of such beneficiary; or if such person is the estate of such

A. 5488 3 1 beneficiary, in such beneficiary's gross income for the last taxable 2 year of such beneficiary. 3 § 2. Subsection (b) of section 612 of the tax law is amended by adding 4 a new paragraph 44 to read as follows: 5 (44) Any non-qualifying distributions made from a farm savings 6 account. This shall not include any distributions that are exempt from 7 taxation as specified in paragraph (e) of subdivision two of section 8 forty-eight of this chapter. 9 § 3. Subsection (c) of section 612 of the tax law is amended by adding 10 a new paragraph 45 to read as follows: 11 (45) An amount equal to any qualified contribution to a farm savings 12 account established pursuant to section forty-eight of this chapter. 13 § 4. Subdivision 4 of section 209 of the tax law, as amended by 14 section 5 of part A of chapter 59 of the laws of 2014, is amended to 15 read as follows: 16 4. Corporations liable to tax under sections one hundred eighty-three 17 to one hundred eighty-four-a, inclusive, corporations taxable under 18 article thirty-three of this chapter, any trust company organized under 19 a law of this state all of the stock of which is owned by not less than 20 twenty savings banks organized under a law of this state, a captive REIT 21 or a captive RIC filing a combined return under subdivision (f) of 22 section fifteen hundred fifteen of this chapter, and housing companies 23 organized and operating pursuant to the provisions of article two or 24 article five of the private housing finance law and housing development 25 fund companies organized pursuant to the provisions of article eleven of 26 the private housing finance law, and farm savings accounts properly 27 established under section forty-eight of this chapter, shall not be 28 subject to tax under this article. 29 § 5. Section 601 of the tax law is amended by adding a new subsection 30 (g-1) to read as follows: 31 (g-1) Farm savings accounts. Any farm savings account properly estab- 32 lished under section forty-eight of this chapter shall not be subject to 33 tax under this article. 34 § 6. This act shall take effect immediately and shall apply to taxable 35 years commencing after such effective date.

Establishes a farm savings account program

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