STATE OF NEW YORK ________________________________________________________________________ 1947 2025-2026 Regular Sessions IN ASSEMBLY January 14, 2025 ___________ Introduced by M. of A. MAHER, E. BROWN, BENDETT, DeSTEFANO, LEMONDES, BRABENEC, McDONOUGH, HAWLEY -- 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 50 to read 2 as follows: 3 § 50. 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 such individual's 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. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD04960-01-5

A. 1947 2 1 (d) Account beneficiary. The term "account beneficiary" means the 2 individual or business on whose behalf the farm savings account was 3 established. 4 2. Program description. (a) Deductions allowed. In the case of a qual- 5 ified farmer, there shall be allowed as a deduction for the taxable year 6 an amount equal to the aggregate amount paid in cash during such taxable 7 year by or on behalf of such individual to a farm savings account of 8 such individual. 9 (b) Contribution requirement. There shall be no minimum or maximum 10 contribution requirement. However, aggregate contributions may not 11 exceed total income derived from farming during a given taxable year. 12 (c) Tax treatment of accounts. A farm savings account is exempt from 13 taxation under this chapter unless such account has ceased to be a farm 14 savings account. 15 (d) Termination of accounts. If the account beneficiary ceases to 16 engage in the trade or business of farming, all farm savings accounts of 17 such individual shall cease to be such accounts and the balance of all 18 such accounts shall be treated as (i) distributed to such individual, 19 and (ii) not paid in a qualified distribution. 20 (e) Tax treatment of distributions. (i) General. In general, any 21 amount paid or distributed out of a farm savings account shall be 22 included in gross income. 23 (ii) Additional tax on non-qualified distributions. (1) In addition to 24 any other tax imposed by this chapter, any non-qualified distribution 25 from a farm savings account shall be subject to a fifteen percent 26 surcharge on the amount of such non-qualifying distribution. 27 (2) Clause one of this subparagraph shall not apply if the payment or 28 distribution is made after the account beneficiary becomes disabled or 29 dies. 30 (iii) Rollover contributions. For purposes of this section, any amount 31 paid or distributed from a farm savings account to the account benefici- 32 ary shall be treated as a qualified distribution to the extent the 33 amount received is paid into a farm savings account for the benefit of 34 such beneficiary not later than the sixtieth day after the day on which 35 the beneficiary receives the payment or distribution. 36 (iv) Transfer of account incident to divorce. The transfer of an indi- 37 vidual's interest in a farm savings account to an individual's spouse or 38 former spouse under a divorce or separation instrument shall not be 39 considered a taxable transfer made by such individual notwithstanding 40 any other provision of this section, and such interest shall, after such 41 transfer, be treated as a farm savings account with respect to which 42 such spouse is the account beneficiary. 43 (v) Treatment after death of account beneficiary. (1) Treatment if 44 designated beneficiary is spouse. If the account beneficiary's surviving 45 spouse acquires such beneficiary's interest in a farm savings account by 46 reason of being the designated beneficiary of such account at the death 47 of the account beneficiary, such farm savings account shall be treated 48 as if the spouse were the account beneficiary. 49 (2) Other cases. If, by reason of the death of the account benefici- 50 ary, any person acquires the account beneficiary's interest in a farm 51 savings account in a case to which clause one of this subparagraph does 52 not apply: 53 (A) such account shall cease to be a farm savings account as of the 54 date of death, and 55 (B) an amount equal to the fair market value of the assets in such 56 account on such date shall be included in such person's gross income for

A. 1947 3 1 the taxable year which includes such date if such person is not the 2 estate of such beneficiary; or if such person is the estate of such 3 beneficiary, in such beneficiary's gross income for the last taxable 4 year of such beneficiary. 5 § 2. Subsection (b) of section 612 of the tax law is amended by adding 6 a new paragraph 44 to read as follows: 7 (44) Any non-qualifying distributions made from a farm savings 8 account. This shall not include any distributions that are exempt from 9 taxation as specified in paragraph (e) of subdivision two of section 10 fifty of this chapter. 11 § 3. Subsection (c) of section 612 of the tax law is amended by adding 12 a new paragraph 48 to read as follows: 13 (48) An amount equal to any qualified contribution to a farm savings 14 account established pursuant to section fifty of this chapter. 15 § 4. Subdivision 4 of section 209 of the tax law, as amended by 16 section 5 of part A of chapter 59 of the laws of 2014, is amended to 17 read as follows: 18 4. Corporations liable to tax under sections one hundred eighty-three 19 to one hundred eighty-four-a, inclusive, corporations taxable under 20 article thirty-three of this chapter, any trust company organized under 21 a law of this state all of the stock of which is owned by not less than 22 twenty savings banks organized under a law of this state, a captive REIT 23 or a captive RIC filing a combined return under subdivision (f) of 24 section fifteen hundred fifteen of this chapter, and housing companies 25 organized and operating pursuant to the provisions of article two or 26 article five of the private housing finance law and housing development 27 fund companies organized pursuant to the provisions of article eleven of 28 the private housing finance law, and farm savings accounts properly 29 established under section fifty of this chapter, shall not be subject to 30 tax under this article. 31 § 5. Section 601 of the tax law is amended by adding a new subsection 32 (g-1) to read as follows: 33 (g-1) Farm savings accounts. Any farm savings account properly estab- 34 lished under section fifty of this chapter shall not be subject to tax 35 under this article. 36 § 6. This act shall take effect immediately and shall apply to taxable 37 years commencing after such effective date.

Establishes a farm savings account program

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