Sec. 118.5. Share of estate or trust in modifications relating to corpus items

Tax Law, § 618(4), (5)

(a) General.

The New York taxable income of a resident estate or trust must be increased or decreased (as the case may be) by the modifications described in paragraphs (1) through (9) of this subdivision, to the extent that such modifications are attributable to principal or corpus items which are included in the Federal taxable income of the estate or trust and which are not included in the Federal distributable net income of the estate or trust:

(1) the optional modifications for depreciation and research and development expenditures pursuant to section 112.7 of this Article;

(2) the optional modifications for waste treatment facility and air pollution control facility expenditures pursuant to section 112.8 of this Article;

(3) the modifications relating to mines, oil and gas wells and other natural deposits pursuant to section 112.9 of this Article;

(4) the modification relating to net capital gains for the taxable year (to the extent allocable to principal) pursuant to section 112.2(i) of this Article, if any. However, no such modification is required to be made to the New York taxable income of an estate or trust under the provisions of such subdivision for that portion of any net gain as described in such subdivision which has been paid or permanently set aside for a charitable purpose by the estate or trust and which is allowable as a deduction for charitable purposes in accordance with the provisions of section 642 of the Internal Revenue Code of 1954 as amended;

(5) the modification for that portion of wages and salaries paid or incurred for the taxable year for which a deduction is not allowed in accordance with the provisions of section 280C of the Internal Revenue Code pursuant to section 112.3(o) of this Article;

(6) the modifications described in: (i) section 112.3(p) of this Article with respect to contributions to and earnings by a qualified higher education fund established by the decedent or grantor of a trust, and (ii) section 112.2(k) of this Article in the case of an estate or trust to which the assets of a qualified higher education fund are required to be distributed pursuant to section 612(k)(3)(A)(iii) of the Tax Law;

(7) for taxable years beginning in 1982, 1983 and 1984, the modifications described in subdivisions (p) and (q) of section 112.2 of this Article and those described in subdivisions (u) and (v) of section 112.3 of this Article relating to an election made pursuant to section 168(f)(8) of the Internal Revenue Code as such section was in effect for safe harbor lease agreements entered into prior to January 1, 1984;

(8) for taxable years beginning in 1982, 1983 and 1984, the modifications described in: (i) section 112.2(r) of this Article relating to the disallowance of the amount allowable as the accelerated cost recovery system deduction pursuant to section 168(f)(8) of the Internal Revenue Code; and (ii) section 112.3(w) of this Article relating to the allowance of a depreciation deduction pursuant to section 167 of the Internal Revenue Code as such section would have applied to property placed in service on December 31, 1980; and

(9) the modification described in section 112.2(s) of this Article or the modification described in section 112.3(x) of this Article relating to the disposition of recovery property for which accelerated cost recovery system deductions were not allowed (see section 112.2[r] of this Article) and for which New York depreciation deductions were allowed (see section 112.3[w] of this Article).

(b) No modification is to be made under this section in respect to any amount, determined under paragraphs (1) through (9) of subdivision (a) of this section, which enters into the determination of the share of the estate or trust in the New York fiduciary adjustment, determined in accordance with section 118.4 of this Part.

(c) If a modification is claimed under this section, the fiduciary must attach a statement to the New York State fiduciary return showing full details regarding the nature and computation of each amount claimed.