On December 16, 2008, New York State Governor David A. Patterson announced his Executive Budget recommendation for consideration by the New York State Legislature. It includes a variety of tax increases, including a proposal to tax non-resident individuals on “carried interest” allocations attributable to an investment fund doing business in New York State. (Budget Bill, S. 60, A. 160, Part N). If enacted, the legislation may treat carried interest allocations received by a nonresident individual partner from an investment fund’s general partner entity as New York source income subject to New York State personal income tax if the nonresident individual partner, through a general partner entity, provides a substantial quantity of investment management services in New York to an investment fund.

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