Section 631. New York source income of a nonresident individual

(a)
  General.  The New York source income of a nonresident  individual  shall
  be  the  sum  of  the  following: (1) The net amount of items of income,
  gain, loss and  deduction  entering  into  his  federal  adjusted  gross
  income,  as  defined  in  the  laws of the United States for the taxable
  year, derived from or connected with New York  sources,  including:  (A)
  his  distributive share of partnership income, gain, loss and deduction,
  determined under section six hundred thirty-two, and
    (B) his pro rata share of New York  S  corporation  income,  loss  and
  deduction, increased by reductions for taxes described in paragraphs two
  and three of subsection (f) of section thirteen hundred sixty-six of the
  internal  revenue code, determined under section six hundred thirty-two,
  and
    (C) his share of estate or trust income,  gain,  loss  and  deduction,
  determined under section six hundred thirty-four and
    (2)  The portion of the modifications described in subsections (b) and
  (c) of section six hundred twelve which relate to  income  derived  from
  New  York  sources (including any modifications attributable to him as a
  partner or shareholder of a New York S corporation).
    (b) Income and deductions from New York sources.
    (1) Items  of  income,  gain,  loss  and  deduction  derived  from  or
  connected with New York sources shall be those items attributable to:
    (A)  the  ownership  of  any  interest  in  real  or tangible personal
  property in this state; or
    (1) For purposes of this subparagraph, the term "real property located
  in this state" includes an interest in a partnership, limited  liability
  corporation,  S  corporation,  or non-publicly traded C corporation with
  one hundred or fewer shareholders (hereinafter the "entity")  that  owns
  real  property  that  is located in New York and has a fair market value
  that equals or exceeds fifty percent of all the assets of the entity  on
  the  date  of sale or exchange of the taxpayer's interest in the entity.
  Only those assets that the entity owned for at least  two  years  before
  the  date  of  the  sale  or  exchange of the taxpayer's interest in the
  entity are to be used in determining the fair market value  of  all  the
  assets  of  the entity on the date of sale or exchange. The gain or loss
  derived from New York sources from the taxpayer's sale or exchange of an
  interest in an  entity  that  is  subject  to  the  provisions  of  this
  subparagraph  is  the total gain or loss for federal income tax purposes
  from that sale or exchange multiplied by a fraction,  the  numerator  of
  which  is the fair market value of the real property located in New York
  on the date of sale or exchange and the denominator of which is the fair
  market value of all the assets of the entity on  the  date  of  sale  or
  exchange.
    (B)  a  business,  trade,  profession or occupation carried on in this
  state; or
    (C) in the case of  a  shareholder  of  an  S  corporation  where  the
  election  provided for in subsection (a) of section six hundred sixty of
  this article is in effect,  the  ownership  of  shares  issued  by  such
  corporation,   to  the  extent  determined  under  section  six  hundred
  thirty-two of this article; or
    (D) winnings from a  wager  placed  in  a  lottery  conducted  by  the
  division  of  the  lottery,  if the proceeds from such wager exceed five
  thousand dollars; or
    (E) gains from the sale, conveyance or other disposition of shares  of
  stock  in a cooperative housing corporation in connection with the grant
  or transfer of a proprietary leasehold by the owner thereof and  subject
  to  the  provisions  of article thirty-one of this chapter, whether such
  shares are held by a partnership, trust or otherwise.

    (2) Income from intangible  personal  property,  including  annuities,
  dividends,  interest,  and  gains  from  the  disposition  of intangible
  personal property, shall constitute income derived from New York sources
  only to the extent that such income  is  from  property  employed  in  a
  business,  trade,  profession, or occupation carried on in this state or
  from winnings from a wager placed in a lottery conducted by the division
  of the lottery, if the proceeds from such  wager  exceed  five  thousand
  dollars.  Income  from  the  disposition of intangible personal property
  shall also constitute income derived from New York sources to the extent
  such gains are from the sale, conveyance or other disposition of  shares
  of  stock  in  a  cooperative housing corporation in connection with the
  grant or transfer of a proprietary leasehold by the  owner  thereof  and
  subject to the provisions of article thirty-one of this chapter, whether
  such shares are held by a partnership, trust or otherwise.
    (3)  Income directly or indirectly derived by an athlete, entertainer,
  or  performing  artist  from   closed-circuit   and   cable   television
  transmissions  of  an  event (other than events occurring on a regularly
  scheduled basis) taking place within  the  state  as  a  result  of  the
  rendition  of services by such athlete, entertainer or performing artist
  shall constitute income derived from New York sources only to the extent
  that such transmissions were received or exhibited within the state.
    (4) Deductions with respect to capital losses, passive activity losses
  and net operating losses shall be based solely on income, gain, loss and
  deduction derived  from  or  connected  with  New  York  sources,  under
  regulations  of  the commissioner of taxation and finance, but otherwise
  shall be determined in the same  manner  as  the  corresponding  federal
  deductions.
    (5)  In  the  case  of  a  nonresident  individual  or  partner  of  a
  partnership doing an insurance business as a  member  of  the  New  York
  insurance  exchange described in section six thousand two hundred one of
  the insurance law, any item of income, gain, loss or deduction  of  such
  business  which  is  the individual's distributive or pro rata share for
  federal income tax purposes or which the individual is required to  take
  into  account  separately  for  federal  income  tax purposes, shall not
  constitute income,  gain,  loss  or  deduction  derived  from  New  York
  sources.
    (6)  The  deduction  allowed  by  section  two  hundred fifteen of the
  internal revenue code, relating  to  alimony,  shall  not  constitute  a
  deduction derived from New York sources.
    (c) Income and deductions partly from New York sources. If a business,
  trade,  profession  or occupation is carried on partly within and partly
  without  this  state,  as  determined  under  regulations  of  the   tax
  commission,  the  items of income, gain, loss and deduction derived from
  or connected with New York sources shall be determined by  apportionment
  and allocation under such regulations.
    (d)  Purchase  and sale for own account.-- A nonresident, other than a
  dealer holding property primarily for sale to customers in the  ordinary
  course  of  his  trade  or  business,  shall not be deemed to carry on a
  business, trade, profession or occupation in this state solely by reason
  of the purchase and sale of property or the purchase, sale or writing of
  stock option contracts, or both, for his own account.
    (e) Military pay. Compensation paid by the United  States  for  active
  service  in  the  armed  forces  of  the  United States, performed by an
  individual not domiciled in this  state,  shall  not  constitute  income
  derived from New York sources.
    (f)  Husband  and  wife.  If  husband and wife determine their federal
  income tax on a joint return but are required  to  determine  their  New
  York income taxes separately, they shall determine their New York source

  incomes  separately  as if their federal adjusted gross incomes had been
  determined separately.
    (g)  Stock  option  grants,  stock  appreciation rights and restricted
  stock.   A nonresident taxpayer who has  been  granted  statutory  stock
  options,   restricted   stock,   nonstatutory  stock  options  or  stock
  appreciation rights and who, during such grant period, performs services
  within New York for, or is employed within New York by, the  corporation
  granting  such option, stock or right, shall compute his or her New York
  source income as determined under rules and  regulations  prescribed  by
  the commissioner.