New York Advisory Opinion TSB-H-80(136)I: Can a corporate officer count days worked from his out-of-state home as out-of-state days for New York nonresident income allocation, when he wasn't required to work from home?

Plain-English summary

Edward Finkelstein and his wife Myra, residents of Westport, Connecticut, asked whether 32 days Mr. Finkelstein worked from his Connecticut home in 1978 could be counted as out-of-state workdays for New York nonresident income allocation. Mr. Finkelstein was Chairman of the Board of a major New York department store (Macy's), whose principal store and executive offices - including his own thirteenth-floor office - were located at Herald Square in Manhattan. He was responsible for merchandising and operating decisions and preparation for organizational meetings; the store was open seven days a week, though the executive offices were secured on weekends for security reasons.

20 NYCRR 131.16 allocates a nonresident employee's compensation to New York based on the ratio of New York working days to total working days. But it draws a sharp line on what counts as an "out-of-state" day: any allowance for days worked outside New York must be based on services that, "of necessity - as distinguished from convenience," obligate the employee to duties outside the state. Working from home simply because it's more convenient for the employee doesn't qualify.

The Department found that Finkelstein wasn't required by his employment contract or any other employer directive to work from his Connecticut home - he did so for his own convenience. Because his out-of-state work days weren't a necessity of his employer's business, the 32 days he worked at home in 1978 were treated as New York workdays, and the income attributable to those days was New York-source income subject to New York's nonresident income tax.

What this means for you

Nonresident corporate officers or executives who occasionally work from home

Days you work from an out-of-state home count as New York workdays for allocation purposes unless your employer specifically required you to be out of state for those days - working from home purely because it's more convenient for you doesn't create an out-of-state day, even if you're the Chairman or another senior executive whose office happens to be in New York.

Companies whose New York-based executives sometimes work remotely

If you want out-of-state work days to reduce a nonresident executive's New York income allocation, the necessity for working outside New York needs to come from the employer (a documented business requirement), not just the employee's personal preference for working from home.

Accountants preparing nonresident allocation schedules for senior executives

Ask specifically whether out-of-state work days were required by the employer or chosen by the employee for convenience - this ruling shows the Department scrutinizes that distinction closely, even for high-level corporate officers with substantial autonomy over their own schedules.

Common questions

Q: Does working from home on a snow day, holiday, or personal day count as an out-of-state workday?
A: The regulation excludes nonworking days (weekends, holidays, illness, vacation, leave) from the calculation entirely - this ruling addresses only actual out-of-state working days, and even those don't count as "out-of-state" unless the employer required the work to be done outside New York.

Q: Does being a top executive (like a Chairman) change this analysis?
A: No - the ruling applied the same necessity-versus-convenience test to a company Chairman as it would to any other nonresident employee; seniority and autonomy over one's schedule don't substitute for an actual employer requirement to work outside the state.

Q: What would make out-of-state home workdays actually count toward reducing New York allocation?
A: The employee would need to show the out-of-state work was required "of necessity" by the employer - for example, a specific business obligation that could only be performed from outside New York - rather than simply being a location the employee chose for personal convenience.

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/income_ao_1980.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/income/h80_136i.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-H-80-(136)-I
Income Tax
July 9, 1980

Taxpayer Services Division
Technical Services Bureau
STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. I800408A

On April 8, 1980, a Petition for Advisory Opinion was received from Edward
Finkelstein and Myra Finkelstein, his wife, 23 Riverfield Drive, Westport,
Connecticut 06880.
The issue raised is whether days worked by Mr. Finkelstein in 1978 at home
in Connecticut can be claimed as days worked out-of-state.
Mr. Finkelstein is Chairman of the Board of Macys, New York. The principal
store and executive offices are located at Herald Square which is at 34th Street
and Broadway in New York City. Mr. Finkelstein's office is situated on the
thirteenth floor, which houses all the executive offices. The store is open seven
days a week. He is responsible for merchandising and operating decisions as well
as preparation for organizational meetings. The executive offices are secured on
weekends for security reasons.
Section 131.16 of Title 20 of the Official Compilation of Codes, Rules and
Regulations of the State of New York states: "If a nonresident employee
(including corporate officers but excluding employees provided for in section
131.15) performs services for his employer both within and without the State, his
income derived from New York sources includes that proportion of his total
compensation for services rendered as an employee which the total number of
working days employed within the State bears to the total number of working days
employed both within and without the State. The items of gain, loss and deduction
(other than deductions entering into the New York itemized deduction) of the
employee attributable to his employment, derived from or connected with New York
sources, are similarly determined. However, any allowance claimed for days worked
outside of the State must be based upon the performance of services which of
necessity--as distinguished from convenience--obligate the employee to
out-of-state duties in the service of his employer. In making the allocation
provided for in this section, no account is taken of nonworking days, including
Saturdays, Sundays, holidays, days of absence because of illness or personal
injury, vacation, or leave with or without pay...."
The taxpayer was not required either by contract or pursuant to any other
direction of his employer to work at his home. The work was performed at his home
for his own convenience on such days and not out of necessity.
The 32 days worked at home in 1978 are considered to be days worked in New
York, and the income earned by the taxpayer for these workdays was derived from
or connected with New York sources.

Dated: June 19, 1980

s/LOUIS ETLINGER
Deputy Director
Technical Services Bureau

JAMES H. TULLY, JR., COMMISSIONER
LOUIS M. JACOBSON, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR