Enacted Connecticut bill targets deferred income received from off-shore hedge funds and the sale of certain real estate entities by nonresidents

June 2014


On June 11, 2014, Connecticut Governor Dannel Malloy signed H. 5466 (Act 14-155), which requires certain deferred federal off-shore hedge fund income that is attributed to services performed in-state to be sourced to Connecticut for purposes of calculating the income for nonresident individuals. The bill is intended to bolster the state impact of Internal Revenue Code section 457A and its subsequent rules enacted by the Internal Revenue Service in 2009 that limited the deferral of certain types of foreign income by the hedge fund partners. This provision is effective on enactment.

Additionally, the bill requires nonresidents to include in their Connecticut taxable income the gain or loss from the sale of their interests in certain entities if those entities hold real estate in Connecticut and 50% or more of its assets are real property located in Connecticut, and meet other requirements. This provision applies to taxable years commencing on or after January 1, 2014.

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