Connecticut Administrative Code › Title 12 - Taxation › 740(a) - INCOME TAX › Part II - Nonresident individuals › Section 12-711(b)-5 - Income from intangible personal property

Current through July 10, 2024
(a)
				Items of income, gain, loss and deduction derived from or connected with
				Connecticut sources do not include such items attributable to intangible
				personal property of a nonresident individual, including annuities, dividends,
				interest, and gains and losses from the disposition of intangible personal
				property, except to the extent attributable to property employed in a business,
				trade, profession or occupation carried on in Connecticut.
Example: Taxpayer A, a resident of New York, owns 100% of the
				  stock of X Corporation, which operates a store in Connecticut. In 1992, the
				  corporation pays A a salary of $20,000, all of which was earned in Connecticut,
				  and a dividend of $2,000. A's income from Connecticut sources is his salary of
				  $20,000, since the dividend is not income derived from Connecticut
				  sources.
(b) Intangible
				personal property is employed in a business, trade, profession or occupation
				carried on in this state if such property's possession and control have been
				localized in connection with a business, trade, profession or occupation in
				Connecticut, so that the property's substantial use and value attach to and
				become an asset of such business, trade, profession or occupation. An example
				is where a nonresident pledges stocks, bonds or other intangible personal
				property in Connecticut as security for the payment of indebtedness incurred in
				connection with a business being carried on in Connecticut by the nonresident.
				Another example is where a nonresident maintains a branch office in Connecticut
				and an interest-bearing checking account on which the agent in charge of the
				branch office may draw checks for the payment of expenses in connection with
				the activities in this state.
(c)
				If intangible personal property of a nonresident is employed in a business,
				trade, profession or occupation carried on in Connecticut, the entire income
				from such property, including gains from its sale, regardless of where the sale
				is consummated, is income derived from or connected with sources within this
				state. However, where a nonresident individual sells real or tangible personal
				property located in Connecticut and, as a result of such sale, receives
				intangible personal property (e.g., a note) which generates interest income and
				capital gain income, such interest income is generally not attributable to the
				sale of the real or tangible personal property but is attributable to the
				intangible personal property; however, such capital gain income is attributable
				to the sale of the real or tangible personal property located in Connecticut.
				See §§
									12-711(b)-3
				and
				12-711(b)-8
				of this Part. Therefore, such interest income to a nonresident does not
				constitute income derived from or connected with Connecticut sources. However,
				interest income derived from an instrument received as a result of a sale of
				real or tangible personal property located in Connecticut, where the instrument
				is employed in a business, trade, profession or occupation carried on in this
				state, does constitute income derived from or connected with Connecticut
				sources.
(d) While this section
				pertains to Section
				12-711(b)
				of the general statutes, for purposes of supplementary interpretation, as the
				phrase is used in Section
				12-2
				of the general statutes, the adoption of this section is authorized by Section
				12-701(c)
				of the general statutes.