New York State Tax Law conforms to the passive activity loss rules for federal purposes. However, any deduction for a passive activity loss (PAL) for a nonresident or part-year resident must be recomputed to determine the amount that is allowed if the federal adjusted gross income took into account only items of income, gain, loss, or deduction derived from or connected with New York sources.
It is possible, because of the above rules, for a nonresident to have a PAL for New York State without having a PAL for federal purposes, or to have a New York State PAL that is larger or smaller than the corresponding federal PAL.
In Part II, Line 6, enter your Federal modified adjusted gross income using only those amounts derived from or connected with New York sources.
Here's more detailed information and instructions from the New York Dept. of Taxation to help you.
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