New York State Governor David A. Patterson and the New York State legislature have each proposed separate revenue bills for New York State’s fiscal year 2010/2011 which include substantial tax increases (Assembly Bill A9710-D, Senate Bill S6610-C). Among the most controversial of the proposed tax increases is the revival of last year’s proposal to tax non-residents on their “carried interest” allocations attributable to an investment fund doing business in New York State. If enacted, the legislation would among other things treat carried interest allocations received by a nonresident individual partner from an investment fund’s general partner entity as New York source income subject to New York State personal income tax if the individual partner provides a substantial quantity of investment management services to an investment fund in New York.