2006 New York Code - Deductions.

 
    § 11-629 Deductions. 1. In computing net income there shall be allowed
  as deductions:
    (a)  All  the  ordinary and necessary expenses paid or incurred during
  the year in carrying on business, including a reasonable  allowance  for
  salaries  or other compensation for personal services actually rendered,
  and including rentals or  other  payments  required  to  be  made  as  a
  condition  to  the  continued use or possession for business purposes of
  property to which the taxpayer has not taken or is not taking  title  or
  in which such taxpayer has no equity;
    (b) All interest paid or accrued during the year on indebtedness;
    (c)  Taxes,  other  than  taxes  on  income or profits paid or accrued
  within the year, imposed, first, by the authority of the United  States,
  or of any of its possessions, or, second, by the authority of any state,
  or  territory,  or  any  county, school district, municipality, or other
  taxing subdivisions of any  state  or  territory,  not  including  those
  assessed  against local benefits of a kind tending to increase the value
  of the property assessed, or, third, by the  authority  of  any  foreign
  government;
    (d)  Losses  sustained  during  the  year  and  not compensated for by
  insurance or otherwise, if incurred in  business;  unless  in  order  to
  clearly  reflect  the  income  the  losses  should in the opinion of the
  commissioner of finance be accounted for as of a  different  period.  No
  deduction  shall  be allowed for any loss claimed to have been sustained
  in any sale or other disposition of shares of stock or securities  where
  it appears that within thirty days before or after the date of such sale
  or  other  disposition the taxpayer has acquired substantially identical
  property, and the property so acquired is held by the taxpayer  for  any
  period  after  such sale or other disposition, unless such claim is made
  with respect to a transaction made in the ordinary course  of  business.
  If  such  acquisition  is  to  the  extent of part only of substantially
  identical property, only a proportionate  part  of  the  loss  shall  be
  disallowed;
    (e) Debts ascertained to be worthless and charged off within the year;
  or  in  the  discretion  of  the  commissioner  of  finance a reasonable
  addition to a reserve for bad debts.  When  satisfied  that  a  debt  is
  recoverable  only  in  part,  the commissioner of finance may allow such
  debt to be charged off in part;
    (f) A reasonable allowance  for  the  exhaustion,  wear  and  tear  of
  property   used  in  business,  including  a  reasonable  allowance  for
  obsolescence. In the case of any such property acquired  before  January
  first, nineteen hundred sixty-six, the amount of such deduction shall be
  equal to the deduction properly taken for such property in reporting the
  tax  due  pursuant  to  article  nine-c  of the tax law. With respect to
  property such as described in paragraph (j) of  this  subdivision,  this
  deduction may be computed and allowed as provided therein;
    (g) If the gross income be derived from business carried on within and
  without  the  city,  the  deductions  allowed  by  this section shall be
  allocated and determined on the basis of separate  accounting  for  each
  office  or  branch  or, at the election of the taxpayer, under rules and
  regulations to be prescribed by the commissioner of finance;
    (h) In the case of  any  taxpayer,  who  establishes  or  maintains  a
  pension  trust  to provide for the payment of reasonable pensions to its
  employees, there shall be allowed as a deduction  (in  addition  to  the
  contributions  to  such  trust  during  the  taxable years, to cover the
  pension liability accruing during the year, allowed as a deduction under
  paragraph (a) of this subdivision) a reasonable  amount  transferred  or
  paid  into  such  trust  during  the  taxable  year  in  excess  of such
  contributions, but only if such amount: (1)  has  not  theretofore  been


  allowable  as  a deduction, and (2) is apportioned in equal parts over a
  period of ten consecutive years beginning with the  year  in  which  the
  transfer  of  payment  is  made;  provided  that said deduction shall be
  allowable  only  with respect to a taxable year (whether the year of the
  transfer or payment or a subsequent year) of the taxpayer ending  within
  or  with a taxable year of the trust with respect to which the trust, by
  reason of its purposes or activities is exempt from federal income tax;
    (i) The amount of the amortizable bond premium on a bond for the  year
  shall  be  allowed  as a deduction as hereinafter provided. In computing
  such deduction, (a) the amount of the bond premium shall  be  determined
  with  reference to the amount of the basis (for determining loss on sale
  or exchange) of such bond, and with reference to the amount  payable  on
  maturity  or  on  earlier  call date, with adjustments proper to reflect
  unamortized bond premium with respect to the bond, for the period  prior
  to  July  thirteenth,  nineteen  hundred  sixty-six  with respect to the
  taxpayer with respect to such bond, and (b) the amortizable bond premium
  of the year shall be the amount of the bond premium attributable to such
  year. The determinations required in the  preceding  sentence  shall  be
  made  in accordance with the method of amortizing bond premium regularly
  employed by the holder of such bond, if such method is  reasonable,  and
  in all other cases in accordance with regulations of the commissioner of
  finance  prescribing reasonable methods of amortizing bond premium. This
  paragraph shall apply only if the taxpayer shall so elect, in accordance
  with regulations of the commissioner of finance, and such election shall
  be made separately with respect to: (1) bonds, the interest of which  is
  wholly  taxable,  and  (2)  bonds,  the  interest  of which is wholly or
  partially tax exempt, for purposes of the income tax imposed by  chapter
  one  of the internal revenue code. If such election is made with respect
  to any bond of the taxpayer described in clauses one or two  hereof,  it
  shall  also apply to all bonds in the same class held by the taxpayer at
  the beginning of the first year to which the election applies and to all
  such bonds thereafter acquired by  it  and  shall  be  binding  for  all
  subsequent years with respect to all such bonds of the taxpayer, unless,
  upon  application  by  the taxpayer, the commissioner of finance permits
  the taxpayer, subject to such conditions as the commissioner of  finance
  deems necessary, to revoke such election. As used in this paragraph, the
  term  "bond"  means  any  bond, debenture, note, or certificate or other
  evidence of indebtedness, issued by any corporation and bearing interest
  (including any like obligation  issued  by  a  government  or  political
  subdivision  thereof),  with interest coupons or in registered form, but
  does not include any such obligation which constitutes stock in trade of
  the taxpayer or any such obligation of a kind which  would  properly  be
  included in the inventory of the taxpayer if on hand at the close of the
  year,  or any such obligation held by the taxpayer primarily for sale to
  customers in the ordinary course of its trade or business; and
    (j) (1) At the election of the taxpayer there shall be  deducted  from
  gross  income,  or  if  gross income is derived from business carried on
  within and without this city, from the portion thereof allocated  within
  the city, depreciation with respect to any property such as described in
  subparagraph (2) of this paragraph, not exceeding twice the depreciation
  allowed  with  respect  to  the  same  property  for  federal income tax
  purposes.
    (2) Such deduction shall be allowed  only  with  respect  to  tangible
  property   which   is   depreciable  pursuant  to  section  one  hundred
  sixty-seven of the internal revenue code, having a situs  in  this  city
  and  used  in the taxpayer's business, (i) constructed, reconstructed or
  erected  after  December  thirty-first,  nineteen  hundred   sixty-five,
  pursuant  to  a  contract which was, on or before December thirty-first,


  nineteen hundred sixty-seven, and at all times  thereafter,  binding  on
  the  taxpayer  or  pursuant  to  an  order  placed on or before December
  thirty-first, nineteen hundred sixty-seven, by purchase  as  defined  in
  section  one  hundred seventy-nine (d), of the internal revenue code, if
  the original use of such property commenced with the taxpayer, commenced
  in this city and commenced after December thirty-first, nineteen hundred
  sixty-five or (iii) acquired,  constructed,  reconstructed,  or  erected
  subsequent  to  December  thirty-first, nineteen hundred sixty-seven, if
  such acquisition, construction, reconstruction or erection  is  pursuant
  to  a plan of the taxpayer which was in existence December thirty-first,
  nineteen hundred sixty-seven and not thereafter substantially  modified,
  and  such  acquisition,  construction,  reconstruction or erection would
  qualify under the rules in paragraph four, five or six of subsection (h)
  of section  forty-eight  of  the  internal  revenue  code  provided  all
  references  in  such  paragraphs four, five and six to the dates October
  nine, nineteen hundred sixty-six,  and  October  ten,  nineteen  hundred
  sixty-six,   shall  read  as  December  thirty-first,  nineteen  hundred
  sixty-seven. A taxpayer shall be allowed a deduction under  clause  (i),
  (ii)  or  (iii) of this paragraph only if the tangible property shall be
  delivered or the  construction,  reconstruction  or  erection  shall  be
  completed   on   or   before  December  thirty-first,  nineteen  hundred
  sixty-nine, except in the case of tangible property which  is  acquired,
  constructed,  reconstructed or erected pursuant to a contract which was,
  on or before December thirty-first, nineteen hundred sixty-seven, and at
  all times thereafter, binding on the taxpayer.  Provided,  however,  for
  any  taxable  year beginning on or after January first, nineteen hundred
  sixty-eight, a taxpayer shall not be allowed a deduction under paragraph
  (a) hereof with respect to tangible personal property leased  by  it  to
  any other person or corporation. For purposes of the preceding sentence,
  any  contract or agreement to lease or rent or for a license to use such
  property shall be considered a lease. With respect to property which the
  taxpayer uses itself for purposes other  than  leasing  for  part  of  a
  taxable year and leases for a part of a taxable year, the taxpayer shall
  be  allowed a deduction under paragraph (a) in proportion to the part of
  the year it uses such property.
    (3) If the deduction allowable for any taxable year pursuant  to  this
  subdivision  exceeds  the  taxpayer's  net  income  computed without the
  allowance of such deduction and without the allowance of  any  deduction
  pursuant  to  paragraph  (f)  of this section with reference to the same
  property, the excess may be carried over to the following  taxable  year
  or  years  and  may be deducted in computing net income for such year or
  years.
    (4) In any taxable year when property is sold  or  otherwise  disposed
  of,  with respect to which a deduction has been allowed pursuant to this
  paragraph, the gain or loss thereon shall be computed by  adjusting  the
  basis  of such property to reflect the deductions so allowed, and if the
  taxpayer's gross income is derived from business carried on both  within
  and  without  the  city,  shall  be allocated within the city. Provided,
  however, that no loss shall be  recognized  for  the  purposes  of  this
  paragraph  with  respect to a sale or other disposition of property to a
  person whose acquisition thereof is not a purchase as defined in section
  one hundred seventy-nine (d) of the internal revenue code.
    2. In computing net income no deduction shall in any case  be  allowed
  in respect of:
    (a)   Any   amount  paid  out  for  new  buildings  or  for  permanent
  improvements or betterments made to increase the value of any property.
    (b) Any amount expended in restoring or in making good the  exhaustion
  thereof for which an allowance is or has been made.