US Laws, Codes, Statutes & Cases

 
    §   11-507  Unincorporated  business  deductions.  The  unincorporated
  business deductions of an unincorporated business  means  the  items  of
  loss and deduction directly connected with or incurred in the conduct of
  the  business,  which  are allowable for federal income tax purposes for
  the taxable year (including losses and  deductions  connected  with  any
  property employed in the business), with the following modifications:
    (1)  A  deduction shall be allowed for charitable contributions of the
  unincorporated business, to the extent that such contributions would  be
  deductible for federal income tax purposes if made by a corporation, but
  not   in  excess  of  five  per  centum  of  the  amount  by  which  the
  unincorporated  business  gross  income  exceeds  the  sum  of  (A)  the
  unincorporated  business  deductions computed without the benefit of any
  deduction for charitable contributions and  (B)  the  deduction  allowed
  under  subdivision  (b)  of  section  11-509  of this chapter, where the
  election permitted by such subsection has been exercised.
    (2) (a) A deduction shall be allowed for net operating losses incurred
  by  the  unincorporated  business,  except  as  otherwise  provided   by
  paragraph  (b)  of  this  subdivision, in an amount computed in the same
  manner as the net operating loss deduction which would  be  allowed  for
  the  taxable  year for federal income tax purposes if the unincorporated
  business were an individual taxpayer (but determined solely by reference
  to the unincorporated business gross income and unincorporated  business
  deductions,  allocated  to  the  city,  of the unincorporated business);
  provided, however, that such net operating loss deduction which would be
  allowed for the taxable year for federal income tax purposes  shall  for
  purposes  of  this  paragraph  be  determined  as  if the unincorporated
  business had elected  under  section  one  hundred  seventy-two  of  the
  internal  revenue  code  to  relinquish the entire carryback period with
  respect to net operating losses, except with respect to  the  first  ten
  thousand  dollars of each of such losses, sustained during taxable years
  ending  after  June  thirtieth,  nineteen  hundred   eighty-nine.   Such
  deduction  shall not include any net operating loss sustained during any
  taxable  year  beginning  prior  to  January  first,  nineteen   hundred
  sixty-six  and  for  the purposes of this paragraph a net operating loss
  shall be determined without regard to any deductions allowed pursuant to
  subdivision (b) of section 11-509 of this chapter and any net  operating
  loss  for  a taxable year beginning in nineteen hundred eighty-one shall
  be computed without regard to the  deduction  allowed  with  respect  to
  recovery  property under section one hundred sixty-eight of the internal
  revenue code; in lieu of such deduction, a taxpayer shall be allowed for
  such taxable  year  with  respect  to  such  property  the  depreciation
  deduction  allowable  under  section  one  hundred  sixty-seven  of such
  internal revenue code as such section was in full force  and  effect  on
  December thirty-first, nineteen hundred eighty.
    (b)  In  the case of a partnership, no net operating loss carryback or
  carryover to any taxable year shall be allowed unless one or more of the
  partners during such taxable year were persons  having  a  proportionate
  interest  or interests, amounting to at least eighty percent of all such
  interests,   in   the   unincorporated   business   gross   income   and
  unincorporated  business  deductions  of the partnership which sustained
  the loss for which a carryback or carryover is claimed. In  such  event,
  the  carryback  or carryover allowable on account of such loss shall not
  exceed the percentage of the amount otherwise allowable,  determined  by
  dividing   (A)   the   sum   of   the  proportionate  interests  in  the
  unincorporated  business  gross  income  and   unincorporated   business
  deductions of the partnership, for the year to which the loss is carried
  back  or  carried over, attributable to such partners, by (B) the sum of
  such proportionate interests owned by  all  partners  for  such  taxable

  year. The amount by which the carryback or carryover otherwise allowable
  exceeds  the  amount  allowable pursuant to the preceding sentence shall
  not be a carryback or carryover to any other taxable year.
    (3)  No  deduction  shall  be  allowed  (except as provided in section
  11-509 of this chapter) for amounts paid or incurred to a proprietor  or
  partner for services or for use of capital.
    (4)  No  deduction  shall  be  allowed for income taxes imposed by the
  city, this state or any other taxing jurisdiction, or the tax imposed by
  article thirteen-A of the tax law.
    (5) No deduction shall be allowed for  (A)  interest  on  indebtedness
  incurred or continued to purchase or carry obligations or securities the
  interest  on  which  is exempt from tax under this chapter; (B) expenses
  paid or incurred for the production or collection of such income or  the
  management,  conservation  or  maintenance  of  property  held  for  the
  production of such income; or (C) the amortizable bond  premium  on  any
  bond the interest income from which is so exempt.
    (6)  No  deduction  shall  be  allowed in respect of the excess of net
  long-term capital gain over net short-term  capital  loss,  but  capital
  losses  incurred  in  the  unincorporated  business  shall be treated as
  ordinary losses and shall be allowed in full.
    (7) In the case of a taxpayer who has exercised the election permitted
  by subdivision (b) of section 11-509 of this chapter, no deduction shall
  be allowed for expenditures with reference to the property to which such
  election relates, or  for  depreciation  of  such  property,  except  as
  permitted by said subdivision.
    (8)  A  deduction  shall  be  allowed (to the extent not allowable for
  federal income tax purposes) for (A) interest on  indebtedness  incurred
  or continued to purchase or carry obligations or securities the interest
  on  which  is  subject to tax under this chapter but exempt from federal
  income tax; (B) ordinary and necessary expenses paid or incurred  during
  the  taxable year for the production or collection of such income or the
  management,  conservation  or  maintenance  of  property  held  for  the
  production  of such income; and (C) the amortizable bond premium for the
  taxable year on any bond the interest on which is subject to  tax  under
  this chapter but exempt from federal income tax.
    (9)  At the election of the taxpayer, a deduction shall be allowed for
  expenditures  paid  or  incurred  during  the  taxable  year   for   the
  construction,  reconstruction,  erection  or  improvement  of industrial
  waste treatment facilities and air pollution control facilities.
    (A) (i) The term "industrial waste treatment  facilities"  shall  mean
  facilities   for  the  treatment,  neutralization  or  stabilization  of
  industrial waste (as the term "industrial waste" is defined  in  section
  17-0105  of the environmental conservation law) from a point immediately
  preceding the point of such treatment, neutralization  or  stabilization
  to   the   point  of  disposal,  including  the  necessary  pumping  and
  transmitting facilities, but excluding such facilities installed for the
  primary  purpose  of  salvaging  materials  which  are  usable  in   the
  manufacturing process or are marketable.
    (ii) The term "air pollution control facilities" shall mean facilities
  which  remove,  reduce,  or render less noxious air contaminants emitted
  from an air contamination source (as the  terms  "air  contaminant"  and
  "air  contamination  source"  are  defined  in  section  19-0107  of the
  environmental conservation law) from a point immediately  preceding  the
  point  of such removal, reduction or rendering to the point of discharge
  of air, meeting emission standards as established by the  air  pollution
  control  board,  but excluding such facilities installed for the primary
  purpose of salvaging materials which are  usable  in  the  manufacturing
  process  or are marketable and excluding those facilities which rely for

  their  efficacy  on  dilution,  dispersion  or   assimilation   of   air
  contaminants in the ambient air after emission.
    (B)  However, such deduction shall be allowed only (i) with respect to
  tangible property which is depreciable, pursuant to section one  hundred
  sixty-seven of the internal revenue code, having a situs in the city and
  used   in   the   taxpayer's   trade   or  business,  the  construction,
  reconstruction, erection  or  improvement  of  which,  in  the  case  of
  industrial  waste treatment facilities, is initiated on or after January
  first, nineteen hundred sixty-six, and only  for  expenditures  paid  or
  incurred prior to January first, nineteen hundred seventy-two, or which,
  in  the  case  of  air  pollution control facilities, is initiated on or
  after January first, nineteen hundred sixty-six, and
    (ii) on condition that such facilities  have  been  certified  by  the
  state   commissioner   of  environmental  conservation  or  his  or  her
  designated representative, in the same  manner  as  provided  in  either
  section  17-0707  or  19-0309  of the environmental conservation law, as
  applicable,  as  complying  with  the  provision  of  the  environmental
  conservation  law,  the sanitary code and regulations, permits or orders
  promulgated pursuant thereto, and
    (iii) on condition that  for  the  taxable  year  and  all  succeeding
  taxable years, no deduction for such expenditures or for depreciation of
  the  same  property  allowed  for  federal  income tax purposes shall be
  allowed under this chapter, except to the extent that the basis  of  the
  property may be attributable to factors other than such expenditures, or
  in  case a deduction is allowable pursuant to this subdivision, for only
  a part of such expenditures, on condition that any deduction allowed for
  federal income tax purposes for such expenditures or for depreciation of
  the same property be proportionately reduced in computing unincorporated
  business deductions for the taxable  year  and  all  succeeding  taxable
  years, and
    (iv)  where  the  election  provided for in subdivision (b) of section
  11-509 of this chapter has not been exercised in  respect  to  the  same
  property.
    (C)  (i)  If  expenditures in respect to an industrial waste treatment
  facility or an air pollution control  facility  have  been  deducted  as
  provided herein and if within ten years from the end of the taxable year
  in which such deduction was allowed such property or any part thereof is
  used  for the primary purpose of salvaging materials which are usable in
  the manufacturing process or are marketable, the taxpayer  shall  report
  such change of use in its return for the first taxable year during which
  it occurs, and the commissioner of finance may recompute the tax for the
  year  or years for which such deduction was allowed and any carryback or
  carryover year, and may assess any additional tax  resulting  from  such
  recomputation  within  the  time fixed by paragraph eight of subdivision
  (c) of section 11-523 of this chapter.
    (ii) If a deduction is allowed as  herein  provided  for  expenditures
  paid  or  incurred  during  any taxable year on the basis of a temporary
  certificate of compliance issued pursuant to the public health law,  and
  if  the  taxpayer  fails to obtain a permanent certificate of compliance
  upon completion of the facilities with respect to which  such  temporary
  certificate  was  issued,  the taxpayer shall report such failure in its
  report for the taxable year during which such facilities are  completed,
  and  the  commissioner  of finance may recompute the tax for the year or
  years for  which  such  deduction  was  allowed  and  any  carryback  or
  carryover  year,  and  may assess any additional tax resulting from such
  recomputation within the time fixed by paragraph  eight  of  subdivision
  (c) of section 11-523 of this chapter.

    (D)  In  any  taxable year when property is sold or otherwise disposed
  of, with respect to which a deduction has been allowed pursuant to  this
  subdivision,  such  deduction  shall be disregarded in computing gain or
  loss, and the gain or loss on the sale  or  other  disposition  of  such
  property  shall  be  the  gain  or loss allowable for federal income tax
  purposes for such taxable year.
    (10) In the case of  mines,  oil  and  gas  wells  and  other  natural
  deposits,  no  deduction  of  any  allowance  for  percentage  depletion
  pursuant to section six hundred thirteen or section six hundred thirteen
  A of the internal  revenue  code  of  nineteen  hundred  fifty-four,  as
  amended,  shall  be  allowed.  However,  an allowance for depletion with
  respect to such property shall be deductible in the amount  which  would
  be  allowable  under section six hundred eleven of such internal revenue
  code if such deduction were computed without reference to  such  section
  six  hundred  thirteen  or  section six hundred thirteen A of such code.
  With respect to the computation of depletion pursuant to  this  section,
  the  basis  for such computation for taxable years beginning in nineteen
  hundred seventy-two shall be the federal basis. For  subsequent  taxable
  years,  the  basis  of  such  computation  shall  be reduced only by the
  deduction for the allowance for depletion deductible  pursuant  to  this
  section. In any taxable year when any such property is sold or otherwise
  disposed of, with respect to which a deduction has been allowed pursuant
  to  this  subdivision,  the  gain  or  loss  thereon  entering  into the
  computation of federal taxable income shall be disregarded in  computing
  unincorporated  business  taxable  income and there shall be added to or
  subtracted from federal gross income, so modified, the gain or loss upon
  such sale or other disposition. In computing  such  gain  or  loss,  the
  basis  of  the property sold or disposed of shall be adjusted to reflect
  the deduction allowed with respect to such  property  pursuant  to  this
  subdivision.
    (11)  A  deduction  shall  be  allowed  for  that portion of wages and
  salaries paid or incurred for the taxable year for which a deduction  is
  not  allowed  pursuant to the provisions of section two hundred eighty C
  of the internal revenue code.
    (12) For taxable years beginning after December thirty-first, nineteen
  hundred eighty-one, except with respect to property which is a qualified
  mass commuting vehicle described in subparagraph (D) of paragraph  eight
  of  subsection  (f)  of  section one hundred sixty-eight of the internal
  revenue  code  (relating  to  qualified  mass  commuting  vehicles),   a
  deduction  shall be allowed for any amount which the taxpayer could have
  excluded for purposes of this chapter  had  it  not  made  the  election
  provided  for in such paragraph eight as it was in effect for agreements
  entered into prior to January first, nineteen hundred eighty-four.
    (13) For taxable years beginning after December thirty-first, nineteen
  hundred eighty-one, except with respect to property which is a qualified
  mass commuting vehicle described in subparagraph (D) of paragraph  eight
  of  subsection  (f)  of  section one hundred sixty-eight of the internal
  revenue  code  (relating  to  qualified  mass  commuting  vehicles),  no
  deduction  shall be allowed for any amount deductible for federal income
  tax purposes solely as a result of an  election  made  pursuant  to  the
  provisions  of  such  paragraph eight as it was in effect for agreements
  entered into prior to January first, nineteen hundred eighty-four.
    (14) In the case of  property  placed  in  service  in  taxable  years
  beginning   before  nineteen  hundred  ninety-four,  for  taxable  years
  beginning after  December  thirty-first,  nineteen  hundred  eighty-one,
  except with respect to property subject to the provisions of section two
  hundred  eighty-F  of  the internal revenue code and property subject to
  the provisions of  section  one  hundred  sixty-eight  of  the  internal

  revenue  code  which is placed in service in this state in taxable years
  beginning after December thirty-first, nineteen hundred eighty-four,  no
  deduction  shall  be  allowed  for  the  amount allowable as a deduction
  determined under section one hundred sixty-eight of the internal revenue
  code.
    (15)  In  the  case  of  property  placed  in service in taxable years
  beginning  before  nineteen  hundred  ninety-four,  for  taxable   years
  beginning  after  December  thirty-first,  nineteen  hundred eighty-one,
  except with respect to property subject to the provisions of section two
  hundred eighty-F of the internal revenue code and  property  subject  to
  the  provisions  of  section  one  hundred  sixty-eight  of the internal
  revenue code which is placed in service in this state in  taxable  years
  beginning after December thirty-first, nineteen hundred eighty-four, and
  provided  a  deduction  has  not been disallowed pursuant to subdivision
  thirteen of this section, a taxpayer shall be allowed  with  respect  to
  property  which  is  subject  to  the  provisions of section one hundred
  sixty-eight of the internal  revenue  code  the  depreciation  deduction
  allowable  under section one hundred sixty-seven of the internal revenue
  code as such section would have applied to property placed in service on
  December thirty-first, nineteen hundred eighty.
    (16) Notwithstanding any  other  provision  of  this  chapter  to  the
  contrary,  no  deduction  shall be allowed for interest, depreciation or
  any other expense directly or indirectly attributable  to  the  holding,
  leasing  or managing of real property or to income or gain therefrom if,
  and to the extent that,  such  holding,  leasing  or  managing  of  real
  property  is  not  deemed  an  unincorporated business carried on by the
  taxpayer pursuant to the provisions of subdivision (d) of section 11-502
  of this chapter.
    (17) Notwithstanding any  other  provision  of  this  chapter  to  the
  contrary,  no  deduction  shall  be allowed for any expenses directly or
  indirectly attributable to activities  described  in  paragraph  two  of
  subdivision  (c) of section 11-502 of this chapter if, and to the extent
  that, such activities are not deemed an unincorporated business  carried
  on  by  the  taxpayer  pursuant  to the provisions of subdivision (c) of
  section 11-502 of this chapter.
    (18) Notwithstanding any  other  provision  of  this  chapter  to  the
  contrary,  in  the  case  of a taxpayer that is an unincorporated entity
  described in subparagraph (B) of paragraph four of  subdivision  (c)  of
  section  11-502  of  this chapter, no deduction shall be allowed for any
  losses or expenses directly or indirectly attributable to  the  sale  or
  other  disposition  of  an interest in another unincorporated entity if,
  and to the extent that, such losses  or  expenses  are  attributable  to
  activities   of   such   other   unincorporated  entity  not  deemed  an
  unincorporated business carried on  by  the  taxpayer  pursuant  to  the
  provisions of subdivision (c) of section 11-502 of this chapter.
    (19)  Notwithstanding  any  other  provision  of  this  chapter to the
  contrary, no deduction shall be allowed for  interest,  depreciation  or
  any  other  expense directly or indirectly attributable to the provision
  by an owner, lessee or  fiduciary  holding,  leasing  or  managing  real
  property  of  the  service  of  parking,  garaging  or  storing of motor
  vehicles on a monthly or longer term  basis  to  tenants  at  such  real
  property  if,  and to the extent that, the provision of such services to
  such tenants is not deemed an unincorporated business  pursuant  to  the
  provisions of subdivision (d) of section 11-502 of this chapter.
    (20) For taxable years ending after September tenth, two thousand one,
  in  the  case  of  qualified  property  described  in  paragraph  two of
  subsection k of section one hundred sixty-eight of the internal  revenue
  code,  other  than  qualified  resurgence  zone  property  described  in

  subdivision twenty-two of this section, and  other  than  qualified  New
  York Liberty Zone property described in paragraph two of subsection b of
  section  fourteen hundred L of the internal revenue code (without regard
  to clause (i) of subparagraph (C) of such paragraph), no deduction shall
  be  allowed  for  the  amount allowable as a deduction under section one
  hundred sixty-seven of the internal revenue code.
    (21) For taxable years ending after September tenth, two thousand one,
  in the  case  of  qualified  property  described  in  paragraph  two  of
  subsection  k of section one hundred sixty-eight of the internal revenue
  code  other  than  qualified  resurgence  zone  property  described   in
  subdivision  twenty-two  of  this  section, and other than qualified New
  York Liberty Zone property described in paragraph two of subsection b of
  section fourteen hundred L of the internal revenue code (without  regard
  to  clause (i) of subparagraph (C) of such paragraph), a deduction shall
  be allowed with respect to  such  property  equal  to  the  depreciation
  deduction  allowable  under  section  one  hundred  sixty-seven  of  the
  internal revenue code  as  such  section  would  have  applied  to  such
  property  had  it  been acquired by the taxpayer on September tenth, two
  thousand one, provided, however, that for taxable years beginning on  or
  after January first, two thousand four, in the case of a passenger motor
  vehicle  or  a  sport  utility  vehicle  subject  to  the  provisions of
  subdivision twenty-four of this section, the limitation under clause (i)
  of subparagraph (A) of paragraph one of subdivision (a) of  section  two
  hundred  eighty  F of the internal revenue code applicable to the amount
  allowed as a deduction under this paragraph shall be  determined  as  of
  the  date  such  vehicle  was  placed in service and not as of September
  tenth, two thousand one.
    (22) For purposes  of  subdivisions  twenty  and  twenty-one  of  this
  section,   qualified  resurgence  zone  property  shall  mean  qualified
  property described in paragraph two  of  subsection  k  of  section  one
  hundred  sixty-eight  of  the internal revenue code substantially all of
  the use of which is in the resurgence zone, as defined below, and is  in
  the  active conduct of a trade or business by the taxpayer in such zone,
  and the original use of which in the resurgence zone commences with  the
  taxpayer  after  September  tenth, two thousand one. The resurgence zone
  shall mean the area of New York county bounded on the south  by  a  line
  running  from  the  intersection  of  the  Hudson River with the Holland
  Tunnel and running thence east to Canal Street, then running  along  the
  centerline  of  Canal Street to the intersection of the Bowery and Canal
  Street, running thence in a southeasterly  direction  diagonally  across
  Manhattan  Bridge  Plaza,  to the Manhattan Bridge, and thence along the
  centerline of the Manhattan Bridge to the point where the centerline  of
  the  Manhattan Bridge would intersect with the easterly bank of the East
  River, and bounded on the north by a line running from the  intersection
  of  the  Hudson  River  with the Holland Tunnel and running thence north
  along West Avenue to the intersection of Clarkson  Street  then  running
  east  along  the  centerline  of  Clarkson Street to the intersection of
  Washington Avenue, then running south along the centerline of Washington
  Avenue to the intersection of West Houston Street, then east  along  the
  centerline  of  West  Houston  Street,  then  at the intersection of the
  Avenue of the Americas continuing east  along  the  centerline  of  East
  Houston Street to the easterly bank of the East River.
    (23)  For  taxable  years  beginning  on  or  after January first, two
  thousand four, in the case of a taxpayer that is not an eligible  farmer
  as  defined in subsection (n) of section six hundred six of the tax law,
  no deduction shall be allowed for the amounts allowable as  a  deduction
  under sections one hundred seventy-nine, one hundred sixty-seven and one
  hundred sixty-eight of the internal revenue code with respect to a sport

  utility  vehicle  that  is  not  a  passenger  automobile  as defined in
  paragraph five of subsection (d) of section two hundred eighty F of  the
  internal revenue code.
    (24)  For  taxable  years  beginning  on  or  after January first, two
  thousand four, in the case of a taxpayer that is not an eligible  farmer
  as  defined in subsection (n) of section six hundred six of the tax law,
  a deduction shall be allowed with respect to  a  sport  utility  vehicle
  that  is  not  a  passenger  automobile  as defined in paragraph five of
  subsection (d) of section two hundred eighty F of the  internal  revenue
  code  equal  to  the amounts allowable as a deduction under sections one
  hundred  seventy-nine,  one  hundred   sixty-seven   and   one   hundred
  sixty-eight  of  the  internal revenue code, determined as if such sport
  utility vehicle were a passenger automobile as defined in such paragraph
  five.