US Laws, Codes, Statutes & Cases

 
    § 11-602 Definitions. When used in this subchapter:
    1. (a) "Corporation" includes (1) an association within the meaning of
  paragraph  three  of subsection (a) of section seventy-seven hundred one
  of the internal revenue code (including a  limited  liability  company),
  (2)  a  joint-stock  company  or  association,  (3)  a  publicly  traded
  partnership treated as  a  corporation  for  purposes  of  the  internal
  revenue  code pursuant to section seventy-seven hundred four thereof and
  (4) any business conducted by a trustee or trustees wherein interest  or
  ownership is evidenced by certificate or other written instrument;
    (b)   (1)  Notwithstanding  paragraph  (a)  of  this  subdivision,  an
  unincorporated organization that (i) is described in subparagraph one or
  three of such paragraph (a) and (ii) was subject to  the  provisions  of
  chapter  five  of  this title for its taxable year beginning in nineteen
  hundred ninety-five, may make a one-time election not to be treated as a
  corporation and, instead, to continue to be subject to the provisions of
  chapter five of this title for its taxable years beginning  in  nineteen
  hundred  ninety-six  and  thereafter. Such election shall be made on the
  return prescribed pursuant  to  such  chapter  five  for  such  electing
  organization's  taxable  year  beginning in nineteen hundred ninety-six,
  which shall be filed on or before the due date (determined  with  regard
  to extensions) for filing such return.
    (2)  An  election  under this paragraph shall continue to be in effect
  until revoked by the unincorporated organization. An election under this
  paragraph shall be  revoked  by  the  filing  of  a  return  under  this
  subchapter  for  the  first  taxable  year  with  respect  to which such
  revocation is to be effective, which return shall be filed on or  before
  the  due  date  (determined  with  regard to extensions) for filing such
  return. In no event shall such election or revocation be for a part of a
  taxable year.
    (c) Notwithstanding paragraph (a) of this subdivision,  a  corporation
  shall  not  include  an  entity  classified as a partnership for federal
  income tax purposes.
    2. "Subsidiary" means a corporation of which over fifty per centum  of
  the  number of shares of stock entitling the holders thereof to vote for
  the election of directors or trustees is owned by the taxpayer;
    3. "Subsidiary capital" means investments in the stock of subsidiaries
  and any indebtedness from subsidiaries, exclusive of accounts receivable
  acquired in the ordinary  course  of  trade  or  business  for  services
  rendered  or for sales of property held primarily for sale to customers,
  whether or not evidenced by written instrument, on which interest is not
  claimed and deducted by the subsidiary for purposes  of  taxation  under
  this  subchapter or subchapter three of this chapter, provided, however,
  that, in the discretion of the commissioner of finance, there  shall  be
  deducted  from  subsidiary capital any liabilities which are directly or
  indirectly attributable to subsidiary capital;
    4. "Investment capital" means investments in stocks, bonds  and  other
  securities,  corporate  and governmental, not held for sale to customers
  in the regular course of business, exclusive of subsidiary  capital  and
  stock issued by the taxpayer, provided, however, that, in the discretion
  of  the commissioner of finance, there shall be deducted from investment
  capital any liabilities which are directly or indirectly attributable to
  investment capital; and provided, further, that investment capital shall
  not include any such investments the income from which is excluded  from
  entire  net  income  pursuant  to  the  provisions of paragraph (c-1) of
  subdivision eight of this section, and that investment capital shall  be
  computed  without  regard  to  any  liabilities  directly  or indirectly
  attributable to such investments, but only if air carriers organized  in
  the  United  States and operating in the foreign country or countries in

  which the taxpayer has its major base of operations and in which  it  is
  organized,  resident or headquartered (if not in the same country as its
  major base of operations) are  not  subject  to  any  tax  based  on  or
  measured  by capital imposed by such foreign country or countries or any
  political subdivision thereof, or if taxed are  provided  an  exemption,
  equivalent  to  that  provided  for  herein,  from  any  tax based on or
  measured by capital imposed by such foreign  country  or  countries  and
  from any such tax imposed by any political subdivision thereof;
    5. "Investment income" means income, including capital gains in excess
  of  capital  losses,  from  investment capital to the extent included in
  computing entire  net  income,  less,  (a)  in  the  discretion  of  the
  commissioner  of  finance,  any deductions allowable in computing entire
  net income which are directly or indirectly attributable  to  investment
  capital  or investment income, and (b) such portion of any net operating
  loss  deduction  allowable  in  computing  entire  net  income,  as  the
  investment  income,  before  such deduction, bears to entire net income,
  before  such  deduction,  provided,  however,  that  in  no  case  shall
  investment income exceed entire net income;
    6.  (a)  "Business  capital"  means  all assets, other than subsidiary
  capital, investment capital and  stock  issued  by  the  taxpayer,  less
  liabilities  not  deducted  from subsidiary or investment capital except
  that cash on hand and on deposit shall be treated as investment  capital
  or as business capital as the taxpayer may elect;
    (b)  Provided, however, "business capital" shall not include assets to
  the extent employed for  the  purpose  of  generating  income  which  is
  excluded  from entire net income pursuant to the provisions of paragraph
  (c-1) of subdivision eight of this section and shall be computed without
  regard to  liabilities  directly  or  indirectly  attributable  to  such
  assets,  but  only  if  air  carriers organized in the United States and
  operating in the foreign country or countries in which the taxpayer  has
  its  major  base of operations and in which it is organized, resident or
  headquartered (if  not  in  the  same  country  as  its  major  base  of
  operations)  are  not subject to any tax based on or measured by capital
  imposed  by  such  foreign  country  or  countries  or   any   political
  subdivision  thereof, or if taxed, are provided an exemption, equivalent
  to that provided for herein, from  any  tax  based  on  or  measured  by
  capital  imposed  by such foreign country or countries and from any such
  tax imposed by any political subdivision thereof.
    7. "Business income" means entire net income minus investment income;
    8. "Entire net income" means total net income from all sources,  which
  shall  be  presumably  the  same  as  the entire taxable income (but not
  alternative minimum taxable income),
    (i) which the taxpayer is required to  report  to  the  United  States
  treasury department, or
    (ii)  which  the  taxpayer  would  have been required to report to the
  United States treasury department if it had not made an  election  under
  subchapter s of chapter one of the internal revenue code, or
    (iii) which the taxpayer, in the case of a corporation which is exempt
  from  federal  income  tax  (other  than  the  tax on unrelated business
  taxable income imposed under section five hundred eleven of the internal
  revenue code) but which is subject to tax under this  subchapter,  would
  have  been  required  to report to the United States treasury department
  but for such exemption, or
    (iv) which the taxpayer would have been  required  to  report  to  the
  United  States treasury department if no election had been made to treat
  the taxpayer as a qualified  subchapter  s  subsidiary  under  paragraph
  three  of  subsection  (b)  of section thirteen hundred sixty-one of the
  internal revenue code, except as hereinafter provided,  and  subject  to

  any modification required by paragraphs (d) and (e) of subdivision three
  of section 11-604 of this subchapter.
    (a) Entire net income shall not include:
    (1)  income,  gains  and  losses  from subsidiary capital which do not
  include the amount of a recovery in respect of any war loss;
    (2) fifty percent of dividends other than  from  subsidiaries,  except
  that entire net income shall include one hundred percent of dividends on
  shares of stock with respect to which a dividend deduction is disallowed
  by  subsection  (c)  of  section  two  hundred forty-six of the internal
  revenue code;
    (2-a)  any  amounts  treated  as   dividends   pursuant   to   section
  seventy-eight  of the internal revenue code and not otherwise deductible
  under subparagraphs one and two of this paragraph;
    (3) bona fide gifts;
    (4) income and deductions with respect to amounts received from school
  districts and from corporations and associations, organized and operated
  exclusively for religious, charitable or educational purposes,  no  part
  of  the  net  earnings  of  which  inures  to the benefit of any private
  shareholder or individual, for the operation of school buses;
    (5) any refund or credit of a  tax  imposed  under  this  chapter,  or
  imposed  by article nine, nine-A or thirty-two of the tax law, for which
  tax no exclusion or deduction was allowed in determining the  taxpayer's
  entire  net  income  under  this  subchapter or subchapter three of this
  chapter for any prior year;
    (6) in the case of a taxpayer who is separately or as a partner  of  a
  partnership  doing  an  insurance  business  as a member of the New York
  insurance exchange described in section six thousand two hundred one  of
  the  insurance  law, any item of income, gain, loss or deduction of such
  business which is the taxpayer's distributive  or  pro  rata  share  for
  federal  income  tax  purposes or which the taxpayer is required to take
  into account separately for federal income tax purposes;
    (7) 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;
    (8) 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)  and
  property of  a  taxpayer  principally  engaged  in  the  conduct  of  an
  aviation,  steamboat,  ferry  or  navigation business, or two or more of
  such businesses,  which  is  placed  in  service  before  taxable  years
  beginning  in nineteen hundred eighty-nine, any amount which is included
  in the taxpayer's federal taxable  income  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;
    (9)  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)  and
  property  of  a  taxpayer  principally  engaged  in  the  conduct  of an
  aviation, steamboat, ferry or navigation business, or  two  or  more  of
  such  businesses,  which  is  placed  in  service  before  taxable years
  beginning in nineteen hundred eighty-nine, any amount which the taxpayer
  could have excluded from federal taxable income  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;
    (10)   the  amount  deductible  pursuant  to  paragraph  (j)  of  this
  subdivision;
    (11) upon the disposition of property to which paragraph (j)  of  this
  subdivision  applies,  the amount, if any, by which the aggregate of the
  amounts described in  subparagraph  eleven  of  paragraph  (b)  of  this
  subdivision  attributable  to such property exceeds the aggregate of the
  amounts described in paragraph (j) of this subdivision  attributable  to
  such property; and
    (12) for taxable years ending after September tenth, two thousand one,
  the amount deductible pursuant to paragraph (k) of this subdivision; and
    (13)   the  amount  deductible  pursuant  to  paragraph  (o)  of  this
  subdivision.
    (a-1) Notwithstanding any other  provision  of  this  subchapter,  for
  taxable  years  beginning on or after August first, two thousand two, in
  the case of a taxpayer that is a partner in a partnership subject to the
  tax imposed by chapter eleven of this title as a utility, as defined  in
  subdivision  six  of  section 11-1101 of such chapter, entire net income
  shall not include the taxpayer's distributive  or  pro  rata  share  for
  federal  income  tax  purposes  of  any  item  of  income, gain, loss or
  deduction of such partnership, or any item  of  income,  gain,  loss  or
  deduction of such partnership that the taxpayer is required to take into
  account separately for federal income tax purposes.
    (b)  Entire  net  income  shall  be  determined without the exclusion,
  deduction or credit of:
    (1) the amount of any specific exemption or credit allowed in any  law
  of  the  United  States imposing any tax on or measured by the income of
  any corporation,
    (2) any part of any income from dividends or interest on any  kind  of
  stock,  securities,  or  indebtedness, except as provided in clauses one
  and two of paragraph (a) hereof,
    (3) taxes on or measured by profits or income paid or accrued  to  the
  United  States,  any  of  its  possessions  or  to  any foreign country,
  including taxes  in  lieu  of  any  of  the  foregoing  taxes  otherwise
  generally  imposed  by  any  foreign country or by any possession of the
  United States, or taxes paid or accrued to the state under article nine,
  nine-A, thirteen-A or thirty-two of the tax law,
    (3-a) taxes on or measured by profits  or  income,  or  which  include
  profits  or  income  as a measure, paid or accrued to any other state of
  the United States, or any  political  subdivision  thereof,  or  to  the
  District  of  Columbia,  including taxes expressly in lieu of any of the
  foregoing taxes otherwise generally imposed by any other  state  of  the
  United  States, or any political subdivision thereof, or the District of
  Columbia;
    (4) taxes imposed under this chapter,
    (4-a) (A) the entire amount allowable as an exclusion or deduction for
  stock transfer taxes imposed  by  article  twelve  of  the  tax  law  in
  determining  the entire taxable income which the taxpayer is required to
  report to the United States treasury department but only to  the  extent
  that such taxes are incurred and paid in market making transactions, and
    (B)  the amount allowed as an exclusion or deduction for sales and use
  taxes imposed by  section  eleven  hundred  seven  of  the  tax  law  in
  determining  the entire taxable income which the taxpayer is required to
  report to the United States treasury department but only such portion of
  such exclusion or deduction which is not in excess of the amount of  the
  credit  allowed pursuant to subdivision twelve of section 11-604 of this
  subchapter,

    (4-b) the amount allowed as an exclusion or a deduction imposed by the
  tax law in determining the entire taxable income which the  taxpayer  is
  required  to  report  to  the United States treasury department but only
  such portion of such exclusion or deduction which is not  in  excess  of
  the  amount  of  the  credit allowed pursuant to subdivision thirteen of
  section 11-604 of this subchapter,
    (4-c) the amount allowed as an exclusion or a deduction imposed by the
  tax law in determining the entire taxable income which the  taxpayer  is
  required  to  report  to  the United States treasury department but only
  such portion of such exclusion or deduction which is not  in  excess  of
  the  amount  of  the  credit allowed pursuant to subdivision fourteen of
  section 11-604 of this subchapter,
    (4-d) the amount allowed as an exclusion or deduction  for  sales  and
  use  taxes  imposed  by  section  eleven hundred seven of the tax law in
  determining the entire taxable income which the taxpayer is required  to
  report  to  the United States Treasury Department, but only such portion
  of such exclusion or deduction which is not in excess of the  amount  of
  the  credit allowed pursuant to subdivision fifteen of section 11-604 of
  this chapter,
    (4-g) The amount allowed as an exclusion or deduction  for  sales  and
  use taxes imposed by section eleven hundred seven of the tax law (or for
  any  interest imposed in connection therewith) in determining the entire
  taxable income which the taxpayer is required to report  to  the  United
  States  treasury  department  but only such portion of such exclusion or
  deduction which is not in excess of the amount  of  the  credit  allowed
  pursuant   to   subdivision   seventeen-a  of  section  11-604  of  this
  subchapter.
    (6) in the discretion of the commissioner of finance,  any  amount  of
  interest  directly  or  indirectly  and  any  other  amount  directly or
  indirectly attributable as a carrying charge or otherwise to  subsidiary
  capital or to income, gains or losses from subsidiary capital,
    (7)  any  amount  by  reason of the granting, issuing or assuming of a
  restricted stock option, as defined in  the  internal  revenue  code  of
  nineteen  hundred  fifty-four, or by reason of the transfer of the share
  of stock upon the exercise of the option, unless such share is  disposed
  of  by  the  grantee of the option within two years from the date of the
  granting of the option or within six months after the transfer  of  such
  share to the grantee,
    (8)  in  the case of a taxpayer who is separately or as a partner of a
  partnership doing an insurance business as a  member  of  the  New  York
  insurance  exchange described in section six thousand two hundred one of
  the insurance law, such taxpayer's distributive or pro rata share of the
  allocated entire  net  income  of  such  business  as  determined  under
  sections  fifteen hundred three and fifteen hundred four of the tax law,
  provided however, in the event such allocated entire  net  income  is  a
  loss,  such taxpayer's distributive or pro rata share of such loss shall
  not be subtracted from federal taxable income in  computing  entire  net
  income under this subdivision,
    (9)  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)  and
  property  of  a  taxpayer  principally  engaged  in  the  conduct  of an
  aviation, steamboat, ferry or navigation business, or  two  or  more  of
  such  businesses,  which  is  placed  in  service  before  taxable years
  beginning in nineteen hundred eighty-nine, any amount which the taxpayer
  claimed as a deduction in computing its federal taxable income 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,
    (10) 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)  and
  property of  a  taxpayer  principally  engaged  in  the  conduct  of  an
  aviation,  steamboat,  ferry  or  navigation business, or two or more of
  such businesses,  which  is  placed  in  service  before  taxable  years
  beginning in nineteen hundred eighty-nine, any amount which the taxpayer
  would  have  been  required to include in the computation of its federal
  taxable income had it not made the election permitted pursuant  to  such
  paragraph eight as it was in effect for agreements entered into prior to
  January first, nineteen hundred eighty-four,
    (11)  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, 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  property
  of  a  taxpayer  principally  engaged  in  the  conduct  of an aviation,
  steamboat, ferry  or  navigation  business,  or  two  or  more  of  such
  businesses, which is placed in service before taxable years beginning in
  nineteen  hundred  eighty-nine,  the  amount  allowable  as  a deduction
  determined under section one hundred sixty-eight of the internal revenue
  code,
    (12) upon the disposition of property to which paragraph (j)  of  this
  subdivision  applies,  the amount, if any, by which the aggregate of the
  amounts described in such paragraph (j) attributable  to  such  property
  exceeds the aggregate of the amounts described in subparagraph eleven of
  this paragraph attributable to such property.
    (16) 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
  paragraph (m) of this subdivision, 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), the amount
  allowable as a deduction under section one hundred  sixty-seven  of  the
  internal revenue code.
    (17)  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,
  the  amount  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.
    (c)  Entire  net  income  shall  include income within and without the
  United States;
    (c-1)(1) Notwithstanding any other provision of  this  subchapter,  in
  the  case of a taxpayer which is a foreign air carrier holding a foreign
  air  carrier  permit  issued  by  the  United   States   department   of

  transportation  pursuant  to  section  four  hundred  two of the federal
  aviation act of nineteen hundred fifty-eight, as amended, and  which  is
  qualified  under  subparagraph  two of this paragraph, entire net income
  shall  not  include,  and  shall  be  computed without the deduction of,
  amounts directly or indirectly attributable to, (i) any  income  derived
  from the international operation of aircraft as described in and subject
  to  the provisions of section eight hundred eighty-three of the internal
  revenue code, (ii) income without the United  States  which  is  derived
  from  the  operation  of  aircraft,  and (iii) income without the United
  States which is of a type described in subdivision (a) of section  eight
  hundred  eighty-one  of  the  internal  revenue  code  except that it is
  derived from sources without the United States. Entire net income  shall
  include  income  described  in  clauses  (i),  (ii)  and  (iii)  of this
  subparagraph in the case of taxpayers  not  described  in  the  previous
  sentence.
    (2)  A  taxpayer  is qualified under this subparagraph if air carriers
  organized in the United States and operating in the foreign  country  or
  countries  in which the taxpayer has its major base of operations and in
  which it is organized, resident or headquartered (if  not  in  the  same
  country  as  its major base of operations) are not subject to any income
  tax or other tax based on or measured by income or receipts  imposed  by
  such  foreign country or countries or any political subdivision thereof,
  or if so subject to such tax, are provided an exemption  from  such  tax
  equivalent to that provided for herein.
    (d)  The  commissioner  of  finance  may,  whenever necessary in order
  properly to reflect the entire net income of any taxpayer, determine the
  year or period in which  any  item  of  income  or  deduction  shall  be
  included,  without  regard  to  the method of accounting employed by the
  taxpayer;
    (e) The entire net income of any bridge commission created by  act  of
  congress  to  construct  a bridge across an international boundary means
  its gross income less the  expense  of  maintaining  and  operating  its
  properties,  the  annual  interest upon its bonds and other obligations,
  and the annual charge for the retirement of such bonds or obligations at
  maturity;
    (f) A net operating loss deduction shall be allowed which shall be the
  same as the net operating  loss  deduction  allowed  under  section  one
  hundred  seventy-two  of  the  internal revenue code or which would have
  been allowed if the taxpayer had not made an election under subchapter s
  of chapter one of the  internal  revenue  code,  except  that  in  every
  instance where such deduction is allowed under this subchapter:
    (1)  any  net  operating  loss  included in determining such deduction
  shall be adjusted to reflect the inclusions and exclusions  from  entire
  net income pursuant to paragraphs (a), (b), (g) and (h) hereof,
    (2) such deductions shall not include any net operating loss sustained
  during any taxable year in which the taxpayer was not subject to the tax
  imposed by this subchapter,
    (3) such deduction shall not exceed the deduction for the taxable year
  allowed  under  section  one hundred seventy-two of the internal revenue
  code, or the deduction for  the  taxable  year  which  would  have  been
  allowed  if  the taxpayer had not made an election under subchapter s of
  chapter one of the internal revenue code,
    (4) 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 code as such section was in full force and effect on
  December thirty-first, nineteen hundred eighty, and
    (5) the net operating loss deduction allowed under section one hundred
  seventy-two  of  the  internal  revenue  code shall for purposes of this
  paragraph be determined as  if  the  taxpayer  had  elected  under  such
  section  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;
    (g)  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.
    (1)(A) 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.
    (B)  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.
    (2) However, such deduction shall be allowed only (A) 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
    (B) on condition that such facilities have been certified by the state
  commissioner  of  environmental conservation or the state commissioner's
  designated representative, in the same manner as provided for in section
  17-0707 or 19-0309 of the environmental conservation law, as applicable,
  as  complying  with   applicable   provisions   of   the   environmental
  conservation  law,  the  state sanitary code and regulations, permits or
  orders issued pursuant thereto, and
    (C) on condition that entire net income for the taxable year  and  all
  succeeding  taxable  years  be  computed without any deductions for such
  expenditures or for depreciation of the same  property  other  than  the
  deductions  allowed  by this paragraph (g) 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
  paragraph 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  entire  net  income  for  the taxable year and all succeeding
  taxable years, and
    (D)  where  the  election provided for in paragraph (d) of subdivision
  three of section 11-604 of this subchapter has  not  been  exercised  in
  respect to the same property.
    (3)(A)  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 (10) 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 report 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 (h)
  of subdivision three of section 11-674 of this chapter.
    (B) 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  environmental
  conservation 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 (h)
  of subdivision three of section 11-674 of this chapter.
    (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,  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 entering into the computation of
  entire taxable income which the taxpayer is required to  report  to  the
  United States treasury for such taxable year;
    (h) With respect to gain derived from the sale or other disposition of
  any   property   acquired  prior  to  January  first,  nineteen  hundred
  sixty-six; which had a federal adjusted basis on such date  (or  on  the
  date  of  its sale or other disposition prior to January first, nineteen
  hundred sixty-six) lower than its fair market value  on  January  first,
  nineteen  hundred sixty-six or the date of its sale or other disposition
  prior thereto, except property described in subsections one and four  of
  section  twelve  hundred  twenty-one of the internal revenue code, there
  shall be deducted from entire net income, the difference between (1) the
  amount of the taxpayer's federal taxable income, and (2) the  amount  of
  the  taxpayer's  federal  taxable  income  (if  smaller  than the amount
  described in subparagraph one of  this  paragraph  computed  as  if  the
  federal  adjusted  basis  of  each  such  property (on the sale or other
  disposition of which gain was derived) on the date of the sale or  other
  disposition  had  been  equal  to  either  (A)  its fair market value on
  January first, nineteen hundred sixty-six or the date  of  its  sale  or
  other  disposition  prior  to January first, nineteen hundred sixty-six,
  plus or minus all  adjustments  to  basis  made  with  respect  to  such
  property  for  federal  income  tax  purposes  for  periods on and after
  January first, nineteen hundred sixty-six or  (B)  the  amount  realized

  from  its  sale  or  disposition, whichever is lower; provided, however,
  that the total modification provided by this  paragraph  (h)  shall  not
  exceed  the  amount  of  the  taxpayer's net gain from the sale or other
  disposition of all such property.
    (i)  If  the period covered by a report under this subchapter is other
  than the period covered by the report  of  the  United  States  treasury
  department,  entire  net  income  shall be determined by multiplying the
  federal taxable income (as adjusted pursuant to the provisions  of  this
  subchapter)  by  the  number  of  calendar months or major parts thereof
  covered by the report under this subchapter and dividing by  the  number
  of  calendar months or major parts thereof covered by the report to such
  department.
    If it shall appear that such method of determining entire  net  income
  does  not  properly  reflect  the  taxpayer's  income  during the period
  covered by the report under this subchapter, the commissioner of finance
  shall be authorized in his or her discretion to  determine  such  entire
  net  income  solely  on  the  basis  of the taxpayer's income during the
  period covered by its report under this subchapter.
    (j) 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  excluded  from  entire  net  income
  pursuant  to  subparagraph  nine of paragraph (b) of this subdivision, 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. This paragraph shall not apply to property of a
  taxpayer  principally  engaged in the conduct of an aviation, steamboat,
  ferry or navigation business, or two or more of such  businesses,  which
  is  placed in service before taxable years beginning in nineteen hundred
  eighty-nine.
    (k) 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
  paragraph (m) of this subdivision, 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), the depreciation
  deduction allowable  under  section  one  hundred  sixty-seven  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 paragraph (o) of this subdivision,
  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.

    (l) for taxable years ending after September tenth, two thousand  one,
  upon  the  disposition  of  property  to  which  paragraph  (k)  of this
  subdivision applies, the amount of any gain or loss includible in entire
  net income shall be adjusted to reflect the  inclusions  and  exclusions
  from  entire net income pursuant to subparagraph twelve of paragraph (a)
  and  subparagraph  sixteen  of  paragraph  (b)   of   this   subdivision
  attributable to such property.
    (m)  for  purposes  of  paragraphs  (l)  and  (m) of this subdivision,
  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.
    (n) Related members expense add back and income exclusion.
    (1) Definitions. (A) Related member or members. For purposes  of  this
  paragraph,   the   term  related  member  or  members  means  a  person,
  corporation, or other entity, including an entity that is treated  as  a
  partnership  or  other  pass-through  vehicle  for  purposes  of federal
  taxation, whether such person, corporation or entity is  a  taxpayer  or
  not,  where  one  such person, corporation, or entity, or set of related
  persons, corporations  or  entities,  directly  or  indirectly  owns  or
  controls  a  controlling  interest  in  another  entity.  Such entity or
  entities may include all taxpayers under this title.
    (B) Controlling interest. A controlling interest shall mean (i) in the
  case of a corporation, either  thirty  percent  or  more  of  the  total
  combined  voting  power  of all classes of stock of such corporation, or
  thirty percent or more of the capital, profits or beneficial interest in
  such voting stock of such  corporation,  and  (ii)  in  the  case  of  a
  partnership,  association, trust or other entity, thirty percent or more
  of the capital, profits or  beneficial  interest  in  such  partnership,
  association, trust or other entity.
    (C) Royalty payments. Royalty payments are payments directly connected
  to  the  acquisition,  use,  maintenance or management, ownership, sale,
  exchange, or any other disposition of licenses, trademarks,  copyrights,
  trade  names,  trade  dress,  service  marks, mask works, trade secrets,
  patents and any other similar types of intangible assets  as  determined
  by  the  commissioner  of  finance,  and  includes  amounts allowable as
  interest  deductions  under  section  one  hundred  sixty-three  of  the
  internal  revenue  code  to  the  extent  such  amounts  are directly or

  indirectly for, related to or in connection with the  acquisition,  use,
  maintenance  or  management, ownership, sale, exchange or disposition of
  such intangible assets.
    (D)  Valid  business  purpose. A valid business purpose is one or more
  business purposes, other than the avoidance or  reduction  of  taxation,
  which alone or in combination constitute the primary motivation for some
  business  activity or transaction, which activity or transaction changes
  in a meaningful way, apart from tax effects, the  economic  position  of
  the taxpayer. The economic position of the taxpayer includes an increase
  in  the  market share of the taxpayer, or the entry by the taxpayer into
  new business markets.
    (2) Royalty expense add backs. (A) For the purpose of computing entire
  net income or other applicable taxable basis, a taxpayer must  add  back
  royalty  payments  to  a  related  member during the taxable year to the
  extent deductible in calculating federal taxable income.
    (B) The add back of royalty payments shall not be required if  and  to
  the extent that such payments meet either of the following conditions:
    (i)  the  related  member  during  the  same  taxable year directly or
  indirectly paid or incurred the amount to a person or entity that is not
  a related member, and such transaction was done  for  a  valid  business
  purpose and the payments are made at arm's length;
    (ii)  the  royalty  payments  are paid or incurred to a related member
  organized under the laws of a country other than the United States,  are
  subject  to  a  comprehensive income tax treaty between such country and
  the United States, and are taxed in such country at a tax rate at  least
  equal to that imposed by this state.
    (3) Royalty income exclusions. For the purpose of computing entire net
  income  or  other  taxable  basis, a taxpayer shall be allowed to deduct
  royalty payments directly or indirectly received from a  related  member
  during the taxable year to the extent included in the taxpayer's federal
  taxable  income unless such royalty payments would not be required to be
  added back under subparagraph two of this  paragraph  or  other  similar
  provision in this chapter.
    (o)  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,
  the deductions allowable 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, determined as if such
  sport utility vehicle were a passenger automobile  as  defined  in  such
  paragraph  five.  For purposes of paragraph (k) and subparagraph sixteen
  of paragraph (b)  of  subdivision  eight  of  this  section,  the  terms
  qualified  resurgence  zone property and qualified New York Liberty Zone
  property described in paragraph two of subsection b of section  fourteen
  hundred  L  of  the  internal  revenue  code shall not include any 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.
    (p) Upon the disposition of property to which paragraph  (o)  of  this
  subdivision applies, the amount of any gain or loss includible in entire
  net  income  shall  be adjusted to reflect the inclusions and exclusions
  from entire net income pursuant to subparagraph  thirteen  of  paragraph
  (a)  and  subparagraph  seventeen  of  paragraph (b) of this subdivision
  attributable to such property.
    9. (a) The term "calendar year" means  a  period  of  twelve  calendar
  months (or any shorter period beginning on the date the taxpayer becomes

  subject   to   the  tax  imposed  by  this  subchapter)  ending  on  the
  thirty-first day of December, provided the taxpayer keeps its  books  on
  the basis of such period or on the basis of any period ending on any day
  other  than  the  last day of a calendar month, or provided the taxpayer
  does not keep books, and includes, in  case  the  taxpayer  changes  the
  period  on the basis of which it keeps its books from a fiscal year to a
  calendar year, the period from the close of its last old fiscal year  up
  to and including the following December thirty-first.
    (b)  The  term  "fiscal year" means a period of twelve calendar months
  (or any shorter period  beginning  on  the  date  the  taxpayer  becomes
  subject to the tax imposed by this subchapter) ending on the last day of
  any  month other than December, provided the taxpayer keeps its books on
  the basis of such period, and includes, in case the taxpayer changes the
  period on the basis of which it keeps its books from a calendar year  to
  a fiscal year or from one fiscal year to another fiscal year, the period
  from  the  close  of its last old calendar or fiscal year up to the date
  designated as the close of its new fiscal year.
    10. The term "tangible personal  property"  means  corporeal  personal
  property,  such  as  machinery,  tools,  implements,  goods,  wares  and
  merchandise, and does not mean  money,  deposits  in  banks,  shares  of
  stock,  bonds,  notes,  credits  or evidence of an interest property and
  evidences of debt.