There is a newer version of the New York Consolidated Laws
2006 New York Code - City Adjusted Gross Income Of A City Resident Individual.
§ 11-1712 City adjusted gross income of a city resident individual.
(a) General. The city adjusted gross income of a city resident
individual means his or her federal adjusted gross income as defined in
the laws of the United States for the taxable year, with the
modifications specified in this section.
(b) Modifications increasing federal adjusted gross income. There
shall be added to federal adjusted gross income: (1) Interest income on
obligations of any state other than this state, or of a political
subdivision of any other such state unless created by compact or
agreement to which this state is a party, to the extent not properly
includible in federal adjusted gross income;
(2) Interest or dividend income on obligations or securities of any
authority, commission, or instrumentality of the United States, which
the laws of the United States exempt from federal income tax but not
from state income taxes;
(3) Income taxes. (A) General. Income taxes imposed by this state or
any other taxing jurisdiction, to the extent deductible in determining
federal adjusted gross income and not credited against federal income
tax.
(B) Shareholders of S corporations. In the case of a shareholder of an
S corporation, with respect to taxes imposed upon or payable by the
corporation, the term "income taxes" in subparagraph (A) of this
paragraph shall also include the taxes imposed under articles nine-A and
thirty-two of the tax law, regardless of the measure of such tax, but
shall not otherwise include taxes imposed by this or any other state of
the United States, or any political subdivision of this or any other
state, or the District of Columbia.
(4) Interest on indebtedness incurred or continued to purchase or
carry obligations or securities the interest on which is exempt from tax
under this chapter, to the extent deductible in determining federal
adjusted gross income.
(5) Expenses paid or incurred during the taxable year for: (i) the
production or collection of income which is exempt from tax under this
chapter, or (ii) the management, conservation or maintenance of property
held for the production of such income, and the amortizable bond premium
for the taxable year on any bond the interest on which is exempt from
tax under this chapter, to the extent that such expenses and premiums
are deductible in determining federal adjusted gross income.
(6) In the case of a taxpayer who has exercised the election permitted
by subdivision (g) or (h) of this section, the amount or amounts
required by said subdivisions to be added to federal adjusted gross
income.
(7) In the case of a taxpayer who is a shareholder of a corporation
organized under article fifteen or authorized to do business in this
state under article fifteen-A of the business corporation law, for the
taxpayer's taxable years beginning before nineteen hundred eighty-eight,
the amount which is deductible by such corporation under paragraph one,
two or three of subsection (a) of section four hundred four of the
internal revenue code for its taxable year ending in or with such
taxpayer's taxable year for contributions paid on behalf of such
taxpayer minus the lesser of fifteen thousand dollars or fifteen percent
of the earned income derived by such taxpayers from such corporation
during such taxpayer's taxable year. In the case of a taxpayer on whose
behalf contributions are paid under more than one plan to which this
paragraph applies or under a plan, contributions to which on his behalf
are subject to the limitations provided in section four hundred four (e)
of the internal revenue code, this paragraph shall apply with respect to
the aggregate of the contributions paid on his behalf under all such
plans.
(10) The amount required to be added to federal adjusted gross income
pursuant to subdivision (i) of this section.
(15) The amount allowed as an exclusion or deduction for the special
additional mortgage recording taxes imposed by subdivision one-a of
section two hundred fifty-three of the tax law in determining federal
adjusted gross income for such taxable year.
(16) Unless the credit allowed pursuant to subsection (f) of section
six hundred six of the tax law is reflected in the computation of the
gain or loss so as to result in an increase in such gain or decrease in
such loss, for federal income tax purposes, from the sale or other
disposition of the property with respect to which the special additional
mortgage recording tax imposed pursuant to subdivision one-a of section
two hundred fifty-three of such law was paid, the amount of the special
additional mortgage recording tax imposed by subdivision one-a of
section two hundred fifty-three of such law which was paid and which is
reflected in the computation of the basis of the property so as to
result in a decrease in such gain or increase in such loss for federal
income tax purposes from the sale or other disposition of the property
with respect to which such tax was paid.
(17) The amount required to be added to federal adjusted gross income
pursuant to subdivision (r) of this section.
(18) In the case of a shareholder of an S corporation: (A) where the
election provided for in subsection (a) of section six hundred sixty of
the tax law is in effect with respect to such corporation, an amount
equal to his pro rata share of the corporation's reductions for taxes
described in paragraphs two and three of subsection (f) of section
thirteen hundred sixty-six of the internal revenue code, and
(B) in the case of a New York S termination year, subparagraph (A) of
this paragraph shall apply to the amount of reductions for taxes
determined under subdivision (s) of this section.
(19) In the case of a shareholder of an S corporation: (A) where the
election provided for in subsection (a) of section six hundred sixty of
the tax law has not been made with respect to such corporation, any item
of loss or deduction of the corporation included in federal gross income
pursuant to section thirteen hundred sixty-six of the internal revenue
code, and
(B) in the case of a New York S termination year, subparagraph (A) of
this paragraph shall apply to the amounts of loss or deduction
determined under subdivision (s) of this section.
(20) S corporation distributions to the extent not included in federal
gross income for the taxable year because of the application of section
thirteen hundred sixty-eight, subsection (e) of section thirteen hundred
seventy-one or subsection (c) of section thirteen hundred seventy-nine
of the internal revenue code which represent income not previously
subject to tax under this chapter because the election provided for in
subsection (a) of section six hundred sixty of the tax law had not been
made. Any such distribution treated in the manner described in paragraph
two of subsection (b) of section thirteen hundred sixty-eight of the
internal revenue code for federal income tax purposes shall be treated
as ordinary income for purposes of this chapter.
(21) In relation to the disposition of stock or indebtedness of a
corporation which elected under subchapter s of chapter one of the
internal revenue code for any taxable year of such corporation
beginning, in the case of a corporation taxable under article nine-A of
the tax law, after December thirty-first, nineteen hundred eighty, and
in the case of a corporation taxable under article thirty-two of the tax
law, after December thirty-first, nineteen hundred ninety-six, the
amount required to be added to federal adjusted gross income pursuant to
subdivision (n) of this section.
(22) The amounts required to be added to federal adjusted gross income
pursuant to subdivision (q) of this section.
(23) 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), any amount
which the taxpayer claimed as a deduction in computing its federal
adjusted gross 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;
(24) 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), any amount
which the taxpayer would have been required to include in the
computation of its federal adjusted gross 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;
* (25) For taxable years beginning after December thirty-first,
nineteen hundred eighty-one, except with respect to recovery property
subject to the provisions of section two hundred eighty-F of the
internal revenue code and recovery property placed in service in this
state in taxable years beginning after December thirty-first, nineteen
hundred eighty-four, the amount allowable as a deduction under section
one hundred sixty-eight of the internal revenue code;
* NB Does not apply to property to which the amendments made by
section 201 of Public Law 99-514 apply
* (25) 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, the
amount allowable as a deduction determined under section one hundred
sixty-eight of the internal revenue code.
* NB Applies to property to which the amendments made by section 201
of Public Law 99-514 apply
* (26) The amount of member or employee contributions to a retirement
system or pension fund picked up or paid by the employer pursuant to
subdivision f of section five hundred seventeen or subdivision d of
section six hundred thirteen of the retirement and social security law
or section 13-225.1, 13-327.1, 13-125.1, 13-125.2 or 13-521.1 of title
thirteen of the code or subdivision nineteen of section twenty-five
hundred seventy-five of the education law.
* NB Expires per ch. 681/92 § 16
26-a. The amount of member or employee contributions to a retirement
system or pension fund picked up or paid by the employer for members of
the Manhattan and Bronx surface transportation authority pension plan
and treated as employer contributions in determining income tax
treatment under section 414(h) of the Internal Revenue Code.
* (27) Upon the disposition of recovery property to which paragraph
twenty-six of subdivision (c) of this section applies, the amount, if
any, by which the aggregate of the modifications described in such
paragraph twenty-six attributable to such property exceeds the aggregate
of the modifications described in paragraph twenty-five of this
subdivision attributable to such property; and
* NB Does not apply to property to which the amendments made by
section 201 of public law 99-514 apply
* (27) Upon the disposition of property to which paragraph twenty-six
of subdivision (c) of this section applies, the amount, if any, by which
the aggregate of the modifications described in such paragraph
twenty-six attributable to such property exceeds the aggregate of the
modifications described in paragraph twenty-five of this subdivision
attributable to such property.
* NB Applies to property to which the amendments made by section 201
of public law 99-514 apply
(29) When gain from the sale or other disposition of property is
included in federal gross income, the amount of reduction in the basis
of such property attributable to credit for solar and wind energy
systems pursuant to paragraph nine of subsection (g) of section six
hundred six of the tax law; but for taxable years beginning before
nineteen hundred eighty-seven, if such gain affects the determination of
a net capital gain for federal income tax purposes, forty percent of
such amount.
(31) The amount deducted or deferred from an employee's salary under a
flexible benefits program established pursuant to section twenty-three
of the general municipal law or section one thousand two hundred ten-a
of the public authorities law.
(32) The amount by which an employee's salary is reduced pursuant to
the provisions of subdivision b of section 12-126.1 and subdivision b of
section 12-126.2 of the code.
* (33) Real property taxes paid on qualified agricultural property and
deducted in determining federal adjusted gross income, to the extent of
the amount of the agricultural property tax credit allowed under
subsection (n) or (i) of section six hundred six of the tax law.
* NB Applies to taxable years beginning on or after January 1, 1997
(c) Modifications reducing federal adjusted gross income. There shall
be subtracted from federal adjusted gross income:
* (1) Interest income on obligations of the United States and its
possessions to the extent includible in gross income for federal income
tax purposes;
* NB Does not apply to distributions made after April 1, 1987
* (1) Interest income on obligations of the United States and its
possessions to the extent includible in gross income for federal income
tax purposes; such interest income shall include the amount received as
dividends from a regulated investment company, as defined in section
eight hundred fifty-one of the internal revenue code, which has been
designated as the amount of such interest income in a written notice to
shareholders not later than sixty days following the close of its
taxable year; provided that, at the close of each quarter of the taxable
year of such regulated investment company, at least fifty percent of the
value of its total assets, as defined in subsection (c) of section eight
hundred fifty-one of the internal revenue code, consists of obligations
of the United States and its possessions. The aggregate amount so
designated by the regulated investment company for its taxable year
shall not exceed the amount determined by multiplying the total
distributions paid by such regulated investment company to its
shareholders with respect to that taxable year (attributable to income
earned in that year), including any such distributions paid after the
close of the taxable year, as described in section eight hundred
fifty-five of the internal revenue code, by the ratio that the interest
income received in that taxable year on obligations of the United States
and its possessions, after reduction for the deductions and expenses
directly or indirectly attributable thereto, bears to the investment
company taxable income of such regulated investment company for such
taxable year, determined without regard to subparagraph (D) of paragraph
two of subsection (b) of section eight hundred fifty-two of the internal
revenue code;
* NB Applies to distributions made after April 1, 1987
(2) Interest or dividend income on obligations or securities of any
authority, commission or instrumentality of the United States to the
extent includible in gross income for federal income tax purposes but
exempt from state income taxes under the laws of the United States;
(3) (i) Pensions to officers and employees of this state, its
subdivisions and agencies, to the extent includible in gross income for
federal income tax purposes;
(ii) Pensions to officers and employees of the United States of
America, any territory or possession or political subdivision of such
territory of possession, the District of Columbia, or any agency or
instrumentality of any one of the foregoing, to the extent includible in
gross income for federal income tax purposes;
(3-a) Pensions and annuities received by an individual who has
attained the age of fifty-nine and one-half, not otherwise excluded
pursuant to paragraph three of this subdivision, to the extent
includible in gross income for federal income tax purposes, but not in
excess of twenty thousand dollars, which are periodic payments
attributable to personal services performed by such individual prior to
his or her retirement from employment, which arise: (i) from an
employer-employee relationship or (ii) from contributions to a
retirement plan which are deductible for federal income tax purposes.
However, the term "pensions and annuities" shall also include
distributions received by an individual who has attained the age of
fifty-nine and one-half from an individual retirement account or an
individual retirement annuity, as defined in section four hundred eight
of the internal revenue code, and distributions received by an
individual who has attained the age of fifty-nine and one-half from
self-employed individual and owner-employee retirement plans which
qualify under section four hundred one of the internal revenue code,
whether or not the payments are periodic in nature. Nevertheless, the
term "pensions and annuities" shall not include any lump sum
distribution, as defined in subparagraph (A) of paragraph four of
subsection (e) of section four hundred two of the internal revenue code
and taxed under section six hundred three of the tax law. Where a
husband and wife file a joint city personal income tax return, the
modification provided for in this paragraph shall be computed as if they
were filing separate city personal income tax returns. Where a payment
would otherwise come within the meaning of the term "pensions and
annuities" as set forth in this paragraph except that such individual is
deceased, such payment shall, nevertheless, be treated as a pension or
annuity for purposes of this paragraph if such payment is received by
such individual's beneficiary.
(3-b) (i) Disability income included in federal gross income, to the
extent that such disability income would have been excluded from federal
gross income pursuant to the provisions of subsection (d) of section one
hundred five of the internal revenue code of nineteen hundred fifty-four
had such provisions continued in effect for taxable years commencing
after December thirty-first, nineteen hundred eighty-three as they were
in effect immediately prior to the repeal of such subsection.
Notwithstanding the foregoing, the sum of disability income excluded
pursuant to this paragraph, and pension and annuity income excluded
pursuant to paragraph three-a of this subdivision, shall not exceed
twenty thousand dollars.
(ii) Notwithstanding subdivision (f) of this section, if a husband and
wife determine their federal income tax on a joint return but are
required to determine their city income taxes separately, the amounts of
exclusion allowed under subparagraph (i) of this paragraph shall be
determined in the same joint manner as such amounts would have been
determined under the provisions of paragraph five of subsection (d) of
section one hundred five of the internal revenue code as such provisions
were in effect immediately prior to the repeal of such subsection, but
shall be attributed for city income tax purposes to the spouse who would
have been required to report any such amount as income if the spouses
had determined their federal income taxes separately.
(iii) Where a husband and wife file a joint city income tax return,
the twenty thousand dollar limitation provided in subparagraph (i) of
this paragraph shall be applied as if they were filing separate city
income tax returns.
(3-c) Social security benefits to the extent includible in gross
income for federal income tax purposes pursuant to section eighty-six of
the internal revenue code.
(4) The portion of any gain, from the sale or other disposition of
property having a higher adjusted basis for New York state income tax
purposes than for federal income tax purposes on the last day of the
last taxable year for which article sixteen of the tax law imposes tax,
that does not exceed such difference in basis.
(5) The amount necessary to prevent the taxation under this chapter of
any annuity or other amount of income or gain which was properly
included in income or gain and was taxable under article sixteen of the
tax law to the taxpayer, or to a decedent by reason of whose death the
taxpayer acquired the right to receive the income or gain, or to a trust
or estate from which the taxpayer received the income or gain;
(6) Interest or dividend income on obligations or securities to the
extent exempt from income tax under the laws of this state authorizing
the issuance of such obligations on securities but includible in gross
income for federal income tax purposes; and
(7) The amount of any refund or credit for overpayment of income taxes
imposed by this city, or any other taxing jurisdiction, to the extent
properly included in gross income for federal income tax purposes.
(8) Compensation received for active service in the armed forces of
the United States on or after October first, nineteen hundred sixty-one,
and prior to September first, nineteen hundred sixty-two; provided,
however, that the amount of such compensation to be deducted shall not
exceed one hundred dollars for each month of the taxable year,
subsequent to September, nineteen hundred sixty-one, during any part of
which month the taxpayer was engaged in such service. For the purposes
of this paragraph, the words "active service in the armed forces of the
United States" shall mean active duty (other than for training) in the
army, navy (including the marine corps), air force or coast guard of the
United States as defined in title ten of the United States Code.
(8-a) Compensation and bonuses received for active service in the
armed forces of the United States while a prisoner of war or missing in
action during the hostilities in Vietnam, to the extent includible in
gross income for federal income tax purposes.
(9) 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, to the extent
that such interest on indebtedness is not deductible in determining
federal adjusted gross income and is attributable to a trade or business
carried on by the taxpayer.
(10) Ordinary and necessary expenses paid or incurred during the
taxable year for: (i) the production or collection of income which is
subject to tax under this chapter but exempt from federal income tax, or
(ii) the management, conservation or maintenance of property held for
the production of such income, and 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, to the extent that such
expenses and premiums are not deductible in determining federal adjusted
gross income and are attributable to a trade or business carried on by
the taxpayer.
(11) In the case of a taxpayer who has exercised the election
permitted by subdivision (g) or (h) of this section, the amount or
amounts required by said subdivisions to be subtracted from federal
adjusted gross income.
(12) The amount necessary to prevent the taxation of amounts properly
included in New York adjusted gross income in prior taxable years in
accordance with paragraph seven of subdivision (b) of this section.
(13) The amount required to be subtracted from federal adjusted gross
income pursuant to subdivision (i) of this section.
(14) The amount that may be subtracted from federal adjusted gross
income pursuant to subdivision (j) of this section.
(15) That portion of wages or 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.
(19) The amount which may be subtracted from federal adjusted gross
income pursuant to subdivision (r) of this section.
(20) The amounts which may be subtracted from federal adjusted gross
income pursuant to subdivision (o) of this section.
(21) In relation to the disposition of stock or indebtedness of a
corporation which elected under subchapter s of chapter one of the
internal revenue code for any taxable year of such corporation
beginning, in the case of a corporation taxable under article nine-A of
the tax law, after December thirty-first, nineteen hundred eighty, and
in the case of a corporation taxable under article thirty-two of the tax
law, after December thirty-first, nineteen hundred ninety-six, the
amounts required to be subtracted from federal adjusted gross income
pursuant to subdivision (n) of this section.
(22) In the case of a shareholder of an S corporation: (A) where the
election provided for in subsection (a) of section six hundred sixty of
the tax law has not been made with respect to such corporation, any item
of income of the corporation included in federal gross income pursuant
to section thirteen hundred sixty-six of the internal revenue code, and
(B) in the case of a New York S termination year, subparagraph (A) of
this paragraph shall apply to the amounts of income determined under
subdivision (s) of this section.
(23) The amounts which may be subtracted from federal adjusted gross
income pursuant to subdivision (p) of this section.
(24) 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), any amount
which is included in the taxpayer's federal adjusted gross 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;
(25) 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), any amount
which the taxpayer could have excluded from federal adjusted gross
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;
* (26) For taxable years beginning after December thirty-first,
nineteen hundred eighty-one, except with respect to recovery property
subject to the provisions of section two hundred eighty-F of the
internal revenue code and recovery property placed in service in this
state in taxable years beginning after December thirty-first, nineteen
hundred eighty-four, the amount allowable as the depreciation deduction
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;
* NB Does not apply to property to which the amendment made by section
201 Public Law 99-514 apply
* (26) 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 eight-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, an
amount with respect to property which is subject to the provisions of
section one hundred sixty-eight of the internal revenue code equal to
the amount allowable as the depreciation deduction 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.
* NB Applies to property to which the amendment made by section 201
Public Law 99-514 apply
* (28) Upon the disposition of recovery property to which paragraph
twenty-six of this subdivision applies, the amount, if any, by which the
aggregate of the modifications described in paragraph twenty-five of
subdivision (b) of this section attributable to such property exceeds
the aggregate of the modifications described in paragraph twenty-six of
this subdivision attributable to such property.
* NB Does not apply to property to which the amendment made by section
201 Public Law 99-514 apply
* (28) Upon the disposition of property to which paragraph twenty-six
of this subdivision applies, the amount, if any, by which the aggregate
of the modifications described in paragraph twenty-five of subdivision
(b) of this section attributable to such property exceeds the aggregate
of the modifications described in paragraph twenty-six of this
subdivision attributable to such property.
* NB Applies to property to which the amendment made by section 201
Public Law 99-514 apply
(29) Deduction for two-earner married couples. (A) For the taxable
year beginning in nineteen hundred eighty-seven, in the case of a
husband and wife who each have qualified earned income and who have
filed a joint return under subdivision (b) of section 11-1751 for the
taxable year, an amount equal to ten percent of the lesser of:
(i) thirty thousand dollars or
(ii) the qualified earned income of the spouse with the lower
qualified earned income for such taxable year.
(B) For purposes of this paragraph, eligibility for the deduction
provided for herein and the term qualified earned income shall be
determined in the manner such eligibility and such qualified earned
income would have been determined pursuant to the provisions of section
two hundred twenty-one of the internal revenue code of nineteen hundred
fifty-four had such provisions continued in effect for taxable years
commencing after December thirty-first, nineteen hundred eighty-six as
they were in effect immediately prior to the repeal of such section.
Provided, however, the determination of such qualified earned income
shall be made with regard only to the items therein included in city
adjusted gross income, with such adjusted gross income determined
without regard to this paragraph, and only with regard to the deductions
and exclusions which are of the type properly allowable to or chargeable
against such qualified earned income in such taxable year.
(30) The amount received by any person as an accelerated payment or
payments of part or all of the death benefit or special surrender value
under a life insurance policy as a result of any of the diagnoses
specified in subparagraph (A) or (B) of paragraph one of subsection (a)
of section one thousand one hundred thirteen of the insurance law, and
the amount received by any person as a viatical settlement pursuant to
the provisions of article seventy-eight of the insurance law, to the
extent includible in gross income for federal income tax purposes.
(32) The portion of the fees paid during the taxable year by a
taxpayer who is a resident of a continuing care retirement community,
issued a certificate of authority pursuant to article forty-six of the
public health law, attributable to the cost of providing long term care
benefits pursuant to a continuing care contract. The portion of the fees
so attributable shall be determined in accordance with regulations
promulgated by the superintendent of insurance. The deduction may not
exceed the limitation that would be applicable to the taxpayer for the
taxable year, with respect to eligible long term care premiums,
determined under paragraph (10) of subsection (d) of section 213 of the
internal revenue code.
(33) Distributions, to the extent includible in adjusted gross income
for federal income tax purposes, made to the taxpayer because of his or
her status as a victim of Nazi persecution, as defined in P.L. 103-286,
or as a spouse or a descendant in need of such victim.
(34) Items of income, to the extent includible in gross income for
federal income tax purposes, attributable to, derived from or in any way
related to assets stolen from, hidden from or otherwise lost to a victim
of Nazi persecution, as defined in P.L. 103-286, immediately prior to,
during and immediately after World War II, including, but not limited to
interest on the proceeds receivable as insurance under policies issued
to a victim of Nazi persecution, as defined in P.L. 103-286, by European
insurance companies immediately prior to and during World War II.
Provided, however, this subtraction from federal adjusted income does
not apply to assets acquired with such assets or with the proceeds from
the sale of such assets. Provided, further, this paragraph is only
applicable to a taxpayer who was the first recipient of such assets
after their recovery and who is a victim of Nazi persecution, as defined
in P.L. 103-286, or a spouse or a descendant of such victim.
(d) Modification for city fiduciary adjustment. There shall be added
to or subtracted from federal adjusted gross income (as the case may be)
the taxpayer's share, as beneficiary of an estate or trust, of the city
fiduciary adjustment determined under section 11-1719.
(e) Modifications of partners and shareholders of S corporations. (1)
Partners and shareholders of S corporations which are not New York C
corporations. The amounts of modifications required to be made under
this section by a partner or by a shareholder of an S corporation (other
than an S corporation which is a New York C corporation), which relate
to partnership or S corporation items of income, gain, loss or deduction
shall be determined under section 11-1717 and, in the case of a partner
of a partnership doing an insurance business as members of the New York
insurance exchange described in section six thousand two hundred one of
the insurance law, under section 11-1717.1 of this chapter.
(2) Shareholders of S corporations which are New York C corporations.
In the case of a shareholder of an S corporation which is a New York C
corporation, the modifications under this section which relate to the
corporation's items of income, loss and deduction shall not apply,
except for the modifications provided under paragraph nineteen of
subdivision (b) and paragraph twenty-two of subdivision (c) of this
section.
(3) New York S termination year. In the case of a New York S
termination year, the amounts of the modifications required under this
section which relate to the S corporation's items of income, loss,
deduction and reductions for taxes (as described in paragraphs two and
three of subsection (f) of section thirteen hundred sixty-six of the
internal revenue code) shall be adjusted in the same manner that the S
corporation's items are adjusted under subdivision (s) of this section.
(f) Husband and wife. If husband and wife determine their federal
income tax on a joint return but are required to determine their city
income taxes separately, they shall determine their city adjusted gross
incomes separately as if their federal adjusted gross incomes had been
determined separately.
(g) Optional modifications. Subject to the conditions provided in
paragraphs three and four of this subdivision, at the election of the
taxpayer there shall also be subtracted from federal adjusted gross
income either or both of the items set forth in paragraphs one and two
of this subdivision, except that only one of such items shall be
subtracted with respect to any one item of property, and except that a
subtraction of the item set forth in such paragraph two may not be taken
with respect to taxable years commencing on or after January first,
nineteen hundred eighty-nine.
(1) Depreciation with respect to any property such as described in
paragraph three or four of this subdivision, and subject to the
conditions provided therein, not exceeding twice the depreciation
allowed with respect to the same property for federal income tax
purposes. Such modification shall be allowed only upon condition that
any depreciation or amortization allowed with respect to the same
property in determining federal adjusted gross income shall be added to
federal adjusted gross income pursuant to paragraph six of subdivision
(b) of this section. The total of all deductions allowed pursuant to
this paragraph in any taxable year or years with respect to any property
described in paragraph three of this subdivision shall not exceed its
cost or other basis and, with respect to property described in paragraph
four of this subdivision, which is used in a business carried on both
within and without the state shall not exceed its cost or other basis
multiplied by a percentage of the excess of the taxpayer's business
income over its business deductions allocated to this state for the
first year such depreciation is deducted. Such percentage shall be
determined by apportionment and allocation under regulations of the tax
commission.
(2) Expenditures paid or incurred during the taxable year for the
construction, reconstruction, erection or acquisition of any property
such as described in paragraph three or four of this subdivision, and
subject to the conditions provided therein, which is used or to be used
for purposes of research and development in the experimental or
laboratory sense. Such purposes shall not be deemed to include the
ordinary testing or inspection of materials or products for quality
control, efficiency surveys, management studies, consumer surveys,
advertising, promotions or research in connection with literary,
historical or similar projects. Such modification shall be allowed only
on condition that, with respect to property described in paragraph four
of this subdivision, which is used in a business carried on both within
and without the state the deduction shall not exceed the expenditures
multiplied by a percentage of the excess of the taxpayer's business
income over its business deductions allocated to this state for the
first year such expenditures are deducted. Such percentage shall be
determined by apportionment and allocation under regulations of the tax
commission, and for the taxable year and all succeeding taxable years,
any deductions allowed for federal income tax purposes on account of
such expenditures or on account of depreciation of the same property,
except to the extent that its basis may be attributable to factors other
than such expenditures, shall be added to federal adjusted gross income
pursuant to paragraph six of subdivision (b) of this section, or in case
a modification is allowable pursuant to this paragraph for only a part
of such expenditures, on condition that a proportionate part of any such
deductions allowed for federal income tax purposes be added to federal
adjusted gross income. With respect to property which is used or to be
used for research and development only in part, or during only part of
its useful life, the modification allowable pursuant to this paragraph
shall be limited to a proportionate part of the expenditures relating
thereto. If a modification shall have been allowed pursuant to this
paragraph for all or part of such expenditures with respect to any
property, and such property is used for purposes other than research and
development to a greater extent than originally reported, the taxpayer
shall report such use in his or her return for the first taxable year
during which it occurs, and the tax commission may recompute the tax for
the year or years for which such deduction was allowed, and may assess
any additional tax resulting from such recomputation within the time
fixed by subdivision (c) of section 11-1783.
(3) For purposes of this paragraph, such modifications 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 state and used in the taxpayer's trade or
business: (A) constructed, reconstructed or erected after December
thirty-first, nineteen hundred sixty-three, 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, property, the
physical construction, reconstruction or erection of which began on or
before December thirty-first, nineteen hundred sixty-seven or which
began after such date pursuant to an order placed on or before December
thirty-first, nineteen hundred sixty-seven, and then only with respect
to that portion of the basis thereof or the expenditures relating
thereto which is properly attributable to such construction,
reconstruction or erection after December thirty-first, nineteen hundred
sixty-three, or (B) acquired after December thirty-first, nineteen
hundred sixty-three, 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 state and commenced after December
thirty-first, nineteen hundred sixty-three, or (C) 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 subdivision (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 be read as December thirty-first, nineteen hundred sixty-seven. A
taxpayer shall be allowed a deduction under clause (A), (B) or (C) 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. However, for any taxable year beginning on or
after January first, nineteen hundred sixty-eight, a taxpayer shall not
be allowed a modification under paragraph one of this subdivision with
respect to tangible personal property leased 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 a taxpayer uses
for purposes other than leasing for part of a taxable year and leases
for a part of a taxable year, a modification under paragraph one of this
subdivision shall be allowed in proportion to the part of the year such
property is used by the taxpayer.
(4) For purposes of this paragraph, such modifications 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 state and used in the taxpayer's trade or
business. The modifications provided for in paragraph one of this
subdivision shall be allowed only with respect to tangible property
which is: (A) constructed, reconstructed or erected after December
thirty-first, nineteen hundred sixty-seven, pursuant to a contract which
was, on or before December thirty-first, nineteen hundred sixty-eight,
and at all times thereafter, binding on the taxpayer or, property, the
physical construction, reconstruction or erection of which began on or
before December thirty-first, nineteen hundred sixty-eight or which
began after such date pursuant to an order placed on or before December
thirty-first, nineteen hundred sixty-eight, and then only with respect
to that portion of the basis thereof or the expenditures relating
thereto which is properly attributable to such construction,
reconstruction or erection after December thirty-first, nineteen hundred
sixty-three, or (B) acquired after December thirty-first, nineteen
hundred sixty-seven, pursuant to a contract which was, on or before
December thirty-first, nineteen hundred sixty-eight, and at all times
thereafter, binding on the taxpayer or pursuant to an order placed on or
before December thirty-first, nineteen hundred sixty-eight, 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 state and commenced after December
thirty-first, nineteen hundred sixty-seven, or (C) acquired,
constructed, reconstructed, or erected subsequent to December
thirty-first, nineteen hundred sixty-eight, 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-eight, and not thereafter substantially modified, and such
acquisition, construction, reconstruction or erection would qualify
under the rules in paragraph four, five or six of subdivision (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 be read as December thirty-first, nineteen hundred sixty-eight. A
taxpayer shall be allowed a deduction under clause (A), (B) or (C) of
the preceding sentence 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
seventy, 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-eight, and at
all times thereafter binding on the taxpayer. The modification provided
for in paragraph two of this subdivision shall be allowed only with
respect to tangible property: (A) the construction, reconstruction or
erection of which is completed after December thirty-first, nineteen
hundred sixty-seven, and then only with respect to that portion of the
basis thereof or the expenditures relating thereto which is properly
attributable to such construction, reconstruction or erection after
December thirty-first, nineteen hundred sixty-three, or (B) acquired
after 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 state and commenced after December
thirty-first, nineteen hundred sixty-three. Provided, however, a
modification under paragraph one of this subdivision shall be allowed
with respect to property described in this paragrpah only on condition
that such property shall be principally used by the taxpayer in the
production of goods by manufacturing; processing; assemblying; refining;
mining; extracting; farming; agriculture; horticulture; floriculture;
viticulture; or commerical fishing. For purposes of the preceding
sentence, manufacturing shall mean the process of working raw materials
into wares suitable for use or which gives new shapes, new qualities or
new combinations to matter which already has gone through some
artificial process by the use of machinery, tools, appliances and other
similar equipment. Property used in the production of goods shall
include machinery, equipment or other tangible property which is
principally used in the repair and service of other machinery, equipment
or other tangible property used principally in the production of goods
and shall include all facilities used in the manufacturing operation,
including storage of material to be used in manufacturing and of the
products that are manufactured. At the option of the taxpayer, air and
water pollution control facilities which qualify for elective deductions
under subdivision (h) of this section may be treated, for purposes of
this paragraph, as tangible property principally used in the production
of goods by manufacturing; processing; assembling; refining; mining;
extracting; farming; agriculture; horticulture; floriculture;
viticulture; or commercial fishing, in which event, a deduction shall
not be allowed under such subdivision (h). However, for any taxable year
beginning on or after January first, nineteen hundred sixty-eight, a
taxpayer shall not be allowed a modification under paragraph one of this
subdivision with respect to tangible personal property leased 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 a
taxpayer uses for purposes other than leasing for part of a taxable year
and leases for a part of a taxable year, a modification under paragraph
one of this subdivision shall be allowed in proportion to the part of
the year such property is used by the taxpayer.
(5) If the modifications allowable for any taxable year pursuant to
this subdivision exceed the taxpayer's city adjusted gross income,
determined without the allowance of such modifications, the excess may
be carried over to the following taxable year or years and may be
subtracted from federal adjusted gross income for such year or years.
(6) In any taxable year when property is sold or otherwise disposed
of, with respect to which a modification has been allowed pursuant to
paragraph one or two of this subdivision, the basis of such property
shall be adjusted to reflect the modifications so allowed, and if the
basis as so adjusted is lower than the adjusted basis of the same
property for federal income tax purposes, there shall be added to
federal adjusted gross income the amount of the difference between such
adjusted bases.
(h) Optional modification for waste treatment facility expenditures.
For taxable years commencing prior to January first, nineteen hundred
eighty-nine, at the election of the taxpayer, there shall also be
subtracted from federal adjusted gross income 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) Such modifications 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 this state 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-five, 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
commissioner of environmental conservation or his or her 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 the provisions of such environmental conservation law,
the state sanitary code and regulations, permits or orders promulgated
pursuant thereto, and
(C) on condition that for the taxable year and all succeeding taxable
years, any deductions allowed for federal income tax purposes for such
expenditures or for depreciation or amortization of the same property,
except to the extent that its basis may be attributable to factors other
than such expenditures, be added to federal adjusted gross income
pursuant to paragraph five of subdivision (b) of this section, or in
case a modification is allowable pursuant to this paragraph for only a
part of such expenditures, on condition that a proportionate amount of
any such deductions allowed for federal income tax purposes be added to
federal adjusted gross income, and
(D) where the election provided for in subdivision (g) of this section
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 allowed as a
modification as provided herein and if within ten years from the end of
the taxable year in which such modification 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 tax commission may
recompute the tax for the year or years for which such modification was
allowed, and may assess any additional tax resulting from such
recomputation within the time fixed by paragraph eight of subdivision
(c) of section 11-1783.
(B) If a modification 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 tax commission may recompute the tax
for the year or years for which such modification was allowed, and may
assess any additional tax resulting from such recomputation within the
time fixed by paragraph eight of subdivision (c) of section 11-1783.
(C) If a modification is allowed as herein provided for expenditures
paid or incurred during any taxable year in respect to an air pollution
control facility on the basis of a certificate of compliance issued
pursuant to the environmental conservation law and the certificate is
revoked pursuant to section 19-0309 of the environmental conservation
law, the tax commission may recompute the tax for the year or years for
which the facility is not or was not in compliance with the applicable
provisions of the environmental conservation law, the state sanitary
code or codes, rules, regulations, permits or orders issued pursuant
thereto, and for which a modification was allowed, and may assess any
additional tax resulting from such recomputation within the time fixed
by paragraph eight of subdivision (c) of section 11-1783.
(4) In any taxable year when property is sold or otherwise disposed
of, with respect to which a modification has been allowed pursuant to
this paragraph, such modification 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
federal adjusted gross income for such taxable year.
(i) In the case of mines, oil and gas wells and other natural
deposits, any allowance for percentage depletion pursuant to section six
hundred thirteen or section six hundred thirteen A of the internal
revenue code, shall be added to federal adjusted gross income. However,
with respect to the property as to which such addition to federal
adjusted gross income is required, an allowance for depletion shall be
subtracted from federal adjusted gross income in the amount that would
be deductible under section six hundred eleven of such code if the
deduction for an allowance for depletion were computed without reference
to such section six hundred thirteen or section six hundred thirteen A.
With respect to the computation of depletion pursuant to this
subdivision, the basis for such computation shall be the basis for state
income tax purposes provided for in subsection (i) of section six
hundred twelve of the tax law. The portion of any gain from the sale or
other disposition of such property having a higher adjusted basis for
city income tax purposes than for federal income tax purposes, that does
not exceed such difference in basis, shall be subtracted from federal
adjusted gross income.
(j) Modification for nonpublic school tuition. (1) General. An
individual shall be entitled to subtract from his or her federal
adjusted gross income an amount shown in the table set forth in this
paragraph for his or her city adjusted gross income for the taxable
year, computed without the benefit of this modification, multiplied by
the number of his or her dependents, not exceeding three, attending a
nonpublic school on a full-time basis for at least four months during
the regular school year for the education of such dependent in grades
one through twelve, provided such individual is allowed an exemption
under section 11-1716 for such dependent. Provided, further, that the
modification under this paragraph may be taken only if such individual
has paid at least fifty dollars for each such dependent in tuition to
such nonpublic school for such education of such dependent. No taxpayer
shall be entitled to the modification provided for in this paragraph if
he or she claims a tuition reimbursement payment pursuant to article
twelve-A of the education law.
If city adjusted The amount allowable
gross income is: for each dependent is:
Less than $9,000 $1,000
9,000 -- 10,999 850
11,000 -- 12,999 700
13,000 -- 14,999 550
15,000 -- 16,999 400
17,000 -- 18,999 250
19,000 -- 20,999 150
21,000 -- 22,999 125
23,000 -- 24,999 100
25,000 and over -0-
(2) Husband and wife. In determining the applicable city adjusted
gross income of a husband and wife for purposes of the table set forth
in paragraph one of this subdivision, the city adjusted gross income of
a husband and wife shall be the aggregate of their city adjusted gross
incomes for the taxable year, determined without the benefit of the
modification provided for in this subdivision, and the number of
dependents with respect to which this modification may be claimed shall
be no more than three in the aggregate.
(3) Definitions. (A) "Tuition", as used in this subdivision, shall
mean the amount actually paid during the taxable year by the taxpayer
for the enrollment of a dependent during the regular school year at a
nonpublic school.
(B) "Nonpublic school", as used in this subdivision, shall mean any
non-profit elementary or secondary school in the state of New York,
other than a public school, which: (i) is providing instruction in
accordance with article seventeen and section thirty-two hundred four of
the education law, (ii) has not been found to be in violation of title
VI of the civil rights act of nineteen hundred sixty-four, 78 Stat. 252,
42 U.S.C. § 2000(d) and (iii) which is entitled to a tax exemption under
sections five hundred one (a) and five hundred one (c) (3) of the
federal internal revenue code of nineteen hundred fifty-four, as
amended. The commissioner of education shall furnish to the tax
commission by February first of each year, a certified list of nonpublic
schools which comply with clause (i) of this subparagraph for the
preceding calendar year and shall provide such other assistance with
respect to whether nonpublic schools come within clause (i) as the tax
commission may require.
(C) "Regular school year", as used in this subdivision, shall mean the
months of the taxable year exclusive of July and August.
(4) Additional information. Any claim for a modification under this
subdivision shall be accompained by such information as the tax
commission may require.
(n) Where gain or loss is recognized for federal income tax purposes
upon the disposition of stock or indebtedness of a corporation electing
under subchapter s of chapter one of the internal revenue code:
(1) There shall be added to federal adjusted gross income the amount
of increase in basis with respect to such stock or indebtedness pursuant
to subsection (a) of section thirteen hundred seventy-six of the
internal revenue code as such section was in effect for taxable years
beginning before January first, nineteen hundred eighty-three and
subparagraphs (A) and (B) of paragraph one of subsection (a) of section
thirteen hundred sixty-seven of such code, for each taxable year of the
corporation beginning, in the case of a corporation taxable under
article nine-A of the tax law, after December thirty-first, nineteen
hundred eighty, and in the case of a corporation taxable under article
thirty-two of the tax law, after December thirty-first, nineteen hundred
ninety-six, for which the election provided for in subsection (a) of
section six hundred sixty of the tax law was not in effect, and
(2) There shall be subtracted from federal adjusted gross income:
(A) the amount of reduction in basis with respect to such stock or
indebtedness pursuant to subsection (b) of section thirteen hundred
seventy-six of the internal revenue code as such section was in effect
for taxable years beginning before January first, nineteen hundred
eighty-three and subparagraphs (B) and (C) of paragraph two of
subsection (a) of section thirteen hundred sixty-seven of such code, for
each taxable year of the corporation beginning, in the case of a
corporation taxable under article nine-A of the tax law, after December
thirty-first, nineteen hundred eighty, and in the case of a corporation
taxable under article thirty-two of the tax law, after December
thirty-first, nineteen hundred ninety-six, for which the election
provided for in subsection (a) of section six hundred sixty of the tax
law was not in effect and
(B) the amount of any modifications to federal gross income with
respect to such stock pursuant to paragraph twenty-one of subdivision
(b) of this section.
(o) Modifications for new business investment gains and certain new
business investments.
1. For purposes of this subdivision, the following definitions shall
apply:
(A) "New business investment gain" means gain from the sale of a new
business investment issued to the taxpayer before January first,
nineteen hundred eighty-eight, if:
(i) such new business investment is, in the hands of the person
selling the same (whether or not the taxpayer), a capital asset as
defined in section twelve hundred twenty-one of the internal revenue
code of nineteen hundred fifty-four, as amended, and
(ii) such new business investment was held by such person for the
period specified in paragraph two of this subdivision.
(B) "New business" means a corporation or partnership organized or
formed under the laws of any state which:
(i) adopts a plan on or after July first, nineteen hundred eighty-one
and before January first, nineteen hundred eighty-eight, to conduct a
new business within the meaning and intent of this section and to issue
new business investments, as defined in this subdivision, and
(ii) is, at the date of adoption of such plan, subject to taxation
(whether or not any amount is owing) under section one hundred
eighty-three, one hundred eighty-four or one hundred eighty-six of
article nine of the tax law, or under article nine-a of the tax law or
article twenty-three of the tax law, or would have been subject to tax
under article twenty-three of such law (as such article was in effect on
January first, nineteen hundred eighty) if such article were still in
effect, and the first taxable period for which such new business became
subject to such taxation commenced on or after July first, nineteen
hundred eighty-one and before January first, nineteen hundred
eighty-eight, and such first taxable period includes the date of
adoption of such plan; if not so subject to taxation, the new business
must be subject to taxation under such sections or articles for the
first time within one year from the date of adoption of such plan, and
(iii) is conducted (or will be conducted, as evidenced by such plan)
whereby at least ninety percent of the assets (valued at original cost)
are located and employed in this state and eighty percent of the
employees (as ascertained within the meaning and intent of subparagraph
three of paragraph (a) of subdivision three of section two hundred ten
of the tax law and, in addition, in the case of a partnership, excluding
partners) are principally employed in this state during each taxable
period, or part thereof, as required by clause (iv) of this
subparagraph, and
(iv) within ninety days after adoption of such plan, or, if a return
is required, as part of such return, under such article nine, article
nine-a or article twenty-three, whichever is sooner, shall file a new
business certificate with the tax commission attesting to whether it
meets, if subject to taxation under such articles, or intends to meet,
if not so subject, all of the conditions stated in clauses (i), (ii) and
(iii) of this subparagraph within the time set forth therein.
Thereafter, during the first four taxable years of such new business,
along with, and as part of, any return required under such articles,
such new business shall make and file a new business certificate for the
period covered by such return attesting to whether it has met the
conditions specified in this subparagraph during the taxable period
covered by such return. If no return is required under such articles,
such certificate shall be filed annually on or before the fifteenth day
of March which shall cover the twelve consecutive calendar month period
ending on the last day of December immediately preceding such March
fifteenth. If such new business fails to meet such conditions specified
in this subparagraph, it shall, in addition, give notice of this fact,
within the time prescribed by the tax commission, to the holders of its
"new business investments." The tax commission shall prescribe the form
and content of such new business certification and may require a new
business to file such certificate for periods (even if no return is
filed or required, but for this section) covering up to eight years from
the date of adoption of such plan, as in its discretion, it deems the
same necessary for the enforcement of this section, and
(v) Special rules:
(1) For any taxable period, in order to constitute a new business, a
business enterprise must have derived more than sixty percent of its
aggregate gross receipts from sources other than royalties, rents,
dividends, interest, annuities and sales or exchanges of stock or
securities.
(2) A new business does not include: (i) any new business of which
twenty-five percent or more of the number of shares of stock that
entitle the holders thereof to vote for the election of directors or
trustees is owned, directly or indirectly, by a taxpayer subject to tax
under section one hundred eighty-three, one hundred eighty-four, one
hundred eighty-five or one hundred eighty-six of article nine of the tax
law, or under article nine-a, thirty-two or thirty-three of the tax law
or (ii) any new business substantially similar in operation and in
ownership, directly or indirectly, to a business entity (or entities)
taxable, or previously taxable, under such section, such article,
article twenty-three of the tax law or which would have been subject to
tax under such article twenty-three (as such article was in effect on
January first, nineteen hundred eighty) or the income (or losses) of
which is (or was) includible under article twenty-two of such tax law
whereby the intent and purpose of this section would be evaded.
(C) "New business investment" means and includes the following
investments issued before January first, nineteen hundred eighty-eight
by a new business pursuant to a plan described in clause (i) of
subparagraph (B) of this paragraph for money or other property (other
than stock or securities) on or before the expiration of the third
taxable year of such new business (excluding any short period
immediately preceding such taxable year because the new business was not
in existence for an entire taxable year) or forty-two months from the
adoption of such plan, whichever is sooner: (i) original issuance
capital stock as part of a new issue, (ii) other original issuance
securities of a new issue of a like nature as stocks which are designed
as a means of investment and issued for the purpose of financing
corporate enterprises and providing for a distribution of rights in such
enterprises, (iii) debt obligations such as bonds and debentures for a
term of at least one year, whether secured or unsecured, and (iv)
certificates and other instruments representing proprietary interests,
whether limited or otherwise, in and assumption of general liabilities,
whether limited or otherwise, of a partnership enterprise.
2. A taxpayer may subtract from his federal adjusted gross income a
portion of an amount constituting a new business investment gain, as
follows:
The modification is equal to the
following proportion of the gain
If new business includible in federal
investment held for: adjusted gross income:
At least four years, but
less than five years twenty-five percent
At least five years, but
less than six years fifty percent
At least six years one hundred percent
3. Where, within six months of the realization of a new business
investment gain allowable as the basis of a modification under paragraph
two of this subdivision, such modification is equal to less than one
hundred percent of the portion of the gain includible in federal
adjusted gross income and the taxpayer purchases a new business
investment which is then held for a period of at least six months, the
taxpayer may subtract from his or her federal adjusted gross income ten
percent (but not an amount that will reduce the portion of such gain
included in his or her New York income below zero) of the amount of such
gain where the purchase price of the new business investment is equal to
or greater than the proceeds of the sale giving rise to such gain. Where
the purchase price of the new business investment is less than an amount
equal to the proceeds of such sale, the modification allowable under
this paragraph shall be equal to ten percent of an amount equal to the
product of: (A) the amount of the gain and (B) a fraction the numerator
of which is the purchase price of the new investment and the denominator
of which is an amount equal to the proceeds of such sale. The
modification allowable under this paragraph may be utilized, at the
option of the taxpayer, with respect to the taxable year in which the
new business investment gain is realized or the year containing the last
day of the six-month retention period described in this paragraph.
4. The tax commission may prescribe such rules and regulations as may
be necessary to carry out the purposes of this subdivision.
(p) New business investment deferral. For taxable years beginning
before January first, nineteen hundred eighty-eight, at the option of
the taxpayer, there may be subtracted from federal adjusted gross income
a reinvested amount of long-term capital gain realized in a taxable year
from the sale of a capital asset, as such term is defined in section
twelve hundred twenty-one of the internal revenue code, which is not a
new business investment. A reinvested amount of long-term capital gain
shall mean an amount which bears the same ratio to the long-term capital
gain realized from the sale of a capital asset which was includible in
New York adjusted gross income as that portion of the sale proceeds
which is reinvested, within one year from date of sale, in a New York
new business bears to the total sale proceeds. For the purposes of this
subdivision, a New York new business is a business enterprise which: (1)
has been a taxpayer under article nine-A, twenty-two, thirty-two or
thirty-three of the tax law for no more than three taxable years
(including short taxable years), (2) over fifty percent of the number of
shares of stock that entitle the holders thereof to vote for the
election of directors or trustees is not owned, directly or indirectly,
by a taxpayer subject to tax under section one hundred eighty-three, one
hundred eighty-four, one hundred eighty-five or one hundred eighty-six
of article nine of the tax law, or under article nine-A, thirty-two or
thirty-three of the tax law, (3) is not substantially similar in
operation or ownership, directly or indirectly, to a business entity (or
entities) taxable, or previously taxable, under such sections, such
articles, article twenty-three of the tax law or which would have been
subject to tax under article twenty-three (as such article was in effect
on January first, nineteen hundred eighty) or the income (or losses) of
which is (or was) includible under article twenty-two of the tax law
whereby the intent and purpose of this subdivision would be evaded, (4)
locates and employs at least ninety percent of its assets in the state,
(5) employs principally in the state eighty percent of its employees (as
ascertained within the meaning and intent of subparagraph three of
paragraph (a) of subdivision three of section two hundred ten of the tax
law and, in addition, in the case of a partnership, excluding partners),
and (6) derives less than forty percent of its gross income from
dividends, interest, royalties (other than mineral, oil, or gas
royalties or copyright royalties), annuities and (7) reports at least
twenty-five hundred dollars in gross income in any taxable year. The
reinvested amount must qualify as a capital asset as defined pursuant to
section twelve hundred twenty-one of the internal revenue code and must
be retained by the taxpayer for at least twelve months. The modification
allowable under this subdivision shall be utilized with respect to the
taxable year in which the twelve month retention period ends.
* (q) An amount deferred under subdivision (p) hereof shall be added
to federal adjusted gross income when the reinvestment in the New York
new business which qualified a taxpayer for such deferral is sold and
not reinvested anew in a New York new business within twelve months,
which is then retained for at least twelve months. If a taxpayer
reinvests anew only a portion of the proceeds of the sale of a deferral
qualifying reinvestment, the taxpayer shall add to his or her federal
adjusted gross income that portion of the full amount deferred which
bears the same ratio to the full amount deferred as the amount not
reinvested anew in a New York new business bears to the full proceeds of
the sale of the deferral qualifying reinvestment. The add back required
by this subdivision must be made with respect to the taxable year during
which there is a failure to reinvest anew within the required twelve
month period or the New York new business investment, once so acquired,
is not retained for the required twelve month retention period.
* NB There are two sub. (q)'s
* (q) An amount deferred under subdivision (p) hereof shall be added
to federal adjusted gross income when the reinvestment in the New York
new business which qualified a taxpayer for such deferral is sold.
* NB Applicable to taxable years beginning after 1987
(r) In the case of a sale or other disposition of property acquired
from a decedent and valued by the executor of the estate of such
decedent for the purposes of the tax under article twenty-six of the tax
law (i) pursuant to paragraph two of subsection (b) of section nine
hundred fifty-four of the tax law, or (ii) pursuant to section nine
hundred fifty-four-a of the tax law, where such estate was insufficient
to require the filing of a federal estate tax return, the amount
necessary to properly reflect the gain or loss from such sale or other
disposition which would have been realized under this chapter, had, in
the case of clause (i) of this subdivision, a federal estate tax return
been filed similarly valuing such property pursuant to section two
thousand thirty-two of the internal revenue code, or in the case of
clause (ii) of this subdivision, pursuant to section two thousand
thirty-two-A of such code.
(s) New York S termination year. (1) General. In the case of a New
York S termination year, the amount of any item of S corporation income,
loss and deduction included in the shareholder's federal adjusted gross
income and any reductions for taxes (as described in paragraphs two and
three of subsection (f) of section thirteen hundred sixty-six of the
internal revenue code) shall be adjusted in accordance with the
treatment provided in paragraph two or three of this subdivision.
(2) Pro rata allocation. Unless paragraph three of this subdivision
applies, an equal portion of each S corporation item shall be assigned
to each day of the S corporation's taxable year for federal income tax
purposes. The portion of each such item thereby assigned to the S short
year shall be treated as an item of a New York S corporation, and the
portion of each such item thereby assigned to the C short year shall be
treated as an item of an S corporation which is a New York C
corporation.
(3) Normal tax accounting. The portion of each S corporation item
assigned to the S short year and the C short year shall be determined
using normal tax accounting rules if:
(A) there is a sale or exchange of fifty percent or more of the stock
in such corporation during the New York S termination year or
(B) the corporation so elects, as provided in subparagraph (B) of
paragraph two of subsection (s) of section six hundred twelve of the tax
law.
(t) Related members expense add back and income exclusion.
(1) Definitions. (A) Related member or members. For purposes of this
subdivision, 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 state commissioner of taxation and 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 city
adjusted gross income, 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 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. (A) For the purpose of computing city
adjusted gross income, 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 paragraph two of this subdivision or other similar
provision in this title.
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