2006 New York Code - Deductions.

 
    § 11-621 Deductions. In computing net income there shall be allowed as
  deductions:
    1. All the ordinary and necessary expenses paid or incurred during the
  year  in  carrying  on  business,  including  a reasonable allowance for
  salaries or other compensation for personal services actually  rendered,
  and  including  rentals  or  other  payments  required  to  be made as a
  condition to the continued use or possession for  business  purposes  of
  property  to  which the taxpayer has not taken or is not taking title or
  in which such taxpayer has no equity.
    2. All interest paid or accrued during the year on indebtedness.
    3. Taxes, other than taxes on income or profits paid or accrued within
  the year, imposed, first, by the authority of the United States,  or  of
  any  of  its  possessions, or, second, by the authority of any state, or
  territory, or any county, school district, municipality, or other taxing
  subdivisions of any state or territory,  not  including  those  assessed
  against  local  benefits  of a kind tending to increase the value of the
  property  assessed,  or,  third,  by  the  authority  of   any   foreign
  government.
    4.  Losses  sustained  during  the  year  and  not  compensated for by
  insurance or otherwise, if incurred in  business;  unless  in  order  to
  clearly  reflect  the  income  the  losses  should in the opinion of the
  commissioner of finance be accounted for as of a  different  period.  No
  deduction  shall  be allowed for any loss claimed to have been sustained
  in any sale or other disposition of shares of stock or securities  where
  it appears that within thirty days before or after the date such sale or
  other  disposition  the  taxpayer  has  acquired substantially identical
  property, and the property so acquired is held by the taxpayer  for  any
  period  after  such sale or other disposition, unless such claim is made
  with respect to a transaction made in the ordinary course  of  business.
  If  such  acquisition  is  to  the  extent of part only of substantially
  identical property, only a proportionate  part  of  the  loss  shall  be
  disallowed.
    5.  Debts ascertained to be worthless and charged off within the year;
  or in the  discretion  of  the  commissioner  of  finance  a  reasonable
  addition  to  a  reserve  for  bad  debts. When satisfied that a debt is
  recoverable only in part, the commissioner of  finance  may  allow  such
  debt to be charged off in part.
    6.  A  reasonable  allowance  for  the  exhaustion,  wear  and tear of
  property  used  in  business,  including  a  reasonable  allowance   for
  obsolescence.  In  the case of any such property acquired before January
  first, nineteen hundred sixty-six, the amount of such deduction shall be
  equal to the deduction properly taken for such property in reporting the
  tax due pursuant to article nine-b of  the  tax  law.  With  respect  to
  property  such  as described in subdivision twelve of this section, this
  deduction may be computed and allowed as provided therein.
    7. If the gross income be derived from business carried on within  and
  without  the  city,  the  deductions  allowed  by  this section shall be
  allocated and determined on the basis of separate  accounting  for  each
  office  or  branch  or, at the election of the taxpayer, under rules and
  regulations to be prescribed by the commissioner of finance.
    8. In the case of any taxpayer who establishes or maintains a  pension
  trust  to  provide  for  the  payment  of  reasonable  pensions  to  its
  employees, there shall be allowed as a deduction  (in  addition  to  the
  contributions to such trust during the taxable year to cover the pension
  liability  accruing  during  the  year,  allowed  as  a  deduction under
  subdivision one of this section) a reasonable amount transferred or paid
  into such trust during the taxable year in excess of such contributions,
  but only if such amount (a) has not  theretofore  been  allowable  as  a


  deduction,  and  (b)  is apportioned in equal parts over a period of ten
  consecutive years beginning with the  year  in  which  the  transfer  or
  payment  is  made  or, under regulations of the commissioner of finance,
  covers  not  more  than  one-tenth  of  the total pension liability with
  respect to services rendered prior to such taxable year;  provided  that
  said  deduction  shall  be allowable only with respect to a taxable year
  (whether the year of the transfer or payment or a  subsequent  year)  of
  the  taxpayer  ending  within  or  with a taxable year of the trust with
  respect to which the trust, by reason of its purposes or activities,  is
  exempt from federal income tax.
    9.  The  amount of the amortizable bond premium on a bond for the year
  shall be allowed as a deduction as hereinafter  provided.  In  computing
  such  deduction:  (a) the amount of the bond premium shall be determined
  with reference to the amount of the basis (for determining loss on  sale
  or  exchange)  of such bond, and with reference to the amount payable on
  maturity or on earlier call date, with  adjustments  proper  to  reflect
  unamortized  bond premium with respect to the bond, for the period prior
  to July thirteenth, nineteen  hundred  sixty-six  with  respect  to  the
  taxpayer with respect to such bond, and (b) the amortizable bond premium
  of the year shall be the amount of the bond premium attributable to such
  year. The determination required in the preceding sentence shall be made
  in  accordance  with  the  method  of  amortizing bond premium regularly
  employed by the holder of such bond, if such method is  reasonable,  and
  in all other cases in accordance with regulations of the commissioner of
  finance  prescribing reasonable methods of amortizing bond premium. This
  subdivision shall  apply  only  if  the  taxpayer  shall  so  elect,  in
  accordance  with  regulations  of  the commissioner of finance, and such
  election shall be  made  separately  with  respect  to  (1)  bonds,  the
  interest  of  which  is  wholly  taxable, and (2) bonds, the interest of
  which is wholly or partially tax exempt, for purposes of the income  tax
  imposed by chapter one of the internal revenue code. If such election is
  made  with  respect to any bond of the taxpayer described in clauses one
  or two hereof, it shall also apply to all bonds in the same  class  held
  by the taxpayer at the beginning of the first year to which the election
  applies  and  to  all  such bonds thereafter acquired by it and shall be
  binding for all subsequent years with respect to all such bonds  of  the
  taxpayer,  unless upon the application by the taxpayer, the commissioner
  of finance permits the taxpayer,  subject  to  such  conditions  as  the
  commissioner  of  finance  deems  necessary, to revoke such election. As
  used in this subdivision the term "bond" means any bond, debenture, note
  or  certificate  or  other  evidence  of  indebtedness,  issued  by  any
  corporation  and  bearing interest (including any like obligation issued
  by a government or political subdivision thereof), with interest coupons
  or in registered form, but does not include any  such  obligation  which
  constitutes  stock  in trade of the taxpayer or any such obligation of a
  kind which would properly be included in the inventory of  the  taxpayer
  if  on hand at the close of the year, or any such obligation held by the
  taxpayer primarily for sale to customers in the ordinary course  of  its
  trade or business.
    10.  In  the  case of a savings bank and savings and loan association,
  amounts paid or  credited  to  depositors  or  holders  of  accounts  as
  interest  or  dividends  on  their deposits or withdrawable accounts, if
  such amounts are withdrawable on demand subject only to customary notice
  of intention to withdraw.
    11. A savings bank and savings and loan association may deduct in  any
  taxable year the amount of the repayment of any loan or advance from the
  mutual  savings  bank fund in computing its net income and the amount of


  interest or dividends subject to the minimum tax under subdivision three
  of section 11-612 of this part.
    12.  (a)  At the election of the taxpayer there shall be deducted from
  gross income, or if gross income is derived  from  business  carried  on
  within  and without this city, from the portion thereof allocated within
  the city, depreciation with respect to any property such as described in
  paragraph (b) of this subdivision, not exceeding twice the  depreciation
  allowed  with  respect  to  the  same  property  for  federal income tax
  purposes.
    (b) Such deduction shall be allowed  only  with  respect  to  tangible
  property   which   is   depreciable  pursuant  to  section  one  hundred
  sixty-seven of the internal revenue code, having a situs  in  this  city
  and  used  in the taxpayer's business, (i) constructed, reconstructed or
  erected  after  December  thirty-first,  nineteen  hundred   sixty-five,
  pursuant  to  a  contract  which was on or before December thirty-first,
  nineteen hundred sixty-seven, and at all times  thereafter,  binding  on
  the  taxpayer or, 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 which is
  properly attributable to such construction, reconstruction  or  erection
  after  December  thirty-first,  nineteen  hundred  sixty-five,  or  (ii)
  acquired  after  December  thirty-first,  nineteen  hundred  sixty-five,
  pursuant  to  a  contract which was, on or before December thirty-first,
  nineteen hundred sixty-seven, and at all times  thereafter,  binding  on
  the  taxpayer  or  pursuant  to  an  order  placed on or before December
  thirty-first, nineteen hundred sixty-seven, by purchase  as  defined  in
  section  one  hundred  seventy-nine (d) of the internal revenue code, if
  the original use of such property commenced with the taxpayer, commenced
  in this city and commenced after December thirty-first, nineteen hundred
  sixty-five, or (iii) acquired,  constructed,  reconstructed  or  erected
  subsequent  to  December  thirty-first, nineteen hundred sixty-seven, if
  such acquisition, construction, reconstruction or erection  is  pursuant
  to  a plan of the taxpayer which was in existence December thirty-first,
  nineteen hundred sixty-seven and not thereafter substantially  modified,
  and  such  acquisition,  construction,  reconstruction or erection would
  qualify under the rules in paragraph four, five or six of subsection (h)
  of section  forty-eight  of  the  internal  revenue  code  provided  all
  references  in  such  paragraphs four, five and six to the dates October
  nine, nineteen hundred  sixty-six  and  October  ten,  nineteen  hundred
  sixty-six  shall  be  read  as  December  thirty-first, nineteen hundred
  sixty-seven. A taxpayer shall be allowed a deduction under  clause  (i),
  (ii)  or  (iii) of this paragraph only if the tangible property shall be
  delivered or the  construction,  reconstruction  or  erection  shall  be
  completed   on   or   before  December  thirty-first,  nineteen  hundred
  sixty-nine, except in the case of tangible property which  is  acquired,
  constructed,  reconstructed or erected pursuant to a contract which was,
  on or before December thirty-first, nineteen hundred sixty-seven, and at
  all times thereafter, binding on the taxpayer.  Provided,  however,  for
  any  taxable  year beginning on or after January first, nineteen hundred
  sixty-eight, a taxpayer shall not be allowed a deduction under paragraph
  (a) hereof with respect to tangible personal property leased  by  it  to
  any other person or corporation. For purposes of the preceding sentence,
  any  contract or agreement to lease or rent or for a license to use such
  property shall be considered a lease. With respect to property which the
  taxpayer uses itself for purposes other  than  leasing  for  part  of  a
  taxable year and leases for a part of a taxable year, the taxpayer shall


  be  allowed a deduction under paragraph (a) in proportion to the part of
  the year it uses such property.
    (c)  If  the deduction allowable for any taxable year pursuant to this
  subdivision exceeds the  taxpayer's  net  income  computed  without  the
  allowance  of  such deduction and without the allowance of any deduction
  pursuant to subdivision six of this section with references to the  same
  property,  the  excess may be carried over to the following taxable year
  or years and may be deducted in computing net income for  such  year  or
  years.
    (d)  In  any  taxable year when property is sold or otherwise disposed
  of, with respect to which a deduction has been allowed pursuant to  this
  subdivision, the gain or loss thereon shall be computed by adjusting the
  basis  of such property to reflect the deductions so allowed, and if the
  taxpayer's gross income is derived from business carried on both  within
  and  without  the  city,  shall  be allocated within the city. Provided,
  however, that no loss shall be  recognized  for  the  purposes  of  this
  paragraph  with  respect to a sale or other disposition of property to a
  person whose acquisition thereof is not a purchase as defined in section
  one hundred seventy-nine (d) of the internal revenue code.