There is a newer version of the New York Consolidated Laws
2006 New York Code - Definitions.
§ 208. Definitions. As used in this article: 1. The term "corporation"
includes (a) an association within the meaning of paragraph three of
subsection (a) of section seventy-seven hundred one of the internal
revenue code (including a limited liability company), (b) a joint-stock
company or association, (c) a publicly traded partnership treated as a
corporation for purposes of the internal revenue code pursuant to
section seventy-seven hundred four thereof and (d) any business
conducted by a trustee or trustees wherein interest or ownership is
evidenced by certificate or other written instrument. "DISC" and "former
DISC" mean any corporation which meets the requirements of subsection
(a) of section nine hundred ninety-two of the internal revenue code;
1-A. The term "New York S corporation" means, with respect to any
taxable year, a corporation subject to tax under this article for which
an election is in effect pursuant to subsection (a) of section six
hundred sixty of this chapter for such year, any such year shall be
denominated a "New York S year", and such election shall be denominated
a "New York S election". The term "New York C corporation" means, with
respect to any taxable year, a corporation subject to tax under this
article which is not a New York S corporation, and any such year shall
be denominated a "New York C year". The term "termination year" means
any taxable year of a corporation during which the New York S election
terminates on a day other than the first day of such year. The portion
of the taxable year ending before the first day for which such
termination is effective shall be denominated the "S short year", and
the portion of such year beginning on such first day shall be
denominated the "C short year". The term "New York S termination year"
means any termination year which is not also an S termination year for
federal purposes.
1-B. The term "QSSS" means a corporation which is a qualified
subchapter S subsidiary as defined in subparagraph (B) of paragraph
three of subsection (b) of section thirteen hundred sixty-one of the
internal revenue code. The term "exempt QSSS" means a QSSS exempt from
tax under this article as provided in paragraph (k) of subdivision nine
of this section, or a QSSS described in subclause (i) of clause (B) of
subparagraph two of paragraph (k) of subdivision nine of this section,
wherein the parent corporation of the QSSS is subject to tax under this
article, and the assets, liabilities, income and deductions of the QSSS
are treated as the assets, liabilities, income and deductions of the
parent corporation. Where a QSSS is an exempt QSSS, then for all
purposes under this article:
(a) the assets, liabilities, income, deductions, property, payroll,
receipts, capital, credits, and all other tax attributes and elements of
economic activity of the QSSS shall be deemed to be those of the parent
corporation,
(b) the stocks, bonds and other securities issued by, and any
indebtedness from, the QSSS shall not be subsidiary, investment or
business capital of the parent corporation,
(c) transactions between the parent corporation and the QSSS,
including the payment of interest and dividends, shall not be taken into
account, and
(d) general executive officers of the QSSS shall be deemed to be
general executive officers of the parent corporation.
2. The term "taxpayer" means any corporation subject to tax under this
article;
3. The term "subsidiary" means a corporation of which over fifty
percent of the number of shares of stock entitling the holders thereof
to vote for the election of directors or trustees is owned by the
taxpayer;
* 4. The term "subsidiary capital" means investments in the stock of
subsidiaries and any indebtedness from subsidiaries, exclusive of
accounts receivable acquired in the ordinary course of trade or business
for services rendered or for sales of property held primarily for sale
to customers, whether or not evidenced by written instrument, on which
interest is not claimed and deducted by the subsidiary for purposes of
taxation under article nine-a, thirty-two or thirty-three of this
chapter, provided, however, that, in the discretion of the tax
commission, there shall be deducted from subsidiary capital any
liabilities payable by their terms on demand or within one year from the
date incurred, other than loans or advances outstanding for more than a
year as of any date during the year covered by the report, which are
attributable to subsidiary capital;
* NB Applies to taxable years prior to December 31, 1986
* 4. (a) The term "subsidiary capital" means investments in the stock
of subsidiaries and any indebtedness from subsidiaries, exclusive of
accounts receivable acquired in the ordinary course of trade or
business for services rendered or for sales of property held primarily
for sale to customers, whether or not evidenced by written instrument,
on which interest is not claimed and deducted by the subsidiary for
purposes of taxation under article nine-a, thirty-two or thirty-three of
this chapter, provided, however, that, in the discretion of the
commissioner of taxation and finance, there shall be deducted from
subsidiary capital any liabilities which are directly or indirectly
attributable to subsidiary capital;
(b) If, within eighteen months of a corporate acquisition wherein the
taxpayer is the acquiring person, the taxpayer sells or otherwise
disposes (including by redemption) of stock of a target corporation such
that immediately prior to such disposition the taxpayer owned more than
fifty percent, and immediately thereafter owned fifty percent or less of
the number of shares of stock entitling the holder thereof to vote for
the election of directors, then stock of the target corporation shall
not constitute subsidiary capital of the taxpayer for the entire taxable
year in which such disposition occurs.
(c) If, within eighteen months of a corporate acquisition wherein the
taxpayer is the acquiring corporation, the target corporation sells or
otherwise disposes of an asset or assets (excluding cash and assets
disposed of by such target corporation in the regular course of its
business) held by the target corporation on the acquisition date such
that immediately prior to such disposition such target corporation owns
more than fifty percent of the total of such assets held by the target
corporation on the acquisition date (by value, such value determined in
the manner in which assets are valued pursuant to subdivision two of
section two hundred ten of this chapter, whether or not the target
corporation is subject to this article) and immediately thereafter owns
fifty percent or less, then for the period starting on the first day of
the taxable year in which the disposition occurs and ending on the date
eighteen months after the date of such disposition the stock of such
target corporation shall not constitute subsidiary capital of the
taxpayer.
* NB Applies to taxable years beginning after December 31, 1986
* 4. The term "subsidiary capital" means investments in the stock of
subsidiaries and any indebtedness from subsidiaries, exclusive of
accounts receivable acquired in the ordinary course of trade or business
for services rendered or for sales of property held primarily for sale
to customers, whether or not evidenced by written instrument, on which
interest is not claimed and deducted by the subsidiary for purposes of
taxation under article nine-A, thirty-two or thirty-three of this
chapter, provided, however, that, in the discretion of the commissioner,
there shall be deducted from subsidiary capital any liabilities which
are directly or indirectly attributable to subsidiary capital.
* NB Applicable to taxable years beginning on or after January 1, 1997
* 5. The term "investment capital" means investments in stocks, bonds
and other securities, corporate and governmental, not held for sale to
customers in the regular course of business, exclusive of subsidiary
capital and stock issued by the taxpayer, provided, however, that, in
the discretion of the tax commission, there shall be deducted from
investment capital any liabilities payable by their terms on demand or
within one year from the date incurred, other than loans or advances
outstanding for more than a year as of any date during the year covered
by the report, which are attributable to investment capital;
* NB Applies to taxable years prior to December 31, 1986
* 5. The term "investment capital" means investments in stocks, bonds
and other securities, corporate and governmental, not held for sale to
customers in the regular course of business, exclusive of subsidiary
capital and stock issued by the taxpayer, provided, however, that, in
the discretion of the commissioner, there shall be deducted from
investment capital any liabilities which are directly or indirectly
attributable to investment capital; and provided, further, that
investment capital shall not include any such investments the income
from which is excluded from entire net income pursuant to the provisions
of paragraph (c-1) of subdivision nine of this section, and that
investment capital shall be computed without regard to liabilities
directly or indirectly attributable to such investments, but only if air
carriers organized in the United States and operating in the foreign
country or countries in which the taxpayer has its major base of
operations and in which it is organized, resident or headquartered (if
not in the same country as its major base of operations) are not subject
to any tax based on or measured by capital imposed by such foreign
country or countries or any political subdivision thereof, or if taxed,
are provided an exemption, equivalent to that provided for herein, from
any tax based on or measured by capital imposed by such foreign country
or countries and from any such tax imposed by any political subdivision
thereof;
* NB Applies to taxable years beginning after December 31, 1986
* 6. The term "investment income" means income, including capital
gains in excess of capital losses, from investment capital, to the
extent included in computing entire net income, less, (a) in the
discretion of the tax commission, any deductions allowable in computing
entire net income which are attributable to investment capital or
investment income, and (b) such portion of any net operating loss
deduction allowable in computing entire net income, as the investment
income, before such deduction, bears to entire net income, before such
deduction, provided, however, that in no case shall investment income
exceed entire net income;
* NB Applies to taxable years prior to December 31, 1986
* 6. The term "investment income" means the sum of (a) income,
including capital gains in excess of capital losses, from investment
capital, and (b) the amounts described in subparagraphs twelve, thirteen
and fourteen of paragraph (b) of subdivision nine of this section, to
the extent included in computing entire net income, less, (c) in the
discretion of the commissioner, any deductions allowable in computing
entire net income which are directly or indirectly attributable to
investment capital or investment income, and (d) such portion of any net
operating loss deduction allowable in computing entire net income, as
the investment income, before such deduction, bears to entire net
income, before such deduction, provided, however, that in no case shall
investment income exceed entire net income;
* NB Applies to taxable years beginning after December 31, 1986
* 6. The term "investment income" means income, including capital
gains in excess of capital losses, from investment capital, to the
extent included in computing entire net income, less, (a) in the
discretion of the commissioner, any deductions allowable in computing
entire net income which are directly or indirectly attributable to
investment capital or investment income, and (b) such portion of any net
operating loss deduction allowable in computing entire net income, as
the investment income, before such deduction, bears to entire net
income, before such deduction, provided, however, that in no case shall
investment income exceed entire net income;
* NB Applicable to taxable years beginning on or after January 1, 1997
* 7. The term "business capital" means all assets, other than
subsidiary capital, investment capital and stock issued by the taxpayer,
less liabilities not deducted from subsidiary or investment capital
which are payable by their terms on demand or within one year from the
date incurred, other than loans or advances outstanding for more than a
year as of any date during the year covered by the report, except that,
subject to the provisions of subdivision six of section two hundred ten
of this chapter, cash on hand and on deposit shall be treated as
investment capital or as business capital as the taxpayer may elect;
* NB Applies to taxable years prior to December 31, 1986
* 7. (a) The term "business capital" means all assets, other than
subsidiary capital, investment capital and stock issued by the taxpayer,
less liabilities not deducted from subsidiary or investment capital
except that cash on hand and on deposit shall be treated as investment
capital or as business capital as the taxpayer may elect.
(b) Provided, however, "business capital" shall not include assets to
the extent employed for the purpose of generating income which is
excluded from entire net income pursuant to the provisions of paragraph
(c-1) of subdivision nine of this section and shall be computed without
regard to liabilities directly or indirectly attributable to such
assets, but only if air carriers organized in the United States and
operating in the foreign country or countries in which the taxpayer has
its major base of operations and in which it is organized, resident or
headquartered (if not in the same country as its major base of
operations) are not subject to any tax based on or measured by capital
imposed by such foreign country or countries or any political
subdivision thereof, or if taxed, are provided an exemption, equivalent
to that provided for herein, from any tax based on or measured by
capital imposed by such foreign country or countries and from any such
tax imposed by any political subdivision thereof;
* NB Applies to taxable years beginning after December 31, 1986
8. The term "business income" means entire net income minus investment
income;
8-A. Provided, however, that with respect to a DISC or a former DISC,
the following provisions shall apply:
(a) investments in the stocks, bonds or other securities of a DISC or
any indebtedness from a DISC shall not be treated as either subsidiary
capital or investment capital under subdivisions four or five of this
section,
(b) any amounts deemed distributed from a DISC or a former DISC which
are taxable as dividends pursuant to subsection (b) of section nine
hundred ninety-five of the internal revenue code of nineteen hundred
fifty-four shall be treated as business income, except any such amounts
from a former DISC attributable to amounts includible in a taxpayer's
entire net income for a prior taxable year under subparagraph (B) of
paragraph (i) of subdivision nine of this section shall be excluded from
entire net income,
(c) any gain recognized for federal income tax purposes on the
disposition of stock in a DISC, and any gain recognized on the
disposition of stock in a former DISC, includible in gross income as a
dividend pursuant to subsection (c) of section nine hundred ninety-five
of the internal revenue code of nineteen hundred fifty-four, shall be
treated as business income, and
(d) except as provided in paragraph (i) of subdivision nine of this
section, any actual distribution from a DISC or a former DISC shall be
treated as business income except an actual distribution which for
federal income tax purposes is treated as made out of "other earnings
and profits" under section nine hundred ninety-six of the internal
revenue code of nineteen hundred fifty-four, in which case such actual
distribution shall be treated as either subsidiary income or investment
income under this article.
* 8-B. (a) The term "minimum taxable income" shall mean the entire net
income of the taxpayer for the taxable year:
(1) increased by the amount of the federal items of tax preference set
forth in section fifty-seven of the internal revenue code (with the
modifications set forth in paragraph (b) of this subdivision), which
items of tax preference shall have the same meaning and be computed in
the same manner as under section fifty-seven of the internal revenue
code,
(2) determined with the federal adjustments described in paragraph (c)
of this subdivision, which adjustments shall have the same meaning and
be computed in the same manner as under sections fifty-six and
fifty-eight of the internal revenue code,
(3) increased by the net operating loss deduction otherwise allowed
under paragraph (f) of subdivision nine of this section, and
(4) reduced, for taxable years beginning after nineteen hundred
ninety-three, by the alternative net operating loss deduction, as
defined in paragraph (d) of this subdivision.
(b) The federal items of tax preference referred to hereinabove shall
be modified by deducting "tax-exempt interest" and "accelerated
depreciation or amortization on certain property placed in service
before January 1, 1987", as determined under paragraphs five and seven
of subsection (a) of section fifty-seven of the internal revenue code.
(c) The adjustments referred to hereinabove shall be:
(1) "Depreciation" as determined under paragraph one of subsection (a)
of section fifty-six of the internal revenue code. For purposes of this
subparagraph, the depreciation item of adjustment provided for here
shall not include any amount attributable to property for which the tax
benefits of the accelerated cost recovery system are not available under
this article by reason of subparagraph ten of paragraph (b) of
subdivision nine of this section;
(2) "Mining exploration and development costs" as determined under
paragraph two of subsection (a) of section fifty-six of the internal
revenue code;
(3) "Treatment of certain long-term contracts" as determined under
paragraph three of subsection (a) of section fifty-six of the internal
revenue code;
(4) "Installment sales of certain property" as determined under
paragraph six of subsection (a) of section fifty-six of the internal
revenue code;
(5) "Circulation expenditures of personal holding companies" as
determined under subparagraph (C) of paragraph two of subsection (b) of
section fifty-six of the internal revenue code;
(6) "Merchant marine capital construction funds" as determined under
paragraph two of subsection (c) of section fifty-six of the internal
revenue code;
(7) "Disallowance of passive activity loss" as determined under
subsection (b) of section fifty-eight of the internal revenue code; and
(8) "Adjusted basis", as it appears in paragraph seven of subsection
(a) of section fifty-six of the internal revenue code, but without
taking into account the references therein to paragraph five of
subsection (a) of section fifty-six of the internal revenue code.
(d) The term "alternative net operating loss deduction" means the net
operating loss deduction allowed for the taxable year under paragraph
(f) of subdivision nine of this section, except as provided herein.
(1)(A) The net operating loss for any year beginning after nineteen
hundred eighty-nine which is included in determining such deduction
shall be determined with the adjustments provided in subparagraph two of
paragraph (a) of this subdivision, and shall be reduced by the items of
tax preference determined under subparagraph one of paragraph (a) of
this subdivision, attributable to such year. An item of tax preference
shall be taken into account only to the extent such item increased the
amount of the net operating loss for the taxable year under paragraph
(f) of subdivision nine of this section.
(B) In the case of loss years beginning before nineteen hundred
ninety, the amount of the net operating loss which may be carried over
to taxable years beginning after nineteen hundred eighty-nine shall be
equal to an amount which may be carried from the loss year to the first
taxable year of the taxpayer beginning after nineteen hundred
eighty-nine.
(2) In determining the amount of such deduction, loss carryforwards
and carrybacks shall, subject to the provisions of subparagraph five of
paragraph (f) of subdivision nine of this section, be computed in the
manner set forth in paragraph two of subsection (b) of section one
hundred seventy-two of the internal revenue code, except that, for the
reference therein to taxable income, there shall be substituted the
phrase "ninety percent of minimum taxable income determined without
regard to the alternative net operating loss deduction".
(3) The amount of such deduction shall not exceed ninety percent of
minimum taxable income determined without regard to such deduction,
provided, however, the term "ninety percent" shall be read as
"forty-five percent" with respect to taxable years beginning in nineteen
hundred ninety-four.
(e) The tax commission may, whenever necessary in order to properly
reflect the minimum taxable income of any taxpayer, determine the year
or period in which any item of income or deduction shall be included,
without regard to the method of accounting employed by the taxpayer.
(f) If the period covered by a report under this article is other than
the period covered by the report to the United States treasury
department, the minimum taxable income shall be appropriately modified
pursuant to regulations promulgated by the tax commission.
* NB Applies to taxable years beginning after December 31, 1986
9. * The term "entire net income" means total net income from all
sources, which shall be presumably the same as the entire taxable income
which the taxpayer is required to report to the United States treasury
department, or which the taxpayer would have been required to report, if
it had not made an election under subchapter s of chapter one of the
internal revenue code, except as hereinafter provided, and subject to
any modification required by paragraphs (d) and (e) of subdivision three
of section two hundred ten of this article.
* NB Applies to taxable years prior to December 31, 1986
* The term "entire net income" means total net income from all
sources, which shall be presumably the same as the entire taxable income
(but not alternative minimum taxable income),
(i) which the taxpayer is required to report to the United States
treasury department, or
(ii) which the taxpayer would have been required to report to the
United States treasury department if it had not made an election under
subchapter s of chapter one of the internal revenue code, or
(iii) which the taxpayer, in the case of a corporation which is exempt
from federal income tax (other than the tax on unrelated business tax-
able income imposed under section 511 of the internal revenue code) but
which is subject to tax under this article, would have been required to
report to the United States treasury department but for such exemption,
except as hereinafter provided, and subject to any modification required
by paragraphs (d) and (e) of subdivision three of section two hundred
ten of this article.
* NB Applies to taxable years beginning after December 31, 1986
(a) Entire net income shall not include:
(1) income, gains and losses from subsidiary capital which do not
include the amount of a recovery in respect of any war loss except for
such amounts from a former DISC which are treated as business income
under subdivision eight-A of this section,
* (2) fifty percent of dividends (A) other than from subsidiaries, and
(B) other than amounts treated as business income under subdivision
eight-A of this section, on shares of stock which conform to the
requirements of subsection (c) of section two hundred forty-six of the
internal revenue code.
* NB Applicable to taxable years beginning on or after January 1, 2000
(3) bona fide gifts,
(4) income and deductions with respect to amounts received from school
districts and from corporations and associations, organized and operated
exclusively for religious, charitable or educational purposes, no part
of the net earnings of which inures to the benefit of any private
shareholder or individual, for the operation of school buses,
(5) (i) any refund or credit of a tax imposed under this article or
article thirty-two of this chapter, for which tax no exclusion or
deduction was allowed in determining the taxpayer's entire net income
under this article or such article thirty-two for any prior year, (ii) a
refund or credit of general corporation tax allowed by subdivision
eleven of section 11-604 of the administrative code of the city of New
York, or (iii) any refund or credit of a tax imposed under sections one
hundred eighty-three, one hundred eighty-three-a, one hundred
eighty-four or one hundred eighty-four-a of this chapter, and
(6) any amount treated as dividends pursuant to section seventy-eight
of the internal revenue code and not otherwise deductible under
subparagraphs one and two of this paragraph;
(7) that portion of wages and salaries paid or incurred for the
taxable year for which a deduction is not allowed pursuant to the
provisions of section two hundred eighty-C of the internal revenue code.
(8) in the case of a taxpayer who is separately or as a partner of a
partnership doing an insurance business as a member of the New York
insurance exchange described in section six thousand two hundred one of
the insurance law, any item of income, gain, loss or deduction of such
business which is the taxpayer's distributive or pro rata share for
federal income tax purposes or which the taxpayer is required to take
into account separately for federal income tax purposes.
(9) for taxable years beginning after December thirty-first, nineteen
hundred eighty-one, except with respect to property which is a qualified
mass commuting vehicle described in subparagraph (D) of paragraph eight
of subsection (f) of section one hundred sixty-eight of the internal
revenue code (relating to qualified mass commuting vehicles) and
property of a taxpayer principally engaged in the conduct of aviation
(other than air freight forwarders acting as principal and like indirect
air carriers) which is placed in service before taxable years beginning
in nineteen hundred eighty-nine, any amount which is included in the
taxpayer's federal taxable income solely as a result of an election made
pursuant to the provisions of such paragraph eight as it was in effect
for agreements entered into prior to January first, nineteen hundred
eighty-four;
(10) for taxable years beginning after December thirty-first, nineteen
hundred eighty-one, except with respect to property which is a qualified
mass commuting vehicle described in subparagraph (D) of paragraph eight
of subsection (f) of section one hundred sixty-eight of the internal
revenue code (relating to qualified mass commuting vehicles) and
property of a taxpayer principally engaged in the conduct of aviation
(other than air freight forwarders acting as principal and like indirect
air carriers) which is placed in service before taxable years beginning
in nineteen hundred eighty-nine, any amount which the taxpayer could
have excluded from federal taxable income had it not made the election
provided for in such paragraph eight as it was in effect for agreements
entered into prior to January first, nineteen hundred eighty-four;
(11) the amount deductible pursuant to paragraph (j) of this
subdivision; and
* (12) upon the disposition of recovery property to which paragraph
(j) of this subdivision applies, the amount, if any, by which the
aggregate of the amounts described in subparagraph ten of paragraph (b)
of this subdivision attributable to such property exceeds the aggregate
of the amounts described in paragraph (j) of this subdivision
attributable to such property.
* NB Does not apply to property to which the amendments made by
section two hundred one of Public Law 99-514 apply.
* (12) upon the disposition of property to which paragraph (j) of this
subdivision applies, the amount, if any, by which the aggregate of the
amounts described in subparagraph ten of paragraph (b) of this
subdivision attributable to such property exceeds the aggregate of the
amounts described in paragraph (j) of this subdivision attributable to
such property; and
* NB Applies to property to which the amendments made by section two
hundred one of Public Law 99-514 apply.
(13) if the added tax provided for in either (i) former subdivision
two of section one hundred eighty-two of this chapter (relating to real
estate corporations) or (ii) former subdivision one-a of section two
hundred nine of this chapter (relating to real estate corporations) has
been imposed upon the taxpayer, any income which has been used in
computing such tax.
(14) The amount deductible pursuant to paragraph (l) of this
subsection.
(15) In the case of an attorney-in-fact, with respect to which a
mutual insurance company, which is an interinsurer or a reciprocal
insurer and is subject to tax under subdivision (a) of section fifteen
hundred ten of this chapter, has made the election provided for under
section eight hundred thirty-five of the Internal Revenue Code, an
amount equal to the excess, if any, of the amounts paid or incurred by
such interinsurer or reciprocal insurer in the taxable year to the
attorney-in-fact over the deduction allowed to such interinsurer or
reciprocal insurer with respect to amounts paid or incurred in the
taxable year to the attorney-in-fact under subsection (b) of such
section eight hundred thirty-five of the Internal Revenue Code.
(16) In the case of a taxpayer subject to the modification provided by
subparagraph sixteen of paragraph (b) of this subdivision, the amount
required to be recaptured pursuant to subsection (d) of section 179 of
the internal revenue code with respect to property upon which such
modification was based.
(17) for taxable years beginning after December thirty-first, two
thousand two, the amount deductible pursuant to paragraph (o) of this
subdivision.
(b) Entire net income shall be determined without the exclusion,
deduction or credit of:
(1) the amount of any specific exemption or credit allowed in any law
of the United States imposing any tax on or measured by the income of
corporations,
(2) any part of any income from dividends or interest on any kind of
stock, securities or indebtedness, except as provided in clauses (1) and
(2) of paragraph (a) hereof,
(3) taxes on or measured by profits or income paid or accrued to the
United States, any of its possessions or to any foreign country,
including taxes in lieu of any of the foregoing taxes otherwise
generally imposed by any foreign country or by any possession of the
United States,
* (3-a) taxes on or measured by profits or income, or which include
profits or income as a measure, paid or accrued to any other state of
the United States, or any political subdivision thereof, or to the
District of Columbia, including taxes expressly in lieu of any of the
foregoing taxes otherwise generally imposed by any other state of the
United States, or any political subdivision thereof, or the District of
Columbia;
* NB Applies to taxable years beginning after December 31, 1986
* (4) taxes imposed under this article, article thirteen-A and
sections one hundred eighty-two, one hundred eighty-two-a and one
hundred eighty-two-b of this chapter,
* NB Applies to taxable years prior to December 31, 1986
* (4) taxes imposed under this article and article thirty-two and
sections one hundred eighty-three, one hundred eighty-three-a, one
hundred eighty-four and one hundred eighty-four-a of this chapter,
* NB Applies to taxable years beginning after December 31, 1986
(4-a)(A) the entire amount allowable as an exclusion or deduction for
stock transfer taxes imposed by article twelve of this chapter in
determining the entire taxable income which the taxpayer is required to
report to the United States treasury department but only to the extent
that such taxes are incurred and paid in market making transactions, (B)
in those instances where a credit for the special additional mortgage
recording tax credit is allowed under paragraph (a) of subdivision
seventeen of section two hundred ten of this article, the amount allowed
as an exclusion or deduction for the special additional mortgage
recording tax imposed by subdivision one-a of section two hundred
fifty-three of this chapter in determining the entire taxable income
which the taxpayer is required to report to the United States treasury
department, and (C) unless the credit allowed pursuant to subdivision
seventeen of section two hundred ten of this article is reflected in the
computation of the gain or loss so as to result in an increase in such
gain or decrease of 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 this chapter was
paid, the amount of the special additional mortgage recording tax
imposed by subdivision one-a of section two hundred fifty-three of this
chapter 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.
** (5) ninety per centum of interest on indebtedness directly or
indirectly owed to any stockholder or shareholder (including
subsidiaries of a corporate stockholder or shareholder), or members of
the immediate family of an individual stockholder or shareholder, owning
in the aggregate in excess of five per centum of the issued capital
stock of the taxpayer, except that such interest may, in any event, be
deducted
* (i) up to an amount not exceeding one thousand dollars,
* NB Applies to taxable years prior to December 31, 1986
* (i) up to an amount not exceeding ten thousand dollars,
* NB Applies to taxable years beginning after December 31, 1986 but
before January 1, 1989
(ii) in full to the extent that it relates to bonds or other evidences
of indebtedness issued, with stock, pursuant to a bona fide plan of
reorganization, to persons, who, prior to such reorganization, were bona
fide creditors of the corporation or its predecessors, but were not
stockholders or shareholders thereof,
(iii) in full where the investment allocation percentage is applied to
entire net income, and (iv) in full to the extent that it is paid to a
federally licensed small business investment company;
** NB Subparagraph (5) repealed for taxable years beginning on or
after January 1, 1989
* (6) in the discretion of the tax commission, any amount of interest
directly or indirectly and any other amount directly attributable as a
carrying charge or otherwise to subsidiary capital or to income, gains
or losses from subsidiary capital.
* NB Applies to taxable years prior to December 31, 1986
* (6) in the discretion of the tax commission, any amount of interest
directly or indirectly and any other amount directly or indirectly
attributable as a carrying charge or otherwise to subsidiary capital or
to income, gains or losses from subsidiary capital.
* NB Applies to taxable years beginning after December 31, 1986
* (6-a) (A) Five percent of the amount of interest paid or accrued by
a taxpayer during the taxable year (to the extent deducted in the
computation of entire net income without regard to this subparagraph),
provided, however, such amount shall not exceed the limitation amount.
The limitation amount shall be computed as the product of two factors.
The first of these factors shall be the taxpayer's total interest
deducted in the computation of entire net income without regard to this
subparagraph. The second factor shall be a fraction. The numerator of
such fraction is the sum of: in the case of subclause one hereof, the
taxpayer's total cost of any target corporation or corporations acquired
in a corporate acquisition during the taxable year or in the three
immediately preceding taxable years; in the case of subclause two
hereof, the value of the assets acquired during the taxable year or in
the three immediately preceding taxable years, but only if such
acquisition took place on or after the effective date of this
subparagraph; and in the case of subclause three hereof, the total
business, investment and subsidiary capital of target corporations which
were constituent corporations in corporate mergers or corporate
consolidations during the taxable year or in the three immediately
preceding taxable years. For purposes of the preceding sentence there
shall be included only: the cost of target corporations acquired in a
taxable year with respect to which none of the conditions set forth in
clause (B) of this subparagraph are satisfied; the value of assets
acquired in an asset acquisition taking place during such a year; and
the total business, investment and subsidiary capital of target
corporations which are constituent corporations in corporate mergers and
corporate consolidations taking place in such a year. The denominator of
the fraction is the taxpayer's average total debt for the taxable year.
This subparagraph shall only apply where the taxpayer during the taxable
year or within the three immediately preceding taxable years:
(1) was an acquiring person in a corporate acquisition and the value
based on cost of the taxpayer's total interest (at any time during the
year in which such acquisition occurred) in any target corporation so
acquired exceeds five million dollars;
(2) has acquired (i) all or substantially all of the assets of another
corporation (other than assets disposed of in the usual or regular
course of business actually conducted by such corporation) pursuant to a
vote by the shareholders of such corporation pursuant to section nine
hundred nine of the business corporation law or any similar statute of
any other state or foreign nation, or (ii) in the absence of such a
statutory requirement, an asset of another corporation such that
immediately prior to the acquisition date the taxpayer owned less than
eighty percent of the assets of such other corporation (as of the date
eighteen months prior to such acquisition date) and immediately
thereafter owned eighty percent or more of such assets (other than
assets disposed of by such other corporation in the usual or regular
course of business actually conducted by such corporation) but (iii)
only where the value of the assets (valued at cost) so acquired is in
excess of five million dollars and only where such acquisition occurred
on or after the effective date of this subparagraph;
(3) was a surviving corporation with respect to a corporate merger or
a consolidated corporation with respect to a corporate consolidation,
where the total business, investment and subsidiary capital (computed
pursuant to subdivision two of section two hundred ten whether or not
subject to this article), of any target corporation immediately prior to
such merger or consolidation exceeded five million dollars; or
(4) is a member of an affiliated group which includes a corporation
described in subclause one, two or three of this clause.
(B) This subparagraph shall not apply if the taxpayer can demonstrate
that:
(1) the ratio of average aggregate debt to average aggregate equity,
for the taxable year in which one or more of the events described in
subclause one, two or three of clause (A) of this subparagraph occurred,
does not increase by more than one hundred percent over such ratio for
the immediately preceding taxable year, or
(2) the ratio of average aggregate debt to average aggregate assets,
for the taxable year in which one or more of the events described in
subclause one, two or three of clause (A) of this subparagraph occurred,
does not increase by more than sixty percent over such ratio for the
immediately preceding taxable year, or
(3) where the taxpayer is not a member of an affiliated group, the
total of the taxpayer's interest paid or accrued during the taxable year
is less than one million dollars, or
(4) where the taxpayer is a member of an affiliated group, the sum of
the interest paid or accrued by the taxpayer during a taxable year and
the interest paid or accrued by each member of the affiliated group
during its taxable year ending within the taxpayer's taxable year, is
less than one million dollars.
(C) For purposes of this subparagraph:
(1) Average aggregate debt for a given taxable year means: (i) In the
case of an event described in subclause one or two of clause (A) of this
subparagraph, the sum of (I) the average debt of the taxpayer plus (II)
the average debt of the target corporation (unless the target
corporation is a member of an affiliated group which includes the
taxpayer). In computing average aggregate debt, intercompany debt shall
be eliminated.
(ii) In the case of an event described in subclause three of clause
(A) of this subparagraph, (I) the average debt of the taxpayer plus (II)
the sum of the average debt of each of the constituent corporations. In
computing aggregate debt, intercompany debt shall be eliminated.
(2) Average aggregate equity for a given taxable year means: (i) In
the case of an event described in subclause one or two of clause (A) of
this subparagraph, the sum of (I) the average equity of the taxpayer
plus (II) the average equity of the target corporation (unless the
target corporation is a member of an affiliated group which includes the
taxpayer). In computing average aggregate equity, intercompany equity
shall be eliminated.
(ii) In the case of an event described in subclause three of clause
(A) of this subparagraph, the sum of (I) the average equity of the
taxpayer plus (II) the sum of the average equity of each of the
constituent corporations. In computing average aggregate equity,
intercompany equity shall be eliminated.
(3) Average aggregate assets for a given taxable year means: (i) In
the case of an event described in subclause one or two of clause (A) of
this subparagraph, the sum of (I) the average assets of the taxpayer
plus (II) the average assets of the target corporation (unless the
target corporation is a member of an affiliated group which includes the
taxpayer). In computing average aggregate assets, intercompany assets
shall be eliminated.
(ii) In the case of an event described in subclause three of clause
(A) of this subparagraph, the sum of (I) the average assets of the
taxpayer plus (II) the sum of the average assets of each of the
constituent corporations. In computing average aggregate assets,
intercompany assets shall be eliminated.
(4) The value of assets shall be the value shown on the books and
records of a corporation using the method of accounting regularly used
by the corporation.
(5) (i) For purposes of subclause one, two and three of this clause,
where the taxpayer is a member of an affiliated group, all members of
the affiliated group shall be treated in the aggregate as the taxpayer.
(ii) Where in applying clauses one, two and three of this clause to a
year in which one or more of the events described in subclause one, two
or three of clause (A) of this subparagraph occurred, the ratio is
determined for an affiliated group, then the ratio for the immediately
preceding taxable year shall be determined for a group comprised of the
corporations which were members of such affiliated group.
(6) The term affiliated group shall have the meaning ascribed thereto
in section 1504 of the internal revenue code, with the following
exceptions.
(i) References to "at least eighty percent" in such section 1504 shall
be read as "more than fifty percent".
(ii) Such section 1504 shall be read without regard to the exclusion
of foreign corporations in section 1504(b)(3) (except that the debt,
equity and assets of such foreign corporations shall be included only to
the extent that they are effectively connected with the conduct of a
trade of business within the United States).
(iii) Such section 1504 shall be read without regard to the exclusion
provided for in section 1504(b)(4).
(7) For purposes of this subparagraph, in the case of a corporate
consolidation, references to the taxable year in which the corporate
consolidation occurs shall be deemed to be references to the first
taxable year of the consolidated corporation.
* NB Repealed for taxable years beginning on or after January 1, 1997
(7) in the case of a taxpayer who is separately or as a partner of a
partnership doing an insurance business as a member of the New York
insurance exchange described in section six thousand two hundred one of
the insurance law, such taxpayer's distributive or pro rata share of the
allocated entire net income of such business as determined under
sections fifteen hundred three and fifteen hundred four of this chapter,
provided however, in the event such allocated entire net income is a
loss, such taxpayer's distributive or pro rata share of such loss shall
not be subtracted from federal taxable income in computing entire net
income under this subdivision.
(8) for taxable years beginning after December thirty-first, nineteen
hundred eighty-one, except with respect to property which is a qualified
mass commuting vehicle described in subparagraph (D) of paragraph eight
of subsection (f) of section one hundred sixty-eight of the internal
revenue code (relating to qualified mass commuting vehicles) and
property of a taxpayer principally engaged in the conduct of aviation
(other than air freight forwarders acting as principal and like indirect
air carriers) which is placed in service before taxable years beginning
in nineteen hundred eighty-nine, any amount which the taxpayer claimed
as a deduction in computing its federal taxable income solely as a
result of an election made pursuant to the provisions of such paragraph
eight as it was in effect for agreements entered into prior to January
first, nineteen hundred eighty-four;
(9) for taxable years beginning after December thirty-first, nineteen
hundred eighty-one, except with respect to property which is a qualified
mass commuting vehicle described in subparagraph (D) of paragraph eight
of subsection (f) of section one hundred sixty-eight of the internal
revenue code (relating to qualified mass commuting vehicles) and
property of a taxpayer principally engaged in the conduct of aviation
(other than air freight forwarders acting as principal and like indirect
air carriers) which is placed in service before taxable years beginning
in nineteen hundred eighty-nine, any amount which the taxpayer would
have been required to include in the computation of its federal taxable
income had it not made the election permitted pursuant to such paragraph
eight as it was in effect for agreements entered into prior to January
first, nineteen hundred eighty-four;
* (10) 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 two hundred one of Public Law 99-514 apply.
* (10) in the case of property placed in service in taxable years
beginning before nineteen hundred ninety-four, for taxable years
beginning after December thirty-first, nineteen hundred eighty-one,
except with respect to property subject to the provisions of section two
hundred eighty-F of the internal revenue code, property subject to the
provisions of section one hundred sixty-eight of the internal revenue
code which is placed in service in this state in taxable years beginning
after December thirty-first, nineteen hundred eighty-four and property
of a taxpayer principally engaged in the conduct of aviation (other than
air freight forwarders acting as principal and like indirect air
carriers) which is placed in service before taxable years beginning in
nineteen hundred eight-nine, 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 two
hundred one of Public Law 99-514 apply.
* (11) upon the disposition of recovery property to which paragraph
(j) of this subdivision applies, the amount, if any, by which the
aggregate of the amounts described in such paragraph (j) attributable to
such property exceeds the aggregate of the amounts described in
subparagraph ten of this paragraph attributable to such property.
* NB Does not apply to property to which the amendments made by
section two hundred one of Public Law 99-514 apply.
* (11) upon the disposition of property to which paragraph (j) of this
subdivision applies, the amount, if any, by which the aggregate of the
amounts described in such paragraph (j) attributable to such property
exceeds the aggregate of the amounts described in subparagraph ten of
this paragraph attributable to such property.
* NB Applies to property to which the amendments made by section two
hundred one of Public Law 99-514 apply.
* (12) dividends from a target corporation referred to in paragraph
(b) of subdivision four of this section which are received on or after
the acquisition date and prior to the first day of the taxable year in
which the dispostion described in such paragraph occurred.
* NB Repealed for taxable years beginning on or after January 1, 2000
* (13) (A) income (other than dividends) from a target corporation
described in paragraph (b) of subdivision four of this section which is
received during the period extending from the acquisition date to the
day immediately preceding the first day of the taxable year in which the
disposition described in such paragraph occurred, which was excluded
from entire net income pursuant to subparagraph one of paragraph (a) of
this subdivision or would have been so excluded but for the fact that
the taxpayer and the target corporation were included on a combined
report.
(B) gains and losses from subsidiary capital consisting of stock or
indebtedness of a target corporation referred to in paragraph (b) of
subdivision four of this section which arose during the period extending
from the acquisition date to the day immediately preceding the first day
of the taxable year in which the disposition described in such paragraph
occurred.
* NB Repealed for taxable years beginning on or after January 1, 2000
* (14) If, within eighteen months of a corporate acquisition wherein
the taxpayer is the acquiring corporation, the target corporation sells
or otherwise disposes of an asset or assets (excluding cash and assets
disposed of by such target corporation in the regular course of its
business) held by the target corporation on the acquisition date such
that immediately prior to such disposition such target corporation owns
more than fifty percent of the total of such assets held by the target
corporation on the acquisition date (by value, such value determined in
the manner in which assets are valued pursuant to subdivision two of
section two hundred ten of this chapter, whether or not a target
corporation is subject to this article) and immediately thereafter owns
fifty percent or less, dividends paid to the taxpayer by such target
corporation on or after the acquisition date and prior to the first day
of the taxable year in which such disposition occurred.
* NB Repealed for taxable years beginning on or after January 1, 2000
* (15) Real property taxes paid on qualified agricultural property and
deducted in determining federal taxable income, to the extent of the
amount of the agricultural property tax credit allowed under subdivision
twenty-two of section two hundred ten of this article.
* NB Applies to taxable years beginning on or after January 1, 1997
(16) In the case of a taxpayer which is not an eligible farmer as
defined in paragraph (b) of subdivision twenty-two of section two
hundred ten of this article, the amount of any deduction claimed
pursuant to section 179 of the internal revenue code with respect to a
sport utility vehicle which is not a passenger automobile as defined in
paragraph 5 of subsection (d) of section 280F of the internal revenue
code.
(17) for taxable years beginning after December thirty-first, two
thousand two, in the case of qualified property described in paragraph
two of subsection k of section 168 of the internal revenue code, other
than qualified resurgence zone property described in paragraph (q) of
this subdivision, and other than qualified New York Liberty Zone
property described in paragraph two of subsection b of section 1400L of
the internal revenue code (without regard to clause (i) of subparagraph
(C) of such paragraph), which was placed in service on or after June
first, two thousand three, the amount allowable as a deduction under
section 167 of the internal revenue code.
* (18) Premiums paid for environmental remediation insurance, as
defined in section twenty-three of this chapter, and deducted in
determining federal taxable income, to the extent of the amount of the
environmental remediation insurance credit allowed under such section
twenty-three and subdivision thirty-five of section two hundred ten of
this article.
* NB Applies to taxable years beginning on or after April 1, 2005
(c) Entire net income shall include income within and without the
United States;
(c-1)(1) Notwithstanding any other provision of this article, in the
case of a taxpayer which is a foreign air carrier holding a foreign air
carrier permit issued by the United States department of transportation
pursuant to section four hundred two of the federal aviation act of
nineteen hundred fifty-eight, as amended, and which is qualified under
subparagraph two of this paragraph, entire net income shall not include,
and shall be computed without the deduction of, amounts directly or
indirectly attributable to, (i) any income derived from the
international operation of aircraft as described in and subject to the
provisions of section eight hundred eighty-three of the internal revenue
code, (ii) income without the United States which is derived from the
operation of aircraft, and (iii) income without the United States which
is of a type described in subdivision (a) of section eight hundred
eighty-one of the internal revenue code except that it is derived from
sources without the United States. Entire net income shall include
income described in clauses (i), (ii) and (iii) of this subparagraph in
the case of taxpayers not described in the previous sentence.
(2) A taxpayer is qualified under this subparagraph if air carriers
organized in the United States and operating in the foreign country or
countries in which the taxpayer has its major base of operations and in
which it is organized, resident or headquartered (if not in the same
country as its major base of operations) are not subject to any income
tax or other tax based on or measured by income or receipts imposed by
such foreign country or countries or any political subdivision thereof,
or if so subject to such tax, are provided an exemption from such tax
equivalent to that provided for herein.
(c-2) Adjustments by qualified public utilities. (1) In the case of a
taxpayer which is a qualified public utility, entire net income shall be
computed with the adjustments set forth in this paragraph.
(2) Definitions. (A) Qualified public utility. The term "qualified
public utility" means a taxpayer which: (i) on December thirty-first,
nineteen hundred ninety-nine, was subject to the ratemaking supervision
of the state department of public service, and (ii) for the year ending
on December thirty-first, nineteen hundred ninety-nine, was subject to
tax under former section one hundred eighty-six of this chapter.
(B) Transition property. The term "transition property" means property
placed in service by the taxpayer before January first, two thousand,
for which a depreciation deduction is allowed under section one hundred
sixty-seven of the internal revenue code.
(3) Federal depreciation disallowed. With respect to transition
property, the deduction for federal income tax purposes for depreciation
shall not be allowed.
(4) New York depreciation. With respect to transition property, a
deduction shall be allowed for the depreciation expense shown on the
books and records of the taxpayer for the taxable year and determined in
accordance with generally accepted accounting principles.
(5) Regulatory assets. A deduction shall be allowed for amounts
recognized as expense on the books and records of the taxpayer for the
taxable year, which amounts were recognized as expense for federal
income tax purposes in a taxable year ending on or before December
thirty-first, nineteen hundred ninety-nine, where: (A) such amounts
represent expenditures which, when made, were charged to a deferred
debit account or similar asset account on the books and records of the
taxpayer, and where (B) the recognition of expense on the books and
records of the taxpayer is matched by revenue stemming from a procedure
or adjustment allowing the recovery of such expenditures, and where (C)
such revenue is recognized for federal income tax purposes in the
taxable year.
(6) Basis for gain or loss. (A) Recognition transactions. (i) General
rule - book basis. Except as provided in subclause (ii) of this clause,
where transition property is sold or otherwise disposed of in the
taxable year in a transaction of the type requiring recognition of gain
or loss for federal income tax purposes, the basis for determining the
amount of such gain or loss under this article shall be the cost of the
property less the accumulated depreciation on the property determined on
the books and records of the taxpayer in accordance with generally
accepted accounting principles.
(ii) Qualified gain - New York basis. Where a sale or disposition
described in subclause (i) of this clause results in recognition of gain
for federal income tax purposes, and where either (I) such recognition
occurs in a taxable year ending after nineteen hundred ninety-nine and
before two thousand ten, or (II) such recognition is with respect to a
nuclear electric generating facility, the basis for determining the
amount of such gain under this article shall be the cost of the property
less the aggregate of the New York depreciation deductions on the
property determined under subparagraph four of this paragraph.
(iii) No conversion of gain to loss. In the event that the basis
determined under subclause (ii) of this clause results in determination
of a loss on the sale or disposition of the property, no gain or loss
shall be recognized under this article with respect to such sale or
disposition.
(B) Nonrecognition transactions. (i) Carryover basis. (I) where
transition property is disposed of ("original disposition") in a
transaction of a type requiring deferral of recognition of gain or loss
for federal income tax purposes, and where (II) there is a subsequent
recognition of gain or loss for federal income tax purposes ("clause B
gain or loss"), the amount of which is determined by reference, in whole
or in part, to the basis of such transition property ("underlying
transition property"), then (III) the amount of such clause B gain or
loss under this article shall be adjusted as provided in subclause (ii)
or (iii) of this clause.
(ii) General rule - book basis adjustment. Except as provided in
subclause (iii) of this clause, the amount of clause B gain shall be
reduced, or the amount of clause B loss increased, by the amount by
which the book basis of the underlying transition property on the date
of original disposition (determined using the provisions of subclause
(i) of clause (A) of this subparagraph) exceeds the federal income tax
basis of such property on such date.
(iii) Qualified gain - New York basis adjustment. Where clause B gain
either (I) occurs in a taxable year ending after nineteen hundred
ninety-nine and before two thousand ten, or (II) is with respect to a
nuclear electric generating facility, the amount of such gain under this
article shall be reduced, but not below zero, by the amount by which the
New York basis of the underlying transition property on the date of
original disposition (determined using the provisions of subclause (ii)
of clause (A) of this subparagraph) exceeds the federal income tax basis
of such property on such date.
(iv) Application to replacement property and transferee taxpayers.
This clause shall apply whether the clause B gain or loss: (I) is with
respect to either transition property or depreciable property the basis
of which is determined by reference to transition property, or (II) is
recognized by either a qualified public utility or by a taxpayer which
is a transferee of transition property (whether or not such transferee
is a qualified public utility, notwithstanding subparagraph one of this
paragraph).
(c-3) Depreciation adjustments by qualified power producers and
pipeline companies. (1) In the case of a qualified taxpayer, entire net
income shall be computed with the depreciation adjustments set forth in
this paragraph.
(2) Definitions. (A) Qualified taxpayer. The term "qualified taxpayer"
means a qualified power producer or a qualified pipeline.
(B) Qualified power producer. The term "qualified power producer"
means a taxpayer which: (i) on December thirty-first, nineteen hundred
ninety-nine, was not subject to the ratemaking supervision of the state
department of public service, and (ii) for the year ending on December
thirty-first, nineteen hundred ninety-nine, was subject to tax under
former section one hundred eighty-six of this chapter on account of its
being principally engaged in the business of supplying electricity.
(C) Qualified pipeline. The term "qualified pipeline" means a taxpayer
which: (i) on December thirty-first, nineteen hundred ninety-nine, was
subject to the ratemaking supervision of either the federal energy
regulatory commission or the state department of public service, and
(ii) for the year ending on December thirty-first, nineteen hundred
ninety-nine, was subject to tax under sections one hundred eighty-three
and one hundred eighty-four of this chapter on account of its being
principally engaged in the business of pipeline transmission.
(D) Transition property. The term "transition property" means property
placed in service by a qualified taxpayer before January first, two
thousand, for which a depreciation deduction is allowed under section
one hundred sixty-seven of the internal revenue code.
(3) Federal depreciation disallowed. With respect to transition
property, the deduction for federal income tax purposes for depreciation
shall not be allowed.
(4) New York depreciation. With respect to transition property, a
deduction shall be allowed for the depreciation expense computed as
provided in this subparagraph. (A) All transition property shown on the
books and records of the taxpayer on January first, two thousand shall
be treated as a single asset placed in service on such date. The New
York basis for purposes of computing the depreciation deduction on such
single asset shall be the net book value of such transition property
determined on the first day of the federal taxable year ending in two
thousand (or on the date any such property is placed in service, if
later) adjusted as provided in clause (B) of this subparagraph.
(B) If transition property is sold or otherwise disposed of, the New
York basis of the single asset shall be reduced on the date of such sale
or disposition by the amount of the adjusted federal tax basis of such
property on such date.
(C) The New York depreciation deduction allowed for any taxable year
with respect to such single asset shall be computed using the
straight-line method, a twenty-year life, and a salvage value of zero.
(D) For purposes of this subparagraph, the term "net book value" means
cost reduced by accumulated depreciation shown on the books and records
of the taxpayer and determined, in the case of a qualified power
producer, in accordance with generally accepted accounting principles;
and in the case of a qualified pipeline, in accordance with the
taxpayer's regulatory reports filed with the federal energy regulatory
commission or state department of public service.
(d) The tax commission may, whenever necessary in order properly to
reflect the entire net income of any taxpayer, determine the year or
period in which any item of income or deduction shall be included,
without regard to the method of accounting employed by the taxpayer;
(e) The entire net income of any bridge commission created by act of
congress to construct a bridge across an international boundary means
its gross income less the expense of maintaining and operating its
properties, the annual interest upon its bonds and other obligations,
and the annual charge for the retirement of such bonds or obligations at
maturity;
(f) A net operating loss deduction shall be allowed which shall be
presumably the same as the net operating loss deduction allowed under
section one hundred seventy-two of the internal revenue code, or which
would have been allowed if the taxpayer had not made an election under
subchapter s of chapter one of the internal revenue code, except that in
every instance where such deduction is allowed under this article:
(1) any net operating loss included in determining such deduction
shall be adjusted to reflect the inclusions and exclusions from entire
net income required by paragraphs (a), (b) and (g) hereof,
(2) such deduction shall not include any net operating loss sustained
during any taxable year beginning prior to January first, nineteen
hundred sixty-one, or during any taxable year in which the taxpayer was
not subject to the tax imposed by this article,
* (2-a) such deduction, for a taxable year in which the taxpayer was a
target corporation in a subdivision seventeen corporate acquisition or
any subsequent taxable year, shall not include any net operating loss
sustained by the target corporation in its taxable year during which
such acquisition occurred or in any prior taxable year.
* NB Repealed for taxable years beginning on or after January 1, 1997
* (2-b) such deduction, for a taxable year in which the taxpayer was a
surviving corporation in a subdivision eighteen corporate merger or any
subsequent taxable year, shall not include any net operating loss
sustained by any target corporation in its taxable year during which
such merger occurred or in any prior taxable year. Where the target
corporation is merged into another corporation, its "taxable year during
which such merger occurred" means its taxable year ending immediately
prior to such merger.
* NB Repealed for taxable years beginning on or after January 1, 1997
* (2-c) such deduction, for a taxable year in which the taxpayer was a
consolidated corporation in a subdivision eighteen corporate
consolidation or any subsequent taxable year, shall not include any net
operating loss sustained by any target corporation in its taxable year
ending immediately prior to such consolidation or in any prior taxable
year.
* NB Repealed for taxable years beginning on or after January 1, 1997
(3) such deduction shall not exceed the deduction for the taxable year
allowed under section one hundred seventy-two of the internal revenue
code, or the deduction for the taxable year which would have been
allowed if the taxpayer had not made an election under subchapter s of
chapter one of the internal revenue code,
(4) in the case of a New York S corporation, such deduction shall not
include any net operating loss sustained during a New York C year or
during a New York S year beginning prior to nineteen hundred ninety, and
in the case of a New York C corporation, such deduction shall not
include any net operating loss sustained during a New York S year,
provided, however, a New York S year shall be treated as a taxable year
for purposes of determining the number of taxable years to which a net
operating loss may be carried back or carried forward, and
(5) the net operating loss deduction allowed under section one hundred
seventy-two of the internal revenue code shall for purposes of this
paragraph be determined as if the taxpayer had elected under such
section to relinquish the entire carryback period with respect to net
operating losses, except with respect to the first ten thousand dollars
of each of such losses, sustained during taxable years ending after June
thirtieth, nineteen hundred eighty-nine.
(g) For taxable years commencing prior to January first, nineteen
hundred eighty-seven, at the election of the taxpayer, a deduction shall
be allowed for expenditures paid or incurred during the taxable year for
the construction, reconstruction, erection or improvement of either
industrial waste treatment facilities or air pollution control
facilities, or, with respect to taxable years beginning on or after
January first, nineteen hundred seventy-seven and before January first,
nineteen hundred eighty-one, industrial waste treatment controlled
process facilities or air pollution controlled process facilities.
(1) (A) (1) The term "industrial waste treatment facilities" shall
mean facilities for the treatment, neutralization or stabilization of
industrial waste and other wastes (as the terms "industrial waste" and
"other wastes" are 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.
(2) The term "industrial waste treatment controlled process facility"
shall mean such portion of the cost of an industrial production facility
designed for the purpose of obviating the need for industrial waste
treatment facilities as defined in item one of this clause as shall
exceed the cost of an industrial production facility of equal production
capacity which if constructed would require industrial waste treatment
facilities to meet emission standards in compliance with the provisions
of the environmental conservation law and the codes, rules, regulations,
permits or orders issued pursuant thereto but only to the extent of the
cost of such industrial waste treatment facilities.
(B) (1) 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 department of
environmental conservation, 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. Such term shall
further include flue gas desulfurization equipment and attendant sludge
disposal facilities, fluidized bed boilers, precombustion coal cleaning
facilities or other facilities that conform with this subdivision and
which comply with the provisions of the state acid deposition control
act set forth in title nine of article nineteen of the environmental
conservation law.
(2) The term "air pollution controlled process facility" shall mean
such portion of the cost of an industrial production facility designed
for the purpose of obviating the need for air pollution control
facilities as defined in item one of this clause as shall exceed the
cost of an industrial production facility of equal productive capacity
which if constructed would require air pollution control facilities to
inert emission standards as established pursuant to title three of
article nineteen of the environmental conservation law but only to the
extent of the cost of such air pollution control facilities.
(2) However, such deduction shall be allowed only
(A) with respect to tangible property which is depreciable, pursuant
to section one hundred sixty-seven of the internal revenue code, having
a situs in 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, or which in the case of industrial waste
treatment controlled process facilities or air pollution controlled
process facilities is initiated on and after January first, nineteen
hundred seventy-seven, and
(B) on condition that such facilities have been certified by the state
commissioner of environmental conservation or his designated
representative, pursuant to section 19-0309 of the environmental
conservation law, as complying with applicable provisions of the
environmental conservation law, the public health law, the state
sanitary code and codes, rules, regulations, permits or orders issued
pursuant thereto, and
(C) on condition that entire net income for the taxable year and all
succeeding taxable years be computed without any deductions for such
expenditures or for depreciation or amortization of the same property
other than the deductions allowed by this paragraph (g), except to the
extent that the basis of the property may be attributable to factors
other than such expenditures, or in case a deduction is allowable
pursuant to this paragraph for only a part of such expenditures, on
condition that any deduction allowed for federal income tax purposes for
such expenditures or for depreciation or amortization of the same
property be proportionately reduced in computing entire net income for
the taxable year and all succeeding taxable years, and
(D) where the election provided for in paragraph (d) of subdivision
three of section two hundred ten of this chapter has not been exercised
in respect to the same property.
(3) (A) If expenditures in respect to an industrial waste treatment
facility, an air pollution control facility, an industrial waste
treatment controlled process facility or an air pollution controlled
process facility have been deducted as provided herein and if within ten
years from the end of the taxable year in which such deduction was
allowed such property or any part thereof is used for the primary
purpose of salvaging materials which are usable in the manufacturing
process or are marketable, the taxpayer shall report such change of use
in its report 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 any carryback or carryover year, and may
assess any additional tax resulting from such recomputation within the
time fixed by paragraph nine of subsection (c) of section ten hundred
eighty-three of this chapter.
(B) If a deduction is allowed as herein provided for expenditures paid
or incurred during any taxable year on the basis of a temporary
certificate of compliance issued pursuant to the environmental
conservation law and if the taxpayer fails to obtain a permanent
certificate of compliance upon completion of the facilities with respect
to which such temporary certificate was issued, the taxpayer shall
report such failure in its report for the taxable year during which such
facilities are completed, and the tax commission may recompute the tax
for the year or years for which such deduction was allowed and any
carryback or carryover year, and may assess any additional tax resulting
from in such recomputation within the time fixed by paragraph nine of
subsection (c) of section ten hundred eighty-three.
(C) If a deduction 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 subdivision three of 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 promulgated pursuant thereto, and for which a
deduction was allowed, as well as for any carryback or carryover year to
which such deduction was carried, and may assess any additional tax
resulting from such recomputation within the time fixed by paragraph
nine of subsection (c) of section ten hundred eighty-three.
(4) In any taxable year when property is sold or otherwise disposed
of, with respect to which a deduction has been allowed pursuant to this
paragraph, such deduction shall be disregarded in computing gain or
loss, and the gain or loss on the sale or other disposition of such
property shall be the gain or loss entering into the computation of
entire taxable income which the taxpayer is required to report to the
United States treasury department for such taxable year.
(h) If the period covered by a report under this article is other than
the period covered by the report to the United States treasury
department,
(1) except as provided in subparagraph two hereof, entire net income
shall be determined by multiplying the taxable income reported to such
department (as adjusted pursuant to the provisions of this article) by
the number of calendar months or major parts thereof covered by the
report under this article and dividing by the number of calendar months
or major parts thereof covered by the report to such department. If it
shall appear that such method of determining entire net income does not
properly reflect the taxpayer's income during the period covered by the
report under this article, the tax commission shall be authorized in its
discretion to determine such entire net income solely on the basis of
the taxpayer's income during the period covered by its report under this
article;
(2) in the case of a New York S termination year, an equal portion of
entire net income shall be assigned to each day of such year. The
portion of such entire net income thereby assigned to the S short year
and the C short year shall be included in the respective reports for the
S short year and the C short year under this article. However, where
paragraph three of subsection (s) of section six hundred twelve of this
chapter applies, the portion of such entire net income assigned to the S
short year and the C short year shall be determined under normal tax
accounting rules.
(i) With respect to a DISC which during any taxable year or reporting
year (1) received more than five percent of its gross sales from the
sale of inventory or other property which it purchased from its
stockholders, (2) received more than five percent of its gross rentals
from the rental of property which it purchased or rented from its
stockholders or (3) received more than five percent of its total
receipts other than sales and rentals from its stockholders, the
following provisions shall apply.
(A) For any taxable year in which sub-paragraph (B) of this paragraph
is in effect and not rendered invalid, a DISC meeting the above test
shall be exempt from all taxes imposed by this article.
(B) Supplemental to the provisions of subdivision five of section two
hundred eleven of this article, any taxpayer required to compute a tax
under this article, which during the taxable year being reported was a
stockholder in any DISC meeting the test prescribed in this paragraph,
shall for any taxable year ending after December thirty-first, nineteen
hundred seventy-one adjust each item of its receipts, expenses, assets
and liabilities, as otherwise computed under this article, by adding
thereto its attributable share of each such DISC's receipts, expenses,
assets and liabilities as reportable by each such DISC to the United
States Treasury Department for its annual reporting period ending during
the current taxable year of such taxpayer; provided, however, (1) that
all transactions between the taxpayer and each such DISC shall be
eliminated from the taxpayer's adjusted receipts, expenses, assets and
liabilities; (2) that the taxpayer's entire net income as otherwise
computed under this section, shall be reduced by subtracting the amount
of the deemed distribution of current income, if any, from each such
DISC already included in the entire net income of such taxpayer by
virtue of having been included in its entire taxable income for that
taxable year as reported to the United States Treasury Department; and
(3) that in the event this paragraph should be rendered invalid, all
DISC's and their stockholders taxable hereunder shall be taxed instead
under the remaining portions of this article.
* (j) 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, and provided a deduction has not been excluded from
entire net income pursuant to subparagraph eight of paragraph (b) of
this subdivision, a taxpayer shall be allowed with respect to recovery
property the depreciation deduction allowable under section one hundred
sixty-seven of the internal revenue code as such section would have
applied to property placed in service on December thirty-first, nineteen
hundred eighty.
* NB Does not apply to property to which the amendments made by
section two hundred one of Public Law 99-514 apply.
* (j) in the case of property placed in service in taxable years
beginning before nineteen hundred ninety-four, for taxable years
beginning after December thirty-first, nineteen hundred eighty-one,
except with respect to property subject to the provisions of section two
hundred eighty-F of the internal revenue code and property subject to
the provisions of section one hundred sixty-eight of the internal
revenue code which is placed in service in this state in taxable years
beginning after December thirty-first, nineteen hundred eighty-four, and
provided a deduction has not been excluded from entire net income
pursuant to subparagraph eight of paragraph (b) of this subdivision, a
taxpayer shall be allowed with respect to property which is subject to
the provisions of section one hundred sixty-eight of the internal
revenue code the depreciation deduction allowable under section one
hundred sixty-seven of the internal revenue code as such section would
have applied to property placed in service on December thirty-first,
nineteen hundred eighty. This paragraph shall not apply to property of a
taxpayer principally engaged in the conduct of aviation (other than air
freight forwarders acting as principal and like indirect air carriers)
which is placed in service before taxable years beginning in nineteen
hundred eighty-nine.
* NB Applies to property to which the amendments made by section two
hundred one of Public Law 99-514 apply.
(k) QSSS. (1) New York S corporation. In the case of a New York S
corporation which is the parent of a qualified subchapter S subsidiary
(QSSS) with respect to a taxable year:
(A) where the QSSS is not an excluded corporation,
(i) in determining the entire net income of such parent corporation,
all assets, liabilities, income and deductions of the QSSS shall be
treated as assets, liabilities, income and deductions of the parent
corporation, and
(ii) the QSSS shall be exempt from all taxes imposed by this article,
and
(B) where the QSSS is an excluded corporation, the entire net income
of the parent corporation shall be determined as if the federal QSSS
election had not been made.
(2) New York C corporation. In the case of a New York C corporation
which is the parent of a QSSS with respect to a taxable year:
(A) where the QSSS is a taxpayer,
(i) in determining the entire net income of such parent corporation,
all assets, liabilities, income and deductions of the QSSS shall be
treated as assets, liabilities, income and deductions of the parent
corporation, and
(ii) the QSSS shall be exempt from all taxes imposed by this article,
and
(B) where the QSSS is not a taxpayer,
(i) if the QSSS is not an excluded corporation, the parent corporation
may make a QSSS inclusion election to include all assets, liabilities,
income and deductions of the QSSS as assets, liabilities, income and
deductions of the parent corporation, and
(ii) in the absence of such election, or where the QSSS is an excluded
corporation, the entire net income of the parent corporation shall be
determined as if the federal QSSS election had not been made.
(3) Non-New York S corporation not excluded. In the case of an S
corporation which is not a taxpayer and not an excluded corporation, and
which is the parent of a QSSS which is a taxpayer, the shareholders of
the parent corporation shall be entitled to make the New York S election
under subsection (a) of section six hundred sixty of this chapter.
(A) For any taxable year for which such election is in effect, the
parent corporation shall be subject to tax under this article as a New
York S corporation, and the provisions of clause (A) of subparagraph one
of this paragraph shall apply.
(B) For any taxable year for which such election is not in effect, the
QSSS shall be a New York C corporation, and the entire net income of the
QSSS shall be determined as if the federal QSSS election had not been
made. For purposes of such determination, the taxable year of the parent
corporation shall constitute the taxable year of the QSSS, excluding,
however, any portion of such year during which the QSSS is not a
taxpayer.
(4) S corporation excluded. In the case of an S corporation which is
an excluded corporation and which is the parent of a QSSS which is a
taxpayer, the QSSS shall be a New York C corporation and the provisions
of clause (B) of subparagraph three of this paragraph shall apply.
(5) Excluded corporation. The term "excluded corporation" means a
corporation subject to tax under sections one hundred eighty-three
through one hundred eighty-six, inclusive, or article thirty-two or
thirty-three of this chapter, or a foreign corporation not taxable by
this state which, if it were taxable, would be subject to tax under any
of such sections or articles.
(6) Taxpayer. For purposes of this paragraph, the term "taxpayer"
means a parent corporation or QSSS subject to tax under this article,
determined without regard to the provisions of this paragraph.
(7) QSSS inclusion election. The election under subclause (i) of
clause (B) of subparagraph two of this paragraph shall be effective for
the taxable year for which made and for all succeeding taxable years of
the corporation until such election is terminated. An election or
termination shall be made on such form and in such manner as the
commissioner may prescribe by regulation or instruction.
(l) Emerging technology investment deferral. In the case of any sale
of a qualified emerging technologies investment held for more than
thirty-six months and with respect to which the taxpayer elects the
application of this paragraph, gain from such sale shall be recognized
only to the extent that the amount realized on such sale exceeds the
cost of any qualified emerging technologies investment purchased by the
taxpayer during the three hundred sixty-five-day period beginning on the
date of such sale, reduced by any portion of such cost previously taken
into account under this paragraph. For purposes of this paragraph the
following shall apply:
(1) A qualified investment is stock of a corporation or an interest,
other than as a creditor, in a partnership or limited liability company
that was acquired by the taxpayer as provided in Internal Revenue Code §
1202(c)(1)(B), except that the reference to the term "stock" in such
section shall be read as "investment," or by the taxpayer from a person
who had acquired such stock or interest in such a manner.
(2) A qualified emerging technology investment is a qualified
investment, that was held by the taxpayer for at least thirty-six
months, in a company defined in paragraph (c) of subdivision one of
section thirty-one hundred two-e of the public authorities law or an
investment in a partnership or limited liability company that is taxed
as a partnership to the extent that such partnership or limited
liability company invests in qualified emerging technology companies.
(3) For purposes of determining whether the nonrecognition of gain
under this subsection applies to a qualified emerging technologies
investment that is sold, the taxpayer's holding period for such
investment and the qualified emerging technologies investment that is
purchased shall be determined without regard to Internal Revenue Code §
1223.
(m) Amounts deferred. The amount deferred under paragraph (l) of this
subdivision shall be added to entire net income when the reinvestment in
the New York qualified emerging technology company which qualified a
taxpayer for such deferral is sold.
* (n) Qualified gas transportation contracts.
(1) Any tax paid under this article allocable to receipts attributable
to a "qualified gas transportation contract" shall be deemed to have
been paid under article nine of this chapter for all purposes of law for
taxable years commencing on or after January first, two thousand,
computed as hereinafter provided, if all of the following conditions are
met:
(i) For periods ending prior to January first, two thousand, the
taxpayer paid the franchise tax due under section one hundred
eighty-four of this chapter.
(ii) For the taxable year, all of the receipts from the pipeline
transportation of natural gas attributable to the taxpayer and included
in the taxpayer's entire net income (without regard to this paragraph)
are solely from the transportation of natural gas for wholesale
customers and commercial retail customers.
(iii) The taxpayer's franchise tax liability under this article for
the taxable year (computed without regard to this paragraph) is
determined under paragraph (a) of subdivision one of section two hundred
ten of this article, and such tax liability (without regard to this
paragraph) is greater than the liability the taxpayer would have
incurred under sections one hundred eighty-three and one hundred
eighty-four of this chapter (as such sections existed on December
thirty-first, nineteen hundred ninety-nine) based on the same taxable
period.
(iv) The taxpayer is a party to a "qualified gas transportation
contract," as defined herein.
(2) The provisions of this paragraph shall apply only for the taxable
years during which such qualified gas transportation contract is in full
force and effect, and shall apply only to the receipts of the taxpayer
less any expenses of the taxpayer (but not less than zero), during the
taxable year, to the extent included in entire net income, which are
attributable to any such qualified gas transportation contracts.
Provided, further, in any event, the characterization hereunder shall
expire and be of no further force and effect for taxable years
commencing on or after January first, two thousand fifteen.
(3) The term "qualified gas transportation contract" shall mean a
service agreement for the transportation of natural gas for an end-user
which is a qualified cogeneration facility with a rated capacity of one
thousand megawatts or more, which (i) was entered into before January
first, two thousand, and was in full force and effect and binding on the
parties thereto as of such date, (ii) as originally executed, was for a
term of at least twenty years, and (iii) the terms of which prohibit the
pass-through to such customer of the franchise tax imposed under this
article, while allowing the recovery of the gross earnings tax imposed
under section one hundred eighty-four of this chapter. A contract shall
not qualify as a qualified gas transportation contract if there is: (i)
any renewal or extension of an otherwise qualified gas transportation
contract occurring on or after January first, two thousand, or (ii) any
material amendment to, or supplementation of, an otherwise qualified gas
transportation contract on or after such date. Such renewal, extension,
or material amendment or supplementation shall have the same force and
effect of terminating the characterization hereunder as if the
qualifying contract had expired by its own terms.
* NB Deemed repealed for taxable years commencing on or after January
1, 2015
* (o) For taxable years beginning after December thirty-first, two
thousand two, in the case of qualified property described in paragraph
two of subsection k of section 168 of the internal revenue code, other
than qualified resurgence zone property described in paragraph (q) of
this subdivision, and other than qualified New York Liberty Zone
property described in paragraph two of subsection b of section 1400L of
the internal revenue code (without regard to clause (i) of subparagraph
(C) of such paragraph), which was placed in service on or after June
first, two thousand three, a taxpayer shall be allowed with respect to
such property the depreciation deduction allowable under section 167 of
the internal revenue code as such section would have applied to such
property had it been acquired by the taxpayer on September tenth, two
thousand one.
* NB There are 2 par (o)'s
* (o) Related members expense add back and income exclusion. (1)
Definitions. (A) Related member or members. For purposes of this
paragraph, the term related member or members means a person,
corporation, or other entity, including an entity that is treated as a
partnership or other pass-through vehicle for purposes of federal
taxation, whether such person, corporation or entity is a taxpayer or
not, where one such person, corporation, or entity, or set of related
persons, corporations or entities, directly or indirectly owns or
controls a controlling interest in another entity. Such entity or
entities may include all taxpayers under articles nine, nine-A,
thirteen, twenty-two, thirty-two, thirty-three or thirty-three-A of this
chapter.
(B) Controlling interest. A controlling interest shall mean (i) in the
case of a corporation, either thirty percent or more of the total
combined voting power of all classes of stock of such corporation, or
thirty percent or more of the capital, profits or beneficial interest in
such voting stock of such corporation, and (ii) in the case of a
partnership, association, trust or other entity, thirty percent or more
of the capital, profits or beneficial interest in such partnership,
association, trust or other entity.
(C) Royalty payments. Royalty payments are payments directly connected
to the acquisition, use, maintenance or management, ownership, sale,
exchange, or any other disposition of licenses, trademarks, copyrights,
trade names, trade dress, service marks, mask works, trade secrets,
patents and any other similar types of intangible assets as determined
by the commissioner, and includes amounts allowable as interest
deductions under section one hundred sixty-three of the internal revenue
code to the extent such amounts are directly or indirectly for, related
to or in connection with the acquisition, use, maintenance or
management, ownership, sale, exchange or disposition of such intangible
assets.
(D) Valid Business Purpose. A valid business purpose is one or more
business purposes, other than the avoidance or reduction of taxation,
which alone or in combination constitute the primary motivation for some
business activity or transaction, which activity or transaction changes
in a meaningful way, apart from tax effects, the economic position of
the taxpayer. The economic position of the taxpayer includes an increase
in the market share of the taxpayer, or the entry by the taxpayer into
new business markets.
(2) Royalty expense add backs. (A) For the purpose of computing entire
net income or other applicable taxable basis, a taxpayer must add back
royalty payments to a related member during the taxable year to the
extent deductible in calculating federal taxable income.
(B) The add back of royalty payments shall not be required if and to
the extent that such payments meet either of the following conditions:
(i) the related member during the same taxable year directly or
indirectly paid or incurred the amount to a person or entity that is not
a related member, and such transaction was done for a valid business
purpose and the payments are made at arm's length;
(ii) the royalty payments are paid or incurred to a related member
organized under the laws of a country other than the United States, are
subject to a comprehensive income tax treaty between such country and
the United States, and are taxed in such country at a tax rate at least
equal to that imposed by this state.
(3) Royalty income exclusions. For the purpose of computing entire net
income or other taxable basis, a taxpayer shall be allowed to deduct
royalty payments directly or indirectly received from a related member
during the taxable year to the extent included in the taxpayer's federal
taxable income unless such royalty payments would not be required to be
added back under subparagraph two of this paragraph or other similar
provision in this chapter.
* NB Applicable to taxable years beginning on or after January 1, 2003
* NB There are 2 par (o)'s
(p) For taxable years beginning after December thirty-first, two
thousand two, upon the disposition of property to which paragraph (o) of
this subdivision applies, the amount of any gain or loss includible in
entire net income shall be adjusted to reflect the inclusions and
exclusions from entire net income pursuant to subparagraph seventeen of
paragraph (a) and subparagraph seventeen of paragraph (b) of this
subdivision attributable to such property.
(q) For purposes of paragraphs (o) and (p) of this subdivision,
qualified resurgence zone property shall mean qualified property
described in paragraph two of subsection k of section 168 of the
internal revenue code substantially all of the use of which is in the
resurgence zone, as defined below, and is in the active conduct of a
trade or business by the taxpayer in such zone, and the original use of
which in the resurgence zone commences with the taxpayer after December
thirty-first, two thousand two. The resurgence zone shall mean the area
of New York county bounded on the south by a line running from the
intersection of the Hudson River with the Holland Tunnel, and running
thence east to Canal Street, then running along the centerline of Canal
Street to the intersection of the Bowery and Canal Street, running
thence in a southeasterly direction diagonally across Manhattan Bridge
Plaza, to the Manhattan Bridge and thence along the centerline of the
Manhattan Bridge to the point where the centerline of the Manhattan
Bridge would intersect with the easterly bank of the East River, and
bounded on the north by a line running from the intersection of the
Hudson River with the Holland Tunnel and running thence north along West
Avenue to the intersection of Clarkson Street then running east along
the centerline of Clarkson Street to the intersection of Washington
Avenue, then running south along the centerline of Washington Avenue to
the intersection of West Houston Street, then east along the centerline
of West Houston Street, then at the intersection of the Avenue of the
Americas continuing east along the centerline of East Houston Street to
the easterly bank of the East River.
10. The term "calendar year" means a period of twelve calendar months
(or any shorter period beginning on the date the taxpayer becomes
subject to the tax imposed by this article) ending on the thirty-first
day of December, provided the taxpayer keeps its books on the basis of
such period or on the basis of any period ending on any day other than
the last day of a calendar month, or provided the taxpayer does not keep
books, and includes, in case the taxpayer changes the period on the
basis of which it keeps its books from a fiscal year to a calendar year,
the period from the close of its last old fiscal year up to and
including the following December thirty-first. The term "fiscal year"
means a period of twelve calendar months (or any shorter period
beginning on the date the taxpayer becomes subject to the tax imposed by
this article) ending on the last day of any month other than December,
provided the taxpayer keeps its books on the basis of such period, and
includes, in case the taxpayer changes the period on the basis of which
it keeps it books from a calendar year to a fiscal year or from one
fiscal year to another fiscal year, the period from the close of its
last old calendar or fiscal year up to the date designated as the close
of its new fiscal year.
11. The term "tangible personal property" means corporeal personal
property, such as machinery, tools, implements, goods, wares and
merchandise, and does not mean money, deposits in banks, shares of
stock, bonds, notes, credits or evidences of an interest in property and
evidences of debt.
12. The term elected or appointed officer shall include the chairman,
president, vice-president, secretary, assistant secretary, treasurer,
assistant treasurer, comptroller, and also any other officer,
irrespective of his title, who is charged with and performs any of the
regular functions of any such officer, unless the total compensation of
such officer is derived exclusively from the receipt of commissions. A
director shall be considered an elected or appointed officer only if he
performs duties ordinarily performed by an officer.
* 13. A "corporate merger" means a procedure comprised of the merging
of two or more constituent corporations into a single corporation which
is one of the constituent corporations, under article nine of the
business corporation law, the corresponding statutes of other states
and/or the corresponding statutes of foreign nations. In the case of a
corporate merger, "acquiring person" means the constituent corporation
the stockholders of which, after the merger, own the largest proportion
of the total voting power in the surviving corporation, and "target
corporation" means all other constituent corporations. A corporate
merger does not include an excluded transaction as defined in
subdivision sixteen of this section or a procedure described hereinabove
which was completed prior to the effective date of this subdivision.
* NB Repealed for taxable years beginning on or after January 1, 1997
* 14. A "corporate consolidation" means a procedure comprised of the
consolidation of two or more corporations into a single corporation
which is a new corporation to be formed pursuant to the consolidation,
under article nine of the business corporation law, the corresponding
statutes of other states and/or the corresponding statutes of foreign
nations. In the case of a corporate consolidation, "acquiring person"
means the constituent corporation the stockholders of which, after the
consolidation, own the largest proportion of the total voting power in
the consolidated corporation, and "target corporation" means all other
constituent corporations. A corporate consolidation does not include an
excluded transaction as defined in subdivision sixteen of this section
or a procedure described hereinabove which was completed prior to the
effective date of this subdivision.
* NB Repealed for taxable years beginning on or after January 1, 1997
* 15. A "corporate acquisition" means the acquisition on an
"acquisition date" by purchase and/or otherwise (including redemption),
by a person (the "acquiring person"), as the term person is defined in
section 7701(a)(1) of the internal revenue code, of stock of a
corporation (the "target corporation"), such that immediately prior to
such acquisition such person owned fifty percent or less, and
immediately thereafter owned more than fifty percent of the total voting
power in the target corporation. A corporate acquisition does not
include an excluded transaction as defined in subdivision sixteen of
this section or an acquisition described hereinabove which occurred
prior to the effective date of this subdivision.
* NB Repealed for taxable years beginning on or after January 1, 1997
* 16. An "excluded transaction" means: (a) an acquisition (i) which
occurs solely by reason of a redemption of stock to the extent that such
redemption qualifies under section 303 of the internal revenue code;
(ii) where a corporation and the corporation acquiring it are members
of an affiliated group as defined in section 1504 of the internal
revenue code, except that the term "common parent corporation" shall be
deemed to mean any person, as defined in section 7701(a)(1) of the
internal revenue code, and except that references to "at least eighty
percent" in such section 1504 shall be read as "more than fifty
percent"; or
(iii) by a person, as defined in section 7701(a)(1) of the internal
revenue code, which is controlled by a majority of the employees of the
target corporation or which is a trust for the exclusive benefit of such
employees or their beneficiaries. Control in this context refers (1) in
the case of a corporation, to ownership of more than fifty percent of
the total voting power in such corporation, and (2) in the case of a
partnership, where the sum of the employees' interests in the
partnership, within the meaning of section 704(b) of the internal
revenue code, exceeds fifty percent;
(b) a merger or consolidation where all the constituent corporations
are members of an affiliated group as defined in section 1504 of the
internal revenue code, except that the term "common parent corporation"
shall be deemed to mean any person, as defined in section 7701 (a)(1) of
the internal revenue code, and except that references to "at least
eighty percent" in such section 1504 shall be read as "more than fifty
percent".
* NB Repealed for taxable years beginning on or after January 1, 1997
* 17. (a) A "subdivision seventeen corporate acquisition" means a
corporate acquisition wherein the taxpayer is the target corporation
and:
(1) where the ratio of average aggregate debt to average aggregate
equity, for the taxable year in which such acquisition occurred,
increases by more than one hundred percent over such ratio for the
immediately preceding taxable year, and (2) where the ratio of average
aggregate debt to average aggregate assets, for the taxable year in
which such acquisition occurred, increases by more than sixty percent
over such ratio for the immediately preceding taxable year, and
(3) where the total of the acquiring person's interest paid or accrued
during its taxable year in which such acquisition occurred is more than
one million dollars.
(b) For purposes of this subdivision:
(1) Average aggregate debt for a given taxable year means the sum of
(i) the average debt of the acquiring person plus (ii) the average debt
of the taxpayer (unless the taxpayer is a member of an affiliated group
which includes the acquiring person). In computing average aggregate
debt, intercompany debt shall be eliminated.
(2) Average aggregate equity for a given taxable year means the sum of
(i) the average equity of the acquiring person plus (ii) the average
equity of the taxpayer (unless the taxpayer is a member of an affiliated
group which includes the acquiring person). In computing average
aggregate equity, intercompany equity shall be eliminated.
(3) Average aggregate assets for a given taxable year means the sum of
(i) the average assets of the acquiring person plus (ii) the average
assets of the taxpayer (unless the taxpayer is a member of an affiliated
group which includes the acquiring person). In computing average
aggregate assets, intercompany assets shall be eliminated.
(4) The value of assets shall be the value shown on the books and
records of a corporation using the method of accounting regularly used
by the corporation.
(5) In any case in which the acquiring person is a member of an
affiliated group, all members of the affiliated group shall be treated
in the aggregate as the acquiring person.
(6) The term affiliated group shall have the meaning ascribed thereto
in section 1504 of the internal revenue code, with the following
exceptions:
(i) References to "at least eighty percent" in such section 1504 shall
be read as "more than fifty percent".
(ii) Such section 1504 shall be read without regard to the exclusion
of foreign corporations provided for in section 1504(b)(3) (provided
that the debt, equity and assets of such foreign corporations shall be
included only to the extent that they are effectively connected with the
conduct of a trade or business within the United States).
(iii) Such section 1504 shall be read without regard to the exclusion
provided for in section 1504(b)(4).
* NB Repealed for taxable years beginning on or after January 1, 1997
* 18. (a) A subdivision eighteen corporate merger or corporate
consolidation is a corporate merger or corporate consolidation wherein
the taxpayer is the surviving or consolidated corporation and:
(1) where the ratio of average aggregate debt to average aggregate
equity, for the taxable year in which such merger or consolidation
occurred, increases by more than one hundred percent over such ratio for
the immediately preceding taxable year, and
(2) where the ratio of average aggregate debt to average aggregate
assets, for the taxable year in which such merger or consolidation
occurred, increases by more than sixty percent over such ratio for the
immediately preceding taxable year, and
(3) where the total interest paid or accrued by the surviving or
consolidated corporation during its taxable year in which such merger or
consolidation occurred is more than one million dollars.
(b) For purposes of this subdivision:
(1) Average aggregate debt for a given taxable year means the sum of
(i) the average debt of the surviving or consolidated corporation plus
(ii) the average debt of the constituents. In computing average
aggregate debt, intercompany debt shall be eliminated.
(2) Average aggregate equity for a given taxable year means the sum of
(i) the average equity of the surviving or consolidated corporation plus
(ii) the average equity of the constituents. In computing average
aggregate equity, intercompany equity shall be eliminated.
(3) Average aggregate assets for a given taxable year means the sum of
(i) the average assets of the surviving or consolidated corporation plus
(ii) the average assets of the constituents. In computing average
aggregate assets, intercompany assets shall be eliminated.
(4) The value of assets shall be the value shown on the books and
records of a corporation using the method of accounting regularly used
by the corporation.
(5) (i) For purposes of subparagraph one, two or three of this
paragraph, where the surviving or consolidated corporation is a member
of an affiliated group, all members of the affiliated group shall be
treated in the aggregate as the surviving or consolidated corporation.
(ii) Where in applying subparagraphs one, two and three of this
paragraph to a year in which a corporate merger or corporate
consolidation occurred, the ratio is determined for an affiliated group,
then the ratio for the immediately preceding taxable year shall be
determined for a group comprised of the corporations which are members
of such affiliated group.
(6) The term affiliated group shall have the meaning ascribed thereto
in section 1504 of the internal revenue code, with the following
exceptions:
(i) References to "at least eighty percent" in such section 1504 shall
be read as "more than fifty percent".
(ii) Such section 1504 shall be read without regard to the exclusion
of foreign corporations provided for in section 1504(b)(3) (provided
that the debt, equity and assets of such foreign corporations shall be
included only to the extent that they are effectively connected with the
conduct of a trade or business within the United States).
(iii) Such section 1504 shall be read without regard to the exclusion
provided for in section 1504(b)(4).
(7) For purposes of this subparagraph, in the case of a corporate
consolidation, references to the taxable year in which the corporate
consolidation occurs shall be deemed to be references to the first
taxable year of the consolidated corporation.
* NB Repealed for taxable years beginning on or after January 1, 1997
19. The term "fulfillment services" shall mean any of the following
services performed by an entity on its premises on behalf of a
purchaser:
(a) the acceptance of orders electronically or by mail, telephone,
telefax or internet;
(b) responses to consumer correspondence or inquiries electronically
or by mail, telephone, telefax or internet;
(c) billing and collection activities; or
(d) the shipment of orders from an inventory of products offered for
sale by the purchaser.
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