2012 New York Consolidated Laws
TAX - Tax
Article 32 - (1450 - 1468) Franchise Tax on Banking Corporations
1462 - Returns.

 
    §  1462.  Returns.  (a) Every taxpayer, as well as every other banking
  corporation having an employee, including any officer, within the state,
  shall annually on or  before  the  fifteenth  day  of  the  third  month
  following  the  close  of  each of its taxable years transmit to the tax
  commission a return in a  form  prescribed  by  it  setting  forth  such
  information as the tax commission may prescribe and every taxpayer which
  ceases  to exercise its franchise or to be subject to the tax imposed by
  this article shall transmit to the tax commission a return on  the  date
  of  such  cessation  or  at  such  other  time as the tax commission may
  require covering each year or period for which no return was theretofore
  filed. In the case of a termination year of  an  S  corporation,  the  S
  short  year  and  the  C  short  year shall be treated as separate short
  taxable years, provided, however, the due date of the report for  the  S
  short  year  shall  be  the same as the due date of the report for the C
  short year.
    (b) Every taxpayer shall also transmit such  other  returns  and  such
  facts  and  information  as  the  tax  commission  may  require  in  the
  administration of this article.
    (c) The tax commission may grant a reasonable extension  of  time  for
  filing returns whenever good cause exists. An automatic extension of six
  months  for  the  filing  of  its  annual  return  shall  be allowed any
  taxpayer, if within the time prescribed by subsection (a), such taxpayer
  files with the tax commission an application for extension in such  form
  as said commission may prescribe by regulation and pays on or before the
  date of such filing the amount properly estimated as its tax.
    (d)  Every  return  shall  have annexed thereto a certification by the
  president,  vice  president,  treasurer,  assistant   treasurer,   chief
  accounting  officer or any other officer of the taxpayer duly authorized
  so to act to the effect that the statements contained therein are  true.
  The  fact  that an individual's name is signed on a certification of the
  return shall be prima facie evidence that such individual is  authorized
  to sign and certify the return on behalf of the corporation. In the case
  of  an  association  or  publicly  traded  partnership  referred  to  in
  paragraph one of subsection (f)  of  this  section,  such  certification
  shall  be made by any person duly authorized so to act on behalf of such
  association or publicly traded partnership.
    (e) If the amount of taxable income  or  alternative  minimum  taxable
  income  for  any  year of any taxpayer (including any taxpayer which has
  elected to be taxed under subchapter s of chapter one  of  the  internal
  revenue  code)  as  returned to the United States treasury department is
  changed or corrected by the commissioner of internal  revenue  or  other
  officer of the United States or other competent authority, such taxpayer
  shall  report  such  change  or  corrected taxable income or alternative
  minimum taxable income within ninety days (or one hundred  twenty  days,
  in  the  case  of a taxpayer making a combined return under this article
  for  such  year)  after  the  final  determination  of  such  change  or
  correction  or  as  required  by the commissioner, and shall concede the
  accuracy of such determination or state wherein  it  is  erroneous.  Any
  taxpayer  filing  an amended return with such department shall also file
  within ninety days (or one  hundred  twenty  days,  in  the  case  of  a
  taxpayer  making  a  combined  return  under this article for such year)
  thereafter an amended return with the commissioner which  shall  contain
  such  information  as the commissioner shall require. The allowance of a
  tentative carryback adjustment based upon a net capital  loss  carryback
  pursuant  to  section  sixty-four hundred eleven of the internal revenue
  code, shall be treated as a final determination  for  purposes  of  this
  subsection.

    (f)  (1)  For  purposes  of  this  subsection,  the term "bank holding
  company" means any corporation subject to article three-A of the banking
  law, or registered  under  the  federal  bank  holding  company  act  of
  nineteen  hundred  fifty-six, as amended, or registered as a savings and
  loan  holding  company  (but  excluding  a  diversified savings and loan
  holding company) under the federal national housing act, as amended. For
  purposes of the preceding sentence, the term "corporation" shall include
  an association, within the meaning of paragraph three of subsection  (a)
  of section seventy-seven hundred one of the internal revenue code, and a
  publicly traded partnership treated as a corporation for purposes of the
  internal  revenue  code  pursuant  to section seventy-seven hundred four
  thereof.
    (2) (i) Any banking corporation  or  bank  holding  company  which  is
  exercising  its corporate franchise or doing business in this state in a
  corporate or organized capacity, and
    (A) which owns or controls, directly or indirectly, eighty percent  or
  more  of  the  voting  stock of one or more banking corporations or bank
  holding companies, or
    (B) whose voting stock is eighty percent or more owned or  controlled,
  directly  or  indirectly,  by  a  banking  corporation or a bank holding
  company,
  shall make a return on a combined  basis  under  this  article  covering
  itself  and  such  corporations described in clause (A) or (B) and shall
  set forth such information as the tax commission may require unless  the
  taxpayer  or  the  tax  commission  shows  that  the inclusion of such a
  corporation in the combined return fails to  properly  reflect  the  tax
  liability  of  such  corporation  under this article. Provided, however,
  that no banking corporation or bank holding company not a taxpayer shall
  be subject to the requirements  of  this  subparagraph  unless  the  tax
  commission  deems that the application of such requirements is necessary
  in order to properly reflect  the  tax  liability  under  this  article,
  because  of  intercompany transactions or some agreement, understanding,
  arrangement or transaction of the type referred to in subsection (g)  of
  this section.
    (ii)  In the discretion of the tax commission, any banking corporation
  or bank holding company which is exercising its corporate  franchise  or
  doing business in this state in a corporate or organized capacity, and
    (A) which owns or controls, directly or indirectly, sixty-five percent
  or  more of the voting stock of one or more banking corporations or bank
  holding companies, or
    (B) whose  voting  stock  is  sixty-five  percent  or  more  owned  or
  controlled,  directly  or indirectly, by a banking corporation or a bank
  holding company,
  may be required or permitted to make a return on a combined basis  under
  this  article  covering itself and such corporations described in clause
  (A) or (B) and shall set forth such information as  the  tax  commission
  may  require;  provided,  however,  that  no  combined  return  shall be
  required or permitted  unless  the  tax  commission  deems  such  report
  necessary  in  order  to  properly  reflect the tax liability under this
  article of any one or more of such banking corporations or bank  holding
  companies.
    (iii) In the discretion of the tax commission, banking corporations or
  bank  holding  companies  which  are sixty-five percent or more owned or
  controlled,  directly  or  indirectly,  by  the  same  interest  may  be
  permitted  or  required  to make a return on a combined basis under this
  article and shall set forth such information as the tax  commission  may
  require,  if  at  least  one  such  banking  corporation or bank holding
  company is exercising its corporate franchise or doing business in  this

  state  in a corporate or organized capacity. No combined return shall be
  required or permitted  unless  the  tax  commission  deems  such  report
  necessary  in  order  to  properly  reflect the tax liability under this
  article  of any one or more of such banking corporations or bank holding
  companies.
    (iv) (A) Notwithstanding any provision of  this  paragraph,  any  bank
  holding  company exercising its corporate franchise or doing business in
  the state may make a return on a  combined  basis  without  seeking  the
  permission  of  the commissioner with any banking corporation exercising
  its corporate franchise or doing business in the state in a corporate or
  organized capacity sixty-five percent or more of whose voting  stock  is
  owned  or  controlled,  directly  or  indirectly,  by  such bank holding
  company, for the first taxable year beginning on or after January first,
  two thousand and before January first, two thousand fifteen during which
  such bank holding company registers for the first time under the federal
  bank holding company act, as amended, and also elects to be a  financial
  holding company. In addition, for each subsequent taxable year beginning
  after January first, two thousand and before January first, two thousand
  fifteen,  any  such  bank  holding  company may file on a combined basis
  without seeking the permission of  the  commissioner  with  any  banking
  corporation that is exercising its corporate franchise or doing business
  in  the  state  and  sixty-five percent or more of whose voting stock is
  owned or controlled,  directly  or  indirectly,  by  such  bank  holding
  company  if  either such banking corporation is exercising its corporate
  franchise or doing business in the state in  a  corporate  or  organized
  capacity  for  the  first  time  during such subsequent taxable year, or
  sixty-five  percent  or  more  of  the  voting  stock  of  such  banking
  corporation is owned or controlled, directly or indirectly, by such bank
  holding  company for the first time during such subsequent taxable year.
  Provided however, for  each  subsequent  taxable  year  beginning  after
  January  first,  two  thousand  and  before  January first, two thousand
  fifteen, a banking corporation described in either of the two  preceding
  sentences  which  filed  on  a combined basis with any such bank holding
  company in a previous taxable year, must continue to file on a  combined
  basis with such bank holding company if such banking corporation, during
  such  subsequent  taxable  year,  continues  to  exercise  its corporate
  franchise or do business in  the  state  in  a  corporate  or  organized
  capacity  and  sixty-five  percent or more of such banking corporation's
  voting  stock  continues  to  be  owned  or  controlled,   directly   or
  indirectly,  by  such bank holding company, unless the permission of the
  commissioner has been obtained to file on  a  separate  basis  for  such
  subsequent  taxable year. Provided further, however, for each subsequent
  taxable year beginning after January  first,  two  thousand  and  before
  January  first, two thousand fifteen, a banking corporation described in
  either of the first two sentences of this clause which did not file on a
  combined basis with any such bank holding company in a previous  taxable
  year,  may  not  file on a combined basis with such bank holding company
  during any such subsequent taxable year unless  the  permission  of  the
  commissioner  has  been  obtained  to  file on a combined basis for such
  subsequent taxable year.
    (B) Notwithstanding any provision of this paragraph other than  clause
  (A)  of  this  subparagraph,  the  commissioner  may  not require a bank
  holding company which, during a  taxable  year  beginning  on  or  after
  January  first,  two  thousand  and  before  January first, two thousand
  fifteen, registers for the first time during such taxable year under the
  federal bank holding company act, as amended, and also elects  to  be  a
  financial  holding company, to make a return on a combined basis for any
  taxable year beginning on or  after  January  first,  two  thousand  and

  before  January  first,  two thousand fifteen with a banking corporation
  sixty-five percent or more of whose voting stock is owned or controlled,
  directly or indirectly, by such bank holding company.
    * (v)  A  banking  corporation  doing  business  in  this state solely
  because it meets one or more of the tests in subparagraphs  (i)  through
  (v)  of  paragraph  one  of  subsection  (c) of section fourteen hundred
  fifty-one of this article (referred  to  in  this  subparagraph  as  the
  "credit  card  bank") will not be included in a combined return pursuant
  to subparagraph (i) of this paragraph with another  banking  corporation
  or  bank  holding company which is exercising its corporate franchise or
  doing business in  this  state  unless  the  credit  card  bank  or  the
  commissioner  shows  that  the  inclusion of the credit card bank in the
  combined return is necessary to properly reflect the  tax  liability  of
  the  credit  card  bank, the banking corporation or bank holding company
  under this article. However, any banking corporation that meets  one  or
  more  of  the tests in subparagraphs (i) through (v) of paragraph one of
  subsection (c) of section fourteen hundred fifty-one and was included in
  a combined return for its last taxable  year  beginning  before  January
  first,  two  thousand  eight  may  continue to be included in a combined
  return for  future  taxable  years,  provided  that  once  that  banking
  corporation  has been included in a combined return for any taxable year
  beginning on or  after  January  first,  two  thousand  eight,  it  must
  continue  to  be  included  in  a  combined  return until it obtains the
  consent of the commissioner to cease being included in a combined return
  because  the  combined  return  no  longer  properly  reflects  the  tax
  liability  under this article of any of the corporations included in the
  combined return. Further, the credit card bank will  be  included  in  a
  combined  return  with  (i)  any  banking corporation not subject to tax
  under this article sixty-five percent or more of whose voting  stock  is
  owned or controlled, directly or indirectly, by the credit card bank, or
  (ii)  any banking corporation or bank holding company not subject to tax
  under this article which  owns  or  controls,  directly  or  indirectly,
  sixty-five  percent or more of the voting stock of the credit card bank,
  or (iii) any banking corporation not subject to tax under  this  article
  sixty-five  percent  or  more  of  the voting stock of which is owned or
  controlled,  directly  or  indirectly,  by  the  same   corporation   or
  corporations  that  own  or  control, directly or indirectly, sixty-five
  percent or more of the voting stock of the  credit  card  bank,  if  the
  corporation  or corporations described in clauses (i), (ii) and (iii) of
  this subparagraph provide services for or support  to  the  credit  card
  bank's operations, unless the credit card bank or the commissioner shows
  that  the  inclusion of any of those corporations in the combined return
  fails to properly reflect the tax liability of the credit card bank. For
  purposes of this subparagraph, services for or  support  to  the  credit
  card  bank's  operations  include  such  activities  as  billing, credit
  investigation and reporting, marketing, research, advertising,  mailing,
  customer   service,   information   technology,  lending  and  financing
  services, and communications services, but will not include  accounting,
  legal or personnel services.
    * NB There are 2 sbù(v)'s
    * (v)(A)   For  purposes  of  this  subparagraph,  the  term  "closest
  controlling stockholder" means the corporation that indirectly  owns  or
  controls  over  fifty  percent  of the voting stock of a captive REIT or
  captive RIC, is subject to tax under this  article,  article  nine-A  or
  article  thirty-three  of  this  chapter  or  otherwise  required  to be
  included in a combined return under  this  article,  article  nine-A  or
  article  thirty-three  of  this  chapter,  and  is  the  fewest tiers of
  corporations away in the ownership structure from the  captive  REIT  or

  captive  RIC.  The commissioner is authorized to prescribe by regulation
  or  published  guidance  the  criteria  for  determining   the   closest
  controlling stockholder.
    (B)  A  captive  REIT  or a captive RIC must be included in a combined
  return with  the  banking  corporation  or  bank  holding  company  that
  directly  owns or controls over fifty percent of the voting stock of the
  captive REIT or captive RIC if that banking corporation or bank  holding
  company  is  subject  to  tax  or  required to be included in a combined
  return under this article.
    (C) If over fifty percent of the voting stock of  a  captive  REIT  or
  captive RIC is not directly owned or controlled by a banking corporation
  or  bank  holding  company  that  is  subject  to  tax or required to be
  included in a combined return under this article, then the captive  REIT
  or  captive RIC must be included in a combined return or report with the
  corporation that is the closest controlling stockholder of  the  captive
  REIT  or  captive  RIC.  If  the  closest controlling stockholder of the
  captive REIT or captive RIC is a banking  corporation  or  bank  holding
  company that is subject to tax or otherwise required to be included in a
  combined return under this article, then the captive REIT or captive RIC
  must be included in a combined return under this article.
    (D)  If  the  corporation  which  directly owns or controls the voting
  stock of the captive REIT or captive RIC is  described  in  subparagraph
  (ii)  or  (iv) of paragraph four of this subsection as a corporation not
  permitted to make a combined return, then the provisions in  clause  (C)
  of  this  subparagraph  must  be applied to determine the corporation in
  whose combined return or report the captive REIT or captive  RIC  should
  be  included. If, under clause (C) of this subparagraph, the corporation
  that is the closest controlling  stockholder  of  the  captive  REIT  or
  captive  RIC is described in subparagraph (ii) or (iv) of paragraph four
  of this subsection as a corporation not permitted  to  make  a  combined
  return,  then  that  corporation  is  deemed  to not be in the ownership
  structure  of  the  captive  REIT  or  captive  RIC,  and  the   closest
  controlling  stockholder  will  be  determined  without  regard  to that
  corporation.
    (E) If a captive REIT owns the stock of a  qualified  REIT  subsidiary
  (as  defined in paragraph two of subsection (i) of section eight hundred
  fifty-six of  the  internal  revenue  code),  then  the  qualified  REIT
  subsidiary  must  be included in any combined return required to be made
  by the captive REIT that owns its stock.
    (F) If a captive  REIT  or  a  captive  RIC  is  required  under  this
  subparagraph   to   be  included  in  a  combined  return  with  another
  corporation, and that other corporation is required to be included in  a
  combined  return with another corporation under other provisions of this
  subsection, the captive REIT or captive RIC must  be  included  in  that
  combined return with those corporations.
    (G)  If  the banking corporation or bank holding company that directly
  or indirectly owns or controls over fifty percent of the voting stock of
  the  captive  REIT  or  captive  RIC  and  is  the  closest  controlling
  stockholder  of  the  captive  REIT  or  captive  RIC  is a member of an
  affiliated group (1) that does  not  include  any  corporation  that  is
  engaged  in a business that a subsidiary of a bank holding company would
  not be permitted to engage in, unless such business is de  minimus,  and
  (2)  whose  members  own assets the combined average value of which does
  not exceed eight billion dollars, then the captive REIT or  captive  RIC
  must  not be included in a combined return under this article or article
  nine-A or article thirty-three of this chapter. In  that  instance,  the
  captive  REIT or captive RIC is subject to the provisions of subdivision
  five or seven of section two hundred nine  of  this  chapter.  The  term

  "affiliated  group"  means  "affiliated  group"  as  defined  in section
  fifteen hundred four of the internal revenue code, but without regard to
  the exceptions provided for in subsection (b) of that section.
    * NB There are 2 sbù(v)'s
    (vi)  (A)  For  purposes  of  this  subparagraph,  the  term  "closest
  controlling stockholder" means the corporation that indirectly  owns  or
  controls  over  fifty  percent of the voting stock of an overcapitalized
  captive insurance company, is subject  to  tax  under  this  article  or
  article nine-A of this chapter or otherwise required to be included in a
  combined  return  under  this article or article nine-A of this chapter,
  and is the fewest tiers of corporations away in the ownership  structure
  from  the overcapitalized captive insurance company. The commissioner is
  authorized to prescribe by regulation or published guidance the criteria
  for determining the closest controlling stockholder.
    (B) An overcapitalized captive insurance company must be included in a
  combined return with the banking corporation  or  bank  holding  company
  that directly owns or controls over fifty percent of the voting stock of
  the   overcapitalized   captive   insurance   company  if  that  banking
  corporation or bank holding company is subject to tax or required to  be
  included in a combined return under this article.
    (C)  If  over  fifty percent of the voting stock of an overcapitalized
  captive insurance company is not  directly  owned  or  controlled  by  a
  banking  corporation  or  bank holding company that is subject to tax or
  required to be included in a combined return under  this  article,  then
  the  overcapitalized  captive  insurance  company  must be included in a
  combined return or report with  the  corporation  that  is  the  closest
  controlling   stockholder   of  the  overcapitalized  captive  insurance
  company. If the closest controlling stockholder of  the  overcapitalized
  captive  insurance  company  is  a  banking  corporation or bank holding
  company that is subject to tax or otherwise required to be included in a
  combined return under this article,  then  the  overcapitalized  captive
  insurance  company  must  be  included  in  a combined return under this
  article.
    (D) If the corporation that directly owns or controls the voting stock
  of  the  overcapitalized  captive  insurance  company  is  described  in
  subparagraph  (ii)  or  (iv)  of  paragraph four of this subsection as a
  corporation not permitted to make a combined return, then the provisions
  in clause (C) of this subparagraph must  be  applied  to  determine  the
  corporation  in  whose  combined  return  or  report the overcapitalized
  captive insurance company should be included. If, under  clause  (C)  of
  this  subparagraph,  the  corporation  that  is  the closest controlling
  stockholder  of  the  overcapitalized  captive  insurance   company   is
  described  in  subparagraph  (ii)  or  (iv)  of  paragraph  four of this
  subsection as a corporation not permitted to  make  a  combined  return,
  then  that corporation is deemed not to be in the ownership structure of
  the  overcapitalized  captive  insurance  company,   and   the   closest
  controlling  stockholder  will  be  determined  without  regard  to that
  corporation.
    (E) If an overcapitalized captive insurance company is required  under
  this  subparagraph  to  be  included  in  a combined return with another
  corporation, and that other corporation is required to be included in  a
  combined  return with another corporation under other provisions of this
  subsection,  the  overcapitalized  captive  insurance  company  must  be
  included in that combined return with those corporations.
    (3) (i) In the case of a combined return, the tax shall be measured by
  the  combined  entire net income, combined alternative entire net income
  or combined assets of all  the  corporations  included  in  the  return,
  including  any  captive  REIT,  captive  RIC  or overcapitalized captive

  insurance company. The allocation percentage shall be computed based  on
  the  combined  factors  with respect to all the corporations included in
  the combined  return.  In  computing  combined  entire  net  income  and
  combined  alternative entire net income intercorporate dividends and all
  other intercorporate transactions shall be eliminated and  in  computing
  combined  assets  intercorporate stockholdings and intercorporate bills,
  notes and accounts  receivable  and  payable  and  other  intercorporate
  indebtedness shall be eliminated.
    (ii)  In  the case of a captive REIT required under this subsection to
  be included in a combined return, "entire net income" means "real estate
  investment  trust  taxable  income"  as  defined  in  paragraph  two  of
  subdivision  (b)  of  section  eight hundred fifty-seven (as modified by
  section eight hundred fifty-eight) of the internal  revenue  code,  plus
  the  amount  taxable under paragraph three of subdivision (b) of section
  eight hundred fifty-seven of that code,  subject  to  the  modifications
  required by section fourteen hundred fifty-three of this article. In the
  case of a captive RIC required under this subsection to be included in a
  combined  return,  "entire net income" means "investment company taxable
  income" as defined in paragraph two of subdivision (b) of section  eight
  hundred  fifty-two  (as modified by section eight hundred fifty-five) of
  the internal revenue code, plus the amount taxable under paragraph three
  of subdivision (b) of section eight  hundred  fifty-two  of  that  code,
  subject  to  the  modifications  required  by  section  fourteen hundred
  fifty-three of this article. However, the deduction under  the  internal
  revenue  code  for  dividends paid by the captive REIT or captive RIC to
  any member of the affiliated group that includes  the  corporation  that
  directly  or  indirectly  owns over fifty percent of the voting stock of
  the captive REIT or  captive  RIC  will  be  limited  to  the  following
  percentages:  (A)  fifty percent for taxable years beginning on or after
  January first, two thousand eight and before January first, two thousand
  nine; (B) twenty-five percent for taxable years beginning  on  or  after
  January  first, two thousand nine and before January first, two thousand
  eleven; and (C) zero percent for taxable years  beginning  on  or  after
  January  first,  two  thousand eleven. The term "affiliated group" means
  "affiliated group" as defined in section fifteen  hundred  four  of  the
  internal revenue code, but without regard to the exceptions provided for
  in subsection (b) of such section fifteen hundred four.
    (iii)  In  the  case  of  an overcapitalized captive insurance company
  required under this subsection to be  included  in  a  combined  return,
  entire  net  income  must  be  computed  as required by section fourteen
  hundred fifty-three of this article.
    (4) (i) In  no  event  shall  an  item  of  income  or  expense  of  a
  corporation  organized under the laws of a country other than the United
  States be included in a combined  return  unless  it  is  includible  in
  entire  net income or alternative entire net income, as the case may be,
  nor shall an asset of such a  corporation  be  included  in  a  combined
  return unless it is included in taxable assets.
    (ii)  In  no event shall a corporation organized under the laws of the
  United States, this state or any other state, be included in a  combined
  return  with  a  corporation organized under the laws of a country other
  than the United States.
    (iii) In no event shall a  corporation  which  has  made  an  election
  pursuant to subsection (d) of section fourteen hundred fifty-two of this
  article  to  be  subject  to  the  tax imposed by article nine-a of this
  chapter be included in a combined return for  those  taxable  years  for
  which  it  is  subject  to  the  tax  imposed  by article nine-a of this
  chapter.

    (iv) In no event shall a corporation whose net  worth  ratio  is  less
  than  five  percent and whose total assets are comprised of thirty-three
  percent or more of mortgages be included in a combined return for  those
  taxable  years  for which its tax is determined pursuant to subparagraph
  (ii)  or  (iii)  of  paragraph one of subsection (b) of section fourteen
  hundred fifty-five of this article.
    (5) Tax liability under this article may be deemed  to  be  improperly
  reflected  because  of  intercompany  transactions  or  some  agreement,
  understanding, arrangement or transaction referred to in subsection  (g)
  of this section.
    (g)  In case it shall appear to the tax commission that any agreement,
  understanding or arrangement exists between the taxpayer and  any  other
  corporation  or  any  person  or  firm,  whereby the activity, business,
  income or assets of the taxpayer  within  the  state  is  improperly  or
  inaccurately  reflected, the tax commission is authorized and empowered,
  in its discretion and in such manner as  it  may  determine,  to  adjust
  items  of  income  or  deductions  in  computing  entire  net  income or
  alternative entire net income and to adjust assets, and to adjust wages,
  salaries and other personal service compensation, receipts  or  deposits
  in  computing  any  allocation percentage, provided only that entire net
  income or alternative entire net income be adjusted accordingly and that
  any asset directly traceable  to  the  elimination  of  any  receipt  be
  eliminated  from  assets  so  as  to  accurately  determine  the tax. If
  however, in the determination of the tax commission, such adjustments do
  not, or cannot effectively provide for the accurate determination of the
  tax, the commission shall be authorized  to  require  the  filing  of  a
  combined  report  by the taxpayer and any such other corporations. Where
  (1) any taxpayer conducts its activity or business under any  agreement,
  arrangement  or  understanding  in  such  manner  as  either directly or
  indirectly to benefit its members or stockholders, or any  of  them,  or
  any person or persons directly or indirectly interested in such activity
  or  business,  by  entering  into any transaction at more or less than a
  fair price which, but for such agreement, arrangement or  understanding,
  might  have  been  paid or received therefor, or (2) any taxpayer enters
  into any transaction with another corporation on such terms as to create
  an improper loss or net income, the tax commission may  include  in  the
  entire  net  income or alternative entire net income of the taxpayer the
  fair  profits  which,   but   for   such   agreement,   arrangement   or
  understanding, the taxpayer might have derived from such transaction.