NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A5316
SPONSOR: Skoufis TITLE OF BILL:
An act to amend the tax law, in relation to franchise tax on banking
corporations
PURPOSE OR GENERAL IDEA OF BILL:
Reinstates a bank tax based on the highest of four bases: a tax on allo-
cated entire net income, a tax on allocated alternative entire net
income, a tax on allocated taxable assets, or a fixed dollar minimum
tax. Banks are not allowed to segregate their income and capital into
business and investment varieties.
SUMMARY OF SPECIFIC PROVISIONS:
The bill will amend the tax law to reinstate Article 32, the franchise
tax on bank corporations.
JUSTIFICATION:
No analysis or study has ever been shared that demonstrates the elimi-
nation of the bank tax in the 20142015 budget was in any way vital to
the well-being of New York's financial sector. Until that time, the bank
tax should be reinstated, particularly in light of the financial
sector's actions leading up to the recent recession as well as the fact
that it has already received substantial assistance from taxpayers as
part of the federal government's Trouble Asset Relief Program or TARP.
PRIOR LEGISLATIVE HISTORY:
None.
FISCAL IMPLICATIONS:
Estimated revenue increase of 200 million to 250 million.
EFFECTIVE DATE:
This act shall take effect immediately and apply to taxable years start-
ing January 1, 2018.
STATE OF NEW YORK
________________________________________________________________________
5316
2017-2018 Regular Sessions
IN ASSEMBLY
February 8, 2017
___________
Introduced by M. of A. SKOUFIS, JAFFEE -- read once and referred to the
Committee on Ways and Means
AN ACT to amend the tax law, in relation to franchise tax on banking
corporations
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The tax law is amended by adding a new article 32 to read
2 as follows:
3 ARTICLE 32
4 FRANCHISE TAX ON BANKING CORPORATIONS
5 Section 1450. General definitions.
6 1451. Imposition of tax.
7 1452. Banking corporation defined; exempt corporations.
8 1453. Computations of entire net income.
9 1453-A. Computation of alternative entire net income.
10 1454. Allocation.
11 1455. Computation of tax.
12 1455-A. Tax surcharge.
13 1455-B. Temporary metropolitan transportation business tax
14 surcharge on banks.
15 1456. Credits.
16 1460. Declarations of estimated tax.
17 1461. Payments of estimated tax.
18 1462. Returns.
19 1463. Payment of tax.
20 1466. Deposit and disposition of revenue.
21 1467. Secrecy required of officials; penalty for violation.
22 1468. Procedural provisions.
23 § 1450. General definitions. As used in this article:
24 (a) The word "taxpayer" means a corporation or association subject to
25 a tax imposed by this article.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD06922-01-7
A. 5316 2
1 (b) The phrase "taxable year" means the taxpayer's taxable year for
2 federal income tax purposes, or the part thereof during which the
3 taxpayer is subject to the tax imposed by this article.
4 (c) The term "international banking facility" shall mean an interna-
5 tional banking facility located in New York state and shall have the
6 same meaning as is set forth in the New York state banking law or regu-
7 lations of the New York state department of financial services or as is
8 set forth in the laws of the United States or regulations of the board
9 of governors of the federal reserve system.
10 (d) The term "subsidiary" means a corporation or association of which
11 over fifty percent of the number of shares of stock entitling the hold-
12 ers thereof to vote for the election of directors or trustees is owned
13 by the taxpayer.
14 (e) The term "subsidiary capital" means investments in the stock of
15 subsidiaries and any indebtedness from subsidiaries, exclusive of
16 accounts receivable acquired in the ordinary course of trade or business
17 for services rendered or for sales of property held primarily for sale
18 to customers, whether or not evidenced by written instrument, on which
19 interest is not claimed and deducted by the subsidiary for purposes of
20 taxation under this article, article nine-A or thirty-three of this
21 chapter, provided, however, there shall be deducted from subsidiary
22 capital any liabilities payable by their terms on demand or within one
23 year from the date incurred, other than loans or advances outstanding
24 for more than a year as of any date during the year covered by the
25 return, which are attributable to subsidiary capital.
26 (f) The terms "New York S corporation", "New York S year", "New York S
27 election", "New York C corporation", "New York C year", "termination
28 year", "S short year", "C short year", and "New York S termination year"
29 shall have the same meaning as those terms have under subdivision one-A
30 of section two hundred eight of this chapter, except that references in
31 such subdivision to article nine-A of this chapter shall be read as
32 references to this article.
33 (g) The term "QSSS" means a corporation which is a qualified subchap-
34 ter S subsidiary as defined in subparagraph (B) of paragraph three of
35 subsection (b) of section thirteen hundred sixty-one of the internal
36 revenue code. The term "exempt QSSS" means a QSSS exempt from tax under
37 this article as provided in subsection (o) of section fourteen hundred
38 fifty-three of this article, or a QSSS described in clause (i) of
39 subparagraph (B) of paragraph two of subsection (o) of section fourteen
40 hundred fifty-three, wherein the parent corporation of the QSSS is
41 subject to tax under this article, and the assets, liabilities, income
42 and deductions of the QSSS are treated as the assets, liabilities,
43 income and deductions of the parent corporation. Where a QSSS is an
44 exempt QSSS, then for all purposes under this article:
45 (1) the assets, liabilities, income, deductions, property, payroll,
46 receipts, capital, credits, and all other tax attributes and elements of
47 economic activity of the QSSS shall be deemed to be those of the parent
48 corporation,
49 (2) the stocks, bonds and other securities issued by, and any indebt-
50 edness from, the QSSS shall not be subsidiary capital of the parent
51 corporation,
52 (3) transactions between the parent corporation and the QSSS, includ-
53 ing the payment of interest and dividends, shall not be taken into
54 account, and
55 (4) general executive officers of the QSSS shall be deemed to be
56 general executive officers of the parent corporation.
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1 (h) The term "financial holding company" means a corporation that,
2 pursuant to subsection (l) of section 4 of the federal bank holding
3 company act of nineteen hundred fifty-six, as amended, has filed with
4 the federal reserve board a written declaration that the corporation
5 elects to be a financial holding company and whose election has not been
6 found to be ineffective by the federal reserve board.
7 § 1451. Imposition of tax. (a) For the privilege of exercising its
8 franchise or doing business in this state in a corporate or organized
9 capacity, a tax, computed under section fourteen hundred fifty-five of
10 this article, is hereby annually imposed on every banking corporation
11 for each of its taxable years, or any part thereof, beginning on or
12 after January first, nineteen hundred seventy-three.
13 (b) In the case of a taxpayer whose taxable year is other than a
14 calendar year, there is hereby imposed a tax for the privilege of exer-
15 cising its franchise or doing business in this state in a corporate or
16 organized capacity for the period beginning January first, nineteen
17 hundred seventy-three and extending through the subsequent part of its
18 first such taxable year ending after such date. Such tax shall be
19 computed under section fourteen hundred fifty-five of this article on
20 the basis of such taxpayer's entire net income, or other applicable
21 basis as the case may be, for such period and shall be paid with a
22 return which shall be separately filed with the tax commission not later
23 than the fifteenth day of the third month succeeding the close of such
24 period. The requirements of sections fourteen hundred sixty and fourteen
25 hundred sixty-one, relating to declarations and payments of estimated
26 tax, except subsection (a) of section fourteen hundred sixty-one, shall
27 not be applicable to the tax imposed by this subsection.
28 (c)(1) A banking corporation is doing business in this state in a
29 corporate or organized capacity if (i) it has issued credit cards to one
30 thousand or more customers who have a mailing address within this state
31 as of the last day of its taxable year, (ii) it has merchant customer
32 contracts with merchants and the total number of locations covered by
33 those contracts equals one thousand or more locations in this state to
34 whom the banking corporation remitted payments for credit card trans-
35 actions during the taxable year, (iii) it has receipts of one million
36 dollars or more in the taxable year from its customers who have been
37 issued credit cards by the banking corporation and have a mailing
38 address within this state, (iv) it has receipts of one million dollars
39 or more arising from merchant customer contracts with merchants relating
40 to locations in this state, or (v) the sum of the number of customers
41 described in subparagraph (i) of this paragraph plus the number of
42 locations covered by its contracts described in subparagraph (ii) of
43 this paragraph equals one thousand or more, or the amount of its
44 receipts described in subparagraphs (iii) and (iv) of this paragraph
45 equals one million dollars or more. For purposes of this paragraph,
46 receipts from processing credit card transactions for merchants include
47 merchant discount fees received by the banking corporation.
48 (2) As used in this subsection, the term "credit card" includes bank,
49 credit, travel and entertainment cards.
50 § 1452. Banking corporation defined; exempt corporations. (a) For the
51 purpose of this article, a banking corporation means:
52 (1) Every corporation or association organized under the laws of this
53 state which is authorized to do a banking business, or which is doing a
54 banking business;
55 (2) every corporation or association organized under the laws of any
56 other state or country which is doing a banking business;
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1 (3) every national banking association organized under the authority
2 of the United States which is doing a banking business;
3 (4) every federal savings bank which is doing a banking business;
4 (5) every federal savings and loan association which is doing a bank-
5 ing business;
6 (6) a production credit association organized under the federal farm
7 credit act of nineteen hundred thirty-three, which is doing a banking
8 business and all of whose stock held by the federal production credit
9 corporation has been retired;
10 (7) every other corporation or association organized under the author-
11 ity of the United States which is doing a banking business;
12 (8) the mortgage facilities corporation created by chapter five
13 hundred sixty-four of the laws of nineteen hundred fifty-six;
14 (9) any corporation sixty-five percent or more of whose voting stock
15 is owned or controlled, directly or indirectly, by a corporation or
16 corporations subject to article three-A of the banking law, or regis-
17 tered under the federal bank holding company act of nineteen hundred
18 fifty-six, as amended, or registered as a savings and loan holding
19 company (but excluding a diversified savings and loan holding company)
20 under the federal national housing act, as amended, or by a corporation
21 or corporations described in any of the foregoing paragraphs of this
22 subsection, provided the corporation whose voting stock is so owned or
23 controlled is principally engaged in a business, regardless of where
24 conducted, which (i) might be lawfully conducted by a corporation
25 subject to article three of the banking law or by a national banking
26 association, or (ii) is so closely related to banking or managing or
27 controlling banks as to be a proper incident thereto, as set forth in
28 paragraph eight of subsection (c) or subparagraph (F) of paragraph four
29 of subsection (k) of section four of the federal bank holding company
30 act of nineteen hundred fifty-six, as amended, or (iii) holds and
31 manages investment assets, including but not limited to bonds, notes,
32 debentures and other obligations for the payment of money, stocks, part-
33 nership interests or other equity interests, and other investment secu-
34 rities and which is not a business described in subparagraph (i) or (ii)
35 of this paragraph; and provided, further, that in no event shall a
36 corporation principally engaged in a business described in section one
37 hundred eighty-three or one hundred eighty-four, or section one hundred
38 eighty-six as it was in effect on December thirty-first, nineteen
39 hundred ninety-nine, of this chapter be subject to the tax imposed under
40 this article if any of its business receipts from such principally
41 engaged in business are from other than a corporation (A) which owns or
42 controls, directly or indirectly, sixty-five percent or more of its
43 voting stock, or (B) sixty-five percent or more of whose voting stock is
44 owned or controlled, directly or indirectly, by the corporation engaged
45 in such business, or (C) sixty-five percent or more of whose voting
46 stock is owned or controlled, directly or indirectly, by the same inter-
47 est.
48 (b) Banking business defined. The words "banking business" as used in
49 this section mean such business as a corporation or association may be
50 created to do under article three, three-B, five, five-A, five-C, six or
51 ten of the banking law or any business which a corporation or associ-
52 ation is authorized by such article to do. However, with respect to a
53 national banking association organized under the authority of the United
54 States, a federal savings bank, a federal savings and loan association
55 or a production credit association, the words "banking business" as used
56 in this section mean such business as a national banking association,
A. 5316 5
1 federal savings bank, federal savings and loan association or production
2 credit association, respectively, may be created to do or is authorized
3 to do under the laws of the United States or this state. The words
4 "banking business" as used in this section shall also mean such business
5 as any corporation or association organized under the authority of the
6 United States or organized under the laws of any other state or country
7 has authority to do which is substantially similar to the business which
8 a corporation or association may be created to do under article three,
9 three-B, five, five-A, five-C, six or ten of the banking law or any
10 business which a corporation or association is authorized by such arti-
11 cle to do.
12 (c) Exempt corporations. A trust company all of whose capital stock is
13 owned by twenty or more savings banks organized under New York law shall
14 be exempt from the tax under this article.
15 (d) Corporations taxable under article nine-A. Notwithstanding the
16 provisions of this article, all corporations of classes now or hereto-
17 fore taxable under article nine-A of this chapter shall continue to be
18 taxable under such article nine-A, except: (1) corporations organized
19 under article five-A of the banking law; (2) corporations subject to
20 article three-A of the banking law, or registered under the federal bank
21 holding company act of nineteen hundred fifty-six, as amended, or regis-
22 tered as a savings and loan holding company (but excluding a diversified
23 savings and loan holding company) under the federal national housing
24 act, as amended, which make a combined return under the provisions of
25 subsection (f) of section fourteen hundred sixty-two of this article;
26 (3) banking corporations described in paragraph nine of subsection (a)
27 of this section; (4) any captive REIT or captive RIC that is required to
28 be included in a combined return under the provisions of subsection (f)
29 of section fourteen hundred sixty-two of this article; and (5) any over-
30 capitalized captive insurance company required to be included in a
31 combined return under subsection (f) of section fourteen hundred sixty-
32 two of this article. Provided, however, that a corporation described in
33 paragraph three of this subsection which was subject to the tax imposed
34 by article nine-A of this chapter for its taxable year ending during
35 nineteen hundred eighty-four may, on or before the due date for filing
36 its return (determined with regard to extensions) for its taxable year
37 ending during nineteen hundred eighty-five, make a one time election to
38 continue to be taxable under such article nine-A. Such election shall
39 continue to be in effect until revoked by the taxpayer. In no event
40 shall such election or revocation be for a part of a taxable year.
41 (e) Corporations taxable under article thirty-three. Except for corpo-
42 rations described in subsection (1) of section fourteen hundred fifty-
43 three of this article, corporations liable to tax under article thirty-
44 three of this chapter shall not be subject to tax under this article.
45 (f) For exemption from tax of a qualified subchapter S subsidiary, see
46 subsection (o) of section fourteen hundred fifty-three of this article.
47 (g) A banking corporation organized under the laws of a country, or
48 any political subdivision thereof, other than the United States shall
49 not be deemed to be doing business in this state under this article if
50 its activities in this state are limited solely to (1) investing or
51 trading in stocks and securities for its own account within the meaning
52 of clause (ii) of subparagraph (A) of paragraph (2) of subsection (b) of
53 section eight hundred sixty-four of the internal revenue code or (2)
54 investing or trading in commodities for its own account within the mean-
55 ing of clause (ii) of subparagraph (B) of paragraph (2) of subsection
56 (b) of section eight hundred sixty-four of the internal revenue code or
A. 5316 6
1 (3) any combination of activities described in paragraphs one and two of
2 this subsection.
3 (h) Transitional provisions relating to the enactment and implementa-
4 tion of the federal Gramm-Leach-Bliley act. (1) Notwithstanding anything
5 to the contrary contained in this section other than subsection (n) of
6 this section, a corporation that was in existence before January first,
7 two thousand and was subject to tax under such article nine-A of this
8 chapter for its last taxable year beginning before January first, two
9 thousand, shall continue to be taxable under such article nine-A for all
10 taxable years beginning on or after January first, two thousand and
11 before January first, two thousand one. The preceding sentence shall not
12 apply to any taxable year during which such corporation is a banking
13 corporation described in paragraphs one through eight of subsection (a)
14 of this section. Notwithstanding anything to the contrary contained in
15 this section other than subsection (n) of this section, a banking corpo-
16 ration that was in existence before January first, two thousand and was
17 subject to tax under this article for its last taxable year beginning
18 before January first, two thousand, shall continue to be taxable under
19 this article for all taxable years beginning on or after January first,
20 two thousand and before January first, two thousand one. Provided,
21 however, that nothing in this subsection shall prohibit a corporation
22 that elected pursuant to subsection (d) of this section to be taxable
23 under article nine-A of this chapter from revoking that election in
24 accordance with such subsection (d).
25 For purposes of this paragraph, a corporation shall be considered to
26 be subject to tax under article nine-A of this chapter for a taxable
27 year if such corporation was not a taxpayer but was properly included in
28 a combined report filed pursuant to section two hundred eleven of this
29 chapter for such taxable year and a corporation shall be considered to
30 be subject to tax under this article for a taxable year if such corpo-
31 ration was not a taxpayer but was properly included in a combined return
32 filed pursuant to subsection (f) or (g) of section fourteen hundred
33 sixty-two of this article for such taxable year. A corporation that was
34 in existence before January first, two thousand but first becomes a
35 taxpayer in a taxable year beginning on or after January first, two
36 thousand and before January first, two thousand one, shall be considered
37 for purposes of this paragraph to have been subject to tax under article
38 nine-A of this chapter for its last taxable year beginning before Janu-
39 ary first, two thousand if such corporation would have been subject to
40 tax under such article for such taxable year if it had been a taxpayer
41 during such taxable year. A corporation that was in existence before
42 January first, two thousand but first becomes a taxpayer in a taxable
43 year beginning on or after January first, two thousand and before Janu-
44 ary first, two thousand one, shall be considered for purposes of this
45 paragraph to have been subject to tax under this article for its last
46 taxable year beginning before January first, two thousand if such corpo-
47 ration would have been subject to tax under this article for such taxa-
48 ble year if it had been a taxpayer during such taxable year.
49 (2) Notwithstanding anything to the contrary contained in this section
50 other than subsection (n) of this section, a corporation formed on or
51 after January first, two thousand and before January first, two thousand
52 one may elect to be subject to tax under this article or under article
53 nine-A of this chapter for its first taxable year beginning on or after
54 January first, two thousand and before January first, two thousand one
55 in which either (i) sixty-five percent or more of its voting stock is
56 owned or controlled, directly or indirectly by a financial holding
A. 5316 7
1 company, provided the corporation whose voting stock is so owned or
2 controlled is principally engaged in activities that are described in
3 section 4(k)(4) or 4(k)(5) of the federal bank holding company act of
4 nineteen hundred fifty-six, as amended and the regulations promulgated
5 pursuant to the authority of such section, or (ii) it is a financial
6 subsidiary. An election under this paragraph may not be made by a corpo-
7 ration described in paragraphs one through eight of subsection (a) of
8 this section or in subsection (e) of this section. In addition, an
9 election under this paragraph may not be made by a corporation that is a
10 party to a reorganization, as defined in subsection (a) of section 368
11 of the internal revenue code of 1986, as amended, of a corporation
12 described in paragraph one of this subsection if both corporations were
13 sixty-five percent or more owned or controlled, directly or indirectly,
14 by the same interests at the time of the reorganization.
15 An election under this paragraph must be made by the taxpayer on or
16 before the due date for filing its return (determined with regard to
17 extensions of time for filing) for the applicable taxable year. The
18 election to be taxed under article nine-A of this chapter shall be made
19 by the taxpayer by filing the report required pursuant to section two
20 hundred eleven of this chapter and the election to be taxed under this
21 article shall be made by the taxpayer by filing the return required
22 pursuant to section fourteen hundred sixty-two of this article. Any
23 election made pursuant to this paragraph shall be irrevocable and shall
24 apply to each subsequent taxable year beginning on or after January
25 first, two thousand and before January first, two thousand one, provided
26 that the stock ownership requirements described in subparagraph (i) of
27 this paragraph are met or such corporation described in subparagraph
28 (ii) of this paragraph continues as a financial subsidiary.
29 (3) For purposes of this section, a financial subsidiary means a
30 corporation (i) sixty-five percent or more of whose voting stock is
31 owned or controlled, directly or indirectly by a banking corporation
32 described in paragraph one, two or three of subsection (a) of this
33 section and (ii) is described in section 5136A(g) of the revised stat-
34 utes of the United States or section 46 of the federal deposit insurance
35 act. For purposes of this article, the term "banking corporation" shall
36 include a corporation electing to be taxed under this article pursuant
37 to paragraph two of this subsection for so long as such election shall
38 be in effect.
39 (i) Transitional provisions relating to the enactment and implementa-
40 tion of the federal Gramm-Leach-Bliley act. (1) Notwithstanding anything
41 to the contrary contained in this section other than subsection (n) of
42 this section, a corporation that was in existence before January first,
43 two thousand one and was subject to tax under article nine-A of this
44 chapter for its last taxable year beginning before January first, two
45 thousand one, shall continue to be taxable under article nine-A for all
46 taxable years beginning on or after January first, two thousand one and
47 before January first, two thousand three. The preceding sentence shall
48 not apply to any taxable year during which such corporation is a banking
49 corporation described in paragraphs one through eight of subsection (a)
50 of this section. Notwithstanding anything to the contrary contained in
51 this section other than subsection (n) of this section, a banking corpo-
52 ration that was in existence before January first, two thousand one and
53 was subject to tax under this article for its last taxable year begin-
54 ning before January first, two thousand one, shall continue to be taxa-
55 ble under this article for all taxable years beginning on or after Janu-
56 ary first, two thousand one and before January first, two thousand
A. 5316 8
1 three. Provided, however, that nothing in this subsection shall prohibit
2 a corporation that elected pursuant to subsection (d) of this section to
3 be taxable under article nine-A of this chapter from revoking that
4 election in accordance with such subsection (d).
5 For purposes of this paragraph, a corporation shall be considered to
6 be subject to tax under article nine-A of this chapter for a taxable
7 year if such corporation was not a taxpayer but was properly included in
8 a combined report filed pursuant to section two hundred eleven of this
9 chapter for such taxable year and a corporation shall be considered to
10 be subject to tax under this article for a taxable year if such corpo-
11 ration was not a taxpayer but was properly included in a combined return
12 filed pursuant to subsection (f) or (g) of section fourteen hundred
13 sixty-two of this article for such taxable year. A corporation that was
14 in existence before January first, two thousand one but first becomes a
15 taxpayer in a taxable year beginning on or after January first, two
16 thousand one and before January first, two thousand three, shall be
17 considered for purposes of this paragraph to have been subject to tax
18 under article nine-A of this chapter for its last taxable year beginning
19 before January first, two thousand one if such corporation would have
20 been subject to tax under such article for such taxable year if it had
21 been a taxpayer during such taxable year. A corporation that was in
22 existence before January first, two thousand one but first becomes a
23 taxpayer in a taxable year beginning on or after January first, two
24 thousand one and before January first, two thousand three, shall be
25 considered for purposes of this paragraph to have been subject to tax
26 under this article for its last taxable year beginning before January
27 first, two thousand one if such corporation would have been subject to
28 tax under this article for such taxable year if it had been a taxpayer
29 during such taxable year.
30 (2) Notwithstanding anything to the contrary contained in this section
31 other than subsection (n) of this section, a corporation formed on or
32 after January first, two thousand one and before January first, two
33 thousand three may elect to be subject to tax under this article or
34 under article nine-A of this chapter for its first taxable year begin-
35 ning on or after January first, two thousand one and before January
36 first, two thousand three in which either (i) sixty-five percent or more
37 of its voting stock is owned or controlled, directly or indirectly by a
38 financial holding company, provided the corporation whose voting stock
39 is so owned or controlled is principally engaged in activities that are
40 described in section 4(k)(4) or 4(k)(5) of the federal bank holding
41 company act of nineteen hundred fifty-six, as amended and the regu-
42 lations promulgated pursuant to the authority of such section, or (ii)
43 it is a financial subsidiary.
44 An election under this paragraph may not be made by a corporation
45 described in paragraphs one through eight of subsection (a) of this
46 section or in subsection (e) of this section. In addition, an election
47 under this paragraph may not be made by a corporation that is a party to
48 a reorganization, as defined in subsection (a) of section 368 of the
49 internal revenue code of 1986, as amended, of a corporation described in
50 paragraph one of this subsection if both corporations were sixty-five
51 percent or more owned or controlled, directly or indirectly, by the same
52 interests at the time of the reorganization. An election under this
53 paragraph must be made by the taxpayer on or before the due date for
54 filing its return (determined with regard to extensions of time for
55 filing) for the applicable taxable year. The election to be taxed under
56 article nine-A of this chapter shall be made by the taxpayer by filing
A. 5316 9
1 the report required pursuant to section two hundred eleven of this chap-
2 ter and the election to be taxed under this article shall be made by the
3 taxpayer by filing the return required pursuant to section fourteen
4 hundred sixty-two of this article. Any election made pursuant to this
5 paragraph shall be irrevocable and shall apply to each subsequent taxa-
6 ble year beginning on or after January first, two thousand one and
7 before January first, two thousand three, provided that the stock owner-
8 ship requirements described in subparagraph (i) of this paragraph are
9 met or such corporation described in subparagraph (ii) of this paragraph
10 continues as a financial subsidiary.
11 (3) For purposes of this section, a financial subsidiary means a
12 corporation (i) sixty-five percent or more of whose voting stock is
13 owned or controlled, directly or indirectly by a banking corporation
14 described in paragraph one, two or three of subsection (a) of this
15 section and (ii) is described in section 5136A(g) of the revised stat-
16 utes of the United States or section 46 of the federal deposit insurance
17 act. For purposes of this article, the term "banking corporation" shall
18 include a corporation electing to be taxed under this article pursuant
19 to paragraph two of this subsection for so long as such election shall
20 be in effect.
21 (j) Transitional provisions relating to the enactment and implementa-
22 tion of the federal Gramm-Leach-Bliley act. (1) Notwithstanding anything
23 to the contrary contained in this section other than subsection (n) of
24 this section, a corporation that was in existence before January first,
25 two thousand three and was subject to tax under article nine-A of this
26 chapter for its last taxable year beginning before January first, two
27 thousand three, shall continue to be taxable under such article nine-A
28 for all taxable years beginning on or after January first, two thousand
29 three and before January first, two thousand four. The preceding
30 sentence shall not apply to any taxable year during which such corpo-
31 ration is a banking corporation described in paragraphs one through
32 eight of subsection (a) of this section. Notwithstanding anything to the
33 contrary contained in this section other than subsection (n) of this
34 section, a banking corporation that was in existence before January
35 first, two thousand three and was subject to tax under this article for
36 its last taxable year beginning before January first, two thousand
37 three, shall continue to be taxable under this article for all taxable
38 years beginning on or after January first, two thousand three and before
39 January first, two thousand four. Provided, however, that nothing in
40 this subsection shall prohibit a corporation that elected pursuant to
41 subsection (d) of this section to be taxable under article nine-A of
42 this chapter from revoking that election in accordance with such
43 subsection (d).
44 For purposes of this paragraph, a corporation shall be considered to
45 be subject to tax under article nine-A of this chapter for a taxable
46 year if such corporation was not a taxpayer but was properly included in
47 a combined report filed pursuant to section two hundred eleven of this
48 chapter for such taxable year and a corporation shall be considered to
49 be subject to tax under this article for a taxable year if such corpo-
50 ration was not a taxpayer but was properly included in a combined return
51 filed pursuant to subsection (f) or (g) of section fourteen hundred
52 sixty-two of this article for such taxable year. A corporation that was
53 in existence before January first, two thousand three but first becomes
54 a taxpayer in a taxable year beginning on or after January first, two
55 thousand three and before January first, two thousand four, shall be
56 considered for purposes of this paragraph to have been subject to tax
A. 5316 10
1 under article nine-A of this chapter for its last taxable year beginning
2 before January first, two thousand three if such corporation would have
3 been subject to tax under such article for such taxable year if it had
4 been a taxpayer during such taxable year. A corporation that was in
5 existence before January first, two thousand three but first becomes a
6 taxpayer in a taxable year beginning on or after January first, two
7 thousand three and before January first, two thousand four, shall be
8 considered for purposes of this paragraph to have been subject to tax
9 under this article for its last taxable year beginning before January
10 first, two thousand three if such corporation would have been subject to
11 tax under this article for such taxable year if it had been a taxpayer
12 during such taxable year.
13 (2) Notwithstanding anything to the contrary contained in this section
14 other than subsection (n) of this section, a corporation formed on or
15 after January first, two thousand three and before January first, two
16 thousand four may elect to be subject to tax under this article or under
17 article nine-A of this chapter for its first taxable year beginning on
18 or after January first, two thousand three and before January first, two
19 thousand four in which either (i) sixty-five percent or more of its
20 voting stock is owned or controlled, directly or indirectly by a finan-
21 cial holding company, provided the corporation whose voting stock is so
22 owned or controlled is principally engaged in activities that are
23 described in section 4(k)(4) or 4(k)(5) of the federal bank holding
24 company act of nineteen hundred fifty-six, as amended and the regu-
25 lations promulgated pursuant to the authority of such section, or (ii)
26 it is a financial subsidiary.
27 An election under this paragraph may not be made by a corporation
28 described in paragraphs one through eight of subsection (a) of this
29 section or in subsection (e) of this section. In addition, an election
30 under this paragraph may not be made by a corporation that is a party to
31 a reorganization, as defined in subsection (a) of section 368 of the
32 internal revenue code of 1986, as amended, of a corporation described in
33 paragraph one of this subsection if both corporations were sixty-five
34 percent or more owned or controlled, directly or indirectly, by the same
35 interests at the time of the reorganization. An election under this
36 paragraph must be made by the taxpayer on or before the due date for
37 filing its return (determined with regard to extensions of time for
38 filing) for the applicable taxable year. The election to be taxed under
39 article nine-A of this chapter shall be made by the taxpayer by filing
40 the report required pursuant to section two hundred eleven of this chap-
41 ter and the election to be taxed under this article shall be made by the
42 taxpayer by filing the return required pursuant to section fourteen
43 hundred sixty-two of this article. Any election made pursuant to this
44 paragraph shall be irrevocable and shall apply to each subsequent taxa-
45 ble year beginning on or after January first, two thousand three and
46 before January first, two thousand four, provided that the stock owner-
47 ship requirements described in subparagraph (i) of this paragraph are
48 met or such corporation described in subparagraph (ii) of this paragraph
49 continues as a financial subsidiary.
50 (3) For purposes of this section, a financial subsidiary means a
51 corporation (i) sixty-five percent or more of whose voting stock is
52 owned or controlled, directly or indirectly by a banking corporation
53 described in paragraph one, two or three of subsection (a) of this
54 section and (ii) is described in section 5136A(g) of the revised stat-
55 utes of the United States or section 46 of the federal deposit insurance
56 act. For purposes of this article, the term "banking corporation" shall
A. 5316 11
1 include a corporation electing to be taxed under this article pursuant
2 to paragraph two of this subsection for so long as such election shall
3 be in effect.
4 (k) Transitional provisions relating to the enactment and implementa-
5 tion of the federal Gramm-Leach-Bliley act. (1) Notwithstanding anything
6 to the contrary contained in this section other than subsection (n) of
7 this section, a corporation that was in existence before January first,
8 two thousand four and was subject to tax under article nine-A of this
9 chapter for its last taxable year beginning before January first, two
10 thousand four, shall continue to be taxable under such article nine-A
11 for all taxable years beginning on or after January first, two thousand
12 four and before January first, two thousand six. The preceding sentence
13 shall not apply to any taxable year during which such corporation is a
14 banking corporation described in paragraphs one through eight of
15 subsection (a) of this section. Notwithstanding anything to the contrary
16 contained in this section other than subsection (n) of this section, a
17 banking corporation that was in existence before January first, two
18 thousand four and was subject to tax under this article for its last
19 taxable year beginning before January first, two thousand four, shall
20 continue to be taxable under this article for all taxable years begin-
21 ning on or after January first, two thousand four and before January
22 first, two thousand six. Provided, however, that nothing in this
23 subsection shall prohibit a corporation that elected pursuant to
24 subsection (d) of this section to be taxable under article nine-A of
25 this chapter from revoking that election in accordance with such
26 subsection (d).
27 For purposes of this paragraph, a corporation shall be considered to
28 be subject to tax under article nine-A of this chapter for a taxable
29 year if such corporation was not a taxpayer but was properly included in
30 a combined report filed pursuant to section two hundred eleven of this
31 chapter for such taxable year and a corporation shall be considered to
32 be subject to tax under this article for a taxable year if such corpo-
33 ration was not a taxpayer but was properly included in a combined return
34 filed pursuant to subsection (f) or (g) of section fourteen hundred
35 sixty-two of this article for such taxable year. A corporation that was
36 in existence before January first, two thousand four but first becomes a
37 taxpayer in a taxable year beginning on or after January first, two
38 thousand four and before January first, two thousand six, shall be
39 considered for purposes of this paragraph to have been subject to tax
40 under article nine-A of this chapter for its last taxable year beginning
41 before January first, two thousand four, if such corporation would have
42 been subject to tax under such article for such taxable year if it had
43 been a taxpayer during such taxable year. A corporation that was in
44 existence before January first, two thousand four, but first becomes a
45 taxpayer in a taxable year beginning on or after January first, two
46 thousand four and before January first, two thousand six, shall be
47 considered for purposes of this paragraph to have been subject to tax
48 under this article for its last taxable year beginning before January
49 first, two thousand four if such corporation would have been subject to
50 tax under this article for such taxable year if it had been a taxpayer
51 during such taxable year.
52 (2) Notwithstanding anything to the contrary contained in this section
53 other than subsection (n) of this section, a corporation formed on or
54 after January first, two thousand four and before January first, two
55 thousand six may elect to be subject to tax under this article or under
56 article nine-A of this chapter for its first taxable year beginning on
A. 5316 12
1 or after January first, two thousand four and before January first, two
2 thousand six in which either (i) sixty-five percent or more of its
3 voting stock is owned or controlled, directly or indirectly by a finan-
4 cial holding company, provided the corporation whose voting stock is so
5 owned or controlled is principally engaged in activities that are
6 described in section 4(k)(4) or 4(k)(5) of the federal bank holding
7 company act of nineteen hundred fifty-six, as amended and the regu-
8 lations promulgated pursuant to the authority of such section, or (ii)
9 it is a financial subsidiary.
10 An election under this paragraph may not be made by a corporation
11 described in paragraphs one through eight of subsection (a) of this
12 section or in subsection (e) of this section. In addition, an election
13 under this paragraph may not be made by a corporation that is a party to
14 a reorganization, as defined in subsection (a) of section three hundred
15 sixty-eight of the internal revenue code of nineteen eighty-six, as
16 amended, of a corporation described in paragraph one of this subsection
17 if both corporations were sixty-five percent or more owned or
18 controlled, directly or indirectly, by the same interests at the time of
19 the reorganization. An election under this paragraph must be made by the
20 taxpayer on or before the due date for filing its return (determined
21 with regard to extensions of time for filing) for the applicable taxable
22 year. The election to be taxed under article nine-A of this chapter
23 shall be made by the taxpayer by filing the report required pursuant to
24 section two hundred eleven of this chapter and the election to be taxed
25 under this article shall be made by the taxpayer by filing the return
26 required pursuant to section fourteen hundred sixty-two of this article.
27 Any election made pursuant to this paragraph shall be irrevocable and
28 shall apply to each subsequent taxable year beginning on or after Janu-
29 ary first, two thousand four and before January first, two thousand six,
30 provided that the stock ownership requirements described in subparagraph
31 (i) of this paragraph are met or such corporation described in subpara-
32 graph (ii) of this paragraph continues as a financial subsidiary.
33 (3) For purposes of this section, a financial subsidiary means a
34 corporation (i) sixty-five percent or more of whose voting stock is
35 owned or controlled, directly or indirectly by a banking corporation
36 described in paragraph one, two or three of subsection (a) of this
37 section and (ii) is described in section 5136A(g) of the revised stat-
38 utes of the United States or section forty-six of the federal deposit
39 insurance act. For purposes of this article, the term "banking corpo-
40 ration" shall include a corporation electing to be taxed under this
41 article pursuant to paragraph two of this subsection for so long as such
42 election shall be in effect.
43 (l) Transitional provisions relating to the enactment and implementa-
44 tion of the federal Gramm-Leach-Bliley act. (1) Notwithstanding anything
45 to the contrary contained in this section other than subsection (n) of
46 this section, a corporation that was in existence before January first,
47 two thousand six and was subject to tax under article nine-A of this
48 chapter for its last taxable year beginning before January first, two
49 thousand six, shall continue to be taxable under article nine-A for all
50 taxable years beginning on or after January first, two thousand six and
51 before January first, two thousand eight. The preceding sentence shall
52 not apply to any taxable year during which such corporation is a banking
53 corporation described in paragraphs one through eight of subsection (a)
54 of this section. Notwithstanding anything to the contrary contained in
55 this section other than subsection (n) of this section, a banking corpo-
56 ration that was in existence before January first, two thousand six and
A. 5316 13
1 was subject to tax under this article for its last taxable year begin-
2 ning before January first, two thousand six, shall continue to be taxa-
3 ble under this article for all taxable years beginning on or after Janu-
4 ary first, two thousand six and before January first, two thousand
5 eight. Provided, however, that nothing in this subsection shall prohibit
6 a corporation that elected pursuant to subsection (d) of this section to
7 be taxable under article nine-A of this chapter from revoking that
8 election in accordance with such subsection (d).
9 For purposes of this paragraph, a corporation shall be considered to
10 be subject to tax under article nine-A of this chapter for a taxable
11 year if such corporation was not a taxpayer but was properly included in
12 a combined report filed pursuant to section two hundred eleven of this
13 chapter for such taxable year and a corporation shall be considered to
14 be subject to tax under this article for a taxable year if such corpo-
15 ration was not a taxpayer but was properly included in a combined return
16 filed pursuant to subsection (f) or (g) of section fourteen hundred
17 sixty-two of this article for such taxable year. A corporation that was
18 in existence before January first, two thousand six but first becomes a
19 taxpayer in a taxable year beginning on or after January first, two
20 thousand six and before January first, two thousand eight, shall be
21 considered for purposes of this paragraph to have been subject to tax
22 under article nine-A of this chapter for its last taxable year beginning
23 before January first, two thousand six if such corporation would have
24 been subject to tax under such article for such taxable year if it had
25 been a taxpayer during such taxable year. A corporation that was in
26 existence before January first, two thousand six but first becomes a
27 taxpayer in a taxable year beginning on or after January first, two
28 thousand six and before January first, two thousand eight, shall be
29 considered for purposes of this paragraph to have been subject to tax
30 under this article for its last taxable year beginning before January
31 first, two thousand six if such corporation would have been subject to
32 tax under this article for such taxable year if it had been a taxpayer
33 during such taxable year.
34 (2) Notwithstanding anything to the contrary contained in this section
35 other than subsection (n) of this section, a corporation formed on or
36 after January first, two thousand six and before January first, two
37 thousand eight may elect to be subject to tax under this article or
38 under article nine-A of this chapter for its first taxable year begin-
39 ning on or after January first, two thousand six and before January
40 first, two thousand eight in which either (i) sixty-five percent or more
41 of its voting stock is owned or controlled, directly or indirectly by a
42 financial holding company, provided the corporation whose voting stock
43 is so owned or controlled is principally engaged in activities that are
44 described in section 4(k)(4) or 4(k)(5) of the federal bank holding
45 company act of nineteen hundred fifty-six, as amended and the regu-
46 lations promulgated pursuant to the authority of such section, or (ii)
47 it is a financial subsidiary. An election under this paragraph may not
48 be made by a corporation described in paragraphs one through eight of
49 subsection (a) of this section or in subsection (e) of this section. In
50 addition, an election under this paragraph may not be made by a corpo-
51 ration that is a party to a reorganization, as defined in subsection (a)
52 of section 368 of the internal revenue code of 1986, as amended, of a
53 corporation described in paragraph one of this subsection if both corpo-
54 rations were sixty-five percent or more owned or controlled, directly or
55 indirectly, by the same interests at the time of the reorganization.
A. 5316 14
1 An election under this paragraph must be made by the taxpayer on or
2 before the due date for filing its return (determined with regard to
3 extensions of time for filing) for the applicable taxable year. The
4 election to be taxed under article nine-A of this chapter shall be made
5 by the taxpayer by filing the report required pursuant to section two
6 hundred eleven of this chapter and the election to be taxed under this
7 article shall be made by the taxpayer by filing the return required
8 pursuant to section fourteen hundred sixty-two of this article. Any
9 election made pursuant to this paragraph shall be irrevocable and shall
10 apply to each subsequent taxable year beginning on or after January
11 first, two thousand six and before January first, two thousand eight,
12 provided that the stock ownership requirements described in subparagraph
13 (i) of this paragraph are met or such corporation described in subpara-
14 graph (ii) of this paragraph continues as a financial subsidiary.
15 (3) For purposes of this section, a financial subsidiary means a
16 corporation (i) sixty-five percent or more of whose voting stock is
17 owned or controlled, directly or indirectly by a banking corporation
18 described in paragraph one, two or three of subsection (a) of this
19 section and (ii) is described in section 5136A(g) of the revised stat-
20 utes of the United States or section 46 of the federal deposit insurance
21 act. For purposes of this article, the term "banking corporation" shall
22 include a corporation electing to be taxed under this article pursuant
23 to paragraph two of this subsection for so long as such election shall
24 be in effect.
25 (m) Transitional provisions relating to the enactment and implementa-
26 tion of the federal Gramm-Leach-Bliley act. (1) Notwithstanding
27 anything to the contrary contained in this section other than subsection
28 (n) of this section, a corporation that was in existence before January
29 first, two thousand twelve and was subject to tax under article nine-A
30 of this chapter for its last taxable year beginning before January
31 first, two thousand twelve, shall continue to be taxable under such
32 article for all taxable years beginning on or after January first, two
33 thousand twelve and before January first, two thousand seventeen. The
34 preceding sentence shall not apply to any taxable year during which such
35 corporation is a banking corporation described in paragraphs one through
36 eight of subsection (a) of this section. Notwithstanding anything to
37 the contrary contained in this section other than subsection (n) of this
38 section, a banking corporation or corporation that was in existence
39 before January first, two thousand twelve and was subject to tax under
40 this article for its last taxable year beginning before January first,
41 two thousand twelve, shall continue to be taxable under this article for
42 all taxable years beginning on or after January first, two thousand
43 twelve and before January first, two thousand seventeen only if the
44 corporation is a banking corporation as defined in subsection (a) of
45 this section or the corporation satisfies the requirements for a corpo-
46 ration to elect to be taxable under this article. Provided further, that
47 nothing in this subsection shall prohibit a corporation that elected
48 pursuant to subsection (d) of this section to be taxable under article
49 nine-A of this chapter from revoking that election in accordance with
50 such subsection (d).
51 For purposes of this paragraph, a corporation shall be considered to
52 be subject to tax under article nine-A of this chapter for a taxable
53 year if such corporation was not a taxpayer but was properly included in
54 a combined report filed pursuant to section two hundred eleven of this
55 chapter for such taxable year and a corporation shall be considered to
56 be subject to tax under this article for a taxable year if such corpo-
A. 5316 15
1 ration was not a taxpayer but was properly included in a combined return
2 filed pursuant to subsection (f) or (g) of section fourteen hundred
3 sixty-two of this article for such taxable year. A corporation that was
4 in existence before January first, two thousand twelve but first becomes
5 a taxpayer in a taxable year beginning on or after January first, two
6 thousand twelve and before January first, two thousand seventeen, shall
7 be considered for purposes of this paragraph to have been subject to tax
8 under article nine-A of this chapter for its last taxable year beginning
9 before January first, two thousand twelve if such corporation would have
10 been subject to tax under such article for such taxable year if it had
11 been a taxpayer during such taxable year. A corporation that was in
12 existence before January first, two thousand twelve but first becomes a
13 taxpayer in a taxable year beginning on or after January first, two
14 thousand twelve and before January first, two thousand seventeen, shall
15 be considered for purposes of this paragraph to have been subject to tax
16 under this article for its last taxable year beginning before January
17 first, two thousand twelve if such corporation would have been subject
18 to tax under this article for such taxable year if it had been a taxpay-
19 er during such taxable year.
20 (2) Notwithstanding anything to the contrary contained in this section
21 other than subsection (n) of this section, a corporation formed on or
22 after January first, two thousand twelve and before January first, two
23 thousand seventeen may elect to be subject to tax under this article or
24 under article nine-A of this chapter for its first taxable year begin-
25 ning on or after January first, two thousand twelve and before January
26 first, two thousand seventeen in which either (i) sixty-five percent or
27 more of its voting stock is owned or controlled, directly or indirectly
28 by a financial holding company, provided the corporation whose voting
29 stock is so owned or controlled is principally engaged in activities
30 that are described in section 4(k)(4) or 4(k)(5) of the federal bank
31 holding company act of nineteen hundred fifty-six, as amended and the
32 regulations promulgated pursuant to the authority of such section, or
33 (ii) it is a financial subsidiary. An election under this paragraph may
34 not be made by a corporation described in paragraphs one through eight
35 of subsection (a) of this section or in subsection (e) of this section.
36 In addition, an election under this paragraph may not be made by a
37 corporation that is a party to a reorganization, as defined in
38 subsection (a) of section 368 of the internal revenue code of 1986, as
39 amended, of a corporation described in paragraph one of this subsection
40 if both corporations were sixty-five percent or more owned or
41 controlled, directly or indirectly, by the same interests at the time of
42 the reorganization.
43 An election under this paragraph must be made by the taxpayer on or
44 before the due date for filing its return (determined with regard to
45 extensions of time for filing) for the applicable taxable year. The
46 election to be taxed under article nine-A of this chapter shall be made
47 by the taxpayer by filing the report required pursuant to section two
48 hundred eleven of this chapter and the election to be taxed under this
49 article shall be made by the taxpayer by filing the return required
50 pursuant to section fourteen hundred sixty-two of this article. Any
51 election made pursuant to this paragraph shall be irrevocable and shall
52 apply to each subsequent taxable year beginning on or after January
53 first, two thousand twelve and before January first, two thousand seven-
54 teen, provided that the stock ownership and activities requirements
55 described in subparagraph (i) of this paragraph are met or such corpo-
A. 5316 16
1 ration described in subparagraph (ii) of this paragraph continues as a
2 financial subsidiary.
3 (3) For purposes of this section, a financial subsidiary means a
4 corporation (i) sixty-five percent or more of whose voting stock is
5 owned or controlled, directly or indirectly by a banking corporation
6 described in paragraph one, two or three of subsection (a) of this
7 section and (ii) is described in section 5136A(g) of the revised stat-
8 utes of the United States or section 46 of the federal deposit insurance
9 act. For purposes of this article, the term "banking corporation" shall
10 include a corporation electing to be taxed under this article pursuant
11 to paragraph two of this subsection for so long as such election shall
12 be in effect.
13 (4) The provisions of this subsection shall not apply to a captive
14 REIT, a captive RIC or an overcapitalized captive insurance company.
15 (n)(1) Notwithstanding anything in this article to the contrary, if
16 any of the conditions described in paragraph three of this subsection
17 apply to a corporation that has made either the election to be taxable
18 under article nine-A of this chapter pursuant to the Gramm-Leach-Bliley
19 transitional provisions in this section, or the election pursuant to
20 subsection (d) of this section to continue to be taxable under article
21 nine-A of this chapter (hereinafter the "electing corporation"), then
22 such corporation shall be deemed to have revoked the election as of the
23 first day of the taxable year in which such condition applied.
24 (2) Notwithstanding anything in this article to the contrary, if any
25 of the conditions described in paragraph three of this subsection apply
26 to a corporation required to be taxable under article nine-A of this
27 chapter pursuant to the Gramm-Leach-Bliley transitional provisions in
28 this section (hereinafter the "grandfathered corporation"), such corpo-
29 ration, if it is otherwise described in subsection (a) of this section,
30 shall be taxable under this article as of the first day of the taxable
31 year in which such condition applied.
32 (3) The provisions of paragraph one and paragraph two of this
33 subsection shall apply if any of the following conditions exist or occur
34 with respect to the electing corporation or the grandfathered corpo-
35 ration in a taxable year (including any short taxable year) beginning on
36 or after January first, two thousand seven:
37 (A) the corporation ceases to be a taxpayer under article nine-A of
38 this chapter;
39 (B) the corporation becomes subject to the fixed dollar minimum tax
40 under paragraph (d) of subdivision one of section two hundred ten of
41 this chapter;
42 (C) the corporation has no wages or receipts allocable to New York
43 state pursuant to subdivision three of section two hundred ten of this
44 chapter, or is otherwise inactive; provided that this subparagraph shall
45 not apply to a corporation which is engaged in the active conduct of a
46 trade or business, or substantially all of the assets of which are stock
47 and securities of corporations which are directly or indirectly
48 controlled by it and are engaged in the active conduct of a trade or
49 business;
50 (D) sixty-five percent or more of the voting stock of the corporation
51 becomes owned or controlled directly by a corporation that acquired the
52 stock in a transaction (or series of related transactions) that quali-
53 fies as a purchase within the meaning of paragraph three of subsection
54 (h) of section three hundred thirty-eight of the internal revenue code
55 unless the corporation whose stock was acquired and the corporation
56 acquiring the stock were, immediately prior to such purchase, members of
A. 5316 17
1 the same affiliated group (as such term is defined in section fifteen
2 hundred four of the internal revenue code without regard to the exclu-
3 sions provided for in subsection (b) of such section); provided that any
4 acquisition that was completed on or before January third, two thousand
5 seven shall be treated for purposes of this subparagraph as an acquisi-
6 tion made before January first, two thousand seven; or
7 (E) the corporation, in a transaction or series of related trans-
8 actions, acquires assets, whether by contribution, purchase, or other-
9 wise, having an average value (determined in accordance with subdivision
10 two of section two hundred ten of this chapter), or, if greater, a total
11 tax basis, in excess of forty percent of the average value, or, if
12 greater, the total tax basis, of all the assets of the corporation imme-
13 diately prior to such acquisition and as a result of such acquisition
14 the corporation is principally engaged in a business that is different
15 from the business immediately prior to such acquisition, provided that
16 such different business is described in subparagraph (i), (ii) or (iii)
17 of paragraph nine of subsection (a) of this section.
18 § 1453. Computations of entire net income. (a) Entire net income means
19 total net income from all sources which shall be the same as the entire
20 taxable income (but not alternative minimum taxable income).
21 (1) which the taxpayer is required to report to the United States
22 treasury department, or
23 (2) which the taxpayer, in the case of a corporation which is exempt
24 from federal income tax (other than the tax on unrelated business taxa-
25 ble income imposed under section 511 of the internal revenue code) but
26 is subject to tax under this article, would have been required to report
27 to the United States treasury department but for such exemption, or
28 (3) which, in the case of a corporation organized under the laws of a
29 country other than the United States, is effectively connected with the
30 conduct of a trade or business within the United States as determined
31 under section 882 of the internal revenue code subject to the modifica-
32 tions and adjustments hereinafter provided, or
33 (4) which the taxpayer would have been required to report to the
34 United States treasury department if it had not made the election under
35 subchapter s of chapter one of the internal revenue code.
36 (b) Entire net income shall be computed without the deduction or
37 exclusion of:
38 (1) (A) in the case of a corporation organized under the laws of a
39 country other than the United States, (i) any part of any income from
40 dividends or interest on any kind of stock, securities or indebtedness,
41 but only if such income is treated as effectively connected with the
42 conduct of a trade or business in the United States pursuant to section
43 eight hundred sixty-four of the internal revenue code, (ii) any income
44 exempt from federal taxable income under any treaty obligation of the
45 United States, but only if such income would be treated as effectively
46 connected in absence of such exemption, provided that such treaty obli-
47 gation does not preclude the taxation of such income by a state, or
48 (iii) any income which would be treated as effectively connected if such
49 income were not excluded from gross income pursuant to subsection (a) of
50 section one hundred three of the internal revenue code; (B) in the case
51 of any other corporation, any part of any income from dividends or
52 interest on any kind of stock, securities or indebtedness; (C) except
53 that for purposes of subparagraphs (A) and (B) of this paragraph there
54 shall be excluded any amounts treated as dividends pursuant to section
55 seventy-eight of the internal revenue code and any amounts described in
56 paragraphs eleven and twelve of subsection (e) of this section;
A. 5316 18
1 (2) taxes on or measured by income or profits paid or accrued within
2 the taxable year to the United States, or any of its possessions or to
3 any foreign country;
4 (3) premiums paid for environmental remediation insurance, as defined
5 in section twenty-three of this chapter, and deducted in determining
6 federal taxable income, to the extent of the amount of the environmental
7 remediation insurance credit allowed under such section twenty-three and
8 subsection (s) of section fourteen hundred fifty-six of this article;
9 (4) taxes imposed under this article, sections one hundred eighty-
10 three and one hundred eighty-four and article nine-A of this chapter;
11 (5) in those instances where a credit for the special additional mort-
12 gage recording tax is allowed under paragraph one of subsection (c) of
13 section fourteen hundred fifty-six of this article, the amount allowed
14 as an exclusion or deduction for the special additional mortgage record-
15 ing tax imposed by subdivision one-a of section two hundred fifty-three
16 of this chapter in determining the entire taxable income which the
17 taxpayer is required to report to the United States treasury department
18 for such taxable year; and
19 (6) Unless the credit allowed pursuant to subsection (c) of section
20 fourteen hundred fifty-six of this article is reflected in the computa-
21 tion of the gain or loss so as to result in an increase in such gain or
22 decrease of such loss, for federal income tax purposes, from the sale or
23 other disposition of the property with respect to which the special
24 additional mortgage recording tax imposed pursuant to subdivision one-a
25 of section two hundred fifty-three of this chapter was paid, the amount
26 of the special additional mortgage recording tax imposed by subdivision
27 one-a of section two hundred fifty-three of this chapter which was paid
28 and which is reflected in the computation of the basis of the property
29 so as to result in a decrease in such gain or increase in such loss for
30 federal income tax purposes from the sale or other disposition of the
31 property with respect to which such tax was paid.
32 (7) for taxable years beginning after December thirty-first, nineteen
33 hundred eighty-one, except with respect to property which is a qualified
34 mass commuting vehicle described in subparagraph (D) of paragraph eight
35 of subsection (f) of section one hundred sixty-eight of the internal
36 revenue code (relating to qualified mass commuting vehicles), any amount
37 which the taxpayer claimed as a deduction in computing its federal taxa-
38 ble income solely as a result of an election made pursuant to the
39 provisions of such paragraph eight as it was in effect for agreements
40 entered into prior to January first, nineteen hundred eighty-four;
41 (8) for taxable years beginning after December thirty-first, nineteen
42 hundred eighty-one, except with respect to property which is a qualified
43 mass commuting vehicle described in subparagraph (D) of paragraph eight
44 of subsection (f) of section one hundred sixty-eight of the internal
45 revenue code (relating to qualified mass commuting vehicles), any amount
46 which the taxpayer would have been required to include in the computa-
47 tion of its federal taxable income had it not made the election permit-
48 ted pursuant to such paragraph eight as it was in effect for agreements
49 entered into prior to January first, nineteen hundred eighty-four;
50 (9) in the case of property placed in service in taxable years begin-
51 ning before nineteen hundred ninety-four, for taxable years beginning
52 after December thirty-first, nineteen hundred eighty-one, except with
53 respect to property subject to the provisions of section two hundred
54 eighty-F of the internal revenue code and property subject to the
55 provisions of section one hundred sixty-eight of the internal revenue
56 code which is placed in service in this state in taxable years beginning
A. 5316 19
1 after December thirty-first, nineteen hundred eighty-four, the amount
2 allowable as a deduction determined under section one hundred sixty-
3 eight of the internal revenue code;
4 (10) upon the disposition of property to which paragraph seven of
5 subsection (e) of this section applies, the amount, if any, by which the
6 aggregate of the amounts described in such paragraph seven attributable
7 to such property exceeds the aggregate of the amounts described in para-
8 graph nine of this subsection attributable to such property,
9 (11) for taxable years beginning before January first, two thousand
10 ten, in the case of a taxpayer subject to the provisions of section
11 585(c) of the internal revenue code, the amount allowed as a deduction
12 pursuant to section 166 of such code, and
13 (12) for taxable years beginning before January first, two thousand
14 ten, for taxpayers subject to the provisions of subsection (i) of this
15 section, twenty percent of the excess of (A) the amount determined
16 pursuant to such subsection (i) over (B) the amount which would have
17 been allowable had such institution maintained its bad debt reserve for
18 all taxable years on the basis of actual experience.
19 (13) for taxable years beginning after December thirty-first, two
20 thousand two, in the case of qualified property described in paragraph
21 two of subsection k of section 168 of the internal revenue code, other
22 than qualified resurgence zone property described in subsection (u) of
23 this section, and other than qualified New York Liberty Zone property
24 described in paragraph two of subsection b of section 1400L of the
25 internal revenue code (without regard to clause (i) of subparagraph (C)
26 of such paragraph), which was placed in service on or after June first,
27 two thousand three, the amount allowable as a deduction under section
28 167 of the internal revenue code.
29 (14) The amount of any deduction allowed pursuant to section one
30 hundred ninety-nine of the internal revenue code.
31 (15) The amount of any federal deduction for taxes imposed under arti-
32 cle twenty-three of this chapter.
33 (c) (1) Except as otherwise provided in paragraphs two, three and four
34 of this subsection, in the case of the sale or exchange of property by a
35 taxpayer which has been subject to article nine-B or nine-C of this
36 chapter (as such articles were in effect on or before December thirty-
37 first, nineteen hundred seventy-two) where the property has a higher
38 adjusted basis for New York tax purposes than for federal tax purposes,
39 there shall be allowed as a deduction from entire net income, the
40 portion of any gain or loss on such sale which equals the difference in
41 such basis.
42 (2) In case of property of a taxpayer, other than a savings bank or a
43 savings and loan association, acquired prior to January first, nineteen
44 hundred twenty-six, and disposed of thereafter, the computation of
45 entire net income shall be modified as follows:
46 (i) no gain shall be deemed to have been derived if either the cost or
47 the fair market price or value on January first, nineteen hundred twen-
48 ty-six, exceeds the value realized;
49 (ii) no loss shall be deemed to have been sustained if either the cost
50 or the fair market price or value on January first, nineteen hundred
51 twenty-six, is less than the value realized;
52 (iii) where both the cost and the fair market price or value on Janu-
53 ary first, nineteen hundred twenty-six, are less than the value real-
54 ized, the basis for computing gain shall be the cost or the fair market
55 price or value on such date, whichever is higher;
A. 5316 20
1 (iv) where both the cost and the fair market price or value on January
2 first, nineteen hundred twenty-six, are in excess of the value realized,
3 the basis for computing loss shall be the cost or the fair market price
4 or value on such date, whichever is lower.
5 (3) In case of property of a savings bank acquired prior to January
6 first, nineteen hundred forty-four, and disposed of thereafter, in
7 computing entire net income the basis of such property shall be the
8 value as of December thirty-first, nineteen hundred forty-three, as set
9 forth in such bank's report of surplus and undivided earnings filed with
10 the tax commission as of that date.
11 (4) In case of property of a savings and loan association, acquired
12 prior to January first, nineteen hundred fifty-three, and disposed of
13 thereafter, the computation of entire net income shall be modified as
14 follows:
15 (i) no gain shall be deemed to have been derived if either the cost or
16 the fair market price or value on January first, nineteen hundred
17 fifty-three, exceeds the value realized;
18 (ii) no loss shall be deemed to have been sustained if either the cost
19 or the fair market price or value on January first, nineteen hundred
20 fifty-three, is less than the value realized;
21 (iii) where both the cost and the fair market price or value on Janu-
22 ary first, nineteen hundred fifty-three, are less than the value real-
23 ized, the basis for computing gain shall be the cost or the fair market
24 price or value on such date, whichever is higher;
25 (iv) where both the cost and the fair market price or value on January
26 first, nineteen hundred fifty-three, are in excess of the value real-
27 ized, the basis for computing loss shall be the cost or the fair market
28 price or value on such date, whichever is lower.
29 (d) Entire net income shall not include any refund or credit of a tax
30 for which no exclusion or deduction was allowed in determining the
31 taxpayer's entire net income under this article or articles nine-A or
32 twenty-three of this chapter for any prior year.
33 (e) There shall be allowed as a deduction in determining entire net
34 income, to the extent not deductible in determining federal taxable
35 income:
36 (1) interest on indebtedness incurred or continued to purchase or
37 carry obligations or securities the income from which is subject to tax
38 under this article but exempt from federal income tax,
39 (2) ordinary and necessary expenses paid or incurred during the taxa-
40 ble year attributable to income which is subject to tax under this arti-
41 cle but exempt from federal income tax,
42 (3) the amortizable bond premium for the taxable year on any bond the
43 interest on which is subject to tax under this article but exempt from
44 federal income tax,
45 (4) that portion of wages or salaries paid or incurred for the taxable
46 year for which a deduction is not allowed pursuant to the provisions of
47 section two hundred eighty-C of the internal revenue code,
48 (5) for taxable years beginning after December thirty-first, nineteen
49 hundred eighty-one, except with respect to property which is a qualified
50 mass commuting vehicle described in subparagraph (D) of paragraph eight
51 of subsection (f) of section one hundred sixty-eight of the internal
52 revenue code (relating to qualified mass commuting vehicles), any amount
53 which is included in the taxpayer's federal taxable income solely as a
54 result of an election made pursuant to the provisions of such paragraph
55 eight as it was in effect for agreements entered into prior to January
56 first, nineteen hundred eighty-four,
A. 5316 21
1 (6) for taxable years beginning after December thirty-first, nineteen
2 hundred eighty-one, except with respect to property which is a qualified
3 mass commuting vehicle described in subparagraph (D) of paragraph eight
4 of subsection (f) of section one hundred sixty-eight of the internal
5 revenue code (relating to qualified mass commuting vehicles), any amount
6 which the taxpayer could have excluded from federal taxable income had
7 it not made the election provided for in such paragraph eight as it was
8 in effect for agreements entered into prior to January first, nineteen
9 hundred eighty-four,
10 (7) in the case of property placed in service in taxable years begin-
11 ning before nineteen hundred ninety-four, for taxable years beginning
12 after December thirty-first, nineteen hundred eighty-one, except with
13 respect to property subject to the provisions of section two hundred
14 eighty-F of the internal revenue code and property subject to the
15 provisions of section one hundred sixty-eight of the internal revenue
16 code which is placed in service in this state in taxable years beginning
17 after December thirty-first, nineteen hundred eighty-four, and provided
18 a deduction has not been excluded from entire net income pursuant to
19 paragraph seven of subsection (b) of this section, an amount with
20 respect to property which is subject to the provisions of section one
21 hundred sixty-eight of the internal revenue code equal to the amount
22 allowable as the depreciation deduction under section one hundred
23 sixty-seven of the internal revenue code as such section would have
24 applied to property placed in service on December thirty-first, nineteen
25 hundred eighty,
26 (8) upon the disposition of property to which paragraph seven of this
27 subsection applies, the amount, if any, by which the aggregate of the
28 amounts described in paragraph nine of subsection (b) of this section
29 attributable to such property exceeds the aggregate of the amounts
30 described in paragraph seven of this subsection attributable to such
31 property,
32 (9) any amount of money or other property received from the federal
33 deposit insurance corporation pursuant to subsection (c) of section
34 thirteen of the federal deposit insurance act, as amended, regardless of
35 whether any note or other instrument is issued in exchange therefor,
36 (10) any amount of money or other property received from the federal
37 savings and loan insurance corporation pursuant to paragraph one, two,
38 three or four of subsection (f) of section four hundred six of the
39 federal national housing act, as amended, regardless of whether any note
40 or other instrument is issued in exchange therefor,
41 (11) (i) seventeen percent of interest income from subsidiary capital,
42 and
43 (ii) sixty percent of dividend income from subsidiary capital except
44 as provided in paragraph eighteen of this subsection, and
45 (iii) sixty percent of the amount by which gains from subsidiary capi-
46 tal exceed losses from subsidiary capital, to the extent such gains and
47 losses were taken into account in determining the entire taxable income
48 referred to in subsection (a) of this section,
49 (12) twenty-two and one-half percent of interest income on obligations
50 of New York state, or of any political subdivision thereof, or of the
51 United States, other than obligations held for resale in connection with
52 regular trading activities,
53 (13) for taxable years beginning before January first, two thousand
54 ten, in the case of a taxpayer which recaptures its balance of the
55 reserve for losses on loans for federal income tax purposes pursuant to
56 section 585(c) of the internal revenue code, any amount which is
A. 5316 22
1 included in federal taxable income pursuant to section 585(c) of such
2 code,
3 (14) for taxable years beginning before January first, two thousand
4 ten, in the case of a taxpayer subject to the provisions of section
5 585(c) of the internal revenue code, any amount which is included in
6 federal taxable income as a result of a recovery of a loan.
7 (15) for taxable years beginning before January first, two thousand
8 ten, in the case of a taxpayer which is currently or has previously been
9 subject to subsection (h) of this section, any amount which is included
10 in federal taxable income pursuant to section 593(e)(2) of the internal
11 revenue code, and any other amount so included as a result of a recovery
12 of or termination from the use of a bad debt reserve as defined in
13 section 593 of such code as in existence on December thirty-first, nine-
14 teen hundred ninety-five as a result of federal legislation enacted
15 after December thirty-first, nineteen hundred ninety-five.
16 (16) the amount deductible pursuant to subsection (p) of this section.
17 (17) one hundred percent of dividend income from subsidiary capital
18 received during the taxable year if that dividend income is directly
19 attributable to a dividend from a captive REIT or captive RIC for which
20 the captive REIT or captive RIC claimed a federal dividends paid
21 deduction and that captive REIT or captive RIC is included in a combined
22 report or return under article nine-A, this article or article thirty-
23 three of this chapter.
24 (f) Provided the taxpayer has not made an election pursuant to para-
25 graph two of subsection (b) of section fourteen hundred fifty-four of
26 this article, there shall be allowed as a deduction in determining
27 entire net income, to the extent not deductible in determining federal
28 taxable income, the adjusted eligible net income of an international
29 banking facility determined as follows:
30 (1) The eligible net income of an international banking facility shall
31 be the amount remaining after subtracting from the eligible gross income
32 the applicable expenses.
33 (2) Eligible gross income shall be the gross income derived by an
34 international banking facility from:
35 (A) making, arranging for, placing or servicing loans to foreign
36 persons, provided, however, that in the case of a foreign person which
37 is an individual, or which is a foreign branch of a domestic corporation
38 (other than a bank), or which is a foreign corporation or foreign part-
39 nership which is eighty per centum or more owned or controlled, either
40 directly or indirectly, by one or more domestic corporations (other than
41 banks), domestic partnerships or resident individuals, substantially all
42 the proceeds of the loan are for use outside of the United States;
43 (B) making or placing deposits with foreign persons which are banks or
44 foreign branches of banks (including foreign subsidiaries or foreign
45 branches of the taxpayer) or with other international banking facili-
46 ties; or
47 (C) entering into foreign exchange trading or hedging transactions
48 related to any of the transactions described in this paragraph.
49 (3) Applicable expenses shall be any expenses or other deductions
50 attributable, directly or indirectly, to the eligible gross income
51 described in paragraph two of this subsection.
52 (4) Adjusted eligible net income shall be determined by subtracting
53 from eligible net income the ineligible funding amount, and by subtract-
54 ing from the amount then remaining the floor amount.
55 (5) The ineligible funding amount shall be the amount, if any, deter-
56 mined by multiplying eligible net income by a fraction, the numerator of
A. 5316 23
1 which is the average aggregate amount for the taxable year of all
2 liabilities, including deposits, and other sources of funds of the
3 international banking facility which were not owed to or received from
4 foreign persons, and the denominator of which is the average aggregate
5 amount for the taxable year of all liabilities, including deposits and
6 other sources of funds of the international banking facility.
7 (6) The floor amount shall be the amount, if any, determined by multi-
8 plying the amount remaining after subtracting the ineligible funding
9 amount from the eligible net income by a fraction, not greater than one,
10 which is determined as follows:
11 (A) The numerator shall be
12 (i) the percentage, as set forth in subparagraph (C) of this para-
13 graph, of the average aggregate amount of the taxpayer's loans to
14 foreign persons and deposits with foreign persons which are banks or
15 foreign branches of banks (including foreign subsidiaries or foreign
16 branches of the taxpayer), which loans and deposits were recorded in the
17 financial accounts of the taxpayer for its branches, agencies and
18 offices within the state for taxable years nineteen hundred seventy-
19 five, nineteen hundred seventy-six and nineteen hundred seventy-seven,
20 minus
21 (ii) the average aggregate amount of such loans and such deposits for
22 the taxable year of the taxpayer (other than such loans and deposits of
23 an international banking facility), provided, however, that in no case
24 shall the amount determined in this clause exceed the amount determined
25 in clause (i) of this subparagraph; and
26 (B) The denominator shall be the average aggregate amount of the loans
27 to foreign persons and deposits with foreign persons which are banks or
28 foreign branches of banks (including foreign subsidiaries or foreign
29 branches of the taxpayer), which loans and deposits were recorded in the
30 financial accounts of the taxpayer's international banking facility for
31 the taxable year.
32 (C) The percentage shall be one hundred percent for the first taxable
33 year in which the taxpayer establishes an international banking facility
34 and for the next succeeding four taxable years. The percentage shall be
35 eighty percent for the fifth, sixty percent for the sixth, forty percent
36 for the seventh, and twenty percent for the eighth taxable year next
37 succeeding the year such taxpayer establishes such international banking
38 facility, and zero in the ninth succeeding year and thereafter.
39 (7) In the event adjusted eligible net income is a loss, the amount of
40 such loss shall be added to entire net income.
41 (8) For the purposes of this subsection the term "foreign person"
42 means
43 (A) an individual who is not a resident of the United States,
44 (B) a foreign corporation, a foreign partnership or a foreign trust,
45 as defined in section seventy-seven hundred one of the internal revenue
46 code, other than a domestic branch thereof,
47 (C) a foreign branch of a domestic corporation (including the taxpay-
48 er),
49 (D) a foreign government or an international organization or an agency
50 of either, or
51 (E) an international banking facility.
52 For purposes of this paragraph, the terms "foreign" and "domestic"
53 shall have the same meaning as set forth in section seventy-seven
54 hundred one of the internal revenue code.
55 (g) Entire net income shall be computed without regard to the
56 reduction in the basis of property that is required by section three
A. 5316 24
1 hundred sixty-two of the internal revenue code, because of any amount of
2 money or other property received from the federal deposit insurance
3 corporation pursuant to subsection (c) of section thirteen of the feder-
4 al deposit insurance act, as amended, or from the federal savings and
5 loan insurance corporation pursuant to paragraph one, two, three or four
6 of subsection (f) of section four hundred six of the federal national
7 housing act, as amended.
8 (h) (1) For purposes of this subsection, a "thrift institution" is a
9 banking corporation which satisfies the requirements of subparagraphs
10 (A) and (B) of this paragraph.
11 (A) Such banking corporation must be (i) a banking corporation as
12 defined in paragraph one of subsection (a) of section fourteen hundred
13 fifty-two of this article created or authorized to do business under
14 article six or ten of the banking law, (ii) a banking corporation as
15 defined in paragraph two or seven of subsection (a) of section fourteen
16 hundred fifty-two of this article which is doing a business substantial-
17 ly similar to the business which a corporation or association may be
18 created to do under article six or ten of the banking law or any busi-
19 ness which a corporation or association is authorized by such article to
20 do, or (iii) a banking corporation as defined in paragraph four or five
21 of subsection (a) of section fourteen hundred fifty-two of this article.
22 (B) At least sixty percent of the amount of the total assets (at the
23 close of the taxable year) of such banking corporation must consist of
24 (i) cash; (ii) obligations of the United States or of a state or poli-
25 tical subdivision thereof, and stock or obligations of a corporation
26 which is an instrumentality of the United States or of a state or poli-
27 tical subdivision thereof, but not including obligations the interest on
28 which is excludable from gross income under section 103 of the internal
29 revenue code; (iii) loans secured by a deposit or share of a member;
30 (iv) loans secured by an interest in real property which is (or from the
31 proceeds of the loan, will become) residential real property or real
32 property used primarily for church purposes, loans made for the improve-
33 ment of residential real property or real property used primarily for
34 church purposes, provided that for purposes of this clause, residential
35 real property shall include single or multifamily dwellings, facilities
36 in residential developments dedicated to public use or property used on
37 a nonprofit basis for residents, and mobile homes not used on a tran-
38 sient basis; (v) property acquired through the liquidation of defaulted
39 loans described in clause (iv) of this subparagraph; (vi) any regular or
40 residual interest in a REMIC, as such term is defined in section 860D of
41 the internal revenue code and any regular interest in a FASIT, as such
42 term is defined in section 860L of the internal revenue code, but only
43 in the proportion which the assets of such REMIC or FASIT consist of
44 property described in any of the preceding clauses of this subparagraph,
45 except that if ninety-five percent or more of the assets of such REMIC
46 or FASIT are assets described in clauses (i) through (v) of this subpar-
47 agraph, the entire interest in the REMIC or FASIT shall qualify; (vii)
48 any mortgage-backed security which represents ownership of a fractional
49 undivided interest in a trust, the assets of which consist primarily of
50 mortgage loans, provided that the real property which serves as security
51 for the loans is (or from the proceeds of the loan, will become) the
52 type of property described in clause (iv) of this subparagraph and any
53 collateralized mortgage obligation, the security for which consists
54 primarily of mortgage loans, provided that the real property which
55 serves as security for the loans is (or from the proceeds of the loan,
56 will become) the type of property described in clause (iv) of this
A. 5316 25
1 subparagraph; (viii) certificates of deposit in, or obligations of, a
2 corporation organized under a state law which specifically authorizes
3 such corporation to insure the deposits or share accounts of member
4 associations; (ix) loans secured by an interest in real property located
5 within any urban renewal area to be developed for predominantly residen-
6 tial use under an urban renewal plan approved by the Secretary of Hous-
7 ing and Urban Development under part A or part B of title I of the Hous-
8 ing Act of 1949, as amended, or located within any area covered by a
9 program eligible for assistance under section 103 of the Demonstration
10 Cities and Metropolitan Development Act of 1966, as amended, and loans
11 made for the improvement of any such real property; (x) loans secured by
12 an interest in educational, health, or welfare institutions or facili-
13 ties, including structures designed or used primarily for residential
14 purposes for students, residents, and persons under care, employees, or
15 members of the staff of such institutions or facilities; (xi) loans made
16 for the payment of expenses of college or university education or voca-
17 tional training; (xii) property used by the taxpayer in the conduct of
18 business which consists principally of acquiring the savings of the
19 public and investing in loans; (xiii) loans for which the taxpayer is
20 the creditor and which are wholly secured by loans described in clause
21 (iv) of this subparagraph, but excluding loans for which the taxpayer is
22 the creditor to any banking corporation described in paragraphs one
23 through seven of subsection (a) of section fourteen hundred fifty-two of
24 this article or a real estate investment trust, as such term is defined
25 in section 856 of the internal revenue code, and excluding loans which
26 are treated by the taxpayer as subsidiary capital for purposes of the
27 deductions provided by paragraph eleven of subsection (e) of this
28 section; (xiv) small business loans or small farm loans located in low-
29 income or moderate-income census tracts or block numbering areas deline-
30 ated by the United States bureau of the census in the most recent decen-
31 nial census; and (xv) community development loans or community
32 development investments. For purposes of clause (xv) of this subpara-
33 graph, a "community development loan" is a loan that (I) has as its
34 primary purpose community development, (II) has not been reported or
35 collected by the taxpayer for consideration in the taxpayer's community
36 reinvestment act evaluation pursuant to the federal community reinvest-
37 ment act of 1977, as amended, or section twenty-eight-b of the banking
38 law as a mortgage loan described in clause (iv) of this subparagraph or
39 a small business loan, small farm loan, or consumer loan, (III) benefits
40 the taxpayer's assessment area or areas for purposes of the federal
41 community reinvestment act of 1977, as amended or section twenty-eight-b
42 of the banking law or a broader statewide or regional area that includes
43 the taxpayer's assessment area, and (IV) is identified in the taxpayer's
44 books and records as a community development loan for purposes of its
45 community reinvestment act evaluation pursuant to the federal community
46 reinvestment act of 1977, as amended or section twenty-eight-b of the
47 banking law. For purposes of clause (xv) of this subparagraph, a "commu-
48 nity development investment" is an investment in a security which has as
49 its primary purpose community development and which is identified in the
50 taxpayer's books and records as a qualified investment for purposes of
51 its community reinvestment act evaluation pursuant to the federal commu-
52 nity reinvestment act of 1977, as amended or section twenty-eight-b of
53 the banking law. For purposes of the two preceding sentences, "community
54 development" means (I) affordable housing (including multifamily rental
55 housing for low-income or moderate-income individuals); (II) community
56 services targeted to low-income or moderate-income individuals; (III)
A. 5316 26
1 activities that promote economic development by financing businesses or
2 farms that meet the size eligibility standards of the small business
3 administration's development company or small business investment compa-
4 ny programs or have gross annual revenues of one million dollars or
5 less; (IV) activities that revitalize or stabilize low-income or moder-
6 ate-income census tracts or block numbering areas delineated by the
7 United States bureau of the census in the most recent decennial census;
8 or (V) activities that seek to prevent defaults and/or foreclosures in
9 loans included in items (I) and (III) of this sentence.
10 (C) At the election of the taxpayer, the percentage specified in
11 subparagraph (B) of this paragraph shall be applied on the basis of the
12 average assets outstanding during the taxable year, in lieu of the close
13 of the taxable year. For purposes of clause (iv) of subparagraph (B) of
14 this paragraph, if a multifamily structure securing a loan is used in
15 part for nonresidential use purposes, the entire loan is deemed a resi-
16 dential real property loan if the planned residential use exceeds eighty
17 percent of the property's planned use (determined as of the time the
18 loan is made). Also, for purposes of clause (iv) of subparagraph (B) of
19 this paragraph, loans made to finance the acquisition or development of
20 land shall be deemed to be loans secured by an interest in residential
21 real property if there is a reasonable assurance that the property will
22 become residential real property within a period of three years from the
23 date of acquisition of such land; but this sentence shall not apply for
24 any taxable year unless, within such three year period, such land
25 becomes residential real property. For purposes of determining whether
26 any interest in a REMIC qualifies under clause (vi) of subparagraph (B)
27 of this paragraph, any regular interest in another REMIC held by such
28 REMIC shall be treated as a loan described in a preceding clause under
29 principles similar to the principle of such clause (vi); except that if
30 such REMICS are part of a tiered structure, they shall be treated as one
31 REMIC for purposes of such clause (vi).
32 (2) For taxable years beginning before January first, two thousand
33 ten, a thrift institution must exclude from the computation of its
34 entire net income any amount allowed as a deduction for federal income
35 tax purposes pursuant to sections 166, 585 or 593 of the internal reven-
36 ue code.
37 (3) For taxable years beginning before January first, two thousand
38 ten, a thrift institution shall be allowed as a deduction in computing
39 entire net income the amount of a reasonable addition to its reserve for
40 bad debts. This amount shall be equal to the sum of
41 (A) the amount determined to be a reasonable addition to the reserve
42 for losses on nonqualifying loans, computed in the same manner as is
43 provided with respect to additions to the reserves for losses on loans
44 of banks under paragraph one of subsection (i) of this section, plus
45 (B) the amount determined by the taxpayer to be a reasonable addition
46 to the reserve for losses on qualifying real property loans, but such
47 amount shall not exceed the amount determined under paragraph four or
48 five of this subsection, whichever is the larger, but the amount deter-
49 mined under this subparagraph shall in no case be greater than the larg-
50 er of
51 (i) the amount determined under such paragraph five, or
52 (ii) the amount which, when added to the amount determined under
53 subparagraph (A) of this paragraph, equals the amount by which twelve
54 percent of the total deposits or withdrawable accounts of depositors of
55 the taxpayer at the close of such year exceeds the sum of its surplus,
56 undivided profits and reserves at the beginning of such year (taking
A. 5316 27
1 into account any portion thereof attributable to the period before the
2 first taxable year beginning after December thirty-first, nineteen
3 hundred fifty-one).
4 The taxpayer must include in its tax return for each year a computa-
5 tion of the amount of the addition to the bad debt reserve determined
6 under this subsection. The use of a particular method in the return for
7 a taxable year is not a binding election by the taxpayer.
8 (4) (A) Subject to subparagraphs (B) and (C) of this paragraph, the
9 amount determined under this paragraph for the taxable year shall be an
10 amount equal to thirty-two percent of the entire net income for such
11 year.
12 (B) The amount determined under subparagraph (A) of this paragraph
13 shall be reduced (but not below 0) by the amount determined under
14 subparagraph (A) of paragraph three of this subsection.
15 (C) The amount determined under this paragraph shall not exceed the
16 amount necessary to increase the balance at the close of the taxable
17 year of the reserve for losses on qualifying real property loans to six
18 percent of such loans outstanding at such time.
19 (D) For purposes of this paragraph, entire net income shall be
20 computed
21 (i) by excluding from income any amount included therein by reason of
22 subparagraph (B) of paragraph eight of this subsection,
23 (ii) without regard to any deduction allowable for any addition to the
24 reserve for bad debts, and
25 (iii) by excluding from income an amount equal to the net gain for the
26 taxable year arising from the sale or exchange of stock of a corporation
27 or of obligations the interest on which is excludable from gross income
28 under section 103 of the internal revenue code.
29 (iv) Whenever a thrift institution is properly includable in a
30 combined return, entire net income, for purposes of this paragraph,
31 shall not exceed the lesser of the thrift institution's separately
32 computed entire net income as adjusted pursuant to clauses (i) through
33 (iii) of this subparagraph or the combined group's entire net income as
34 adjusted pursuant to clauses (i) through (iii) of this subparagraph.
35 (5) The amount determined under this paragraph for the taxable year
36 shall be computed in the same manner as is provided under paragraph one
37 of subsection (i) of this section with respect to additions to reserves
38 for losses on loans of banks. Provided, however, that for any taxable
39 year beginning after nineteen hundred ninety-five, for purposes of such
40 computation, the base year shall be the later of (A) the last taxable
41 year beginning in nineteen hundred ninety-five or (B) the last taxable
42 year before the current year in which the amount determined under the
43 provisions of subparagraph (B) of paragraph three of this subsection
44 exceeded the amount allowable under this subparagraph.
45 (6) (A) (i) Each taxpayer described in paragraph one of this
46 subsection shall establish and maintain a New York reserve for losses on
47 qualifying real property loans, a New York reserve for losses on
48 nonqualifying loans and a supplemental reserve for losses on loans. Such
49 reserves shall be maintained for all subsequent taxable years that this
50 subsection applies to the taxpayer. (ii) For purposes of this
51 subsection, such reserves shall be treated as reserves for bad debts,
52 but no deduction shall be allowed for any addition to the supplemental
53 reserve for losses on loans. (iii) Except as noted below, the balances
54 of each such reserve at the beginning of the first day of the first
55 taxable year beginning after December thirty-first, nineteen hundred
56 ninety-five shall be the same as the balances maintained for federal
A. 5316 28
1 income tax purposes in accordance with section 593(c)(1) of the internal
2 revenue code as in existence on December thirty-first, nineteen hundred
3 ninety-five for the last day of the last tax year beginning before Janu-
4 ary first, nineteen hundred ninety-six. A taxpayer which maintained a
5 New York reserve for loan losses on qualifying real property loans in
6 the last tax year beginning before January first, nineteen hundred nine-
7 ty-six shall have a continuation of such New York reserve balance in
8 lieu of the amount determined under the preceding sentence. (iv)
9 Notwithstanding clause (ii) of this subparagraph, any amount allocated
10 to the reserve for losses on qualifying real property loans pursuant to
11 section 593 (c) (5) of the internal revenue code as in effect immediate-
12 ly prior to the enactment of the Tax Reform Act of 1976 shall not be
13 treated as a reserve for bad debts for any purpose other than determin-
14 ing the amount referred to in subparagraph (B) of paragraph three of
15 this subsection, and for such purpose such amount shall be treated as
16 remaining in such reserve.
17 (B) Any debt becoming worthless or partially worthless in respect of a
18 qualifying real property loan shall be charged to the reserve for losses
19 on such loans and any debt becoming worthless or partially worthless in
20 respect of a nonqualifying loan shall be charged to the reserve for
21 losses on nonqualifying loans, except that any such debt may, at the
22 election of the taxpayer, be charged in whole or in part to the supple-
23 mental reserve for losses on loans.
24 (C) The New York reserve for losses on qualifying real property loans
25 shall be increased by the amount determined under subparagraph (B) of
26 paragraph three of this subsection and the New York reserve for losses
27 on nonqualifying loans shall be increased by the amount determined under
28 subparagraph (A) of paragraph three of this subsection.
29 (7) (A) For purposes of this subsection, the term "qualifying real
30 property loan" shall mean any loan secured by an interest in improved
31 real property or secured by an interest in real property which is to be
32 improved out of the proceeds of the loan. Such term shall include any
33 mortgage-backed security which represents ownership of a fractional
34 undivided interest in a trust, the assets of which consist primarily of
35 mortgage loans, provided that the real property which serves as security
36 for the loans is (or from the proceeds of the loan, will become) the
37 type of property described in clauses (i) through (v) of subparagraph
38 (B) of paragraph one of this subdivision. However, such term shall not
39 include: (i) any loan evidenced by a security (as defined in section
40 165(g) (2) (C) of the internal revenue code); (ii) any loan, whether or
41 not evidenced by a security (as defined in such section 165(g) (2) (C)),
42 the primary obligor of which is (I) a government or political subdivi-
43 sion or instrumentality thereof, (II) a banking corporation, or (III)
44 any corporation sixty-five percent or more of whose voting stock is
45 owned or controlled, directly or indirectly, by the taxpayer or by a
46 banking corporation or bank holding company that owns or controls,
47 directly or indirectly, sixty-five percent or more of the voting stock
48 of the taxpayer; (iii) any loan, to the extent secured by a deposit in
49 or share of the taxpayer; or (iv) any loan which, within a sixty-day
50 period beginning in one taxable year of the creditor and ending in its
51 next taxable year, is made or acquired and then repaid or disposed of,
52 unless the transactions by which such loan was made or acquired and then
53 repaid or disposed of are established to be for bona fide business
54 purposes.
55 (B) For purposes of this subsection, the term "nonqualifying loan"
56 shall mean any loan which is not a qualifying real property loan.
A. 5316 29
1 (C) For purposes of this subsection, the term "loan" shall mean debt,
2 as the term "debt" is used in section 166 of the internal revenue code.
3 (D) A regular or residual interest in a REMIC, as such term is defined
4 in section 860D of the internal revenue code, shall be treated as a
5 qualifying real property loan, except that, if less than ninety-five
6 percent of the assets of such REMIC are qualifying real property loans
7 (determined as if the taxpayer held the assets of the REMIC), such
8 interest shall be so treated only in the proportion which the assets of
9 such REMIC consist of such loans. For purposes of determining whether
10 any interest in a REMIC qualifies under the preceding sentence, any
11 interest in another REMIC held by such REMIC shall be treated as a qual-
12 ifying real property loan under principles similar to the principles of
13 the preceding sentence, except that if such REMICS are part of a tiered
14 structure, they shall be treated as one REMIC for purposes of this para-
15 graph.
16 (8)(A) Any distribution of property (as defined in section 317(a) of
17 the internal revenue code) by a thrift institution to a shareholder with
18 respect to its stock, if such distribution is not allowable as a
19 deduction under section 591 of such code, shall be treated as made
20 (i) first out of its New York earnings and profits accumulated in
21 taxable years beginning after December thirty-first, nineteen hundred
22 fifty-one, to the extent thereof,
23 (ii) then out of the New York reserve for losses on qualifying real
24 property loans, to the extent additions to such reserve exceed the addi-
25 tions which would have been allowed under paragraph five of this
26 subsection,
27 (iii) then out of the supplemental reserve for losses on loans, to the
28 extent thereof,
29 (iv) then out of such other accounts as may be proper.
30 This subparagraph shall apply in the case of any distribution in redemp-
31 tion of stock or in partial or complete liquidation of a thrift institu-
32 tion, except that any such distribution shall be treated as made first
33 out of the amount referred to in clause (ii) of this subparagraph,
34 second out of the amount referred to in clause (iii) of this subpara-
35 graph, third out of the amount referred to in clause (i) of this subpar-
36 agraph and then out of such other accounts as may be proper. This
37 subparagraph shall not apply to any transaction to which section 381 of
38 such code (relating to carryovers and certain corporate acquisitions)
39 applies, or to any distribution to the federal savings and loan insur-
40 ance corporation or the federal deposit insurance corporation in redemp-
41 tion of an interest in an association or institution, if such interest
42 was originally received by the federal savings and loan insurance corpo-
43 ration or the federal deposit insurance corporation in exchange for
44 financial assistance pursuant to section 406(f) of the federal national
45 housing act or pursuant to subsection (c) of section thirteen of the
46 federal deposit insurance act.
47 (B) If any distribution is treated under subparagraph (A) of this
48 paragraph as having been made out of the reserves described in clauses
49 (ii) and (iii) of such subparagraph, the amount charged against such
50 reserve shall be the amount which, when reduced by the amount of tax
51 imposed under the internal revenue code and attributable to the inclu-
52 sion of such amount in gross income, is equal to the amount of such
53 distribution; and the amount so charged against such reserve shall be
54 included in the entire net income of the taxpayer.
55 (C) (i) For purposes of clause (ii) of subparagraph (A) of this para-
56 graph, additions to the New York reserve for losses on qualifying real
A. 5316 30
1 property loans for the taxable year in which the distribution occurs
2 shall be taken into account.
3 (ii) For purposes of computing under this subsection the amount of a
4 reasonable addition to the New York reserve for losses on qualifying
5 real property loans for any taxable year, the amount charged during any
6 year to such reserve pursuant to the provisions of subparagraph (B) of
7 this paragraph shall not be taken into account.
8 (9) A taxpayer which maintains a New York reserve for losses on quali-
9 fying real property loans and which ceases to meet the definition of a
10 thrift institution as defined in paragraph one of this subsection, must
11 include in its entire net income for the last taxable year such para-
12 graph applied the excess of its New York reserve for losses on qualify-
13 ing real property loans over the greater of (A) its reserve for losses
14 on qualifying real property loans as of the last day of the last taxable
15 year such reserve is maintained for federal income tax purposes or (B)
16 the balance of the New York reserve for losses on qualifying real prop-
17 erty loans which would be allowable to the taxpayer for the last taxable
18 year such taxpayer met such definition of a thrift institution if the
19 taxpayer had computed its reserve balance pursuant to the method
20 described in subparagraph (A) of paragraph one of subsection (i) of this
21 section.
22 (i) (1) For taxable years beginning before January first, two thousand
23 ten, a taxpayer subject to the provisions of section 585(c) of the
24 internal revenue code and not subject to subsection (h) of this section
25 may, in computing entire net income, deduct an amount equal to or less
26 than the amount determined pursuant to subparagraph (A) of this para-
27 graph or subparagraph (B) of this paragraph, whichever is greater.
28 Provided, however, in no event shall the deduction be less than the
29 amount determined pursuant to such subparagraph (A).
30 (A) The amount determined pursuant to this subparagraph shall be the
31 amount necessary to increase the balance of its New York reserve for
32 losses on loans (at the close of the taxable year) to the amount which
33 bears the same ratio to loans outstanding at the close of the taxable
34 year as (i) the total bad debts sustained during the taxable year and
35 the five preceding taxable years (or, with the approval of the commis-
36 sioner of taxation and finance, a shorter period), adjusted for recov-
37 eries of bad debts during such period, bears to (ii) the sum of the
38 loans outstanding at the close of such six or fewer taxable years.
39 (B) (i) The amount determined pursuant to this subparagraph shall be
40 the amount necessary to increase the balance of its New York reserve for
41 losses on loans (at the close of the taxable year) to the lower of --
42 (I) the balance of the reserve at the close of the base year, or
43 (II) if the amount of loans outstanding at the close of the taxable
44 year is less than the amount of loans outstanding at the close of the
45 base year, the amount which bears the same ratio to loans outstanding at
46 the close of the taxable year as the balance of the reserve at the close
47 of the base year bears to the amount of loans outstanding at the close
48 of the base year.
49 (ii) For purposes of this paragraph, the base year shall be (I) for
50 taxable years beginning in nineteen hundred eighty-seven, the last taxa-
51 ble year before the most recent adoption of the experience method for
52 federal income tax purposes or for purposes of this article, whichever
53 is earlier, and (II) for taxable years beginning after nineteen hundred
54 eighty-seven, the last taxable year beginning before nineteen hundred
55 eighty-eight.
A. 5316 31
1 (2) (A) For taxable years beginning before January first, two thousand
2 ten, each taxpayer described in paragraph one of this subsection shall
3 establish and maintain a New York reserve for losses on loans. Such
4 reserve shall be maintained for all subsequent taxable years. The
5 balance of the New York reserve for losses on loans at the beginning of
6 the first day of the first taxable year the taxpayer becomes subject to
7 this subsection shall be the same as the balance at the beginning of
8 such day of the reserve for losses on loans maintained for federal
9 income tax purposes. The New York reserve for losses on loans shall be
10 reduced by an amount equal to the deduction allowed, but not more than
11 the amount allowable, for worthless debts for federal income tax
12 purposes pursuant to section 166 of the internal revenue code plus the
13 amount, if any, charged against its reserve for losses on loans pursuant
14 to section 585(c)(4) of such code.
15 (B) For purposes of subparagraph (A) of this paragraph, a taxpayer
16 which had previously been subject to the provisions of subsection (h) of
17 this section shall establish a New York reserve for losses on loans
18 equal to the sum of (i) the greater of (I) the balance of its federal
19 reserve for losses on qualifying real property loans as of the first day
20 of the first taxable year the taxpayer becomes subject to the provisions
21 of this subsection or (II) the greater of the amounts determined under
22 subparagraphs (A) and (B) of paragraph nine of subsection (h) of this
23 section in the year such paragraph applied to the taxpayer, (ii) the
24 greater of (I) the balance in its federal reserve for losses on nonqual-
25 ifying loans as of the first day of the first taxable year the taxpayer
26 becomes subject to this subsection or (II) the balance in its New York
27 reserve for losses on nonqualifying loans as of the last date the
28 taxpayer was subject to the provisions of subsection (h) of this section
29 and (iii) the balance in its supplemental reserve for losses on loans as
30 of the last date the taxpayer was subject to the provisions of
31 subsection (h) of this section.
32 (3) The determination and treatment of the New York reserve balance,
33 including any additions thereto, subtractions therefrom, or recapture
34 thereof, for
35 (A) any banking corporation which was subject to tax for federal
36 income tax purposes but not subject to tax under this article for prior
37 taxable years,
38 (B) any taxpayer which ceases to be subject to tax under this article,
39 or
40 (C) any other unusual circumstances
41 shall be determined by the commissioner of taxation and finance.
42 Provided, however, any banking corporation which was subject to tax for
43 federal income tax purposes but not subject to tax under this article
44 for prior taxable years shall have as its opening New York reserve for
45 losses on loans the amount determined by applying the provisions of
46 subparagraph (A) of paragraph one of this subsection to loans outstand-
47 ing at the close of its last taxable year for federal income tax
48 purposes ending prior to the first taxable year for which the taxpayer
49 is subject to tax under this article and provided, further, that the
50 provisions of subparagraph (B) of paragraph one of this subsection shall
51 not apply.
52 (j) (1) In the case of property placed in service prior to January
53 first, nineteen hundred seventy-three, for which the taxpayer properly
54 adopted a different method of computing depreciation under section two
55 hundred nineteen-z or section two hundred nineteen-xx of this chapter
56 (as such sections were in effect on or before December thirty-first,
A. 5316 32
1 nineteen hundred seventy-two) than was adopted for federal income tax
2 purposes with respect to such property, entire net income under this
3 article shall be computed without regard to the amount allowable as a
4 deduction for depreciation of such property in computing federal taxable
5 income for the taxable year but, in lieu thereof, shall be computed as
6 if such deduction were determined by the method of depreciation adopted
7 with respect to such property under sections two hundred nineteen-z or
8 two hundred nineteen-xx of this chapter (as such sections were in effect
9 on or before December thirty-first, nineteen hundred seventy-two).
10 (2) In computing entire net income, the amount allowable as a
11 deduction for charitable contributions for federal income tax purposes
12 shall be decreased by any amount allowed as a deduction for federal
13 income tax purposes for the taxable year under section one hundred
14 seventy of the internal revenue code as a carryover of excess contrib-
15 utions which are not made in such taxable year and which were deductible
16 in computing the tax due under article nine-B or nine-C of this chapter
17 (as such articles were in effect on or before December thirty-first,
18 nineteen hundred seventy-two).
19 (3) There shall be excluded from the computation of entire net income
20 any amount allowed as a deduction for federal income tax purposes for
21 the taxable year under section twelve hundred twelve of the internal
22 revenue code as a capital loss carryforward to the taxable year, which
23 was deductible as a loss in computing the tax due under article nine-B
24 or nine-C of this chapter (as such articles were in effect on December
25 thirty-first, nineteen hundred seventy-two).
26 (4) There shall be excluded from the computation of entire net income
27 the amount of any income or gain from the sale of real or personal prop-
28 erty which is includible in determining federal taxable income for the
29 taxable year pursuant to the installment method under section four
30 hundred fifty-three of the internal revenue code, to the extent that
31 such income or gain was includible in the computation of the tax due
32 under article nine-B or nine-C of this chapter (as such articles were in
33 effect on December thirty-first, nineteen hundred seventy-two).
34 (5) To the extent not otherwise provided in this article, there shall
35 be excluded from entire net income the amount necessary to prevent the
36 taxation under this article of any other amount of income or gain which
37 was properly included in income or gain and was taxable under article
38 nine-B or nine-C of this chapter (as such articles were in effect on or
39 before December thirty-first, nineteen hundred seventy-two) and there
40 shall be disallowed as a deduction in computing entire net income any
41 amount which was allowable as a deduction in computing the tax due under
42 such articles (as they were in effect on or before December thirty-
43 first, nineteen hundred seventy-two).
44 (k) (1) At the election of the taxpayer, there shall be deducted from
45 the portion of its entire net income allocated within the state, depre-
46 ciation with respect to any property such as described in paragraph two
47 of this subsection, not exceeding twice the depreciation allowed with
48 respect to the same property for federal income tax purposes. Such
49 deduction shall be allowed only upon condition that entire net income be
50 computed without any deduction for depreciation or amortization of the
51 same property, and the total of all deductions allowed under article
52 nine-B or nine-C of this chapter (as such articles were in effect on or
53 before December thirty-first, nineteen hundred seventy-two) and this
54 article in any taxable year or years with respect to the depreciation of
55 any such property shall not exceed its cost or other basis.
A. 5316 33
1 (2) Such deduction shall be allowed only with respect to tangible
2 property which is depreciable pursuant to section one hundred sixty-sev-
3 en of the internal revenue code, having a situs in this state and used
4 in the taxpayer's business, (i) constructed, reconstructed or erected
5 after December thirty-first, nineteen hundred sixty-three, pursuant to a
6 contract which was, on or before December thirty-first, nineteen hundred
7 sixty-seven, and at all times thereafter, binding on the taxpayer or,
8 property, the physical construction, reconstruction or erection of which
9 began on or before December thirty-first, nineteen hundred sixty-seven
10 or which began after such date pursuant to an order placed on or before
11 December thirty-first, nineteen hundred sixty-seven, and then only with
12 respect to that portion of the basis thereof which is properly attribut-
13 able to such construction, reconstruction or erection after December
14 thirty-first, nineteen hundred sixty-three, or (ii) acquired after
15 December thirty-first, nineteen hundred sixty-three, pursuant to a
16 contract which was, on or before December thirty-first, nineteen hundred
17 sixty-seven, and at all times thereafter, binding on the taxpayer or
18 pursuant to an order placed on or before December thirty-first, nineteen
19 hundred sixty-seven, by purchase as defined in section one hundred
20 seventy-nine (d) of the internal revenue code, if the original use of
21 such property commenced with the taxpayer, commenced in this state and
22 commenced after December thirty-first, nineteen hundred sixty-three, or
23 (iii) acquired, constructed, reconstructed, or erected subsequent to
24 December thirty-first nineteen hundred sixty-seven, if such acquisition,
25 construction, reconstruction or erection is pursuant to a plan of the
26 taxpayer which was in existence December thirty-first, nineteen hundred
27 sixty-seven and not thereafter substantially modified, and such acquisi-
28 tion, construction, reconstruction or erection would qualify under the
29 rules in paragraphs four, five or six of subsection (h) of section
30 forty-eight of the internal revenue code provided all references in such
31 paragraphs four, five and six to the dates October nine, nineteen
32 hundred sixty-six, and October ten, nineteen hundred sixty-six, shall be
33 read as December thirty-first, nineteen hundred sixty-seven. A taxpayer
34 shall be allowed a deduction under clauses (i), (ii) or (iii) of this
35 paragraph only if the tangible property shall be delivered or the
36 construction, reconstruction or erection shall be completed on or before
37 December thirty-first, nineteen hundred sixty-nine, except in the case
38 of tangible property which is acquired, constructed, reconstructed or
39 erected pursuant to a contract which was, on or before December thirty-
40 first, nineteen hundred sixty-seven, and at all times thereafter, bind-
41 ing on the taxpayer. Provided, however, for any taxable year beginning
42 on or after January first, nineteen hundred sixty-eight, a taxpayer
43 shall not be allowed a deduction under paragraph one of this subsection
44 with respect to tangible personal property leased by it to any other
45 person or corporation. For purposes of the preceding sentence, any
46 contract or agreement to lease or rent or for a license to use such
47 property shall be considered a lease. With respect to property which the
48 taxpayer uses itself for purposes other than leasing for part of a taxa-
49 ble year and leases for a part of a taxable year, the taxpayer shall be
50 allowed a deduction under paragraph one of this subsection in proportion
51 to the part of the year it uses such property.
52 (3) If the deduction allowable for any taxable year pursuant to this
53 subsection exceeds the portion of the taxpayer's entire net income allo-
54 cated to this state for such year, the excess may be carried over to the
55 following taxable year or years and may be deducted from the portion of
A. 5316 34
1 the taxpayer's entire net income allocated to this state for such year
2 or years.
3 (4) In any taxable year when property is sold or otherwise disposed
4 of, with respect to which a deduction has been allowed pursuant to this
5 subsection, subdivision twelve of section two hundred nineteen-z or
6 subdivision ten of section two hundred nineteen-xx of this chapter (as
7 such subdivisions were in effect on or before December thirty-first,
8 nineteen hundred seventy-two), the gain or loss entering into the compu-
9 tation of federal taxable income shall be disregarded in computing
10 entire net income, and there shall be added or subtracted from the
11 portion of entire net income allocated within the state the gain or loss
12 upon such sale or other disposition. In computing such gain or loss the
13 basis of the property sold or disposed of shall be adjusted to reflect
14 the deduction allowed with respect to such property pursuant to para-
15 graph one of this subsection. Provided however, that no loss shall be
16 recognized for the purposes of this paragraph with respect to a sale or
17 other disposition of property to a person whose acquisition thereof is
18 not a purchase as defined in section one hundred seventy-nine (d) of the
19 internal revenue code.
20 (k-1) A net operating loss deduction shall be allowed which shall be
21 presumably the same as the net operating loss deduction allowed under
22 section one hundred seventy-two of the internal revenue code, except
23 that in every instance where such deduction is allowed under this arti-
24 cle:
25 (1) any net operating loss included in determining such deduction
26 shall be adjusted to reflect the inclusions and exclusions from entire
27 net income required by the other provisions of this section,
28 (2) such deduction shall not include any net operating loss sustained
29 during any taxable year beginning prior to January first, two thousand
30 one, or during any taxable year in which the taxpayer was not subject to
31 the tax imposed by this article,
32 (3) such deduction shall not exceed the deduction for the taxable year
33 allowed under section one hundred seventy-two of the internal revenue
34 code augmented by the excess of the amount allowed as a deduction pursu-
35 ant to subsection (h) or (i) of this section, whichever is applicable,
36 over the amount allowed as a deduction pursuant to section 166 or 585 of
37 the internal revenue code, for each taxable year in which the taxpayer
38 had a net operating loss which is carried to the taxable year of the
39 deduction under this provision, in the aggregate, (except to the extent
40 such excess was previously deducted in computing entire net income), and
41 (4) the net operating loss deduction allowed under section one hundred
42 seventy-two of the internal revenue code shall for purposes of this
43 subsection be determined as if the taxpayer had elected under such
44 section to relinquish the entire carryback period with respect to net
45 operating losses.
46 (l) In the case of a savings and insurance bank which conducts a life
47 insurance business through a life insurance department under the author-
48 ity of former article six-a of the banking law, entire net income means
49 the federal taxable income which such bank is required to report to the
50 United States treasury department under paragraph one of subsection (a)
51 of section five hundred ninety-four of the internal revenue code and the
52 modifications required by this section in computing entire net income
53 shall only be made with respect to such federal taxable income.
54 (m) If the period covered by a return under this article is other than
55 the period covered by the return to the United States treasury depart-
56 ment,
A. 5316 35
1 (1) except as provided in paragraph two of this subsection, entire net
2 income and alternative entire net income shall be determined by multi-
3 plying the taxable income reported to such department (as adjusted
4 pursuant to the provisions of this article) by the number of calendar
5 months or major parts thereof covered by the return under this article
6 and dividing by the number of calendar months or major parts thereof
7 covered by the return to such department. If it shall appear that such
8 method of determining entire net income or alternative entire net income
9 does not properly reflect the taxpayer's income during the period
10 covered by the return under this article, the commissioner shall be
11 authorized in his or her discretion to determine such entire net income
12 or alternative entire net income solely on the basis of the taxpayer's
13 income during the period covered by its return under this article.
14 (2) in the case of a New York S termination year, an equal portion of
15 entire net income shall be assigned to each day of such year. The
16 portion of such entire net income thereby assigned to the S short year
17 and the C short year shall be included in the respective returns for the
18 S short year and the C short year under this article. However, where
19 paragraph three of subsection (s) of section six hundred twelve of this
20 chapter applies, the portion of such entire net income assigned to the S
21 short year and the C short year shall be determined under normal
22 accounting rules.
23 (n) The tax commission may, whenever necessary in order properly to
24 reflect the entire net income of any taxpayer, determine the year or
25 period in which any item of income or deduction shall be included, with-
26 out regard to the method of accounting employed by the taxpayer.
27 (o) QSSS. (1) New York S corporation. In the case of a New York S
28 corporation which is the parent of a qualified subchapter S subsidiary
29 (QSSS) with respect to a taxable year:
30 (A) where the QSSS is not an excluded corporation,
31 (i) in determining the entire net income of such parent corporation,
32 all assets, liabilities, income and deductions of the QSSS shall be
33 treated as assets, liabilities, income and deductions of the parent
34 corporation, and
35 (ii) the QSSS shall be exempt from all taxes imposed by this article,
36 and
37 (B) where the QSSS is an excluded corporation, the entire net income
38 of the parent corporation shall be determined as if the federal QSSS
39 election had not been made.
40 (2) New York C corporation. In the case of a New York C corporation
41 which is the parent of a QSSS with respect to a taxable year:
42 (A) where the QSSS is a taxpayer,
43 (i) in determining the entire net income of such parent corporation,
44 all assets, liabilities, income and deductions of the QSSS shall be
45 treated as assets, liabilities, income and deductions of the parent
46 corporation, and
47 (ii) the QSSS shall be exempt from all taxes imposed by this article,
48 and
49 (B) where the QSSS is not a taxpayer,
50 (i) if the QSSS is not an excluded corporation, the parent corporation
51 may make a QSSS inclusion election to include all assets, liabilities,
52 income and deductions of the QSSS as assets, liabilities, income and
53 deductions of the parent corporation, and
54 (ii) in the absence of such election, or where the QSSS is an excluded
55 corporation, the entire net income of the parent corporation shall be
56 determined as if the federal QSSS election had not been made.
A. 5316 36
1 (3) Non-New York S corporation not excluded. In the case of an S
2 corporation which is not a taxpayer and not an excluded corporation, and
3 which is the parent of a QSSS which is a taxpayer, the shareholders of
4 the parent corporation shall be entitled to make the New York S election
5 under subsection (a) of section six hundred sixty of this chapter.
6 (A) For any taxable year for which such election is in effect, the
7 parent corporation shall be subject to tax under this article as a New
8 York S corporation, and the provisions of subparagraph (A) of paragraph
9 one of this subsection shall apply.
10 (B) For any taxable year for which such election is not in effect, the
11 QSSS shall be a New York C corporation, and the entire net income of the
12 QSSS shall be determined as if the federal QSSS election had not been
13 made. For purposes of such determination, the taxable year of the parent
14 corporation shall constitute the taxable year of the QSSS, excluding,
15 however, any portion of such year during which the QSSS is not a taxpay-
16 er.
17 (4) S corporation excluded. In the case of an S corporation which is
18 an excluded corporation and which is the parent of a QSSS which is a
19 taxpayer, the QSSS shall be a New York C corporation and the provisions
20 of subparagraph (B) of paragraph three of this subsection shall apply.
21 (5) Excluded corporation. The term "excluded corporation" means a
22 corporation subject to tax under sections one hundred eighty-three
23 through one hundred eighty-five of this chapter, inclusive, or article
24 nine-A or thirty-three of this chapter, or a foreign corporation not
25 taxable by this state which, if it were taxable, would be subject to tax
26 under any of such sections or articles.
27 (6) Taxpayer. For purposes of this paragraph, the term "taxpayer"
28 means a parent corporation or QSSS subject to tax under this article,
29 determined without regard to the provisions of this paragraph.
30 (7) QSSS inclusion election. The election under clause (i) of subpara-
31 graph (B) of paragraph two of this subsection shall be effective for the
32 taxable year for which made and for all succeeding taxable years of the
33 corporation until such election is terminated. An election or termi-
34 nation shall be made on such form and in such manner as the commissioner
35 may prescribe by regulation or instruction.
36 (p) Emerging technology investment deferral. In the case of any sale
37 of a qualified emerging technologies investment held for more than thir-
38 ty-six months and with respect to which the taxpayer elects the applica-
39 tion of this subsection, gain from such sale shall be recognized only to
40 the extent that the amount realized on such sale exceeds the cost of any
41 qualified emerging technologies investment purchased by the taxpayer
42 during the three hundred sixty-five-day period beginning on the date of
43 such sale, reduced by any portion of such cost previously taken into
44 account under this subsection. For purposes of this subsection the
45 following shall apply:
46 (1) A qualified investment is stock of a corporation or an interest,
47 other than as a creditor, in a partnership or limited liability company
48 that was acquired by the taxpayer as provided in Internal Revenue Code §
49 1202(c)(1)(B), except that the reference to the term "stock" in such
50 section shall be read as "investment," or by the taxpayer from a person
51 who had acquired such stock or interest in such a manner.
52 (2) A qualified emerging technology investment is a qualified invest-
53 ment, that was held by the taxpayer for at least thirty-six months, in a
54 company defined in paragraph (c) of subdivision one of section thirty-
55 one hundred two-e of the public authorities law or an investment in a
56 partnership or limited liability company that is taxed as a partnership
A. 5316 37
1 to the extent that such partnership or limited liability company invests
2 in qualified emerging technology companies.
3 (3) For purposes of determining whether the nonrecognition of gain
4 under this subsection applies to a qualified emerging technologies
5 investment that is sold, the taxpayer's holding period for such invest-
6 ment and the qualified emerging technologies investment that is
7 purchased shall be determined without regard to Internal Revenue Code §
8 1223.
9 (q) Amounts deferred. The amount deferred under subsection (p) of this
10 section shall be added to entire net income when the reinvestment in the
11 New York qualified emerging technology company which qualified a taxpay-
12 er for such deferral is sold.
13 (r) For taxable years beginning after December thirty-first, two thou-
14 sand two, in the case of qualified property described in paragraph two
15 of subsection k of section 168 of the internal revenue code, other than
16 qualified resurgence zone property described in subsection (u) of this
17 section, and other than qualified New York Liberty Zone property
18 described in paragraph two of subsection b of section 1400L of the
19 internal revenue code (without regard to clause (i) of subparagraph (C)
20 of such paragraph), which was placed in service on or after June first,
21 two thousand three, a taxpayer shall be allowed with respect to such
22 property the depreciation deduction allowable under section 167 of the
23 internal revenue code as such section would have applied to such proper-
24 ty had it been acquired by the taxpayer on September tenth, two thousand
25 one.
26 (s) Related members expense add back. (1) Definitions. (A) Related
27 member. "Related member" means a related person as defined in subpara-
28 graph (c) of paragraph three of subsection (b) of section four hundred
29 sixty-five of the internal revenue code, except that "fifty percent"
30 shall be substituted for "ten percent".
31 (B) Effective rate of tax. "Effective rate of tax" means, as to any
32 state or U.S. possession, the maximum statutory rate of tax imposed by
33 the state or possession on or measured by a related member's net income
34 multiplied by the apportionment percentage, if any, applicable to the
35 related member under the laws of said jurisdiction. For purposes of this
36 definition, the effective rate of tax as to any state or U.S. possession
37 is zero where the related member's net income tax liability in said
38 jurisdiction is reported on a combined or consolidated return including
39 both the taxpayer and the related member where the reported transactions
40 between the taxpayer and the related member are eliminated or offset.
41 Also, for purposes of this definition, when computing the effective rate
42 of tax for a jurisdiction in which a related member's net income is
43 eliminated or offset by a credit or similar adjustment that is dependent
44 upon the related member either maintaining or managing intangible prop-
45 erty or collecting interest income in that jurisdiction, the maximum
46 statutory rate of tax imposed by said jurisdiction shall be decreased to
47 reflect the statutory rate of tax that applies to the related member as
48 effectively reduced by such credit or similar adjustment.
49 (C) Royalty payments. Royalty payments are payments directly connected
50 to the acquisition, use, maintenance or management, ownership, sale,
51 exchange, or any other disposition of licenses, trademarks, copyrights,
52 trade names, trade dress, service marks, mask works, trade secrets,
53 patents and any other similar types of intangible assets as determined
54 by the commissioner, and include amounts allowable as interest
55 deductions under section one hundred sixty-three of the internal revenue
56 code to the extent such amounts are directly or indirectly for, related
A. 5316 38
1 to or in connection with the acquisition, use, maintenance or manage-
2 ment, ownership, sale, exchange or disposition of such intangible
3 assets.
4 (D) Valid business purpose. A valid business purpose is one or more
5 business purposes, other than the avoidance or reduction of taxation,
6 which alone or in combination constitute the primary motivation for some
7 business activity or transaction, which activity or transaction changes
8 in a meaningful way, apart from tax effects, the economic position of
9 the taxpayer. The economic position of the taxpayer includes an increase
10 in the market share of the taxpayer, or the entry by the taxpayer into
11 new business markets.
12 (2) Royalty expense add backs. (A) Except where a taxpayer is included
13 in a combined return with a related member pursuant to subsection (f) of
14 section fourteen hundred sixty-two of this article, for the purpose of
15 computing entire net income, a taxpayer must add back royalty payments
16 directly or indirectly paid, accrued, or incurred in connection with one
17 or more direct or indirect transactions with one or more related members
18 during the taxable year to the extent deductible in calculating federal
19 taxable income.
20 (B) Exceptions. (i) The adjustment required in this subsection shall
21 not apply to the portion of the royalty payment that the taxpayer estab-
22 lishes, by clear and convincing evidence of the type and in the form
23 specified by the commissioner, meets all of the following requirements:
24 (I) the related member was subject to tax in this state or another state
25 or possession of the United States or a foreign nation or some combina-
26 tion thereof on a tax base that included the royalty payment paid,
27 accrued or incurred by the taxpayer; (II) the related member during the
28 same taxable year directly or indirectly paid, accrued or incurred such
29 portion to a person that is not a related member; and (III) the trans-
30 action giving rise to the royalty payment between the taxpayer and the
31 related member was undertaken for a valid business purpose.
32 (ii) The adjustment required in this subsection shall not apply if the
33 taxpayer establishes, by clear and convincing evidence of the type and
34 in the form specified by the commissioner, that: (I) the related member
35 was subject to tax on or measured by its net income in this state or
36 another state or possession of the United States or some combination
37 thereof; (II) the tax base for said tax included the royalty payment
38 paid, accrued or incurred by the taxpayer; and (III) the aggregate
39 effective rate of tax applied to the related member in those jurisdic-
40 tions is no less than eighty percent of the statutory rate of tax that
41 applied to the taxpayer under section fourteen hundred fifty-five of
42 this article for the taxable year.
43 (iii) The adjustment required in this subsection shall not apply if
44 the taxpayer establishes, by clear and convincing evidence of the type
45 and in the form specified by the commissioner, that: (I) the royalty
46 payment was paid, accrued or incurred to a related member organized
47 under the laws of a country other than the United States; (II) the
48 related member's income from the transaction was subject to a comprehen-
49 sive income tax treaty between such country and the United States; (III)
50 the related member was subject to tax in a foreign nation on a tax base
51 that included the royalty payment paid, accrued or incurred by the
52 taxpayer; (IV) the related member's income from the transaction was
53 taxed in such country at an effective rate of tax at least equal to that
54 imposed by this state; and (V) the royalty payment was paid, accrued or
55 incurred pursuant to a transaction that was undertaken for a valid busi-
56 ness purpose and using terms that reflect an arm's length relationship.
A. 5316 39
1 (iv) The adjustment required in this subsection shall not apply if the
2 taxpayer and the commissioner agree in writing to the application or use
3 of alternative adjustments or computations. The commissioner may, in his
4 or her discretion, agree to the application or use of alternative
5 adjustments or computations when he or she concludes that in the absence
6 of such agreement the income of the taxpayer would not be properly
7 reflected.
8 (t) For taxable years beginning after December thirty-first, two thou-
9 sand two, upon the disposition of property to which subsection (r) of
10 this section applies, the amount of any gain or loss includible in
11 entire net income shall be adjusted to reflect the inclusions and exclu-
12 sions from entire net income pursuant to paragraph thirteen of
13 subsection (b) of this section attributable to such property.
14 (u) For purposes of subsections (r) and (t) of this section, qualified
15 resurgence zone property shall mean qualified property described in
16 paragraph two of subsection k of section 168 of the internal revenue
17 code substantially all of the use of which is in the resurgence zone, as
18 defined below, and is in the active conduct of a trade or business by
19 the taxpayer in such zone, and the original use of which in the resur-
20 gence zone commences with the taxpayer after December thirty-first, two
21 thousand two. The resurgence zone shall mean the area of New York county
22 bounded on the south by a line running from the intersection of the
23 Hudson River with the Holland Tunnel, and running thence east to Canal
24 Street, then running along the centerline of Canal Street to the inter-
25 section of the Bowery and Canal Street, running thence in a southeaster-
26 ly direction diagonally across Manhattan Bridge Plaza, to the Manhattan
27 Bridge and thence along the centerline of the Manhattan Bridge to the
28 point where the centerline of the Manhattan Bridge would intersect with
29 the easterly bank of the East River, and bounded on the north by a line
30 running from the intersection of the Hudson River with the Holland
31 Tunnel and running thence north along West Avenue to the intersection of
32 Clarkson Street then running east along the centerline of Clarkson
33 Street to the intersection of Washington Avenue, then running south
34 along the centerline of Washington Avenue to the intersection of West
35 Houston Street, then east along the centerline of West Houston Street,
36 then at the intersection of the Avenue of the Americas continuing east
37 along the centerline of East Houston Street to the easterly bank of the
38 East River.
39 (v) Disallowed investment proceeds from a REIT or RIC. (1)(A) As used
40 in this subsection, the term "REIT" means a real estate investment trust
41 as defined in section eight hundred fifty-six of the internal revenue
42 code.
43 (B) As used in this subsection, the term "RIC" means a regulated
44 investment company as defined in section eight hundred fifty-one of the
45 internal revenue code.
46 (C) As used in this subsection, the term "REIT holding company" means
47 a corporation that (i) owns, directly or indirectly, over fifty percent
48 of the capital stock of a REIT, or (ii) in connection with one or more
49 other corporations in its affiliated group (as such term is defined in
50 section fifteen hundred four of the internal revenue code without regard
51 to the exclusions provided for in subsection (b) of such section fifteen
52 hundred four), owns over fifty percent of the capital stock of a REIT.
53 (D) As used in this subsection, the term "RIC holding company" means a
54 corporation that (i) owns, directly or indirectly, over fifty percent of
55 the capital stock of a RIC, or (ii) in connection with one or more other
56 corporations in its affiliated group (as such term is defined in section
A. 5316 40
1 fifteen hundred four of the internal revenue code without regard to the
2 exclusions provided for in subsection (b) of such section fifteen
3 hundred four), owns over fifty percent of the capital stock of a RIC.
4 (2) For purposes of computing entire net income or other applicable
5 taxable base, there shall be no deduction for disallowed investment
6 proceeds as defined in paragraphs three and four of this subsection.
7 (3) For purposes of the deduction of gains in excess of losses under
8 subparagraph (iii) of paragraph eleven of subsection (e) of this
9 section, disallowed investment proceeds means (A) gain or loss from the
10 disposition of an ownership interest in a REIT, (B) gain or loss from
11 the disposition of an ownership interest in a RIC, and (C) gain or loss
12 from the disposition of an ownership interest in a REIT holding company
13 or a RIC holding company to the extent the gain or loss is attributable
14 to such holding company's ownership interest in a REIT or a RIC.
15 (4) For purposes of the deduction of dividend income from subsidiary
16 capital under subparagraph (ii) of paragraph eleven of subsection (e) of
17 this section, disallowed investment proceeds means (A) dividends from a
18 REIT, and (B) dividends from a RIC, (C) dividends from a REIT holding
19 company or a RIC holding company to the extent the dividends are attrib-
20 utable to such holding company's ownership interest in a REIT or a RIC.
21 (5) Notwithstanding paragraphs three and four of this subsection,
22 (A) disallowed investment proceeds shall not include any dividends
23 from, or attributable to, a REIT or a RIC required to be included in a
24 combined report pursuant to subdivisions five or seven of section two
25 hundred nine of this chapter to the extent such dividends were included
26 in the computation of combined entire net income; and
27 (B) a banking corporation, or a group of banking corporations properly
28 included in a combined return, with taxable assets (or combined taxable
29 assets in the case of a combined return) for the taxable year of eight
30 billion dollars or less shall not have any disallowed investment
31 proceeds.
32 § 1453-A. Computation of alternative entire net income.--(a) Alterna-
33 tive entire net income means entire net income as determined pursuant to
34 section fourteen hundred fifty-three of this article, except that the
35 deductions described in paragraphs eleven and twelve of subsection (e)
36 of section fourteen hundred fifty-three of this article shall not be
37 allowed.
38 (b) Any election made pursuant to paragraph two of subsection (b) of
39 section fourteen hundred fifty-four of this article with respect to the
40 modification provided for in subsection (f) of section fourteen hundred
41 fifty-three of this article shall be deemed to have been made for
42 purposes of computing alternative entire net income.
43 § 1454. Allocation. (a) In general. If a taxpayer's entire net income,
44 alternative entire net income, or taxable assets are derived from busi-
45 ness carried on within and without the state, the taxpayer shall, for
46 purposes of computing allocation percentages, compute payroll, receipts,
47 and deposits percentages in accordance with the following rules:
48 (1) The taxpayer shall ascertain the percentage which eighty percent
49 of the total wages, salaries and other personal service compensation
50 during the taxable year of employees within the state, except wages,
51 salaries and other personal service compensation of general executive
52 officers, bears to the total wages, salaries and other personal service
53 compensation during the taxable year of all the taxpayer's employees
54 within and without the state, except wages, salaries and other personal
55 service compensation of general executive officers.
A. 5316 41
1 (2) (A) The taxpayer shall ascertain the percentage which the receipts
2 of the taxpayer arising during the taxable year from:
3 (i) loans (including a taxpayer's portion of a participation in a
4 loan) and financing leases within the state, and all other business
5 receipts earned within the state, bear to
6 (ii) the total amount of the taxpayer's receipts from loans (including
7 a taxpayer's portion of a participation in a loan) and financing leases
8 and all other business receipts within and without the state.
9 (B) All interest from loans and financing leases is located where the
10 greater portion of income producing activity related to the loan or
11 financing lease occurred; provided, however:
12 (i) In the case of a taxpayer described in paragraph one, two, three,
13 four, five or seven of subsection (a) of section fourteen hundred
14 fifty-two of this article, a loan or financing lease attributed by such
15 taxpayer to a branch without the state shall be presumed to be properly
16 so attributed provided that such presumption may be rebutted if the tax
17 commission demonstrates that the greater portion of income producing
18 activity related to the loan or financing lease did not occur at such
19 branch. Where such presumption has been rebutted, the loan or financing
20 lease shall be presumed to be within this state if the taxpayer had a
21 branch within this state at the time the loan or financing lease was
22 made. The taxpayer may rebut such presumption by demonstrating that the
23 greater portion of income producing activity related to the loan or
24 financing lease did not occur within the state. In the case of a loan or
25 financing lease which is recorded on the books of a place without the
26 state which is not a branch, it shall be presumed that the greater
27 portion of income producing activity related to such loan or financing
28 lease occurred within this state if the taxpayer had a branch within
29 this state at the time the loan or financing lease was made. The taxpay-
30 er may rebut such presumption by demonstrating that the greater portion
31 of income producing activity related to the loan or financing lease did
32 not occur within this state.
33 (ii) In the case of a taxpayer described in paragraph six or nine of
34 subsection (a) of section fourteen hundred fifty-two of this article, a
35 loan or financing lease attributed by such taxpayer to a bona fide
36 office without the state shall be presumed to be properly so attributed
37 provided that such presumption may be rebutted if the tax commission
38 demonstrates that the greater portion of income producing activity
39 related to the loan or financing lease did not occur without this state.
40 (C) Receipts from lease transactions other than financing leases
41 referred to in subparagraph (B) are located where the property subject
42 to the lease is located.
43 (D) (i) Interest, and fees and penalties in the nature of interest,
44 from bank, credit, travel and entertainment card receivables are earned
45 within the state if the mailing address of the card holder in the
46 records of the taxpayer is in the state;
47 (ii) Service charges and fees from such cards are earned within the
48 state if the mailing address of the card holder in the records of the
49 taxpayer is in the state; and
50 (iii) Receipts from merchant discounts are earned within the state if
51 the merchant is located within the state.
52 (E) The portion of total net gains and other income from trading
53 activities (including but not limited to foreign exchange, options and
54 financial futures), and from investment activities which is attributed
55 within the state shall be ascertained by multiplying such total net
56 gains and other income by a fraction the numerator of which is the aver-
A. 5316 42
1 age value of trading assets and investment assets attributable to this
2 state and the denominator of which is the average value of all trading
3 and investment assets. A trading asset or investment asset is attribut-
4 able to this state if the greater portion of income producing activity
5 related to the trading asset or investment asset occurred within the
6 state.
7 (F) Fees or charges from the issuance of letters of credit, travelers
8 checks and money orders are earned within the state if such letters of
9 credit, travelers checks or money orders are issued within the state.
10 (G) Rules for receipts from certain services to investment companies.
11 (1) For taxable years beginning on or after January first, two thousand
12 one, the portion of receipts received from an investment company arising
13 from the sale of management, administration or distribution services to
14 such investment company determined in accordance with clause two of this
15 subparagraph shall be deemed to arise from services performed within the
16 state (such portion referred to herein as the New York portion).
17 (2) The New York portion shall be the product of (i) the total of such
18 receipts from the sale of such services and (ii) a fraction. The numera-
19 tor of that fraction is the sum of the monthly percentages (as defined
20 hereinafter) determined for each month of the investment company's taxa-
21 ble year for federal income tax purposes which taxable year ends within
22 the taxable year of the taxpayer (but excluding any month during which
23 the investment company had no outstanding shares). The monthly percent-
24 age for each such month is determined by dividing (i) the number of
25 shares in the investment company which are owned on the last day of the
26 month by shareholders which are domiciled in the state by (ii) the total
27 number of shares in the investment company outstanding on that date. The
28 denominator of the fraction is the number of such monthly percentages.
29 (3)(i) For purposes of this subparagraph the term "domicile", in the
30 case of an individual shall have the meaning ascribed to it under arti-
31 cle twenty-two of this chapter; an estate or trust is domiciled in the
32 state if it is a resident estate or trust as defined in paragraph three
33 of subsection (b) of section six hundred five of this chapter; a busi-
34 ness entity is domiciled in the state if the location of the actual seat
35 of management or control is in the state. It shall be presumed that the
36 domicile of a shareholder, with respect to any month, is his, her or its
37 mailing address on the records of the investment company as of the last
38 day of such month.
39 (ii) For purposes of this subparagraph, the term "investment company"
40 shall mean a regulated investment company, as defined in section 851 of
41 the internal revenue code, and a partnership to which section 7704(a) of
42 the internal revenue code applies (by virtue of section 7704(c)(3) of
43 such code) and which meets the requirements of section 851(b) of such
44 code. The preceding sentence shall be applied to the taxable year for
45 federal income tax purposes of the business entity which is asserted to
46 constitute an investment company which ends within the taxable year of
47 the taxpayer.
48 (iii) For purposes of this subparagraph, the term "receipts from an
49 investment company" includes amounts received directly from an invest-
50 ment company as well as amounts received from the shareholders in such
51 investment company, in their capacity as such.
52 (iv) For purposes of this subparagraph, the term "management services"
53 means the rendering of investment advice to an investment company,
54 making determinations as to when sales and purchases of securities are
55 to be made on behalf of an investment company, or the selling or
56 purchasing of securities constituting assets of an investment company,
A. 5316 43
1 and related activities, but only where such activity or activities are
2 performed pursuant to a contract with the investment company entered
3 into pursuant to section 15(a) of the federal investment company act of
4 nineteen hundred forty, as amended.
5 (v) For purposes of this subparagraph, the term "distribution
6 services" means the services of advertising, servicing investor accounts
7 (including redemptions), marketing shares or selling shares of an
8 investment company, but, in the case of advertising, servicing investor
9 accounts (including redemptions) or marketing shares, only where such
10 service is performed by a person who is (or was, in the case of a closed
11 end company) also engaged in the service of selling such shares. In the
12 case of an open end company, such service of selling shares must be
13 performed pursuant to a contract entered into pursuant to section 15(b)
14 of the federal investment company act of nineteen hundred forty, as
15 amended.
16 (vi) For purposes of this subparagraph, the term "administration
17 services" includes clerical, accounting, bookkeeping, data processing,
18 internal auditing, legal and tax services performed for an investment
19 company but only if the provider of such service or services during the
20 taxable year in which such service or services are sold also sells
21 management or distribution services, as defined in item (v) of this
22 clause, to such investment company.
23 (H) All receipts from the performance of services not described in
24 this clause are earned within the state if the services are performed in
25 the state. When a service is performed both within and without the
26 state, the receipts shall be allocated within and without the state in
27 accordance with rules and regulations of the tax commission.
28 (I) All other receipts not described in subparagraphs (B) through (H)
29 of this paragraph shall be attributable within and without the state in
30 accordance with rules and regulations issued by the commissioner.
31 (3) The taxpayer shall ascertain the percentage which the average
32 value of deposits maintained at branches within the state during the
33 taxable year, bears to the average value of all the taxpayer's deposits
34 maintained at branches within and without the state during the taxable
35 year.
36 (4) Each percentage computed pursuant to this subsection shall be
37 computed on a cash or accrual basis according to the method of account-
38 ing used for the taxable year. The receipts percentage shall include
39 only receipts which are included in alternative entire net income for
40 the taxable year. The deposits and payroll percentages shall include
41 only deposits and payroll the expenses of which are included in the
42 computation of alternative entire net income for the taxable year.
43 (5) For purposes of this section:
44 (A) The term "bona fide office" means an office at which the taxpayer
45 carries on its business in a regular and systematic manner and which is
46 continuously maintained, occupied and used by employees of the taxpayer.
47 (B) The term "branch" means a bona fide office which is used by the
48 taxpayer on a regular and systematic basis to (i) approve loans (regard-
49 less of whether the approval of certain classes of loans requires review
50 or final approval by another office of the taxpayer), (ii) accept loan
51 repayments, (iii) disburse funds, and (iv) conduct one or more other
52 functions of a banking business.
53 (6) If it shall appear to the tax commission that the allocation
54 percentage determined in subsection (b), (c), or (d) of this section
55 does not properly reflect the activity, business, income or assets of a
56 taxpayer within the state, the tax commission shall be authorized in its
A. 5316 44
1 discretion to adjust it by (1) excluding one or more of the factors
2 therein, (2) including one or more other factors, or (3) any other simi-
3 lar or different method calculated to effect a fair and proper allo-
4 cation of the income or assets reasonably attributable to the state.
5 (7) The tax commission from time to time shall publish all rulings of
6 general public interest with respect to any application of the
7 provisions of paragraph six of this subsection.
8 (b) Allocation of entire net income.
9 (1) If a taxpayer's entire net income is derived from business carried
10 on both within and without the state, the portion thereof which is
11 derived from business carried on within the state shall be determined by
12 multiplying its entire net income by the income allocation percentage
13 determined as follows: add the percentages ascertained under paragraphs
14 one, two and three of subsection (a) of this section, plus, in the case
15 of a taxpayer other than a New York S corporation, an additional
16 percentage equal to the receipts percentage ascertained under paragraph
17 two of such subsection and an additional percentage equal to the depos-
18 its percentage ascertained under paragraph three of such subsection, and
19 divide the result by the number of percentages so added together.
20 (1-a) Notwithstanding the provisions of paragraph one of this
21 subsection, each banking corporation described in paragraph nine of
22 subsection (a) of section fourteen hundred fifty-two of this article
23 subject to the tax imposed by this article that substantially provides
24 management, administrative or distribution services to an investment
25 company, as such terms are defined in subparagraph (G) of paragraph two
26 of subsection (a) of this section, shall determine the portion of its
27 entire net income derived from business carried on within the state by
28 multiplying such income by an income allocation percentage obtained as
29 follows:
30 (A) For taxable years beginning on or after January first, two thou-
31 sand six and before the first day of January, two thousand seven, by
32 adding the following percentages:
33 (i) the product of seventeen percent and the percentage determined
34 under paragraph one of subsection (a) of this section,
35 (ii) the product of fifty percent and the percentage determined under
36 paragraph two of subsection (a) of this section, and
37 (iii) the product of thirty-three percent and the percentage deter-
38 mined under paragraph three of subsection (a) of this section.
39 (B) For taxable years beginning on or after January first, two thou-
40 sand seven and before the first day of January, two thousand eight, by
41 adding the following percentages:
42 (i) the product of ten percent and the percentage determined under
43 paragraph one of subsection (a) of this section,
44 (ii) the product of seventy percent and the percentage determined
45 under paragraph two of subsection (a) of this section, and
46 (iii) the product of twenty percent and the percentage determined
47 under paragraph three of subsection (a) of this section.
48 (C) For taxable years beginning on or after January first, two thou-
49 sand eight, by the percentage ascertained under paragraph two of
50 subsection (a) of this section.
51 (2) (A) In lieu of the modification provided for in subsection (f) of
52 section fourteen hundred fifty-three of this article, (relating to a
53 modification for the adjusted eligible net income of an international
54 banking facility), a taxpayer may, in the manner prescribed by the tax
55 commission, elect to modify on an annual basis its income allocation
A. 5316 45
1 percentage in the manner described in clauses (i), (ii) and (iii) of
2 this subparagraph:
3 (i) wages, salaries and other personal service compensation properly
4 attributable to the production of eligible gross income of the tax-
5 payer's international banking facility shall not be included in the
6 computation of wages, salaries and other personal service compensation
7 of employees within the state,
8 (ii) receipts properly attributable to the production of eligible
9 gross income of the taxpayer's international banking facility shall not
10 be included in the computation of receipts within the state, and
11 (iii) deposits from foreign persons which are properly attributable to
12 the production of eligible gross income of the taxpayer's international
13 banking facility shall not be included in the computation of deposits
14 maintained at branches within the state.
15 (B) For purposes of this paragraph, the term "eligible gross income"
16 refers to such term as set out in subsection (f) of section fourteen
17 hundred fifty-three of this article except that the term "foreign
18 person" as defined in paragraph eight of such subsection (f) shall not
19 include a foreign branch of the taxpayer and in no event shall trans-
20 actions between the taxpayer's international banking facility and its
21 foreign branches be considered.
22 (c) Allocation of alternative entire net income. If a taxpayer's
23 alternative entire net income is derived from business carried on both
24 within and without the state, the portion thereof which is derived from
25 business carried on within the state shall be determined by multiplying
26 its alternative entire net income by the alternative entire net income
27 allocation percentage determined as follows:
28 (1) Recompute the payroll percentage under paragraph one of subsection
29 (a) of this section without giving consideration to the phrase "eighty
30 percent of," add to the resulting percentage the percentages ascertained
31 under paragraphs two and three of such subsection, and divide the result
32 by the number of percentages so added together.
33 (2) When an election has been made pursuant to paragraph two of
34 subsection (b) of this section (relating to international banking facil-
35 ities) the taxpayer shall make the modifications described in such para-
36 graph for purposes of its alternative entire net income allocation
37 percentage.
38 (3) For taxable years beginning on or after January first, two thou-
39 sand six, each banking corporation described in paragraph nine of
40 subsection (a) of section fourteen hundred fifty-two of this article
41 subject to the tax imposed by this article that substantially provides
42 management, administrative or distribution services to an investment
43 company, as such terms are defined in subparagraph (G) of paragraph two
44 of subsection (a) of this section, shall determine the portion of its
45 alternative entire net income derived from business carried on within
46 the state by multiplying such income by the percentage ascertained for
47 the taxable year under paragraph one-a of subsection (b) of this
48 section, except that in computing such percentage (A) for taxable years
49 beginning before January first, two thousand eight, no consideration
50 shall be given to the phrase "eighty percent of" in paragraph one of
51 subsection (a) of this section, (B) for taxable years beginning before
52 January first, two thousand eight, when an election has been made pursu-
53 ant to paragraph two of subsection (b) of this section (relating to an
54 international banking facility) the taxpayer shall make the modifica-
55 tions described in such paragraph, and (C) for taxable years beginning
56 on or after January first, two thousand eight, when an election has been
A. 5316 46
1 made pursuant to paragraph two of subsection (b) of this section (relat-
2 ing to an international banking facility) the taxpayer shall make the
3 modifications described in clause (ii) of subparagraph (A) of such para-
4 graph.
5 (d) Allocation of taxable assets. If the taxpayer's taxable assets are
6 derived from business carried on both within and without the state, the
7 portion thereof which is derived from business carried on within the
8 state shall be determined by multiplying its taxable assets by an asset
9 allocation percentage determined in the same manner as the income allo-
10 cation percentage under subsection (b) of this section, determined as if
11 the election provided for in paragraph two of such subsection has been
12 made, except that the modifications described in clauses (i), (ii) and
13 (iii) of subparagraph (A) of such paragraph shall not be made.
14 § 1455. Computation of tax. The tax imposed by section fourteen
15 hundred fifty-one of this article shall be, in the case of each taxpayer
16 other than a New York S corporation, the greater of the following compu-
17 tations:
18 (a) Basic tax. For taxable years beginning before July first, two
19 thousand, nine percent of the taxpayer's entire net income, or the
20 portion thereof allocated to this state, for the taxable year, or part
21 thereof. For taxable years beginning after June thirtieth, two thousand
22 and before July first, two thousand one, eight and one-half percent of
23 the taxpayer's entire net income, or portion thereof allocated to this
24 state, for the taxable year, or part thereof. For taxable years begin-
25 ning after June thirtieth, two thousand one and before July first, two
26 thousand two, eight percent of the taxpayer's entire net income, or
27 portion thereof allocated to this state, for the taxable year, or part
28 thereof. For taxable years beginning after June thirtieth, two thousand
29 two and before January first, two thousand seven, seven and one-half
30 percent of the taxpayer's entire net income, or portion thereof allo-
31 cated to this state, for the taxable year, or part thereof. For taxable
32 years beginning on or after January first, two thousand seven, seven and
33 one-tenth percent of the taxpayer's entire net income, or the portion
34 thereof allocated to this state, for the taxable year, or part thereof.
35 (b) Alternative minimum tax. If the tax under subsection (a) of this
36 section is less than any of the following amounts, the tax shall be the
37 larger of the following amounts:
38 (1) (i) Except in the case of a taxpayer described in clause (ii),
39 (iii), or (iv) of this paragraph, one-tenth of a mill upon each dollar
40 of taxable assets, or the portion thereof allocated to this state.
41 (ii) In the case of a taxpayer whose net worth ratio is less than five
42 but greater than or equal to four percent and whose total assets are
43 comprised of thirty-three percent or more of mortgages, one-twenty-fifth
44 of a mill upon each dollar of taxable assets, or the portion thereof
45 allocated to this state.
46 (iii) In the case of a taxpayer whose net worth ratio is less than
47 four percent and whose total assets are comprised of thirty-three
48 percent or more of mortgages, one-fiftieth of a mill upon each dollar of
49 taxable assets, or the portion thereof allocated to this state.
50 (iv) For taxable years beginning on or after January first, nineteen
51 hundred eighty-five, a taxpayer (whether or not a qualified institution
52 as defined in subparagraph (B) of paragraph five of subsection (f) of
53 section four hundred six of the federal national housing act, as
54 amended, or as defined in paragraph two of subsection (i) of section
55 thirteen of the federal deposit insurance act, as amended) shall not be
56 subject to the provisions of this paragraph for that portion of the
A. 5316 47
1 taxable year in which it had outstanding net worth certificates issued
2 in accordance with paragraph five of subsection (f) of section four
3 hundred six of the federal national housing act, as amended, or issued
4 in accordance with subsection (i) of section thirteen of the federal
5 deposit insurance act, as amended.
6 (v) For the purposes of this article:
7 (A) The term "taxable assets" shall mean the average value of total
8 assets reduced by any amount of money or other property received from or
9 attributable to amounts received from the federal deposit insurance
10 corporation pursuant to subsection (c) of section thirteen of the feder-
11 al deposit insurance act, as amended, or the federal savings and loan
12 insurance corporation pursuant to paragraph one, two, three or four of
13 subsection (f) of section four hundred six of the federal national hous-
14 ing act, as amended. Total assets are those assets which are properly
15 reflected on a balance sheet the income or expenses of which are proper-
16 ly reflected (or would have been properly reflected if not fully depre-
17 ciated or expensed or depreciated or expensed to a nominal amount) in
18 the computation of alternative entire net income for the taxable year or
19 in the computation of the eligible net income of the taxpayer's interna-
20 tional banking facility for the taxable year.
21 (B) The term "net worth ratio" shall mean the percentage of net worth
22 to assets on the last day of the taxable year. The term "net worth"
23 means the sum of preferred stock, common stock, surplus, capital
24 reserves, undivided profits, mutual capital certificates, reserve for
25 contingencies, reserve for loan losses and reserve for security losses
26 minus assets classified loss. The term "assets" means the sum of mort-
27 gage loans, nonmortgage loans, repossessed assets, real estate held for
28 development or investment or resale, cash, deposits, investment securi-
29 ties, fixed assets and other assets (such as financial futures, goodwill
30 and other intangible assets) minus assets classified loss. In no event
31 shall assets be reduced by reserves for losses.
32 (C) The term "mortgages" shall mean loans secured by real property
33 within or without the state, participations in and securities collater-
34 alized by pools of residential mortgages, whether or not issued or guar-
35 anteed by a United States government agency, and loans secured by stock
36 in a cooperative housing corporation. The percentage of total assets
37 comprised of mortgages shall be an amount equal to the ratio of the
38 average of the four quarterly balances of such mortgages ending within
39 the taxable year, to the average of the four quarterly balances of all
40 assets ending within the taxable year. Such quarterly balances shall be
41 computed in the same manner as the report of condition required for
42 federal deposit insurance corporation or federal savings and loan insur-
43 ance corporation purposes, whether or not such report is required. For
44 taxable periods of less than one year, the taxpayer shall compute such
45 ratio using the number of such quarterly balances ending within such
46 taxable period.
47 (2) Three percent of the taxpayer's alternative entire net income, or
48 portion thereof allocated to this state, for the taxable year, or part
49 thereof.
50 (3) Two hundred fifty dollars.
51 (c) New York S corporations. (1) General. In the case of a New York S
52 corporation, the tax imposed by section fourteen hundred fifty-one of
53 this article shall be the higher of (i) the amount prescribed in
54 subsection (a) of this section reduced by the article twenty-two tax
55 equivalent or (ii) the amount prescribed in paragraph three of
56 subsection (b) of this section.
A. 5316 48
1 (2) The article twenty-two tax equivalent is the amount computed under
2 subsection (a) of this section by substituting for the rate therein the
3 rate of 7.875 percent.
4 (3) Termination year. In the case of a termination year, the tax for
5 the S short year shall be computed under paragraph one of this
6 subsection without regard to the amount prescribed in paragraph three of
7 subsection (b) of this section, and the tax for the C short year shall
8 be the larger of the taxes computed under subsection (a) of this section
9 or paragraph one or two of subsection (b) of this section, but in no
10 event shall the sum of the tax for the S short year and the tax for the
11 C short year be less than the tax prescribed in paragraph three of
12 subsection (b) of this section.
13 § 1455-A. Tax surcharge. (a) In addition to the tax imposed under
14 section fourteen hundred fifty-one of this article, there is hereby
15 imposed, (1) for taxable years ending after June thirtieth, nineteen
16 hundred eighty-nine and before July first, nineteen hundred ninety, a
17 tax surcharge at the rate of two and one-half percent of the tax imposed
18 under section fourteen hundred fifty-one of this article, before
19 deduction of any credits against tax otherwise allowable under this
20 article for all or any parts of such taxable years, (2) for taxable
21 years ending after June thirtieth, nineteen hundred ninety and before
22 July first, nineteen hundred ninety-four, and until such rate is super-
23 seded, a tax surcharge at the rate of fifteen percent of the tax imposed
24 under section fourteen hundred fifty-one of this article, after
25 deduction of any credits against tax otherwise allowable under this
26 article, (3) for taxable years ending after June thirtieth, nineteen
27 hundred ninety-four and before July first, nineteen hundred ninety-five,
28 and until such rate is superseded, a tax surcharge at the rate of ten
29 percent of the tax imposed under section fourteen hundred fifty-one of
30 this article, after deduction of any credits against the tax otherwise
31 allowable under this article, (4) for taxable years ending after June
32 thirtieth, nineteen hundred ninety-five and before July first, nineteen
33 hundred ninety-six, and until such rate is superseded, a tax surcharge
34 at the rate of five percent of the tax imposed under section fourteen
35 hundred fifty-one of this article, after deduction of any credits
36 against the tax otherwise allowable under this article and (5) for taxa-
37 ble years ending after June thirtieth, nineteen hundred ninety-six and
38 before July first, nineteen hundred ninety-seven, a tax surcharge at the
39 rate of zero percent of the tax imposed under section fourteen hundred
40 fifty-one of this article, after deduction of any credits against the
41 tax otherwise allowable under this article. However, the tax surcharge
42 imposed by this section at the rate of two and one-half percent shall
43 not be imposed upon any taxpayer for more than twelve months, the tax
44 surcharge imposed by this section at the rate of fifteen percent shall
45 not be imposed upon any taxpayer for more than forty-eight months, and
46 the tax surcharges imposed by this section at the rates of ten percent,
47 five percent and zero percent shall not, respectively, be imposed upon
48 any taxpayer for more than twelve months, and the commissioner shall
49 prescribe by regulation or instructions a method of proration designed
50 to effectuate such result. The credits against tax otherwise allowable
51 under section fourteen hundred fifty-six of this article shall not be
52 allowed as a credit against the tax surcharge imposed by this section.
53 (b) (1) The provisions concerning returns under section fourteen
54 hundred sixty-two of this article shall be applicable to this section,
55 except that for purposes of an automatic extension for six months for
56 filing a return covering the taxes imposed by this article, such auto-
A. 5316 49
1 matic extension shall be allowed, for taxable years to which the tax
2 surcharge imposed by this section apply, only if a taxpayer files with
3 the commissioner an application for extension in such form as the
4 commissioner may prescribe and pays on or before the date of such filing
5 in addition to any other amounts required under this article, two and
6 one-half percent, fifteen percent, ten percent, five percent or zero
7 percent, whichever is the rate applicable to the taxable year pursuant
8 to subsection (a) of this section, of the amount properly estimated as
9 provided in subsection (b) of section fourteen hundred sixty-three of
10 this article as its tax payable under section fourteen hundred fifty-one
11 of this article, before deduction of any credits against tax otherwise
12 allowable under section fourteen hundred fifty-six of this article in
13 the case of the tax surcharge imposed at the rate of two and one-half
14 percent, and after deduction of any credits against tax otherwise allow-
15 able under section fourteen hundred fifty-six of this article in the
16 case of the tax surcharge imposed at the rate of fifteen, ten, five or
17 zero percent. The tax surcharge imposed by this section shall be paya-
18 ble to the commissioner in full at the time the return is required to be
19 filed.
20 (2) Except as otherwise provided in this section, all of the
21 provisions of this article, except for section fourteen hundred fifty-
22 five-B of this article, presently applicable are applicable to the tax
23 surcharge imposed by this section with such modifications as may be
24 necessary to adapt such language to the tax surcharge imposed by this
25 section. Such provisions shall apply with the same force and effect as
26 if those provisions had been set forth in full in this section except to
27 the extent that any provision is either inconsistent with a provision of
28 this section or not relevant to the tax surcharge imposed by this
29 section and to that end a reference in this article to the tax imposed
30 by section fourteen hundred fifty-one of this article shall be read as a
31 reference to the tax surcharge imposed by this section, and to the sum
32 of such tax and such tax surcharge in the case of sections fourteen
33 hundred sixty and fourteen hundred sixty-one of this article and such
34 other provisions requiring such reading in order to effectuate the
35 purposes of this provision, unless a different meaning is clearly
36 required.
37 (c) Coordination with section fourteen hundred fifty-five-B of this
38 article. The amount of tax surcharge imposed pursuant to this section
39 shall not be included in any calculation of a tax surcharge imposed
40 pursuant to section fourteen hundred fifty-five-B of this article.
41 (d) Insofar as subsection (a) of this section establishes a rate of
42 fifteen percent in the case of taxable years ending after June thirti-
43 eth, nineteen hundred ninety and before July first, nineteen hundred
44 ninety-four and until such rate is superseded, a rate of ten percent in
45 the case of taxable years ending after June thirtieth, nineteen hundred
46 ninety-four and before July first, nineteen hundred ninety-five and
47 until such rate is superseded, a rate of five percent in the case of
48 taxable years ending after June thirtieth, nineteen hundred ninety-five
49 and before July first, nineteen hundred ninety-six and until such rate
50 is superseded, and a rate of zero percent in the case of taxable years
51 ending after June thirtieth, nineteen hundred ninety-six and before July
52 first, nineteen hundred ninety-seven, the transition from such rate of
53 fifteen percent to such rate of ten percent, from such rate of ten
54 percent to such rate of five percent, and from such rate of five percent
55 to such rate of zero percent, shall be deemed to occur, respectively, on
56 the first day of the seventh month of each of such taxable years, with
A. 5316 50
1 the result that for purposes of implementation of such changes in rates,
2 and notwithstanding such subsection (a), there is hereby imposed with
3 respect to all taxable years ending after June thirtieth, nineteen
4 hundred ninety-four and before July first, nineteen hundred ninety-five,
5 including taxable years of fewer than twelve months, a tax surcharge at
6 the rate of twelve and one-half percent; there is hereby imposed with
7 respect to all taxable years ending after June thirtieth, nineteen
8 hundred ninety-five and before July first, nineteen hundred ninety-six,
9 including taxable years of fewer than twelve months, a tax surcharge at
10 the rate of seven and one-half percent; and there is hereby imposed with
11 respect to all taxable years ending after June thirtieth, nineteen
12 hundred ninety-six and before July first, nineteen hundred ninety-seven,
13 including taxable years of fewer than twelve months, a tax surcharge at
14 the rate of two and one-half percent. In addition, for purposes of
15 implementation of all the provisions of this section references to ten
16 percent shall be read as references to twelve and one-half percent,
17 references to five percent shall be read as references to seven and
18 one-half percent and references to zero percent shall be read as refer-
19 ences to two and one-half percent.
20 § 1455-B. Temporary metropolitan transportation business tax surcharge
21 on banks. (a) For the privilege of exercising its franchise or doing
22 business in the metropolitan commuter transportation district in a
23 corporate or organized capacity, there is hereby imposed on every
24 taxpayer subject to tax under this article, other than a New York S
25 corporation, for the taxable years commencing on or after January first,
26 nineteen hundred eighty-two but ending before December thirty-first, two
27 thousand nineteen, a tax surcharge, in addition to the tax imposed under
28 section fourteen hundred fifty-one of this article, at the rate of eigh-
29 teen percent of the tax imposed under such section fourteen hundred
30 fifty-one of this article, for such taxable years or any part of such
31 taxable years ending before December thirty-first, nineteen hundred
32 eighty-three after the deduction of any credits otherwise allowable
33 under this article, and at the rate of seventeen percent of the tax
34 imposed under such section for such taxable years or any part of such
35 taxable years ending on or after December thirty-first, nineteen hundred
36 eighty-three after the deduction of any credits otherwise allowable
37 under this article; provided however, that such rates of tax surcharge
38 shall be applied only to that portion of the tax imposed under section
39 fourteen hundred fifty-one of this article after the deduction of any
40 credits otherwise allowable under this article which is attributable to
41 the taxpayer's business activity carried on within the metropolitan
42 commuter transportation district; and provided, further, that the tax
43 surcharge imposed by this section shall not be imposed upon any taxpayer
44 for more than four hundred thirty-two months. Provided however, that for
45 taxable years commencing on or after July first, two thousand, such
46 surcharge shall be calculated as if the rate of the basic tax computed
47 under subsection (a) of section fourteen hundred fifty-five of this
48 article was nine percent.
49 (b) If the tax imposed under section fourteen hundred fifty-one of
50 this article is derived from business activity carried on both within
51 and without the metropolitan commuter transportation district, the
52 portion of the tax attributable to business activity carried on in the
53 metropolitan commuter transportation district shall be determined in
54 accordance with rules and regulations promulgated by the tax commission.
55 (c) The provisions concerning returns under section fourteen hundred
56 sixty-two of this article shall be applicable to this section, except
A. 5316 51
1 that for purposes of an automatic extension for six months for filing a
2 return covering the tax surcharge imposed by this section, such automat-
3 ic extension shall be allowed only if a taxpayer files with the commis-
4 sioner an application for extension in such form as said commissioner
5 may prescribe by regulation and pays on or before the date of such
6 filing in addition to any other amounts required under this article,
7 either ninety percent of the entire tax surcharge required to be paid
8 under this section for the applicable period, or not less than the tax
9 surcharge shown on the taxpayer's return for the preceding taxable year,
10 if such preceding taxable year was a taxable year of twelve months. The
11 tax surcharge imposed by this section shall be payable to the commis-
12 sioner in full at the time the return is required to be filed, and such
13 tax surcharge or the balance thereof, imposed on any taxpayer which
14 ceases to exercise its franchise or be subject to the tax surcharge
15 imposed by this section shall be payable to the commissioner at the time
16 the return is required to be filed, provided such tax surcharge of a
17 domestic corporation which continues to possess its franchise shall be
18 subject to adjustment as the circumstances may require; all other tax
19 surcharges of any such taxpayer, which pursuant to the foregoing
20 provisions of this section would otherwise be payable subsequent to the
21 time such return is required to be filed, shall nevertheless be payable
22 at such time. All of the provisions of this article presently applicable
23 are applicable to the tax surcharge imposed by this section.
24 (d) Notwithstanding any contrary provisions of state or local law, the
25 tax surcharge imposed under this section shall not be allowed as a
26 deduction in the computation of any state or local tax imposed under
27 this chapter or any chapter or local law. Furthermore, the credits
28 otherwise allowable under this article shall not be allowed against the
29 tax surcharge imposed by this section.
30 (e) The term metropolitan commuter transportation district as used in
31 this section shall be defined pursuant to section twelve hundred sixty-
32 two of the public authorities law.
33 § 1456. Credits. (a) Credit for servicing certain mortgages. Every
34 bank, as defined in section two thousand four hundred two of the public
35 authorities law, which shall have entered into a contract with the state
36 of New York mortgage agency to service mortgages acquired by such agency
37 pursuant to the state of New York mortgage agency act, shall have cred-
38 ited to it annually to apply upon or in lieu of the payment of any tax
39 to which it may be subject under this article an amount equal to two and
40 ninety-three one hundredths percentum of the total principal and inter-
41 est collected by the bank during its taxable year on each such mortgage
42 secured by a lien on real estate improved by a one-family to four-family
43 residential structure and an amount equal to the interest collected by
44 the bank during its taxable year on each such mortgage secured by a lien
45 on real property improved by a structure occupied as the residence of
46 five or more families living independently of each other, multiplied by
47 a fraction the denominator of which shall be the interest rate payable
48 on the mortgage (computed to five decimal places) and the numerator of
49 which shall be .00125 in the case of such a mortgage acquired by such
50 agency for less than one million dollars, and .00100 in the case of such
51 a mortgage acquired by such agency for one million dollars or more;
52 provided, however, that there shall in no case be credited to any such
53 bank an amount in excess of the amount due from such bank for taxes
54 payable to the state under this article for the taxable year for which
55 such credit is given. In computing such tax credit for the servicing of
56 mortgages on one-family to four-family residential structures, the bank
A. 5316 52
1 shall be entitled to no credit for the collection of curtailments or
2 payments in discharge of any such mortgage. For the purposes of this
3 section, (1) a "curtailment" shall mean amounts paid by mortgagors (i)
4 in excess of the monthly constant due during the month of collection and
5 (ii) in reduction of the unpaid principal balance of the mortgage; in
6 the absence of clear evidence to the contrary, amounts paid in excess of
7 the monthly constant due during the month of collection shall be deemed
8 to be in reduction of the unpaid principal balance of the mortgage; and
9 (2) "monthly constant" shall mean the amount of principal and interest
10 which is due and payable according to the mortgage documents on each
11 periodic payment date.
12 (b) Eligible business facility credit.
13 (1) On or after April first, nineteen hundred eighty-three, for taxa-
14 ble years beginning before January first, two thousand, a credit against
15 the tax imposed by this article shall be allowed only to a taxpayer
16 owning or operating an eligible business facility, where such taxpayer
17 has received a certificate of eligibility for tax credits, or a renewal
18 or extension thereof, for such facility from the New York state job
19 incentive board prior to April first, nineteen hundred eighty-three, or
20 has received a certificate of eligibility for tax credits, or a renewal
21 or extension thereof, for such facility from the state tax commission
22 subsequent to such date pursuant to paragraph eight of this subsection,
23 and only with respect to such facility, to be computed as hereinafter
24 provided.
25 (2) The amount of the credit allowable in any taxable year shall be
26 the sum determined by multiplying the tax otherwise due by a percentage
27 to be determined by:
28 (A) ascertaining the percentage which the total of eligible property
29 values during the period covered by its return, as defined in paragraph
30 four of this subsection, bears to the average value of all the taxpay-
31 er's real and tangible personal property except for inventory within the
32 state during such period. For the purposes of this subparagraph only,
33 the taxpayer's real and tangible personal property shall include not
34 only such property owned by the taxpayer but also property rented to it,
35 and the value of rented property shall be deemed to be eight times the
36 net annual rental rate, that is, the annual rental rate paid by the
37 taxpayer less any annual rental rate received by the taxpayer from
38 subrentals;
39 (B) ascertaining the percentage which the total wages, salaries and
40 other personal service compensation during such period, of employees,
41 except general executive officers and that portion of employee's wages,
42 salaries and other personal service compensation attributable, directly
43 or indirectly, to the production of adjusted eligible net income which
44 is allowed as a deduction from entire net income as set forth in
45 subsection (f) of section fourteen hundred fifty-three of this article,
46 serving in jobs created or retained in an eligible area (as the term
47 "eligible area" was defined by section one hundred fifteen of the
48 commerce law as it existed on March thirty-first, nineteen hundred
49 eighty-three) by such business facility, bears to the total wages, sala-
50 ries and other personal service compensation, during such period, of all
51 the taxpayer's employees within the state, except general executive
52 officers; and
53 (C) adding together the percentages so determined and dividing the
54 result by two; provided, however, that if no wages, salaries or other
55 personal service compensation were paid or incurred by the taxpayer
56 during such period to employees within the state other than general
A. 5316 53
1 executive officers, subparagraph (B) of this paragraph shall be disre-
2 garded and the amount of credit allowable shall be determined by multi-
3 plying the tax otherwise due by the percentage specified in subparagraph
4 (A) of this paragraph.
5 (3) In no event shall the credit herein provided for be allowed in any
6 amount which will reduce the tax payable to less than the dollar amount
7 fixed as a minimum tax by subsection (b) of section fourteen hundred
8 fifty-five.
9 (4) (A) Eligible property values, for the purposes of this subsection,
10 shall include such part of the value of depreciable real and tangible
11 personal property included in an eligible business facility as repres-
12 ents:
13 (i) expenditures paid or incurred by the taxpayer for capital improve-
14 ments consisting of the construction, reconstruction, erection or
15 improvement of real property included in an eligible facility, which
16 construction, reconstruction, erection or improvements were commenced on
17 or after July first, nineteen hundred sixty-eight;
18 (ii) in the case of real property leased by the taxpayer from another
19 party, eight times the portion of the net annual rental rate attribut-
20 able to such construction, reconstruction, erection or improvement
21 commenced on or after July first, nineteen hundred sixty-eight;
22 (iii) expenditures paid or incurred by the taxpayer for the purchase
23 of tangible personal property, other than vehicles, included in an
24 eligible business facility, provided such property was purchased on or
25 after July first, nineteen hundred sixty-eight; and
26 (iv) in the case of tangible personal property, other than vehicles,
27 leased by the taxpayer from another party and included in an eligible
28 business facility, eight times the net annual rental rate, provided the
29 period for which such property was leased by the taxpayer began on or
30 after July first, nineteen hundred sixty-eight.
31 (B) Provided, however, eligible property values for purposes of this
32 subdivision shall not include expenditures paid or incurred more than
33 one year prior to the filing of an application for a certificate of
34 eligibility pursuant to section one hundred nineteen of the commerce
35 law, as such section existed on March thirty-first, nineteen hundred
36 eighty-three.
37 (C) Provided further that, for purposes of this subsection, eligible
38 property values shall not include that portion of the value of property
39 which is used in the production of adjusted eligible net income which is
40 allowed as a deduction from entire net income as set forth in subsection
41 (f) of section fourteen hundred fifty-three of this article.
42 (5) The total of all credits allowed pursuant to this subsection in
43 any taxable year or years with reference to any eligible business facil-
44 ity shall not exceed the total eligible property values included.
45 (6) If a credit is allowed for any taxable year as herein provided on
46 the basis of a certificate of eligibility, and if such certificate is
47 revoked or modified, the taxpayer shall report such revocation or
48 modification in its return for the taxable year during which it occurs,
49 and the tax commission shall recompute such credit and may assess any
50 additional tax resulting from such recomputation within the time fixed
51 by paragraph nine of subsection (c) of section ten hundred eighty-three
52 of this chapter.
53 (7) If a business facility owned or operated by a taxpayer shall be an
54 eligible business facility for only part of a taxable year, the credit
55 allowed by this subdivision shall be prorated according to the period
56 such facility was an eligible business facility, and if the total of the
A. 5316 54
1 eligible property values shall have changed during any taxable year, a
2 pro-rata adjustment shall be made in computing such credit.
3 (8) The state tax commission shall be empowered, on or after April
4 first, nineteen hundred eighty-three, to issue a certificate of eligi-
5 bility for tax credits to a taxpayer for an eligible business facility
6 with regard to which such taxpayer has, prior to July first, nineteen
7 hundred eighty-three, received from the New York state job incentive
8 board initial approval of an application for such certificate by such
9 board as evidenced by the minutes of the meeting of the board at which
10 such application was approved, or a letter of intent authorized by
11 section 102.4 of part one hundred two of title five of the codes, rules
12 and regulations of the state of New York regarding such certificate of
13 eligibility and to renew, extend, revoke or modify a certificate of
14 eligibility for tax credits, pursuant to section one hundred twenty of
15 the commerce law as such section existed on March thirty-first, nineteen
16 hundred eighty-three.
17 (9) For purposes of the requirement for eligibility for the credit
18 allowed under this subdivision that a business facility create or retain
19 not less than five jobs as provided in subdivision (c) of section one
20 hundred eighteen of the commerce law as such section existed on March
21 thirty-first, nineteen hundred eighty-three, a business facility shall
22 have (i) created not less than five jobs only if the number of jobs for
23 the taxable year exceeds the number of jobs at the time of the commence-
24 ment of the project as stated on its application for initial approval by
25 five or more; or (ii) retained not less than five jobs only if initial
26 approval was based on the retention of five or more jobs and (A) the
27 number of jobs for the taxable year is at least equal to the number of
28 jobs at the time of the commencement of the project as stated on its
29 application for initial approval or (B) where initial approval was based
30 on the retention of fewer jobs than the number of jobs at the time of
31 the commencement of the project as stated on its application for initial
32 approval, the number of jobs for the taxable year is at least equal to
33 the number approved for retention. For purposes of this paragraph, the
34 phrase "initial approval was based on the retention of five or more
35 jobs" shall mean that such initial approval was given by the job incen-
36 tive board to an applicant that had not stated in its application for
37 initial approval that it would increase the number of jobs at its facil-
38 ity by at least five.
39 (c) Mortgage recording tax credit. (1) A taxpayer shall be allowed a
40 credit, to be credited against the tax imposed by this article. The
41 amount of the credit shall be the amount of the special additional mort-
42 gage recording tax paid by the taxpayer pursuant to the provisions of
43 subdivision one-a of section two hundred fifty-three of this chapter on
44 mortgages recorded on and after January first, nineteen hundred seven-
45 ty-nine. Provided, however, no credit shall be allowed with respect to a
46 mortgage of real property principally improved or to be improved by one
47 or more structures containing in the aggregate not more than six resi-
48 dential dwelling units, each dwelling unit having its own separate cook-
49 ing facilities, where the real property is located in one or more of the
50 counties comprising the metropolitan commuter transportation district
51 and where the mortgage is recorded on or after May first, nineteen
52 hundred eighty-seven. Provided, however, no credit shall be allowed with
53 respect to a mortgage of real property principally improved or to be
54 improved by one or more structures containing in the aggregate not more
55 than six residential dwelling units, each dwelling unit having its own
56 separate cooking facilities, where the real property is located in the
A. 5316 55
1 county of Erie and where the mortgage is recorded on or after May first,
2 nineteen hundred eighty-seven.
3 (2) In no event shall the credit herein provided for, and carryovers
4 of such credit, in the aggregate, be allowed in an amount which will
5 reduce the tax payable to less than the dollar amount fixed as a minimum
6 tax by subsection (b) of section fourteen hundred fifty-five. However,
7 if the amount of credit or carryovers of such credit, or both, allowable
8 under this subdivision for any taxable year reduces the tax to such
9 amount, any amount of credit or carryovers of such credit thus not
10 deductible in such taxable year may be carried over to the following
11 year or years and may be deducted from the taxpayer's tax for such year
12 or years.
13 (d) Empire zone capital credit.
14 (1) A taxpayer shall be allowed a credit against the tax imposed by
15 this article. The amount of the credit shall be equal to twenty-five
16 percent of the sum of the following investments and contributions made
17 during the taxable year and certified by the commissioner of economic
18 development: (A) for taxable years beginning before January first, two
19 thousand five, qualified investments made in, or contributions in the
20 form of donations made to, one or more empire zone capital corporations
21 established pursuant to section nine hundred sixty-four of the general
22 municipal law prior to January first, two thousand five, (B) qualified
23 investments in certified zone businesses which during the twelve month
24 period immediately preceding the month in which such investment is made
25 employed full-time within the state an average number of individuals,
26 excluding general executive officers, of two hundred fifty or fewer,
27 computed pursuant to the provisions of subparagraph (C) of paragraph two
28 of subsection (e) of this section, except for investments made by or on
29 behalf of an owner of the business, including, but not limited to, a
30 stockholder, partner or sole proprietor, or any related person, as
31 defined in subparagraph (C) of paragraph three of subsection (b) of
32 section four hundred sixty-five of the internal revenue code, and (C)
33 contributions of money to community development projects as defined in
34 regulations promulgated by the commissioner of economic development.
35 "Qualified investments" means the contribution of property to a corpo-
36 ration in exchange for original issue capital stock or other ownership
37 interest, the contribution of property to a partnership in exchange for
38 an interest in the partnership, and similar contributions in the case of
39 a business entity not in corporate or partnership form in exchange for
40 an ownership interest in such entity. The total amount of credit allow-
41 able to a taxpayer under this provision for all years, taken in the
42 aggregate, shall not exceed three hundred thousand dollars, and shall
43 not exceed one hundred thousand dollars with respect to the investments
44 and contributions described in each of subparagraphs (A), (B) and (C) of
45 this paragraph.
46 (2) The credit and carryover of such credit allowed under this
47 subsection for any taxable year shall not, in the aggregate, reduce the
48 tax due for such year to less than the minimum tax fixed by subsection
49 (b) of section fourteen hundred fifty-five of this article. However, if
50 the amount of credit or carryovers of such credit, or both, allowed
51 under this subsection for any taxable year reduces the tax to such
52 amount, or if any part of the credit or carryovers of such credit may
53 not be deducted from the tax otherwise due by reason of the final
54 sentence of this paragraph, any amount of credit or carryovers of such
55 credit thus not deductible in such taxable year may be carried over to
56 the following year or years and may be deducted from the tax for such
A. 5316 56
1 year or years. In addition, the amount of such credit, and carryovers of
2 such credit to the taxable year, deducted from the tax otherwise due may
3 not, in the aggregate, exceed fifty percent of the tax imposed under
4 section fourteen hundred fifty-five of this article computed without
5 regard to any credit provided for under this article.
6 (2-a) Any carryover of a credit from prior taxable years will not be
7 allowed to an empire zone enterprise which is the basis of the credit,
8 if an empire zone retention certificate is not issued to such entity
9 pursuant to subdivision (w) of section nine hundred fifty-nine of the
10 general municipal law.
11 (3) Where the stock, partnership interest or other ownership interest
12 arising from a qualified investment as described in subparagraphs (A)
13 and (B) of paragraph one of this subsection is disposed of, the taxpay-
14 er's entire net income shall be computed, pursuant to regulations
15 promulgated by the commissioner, so as to properly reflect the reduced
16 cost thereof arising from the application of the credit provided for
17 herein.
18 (4)(A) Where a taxpayer sells, transfers or otherwise disposes of
19 corporate stock, a partnership interest or other ownership interest
20 arising from the making of a qualified investment which was the basis,
21 in whole or in part, for the allowance of the credit provided for under
22 this subsection, or where a contribution or investment which was the
23 basis for such allowance is in any manner, in whole or in part, recov-
24 ered by such taxpayer, and such disposition or recovery occurs during
25 the taxable year or within thirty-six months from the close of the taxa-
26 ble year with respect to which such credit is allowed, subparagraph (B)
27 of this paragraph shall apply.
28 (B) The taxpayer shall add back with respect to the taxable year in
29 which the disposition or recovery described in subparagraph (A) of this
30 paragraph occurred the required portion of the credit originally
31 allowed.
32 (C) The required portion of the credit originally allowed shall be the
33 product of (i) the portion of such credit attributable to the property
34 disposed of or the payment or contribution recovered and (ii) the appli-
35 cable percentage.
36 (D) The applicable percentage shall be:
37 (i) one hundred percent, if the disposition or recovery occurs within
38 the taxable year with respect to which the credit is allowed or within
39 twelve months of the end of such taxable year,
40 (ii) sixty-seven percent, if the disposition or recovery occurs more
41 than twelve but not more than twenty-four months after the end of the
42 taxable year with respect to which the credit is allowed, or
43 (iii) thirty-three percent, if the disposition or recovery occurs more
44 than twenty-four but not more than thirty-six months after the end of
45 the taxable year with respect to which the credit is allowed.
46 (5) If the designation of an area as an empire zone is no longer in
47 effect because the designations of all empire zones pursuant to article
48 eighteen-B of the general municipal law have expired, a taxpayer that
49 has made a contribution of money on or before the day immediately
50 preceding the day the empire zones expired to a community development
51 project approved by the commissioner of economic development shall be
52 deemed eligible to claim the empire zone capital credit under subpara-
53 graph (C) of paragraph one of this subsection for additional contrib-
54 utions made prior to April first, two thousand fourteen and certified by
55 the commissioner of economic development to that community development
A. 5316 57
1 project as payment of a commitment made by the taxpayer to that communi-
2 ty development project before the empire zones expired.
3 (e) Empire zone wage tax credit. (1) A taxpayer shall be allowed a
4 credit, to be computed as hereinafter provided, against the tax imposed
5 by this article where the taxpayer has been certified pursuant to arti-
6 cle eighteen-B of the general municipal law. The amount of such credit
7 shall be as prescribed in paragraph four hereof.
8 (2) For purposes of this subsection, the following terms shall have
9 the following meanings: (A) "Empire zone wages" means wages paid by the
10 taxpayer for full-time employment, other than to general executive offi-
11 cers, during the taxable year in an area designated or previously desig-
12 nated as an empire zone or zone equivalent area pursuant to article
13 eighteen-B of the general municipal law where such employment is in a
14 job created in the area (i) during the period of its designation as an
15 empire zone, (ii) within four years of the expiration of such desig-
16 nation, or (iii) during the ten year period immediately following the
17 date of designation as a zone equivalent area, provided, however, that
18 if the taxpayer's certification under article eighteen-B of the general
19 municipal law is revoked with respect to an empire zone or zone equiv-
20 alent area, any wages paid by the taxpayer, on or after the effective
21 date of such decertification, for employment in such zone shall not
22 constitute empire zone wages.
23 (B) "Targeted employee" means a New York resident who receives empire
24 zone wages and who is (i) an eligible individual under the provisions of
25 the targeted jobs tax credit (section fifty-one of the internal revenue
26 code), (ii) eligible for benefits under the provisions of the workforce
27 investment act as a dislocated worker or low-income individual (P.L.
28 105-220, as amended), (iii) a recipient of public assistance benefits,
29 (iv) an individual whose income is below the most recently established
30 poverty rate promulgated by the United States department of commerce, or
31 a member of a family whose family income is below the most recently
32 established poverty rate promulgated by the appropriate federal agency
33 or (v) an honorably discharged member of any branch of the armed forces
34 of the United States.
35 An individual who satisfies the criteria set forth in clause (i),
36 (ii), (iv) or (v) of this subparagraph at the time of initial employment
37 in the job with respect to which the credit is claimed, or who satisfies
38 the criterion set forth in clause (iii) of this subparagraph at such
39 time or at any time within the previous two years, shall be a targeted
40 employee so long as such individual continues to receive empire zone
41 wages.
42 (C) "Average number of individuals, excluding general executive offi-
43 cers, employed full-time" shall be computed by ascertaining the number
44 of such individuals employed by the taxpayer on the thirty-first day of
45 March, the thirtieth day of June, the thirtieth day of September and the
46 thirty-first day of December during each taxable year or other applica-
47 ble period, by adding together the number of such individuals ascer-
48 tained on each of such dates and dividing the sum so obtained by the
49 number of such dates occurring within such taxable year or other appli-
50 cable period.
51 (3) The credit provided for herein shall be allowed only where the
52 average number of individuals, excluding general executive officers,
53 employed full-time by the taxpayer in (A) (i) the state and (ii) the
54 empire zone or area previously constituting such zone or zone equivalent
55 area, during the taxable year exceeds the average number of such indi-
56 viduals employed full-time by the taxpayer in (B) (i) the state and (ii)
A. 5316 58
1 such zone or area subsequently or previously constituting such zone or
2 such zone equivalent area, respectively, during the four years imme-
3 diately preceding the first taxable year in which the credit is claimed
4 with respect to such zone or area. Where the taxpayer provided full-time
5 employment within (C) (i) the state or (ii) such zone or area during
6 only a portion of such four-year period, then for purposes of this para-
7 graph the term "four years" shall be deemed to refer instead to such
8 portion, if any.
9 The credit shall be allowed only with respect to the first taxable
10 year during which payments of empire zone wages are made and the condi-
11 tions set forth in this paragraph are satisfied, and with respect to
12 each of the four taxable years next following (but only, with respect to
13 each of such years, if such conditions are satisfied), in accordance
14 with paragraph four of this subsection. Subsequent certifications of the
15 taxpayer pursuant to article eighteen-B of the general municipal law, at
16 the same or a different location in the same empire zone or zone equiv-
17 alent area or at a location in a different empire zone or zone equiv-
18 alent area, shall not extend the five taxable year time limitation on
19 the allowance of the credit set forth in the preceding sentence.
20 Provided, further, however, that no credit shall be allowed with respect
21 to any taxable year beginning more than four years following the taxable
22 year in which designation as an empire zone expired or more than ten
23 years after the designation as a zone equivalent area.
24 (4) The amount of the credit shall equal the sum of (A) the product of
25 three thousand dollars and the average number of individuals (excluding
26 general executive officers) employed full-time by the taxpayer, computed
27 pursuant to the provisions of subparagraph (C) of paragraph two of this
28 subsection, who (i) received empire zone wages for more than half of the
29 taxable year, (ii) received, with respect to more than half of the peri-
30 od of employment by the taxpayer during the taxable year, an hourly wage
31 which was at least one hundred thirty-five percent of the minimum wage
32 specified in section six hundred fifty-two of the labor law, and (iii)
33 are targeted employees; and
34 (B) the product of fifteen hundred dollars and the average number of
35 individuals (excluding general executive officers and individuals
36 described in subparagraph (A) of this paragraph) employed full-time by
37 the taxpayer, computed pursuant to the provisions of subparagraph (C) of
38 paragraph two of this subsection, who received empire zone wages for
39 more than half of the taxable year.
40 (C) For purposes of calculating the amount of the credit, individuals
41 employed within an empire zone or zone equivalent area within the imme-
42 diately preceding sixty months by a related person, as such term is
43 defined in subparagraph (c) of paragraph three of subsection (b) of
44 section four hundred sixty-five of the internal revenue code, shall not
45 be included in the average number of individuals described in subpara-
46 graph (A) or subparagraph (B) of this paragraph, unless such related
47 person was never allowed a credit under this subsection with respect to
48 such employees. For the purposes of this subparagraph, a "related
49 person" shall include an entity which would have qualified as a "related
50 person" to the taxpayer if it had not been dissolved, liquidated, merged
51 with another entity or otherwise ceased to exist or operate.
52 (D) If a taxpayer is certified in an empire zone designated under
53 subdivision (a) or (d) of section nine hundred fifty-eight of the gener-
54 al municipal law, the dollar amounts specified under subparagraph (A) or
55 (B) of this paragraph shall be increased by five hundred dollars for
A. 5316 59
1 each qualifying individual under such subparagraph who received, during
2 the taxable year, wages in excess of forty thousand dollars.
3 (E) The requirement in this paragraph that an employee must receive
4 empire zone wages for more than half the taxable year shall not apply in
5 the first taxable year of a taxpayer satisfying the criteria set forth
6 in this subparagraph. In such a case, the credit allowed under this
7 subsection shall be computed by utilizing the number of individuals
8 (excluding general executive officers) employed full time by the taxpay-
9 er on the last day of its first taxable year. A taxpayer shall satisfy
10 the following criteria: (i) such taxpayer acquired real or tangible
11 personal property during its first taxable year from an entity which is
12 not a related person (as such term is defined in subdivision (g) of
13 section fourteen of this chapter); (ii) the first taxable year of such
14 taxpayer shall be a short taxable year of not more than seven months in
15 duration; and (iii) the number of individuals employed full-time on the
16 last day of such first taxable year shall be at least one hundred ninety
17 and substantially all of such individuals must have been previously
18 employed by the entity from whom such taxpayer purchased its assets.
19 Provided, further, however, that the credit provided for herein with
20 respect to the taxable year, and carryovers of such credit to the taxa-
21 ble year, deducted from the tax otherwise due, may not, in the aggre-
22 gate, exceed fifty percent of the tax imposed under section fourteen
23 hundred fifty-five computed without regard to any credit provided for
24 under this article.
25 (5) The credit and carryovers of such credit allowed under this
26 subsection for any taxable year shall not, in the aggregate, reduce the
27 tax due for such year to less than the minimum tax fixed by subsection
28 (b) of section fourteen hundred fifty-five of this article. However, if
29 the amount of credit or carryovers of such credit, or both, allowed
30 under this subsection for any taxable year reduces the tax to such
31 amount, or if any part of the credit or carryovers of such credit may
32 not be deducted from the tax otherwise due by reason of the final
33 sentence in paragraph four hereof, any amount of credit or carryovers of
34 such credit thus not deductible in such taxable year may be carried over
35 to the following year or years and may be deducted from the taxpayer's
36 tax for such year or years.
37 (5-a) Any carry over of a credit from prior taxable years will not be
38 allowed if an empire zone retention certificate is not issued pursuant
39 to subdivision (w) of section nine hundred fifty-nine of the general
40 municipal law to the empire zone enterprise which is the basis of the
41 credit.
42 (e-1) Hire a vet credit. (1) Allowance of credit. For taxable years
43 beginning on or after January first, two thousand seventeen and before
44 January first, two thousand nineteen, a taxpayer shall be allowed a
45 credit, to be computed as provided in this subsection, against the tax
46 imposed by this article, for hiring and employing, for not less than one
47 year and for not less than thirty-five hours each week, a qualified
48 veteran within the state. The taxpayer may claim the credit in the year
49 in which the qualified veteran completes one year of employment by the
50 taxpayer. If the taxpayer claims the credit allowed under this
51 subsection, the taxpayer may not use the hiring of a qualified veteran
52 that is the basis for this credit in the basis of any other credit
53 allowed in this article.
54 (2) Qualified veteran. A qualified veteran is an individual:
55 (A) who served on active duty in the United States army, navy, air
56 force, marine corps, coast guard or the reserves thereof, or who served
A. 5316 60
1 in active military service of the United States as a member of the army
2 national guard, air national guard, New York guard or New York naval
3 militia; who was released from active duty by general or honorable
4 discharge after September eleventh, two thousand one;
5 (B) who commences employment by the qualified taxpayer on or after
6 January first, two thousand fourteen, and before January first, two
7 thousand seventeen; and
8 (C) who certifies by signed affidavit, under penalty of perjury, that
9 he or she has not been employed for thirty-five or more hours during any
10 week in the one hundred eighty day period immediately prior to his or
11 her employment by the taxpayer.
12 (3) Employer prohibition. An employer shall not discharge an employee
13 and hire a qualifying veteran solely for the purpose of qualifying for
14 this credit.
15 (4) Amount of credit. The amount of the credit shall be ten percent of
16 the total amount of wages paid to the qualified veteran during the
17 veteran's first full year of employment. Provided, however, that, if the
18 qualified veteran is a disabled veteran, as defined in paragraph (b) of
19 subdivision one of section eighty-five of the civil service law, the
20 amount of the credit shall be fifteen percent of the total amount of
21 wages paid to the qualified veteran during the veteran's first full year
22 of employment. The credit allowed pursuant to this subsection shall not
23 exceed in any taxable year, five thousand dollars for any qualified
24 veteran and fifteen thousand dollars for any qualified veteran who is a
25 disabled veteran.
26 (5) Carryover. The credit allowed under this subsection for any taxa-
27 ble year shall not reduce the tax due for such year to less than the
28 amount prescribed in paragraph three of subsection (b) of section four-
29 teen hundred fifty-five of this article. However, if the amount of cred-
30 it allowable under this subsection for any taxable year reduces the tax
31 to such amount, any amount of credit not deductible in such taxable year
32 may be carried over to the following three years and may be deducted
33 from the taxpayer's tax for such year or years.
34 (f) Credit for employment of persons with disabilities. (1) Allowance
35 of credit. A taxpayer shall be allowed a credit, to be computed as here-
36 inafter provided, against the tax imposed by this article, for employing
37 within the state a qualified employee.
38 (2) Qualified employee. A qualified employee is an individual:
39 (A) who is certified by the education department, or in the case of an
40 individual who is blind or visually handicapped, by the state agency
41 responsible for provision of vocational rehabilitation services to the
42 blind and visually handicapped: (i) as a person with a disability which
43 constitutes or results in a substantial handicap to employment and (ii)
44 as having completed or as receiving services under an individualized
45 written rehabilitation plan approved by the education department or
46 other state agency responsible for providing vocational rehabilitation
47 services to such individual; and
48 (B) who has worked on a full-time basis for the employer who is claim-
49 ing the credit for at least one hundred eighty days or four hundred
50 hours.
51 (3) Amount of credit. Except as provided in paragraph four of this
52 subsection, the amount of credit shall be thirty-five percent of the
53 first six thousand dollars in qualified first-year wages earned by each
54 qualified employee. "Qualified first-year wages" means wages paid or
55 incurred by the taxpayer during the taxable year to qualified employees
56 which are attributable, with respect to any such employee, to services
A. 5316 61
1 rendered during the one-year period beginning with the day the employee
2 begins work for the taxpayer.
3 (4) Credit where federal work opportunity tax credit applies. With
4 respect to any qualified employee whose qualified first-year wages under
5 paragraph three of this subsection also constitute qualified first-year
6 wages for purposes of the work opportunity tax credit for vocational
7 rehabilitation referrals under section fifty-one of the internal revenue
8 code, the amount of credit under this subsection shall be thirty-five
9 percent of the first six thousand dollars in qualified second-year wages
10 earned by each such employee. "Qualified second-year wages" means wages
11 paid or incurred by the taxpayer during the taxable year to qualified
12 employees which are attributable, with respect to any such employees, to
13 services rendered during the one-year period beginning one year after
14 the employee begins work for the taxpayer.
15 (5) Carryover. The credit and carryovers of such credit allowed under
16 this subsection for any taxable year shall not, in the aggregate, reduce
17 the tax due for such year to less than the minimum tax fixed by
18 subsection (b) of section fourteen hundred fifty-five of this article.
19 However, if the amount of credit or carryovers of such credit, or both,
20 allowed under this subdivision for any taxable year reduces the tax to
21 such amount, then any amount of credit or carryovers of such credit thus
22 not deductible in such taxable year may be carried over to the following
23 year or years and may be deducted from the taxpayer's tax for such year
24 or years.
25 (6) Coordination with federal work opportunity tax credit. The
26 provisions of sections fifty-one and fifty-two of the internal revenue
27 code, as such sections applied on October first, nineteen hundred nine-
28 ty-six, that apply to the work opportunity tax credit for vocational
29 rehabilitation referrals shall apply to the credit under this subsection
30 to the extent that such sections are consistent with the specific
31 provisions of this subsection, provided that in the event of a conflict
32 the provisions of this subsection shall control.
33 (g) Order of credits. Credits allowable under this article which
34 cannot be carried over and which are not refundable shall be deducted
35 first. Credits allowable under this article which can be carried over,
36 and carryovers of such credits, shall be deducted next, and among such
37 credits, those whose carryover is of limited duration shall be deducted
38 before those whose carryover is of unlimited duration; provided, howev-
39 er, that the credit allowable under subsection (e) of this section shall
40 be deducted prior to all other credits described in this sentence.
41 Credits allowable under this article which are refundable shall be
42 deducted last.
43 (h) Credits for New York S corporations. Notwithstanding the
44 provisions of this section, no carryover of credit allowable in a New
45 York C year shall be deducted from the tax otherwise due under this
46 article in a New York S year, and no credit allowable in a New York S
47 year, or carryover of such credit, shall be deducted from the tax
48 imposed by this article. However, a New York S year shall be treated as
49 a taxable year for purposes of determining the number of taxable years
50 to which a credit may be carried over under this section. Notwithstand-
51 ing the first sentence of this subsection, however, the credit for the
52 special additional mortgage recording tax shall be allowed as provided
53 in subsection (c) of this section, and the carryover of any such credit
54 shall be determined without regard to whether the credit is carried from
55 a New York C year to a New York S year or vice-versa.
A. 5316 62
1 (i) Investment tax credit (ITC). (1) A taxpayer shall be allowed a
2 credit, to be computed as hereinafter provided, against the tax imposed
3 by this article. Provided, however, a taxpayer shall not be allowed such
4 credit provided by this paragraph unless (i) eighty percent or more of
5 the employees performing the administrative and support functions
6 resulting from or related to the qualifying uses of such equipment are
7 located in this state, or (ii) the average number of employees that
8 perform the administrative and support functions resulting from or
9 related to the qualifying uses of such equipment and are located in this
10 state during the taxable year for which the credit is claimed is equal
11 to or greater than ninety-five percent of the average number of employ-
12 ees that perform these functions and are located in this state during
13 the thirty-six months immediately preceding the year for which the cred-
14 it is claimed, or (iii) the number of employees located in this state
15 during the taxable year for which the credit is claimed is equal to or
16 greater than ninety percent of the number of employees located in this
17 state on December thirty-first, nineteen hundred ninety-eight or, if the
18 taxpayer was not a calendar year taxpayer in nineteen hundred ninety-
19 eight, the last day of its first taxable year ending after December
20 thirty-first, nineteen hundred ninety-eight. If the taxpayer becomes
21 subject to tax in this state after the taxable year beginning in nine-
22 teen hundred ninety-eight, then the taxpayer is not required to satisfy
23 the employment test provided in the preceding sentence of this subpara-
24 graph for its first taxable year. For the purposes of subparagraph (iii)
25 of this paragraph the employment test will be based on the number of
26 employees located in this state on the last day of the first taxable
27 year the taxpayer is subject to tax in this state. If the uses of the
28 property must be aggregated to determine whether the property is princi-
29 pally used in qualifying uses, then either each affiliate using the
30 property must satisfy this employment test or this employment test must
31 be satisfied through the aggregation of the employees of the taxpayer,
32 its affiliated regulated broker, dealer, and registered investment
33 adviser using the property. The amount of the credit shall be the
34 percent provided for herein below of the investment credit base. The
35 investment credit base is the cost or other basis for federal income tax
36 purposes of tangible personal property and other tangible property,
37 including buildings and structural components of buildings, described in
38 paragraph two of this subsection, less the amount of the nonqualified
39 nonrecourse financing with respect to such property to the extent such
40 financing would be excludible from the credit base pursuant to section
41 46(c)(8) of the Internal Revenue Code (treating such property as section
42 thirty-eight property irrespective of whether or not it in fact consti-
43 tutes section thirty-eight property). If, at the close of a taxable
44 year following the taxable year in which such property was placed in
45 service, there is a net decrease in the amount of nonqualified nonrec-
46 ourse financing with respect to such property, such net decrease shall
47 be treated as if it were the cost or other basis of property described
48 in paragraph two of this subsection acquired, constructed, reconstructed
49 or erected during the year of the decrease in the amount of nonqualified
50 nonrecourse financing. In the case of a combined report the term invest-
51 ment credit base shall mean the sum of the investment credit base of
52 each corporation included on such report. The percentage to be used to
53 compute the credit allowed pursuant to this subsection shall be
54 For taxable years beginning after
55 1997 .................................. five percent with
56 respect to the first three hundred fifty million dollars of
A. 5316 63
1 the investment credit base, and four percent with respect to
2 the investment credit base in excess of three hundred fifty
3 million dollars.
4 (2) A credit shall be allowed under this subsection with respect to
5 tangible personal property and other tangible property, including build-
6 ings and structural components of buildings, which are: depreciable
7 pursuant to section one hundred sixty-seven of the Internal Revenue
8 Code, have a useful life of four years or more, are acquired by purchase
9 as defined in section one hundred seventy-nine (d) of the Internal
10 Revenue Code, have a situs in this state and are (A) principally used in
11 the ordinary course of the taxpayer's trade or business as a broker or
12 dealer in connection with the purchase or sale (which shall include but
13 not be limited to the issuance, entering into, assumption, offset,
14 assignment, termination, or transfer) of stocks, bonds or other securi-
15 ties as defined in section four hundred seventy-five (c) (2) of the
16 Internal Revenue Code, or of commodities as defined in section four
17 hundred seventy-five (e) of the Internal Revenue Code, or (B) principal-
18 ly used in the ordinary course of the taxpayer's trade or business of
19 providing investment advisory services for a regulated investment compa-
20 ny as defined in section eight hundred fifty-one of the Internal Revenue
21 Code, or lending, loan arrangement or loan origination services to
22 customers in connection with the purchase or sale (which shall include
23 but not be limited to the issuance, entering into, assumption, offset,
24 assignment, termination, or transfer) of securities as defined in
25 section four hundred seventy-five (c) (2) of the Internal Revenue Code.
26 For purposes of subparagraphs (A) and (B) of this paragraph, property
27 purchased by a taxpayer affiliated with a regulated broker, dealer, or
28 registered investment adviser is allowed a credit under this subsection
29 if the property is used by its affiliated regulated broker, dealer, or
30 registered investment adviser in accordance with this subsection. For
31 purposes of determining if the property is principally used in qualify-
32 ing uses, the uses by the taxpayer described in subparagraphs (A) and
33 (B) of this paragraph may be aggregated. In addition, the uses by the
34 taxpayer, its affiliated regulated broker, dealer and registered invest-
35 ment adviser under either or both of such subparagraphs may be aggre-
36 gated.
37 (3) A taxpayer shall not be allowed a credit under this subsection
38 with respect to any property described in paragraph two of this
39 subsection if such property qualifies for the deduction allowed under
40 subsection (k) of section one thousand four hundred fifty-three of this
41 article whether or not such amount shall have been deducted.
42 (4) A taxpayer shall not be allowed a credit under this subsection
43 with respect to tangible personal property and other tangible property,
44 including buildings and structural components of buildings, which it
45 leases to any other person or corporation except where a taxpayer leases
46 property to an affiliated broker, dealer, or registered investment
47 adviser that uses such property in accordance with subparagraph (A) or
48 (B) of paragraph two of this subsection. For purposes of the preceding
49 sentence, any contract or agreement to lease or rent or for a license to
50 use such property shall be considered a lease.
51 (5) Except as otherwise provided in this paragraph, the credit allowed
52 under this subsection for any taxable year shall not reduce the tax due
53 for such year to less than the dollar amount fixed as a minimum tax by
54 subsection (b) of section one thousand four hundred fifty-five of this
55 article. However, if the amount of credit allowable under this
56 subsection for any taxable year reduces the tax to such amount, any
A. 5316 64
1 amount of credit allowed for a taxable year may be carried over to the
2 fifteen taxable years next following such taxable year and may be
3 deducted from the taxpayer's tax for such year or years. In lieu of such
4 carryover, any such taxpayer which qualifies as a new business under
5 paragraph eight of this subsection may elect to treat the amount of such
6 carryover as an overpayment of tax to be credited or refunded in accord-
7 ance with the provisions of section one thousand eighty-six of this
8 chapter, provided, however, the provisions of subsection (c) of section
9 one thousand eighty-eight of this chapter notwithstanding no interest
10 shall be paid thereon.
11 (6) At the option of the taxpayer an eligible business facility for
12 which a credit is allowed under subsection (b) of this section may be
13 treated as property (A) principally used in the ordinary course of the
14 taxpayer's trade or business as a broker or dealer in connection with
15 the purchase or sale (which shall include but not be limited to the
16 issuance, entering into, assumption, offset, assignment, termination, or
17 transfer) of stocks, bonds or other securities as defined in section
18 four hundred seventy-five (c) (2) of the Internal Revenue Code, or of
19 commodities as defined in section four hundred seventy-five (e) of the
20 Internal Revenue Code, or (B) principally used in the ordinary course of
21 the taxpayer's trade or business of providing investment advisory
22 services for a regulated investment company as defined in section eight
23 hundred fifty-one of the Internal Revenue Code, or lending, loan
24 arrangement or loan origination services to customers in connection with
25 the purchase or sale (which shall include but not be limited to the
26 issuance, entering into, assumption, offset, assignment, termination, or
27 transfer) of securities as defined in section four hundred seventy-five
28 (c) (2) of the Internal Revenue Code provided the property otherwise
29 qualifies under paragraph two of this subsection, in which event a cred-
30 it shall not be allowed under subsection (b) of this section.
31 (7)(A) With respect to property which is depreciable pursuant to
32 section one hundred sixty-seven of the Internal Revenue Code but is not
33 subject to the provisions of section one hundred sixty-eight of such
34 code and which is disposed of or ceases to be in qualified use prior to
35 the end of the taxable year in which the credit is to be taken, the
36 amount of the credit shall be that portion of the credit provided for in
37 this subsection which represents the ratio which the months of qualified
38 use bear to the months of useful life. If property on which credit has
39 been taken is disposed of or ceases to be in qualified use prior to the
40 end of its useful life, the difference between the credit taken and the
41 credit allowed for actual use must be added back in the year of disposi-
42 tion. Provided, however, if such property is disposed of or ceases to be
43 in qualified use after it has been in qualified use for more than twelve
44 consecutive years, it shall not be necessary to add back the credit as
45 provided in this subparagraph. The amount of credit allowed for actual
46 use shall be determined by multiplying the original credit by the ratio
47 which the months of qualified use bear to the months of useful life. For
48 purposes of this subparagraph, useful life of property shall be the same
49 as the taxpayer uses for depreciation purposes when computing his feder-
50 al income tax liability.
51 (B) Except with respect to that property to which subparagraph (D) of
52 this paragraph applies, with respect to three-year property, as defined
53 in subsection (e) of section one hundred sixty-eight of the Internal
54 Revenue Code, which is disposed of or ceases to be in qualified use
55 prior to the end of the taxable year in which the credit is to be taken,
56 the amount of the credit shall be that portion of the credit provided
A. 5316 65
1 for in this subsection which represents the ratio which the months of
2 qualified use bear to thirty-six. If property on which credit has been
3 taken is disposed of or ceases to be in qualified use prior to the end
4 of thirty-six months, the difference between the credit taken and the
5 credit allowed for actual use must be added back in the year of disposi-
6 tion. The amount of credit allowed for actual use shall be determined by
7 multiplying the original credit by the ratio which the months of quali-
8 fied use bear to thirty-six.
9 (C) Except with respect to that property to which subparagraph (D) of
10 this paragraph applies, with respect to property subject to the
11 provisions of section one hundred sixty-eight of the Internal Revenue
12 Code, other than three-year property as defined in subsection (e) of
13 such section one hundred sixty-eight which is disposed of or ceases to
14 be in qualified use prior to the end of the taxable year in which the
15 credit is to be taken, the amount of the credit shall be that portion of
16 the credit provided for in this subsection which represents the ratio
17 which the months of qualified use bear to sixty. If property on which
18 credit has been taken is disposed of or ceases to be in qualified use
19 prior to the end of sixty months, the difference between the credit
20 taken and the credit allowed for actual use must be added back in the
21 year of disposition. The amount of credit allowed for actual use shall
22 be determined by multiplying the original credit by the ratio which the
23 months of qualified use bear to sixty.
24 (D) With respect to any property to which section one hundred sixty-
25 eight of the Internal Revenue Code applies, which is a building or a
26 structural component of a building and which is disposed of or ceases to
27 be in a qualified use prior to the end of the taxable year in which the
28 credit is to be taken, the amount of the credit shall be that portion of
29 the credit provided for in this subsection which represents the ratio
30 which the months of qualified use bear to the total number of months
31 over which the taxpayer chooses to deduct the property under the Inter-
32 nal Revenue Code. If property on which credit has been taken is disposed
33 of or ceases to be in qualified use prior to the end of the period over
34 which the taxpayer chooses to deduct the property under the Internal
35 Revenue Code, the difference between the credit taken and the credit
36 allowed for actual use must be added back in the year of disposition.
37 Provided, however, if such property is disposed of or ceases to be in
38 qualified use after it has been in qualified use for more than twelve
39 consecutive years, it shall not be necessary to add back the credit as
40 provided in this subparagraph. The amount of credit allowed for actual
41 use shall be determined by multiplying the original credit by the ratio
42 which the months of qualified use bear to the total number of months
43 over which the taxpayer chooses to deduct the property under the Inter-
44 nal Revenue Code.
45 (E) For taxable years commencing on or after January first, nineteen
46 hundred ninety-eight the amount required to be added back pursuant to
47 this paragraph shall be augmented by an amount equal to the product of
48 such amount and the underpayment rate of interest (without regard to
49 compounding), set by the commissioner pursuant to subsection (e) of
50 section one thousand ninety-six of this chapter, in effect on the last
51 day of the taxable year.
52 (F) If, as of the close of the taxable year, there is a net increase
53 with respect to the taxpayer in the amount of nonqualified nonrecourse
54 financing (within the meaning of section 46(c)(8) of the Internal Reven-
55 ue Code) with respect to any property with respect to which the credit
56 under this subsection was limited based on attributable nonqualified
A. 5316 66
1 nonrecourse financing, then an amount equal to the decrease in such
2 credit which would have resulted from reducing, by the amount of such
3 net increase, the cost or other basis taken into account with respect to
4 such property must be added back in such taxable year. The amount of
5 nonqualified nonrecourse financing shall not be treated as increased by
6 reason of a transfer of (or agreement to transfer) any evidence of an
7 indebtedness if such transfer occurs (or such agreement is entered into)
8 more than one year after the date such indebtedness was incurred.
9 (8) For purposes of paragraph five of this subsection, a new business
10 shall include any corporation, except a corporation which:
11 (A) over fifty percent of the number of shares of stock entitling the
12 holders thereof to vote for the election of directors or trustees is
13 owned or controlled, either directly or indirectly, by a taxpayer
14 subject to tax under this article; section one hundred eighty-three, one
15 hundred eighty-four or one hundred eighty-five of article nine; article
16 nine-A or article thirty-three of this chapter; or
17 (B) is substantially similar in operation and in ownership to a busi-
18 ness entity (or entities) taxable, or previously taxable, under this
19 article; section one hundred eighty-three, one hundred eighty-four or
20 one hundred eighty-five of article nine; article nine-A or article thir-
21 ty-three of this chapter; article twenty-three of this chapter or which
22 would have been subject to tax under such article twenty-three (as such
23 article was in effect on January first, nineteen hundred eighty) or the
24 income (or losses) of which is (or was) includable under article twen-
25 ty-two of this chapter whereby the intent and purpose of this paragraph
26 and paragraph five of this subsection with respect to refunding of cred-
27 it to new business would be evaded; or
28 (C) has been subject to tax under this article for more than five
29 taxable years (excluding short taxable years).
30 (9)(A)(i) If a taxpayer is required by paragraph seven of this
31 subsection to add back a portion of the credit taken because property
32 was destroyed or ceased to be in qualified use as a direct result of the
33 September eleventh, two thousand one terrorist attacks, such taxpayer
34 may elect to defer the amount to be recaptured for all such property to
35 the taxable year next succeeding the taxable year in which the
36 destruction or cessation of qualified use occurred. The taxable year in
37 which the destruction or cessation of qualified use occurred shall be
38 hereinafter referred to as the "recapture event taxable year". If the
39 taxpayer's total employment number in the state on the last day of the
40 taxable year next succeeding the recapture event taxable year is a
41 significant percentage of the taxpayer's average total employment number
42 in the state for the taxpayer's recapture event taxable year and the two
43 taxable years immediately preceding the recapture event taxable year,
44 then the taxpayer shall not be required to recapture any credit with
45 respect to such property. If the taxpayer's total employment number in
46 the state on the last day of the taxable year next succeeding the recap-
47 ture event taxable year is not a significant percentage of the taxpay-
48 er's average total employment number in the state for the taxpayer's
49 recapture event taxable year and the two taxable years immediately
50 preceding the recapture event taxable year, the taxpayer shall be
51 required to recapture the portion of the credit taken under this
52 subsection, as required by paragraph seven of this subsection, for all
53 of its property destroyed or which ceased to be in qualified use as a
54 direct result of the September eleventh, two thousand one terrorist
55 attacks. The amount required to be recaptured shall be augmented as
56 required pursuant to subparagraph (E) of paragraph seven of this
A. 5316 67
1 subsection by using an interest rate equal to two times the rate of
2 interest specified in such subparagraph seven applicable for the taxable
3 year in which the recapture occurs.
4 (ii) The taxpayer's total employment number shall include all employ-
5 ees of the taxpayer employed full-time by the taxpayer in the state. The
6 average total employment number for the recapture event taxable year and
7 the two taxable years immediately preceding the recapture event taxable
8 year shall be computed by determining the taxpayer's total employment
9 number on the thirty-first day of March, the thirtieth day of June, the
10 thirtieth day of September and the thirty-first day of December during
11 the applicable taxable years, adding together the number of such indi-
12 viduals determined to be so employed on each of such dates and dividing
13 the sum so obtained by the number of such dates occurring within such
14 applicable taxable years. However, in the case of the taxable year which
15 included September eleventh, two thousand one, the average total employ-
16 ment number for such taxable year shall be determined by using the total
17 employment number on September first, two thousand one in lieu of
18 September thirtieth, two thousand one and, if such taxable year included
19 December thirty-first, two thousand one, by excluding the total employ-
20 ment number on December thirty-first, two thousand one.
21 (B) In lieu of subparagraph (A) of this paragraph, a taxpayer may
22 elect to recapture the portion of the credit taken under this
23 subsection, as required by paragraph seven of this subsection, for all
24 of its property destroyed or which ceased to be in qualified use as a
25 direct result of the September eleventh, two thousand one terrorist
26 attacks, in the taxable year in which the destruction or cessation of
27 qualified use occurred. If the taxpayer makes such election and acquires
28 property (hereinafter referred to as "replacement property") to replace
29 any property destroyed as a direct result of the September eleventh, two
30 thousand one terrorist attacks (regardless of when such property was
31 placed in service and whether a credit was claimed on that property
32 pursuant to this subsection), and such replacement property is similar
33 or related in service or use to such destroyed property, the investment
34 credit base of the replacement property shall be determined without
35 regard to any basis reduction required pursuant to section 1033 of the
36 internal revenue code.
37 (C) The election made by the taxpayer under subparagraph (A) or (B) of
38 this paragraph shall be made in the manner and form prescribed by the
39 commissioner.
40 (D) A taxpayer, over fifty percent of whose employees died as a direct
41 result of the September eleventh, two thousand one terrorist attacks,
42 may make the election provided for in subparagraph (A) of this para-
43 graph, and shall not be required to recapture any credit with respect to
44 property which was destroyed or which ceased to be in qualified use as a
45 direct result of such attacks, whether or not it meets the employment
46 test specified in clause (i) of subparagraph (A) of this paragraph.
47 (j) Credit for purchase of an automated external defibrillator. A
48 taxpayer shall be allowed a credit as hereinafter provided, against the
49 tax imposed by this article for the purchase, other than for resale, of
50 an automated external defibrillator, as such term is defined in section
51 three thousand-b of the public health law. The amount of the credit
52 shall be the cost to the taxpayer of automated external defibrillators
53 purchased during the taxable year, such credit not to exceed five
54 hundred dollars with respect to each unit purchased. The credit allowed
55 under this subsection for any taxable year shall not reduce the tax due
A. 5316 68
1 for such year to less than the minimum tax fixed by subsection (b) of
2 section fourteen hundred fifty-five of this article.
3 (k) (1) A taxpayer shall be allowed a credit against the tax imposed
4 by this article equal to twenty percent of the premium paid during the
5 taxable year for long-term care insurance. In order to qualify for such
6 credit, the taxpayer's premium payment must be for the purchase of or
7 for continuing coverage under a long-term care insurance policy that
8 qualifies for such credit pursuant to section one thousand one hundred
9 seventeen of the insurance law.
10 (2) In no event shall the credit herein provided for, and carryovers
11 of such credit, be allowed in an amount which will reduce the tax paya-
12 ble to less than the dollar amount fixed as a minimum tax by subsection
13 (b) of section fourteen hundred fifty-five of this article. If, however,
14 the amount of credit or carryovers of such credit, or both, allowable
15 under this subsection for any taxable year reduces the tax to such
16 amount, any amount of credit or carryovers of such credit thus not
17 deductible in such taxable year may be carried over to the following
18 year or years and may be deducted from the taxpayer's tax for such year
19 or years.
20 (l) Low-income housing credit. (1) Allowance of credit. A taxpayer
21 shall be allowed a credit against the tax imposed by this article with
22 respect to the ownership of eligible low-income buildings, computed as
23 provided in section eighteen of this chapter.
24 (2) Application of credit. The credit and carryovers of such credit
25 allowed under this subsection for any taxable year shall not, in the
26 aggregate, reduce the tax due for such year to less than the minimum tax
27 fixed by subsection (b) of section fourteen hundred fifty-five of this
28 article. However, if the amount of credit or carryovers of such credit,
29 or both, allowed under this subsection for any taxable year reduces the
30 tax to such amount, then any amount of credit or carryovers of such
31 credit thus not deductible in such taxable year may be carried over to
32 the following year or years and may be deducted from the taxpayer's tax
33 for such year or years.
34 (3) Credit recapture. For provisions requiring recapture of credit,
35 see subdivision (b) of section eighteen of this chapter.
36 (m) Green building credit. (1) Allowance of credit. A taxpayer shall
37 be allowed a credit, to be computed as provided in section nineteen of
38 this chapter, against the tax imposed by this article.
39 (2) Carryover. The credit and carryovers of such credit allowed under
40 this subsection for any taxable year shall not, in the aggregate, reduce
41 the tax due for such year to less than the minimum tax fixed by
42 subsection (b) of section fourteen hundred fifty-five of this article.
43 However, if the amount of credit or carryovers of such credit, or both,
44 allowed under this subsection for any taxable year reduces the tax to
45 such amount, then any amount of credit or carryovers of such credit thus
46 not deductible in such taxable year may be carried over to the following
47 year or years and may be deducted from the taxpayer's tax for such year
48 or years.
49 (n) Credit for transportation improvement contributions. (1) Allowance
50 of credit. A taxpayer shall be allowed a credit, to be computed as
51 provided in section twenty of this chapter, against the tax imposed by
52 this article.
53 (2) Application of credit. The credit allowed under this subsection
54 for any taxable year shall not reduce the tax due for such year to less
55 than the minimum tax fixed by subsection (b) of section fourteen hundred
56 fifty-five of this article. However, if the amount of credit allowed
A. 5316 69
1 under this subsection for any taxable year reduces the tax to such
2 amount, then any amount of credit thus not deductible in such taxable
3 year shall be treated as an overpayment of tax to be credited or
4 refunded in accordance with the provisions of section ten hundred eight-
5 y-six of this chapter. Provided, however, the provisions of subsection
6 (c) of section ten hundred eighty-eight of this chapter notwithstanding,
7 no interest shall be paid thereon.
8 (3) Credit recapture. For provisions requiring recapture of credit,
9 see subdivision (c) of section twenty of this chapter.
10 (o) QEZE credit for real property taxes. (1) Allowance of credit. A
11 taxpayer which is a qualified empire zone enterprise shall be allowed a
12 credit for eligible real property taxes, to be computed as provided in
13 section fifteen of this chapter, against the tax imposed by this arti-
14 cle.
15 (2) Application of credit. The credit allowed under this subsection
16 for any taxable year shall not reduce the tax due for such year to less
17 than the minimum tax fixed by subsection (b) of section fourteen hundred
18 fifty-five of this article. However, if the amount of credit allowed
19 under this subsection for any taxable year reduces the tax to such
20 amount, then any amount of credit thus not deductible in such taxable
21 year shall be treated as an overpayment of tax to be credited or
22 refunded in accordance with the provisions of section ten hundred eight-
23 y-six of this chapter. Provided, however, the provisions of subsection
24 (c) of section ten hundred eighty-eight of this chapter notwithstanding,
25 no interest shall be paid thereon.
26 (p) QEZE tax reduction credit. (1) Allowance of credit. A taxpayer
27 which is a qualified empire zone enterprise shall be allowed a QEZE tax
28 reduction credit, to be computed as provided in section sixteen of this
29 chapter, against the tax imposed by this article.
30 (2) Application of credit. The credit allowed under this subsection
31 for any taxable year shall not reduce the tax due for such year to less
32 than the minimum tax fixed by paragraph three of subsection (b) of
33 section fourteen hundred fifty-five of this article.
34 (q) Brownfield redevelopment tax credit. (1) Allowance of credit. A
35 taxpayer shall be allowed a credit, to be computed as provided in
36 section twenty-one of this chapter, against the tax imposed by this
37 article.
38 (2) Application of credit. The credit allowed under this subsection
39 for any taxable year shall not reduce the tax due for such year to less
40 than the minimum tax fixed by paragraph three of subsection (b) of
41 section fourteen hundred fifty-five of this article. However, if the
42 amount of credits allowed under this subsection for any taxable year
43 reduces the tax to such amount, any amount of credit thus not deductible
44 in such taxable year shall be treated as an overpayment of tax to be
45 credited or refunded in accordance with the provisions of section ten
46 hundred eighty-six of this chapter. Provided, however, the provisions of
47 subsection (c) of section ten hundred eighty-eight of this chapter
48 notwithstanding, no interest shall be paid thereon.
49 (r) Remediated brownfield credit for real property taxes for qualified
50 sites. (1) Allowance of credit. A taxpayer which is a developer of a
51 qualified site shall be allowed a credit for eligible real property
52 taxes, to be computed as provided in subdivision (b) of section twenty-
53 two of this chapter, against the tax imposed by this article. For
54 purposes of this subsection, the terms "qualified site" and "developer"
55 shall have the same meaning as set forth in paragraphs two and three,
56 respectively, of subdivision (a) of section twenty-two of this chapter.
A. 5316 70
1 (2) Application of credit. The credit allowed under this subsection
2 for any taxable year shall not reduce the tax due for such year to less
3 than the minimum tax fixed by paragraph three of subsection (b) of
4 section fourteen hundred fifty-five of this article. However, if the
5 amount of credit allowed under this subsection for any taxable year
6 reduces the tax to such amount, any amount of credit thus not deductible
7 in such taxable year shall be treated as an overpayment of tax to be
8 credited or refunded in accordance with the provisions of section ten
9 hundred eighty-six of this chapter. Provided, however, the provisions of
10 subsection (c) of section ten hundred eighty-eight of this chapter
11 notwithstanding, no interest shall be paid thereon.
12 (s) Environmental remediation insurance credit. (1) Allowance of cred-
13 it. A taxpayer shall be allowed a credit, to be computed as provided in
14 section twenty-three of this chapter, against the tax imposed by this
15 article.
16 (2) Application of credit. The credit allowed under this subdivision
17 for any taxable year shall not reduce the tax due for such year to less
18 than the minimum tax fixed by paragraph three of subsection (b) of
19 section fourteen hundred fifty-five of this article. However, if the
20 amount of credits allowed under this subdivision for any taxable year
21 reduces the tax to such amount, any amount of credit thus not deductible
22 in such taxable year shall be treated as an overpayment of tax to be
23 credited or refunded in accordance with the provisions of section one
24 thousand eighty-six of this chapter. Provided, however, the provisions
25 of subsection (c) of section one thousand eighty-eight of this chapter
26 notwithstanding, no interest shall be paid thereon.
27 (t) Security training tax credit. (1) Allowance of credit. A taxpayer
28 shall be allowed a credit, to be computed as provided in section twen-
29 ty-six of this chapter, against the tax imposed by this article.
30 (2) Application of credit. The credit allowed under this subsection
31 for any taxable year shall not reduce the tax due for such year to less
32 than the minimum tax fixed by paragraph three of subsection (b) of
33 section fourteen hundred fifty-five of this article. However, if the
34 amount of credits allowed under this subsection for any taxable year
35 reduces the tax to such amount, any amount of credit thus not deductible
36 in such taxable year shall be treated as an overpayment of tax to be
37 credited or refunded in accordance with the provisions of section one
38 thousand eighty-six of this chapter. Provided, however, the provisions
39 of subsection (c) of section one thousand eighty-eight of this chapter
40 notwithstanding, no interest shall be paid thereon.
41 (u) Credit for fuel cell electric generating equipment expenditures.
42 (1) Allowance of credit. For taxable years beginning before January
43 first, two thousand nine, a taxpayer shall be allowed a credit against
44 the tax imposed by this article, equal to its qualified fuel cell elec-
45 tric generating equipment expenditures. This credit shall not exceed one
46 thousand five hundred dollars per generating unit with respect to any
47 taxable year. The credit provided for in this subsection shall be
48 allowed with respect to the taxable year in which the fuel cell electric
49 generating equipment is placed in service.
50 (2) Qualified fuel cell electric generating equipment expenditures.
51 (A) Qualified fuel cell electric generating equipment expenditures are
52 the costs, incurred on or after July first, two thousand five, associ-
53 ated with the purchase of on-site electricity generation units utilizing
54 proton exchange membrane fuel cells, providing a rated baseload capacity
55 of no less than one kilowatt and no more than one hundred kilowatts of
A. 5316 71
1 electricity, which are located in this state at the time the qualified
2 fuel cell electric generating equipment is placed in service.
3 (B) Qualified fuel cell electric generating equipment expenditures
4 shall also include costs, incurred on or after July first, two thousand
5 five, for materials, labor for on-site preparation, assembly and
6 original installation, engineering services, designs and plans directly
7 related to construction or installation and utility compliance costs.
8 (C) Such qualified expenditures shall not include interest or other
9 finance charges.
10 (D) The amount of any federal, state or local grant received by the
11 taxpayer, which was used for the purpose and/or installation of such
12 equipment and which was not included in the federal gross income of the
13 taxpayer, shall not be included in the amount of such qualified expendi-
14 tures.
15 (3) Application of credit. The credit allowed under this subsection
16 for any taxable year shall not reduce the tax due for such year to less
17 than the minimum tax fixed by paragraph three of subsection (b) of
18 section fourteen hundred fifty-five of this article. However, if the
19 amount of credit allowed under this subsection for any taxable year
20 reduces the tax to such amount, any amount of credit thus not deductible
21 in such taxable year may be carried over to the following year or years
22 and may be deducted from the taxpayer's tax for such year or years.
23 (v) Excelsior jobs program tax credit. (1) Allowance of credit. A
24 taxpayer will be allowed a credit, to be computed as provided in section
25 thirty-one of this chapter, against the tax imposed by this article.
26 (2) The credit allowed under this subsection for any taxable year will
27 not reduce the tax due for such year to less than the minimum tax fixed
28 by paragraph three of subsection (b) of section fourteen hundred fifty-
29 five of this article. However, if the amount of credit allowed under
30 this subsection for any taxable year reduces the tax to such amount, any
31 amount of credit thus not deductible in such taxable year will be treat-
32 ed as an overpayment of tax to be credited or refunded in accordance
33 with the provisions of section one thousand eighty-six of this chapter.
34 Provided, however, the provisions of subsection (c) of section one thou-
35 sand eighty-eight of this chapter notwithstanding, no interest will be
36 paid thereon.
37 (w) Credit for rehabilitation of historic properties. (1) (A) For
38 taxable years beginning on or after January first, two thousand ten and
39 before January first, two thousand twenty, a taxpayer shall be allowed a
40 credit as hereinafter provided, against the tax imposed by this article,
41 in an amount equal to one hundred percent of the amount of credit
42 allowed the taxpayer with respect to a certified historic structure
43 under subsection (a)(2) of section 47 of the federal internal revenue
44 code with respect to a certified historic structure located within the
45 state. Provided, however, the credit shall not exceed five million
46 dollars. For taxable years beginning on or after January first, two
47 thousand twenty, a taxpayer shall be allowed a credit as hereinafter
48 provided, against the tax imposed by this article, in an amount equal to
49 thirty percent of the amount of credit allowed the taxpayer with respect
50 to a certified historic structure under subsection (a)(2) of section 47
51 of the federal internal revenue code with respect to a certified histor-
52 ic structure located within the state. Provided, however, the credit
53 shall not exceed one hundred thousand dollars.
54 (B) If the taxpayer is a partner in a partnership or a shareholder of
55 a New York S corporation, then the credit caps imposed in subparagraph
56 (A) of this paragraph shall be applied at the entity level, so that the
A. 5316 72
1 aggregate credit allowed to all the partners or shareholders of each
2 such entity in the taxable year does not exceed the credit cap that is
3 applicable in that taxable year.
4 (2) Tax credits allowed pursuant to this subsection shall be allowed
5 in the taxable year that the qualified rehabilitation is placed in
6 service under section 167 of the federal internal revenue code.
7 (3) If the credit allowed the taxpayer pursuant to section 47 of the
8 internal revenue code with respect to a qualified rehabilitation is
9 recaptured pursuant to subsection (a) of section 50 of the internal
10 revenue code, a portion of the credit allowed under this subsection must
11 be added back in the same taxable year and in the same proportion as the
12 federal recapture.
13 (4) The credit allowed under this subsection for any taxable year
14 shall not reduce the tax to less than the dollar amount fixed as a mini-
15 mum tax by subsection (b) of section fourteen hundred fifty-five of this
16 article. However, if the amount of credit allowed under this subsection
17 for any taxable year reduces the tax to such amount, any amount of cred-
18 it thus not deductible in such taxable year shall be treated as an over-
19 payment of tax to be credited or refunded in accordance with the
20 provisions of section one thousand eighty-six of this chapter. Provided,
21 however, the provisions of subsection (c) of section one thousand eight-
22 y-eight of this chapter notwithstanding, no interest shall be paid ther-
23 eon.
24 (5) To be eligible for the credit allowable under this subsection the
25 rehabilitation project shall be in whole or in part located within a
26 census tract which is identified as being at or below one hundred
27 percent of the state median family income as calculated as of January
28 first of each year using the most recent five year estimate from the
29 American community survey published by the United States Census bureau.
30 (x) Temporary deferral nonrefundable payout credit. (1) Allowance of
31 credit. A taxpayer shall be allowed a credit, to be computed as provided
32 in subdivision one of section thirty-four of this chapter, against the
33 tax imposed by this article.
34 (2) Application of credit. The credit allowed under this subdivision
35 for any taxable year shall not reduce the tax due for that year to less
36 than the minimum tax fixed by subsection (b) of section fourteen hundred
37 fifty-five of this article. However, if the amount of credit allowed
38 under this subdivision for any taxable year reduces the tax to such
39 amount, any amount of credit thus not deductible in such taxable year
40 may be carried over to the following year or years and may be deducted
41 from the taxpayer's tax for such year or years.
42 (y) Temporary deferral refundable payout credit. (1) Allowance of
43 credit. A taxpayer shall be allowed a credit, to be computed as provided
44 in subdivision two of section thirty-four of this chapter, against the
45 tax imposed by this article.
46 (2) Application of credit. In no event shall the credit under this
47 section be allowed in an amount which will reduce the tax to less than
48 the minimum tax fixed by subsection (b) of section fourteen hundred
49 fifty-five of this article. If, however, the amount of credit allowed
50 under this section for any taxable year reduces the tax to such amount,
51 any amount of credit not deductible in such taxable year shall be treat-
52 ed as an overpayment of tax to be refunded in accordance with the
53 provisions of section one thousand eighty-six of this chapter, provided
54 however, that no interest shall be paid thereon.
55 (z) Economic transformation and facility redevelopment program tax
56 credit. (1) Allowance of credit. A taxpayer shall be allowed a credit,
A. 5316 73
1 to be computed as provided in section thirty-five of this chapter,
2 against the tax imposed by this article.
3 (2) The credit allowed under this subsection for any taxable year will
4 not reduce the tax due for such year to less than the minimum tax fixed
5 by paragraph three of subsection (b) of section fourteen hundred fifty-
6 five of this article. However, if the amount of credit allowed under
7 this subsection for any taxable year reduces the tax to such amount, any
8 amount of credit thus not deductible in such taxable year will be treat-
9 ed as an overpayment of tax to be credited or refunded in accordance
10 with the provisions of section one thousand eighty-six of this chapter.
11 Provided, however, the provisions of subsection (c) of section one thou-
12 sand eighty-eight of this chapter notwithstanding, no interest will be
13 paid thereon.
14 (aa) Empire state jobs retention program credit. (1) Allowance of
15 credit. A taxpayer shall be allowed a credit, to be computed as
16 provided in section thirty-six of this chapter, against the taxes
17 imposed by this article.
18 (2) Application of credit. The credit allowed under this subsection
19 for any taxable year will not reduce the tax due for such year to less
20 than the minimum tax fixed by this article. However, if the amount of
21 credit allowed under this subsection for any taxable year reduces the
22 tax to such amount, any amount of credit thus not deductible in such
23 taxable year will be treated as an overpayment of tax to be credited or
24 refunded in accordance with the provisions of section one thousand
25 eighty-six of this chapter. Provided, however, the provisions of
26 subsection (c) of section one thousand eighty-eight of this chapter
27 notwithstanding, no interest will be paid thereon.
28 (bb) Minimum wage reimbursement credit. (1) Allowance of credit. A
29 taxpayer shall be allowed a credit, to be computed as provided under
30 section thirty-eight of this chapter, against the tax imposed by this
31 article.
32 (2) Application of credit. The credit allowed under this subsection
33 for any taxable year shall not, in the aggregate, reduce the tax due for
34 such year to less than the minimum tax fixed by subsection (b) of
35 section fourteen hundred fifty-five of this article. However, if the
36 amount of credit of such credit allowed under this subsection for any
37 taxable year reduces the tax to such amount, then any amount of credit
38 thus not deductible shall be treated as an overpayment of tax to be
39 credited or refunded in accordance with the provisions of section one
40 thousand eighty-six of this chapter. Provided, however, the provisions
41 of subsection (c) of section one thousand eighty-eight of this chapter
42 notwithstanding, no interest shall be paid thereon.
43 § 1460. Declarations of estimated tax. (a) Requirements of declara-
44 tion.--Every taxpayer subject to the tax imposed by subsection (a) of
45 section fourteen hundred fifty-one of this article shall make a declara-
46 tion of its estimated tax for the current taxable year, containing such
47 information as the commissioner of taxation and finance may prescribe by
48 regulations or instructions, if such estimated tax can reasonably be
49 expected to exceed one thousand dollars. If a taxpayer is subject to the
50 tax surcharge imposed by section fourteen hundred fifty-five-B of this
51 article and such taxpayer's estimated tax under subsection (a) of
52 section fourteen hundred fifty-one of this article can reasonably be
53 expected to exceed one thousand dollars, such taxpayer shall also make a
54 declaration of its estimated tax surcharge for the current taxable year.
55 (b) Definition of estimated tax and estimated tax surcharge.--The
56 terms "estimated tax" and "estimated tax surcharge" mean the amounts
A. 5316 74
1 which a taxpayer estimates to be the tax or tax surcharge imposed by
2 subsection (a) of section fourteen hundred fifty-one of this article or
3 fourteen hundred fifty-five-B of this article, respectively, for the
4 current taxable year, less the amount which it estimates to be the sum
5 of any credits allowable against the tax or tax surcharge, respectively.
6 (c) Time for filing declaration.--A declaration of estimated tax and a
7 declaration of estimated tax surcharge shall be filed on or before June
8 fifteenth of the current taxable year in the case of a taxpayer which
9 reports on the basis of a calendar year, except that if the requirements
10 of subsection (a) of this section are first met:
11 (1) after May thirty-first and before September first of such current
12 taxable year, the declaration shall be filed on or before September
13 fifteenth, or
14 (2) after August thirty-first and before December first of such
15 current taxable year, the declaration shall be filed on or before Decem-
16 ber fifteenth.
17 (d) Amendments of declaration.--A taxpayer may amend a declaration
18 under regulations of the tax commission.
19 (e) Return as declaration.--If, on or before February fifteenth of the
20 succeeding year in the case of a taxpayer whose taxable year is a calen-
21 dar year, a taxpayer files its return for the year for which the decla-
22 ration is required, and pays therewith the balance, if any, of the full
23 amount of the tax or tax surcharge shown to be due on the return:
24 (1) such return shall be considered as its declaration if no declara-
25 tion was required to be filed during the taxable year for which the tax
26 or tax surcharge was imposed, but is otherwise required to be filed on
27 or before December fifteenth pursuant to paragraph two of subsection (c)
28 of this section, and
29 (2) such return shall be considered as the amendment permitted by
30 subsection (d) of this section to be filed on or before December
31 fifteenth if the tax or tax surcharge shown on the return is greater
32 than the estimated tax or estimated tax surcharge, as the case may be,
33 shown on a declaration previously made.
34 (f) Fiscal year.--This section shall apply to taxable years of twelve
35 months other than a calendar year by the substitutions of the months of
36 such fiscal year for the corresponding months specified in this section.
37 (g) Short taxable period.--If the taxable period for which a tax or
38 tax surcharge is imposed by subsection (a) of section fourteen hundred
39 fifty-one of this article or section fourteen hundred fifty-five-B of
40 this article, respectively, is less than twelve months, every taxpayer
41 required to make a declaration of estimated tax or a declaration of
42 estimated tax surcharge for such taxable period shall make such a decla-
43 ration in accordance with regulations of the commissioner of taxation
44 and finance.
45 (h) Extension of time.--The tax commission may grant a reasonable
46 extension of time, not to exceed three months, for the filing of any
47 declaration required pursuant to this section, on such terms and condi-
48 tions as it may require.
49 § 1461. Payments of estimated tax. (a) Every taxpayer subject to the
50 tax imposed by section fourteen hundred fifty-one of this article must
51 pay an amount equal to (i) twenty-five percent of the preceding year's
52 tax if the preceding year's tax exceeded one thousand dollars but was
53 equal to or less than one hundred thousand dollars, or (ii) forty
54 percent of the preceding year's tax if the preceding year's tax exceeded
55 one hundred thousand dollars. The amount must be paid with the return
56 required to be filed for the preceding taxable year or with an applica-
A. 5316 75
1 tion for an extension of the time for filing the return. If the preced-
2 ing year's tax under section fourteen hundred fifty-one of this article
3 exceeded one thousand dollars and the taxpayer is subject to the tax
4 surcharge imposed by section fourteen hundred fifty-five-B of this arti-
5 cle, the taxpayer must also pay with the tax surcharge return required
6 to be filed for the preceding taxable year, or with an application for
7 an extension of the time for filing the return, an amount equal to (i)
8 twenty-five percent of the tax surcharge imposed for the preceding year
9 if the preceding year's tax was equal to or less than one hundred thou-
10 sand dollars, or (ii) forty percent of the tax surcharge imposed for the
11 preceding year if the preceding year's tax exceeded one hundred thousand
12 dollars.
13 (b) Other installments.--The estimated tax or estimated tax surcharge
14 for each taxable year with respect to which a declaration of estimated
15 tax or a declaration of estimated tax surcharge, respectively, is
16 required to be filed under this article shall be paid, in the case of a
17 taxpayer which reports on the basis of a calendar year, as follows:
18 (1) If the declaration is filed on or before June fifteenth, the esti-
19 mated tax or estimated tax surcharge shown thereon, after applying ther-
20 eto the amount, if any, paid during the same taxable year pursuant to
21 subsection (a) of this section, shall be paid in three equal install-
22 ments. One of such installments shall be paid at the time of the filing
23 of the declaration, one shall be paid on the following September
24 fifteenth, and one on the following December fifteenth.
25 (2) If the declaration is filed after June fifteenth and not after
26 September fifteenth of such taxable year, and is not required to be
27 filed on or before June fifteenth of such year the estimated tax or
28 estimated tax surcharge shown on such declaration, after applying there-
29 to the amount, if any, paid during the same taxable year pursuant to
30 subsection (a) of this section, shall be paid in two equal installments.
31 One of such installments shall be paid at the time of the filing of the
32 declaration and one shall be paid on the following December fifteenth.
33 (3) If the declaration is filed after September fifteenth of such
34 taxable year, and is not required to be filed on or before September
35 fifteenth of such year, the estimated tax or estimated tax surcharge
36 shown on such declaration, after applying thereto the amount, if any,
37 paid in respect of such year pursuant to subsection (a) of this section
38 shall be paid in full at the time of the filing of the declaration.
39 (4) If the declaration is filed after the time prescribed therefor, or
40 after the expiration of any extension of time therefor, paragraphs two
41 and three of this subsection shall not apply and there shall be paid at
42 the time of such filing all installments of estimated tax or estimated
43 tax surcharge payable at or before such time, and the remaining install-
44 ments shall be paid at the times at which, and in the amounts in which,
45 they would have been payable if the declaration had been filed when due.
46 (c) Amendments of declarations.--If any amendment of a declaration is
47 filed, the remaining installments, if any, shall be ratably increased or
48 decreased (as the case may be) to reflect any increase or decrease in
49 the estimated tax or estimated tax surcharge by reason of such amend-
50 ment, and if any amendment is made after September fifteenth of the
51 taxable year, any increase in the estimated tax or estimated tax
52 surcharge by reason thereof shall be paid at the time of making such
53 amendment.
54 (d) Application of installments based on the preceding year's tax.--
55 (1) Any amount paid pursuant to subsection (a) shall be applied as a
56 first installment against the estimated tax or estimated tax surcharge,
A. 5316 76
1 respectively, of the taxpayer for the taxable year shown on the declara-
2 tion required to be filed pursuant to section fourteen hundred sixty of
3 this article, or if no declaration of estimated tax or a declaration of
4 estimated tax surcharge is required to be filed by the taxpayer pursuant
5 to such section, any such amount shall be considered a payment on
6 account of the tax or tax surcharge shown on the return required to be
7 filed by the taxpayer for such taxable year.
8 (2) Any amount paid pursuant to paragraph four of subsection (c) of
9 section six hundred fifty-eight of this chapter on behalf of a taxpayer
10 subject to tax under this article shall be applied against the estimated
11 tax of the taxpayer for the taxable year shown on the declaration
12 required to be filed pursuant to section fourteen hundred sixty of this
13 article, or if no declaration is filed pursuant to such section, any
14 such amount shall be considered a payment on account of tax shown on the
15 return required to be filed by the taxpayer for such taxable year.
16 (e) Interest on certain installments based on the preceding year's
17 tax.--Notwithstanding the provisions of section one thousand eighty-
18 eight of this chapter or of section sixteen of the state finance law, if
19 an amount paid pursuant to subsection (a) of this section exceeds the
20 tax or tax surcharge, respectively, shown on the return required to be
21 filed by the taxpayer for the taxable year during which the amount was
22 paid, interest shall be allowed and paid on the amount by which the
23 amount so paid pursuant to such subsection exceeds such tax or tax
24 surcharge, at the overpayment rate set by the commissioner of taxation
25 and finance pursuant to section one thousand ninety-six of this chapter,
26 or if no rate is set, at the rate of six per cent per annum from the
27 date of payment of the amount so paid pursuant to such subsection to the
28 fifteenth day of the third month following the close of the taxable
29 year, provided, however, that no interest shall be allowed or paid under
30 this subsection if the amount thereof is less than one dollar.
31 (f) The preceding year's tax defined.--As used in this section, "the
32 preceding year's tax" means the tax imposed upon the taxpayer by
33 subsection (a) of section fourteen hundred fifty-one for the preceding
34 taxable year, or, for purposes of computing the first installment of
35 estimated tax when an application has been filed for extension of the
36 time for filing the return required to be filed for such preceding taxa-
37 ble year, the amount properly estimated pursuant to paragraph one of
38 subsection (b) of section fourteen hundred sixty-three as the tax
39 imposed upon the taxpayer for such taxable year.
40 (g) Application to short taxable period.--This section shall apply to
41 a taxable period of less than twelve months in accordance with regu-
42 lations of the tax commission.
43 (h) Fiscal year.--The provisions of this section shall apply to taxa-
44 ble years of twelve months other than a calendar year by the substi-
45 tution of the months of such fiscal year for the corresponding months
46 specified in such provisions.
47 (i) Extension of time.--The commissioner of taxation and finance may
48 grant a reasonable extension of time, not to exceed six months, for
49 payment of any installment of estimated tax or estimated tax surcharge
50 required pursuant to this section, on such terms and conditions as he
51 may require, including the furnishing of a bond or other security by the
52 taxpayer in an amount not exceeding twice the amount for which any
53 extension of time for payment is granted, provided, however, that inter-
54 est at the underpayment rate set by the commissioner pursuant to section
55 one thousand ninety-six of this chapter, or if no rate is set, at the
56 rate of six per centum per annum for the period of the extension shall
A. 5316 77
1 be charged and collected on the amount for which any extension of time
2 for payment is granted under this subsection.
3 (j) Payment of installments in advance.--A taxpayer may elect to pay
4 any installment of estimated tax or estimated tax surcharge prior to the
5 date prescribed in this section for payment thereof.
6 § 1462. Returns. (a) Every taxpayer, as well as every other banking
7 corporation having an employee, including any officer, within the state,
8 shall annually on or before the fifteenth day of the third month follow-
9 ing the close of each of its taxable years transmit to the tax commis-
10 sion a return in a form prescribed by it setting forth such information
11 as the tax commission may prescribe and every taxpayer which ceases to
12 exercise its franchise or to be subject to the tax imposed by this arti-
13 cle shall transmit to the tax commission a return on the date of such
14 cessation or at such other time as the tax commission may require cover-
15 ing each year or period for which no return was theretofore filed. In
16 the case of a termination year of an S corporation, the S short year and
17 the C short year shall be treated as separate short taxable years,
18 provided, however, the due date of the report for the S short year shall
19 be the same as the due date of the report for the C short year.
20 (b) Every taxpayer shall also transmit such other returns and such
21 facts and information as the tax commission may require in the adminis-
22 tration of this article.
23 (c) The tax commission may grant a reasonable extension of time for
24 filing returns whenever good cause exists. An automatic extension of six
25 months for the filing of its annual return shall be allowed any taxpay-
26 er, if within the time prescribed by subsection (a) of this section,
27 such taxpayer files with the tax commission an application for extension
28 in such form as said commission may prescribe by regulation and pays on
29 or before the date of such filing the amount properly estimated as its
30 tax.
31 (d) Every return shall have annexed thereto a certification by the
32 president, vice president, treasurer, assistant treasurer, chief
33 accounting officer or any other officer of the taxpayer duly authorized
34 so to act to the effect that the statements contained therein are true.
35 The fact that an individual's name is signed on a certification of the
36 return shall be prima facie evidence that such individual is authorized
37 to sign and certify the return on behalf of the corporation. In the case
38 of an association or publicly traded partnership referred to in para-
39 graph one of subsection (f) of this section, such certification shall be
40 made by any person duly authorized so to act on behalf of such associ-
41 ation or publicly traded partnership.
42 (e) If the amount of taxable income or alternative minimum taxable
43 income for any year of any taxpayer (including any taxpayer which has
44 elected to be taxed under subchapter s of chapter one of the internal
45 revenue code) as returned to the United States treasury department is
46 changed or corrected by the commissioner of internal revenue or other
47 officer of the United States or other competent authority, such taxpayer
48 shall report such change or corrected taxable income or alternative
49 minimum taxable income within ninety days (or one hundred twenty days,
50 in the case of a taxpayer making a combined return under this article
51 for such year) after the final determination of such change or
52 correction or as required by the commissioner, and shall concede the
53 accuracy of such determination or state wherein it is erroneous. Any
54 taxpayer filing an amended return with such department shall also file
55 within ninety days (or one hundred twenty days, in the case of a taxpay-
56 er making a combined return under this article for such year) thereafter
A. 5316 78
1 an amended return with the commissioner which shall contain such infor-
2 mation as the commissioner shall require. The allowance of a tentative
3 carryback adjustment based upon a net capital loss carryback pursuant to
4 section sixty-four hundred eleven of the internal revenue code, shall be
5 treated as a final determination for purposes of this subsection.
6 (f) (1) For purposes of this subsection, the term "bank holding compa-
7 ny" means any corporation subject to article three-A of the banking law,
8 or registered under the federal bank holding company act of nineteen
9 hundred fifty-six, as amended, or registered as a savings and loan hold-
10 ing company (but excluding a diversified savings and loan holding compa-
11 ny) under the federal national housing act, as amended. For purposes of
12 the preceding sentence, the term "corporation" shall include an associ-
13 ation, within the meaning of paragraph three of subsection (a) of
14 section seventy-seven hundred one of the internal revenue code, and a
15 publicly traded partnership treated as a corporation for purposes of the
16 internal revenue code pursuant to section seventy-seven hundred four
17 thereof.
18 (2) (i) Any banking corporation or bank holding company which is exer-
19 cising its corporate franchise or doing business in this state in a
20 corporate or organized capacity, and
21 (A) which owns or controls, directly or indirectly, eighty percent or
22 more of the voting stock of one or more banking corporations or bank
23 holding companies, or
24 (B) whose voting stock is eighty percent or more owned or controlled,
25 directly or indirectly, by a banking corporation or a bank holding
26 company, shall make a return on a combined basis under this article
27 covering itself and such corporations described in clause (A) or (B) and
28 shall set forth such information as the tax commission may require
29 unless the taxpayer or the tax commission shows that the inclusion of
30 such a corporation in the combined return fails to properly reflect the
31 tax liability of such corporation under this article. Provided, however,
32 that no banking corporation or bank holding company not a taxpayer shall
33 be subject to the requirements of this subparagraph unless the tax
34 commission deems that the application of such requirements is necessary
35 in order to properly reflect the tax liability under this article,
36 because of intercompany transactions or some agreement, understanding,
37 arrangement or transaction of the type referred to in subsection (g) of
38 this section.
39 (ii) In the discretion of the tax commission, any banking corporation
40 or bank holding company which is exercising its corporate franchise or
41 doing business in this state in a corporate or organized capacity, and
42 (A) which owns or controls, directly or indirectly, sixty-five percent
43 or more of the voting stock of one or more banking corporations or bank
44 holding companies, or
45 (B) whose voting stock is sixty-five percent or more owned or
46 controlled, directly or indirectly, by a banking corporation or a bank
47 holding company,
48 may be required or permitted to make a return on a combined basis under
49 this article covering itself and such corporations described in clause
50 (A) or (B) and shall set forth such information as the tax commission
51 may require; provided, however, that no combined return shall be
52 required or permitted unless the tax commission deems such report neces-
53 sary in order to properly reflect the tax liability under this article
54 of any one or more of such banking corporations or bank holding compa-
55 nies.
A. 5316 79
1 (iii) In the discretion of the tax commission, banking corporations or
2 bank holding companies which are sixty-five percent or more owned or
3 controlled, directly or indirectly, by the same interest may be permit-
4 ted or required to make a return on a combined basis under this article
5 and shall set forth such information as the tax commission may require,
6 if at least one such banking corporation or bank holding company is
7 exercising its corporate franchise or doing business in this state in a
8 corporate or organized capacity. No combined return shall be required or
9 permitted unless the tax commission deems such report necessary in order
10 to properly reflect the tax liability under this article of any one or
11 more of such banking corporations or bank holding companies.
12 (iv) (A) Notwithstanding any provision of this paragraph, any bank
13 holding company exercising its corporate franchise or doing business in
14 the state may make a return on a combined basis without seeking the
15 permission of the commissioner with any banking corporation exercising
16 its corporate franchise or doing business in the state in a corporate or
17 organized capacity sixty-five percent or more of whose voting stock is
18 owned or controlled, directly or indirectly, by such bank holding compa-
19 ny, for the first taxable year beginning on or after January first, two
20 thousand and before January first, two thousand seventeen during which
21 such bank holding company registers for the first time under the federal
22 bank holding company act, as amended, and also elects to be a financial
23 holding company. In addition, for each subsequent taxable year beginning
24 after January first, two thousand and before January first, two thousand
25 seventeen, any such bank holding company may file on a combined basis
26 without seeking the permission of the commissioner with any banking
27 corporation that is exercising its corporate franchise or doing business
28 in the state and sixty-five percent or more of whose voting stock is
29 owned or controlled, directly or indirectly, by such bank holding compa-
30 ny if either such banking corporation is exercising its corporate fran-
31 chise or doing business in the state in a corporate or organized capaci-
32 ty for the first time during such subsequent taxable year, or sixty-five
33 percent or more of the voting stock of such banking corporation is owned
34 or controlled, directly or indirectly, by such bank holding company for
35 the first time during such subsequent taxable year. Provided however,
36 for each subsequent taxable year beginning after January first, two
37 thousand and before January first, two thousand seventeen, a banking
38 corporation described in either of the two preceding sentences which
39 filed on a combined basis with any such bank holding company in a previ-
40 ous taxable year, must continue to file on a combined basis with such
41 bank holding company if such banking corporation, during such subsequent
42 taxable year, continues to exercise its corporate franchise or do busi-
43 ness in the state in a corporate or organized capacity and sixty-five
44 percent or more of such banking corporation's voting stock continues to
45 be owned or controlled, directly or indirectly, by such bank holding
46 company, unless the permission of the commissioner has been obtained to
47 file on a separate basis for such subsequent taxable year. Provided
48 further, however, for each subsequent taxable year beginning after Janu-
49 ary first, two thousand and before January first, two thousand seven-
50 teen, a banking corporation described in either of the first two
51 sentences of this clause which did not file on a combined basis with any
52 such bank holding company in a previous taxable year, may not file on a
53 combined basis with such bank holding company during any such subsequent
54 taxable year unless the permission of the commissioner has been obtained
55 to file on a combined basis for such subsequent taxable year.
A. 5316 80
1 (B) Notwithstanding any provision of this paragraph other than clause
2 (A) of this subparagraph, the commissioner may not require a bank hold-
3 ing company which, during a taxable year beginning on or after January
4 first, two thousand and before January first, two thousand seventeen,
5 registers for the first time during such taxable year under the federal
6 bank holding company act, as amended, and also elects to be a financial
7 holding company, to make a return on a combined basis for any taxable
8 year beginning on or after January first, two thousand and before Janu-
9 ary first, two thousand seventeen with a banking corporation sixty-five
10 percent or more of whose voting stock is owned or controlled, directly
11 or indirectly, by such bank holding company.
12 (v) A banking corporation doing business in this state solely because
13 it meets one or more of the tests in subparagraphs (i) through (v) of
14 paragraph one of subsection (c) of section fourteen hundred fifty-one of
15 this article (referred to in this subparagraph as the "credit card
16 bank") will not be included in a combined return pursuant to subpara-
17 graph (i) of this paragraph with another banking corporation or bank
18 holding company which is exercising its corporate franchise or doing
19 business in this state unless the credit card bank or the commissioner
20 shows that the inclusion of the credit card bank in the combined return
21 is necessary to properly reflect the tax liability of the credit card
22 bank, the banking corporation or bank holding company under this arti-
23 cle. However, any banking corporation that meets one or more of the
24 tests in subparagraphs (i) through (v) of paragraph one of subsection
25 (c) of section fourteen hundred fifty-one and was included in a combined
26 return for its last taxable year beginning before January first, two
27 thousand eight may continue to be included in a combined return for
28 future taxable years, provided that once that banking corporation has
29 been included in a combined return for any taxable year beginning on or
30 after January first, two thousand eight, it must continue to be included
31 in a combined return until it obtains the consent of the commissioner to
32 cease being included in a combined return because the combined return no
33 longer properly reflects the tax liability under this article of any of
34 the corporations included in the combined return. Further, the credit
35 card bank will be included in a combined return with (i) any banking
36 corporation not subject to tax under this article sixty-five percent or
37 more of whose voting stock is owned or controlled, directly or indirect-
38 ly, by the credit card bank, or (ii) any banking corporation or bank
39 holding company not subject to tax under this article which owns or
40 controls, directly or indirectly, sixty-five percent or more of the
41 voting stock of the credit card bank, or (iii) any banking corporation
42 not subject to tax under this article sixty-five percent or more of the
43 voting stock of which is owned or controlled, directly or indirectly, by
44 the same corporation or corporations that own or control, directly or
45 indirectly, sixty-five percent or more of the voting stock of the credit
46 card bank, if the corporation or corporations described in clauses (i),
47 (ii) and (iii) of this subparagraph provide services for or support to
48 the credit card bank's operations, unless the credit card bank or the
49 commissioner shows that the inclusion of any of those corporations in
50 the combined return fails to properly reflect the tax liability of the
51 credit card bank. For purposes of this subparagraph, services for or
52 support to the credit card bank's operations include such activities as
53 billing, credit investigation and reporting, marketing, research, adver-
54 tising, mailing, customer service, information technology, lending and
55 financing services, and communications services, but will not include
56 accounting, legal or personnel services.
A. 5316 81
1 (vi)(A) For purposes of this subparagraph, the term "closest control-
2 ling stockholder" means the corporation that indirectly owns or controls
3 over fifty percent of the voting stock of a captive REIT or captive RIC,
4 is subject to tax under this article, article nine-A or article thirty-
5 three of this chapter or otherwise required to be included in a combined
6 return under this article, article nine-A or article thirty-three of
7 this chapter, and is the fewest tiers of corporations away in the owner-
8 ship structure from the captive REIT or captive RIC. The commissioner is
9 authorized to prescribe by regulation or published guidance the criteria
10 for determining the closest controlling stockholder.
11 (B) A captive REIT or a captive RIC must be included in a combined
12 return with the banking corporation or bank holding company that direct-
13 ly owns or controls over fifty percent of the voting stock of the
14 captive REIT or captive RIC if that banking corporation or bank holding
15 company is subject to tax or required to be included in a combined
16 return under this article.
17 (C) If over fifty percent of the voting stock of a captive REIT or
18 captive RIC is not directly owned or controlled by a banking corporation
19 or bank holding company that is subject to tax or required to be
20 included in a combined return under this article, then the captive REIT
21 or captive RIC must be included in a combined return or report with the
22 corporation that is the closest controlling stockholder of the captive
23 REIT or captive RIC. If the closest controlling stockholder of the
24 captive REIT or captive RIC is a banking corporation or bank holding
25 company that is subject to tax or otherwise required to be included in a
26 combined return under this article, then the captive REIT or captive RIC
27 must be included in a combined return under this article.
28 (D) If the corporation which directly owns or controls the voting
29 stock of the captive REIT or captive RIC is described in subparagraph
30 (ii) or (iv) of paragraph four of this subsection as a corporation not
31 permitted to make a combined return, then the provisions in clause (C)
32 of this subparagraph must be applied to determine the corporation in
33 whose combined return or report the captive REIT or captive RIC should
34 be included. If, under clause (C) of this subparagraph, the corporation
35 that is the closest controlling stockholder of the captive REIT or
36 captive RIC is described in subparagraph (ii) or (iv) of paragraph four
37 of this subsection as a corporation not permitted to make a combined
38 return, then that corporation is deemed to not be in the ownership
39 structure of the captive REIT or captive RIC, and the closest control-
40 ling stockholder will be determined without regard to that corporation.
41 (E) If a captive REIT owns the stock of a qualified REIT subsidiary
42 (as defined in paragraph two of subsection (i) of section eight hundred
43 fifty-six of the internal revenue code), then the qualified REIT subsid-
44 iary must be included in any combined return required to be made by the
45 captive REIT that owns its stock.
46 (F) If a captive REIT or a captive RIC is required under this subpara-
47 graph to be included in a combined return with another corporation, and
48 that other corporation is required to be included in a combined return
49 with another corporation under other provisions of this subsection, the
50 captive REIT or captive RIC must be included in that combined return
51 with those corporations.
52 (G) If the banking corporation or bank holding company that directly
53 or indirectly owns or controls over fifty percent of the voting stock of
54 the captive REIT or captive RIC and is the closest controlling stock-
55 holder of the captive REIT or captive RIC is a member of an affiliated
56 group (1) that does not include any corporation that is engaged in a
A. 5316 82
1 business that a subsidiary of a bank holding company would not be
2 permitted to engage in, unless such business is de minimus, and (2)
3 whose members own assets the combined average value of which does not
4 exceed eight billion dollars, then the captive REIT or captive RIC must
5 not be included in a combined return under this article or article
6 nine-A or article thirty-three of this chapter. In that instance, the
7 captive REIT or captive RIC is subject to the provisions of subdivision
8 five or seven of section two hundred nine of this chapter. The term
9 "affiliated group" means "affiliated group" as defined in section
10 fifteen hundred four of the internal revenue code, but without regard to
11 the exceptions provided for in subsection (b) of that section.
12 (vii) (A) For purposes of this subparagraph, the term "closest
13 controlling stockholder" means the corporation that indirectly owns or
14 controls over fifty percent of the voting stock of an overcapitalized
15 captive insurance company, is subject to tax under this article or arti-
16 cle nine-A of this chapter or otherwise required to be included in a
17 combined return under this article or article nine-A of this chapter,
18 and is the fewest tiers of corporations away in the ownership structure
19 from the overcapitalized captive insurance company. The commissioner is
20 authorized to prescribe by regulation or published guidance the criteria
21 for determining the closest controlling stockholder.
22 (B) An overcapitalized captive insurance company must be included in a
23 combined return with the banking corporation or bank holding company
24 that directly owns or controls over fifty percent of the voting stock of
25 the overcapitalized captive insurance company if that banking corpo-
26 ration or bank holding company is subject to tax or required to be
27 included in a combined return under this article.
28 (C) If over fifty percent of the voting stock of an overcapitalized
29 captive insurance company is not directly owned or controlled by a bank-
30 ing corporation or bank holding company that is subject to tax or
31 required to be included in a combined return under this article, then
32 the overcapitalized captive insurance company must be included in a
33 combined return or report with the corporation that is the closest
34 controlling stockholder of the overcapitalized captive insurance compa-
35 ny. If the closest controlling stockholder of the overcapitalized
36 captive insurance company is a banking corporation or bank holding
37 company that is subject to tax or otherwise required to be included in a
38 combined return under this article, then the overcapitalized captive
39 insurance company must be included in a combined return under this arti-
40 cle.
41 (D) If the corporation that directly owns or controls the voting stock
42 of the overcapitalized captive insurance company is described in subpar-
43 agraph (ii) or (iv) of paragraph four of this subsection as a corpo-
44 ration not permitted to make a combined return, then the provisions in
45 clause (C) of this subparagraph must be applied to determine the corpo-
46 ration in whose combined return or report the overcapitalized captive
47 insurance company should be included. If, under clause (C) of this
48 subparagraph, the corporation that is the closest controlling stockhold-
49 er of the overcapitalized captive insurance company is described in
50 subparagraph (ii) or (iv) of paragraph four of this subsection as a
51 corporation not permitted to make a combined return, then that corpo-
52 ration is deemed not to be in the ownership structure of the overcapi-
53 talized captive insurance company, and the closest controlling stock-
54 holder will be determined without regard to that corporation.
55 (E) If an overcapitalized captive insurance company is required under
56 this subparagraph to be included in a combined return with another
A. 5316 83
1 corporation, and that other corporation is required to be included in a
2 combined return with another corporation under other provisions of this
3 subsection, the overcapitalized captive insurance company must be
4 included in that combined return with those corporations.
5 (3) (i) In the case of a combined return, the tax shall be measured by
6 the combined entire net income, combined alternative entire net income
7 or combined assets of all the corporations included in the return,
8 including any captive REIT, captive RIC or overcapitalized captive
9 insurance company. The allocation percentage shall be computed based on
10 the combined factors with respect to all the corporations included in
11 the combined return. In computing combined entire net income and
12 combined alternative entire net income intercorporate dividends and all
13 other intercorporate transactions shall be eliminated and in computing
14 combined assets intercorporate stockholdings and intercorporate bills,
15 notes and accounts receivable and payable and other intercorporate
16 indebtedness shall be eliminated.
17 (ii) In the case of a captive REIT required under this subsection to
18 be included in a combined return, "entire net income" means "real estate
19 investment trust taxable income" as defined in paragraph two of subdivi-
20 sion (b) of section eight hundred fifty-seven (as modified by section
21 eight hundred fifty-eight) of the internal revenue code, plus the amount
22 taxable under paragraph three of subdivision (b) of section eight
23 hundred fifty-seven of that code, subject to the modifications required
24 by section fourteen hundred fifty-three of this article. In the case of
25 a captive RIC required under this subsection to be included in a
26 combined return, "entire net income" means "investment company taxable
27 income" as defined in paragraph two of subdivision (b) of section eight
28 hundred fifty-two (as modified by section eight hundred fifty-five) of
29 the internal revenue code, plus the amount taxable under paragraph three
30 of subdivision (b) of section eight hundred fifty-two of that code,
31 subject to the modifications required by section fourteen hundred
32 fifty-three of this article. However, the deduction under the internal
33 revenue code for dividends paid by the captive REIT or captive RIC to
34 any member of the affiliated group that includes the corporation that
35 directly or indirectly owns over fifty percent of the voting stock of
36 the captive REIT or captive RIC will be limited to the following
37 percentages: (A) fifty percent for taxable years beginning on or after
38 January first, two thousand eight and before January first, two thousand
39 nine; (B) twenty-five percent for taxable years beginning on or after
40 January first, two thousand nine and before January first, two thousand
41 eleven; and (C) zero percent for taxable years beginning on or after
42 January first, two thousand eleven. The term "affiliated group" means
43 "affiliated group" as defined in section fifteen hundred four of the
44 internal revenue code, but without regard to the exceptions provided for
45 in subsection (b) of such section fifteen hundred four.
46 (iii) In the case of an overcapitalized captive insurance company
47 required under this subsection to be included in a combined return,
48 entire net income must be computed as required by section fourteen
49 hundred fifty-three of this article.
50 (4) (i) In no event shall an item of income or expense of a corpo-
51 ration organized under the laws of a country other than the United
52 States be included in a combined return unless it is includible in
53 entire net income or alternative entire net income, as the case may be,
54 nor shall an asset of such a corporation be included in a combined
55 return unless it is included in taxable assets.
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1 (ii) In no event shall a corporation organized under the laws of the
2 United States, this state or any other state, be included in a combined
3 return with a corporation organized under the laws of a country other
4 than the United States.
5 (iii) In no event shall a corporation which has made an election
6 pursuant to subsection (d) of section fourteen hundred fifty-two of this
7 article to be subject to the tax imposed by article nine-a of this chap-
8 ter be included in a combined return for those taxable years for which
9 it is subject to the tax imposed by article nine-a of this chapter.
10 (iv) In no event shall a corporation whose net worth ratio is less
11 than five percent and whose total assets are comprised of thirty-three
12 percent or more of mortgages be included in a combined return for those
13 taxable years for which its tax is determined pursuant to subparagraph
14 (ii) or (iii) of paragraph one of subsection (b) of section fourteen
15 hundred fifty-five of this article.
16 (5) Tax liability under this article may be deemed to be improperly
17 reflected because of intercompany transactions or some agreement, under-
18 standing, arrangement or transaction referred to in subsection (g) of
19 this section.
20 (g) In case it shall appear to the tax commission that any agreement,
21 understanding or arrangement exists between the taxpayer and any other
22 corporation or any person or firm, whereby the activity, business,
23 income or assets of the taxpayer within the state is improperly or inac-
24 curately reflected, the tax commission is authorized and empowered, in
25 its discretion and in such manner as it may determine, to adjust items
26 of income or deductions in computing entire net income or alternative
27 entire net income and to adjust assets, and to adjust wages, salaries
28 and other personal service compensation, receipts or deposits in comput-
29 ing any allocation percentage, provided only that entire net income or
30 alternative entire net income be adjusted accordingly and that any asset
31 directly traceable to the elimination of any receipt be eliminated from
32 assets so as to accurately determine the tax. If however, in the deter-
33 mination of the tax commission, such adjustments do not, or cannot
34 effectively provide for the accurate determination of the tax, the
35 commission shall be authorized to require the filing of a combined
36 report by the taxpayer and any such other corporations. Where (1) any
37 taxpayer conducts its activity or business under any agreement, arrange-
38 ment or understanding in such manner as either directly or indirectly to
39 benefit its members or stockholders, or any of them, or any person or
40 persons directly or indirectly interested in such activity or business,
41 by entering into any transaction at more or less than a fair price
42 which, but for such agreement, arrangement or understanding, might have
43 been paid or received therefor, or (2) any taxpayer enters into any
44 transaction with another corporation on such terms as to create an
45 improper loss or net income, the tax commission may include in the
46 entire net income or alternative entire net income of the taxpayer the
47 fair profits which, but for such agreement, arrangement or understand-
48 ing, the taxpayer might have derived from such transaction.
49 § 1463. Payment of tax. (a) To the extent the tax imposed by section
50 fourteen hundred fifty-one of this article shall not have been previous-
51 ly paid pursuant to section fourteen hundred sixty-one,
52 (1) such tax, or the balance thereof, shall be payable to the tax
53 commission in full at the time its return is required to be filed, and
54 (2) such tax, or the balance thereof, imposed on any taxpayer which
55 ceased to exercise its franchise or to be subject to the tax imposed by
56 this article shall be payable to the tax commission at the time the
A. 5316 85
1 return is required to be filed, provided such tax of a domestic corpo-
2 ration which continues to possess its franchise shall be subject to
3 adjustment as the circumstances may require; all other taxes of any such
4 taxpayer, which pursuant to the foregoing provisions of this subsection
5 would otherwise be payable subsequent to the time such return is
6 required to be filed, shall nevertheless be payable at such time.
7 (b) If the taxpayer, within the time prescribed by subsection (c) of
8 section fourteen hundred sixty-two, shall have applied for an automatic
9 extension of time to file its annual return and shall have paid to the
10 commissioner of taxation and finance on or before the date such applica-
11 tion is filed an amount properly estimated as provided by said
12 subsection the only amount payable in addition to the tax shall be
13 interest at the underpayment rate set by the commissioner pursuant to
14 section one thousand ninety-six of this chapter, or if no rate is set,
15 at the rate of six per cent per annum upon the amount by which the tax,
16 or portion thereof payable on or before the date the return was required
17 to be filed, exceeds the amount so paid. For the purposes of the preced-
18 ing sentence:
19 (1) an amount so paid shall be deemed properly estimated if it is
20 either (i) not less than ninety per cent of the tax as finally deter-
21 mined, or (ii) not less than the tax shown on the taxpayer's return for
22 the preceding taxable year, if such preceding year was a taxable year of
23 twelve months; and
24 (2) the time when a return is required to be filed shall be determined
25 without regard to any extension of time for filing such return.
26 (c) The tax commission may grant a reasonable extension of time for
27 payment of any tax imposed by this article under such conditions as it
28 deems just and proper.
29 § 1466. Deposit and disposition of revenue. All taxes, interest and
30 penalties collected or received by the tax commission under this article
31 shall be deposited and disposed of pursuant to the provisions of section
32 one hundred seventy-one-a of this chapter.
33 § 1467. Secrecy required of officials; penalty for violation. (a)
34 Except in accordance with the proper judicial order or as otherwise
35 provided by law, it shall be unlawful for the commissioner of taxation
36 and finance, any officer or employee of the department of taxation and
37 finance, or any person who, pursuant to this section, is permitted to
38 inspect any return, or any person engaged or retained by such department
39 on an independent contract basis, or any person who in any manner may
40 acquire knowledge of the contents of a return filed pursuant to this
41 article, to divulge or make known in any manner the amount of income or
42 any particulars set forth or disclosed in any return required under this
43 article. The officers charged with the custody of such returns shall not
44 be required to produce any of them or evidence of anything contained in
45 them in any action or proceedings in any court, except on behalf of the
46 state or the commissioner of taxation and finance in an action or
47 proceeding under the provisions of this chapter or in any other action
48 or proceeding involving the collection of a tax due under this chapter
49 to which the state or the commissioner of taxation and finance is a
50 party or a claimant or on behalf of any party in an action or proceeding
51 under the provisions of this article when the returns or facts shown
52 thereby are directly involved in such action or proceeding, in any of
53 which events the court may require the production of and may admit in
54 evidence so much of said returns or the facts shown thereby as are
55 pertinent to the action or proceeding and no more. The commissioner of
56 taxation and finance may, nevertheless, publish a copy or a summary of
A. 5316 86
1 any determination or decision rendered after the hearing provided for in
2 section one thousand eighty-nine of this chapter. Nothing herein shall
3 be construed to prohibit the delivery to a taxpayer or its duly author-
4 ized representative of a certified copy of any return filed in
5 connection with its tax nor to prohibit the publication of statistics so
6 classified as to prevent the identification of particular returns and
7 the items thereof, or the inspection by the attorney-general or other
8 legal representatives of the state of the return of any taxpayer which
9 shall bring action to set aside or review the tax based thereon, or
10 against which an action or proceeding under this chapter has been recom-
11 mended by the commissioner of taxation and finance or the attorney-gen-
12 eral or has been instituted; or the inspection of the returns of any
13 taxpayer by the comptroller or duly designated officer or employee of
14 the state department of audit and control for purposes of the audit of a
15 refund of any tax paid by such taxpayer under this article, or the
16 disclosing to a state agency, pursuant to section one hundred seventy-
17 one-f of this chapter, of the amount of an overpayment and interest
18 thereon certified to the comptroller to be credited against a past-due
19 legally enforceable debt owed to such agency and of the name and iden-
20 tification number of the taxpayer who made such overpayment, or the
21 disclosing to the commissioner of finance of the city of New York,
22 pursuant to section one hundred seventy-one-l of this chapter, of the
23 amount of an overpayment and interest thereon certified to the comp-
24 troller to be credited against a city of New York tax warrant judgment
25 debt and of the name and identification number of the taxpayer who made
26 such overpayment. Returns shall be preserved for three years and there-
27 after until the commissioner of taxation and finance orders them to be
28 destroyed.
29 (b) (1) Any officer or employee of the state who willfully violates
30 the provisions of subsection (a) of this section shall be dismissed from
31 office and be incapable of holding any public office in this state for a
32 period of five years thereafter.
33 (2) Cross-reference: For criminal penalties, see article thirty-seven
34 of this chapter.
35 (c) Notwithstanding any provisions of this section, the tax commission
36 may permit the secretary of the treasury of the United States or his
37 delegates, or the proper officer of any other state charged with tax
38 administration, or the authorized representative of either such officer,
39 to inspect the returns filed under this article, or may furnish to such
40 officer or his authorized representative an abstract of any return or
41 supply him with information concerning an item contained in any return,
42 or disclosed by an investigation of tax liability under this article,
43 but such permission shall be granted or such information furnished to
44 such officer or his representative only if the laws of the United States
45 or of such other state, as the case may be, grant substantially similar
46 privileges to the commission or officer of this state charged with the
47 administration of the tax imposed by this article and such information
48 is to be used for tax purposes only; and provided further the commis-
49 sioner of taxation and finance may furnish to the secretary of the trea-
50 sury of the United States or his delegates such returns filed under this
51 article and other tax information, as he may consider proper, for use in
52 court actions or proceedings under the internal revenue code, whether
53 civil or criminal, where a written request therefor has been made to the
54 commissioner of taxation and finance by the secretary of the treasury or
55 his delegates provided the laws of the United States grant substantially
56 similar powers to the secretary of the treasury or his delegates. Where
A. 5316 87
1 the commissioner of taxation and finance has so authorized use of
2 returns or other information in such actions or proceedings, officers
3 and employees of the department of taxation and finance may testify in
4 such actions or proceedings in respect to such returns or other tax
5 information.
6 (d) Notwithstanding the provisions of subsection (a) of this section,
7 the tax commission may permit the officer charged with the adminis-
8 tration of a tax on or measured by income imposed by any city of the
9 state of New York, or the authorized representative of such officer, to
10 inspect the returns filed under this article, or may furnish to such
11 officer or his authorized representative an abstract of any such return
12 or supply information concerning an item contained in any such return,
13 or disclosed by any investigation of tax liability under this article,
14 but such permission shall be granted or such information furnished to
15 such officer or his representative only if the local laws of such city
16 grant substantially similar privileges to the commission or officer of
17 this state charged with the administration of the tax imposed by this
18 article and such information is to be used for tax purposes only; and
19 provided further the commissioner of taxation and finance may furnish to
20 such city officer or his delegates and the legal representative of such
21 city such returns filed under this article and other tax information, as
22 he may consider proper, for use in court actions or proceedings under
23 such local law, whether civil or criminal, where a written request
24 therefor has been made to the commissioner of taxation and finance by
25 such city officer or his delegates or by such legal representative of
26 such city, provided the local law of such city grants substantially
27 similar powers to the city officer charged with the administration of
28 the city income tax or his delegates. Where the commissioner of taxation
29 and finance has so authorized use of returns or other tax information in
30 such actions or proceedings, officers and employees of the department of
31 taxation and finance may testify in such actions or proceedings in
32 respect to such returns or other tax information.
33 (e) Notwithstanding the provisions of subsection (a) of this section,
34 the tax commission, in its discretion, may require or permit any or all
35 persons liable for any tax imposed by this article, to make payments on
36 account of estimated tax and payment of any tax, penalty or interest
37 imposed by this article to banks, banking houses or trust companies
38 designated by the tax commission and to file declarations of estimated
39 tax, applications for automatic extensions of time to file returns, and
40 returns with such banks, banking houses or trust companies as agents of
41 the tax commission, in lieu of making any such payment directly to the
42 tax commission. However, the tax commission shall designate only such
43 banks, banking houses or trust companies as are or shall be designated
44 by the comptroller as depositories pursuant to section fourteen hundred
45 sixty-six.
46 (f) Notwithstanding the provisions of subsection (a) of this section,
47 the commissioner may disclose to a taxpayer or a taxpayer's related
48 member, as defined in subsection (s) of section fourteen hundred fifty-
49 three of this article, information relating to any royalty paid,
50 incurred or received by such taxpayer or related member to or from the
51 other, including the treatment of such payments by the taxpayer or the
52 related member in any report or return transmitted to the commissioner
53 under this chapter.
54 § 1468. Procedural provisions. The provisions of article twenty-seven
55 of this chapter shall apply to the provisions of this article in the
56 same manner and with the same force and effect as if the language of
A. 5316 88
1 such article twenty-seven had been incorporated in full into this arti-
2 cle and had expressly referred to the tax under this article, except to
3 the extent that any such provision is either inconsistent with a
4 provision of this article or is not relevant to this article.
5 § 2. This act shall take effect immediately and apply to taxable years
6 starting January 1, 2017.
