STATE OF NEW YORK ________________________________________________________________________ 5431 2025-2026 Regular Sessions IN SENATE February 21, 2025 ___________ Introduced by Sens. SKOUFIS, MAY, SANDERS -- read twice and ordered printed, and when printed to be committed to the Committee on Budget and Revenue 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: EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD08765-01-5
S. 5431 2 1 (a) The word "taxpayer" means a corporation or association subject to 2 a tax imposed by this article. 3 (b) The phrase "taxable year" means the taxpayer's taxable year for 4 federal income tax purposes, or the part thereof during which the 5 taxpayer is subject to the tax imposed by this article. 6 (c) The term "international banking facility" shall mean an interna- 7 tional banking facility located in New York state and shall have the 8 same meaning as is set forth in the New York state banking law or regu- 9 lations of the New York state department of financial services or as is 10 set forth in the laws of the United States or regulations of the board 11 of governors of the federal reserve system. 12 (d) The term "subsidiary" means a corporation or association of which 13 over fifty percent of the number of shares of stock entitling the hold- 14 ers thereof to vote for the election of directors or trustees is owned 15 by the taxpayer. 16 (e) The term "subsidiary capital" means investments in the stock of 17 subsidiaries and any indebtedness from subsidiaries, exclusive of 18 accounts receivable acquired in the ordinary course of trade or business 19 for services rendered or for sales of property held primarily for sale 20 to customers, whether or not evidenced by written instrument, on which 21 interest is not claimed and deducted by the subsidiary for purposes of 22 taxation under this article, article nine-A or thirty-three of this 23 chapter, provided, however, there shall be deducted from subsidiary 24 capital any liabilities payable by their terms on demand or within one 25 year from the date incurred, other than loans or advances outstanding 26 for more than a year as of any date during the year covered by the 27 return, which are attributable to subsidiary capital. 28 (f) The terms "New York S corporation", "New York S year", "New York S 29 election", "New York C corporation", "New York C year", "termination 30 year", "S short year", "C short year", and "New York S termination year" 31 shall have the same meaning as those terms have under subdivision one-A 32 of section two hundred eight of this chapter, except that references in 33 such subdivision to article nine-A of this chapter shall be read as 34 references to this article. 35 (g) The term "QSSS" means a corporation which is a qualified subchap- 36 ter S subsidiary as defined in subparagraph (B) of paragraph three of 37 subsection (b) of section thirteen hundred sixty-one of the internal 38 revenue code. The term "exempt QSSS" means a QSSS exempt from tax under 39 this article as provided in subsection (o) of section fourteen hundred 40 fifty-three of this article, or a QSSS described in clause (i) of 41 subparagraph (B) of paragraph two of subsection (o) of section fourteen 42 hundred fifty-three, wherein the parent corporation of the QSSS is 43 subject to tax under this article, and the assets, liabilities, income 44 and deductions of the QSSS are treated as the assets, liabilities, 45 income and deductions of the parent corporation. Where a QSSS is an 46 exempt QSSS, then for all purposes under this article: 47 (1) the assets, liabilities, income, deductions, property, payroll, 48 receipts, capital, credits, and all other tax attributes and elements of 49 economic activity of the QSSS shall be deemed to be those of the parent 50 corporation, 51 (2) the stocks, bonds and other securities issued by, and any indebt- 52 edness from, the QSSS shall not be subsidiary capital of the parent 53 corporation, 54 (3) transactions between the parent corporation and the QSSS, includ- 55 ing the payment of interest and dividends, shall not be taken into 56 account, and
S. 5431 3 1 (4) general executive officers of the QSSS shall be deemed to be 2 general executive officers of the parent corporation. 3 (h) The term "financial holding company" means a corporation that, 4 pursuant to subsection (l) of section 4 of the federal bank holding 5 company act of nineteen hundred fifty-six, as amended, has filed with 6 the federal reserve board a written declaration that the corporation 7 elects to be a financial holding company and whose election has not been 8 found to be ineffective by the federal reserve board. 9 § 1451. Imposition of tax. (a) For the privilege of exercising its 10 franchise or doing business in this state in a corporate or organized 11 capacity, a tax, computed under section fourteen hundred fifty-five of 12 this article, is hereby annually imposed on every banking corporation 13 for each of its taxable years, or any part thereof, beginning on or 14 after January first, nineteen hundred seventy-three. 15 (b) In the case of a taxpayer whose taxable year is other than a 16 calendar year, there is hereby imposed a tax for the privilege of exer- 17 cising its franchise or doing business in this state in a corporate or 18 organized capacity for the period beginning January first, nineteen 19 hundred seventy-three and extending through the subsequent part of its 20 first such taxable year ending after such date. Such tax shall be 21 computed under section fourteen hundred fifty-five of this article on 22 the basis of such taxpayer's entire net income, or other applicable 23 basis as the case may be, for such period and shall be paid with a 24 return which shall be separately filed with the tax commission not later 25 than the fifteenth day of the third month succeeding the close of such 26 period. The requirements of sections fourteen hundred sixty and fourteen 27 hundred sixty-one of this article, relating to declarations and payments 28 of estimated tax, except subsection (a) of section fourteen hundred 29 sixty-one of this article, shall not be applicable to the tax imposed by 30 this subsection. 31 (c)(1) A banking corporation is doing business in this state in a 32 corporate or organized capacity if (i) it has issued credit cards to one 33 thousand or more customers who have a mailing address within this state 34 as of the last day of its taxable year, (ii) it has merchant customer 35 contracts with merchants and the total number of locations covered by 36 those contracts equals one thousand or more locations in this state to 37 whom the banking corporation remitted payments for credit card trans- 38 actions during the taxable year, (iii) it has receipts of one million 39 dollars or more in the taxable year from its customers who have been 40 issued credit cards by the banking corporation and have a mailing 41 address within this state, (iv) it has receipts of one million dollars 42 or more arising from merchant customer contracts with merchants relating 43 to locations in this state, or (v) the sum of the number of customers 44 described in subparagraph (i) of this paragraph plus the number of 45 locations covered by its contracts described in subparagraph (ii) of 46 this paragraph equals one thousand or more, or the amount of its 47 receipts described in subparagraphs (iii) and (iv) of this paragraph 48 equals one million dollars or more. For purposes of this paragraph, 49 receipts from processing credit card transactions for merchants include 50 merchant discount fees received by the banking corporation. 51 (2) As used in this subsection, the term "credit card" includes bank, 52 credit, travel and entertainment cards. 53 § 1452. Banking corporation defined; exempt corporations. (a) For the 54 purpose of this article, a banking corporation means:
S. 5431 4 1 (1) Every corporation or association organized under the laws of this 2 state which is authorized to do a banking business, or which is doing a 3 banking business; 4 (2) every corporation or association organized under the laws of any 5 other state or country which is doing a banking business; 6 (3) every national banking association organized under the authority 7 of the United States which is doing a banking business; 8 (4) every federal savings bank which is doing a banking business; 9 (5) every federal savings and loan association which is doing a bank- 10 ing business; 11 (6) a production credit association organized under the federal farm 12 credit act of nineteen hundred thirty-three, which is doing a banking 13 business and all of whose stock held by the federal production credit 14 corporation has been retired; 15 (7) every other corporation or association organized under the author- 16 ity of the United States which is doing a banking business; 17 (8) the mortgage facilities corporation created by chapter five 18 hundred sixty-four of the laws of nineteen hundred fifty-six; 19 (9) any corporation sixty-five percent or more of whose voting stock 20 is owned or controlled, directly or indirectly, by a corporation or 21 corporations subject to article three-A of the banking law, or regis- 22 tered under the federal bank holding company act of nineteen hundred 23 fifty-six, as amended, or registered as a savings and loan holding 24 company (but excluding a diversified savings and loan holding company) 25 under the federal national housing act, as amended, or by a corporation 26 or corporations described in any of the foregoing paragraphs of this 27 subsection, provided the corporation whose voting stock is so owned or 28 controlled is principally engaged in a business, regardless of where 29 conducted, which (i) might be lawfully conducted by a corporation 30 subject to article three of the banking law or by a national banking 31 association, or (ii) is so closely related to banking or managing or 32 controlling banks as to be a proper incident thereto, as set forth in 33 paragraph eight of subsection (c) or subparagraph (F) of paragraph four 34 of subsection (k) of section four of the federal bank holding company 35 act of nineteen hundred fifty-six, as amended, or (iii) holds and 36 manages investment assets, including but not limited to bonds, notes, 37 debentures and other obligations for the payment of money, stocks, part- 38 nership interests or other equity interests, and other investment secu- 39 rities and which is not a business described in subparagraph (i) or (ii) 40 of this paragraph; and provided, further, that in no event shall a 41 corporation principally engaged in a business described in section one 42 hundred eighty-three or one hundred eighty-four, or section one hundred 43 eighty-six as it was in effect on December thirty-first, nineteen 44 hundred ninety-nine, of this chapter be subject to the tax imposed under 45 this article if any of its business receipts from such principally 46 engaged in business are from other than a corporation (A) which owns or 47 controls, directly or indirectly, sixty-five percent or more of its 48 voting stock, or (B) sixty-five percent or more of whose voting stock is 49 owned or controlled, directly or indirectly, by the corporation engaged 50 in such business, or (C) sixty-five percent or more of whose voting 51 stock is owned or controlled, directly or indirectly, by the same inter- 52 est. 53 (b) Banking business defined. The words "banking business" as used in 54 this section mean such business as a corporation or association may be 55 created to do under article three, three-B, five, five-A, five-C, six or 56 ten of the banking law or any business which a corporation or associ-
S. 5431 5 1 ation is authorized by such article to do. However, with respect to a 2 national banking association organized under the authority of the United 3 States, a federal savings bank, a federal savings and loan association 4 or a production credit association, the words "banking business" as used 5 in this section mean such business as a national banking association, 6 federal savings bank, federal savings and loan association or production 7 credit association, respectively, may be created to do or is authorized 8 to do under the laws of the United States or this state. The words 9 "banking business" as used in this section shall also mean such business 10 as any corporation or association organized under the authority of the 11 United States or organized under the laws of any other state or country 12 has authority to do which is substantially similar to the business which 13 a corporation or association may be created to do under article three, 14 three-B, five, five-A, five-C, six or ten of the banking law or any 15 business which a corporation or association is authorized by such arti- 16 cle to do. 17 (c) Exempt corporations. A trust company all of whose capital stock is 18 owned by twenty or more savings banks organized under New York law shall 19 be exempt from the tax under this article. 20 (d) Corporations taxable under article nine-A. Notwithstanding the 21 provisions of this article, all corporations of classes now or hereto- 22 fore taxable under article nine-A of this chapter shall continue to be 23 taxable under such article nine-A, except: (1) corporations organized 24 under article five-A of the banking law; (2) corporations subject to 25 article three-A of the banking law, or registered under the federal bank 26 holding company act of nineteen hundred fifty-six, as amended, or regis- 27 tered as a savings and loan holding company (but excluding a diversified 28 savings and loan holding company) under the federal national housing 29 act, as amended, which make a combined return under the provisions of 30 subsection (f) of section fourteen hundred sixty-two of this article; 31 (3) banking corporations described in paragraph nine of subsection (a) 32 of this section; (4) any captive REIT or captive RIC that is required to 33 be included in a combined return under the provisions of subsection (f) 34 of section fourteen hundred sixty-two of this article; and (5) any over- 35 capitalized captive insurance company required to be included in a 36 combined return under subsection (f) of section fourteen hundred sixty- 37 two of this article. Provided, however, that a corporation described in 38 paragraph three of this subsection which was subject to the tax imposed 39 by article nine-A of this chapter for its taxable year ending during 40 nineteen hundred eighty-four may, on or before the due date for filing 41 its return (determined with regard to extensions) for its taxable year 42 ending during nineteen hundred eighty-five, make a one time election to 43 continue to be taxable under such article nine-A. Such election shall 44 continue to be in effect until revoked by the taxpayer. In no event 45 shall such election or revocation be for a part of a taxable year. 46 (e) Corporations taxable under article thirty-three. Except for corpo- 47 rations described in subsection (1) of section fourteen hundred fifty- 48 three of this article, corporations liable to tax under article thirty- 49 three of this chapter shall not be subject to tax under this article. 50 (f) For exemption from tax of a qualified subchapter S subsidiary, see 51 subsection (o) of section fourteen hundred fifty-three of this article. 52 (g) A banking corporation organized under the laws of a country, or 53 any political subdivision thereof, other than the United States shall 54 not be deemed to be doing business in this state under this article if 55 its activities in this state are limited solely to (1) investing or 56 trading in stocks and securities for its own account within the meaning
S. 5431 6 1 of clause (ii) of subparagraph (A) of paragraph (2) of subsection (b) of 2 section eight hundred sixty-four of the internal revenue code or (2) 3 investing or trading in commodities for its own account within the mean- 4 ing of clause (ii) of subparagraph (B) of paragraph (2) of subsection 5 (b) of section eight hundred sixty-four of the internal revenue code or 6 (3) any combination of activities described in paragraphs one and two of 7 this subsection. 8 (h) Transitional provisions relating to the enactment and implementa- 9 tion of the federal Gramm-Leach-Bliley act. (1) Notwithstanding anything 10 to the contrary contained in this section other than subsection (n) of 11 this section, a corporation that was in existence before January first, 12 two thousand and was subject to tax under such article nine-A of this 13 chapter for its last taxable year beginning before January first, two 14 thousand, shall continue to be taxable under such article nine-A for all 15 taxable years beginning on or after January first, two thousand and 16 before January first, two thousand one. The preceding sentence shall not 17 apply to any taxable year during which such corporation is a banking 18 corporation described in paragraphs one through eight of subsection (a) 19 of this section. Notwithstanding anything to the contrary contained in 20 this section other than subsection (n) of this section, a banking corpo- 21 ration that was in existence before January first, two thousand and was 22 subject to tax under this article for its last taxable year beginning 23 before January first, two thousand, shall continue to be taxable under 24 this article for all taxable years beginning on or after January first, 25 two thousand and before January first, two thousand one. Provided, 26 however, that nothing in this subsection shall prohibit a corporation 27 that elected pursuant to subsection (d) of this section to be taxable 28 under article nine-A of this chapter from revoking that election in 29 accordance with such subsection (d). 30 For purposes of this paragraph, a corporation shall be considered to 31 be subject to tax under article nine-A of this chapter for a taxable 32 year if such corporation was not a taxpayer but was properly included in 33 a combined report filed pursuant to section two hundred eleven of this 34 chapter for such taxable year and a corporation shall be considered to 35 be subject to tax under this article for a taxable year if such corpo- 36 ration was not a taxpayer but was properly included in a combined return 37 filed pursuant to subsection (f) or (g) of section fourteen hundred 38 sixty-two of this article for such taxable year. A corporation that was 39 in existence before January first, two thousand but first becomes a 40 taxpayer in a taxable year beginning on or after January first, two 41 thousand and before January first, two thousand one, shall be considered 42 for purposes of this paragraph to have been subject to tax under article 43 nine-A of this chapter for its last taxable year beginning before Janu- 44 ary first, two thousand if such corporation would have been subject to 45 tax under such article for such taxable year if it had been a taxpayer 46 during such taxable year. A corporation that was in existence before 47 January first, two thousand but first becomes a taxpayer in a taxable 48 year beginning on or after January first, two thousand and before Janu- 49 ary first, two thousand one, shall be considered for purposes of this 50 paragraph to have been subject to tax under this article for its last 51 taxable year beginning before January first, two thousand if such corpo- 52 ration would have been subject to tax under this article for such taxa- 53 ble year if it had been a taxpayer during such taxable year. 54 (2) Notwithstanding anything to the contrary contained in this section 55 other than subsection (n) of this section, a corporation formed on or 56 after January first, two thousand and before January first, two thousand
S. 5431 7 1 one may elect to be subject to tax under this article or under article 2 nine-A of this chapter for its first taxable year beginning on or after 3 January first, two thousand and before January first, two thousand one 4 in which either (i) sixty-five percent or more of its voting stock is 5 owned or controlled, directly or indirectly by a financial holding 6 company, provided the corporation whose voting stock is so owned or 7 controlled is principally engaged in activities that are described in 8 section 4(k)(4) or 4(k)(5) of the federal bank holding company act of 9 nineteen hundred fifty-six, as amended and the regulations promulgated 10 pursuant to the authority of such section, or (ii) it is a financial 11 subsidiary. An election under this paragraph may not be made by a corpo- 12 ration described in paragraphs one through eight of subsection (a) of 13 this section or in subsection (e) of this section. In addition, an 14 election under this paragraph may not be made by a corporation that is a 15 party to a reorganization, as defined in subsection (a) of section 368 16 of the internal revenue code of 1986, as amended, of a corporation 17 described in paragraph one of this subsection if both corporations were 18 sixty-five percent or more owned or controlled, directly or indirectly, 19 by the same interests at the time of the reorganization. 20 An election under this paragraph must be made by the taxpayer on or 21 before the due date for filing its return (determined with regard to 22 extensions of time for filing) for the applicable taxable year. The 23 election to be taxed under article nine-A of this chapter shall be made 24 by the taxpayer by filing the report required pursuant to section two 25 hundred eleven of this chapter and the election to be taxed under this 26 article shall be made by the taxpayer by filing the return required 27 pursuant to section fourteen hundred sixty-two of this article. Any 28 election made pursuant to this paragraph shall be irrevocable and shall 29 apply to each subsequent taxable year beginning on or after January 30 first, two thousand and before January first, two thousand one, provided 31 that the stock ownership requirements described in subparagraph (i) of 32 this paragraph are met or such corporation described in subparagraph 33 (ii) of this paragraph continues as a financial subsidiary. 34 (3) For purposes of this section, a financial subsidiary means a 35 corporation (i) sixty-five percent or more of whose voting stock is 36 owned or controlled, directly or indirectly by a banking corporation 37 described in paragraph one, two or three of subsection (a) of this 38 section and (ii) is described in section 5136A(g) of the revised stat- 39 utes of the United States or section 46 of the federal deposit insurance 40 act. For purposes of this article, the term "banking corporation" shall 41 include a corporation electing to be taxed under this article pursuant 42 to paragraph two of this subsection for so long as such election shall 43 be in effect. 44 (i) Transitional provisions relating to the enactment and implementa- 45 tion of the federal Gramm-Leach-Bliley act. (1) Notwithstanding anything 46 to the contrary contained in this section other than subsection (n) of 47 this section, a corporation that was in existence before January first, 48 two thousand one and was subject to tax under article nine-A of this 49 chapter for its last taxable year beginning before January first, two 50 thousand one, shall continue to be taxable under article nine-A for all 51 taxable years beginning on or after January first, two thousand one and 52 before January first, two thousand three. The preceding sentence shall 53 not apply to any taxable year during which such corporation is a banking 54 corporation described in paragraphs one through eight of subsection (a) 55 of this section. Notwithstanding anything to the contrary contained in 56 this section other than subsection (n) of this section, a banking corpo-
S. 5431 8 1 ration that was in existence before January first, two thousand one and 2 was subject to tax under this article for its last taxable year begin- 3 ning before January first, two thousand one, shall continue to be taxa- 4 ble under this article for all taxable years beginning on or after Janu- 5 ary first, two thousand one and before January first, two thousand 6 three. Provided, however, that nothing in this subsection shall prohibit 7 a corporation that elected pursuant to subsection (d) of this section to 8 be taxable under article nine-A of this chapter from revoking that 9 election in accordance with such subsection (d). 10 For purposes of this paragraph, a corporation shall be considered to 11 be subject to tax under article nine-A of this chapter for a taxable 12 year if such corporation was not a taxpayer but was properly included in 13 a combined report filed pursuant to section two hundred eleven of this 14 chapter for such taxable year and a corporation shall be considered to 15 be subject to tax under this article for a taxable year if such corpo- 16 ration was not a taxpayer but was properly included in a combined return 17 filed pursuant to subsection (f) or (g) of section fourteen hundred 18 sixty-two of this article for such taxable year. A corporation that was 19 in existence before January first, two thousand one but first becomes a 20 taxpayer in a taxable year beginning on or after January first, two 21 thousand one and before January first, two thousand three, shall be 22 considered for purposes of this paragraph to have been subject to tax 23 under article nine-A of this chapter for its last taxable year beginning 24 before January first, two thousand one if such corporation would have 25 been subject to tax under such article for such taxable year if it had 26 been a taxpayer during such taxable year. A corporation that was in 27 existence before January first, two thousand one but first becomes a 28 taxpayer in a taxable year beginning on or after January first, two 29 thousand one and before January first, two thousand three, shall be 30 considered for purposes of this paragraph to have been subject to tax 31 under this article for its last taxable year beginning before January 32 first, two thousand one if such corporation would have been subject to 33 tax under this article for such taxable year if it had been a taxpayer 34 during such taxable year. 35 (2) Notwithstanding anything to the contrary contained in this section 36 other than subsection (n) of this section, a corporation formed on or 37 after January first, two thousand one and before January first, two 38 thousand three may elect to be subject to tax under this article or 39 under article nine-A of this chapter for its first taxable year begin- 40 ning on or after January first, two thousand one and before January 41 first, two thousand three in which either (i) sixty-five percent or more 42 of its voting stock is owned or controlled, directly or indirectly by a 43 financial holding company, provided the corporation whose voting stock 44 is so owned or controlled is principally engaged in activities that are 45 described in section 4(k)(4) or 4(k)(5) of the federal bank holding 46 company act of nineteen hundred fifty-six, as amended and the regu- 47 lations promulgated pursuant to the authority of such section, or (ii) 48 it is a financial subsidiary. 49 An election under this paragraph may not be made by a corporation 50 described in paragraphs one through eight of subsection (a) of this 51 section or in subsection (e) of this section. In addition, an election 52 under this paragraph may not be made by a corporation that is a party to 53 a reorganization, as defined in subsection (a) of section 368 of the 54 internal revenue code of 1986, as amended, of a corporation described in 55 paragraph one of this subsection if both corporations were sixty-five 56 percent or more owned or controlled, directly or indirectly, by the same
S. 5431 9 1 interests at the time of the reorganization. An election under this 2 paragraph must be made by the taxpayer on or before the due date for 3 filing its return (determined with regard to extensions of time for 4 filing) for the applicable taxable year. The election to be taxed under 5 article nine-A of this chapter shall be made by the taxpayer by filing 6 the report required pursuant to section two hundred eleven of this chap- 7 ter and the election to be taxed under this article shall be made by the 8 taxpayer by filing the return required pursuant to section fourteen 9 hundred sixty-two of this article. Any election made pursuant to this 10 paragraph shall be irrevocable and shall apply to each subsequent taxa- 11 ble year beginning on or after January first, two thousand one and 12 before January first, two thousand three, provided that the stock owner- 13 ship requirements described in subparagraph (i) of this paragraph are 14 met or such corporation described in subparagraph (ii) of this paragraph 15 continues as a financial subsidiary. 16 (3) For purposes of this section, a financial subsidiary means a 17 corporation (i) sixty-five percent or more of whose voting stock is 18 owned or controlled, directly or indirectly by a banking corporation 19 described in paragraph one, two or three of subsection (a) of this 20 section and (ii) is described in section 5136A(g) of the revised stat- 21 utes of the United States or section 46 of the federal deposit insurance 22 act. For purposes of this article, the term "banking corporation" shall 23 include a corporation electing to be taxed under this article pursuant 24 to paragraph two of this subsection for so long as such election shall 25 be in effect. 26 (j) Transitional provisions relating to the enactment and implementa- 27 tion of the federal Gramm-Leach-Bliley act. (1) Notwithstanding anything 28 to the contrary contained in this section other than subsection (n) of 29 this section, a corporation that was in existence before January first, 30 two thousand three and was subject to tax under article nine-A of this 31 chapter for its last taxable year beginning before January first, two 32 thousand three, shall continue to be taxable under such article nine-A 33 for all taxable years beginning on or after January first, two thousand 34 three and before January first, two thousand four. The preceding 35 sentence shall not apply to any taxable year during which such corpo- 36 ration is a banking corporation described in paragraphs one through 37 eight of subsection (a) of this section. Notwithstanding anything to the 38 contrary contained in this section other than subsection (n) of this 39 section, a banking corporation that was in existence before January 40 first, two thousand three and was subject to tax under this article for 41 its last taxable year beginning before January first, two thousand 42 three, shall continue to be taxable under this article for all taxable 43 years beginning on or after January first, two thousand three and before 44 January first, two thousand four. Provided, however, that nothing in 45 this subsection shall prohibit a corporation that elected pursuant to 46 subsection (d) of this section to be taxable under article nine-A of 47 this chapter from revoking that election in accordance with such 48 subsection (d). 49 For purposes of this paragraph, a corporation shall be considered to 50 be subject to tax under article nine-A of this chapter for a taxable 51 year if such corporation was not a taxpayer but was properly included in 52 a combined report filed pursuant to section two hundred eleven of this 53 chapter for such taxable year and a corporation shall be considered to 54 be subject to tax under this article for a taxable year if such corpo- 55 ration was not a taxpayer but was properly included in a combined return 56 filed pursuant to subsection (f) or (g) of section fourteen hundred
S. 5431 10 1 sixty-two of this article for such taxable year. A corporation that was 2 in existence before January first, two thousand three but first becomes 3 a taxpayer in a taxable year beginning on or after January first, two 4 thousand three and before January first, two thousand four, shall be 5 considered for purposes of this paragraph to have been subject to tax 6 under article nine-A of this chapter for its last taxable year beginning 7 before January first, two thousand three if such corporation would have 8 been subject to tax under such article for such taxable year if it had 9 been a taxpayer during such taxable year. A corporation that was in 10 existence before January first, two thousand three but first becomes a 11 taxpayer in a taxable year beginning on or after January first, two 12 thousand three and before January first, two thousand four, shall be 13 considered for purposes of this paragraph to have been subject to tax 14 under this article for its last taxable year beginning before January 15 first, two thousand three if such corporation would have been subject to 16 tax under this article for such taxable year if it had been a taxpayer 17 during such taxable year. 18 (2) Notwithstanding anything to the contrary contained in this section 19 other than subsection (n) of this section, a corporation formed on or 20 after January first, two thousand three and before January first, two 21 thousand four may elect to be subject to tax under this article or under 22 article nine-A of this chapter for its first taxable year beginning on 23 or after January first, two thousand three and before January first, two 24 thousand four in which either (i) sixty-five percent or more of its 25 voting stock is owned or controlled, directly or indirectly by a finan- 26 cial holding company, provided the corporation whose voting stock is so 27 owned or controlled is principally engaged in activities that are 28 described in section 4(k)(4) or 4(k)(5) of the federal bank holding 29 company act of nineteen hundred fifty-six, as amended and the regu- 30 lations promulgated pursuant to the authority of such section, or (ii) 31 it is a financial subsidiary. 32 An election under this paragraph may not be made by a corporation 33 described in paragraphs one through eight of subsection (a) of this 34 section or in subsection (e) of this section. In addition, an election 35 under this paragraph may not be made by a corporation that is a party to 36 a reorganization, as defined in subsection (a) of section 368 of the 37 internal revenue code of 1986, as amended, of a corporation described in 38 paragraph one of this subsection if both corporations were sixty-five 39 percent or more owned or controlled, directly or indirectly, by the same 40 interests at the time of the reorganization. An election under this 41 paragraph must be made by the taxpayer on or before the due date for 42 filing its return (determined with regard to extensions of time for 43 filing) for the applicable taxable year. The election to be taxed under 44 article nine-A of this chapter shall be made by the taxpayer by filing 45 the report required pursuant to section two hundred eleven of this chap- 46 ter and the election to be taxed under this article shall be made by the 47 taxpayer by filing the return required pursuant to section fourteen 48 hundred sixty-two of this article. Any election made pursuant to this 49 paragraph shall be irrevocable and shall apply to each subsequent taxa- 50 ble year beginning on or after January first, two thousand three and 51 before January first, two thousand four, provided that the stock owner- 52 ship requirements described in subparagraph (i) of this paragraph are 53 met or such corporation described in subparagraph (ii) of this paragraph 54 continues as a financial subsidiary. 55 (3) For purposes of this section, a financial subsidiary means a 56 corporation (i) sixty-five percent or more of whose voting stock is
S. 5431 11 1 owned or controlled, directly or indirectly by a banking corporation 2 described in paragraph one, two or three of subsection (a) of this 3 section and (ii) is described in section 5136A(g) of the revised stat- 4 utes of the United States or section 46 of the federal deposit insurance 5 act. For purposes of this article, the term "banking corporation" shall 6 include a corporation electing to be taxed under this article pursuant 7 to paragraph two of this subsection for so long as such election shall 8 be in effect. 9 (k) Transitional provisions relating to the enactment and implementa- 10 tion of the federal Gramm-Leach-Bliley act. (1) Notwithstanding anything 11 to the contrary contained in this section other than subsection (n) of 12 this section, a corporation that was in existence before January first, 13 two thousand four and was subject to tax under article nine-A of this 14 chapter for its last taxable year beginning before January first, two 15 thousand four, shall continue to be taxable under such article nine-A 16 for all taxable years beginning on or after January first, two thousand 17 four and before January first, two thousand six. The preceding sentence 18 shall not apply to any taxable year during which such corporation is a 19 banking corporation described in paragraphs one through eight of 20 subsection (a) of this section. Notwithstanding anything to the contrary 21 contained in this section other than subsection (n) of this section, a 22 banking corporation that was in existence before January first, two 23 thousand four and was subject to tax under this article for its last 24 taxable year beginning before January first, two thousand four, shall 25 continue to be taxable under this article for all taxable years begin- 26 ning on or after January first, two thousand four and before January 27 first, two thousand six. Provided, however, that nothing in this 28 subsection shall prohibit a corporation that elected pursuant to 29 subsection (d) of this section to be taxable under article nine-A of 30 this chapter from revoking that election in accordance with such 31 subsection (d). 32 For purposes of this paragraph, a corporation shall be considered to 33 be subject to tax under article nine-A of this chapter for a taxable 34 year if such corporation was not a taxpayer but was properly included in 35 a combined report filed pursuant to section two hundred eleven of this 36 chapter for such taxable year and a corporation shall be considered to 37 be subject to tax under this article for a taxable year if such corpo- 38 ration was not a taxpayer but was properly included in a combined return 39 filed pursuant to subsection (f) or (g) of section fourteen hundred 40 sixty-two of this article for such taxable year. A corporation that was 41 in existence before January first, two thousand four but first becomes a 42 taxpayer in a taxable year beginning on or after January first, two 43 thousand four and before January first, two thousand six, shall be 44 considered for purposes of this paragraph to have been subject to tax 45 under article nine-A of this chapter for its last taxable year beginning 46 before January first, two thousand four, if such corporation would have 47 been subject to tax under such article for such taxable year if it had 48 been a taxpayer during such taxable year. A corporation that was in 49 existence before January first, two thousand four, but first becomes a 50 taxpayer in a taxable year beginning on or after January first, two 51 thousand four and before January first, two thousand six, shall be 52 considered for purposes of this paragraph to have been subject to tax 53 under this article for its last taxable year beginning before January 54 first, two thousand four if such corporation would have been subject to 55 tax under this article for such taxable year if it had been a taxpayer 56 during such taxable year.
S. 5431 12 1 (2) Notwithstanding anything to the contrary contained in this section 2 other than subsection (n) of this section, a corporation formed on or 3 after January first, two thousand four and before January first, two 4 thousand six may elect to be subject to tax under this article or under 5 article nine-A of this chapter for its first taxable year beginning on 6 or after January first, two thousand four and before January first, two 7 thousand six in which either (i) sixty-five percent or more of its 8 voting stock is owned or controlled, directly or indirectly by a finan- 9 cial holding company, provided the corporation whose voting stock is so 10 owned or controlled is principally engaged in activities that are 11 described in section 4(k)(4) or 4(k)(5) of the federal bank holding 12 company act of nineteen hundred fifty-six, as amended and the regu- 13 lations promulgated pursuant to the authority of such section, or (ii) 14 it is a financial subsidiary. 15 An election under this paragraph may not be made by a corporation 16 described in paragraphs one through eight of subsection (a) of this 17 section or in subsection (e) of this section. In addition, an election 18 under this paragraph may not be made by a corporation that is a party to 19 a reorganization, as defined in subsection (a) of section three hundred 20 sixty-eight of the internal revenue code of nineteen eighty-six, as 21 amended, of a corporation described in paragraph one of this subsection 22 if both corporations were sixty-five percent or more owned or 23 controlled, directly or indirectly, by the same interests at the time of 24 the reorganization. An election under this paragraph must be made by the 25 taxpayer on or before the due date for filing its return (determined 26 with regard to extensions of time for filing) for the applicable taxable 27 year. The election to be taxed under article nine-A of this chapter 28 shall be made by the taxpayer by filing the report required pursuant to 29 section two hundred eleven of this chapter and the election to be taxed 30 under this article shall be made by the taxpayer by filing the return 31 required pursuant to section fourteen hundred sixty-two of this article. 32 Any election made pursuant to this paragraph shall be irrevocable and 33 shall apply to each subsequent taxable year beginning on or after Janu- 34 ary first, two thousand four and before January first, two thousand six, 35 provided that the stock ownership requirements described in subparagraph 36 (i) of this paragraph are met or such corporation described in subpara- 37 graph (ii) of this paragraph continues as a financial subsidiary. 38 (3) For purposes of this section, a financial subsidiary means a 39 corporation (i) sixty-five percent or more of whose voting stock is 40 owned or controlled, directly or indirectly by a banking corporation 41 described in paragraph one, two or three of subsection (a) of this 42 section and (ii) is described in section 5136A(g) of the revised stat- 43 utes of the United States or section forty-six of the federal deposit 44 insurance act. For purposes of this article, the term "banking corpo- 45 ration" shall include a corporation electing to be taxed under this 46 article pursuant to paragraph two of this subsection for so long as such 47 election shall be in effect. 48 (l) Transitional provisions relating to the enactment and implementa- 49 tion of the federal Gramm-Leach-Bliley act. (1) Notwithstanding anything 50 to the contrary contained in this section other than subsection (n) of 51 this section, a corporation that was in existence before January first, 52 two thousand six and was subject to tax under article nine-A of this 53 chapter for its last taxable year beginning before January first, two 54 thousand six, shall continue to be taxable under article nine-A for all 55 taxable years beginning on or after January first, two thousand six and 56 before January first, two thousand eight. The preceding sentence shall
S. 5431 13 1 not apply to any taxable year during which such corporation is a banking 2 corporation described in paragraphs one through eight of subsection (a) 3 of this section. Notwithstanding anything to the contrary contained in 4 this section other than subsection (n) of this section, a banking corpo- 5 ration that was in existence before January first, two thousand six and 6 was subject to tax under this article for its last taxable year begin- 7 ning before January first, two thousand six, shall continue to be taxa- 8 ble under this article for all taxable years beginning on or after Janu- 9 ary first, two thousand six and before January first, two thousand 10 eight. Provided, however, that nothing in this subsection shall prohibit 11 a corporation that elected pursuant to subsection (d) of this section to 12 be taxable under article nine-A of this chapter from revoking that 13 election in accordance with such subsection (d). 14 For purposes of this paragraph, a corporation shall be considered to 15 be subject to tax under article nine-A of this chapter for a taxable 16 year if such corporation was not a taxpayer but was properly included in 17 a combined report filed pursuant to section two hundred eleven of this 18 chapter for such taxable year and a corporation shall be considered to 19 be subject to tax under this article for a taxable year if such corpo- 20 ration was not a taxpayer but was properly included in a combined return 21 filed pursuant to subsection (f) or (g) of section fourteen hundred 22 sixty-two of this article for such taxable year. A corporation that was 23 in existence before January first, two thousand six but first becomes a 24 taxpayer in a taxable year beginning on or after January first, two 25 thousand six and before January first, two thousand eight, shall be 26 considered for purposes of this paragraph to have been subject to tax 27 under article nine-A of this chapter for its last taxable year beginning 28 before January first, two thousand six if such corporation would have 29 been subject to tax under such article for such taxable year if it had 30 been a taxpayer during such taxable year. A corporation that was in 31 existence before January first, two thousand six but first becomes a 32 taxpayer in a taxable year beginning on or after January first, two 33 thousand six and before January first, two thousand eight, shall be 34 considered for purposes of this paragraph to have been subject to tax 35 under this article for its last taxable year beginning before January 36 first, two thousand six if such corporation would have been subject to 37 tax under this article for such taxable year if it had been a taxpayer 38 during such taxable year. 39 (2) Notwithstanding anything to the contrary contained in this section 40 other than subsection (n) of this section, a corporation formed on or 41 after January first, two thousand six and before January first, two 42 thousand eight may elect to be subject to tax under this article or 43 under article nine-A of this chapter for its first taxable year begin- 44 ning on or after January first, two thousand six and before January 45 first, two thousand eight in which either (i) sixty-five percent or more 46 of its voting stock is owned or controlled, directly or indirectly by a 47 financial holding company, provided the corporation whose voting stock 48 is so owned or controlled is principally engaged in activities that are 49 described in section 4(k)(4) or 4(k)(5) of the federal bank holding 50 company act of nineteen hundred fifty-six, as amended and the regu- 51 lations promulgated pursuant to the authority of such section, or (ii) 52 it is a financial subsidiary. An election under this paragraph may not 53 be made by a corporation described in paragraphs one through eight of 54 subsection (a) of this section or in subsection (e) of this section. In 55 addition, an election under this paragraph may not be made by a corpo- 56 ration that is a party to a reorganization, as defined in subsection (a)
S. 5431 14 1 of section 368 of the internal revenue code of 1986, as amended, of a 2 corporation described in paragraph one of this subsection if both corpo- 3 rations were sixty-five percent or more owned or controlled, directly or 4 indirectly, by the same interests at the time of the reorganization. 5 An election under this paragraph must be made by the taxpayer on or 6 before the due date for filing its return (determined with regard to 7 extensions of time for filing) for the applicable taxable year. The 8 election to be taxed under article nine-A of this chapter shall be made 9 by the taxpayer by filing the report required pursuant to section two 10 hundred eleven of this chapter and the election to be taxed under this 11 article shall be made by the taxpayer by filing the return required 12 pursuant to section fourteen hundred sixty-two of this article. Any 13 election made pursuant to this paragraph shall be irrevocable and shall 14 apply to each subsequent taxable year beginning on or after January 15 first, two thousand six and before January first, two thousand eight, 16 provided that the stock ownership requirements described in subparagraph 17 (i) of this paragraph are met or such corporation described in subpara- 18 graph (ii) of this paragraph continues as a financial subsidiary. 19 (3) For purposes of this section, a financial subsidiary means a 20 corporation (i) sixty-five percent or more of whose voting stock is 21 owned or controlled, directly or indirectly by a banking corporation 22 described in paragraph one, two or three of subsection (a) of this 23 section and (ii) is described in section 5136A(g) of the revised stat- 24 utes of the United States or section 46 of the federal deposit insurance 25 act. For purposes of this article, the term "banking corporation" shall 26 include a corporation electing to be taxed under this article pursuant 27 to paragraph two of this subsection for so long as such election shall 28 be in effect. 29 (m) Transitional provisions relating to the enactment and implementa- 30 tion of the federal Gramm-Leach-Bliley act. (1) Notwithstanding 31 anything to the contrary contained in this section other than subsection 32 (n) of this section, a corporation that was in existence before January 33 first, two thousand twelve and was subject to tax under article nine-A 34 of this chapter for its last taxable year beginning before January 35 first, two thousand twelve, shall continue to be taxable under such 36 article for all taxable years beginning on or after January first, two 37 thousand twelve and before January first, two thousand twenty-five. The 38 preceding sentence shall not apply to any taxable year during which such 39 corporation is a banking corporation described in paragraphs one through 40 eight of subsection (a) of this section. Notwithstanding anything to 41 the contrary contained in this section other than subsection (n) of this 42 section, a banking corporation or corporation that was in existence 43 before January first, two thousand twelve and was subject to tax under 44 this article for its last taxable year beginning before January first, 45 two thousand twelve, shall continue to be taxable under this article for 46 all taxable years beginning on or after January first, two thousand 47 twelve and before January first, two thousand twenty-five only if the 48 corporation is a banking corporation as defined in subsection (a) of 49 this section or the corporation satisfies the requirements for a corpo- 50 ration to elect to be taxable under this article. Provided further, that 51 nothing in this subsection shall prohibit a corporation that elected 52 pursuant to subsection (d) of this section to be taxable under article 53 nine-A of this chapter from revoking that election in accordance with 54 such subsection (d). 55 For purposes of this paragraph, a corporation shall be considered to 56 be subject to tax under article nine-A of this chapter for a taxable
S. 5431 15 1 year if such corporation was not a taxpayer but was properly included in 2 a combined report filed pursuant to section two hundred eleven of this 3 chapter for such taxable year and a corporation shall be considered to 4 be subject to tax under this article for a taxable year if such corpo- 5 ration was not a taxpayer but was properly included in a combined return 6 filed pursuant to subsection (f) or (g) of section fourteen hundred 7 sixty-two of this article for such taxable year. A corporation that was 8 in existence before January first, two thousand twelve but first becomes 9 a taxpayer in a taxable year beginning on or after January first, two 10 thousand twelve and before January first, two thousand twenty-five, 11 shall be considered for purposes of this paragraph to have been subject 12 to tax under article nine-A of this chapter for its last taxable year 13 beginning before January first, two thousand twelve if such corporation 14 would have been subject to tax under such article for such taxable year 15 if it had been a taxpayer during such taxable year. A corporation that 16 was in existence before January first, two thousand twelve but first 17 becomes a taxpayer in a taxable year beginning on or after January 18 first, two thousand twelve and before January first, two thousand twen- 19 ty-five, shall be considered for purposes of this paragraph to have been 20 subject to tax under this article for its last taxable year beginning 21 before January first, two thousand twelve if such corporation would have 22 been subject to tax under this article for such taxable year if it had 23 been a taxpayer during such taxable year. 24 (2) Notwithstanding anything to the contrary contained in this section 25 other than subsection (n) of this section, a corporation formed on or 26 after January first, two thousand twelve and before January first, two 27 thousand twenty-five may elect to be subject to tax under this article 28 or under article nine-A of this chapter for its first taxable year 29 beginning on or after January first, two thousand twelve and before 30 January first, two thousand twenty-five in which either (i) sixty-five 31 percent or more of its voting stock is owned or controlled, directly or 32 indirectly by a financial holding company, provided the corporation 33 whose voting stock is so owned or controlled is principally engaged in 34 activities that are described in section 4(k)(4) or 4(k)(5) of the 35 federal bank holding company act of nineteen hundred fifty-six, as 36 amended and the regulations promulgated pursuant to the authority of 37 such section, or (ii) it is a financial subsidiary. An election under 38 this paragraph may not be made by a corporation described in paragraphs 39 one through eight of subsection (a) of this section or in subsection (e) 40 of this section. In addition, an election under this paragraph may not 41 be made by a corporation that is a party to a reorganization, as defined 42 in subsection (a) of section 368 of the internal revenue code of 1986, 43 as amended, of a corporation described in paragraph one of this 44 subsection if both corporations were sixty-five percent or more owned or 45 controlled, directly or indirectly, by the same interests at the time of 46 the reorganization. 47 An election under this paragraph must be made by the taxpayer on or 48 before the due date for filing its return (determined with regard to 49 extensions of time for filing) for the applicable taxable year. The 50 election to be taxed under article nine-A of this chapter shall be made 51 by the taxpayer by filing the report required pursuant to section two 52 hundred eleven of this chapter and the election to be taxed under this 53 article shall be made by the taxpayer by filing the return required 54 pursuant to section fourteen hundred sixty-two of this article. Any 55 election made pursuant to this paragraph shall be irrevocable and shall 56 apply to each subsequent taxable year beginning on or after January
S. 5431 16 1 first, two thousand twelve and before January first, two thousand twen- 2 ty-five, provided that the stock ownership and activities requirements 3 described in subparagraph (i) of this paragraph are met or such corpo- 4 ration described in subparagraph (ii) of this paragraph continues as a 5 financial subsidiary. 6 (3) For purposes of this section, a financial subsidiary means a 7 corporation (i) sixty-five percent or more of whose voting stock is 8 owned or controlled, directly or indirectly by a banking corporation 9 described in paragraph one, two or three of subsection (a) of this 10 section and (ii) is described in section 5136A(g) of the revised stat- 11 utes of the United States or section 46 of the federal deposit insurance 12 act. For purposes of this article, the term "banking corporation" shall 13 include a corporation electing to be taxed under this article pursuant 14 to paragraph two of this subsection for so long as such election shall 15 be in effect. 16 (4) The provisions of this subsection shall not apply to a captive 17 REIT, a captive RIC or an overcapitalized captive insurance company. 18 (n)(1) Notwithstanding anything in this article to the contrary, if 19 any of the conditions described in paragraph three of this subsection 20 apply to a corporation that has made either the election to be taxable 21 under article nine-A of this chapter pursuant to the Gramm-Leach-Bliley 22 transitional provisions in this section, or the election pursuant to 23 subsection (d) of this section to continue to be taxable under article 24 nine-A of this chapter (hereinafter the "electing corporation"), then 25 such corporation shall be deemed to have revoked the election as of the 26 first day of the taxable year in which such condition applied. 27 (2) Notwithstanding anything in this article to the contrary, if any 28 of the conditions described in paragraph three of this subsection apply 29 to a corporation required to be taxable under article nine-A of this 30 chapter pursuant to the Gramm-Leach-Bliley transitional provisions in 31 this section (hereinafter the "grandfathered corporation"), such corpo- 32 ration, if it is otherwise described in subsection (a) of this section, 33 shall be taxable under this article as of the first day of the taxable 34 year in which such condition applied. 35 (3) The provisions of paragraph one and paragraph two of this 36 subsection shall apply if any of the following conditions exist or occur 37 with respect to the electing corporation or the grandfathered corpo- 38 ration in a taxable year (including any short taxable year) beginning on 39 or after January first, two thousand seven: 40 (A) the corporation ceases to be a taxpayer under article nine-A of 41 this chapter; 42 (B) the corporation becomes subject to the fixed dollar minimum tax 43 under paragraph (d) of subdivision one of section two hundred ten of 44 this chapter; 45 (C) the corporation has no wages or receipts allocable to New York 46 state pursuant to subdivision three of section two hundred ten of this 47 chapter, or is otherwise inactive; provided that this subparagraph shall 48 not apply to a corporation which is engaged in the active conduct of a 49 trade or business, or substantially all of the assets of which are stock 50 and securities of corporations which are directly or indirectly 51 controlled by it and are engaged in the active conduct of a trade or 52 business; 53 (D) sixty-five percent or more of the voting stock of the corporation 54 becomes owned or controlled directly by a corporation that acquired the 55 stock in a transaction (or series of related transactions) that quali- 56 fies as a purchase within the meaning of paragraph three of subsection
S. 5431 17 1 (h) of section three hundred thirty-eight of the internal revenue code 2 unless the corporation whose stock was acquired and the corporation 3 acquiring the stock were, immediately prior to such purchase, members of 4 the same affiliated group (as such term is defined in section fifteen 5 hundred four of the internal revenue code without regard to the exclu- 6 sions provided for in subsection (b) of such section); provided that any 7 acquisition that was completed on or before January third, two thousand 8 seven shall be treated for purposes of this subparagraph as an acquisi- 9 tion made before January first, two thousand seven; or 10 (E) the corporation, in a transaction or series of related trans- 11 actions, acquires assets, whether by contribution, purchase, or other- 12 wise, having an average value (determined in accordance with subdivision 13 two of section two hundred ten of this chapter), or, if greater, a total 14 tax basis, in excess of forty percent of the average value, or, if 15 greater, the total tax basis, of all the assets of the corporation imme- 16 diately prior to such acquisition and as a result of such acquisition 17 the corporation is principally engaged in a business that is different 18 from the business immediately prior to such acquisition, provided that 19 such different business is described in subparagraph (i), (ii) or (iii) 20 of paragraph nine of subsection (a) of this section. 21 § 1453. Computations of entire net income. (a) Entire net income means 22 total net income from all sources which shall be the same as the entire 23 taxable income (but not alternative minimum taxable income). 24 (1) which the taxpayer is required to report to the United States 25 treasury department, or 26 (2) which the taxpayer, in the case of a corporation which is exempt 27 from federal income tax (other than the tax on unrelated business taxa- 28 ble income imposed under section 511 of the internal revenue code) but 29 is subject to tax under this article, would have been required to report 30 to the United States treasury department but for such exemption, or 31 (3) which, in the case of a corporation organized under the laws of a 32 country other than the United States, is effectively connected with the 33 conduct of a trade or business within the United States as determined 34 under section 882 of the internal revenue code subject to the modifica- 35 tions and adjustments hereinafter provided, or 36 (4) which the taxpayer would have been required to report to the 37 United States treasury department if it had not made the election under 38 subchapter s of chapter one of the internal revenue code. 39 (b) Entire net income shall be computed without the deduction or 40 exclusion of: 41 (1) (A) in the case of a corporation organized under the laws of a 42 country other than the United States, (i) any part of any income from 43 dividends or interest on any kind of stock, securities or indebtedness, 44 but only if such income is treated as effectively connected with the 45 conduct of a trade or business in the United States pursuant to section 46 eight hundred sixty-four of the internal revenue code, (ii) any income 47 exempt from federal taxable income under any treaty obligation of the 48 United States, but only if such income would be treated as effectively 49 connected in absence of such exemption, provided that such treaty obli- 50 gation does not preclude the taxation of such income by a state, or 51 (iii) any income which would be treated as effectively connected if such 52 income were not excluded from gross income pursuant to subsection (a) of 53 section one hundred three of the internal revenue code; (B) in the case 54 of any other corporation, any part of any income from dividends or 55 interest on any kind of stock, securities or indebtedness; (C) except 56 that for purposes of subparagraphs (A) and (B) of this paragraph there
S. 5431 18 1 shall be excluded any amounts treated as dividends pursuant to section 2 seventy-eight of the internal revenue code and any amounts described in 3 paragraphs eleven and twelve of subsection (e) of this section; 4 (2) taxes on or measured by income or profits paid or accrued within 5 the taxable year to the United States, or any of its possessions or to 6 any foreign country; 7 (3) premiums paid for environmental remediation insurance, as defined 8 in section twenty-three of this chapter, and deducted in determining 9 federal taxable income, to the extent of the amount of the environmental 10 remediation insurance credit allowed under such section twenty-three and 11 subsection (s) of section fourteen hundred fifty-six of this article; 12 (4) taxes imposed under this article, sections one hundred eighty- 13 three and one hundred eighty-four and article nine-A of this chapter; 14 (5) in those instances where a credit for the special additional mort- 15 gage recording tax is allowed under paragraph one of subsection (c) of 16 section fourteen hundred fifty-six of this article, the amount allowed 17 as an exclusion or deduction for the special additional mortgage record- 18 ing tax imposed by subdivision one-a of section two hundred fifty-three 19 of this chapter in determining the entire taxable income which the 20 taxpayer is required to report to the United States treasury department 21 for such taxable year; and 22 (6) Unless the credit allowed pursuant to subsection (c) of section 23 fourteen hundred fifty-six of this article is reflected in the computa- 24 tion of the gain or loss so as to result in an increase in such gain or 25 decrease of such loss, for federal income tax purposes, from the sale or 26 other disposition of the property with respect to which the special 27 additional mortgage recording tax imposed pursuant to subdivision one-a 28 of section two hundred fifty-three of this chapter was paid, the amount 29 of the special additional mortgage recording tax imposed by subdivision 30 one-a of section two hundred fifty-three of this chapter which was paid 31 and which is reflected in the computation of the basis of the property 32 so as to result in a decrease in such gain or increase in such loss for 33 federal income tax purposes from the sale or other disposition of the 34 property with respect to which such tax was paid. 35 (7) for taxable years beginning after December thirty-first, nineteen 36 hundred eighty-one, except with respect to property which is a qualified 37 mass commuting vehicle described in subparagraph (D) of paragraph eight 38 of subsection (f) of section one hundred sixty-eight of the internal 39 revenue code (relating to qualified mass commuting vehicles), any amount 40 which the taxpayer claimed as a deduction in computing its federal taxa- 41 ble income solely as a result of an election made pursuant to the 42 provisions of such paragraph eight as it was in effect for agreements 43 entered into prior to January first, nineteen hundred eighty-four; 44 (8) for taxable years beginning after December thirty-first, nineteen 45 hundred eighty-one, except with respect to property which is a qualified 46 mass commuting vehicle described in subparagraph (D) of paragraph eight 47 of subsection (f) of section one hundred sixty-eight of the internal 48 revenue code (relating to qualified mass commuting vehicles), any amount 49 which the taxpayer would have been required to include in the computa- 50 tion of its federal taxable income had it not made the election permit- 51 ted pursuant to such paragraph eight as it was in effect for agreements 52 entered into prior to January first, nineteen hundred eighty-four; 53 (9) in the case of property placed in service in taxable years begin- 54 ning before nineteen hundred ninety-four, for taxable years beginning 55 after December thirty-first, nineteen hundred eighty-one, except with 56 respect to property subject to the provisions of section two hundred
S. 5431 19 1 eighty-F of the internal revenue code and property subject to the 2 provisions of section one hundred sixty-eight of the internal revenue 3 code which is placed in service in this state in taxable years beginning 4 after December thirty-first, nineteen hundred eighty-four, the amount 5 allowable as a deduction determined under section one hundred sixty- 6 eight of the internal revenue code; 7 (10) upon the disposition of property to which paragraph seven of 8 subsection (e) of this section applies, the amount, if any, by which the 9 aggregate of the amounts described in such paragraph seven attributable 10 to such property exceeds the aggregate of the amounts described in para- 11 graph nine of this subsection attributable to such property, 12 (11) for taxable years beginning before January first, two thousand 13 ten, in the case of a taxpayer subject to the provisions of section 14 585(c) of the internal revenue code, the amount allowed as a deduction 15 pursuant to section 166 of such code, and 16 (12) for taxable years beginning before January first, two thousand 17 ten, for taxpayers subject to the provisions of subsection (i) of this 18 section, twenty percent of the excess of (A) the amount determined 19 pursuant to such subsection (i) over (B) the amount which would have 20 been allowable had such institution maintained its bad debt reserve for 21 all taxable years on the basis of actual experience. 22 (13) for taxable years beginning after December thirty-first, two 23 thousand two, in the case of qualified property described in paragraph 24 two of subsection k of section 168 of the internal revenue code, other 25 than qualified resurgence zone property described in subsection (u) of 26 this section, and other than qualified New York Liberty Zone property 27 described in paragraph two of subsection b of section 1400L of the 28 internal revenue code (without regard to clause (i) of subparagraph (C) 29 of such paragraph), which was placed in service on or after June first, 30 two thousand three, the amount allowable as a deduction under section 31 167 of the internal revenue code. 32 (14) The amount of any deduction allowed pursuant to section one 33 hundred ninety-nine of the internal revenue code. 34 (15) The amount of any federal deduction for taxes imposed under arti- 35 cle twenty-three of this chapter. 36 (c) (1) Except as otherwise provided in paragraphs two, three and four 37 of this subsection, in the case of the sale or exchange of property by a 38 taxpayer which has been subject to article nine-B or nine-C of this 39 chapter (as such articles were in effect on or before December thirty- 40 first, nineteen hundred seventy-two) where the property has a higher 41 adjusted basis for New York tax purposes than for federal tax purposes, 42 there shall be allowed as a deduction from entire net income, the 43 portion of any gain or loss on such sale which equals the difference in 44 such basis. 45 (2) In case of property of a taxpayer, other than a savings bank or a 46 savings and loan association, acquired prior to January first, nineteen 47 hundred twenty-six, and disposed of thereafter, the computation of 48 entire net income shall be modified as follows: 49 (i) no gain shall be deemed to have been derived if either the cost or 50 the fair market price or value on January first, nineteen hundred twen- 51 ty-six, exceeds the value realized; 52 (ii) no loss shall be deemed to have been sustained if either the cost 53 or the fair market price or value on January first, nineteen hundred 54 twenty-six, is less than the value realized; 55 (iii) where both the cost and the fair market price or value on Janu- 56 ary first, nineteen hundred twenty-six, are less than the value real-
S. 5431 20 1 ized, the basis for computing gain shall be the cost or the fair market 2 price or value on such date, whichever is higher; 3 (iv) where both the cost and the fair market price or value on January 4 first, nineteen hundred twenty-six, are in excess of the value realized, 5 the basis for computing loss shall be the cost or the fair market price 6 or value on such date, whichever is lower. 7 (3) In case of property of a savings bank acquired prior to January 8 first, nineteen hundred forty-four, and disposed of thereafter, in 9 computing entire net income the basis of such property shall be the 10 value as of December thirty-first, nineteen hundred forty-three, as set 11 forth in such bank's report of surplus and undivided earnings filed with 12 the tax commission as of that date. 13 (4) In case of property of a savings and loan association, acquired 14 prior to January first, nineteen hundred fifty-three, and disposed of 15 thereafter, the computation of entire net income shall be modified as 16 follows: 17 (i) no gain shall be deemed to have been derived if either the cost or 18 the fair market price or value on January first, nineteen hundred 19 fifty-three, exceeds the value realized; 20 (ii) no loss shall be deemed to have been sustained if either the cost 21 or the fair market price or value on January first, nineteen hundred 22 fifty-three, is less than the value realized; 23 (iii) where both the cost and the fair market price or value on Janu- 24 ary first, nineteen hundred fifty-three, are less than the value real- 25 ized, the basis for computing gain shall be the cost or the fair market 26 price or value on such date, whichever is higher; 27 (iv) where both the cost and the fair market price or value on January 28 first, nineteen hundred fifty-three, are in excess of the value real- 29 ized, the basis for computing loss shall be the cost or the fair market 30 price or value on such date, whichever is lower. 31 (d) Entire net income shall not include any refund or credit of a tax 32 for which no exclusion or deduction was allowed in determining the 33 taxpayer's entire net income under this article or articles nine-A or 34 twenty-three of this chapter for any prior year. 35 (e) There shall be allowed as a deduction in determining entire net 36 income, to the extent not deductible in determining federal taxable 37 income: 38 (1) interest on indebtedness incurred or continued to purchase or 39 carry obligations or securities the income from which is subject to tax 40 under this article but exempt from federal income tax, 41 (2) ordinary and necessary expenses paid or incurred during the taxa- 42 ble year attributable to income which is subject to tax under this arti- 43 cle but exempt from federal income tax, 44 (3) the amortizable bond premium for the taxable year on any bond the 45 interest on which is subject to tax under this article but exempt from 46 federal income tax, 47 (4) that portion of wages or salaries paid or incurred for the taxable 48 year for which a deduction is not allowed pursuant to the provisions of 49 section two hundred eighty-C of the internal revenue code, 50 (5) for taxable years beginning after December thirty-first, nineteen 51 hundred eighty-one, except with respect to property which is a qualified 52 mass commuting vehicle described in subparagraph (D) of paragraph eight 53 of subsection (f) of section one hundred sixty-eight of the internal 54 revenue code (relating to qualified mass commuting vehicles), any amount 55 which is included in the taxpayer's federal taxable income solely as a 56 result of an election made pursuant to the provisions of such paragraph
S. 5431 21 1 eight as it was in effect for agreements entered into prior to January 2 first, nineteen hundred eighty-four, 3 (6) for taxable years beginning after December thirty-first, nineteen 4 hundred eighty-one, except with respect to property which is a qualified 5 mass commuting vehicle described in subparagraph (D) of paragraph eight 6 of subsection (f) of section one hundred sixty-eight of the internal 7 revenue code (relating to qualified mass commuting vehicles), any amount 8 which the taxpayer could have excluded from federal taxable income had 9 it not made the election provided for in such paragraph eight as it was 10 in effect for agreements entered into prior to January first, nineteen 11 hundred eighty-four, 12 (7) in the case of property placed in service in taxable years begin- 13 ning before nineteen hundred ninety-four, for taxable years beginning 14 after December thirty-first, nineteen hundred eighty-one, except with 15 respect to property subject to the provisions of section two hundred 16 eighty-F of the internal revenue code and property subject to the 17 provisions of section one hundred sixty-eight of the internal revenue 18 code which is placed in service in this state in taxable years beginning 19 after December thirty-first, nineteen hundred eighty-four, and provided 20 a deduction has not been excluded from entire net income pursuant to 21 paragraph seven of subsection (b) of this section, an amount with 22 respect to property which is subject to the provisions of section one 23 hundred sixty-eight of the internal revenue code equal to the amount 24 allowable as the depreciation deduction under section one hundred 25 sixty-seven of the internal revenue code as such section would have 26 applied to property placed in service on December thirty-first, nineteen 27 hundred eighty, 28 (8) upon the disposition of property to which paragraph seven of this 29 subsection applies, the amount, if any, by which the aggregate of the 30 amounts described in paragraph nine of subsection (b) of this section 31 attributable to such property exceeds the aggregate of the amounts 32 described in paragraph seven of this subsection attributable to such 33 property, 34 (9) any amount of money or other property received from the federal 35 deposit insurance corporation pursuant to subsection (c) of section 36 thirteen of the federal deposit insurance act, as amended, regardless of 37 whether any note or other instrument is issued in exchange therefor, 38 (10) any amount of money or other property received from the federal 39 savings and loan insurance corporation pursuant to paragraph one, two, 40 three or four of subsection (f) of section four hundred six of the 41 federal national housing act, as amended, regardless of whether any note 42 or other instrument is issued in exchange therefor, 43 (11) (i) seventeen percent of interest income from subsidiary capital, 44 and 45 (ii) sixty percent of dividend income from subsidiary capital except 46 as provided in paragraph seventeen of this subsection, and 47 (iii) sixty percent of the amount by which gains from subsidiary capi- 48 tal exceed losses from subsidiary capital, to the extent such gains and 49 losses were taken into account in determining the entire taxable income 50 referred to in subsection (a) of this section, 51 (12) twenty-two and one-half percent of interest income on obligations 52 of New York state, or of any political subdivision thereof, or of the 53 United States, other than obligations held for resale in connection with 54 regular trading activities, 55 (13) for taxable years beginning before January first, two thousand 56 ten, in the case of a taxpayer which recaptures its balance of the
S. 5431 22 1 reserve for losses on loans for federal income tax purposes pursuant to 2 section 585(c) of the internal revenue code, any amount which is 3 included in federal taxable income pursuant to section 585(c) of such 4 code, 5 (14) for taxable years beginning before January first, two thousand 6 ten, in the case of a taxpayer subject to the provisions of section 7 585(c) of the internal revenue code, any amount which is included in 8 federal taxable income as a result of a recovery of a loan. 9 (15) for taxable years beginning before January first, two thousand 10 ten, in the case of a taxpayer which is currently or has previously been 11 subject to subsection (h) of this section, any amount which is included 12 in federal taxable income pursuant to section 593(e)(2) of the internal 13 revenue code, and any other amount so included as a result of a recovery 14 of or termination from the use of a bad debt reserve as defined in 15 section 593 of such code as in existence on December thirty-first, nine- 16 teen hundred ninety-five as a result of federal legislation enacted 17 after December thirty-first, nineteen hundred ninety-five. 18 (16) the amount deductible pursuant to subsection (p) of this section. 19 (17) one hundred percent of dividend income from subsidiary capital 20 received during the taxable year if that dividend income is directly 21 attributable to a dividend from a captive REIT or captive RIC for which 22 the captive REIT or captive RIC claimed a federal dividends paid 23 deduction and that captive REIT or captive RIC is included in a combined 24 report or return under article nine-A, this article or article thirty- 25 three of this chapter. 26 (f) Provided the taxpayer has not made an election pursuant to para- 27 graph two of subsection (b) of section fourteen hundred fifty-four of 28 this article, there shall be allowed as a deduction in determining 29 entire net income, to the extent not deductible in determining federal 30 taxable income, the adjusted eligible net income of an international 31 banking facility determined as follows: 32 (1) The eligible net income of an international banking facility shall 33 be the amount remaining after subtracting from the eligible gross income 34 the applicable expenses. 35 (2) Eligible gross income shall be the gross income derived by an 36 international banking facility from: 37 (A) making, arranging for, placing or servicing loans to foreign 38 persons, provided, however, that in the case of a foreign person which 39 is an individual, or which is a foreign branch of a domestic corporation 40 (other than a bank), or which is a foreign corporation or foreign part- 41 nership which is eighty per centum or more owned or controlled, either 42 directly or indirectly, by one or more domestic corporations (other than 43 banks), domestic partnerships or resident individuals, substantially all 44 the proceeds of the loan are for use outside of the United States; 45 (B) making or placing deposits with foreign persons which are banks or 46 foreign branches of banks (including foreign subsidiaries or foreign 47 branches of the taxpayer) or with other international banking facili- 48 ties; or 49 (C) entering into foreign exchange trading or hedging transactions 50 related to any of the transactions described in this paragraph. 51 (3) Applicable expenses shall be any expenses or other deductions 52 attributable, directly or indirectly, to the eligible gross income 53 described in paragraph two of this subsection. 54 (4) Adjusted eligible net income shall be determined by subtracting 55 from eligible net income the ineligible funding amount, and by subtract- 56 ing from the amount then remaining the floor amount.
S. 5431 23 1 (5) The ineligible funding amount shall be the amount, if any, deter- 2 mined by multiplying eligible net income by a fraction, the numerator of 3 which is the average aggregate amount for the taxable year of all 4 liabilities, including deposits, and other sources of funds of the 5 international banking facility which were not owed to or received from 6 foreign persons, and the denominator of which is the average aggregate 7 amount for the taxable year of all liabilities, including deposits and 8 other sources of funds of the international banking facility. 9 (6) The floor amount shall be the amount, if any, determined by multi- 10 plying the amount remaining after subtracting the ineligible funding 11 amount from the eligible net income by a fraction, not greater than one, 12 which is determined as follows: 13 (A) The numerator shall be 14 (i) the percentage, as set forth in subparagraph (C) of this para- 15 graph, of the average aggregate amount of the taxpayer's loans to 16 foreign persons and deposits with foreign persons which are banks or 17 foreign branches of banks (including foreign subsidiaries or foreign 18 branches of the taxpayer), which loans and deposits were recorded in the 19 financial accounts of the taxpayer for its branches, agencies and 20 offices within the state for taxable years nineteen hundred seventy- 21 five, nineteen hundred seventy-six and nineteen hundred seventy-seven, 22 minus 23 (ii) the average aggregate amount of such loans and such deposits for 24 the taxable year of the taxpayer (other than such loans and deposits of 25 an international banking facility), provided, however, that in no case 26 shall the amount determined in this clause exceed the amount determined 27 in clause (i) of this subparagraph; and 28 (B) The denominator shall be the average aggregate amount of the loans 29 to foreign persons and deposits with foreign persons which are banks or 30 foreign branches of banks (including foreign subsidiaries or foreign 31 branches of the taxpayer), which loans and deposits were recorded in the 32 financial accounts of the taxpayer's international banking facility for 33 the taxable year. 34 (C) The percentage shall be one hundred percent for the first taxable 35 year in which the taxpayer establishes an international banking facility 36 and for the next succeeding four taxable years. The percentage shall be 37 eighty percent for the fifth, sixty percent for the sixth, forty percent 38 for the seventh, and twenty percent for the eighth taxable year next 39 succeeding the year such taxpayer establishes such international banking 40 facility, and zero in the ninth succeeding year and thereafter. 41 (7) In the event adjusted eligible net income is a loss, the amount of 42 such loss shall be added to entire net income. 43 (8) For the purposes of this subsection the term "foreign person" 44 means 45 (A) an individual who is not a resident of the United States, 46 (B) a foreign corporation, a foreign partnership or a foreign trust, 47 as defined in section seventy-seven hundred one of the internal revenue 48 code, other than a domestic branch thereof, 49 (C) a foreign branch of a domestic corporation (including the taxpay- 50 er), 51 (D) a foreign government or an international organization or an agency 52 of either, or 53 (E) an international banking facility. 54 For purposes of this paragraph, the terms "foreign" and "domestic" 55 shall have the same meaning as set forth in section seventy-seven 56 hundred one of the internal revenue code.
S. 5431 24 1 (g) Entire net income shall be computed without regard to the 2 reduction in the basis of property that is required by section three 3 hundred sixty-two of the internal revenue code, because of any amount of 4 money or other property received from the federal deposit insurance 5 corporation pursuant to subsection (c) of section thirteen of the feder- 6 al deposit insurance act, as amended, or from the federal savings and 7 loan insurance corporation pursuant to paragraph one, two, three or four 8 of subsection (f) of section four hundred six of the federal national 9 housing act, as amended. 10 (h) (1) For purposes of this subsection, a "thrift institution" is a 11 banking corporation which satisfies the requirements of subparagraphs 12 (A) and (B) of this paragraph. 13 (A) Such banking corporation must be (i) a banking corporation as 14 defined in paragraph one of subsection (a) of section fourteen hundred 15 fifty-two of this article created or authorized to do business under 16 article six or ten of the banking law, (ii) a banking corporation as 17 defined in paragraph two or seven of subsection (a) of section fourteen 18 hundred fifty-two of this article which is doing a business substantial- 19 ly similar to the business which a corporation or association may be 20 created to do under article six or ten of the banking law or any busi- 21 ness which a corporation or association is authorized by such article to 22 do, or (iii) a banking corporation as defined in paragraph four or five 23 of subsection (a) of section fourteen hundred fifty-two of this article. 24 (B) At least sixty percent of the amount of the total assets (at the 25 close of the taxable year) of such banking corporation must consist of 26 (i) cash; (ii) obligations of the United States or of a state or poli- 27 tical subdivision thereof, and stock or obligations of a corporation 28 which is an instrumentality of the United States or of a state or poli- 29 tical subdivision thereof, but not including obligations the interest on 30 which is excludable from gross income under section 103 of the internal 31 revenue code; (iii) loans secured by a deposit or share of a member; 32 (iv) loans secured by an interest in real property which is (or from the 33 proceeds of the loan, will become) residential real property or real 34 property used primarily for church purposes, loans made for the improve- 35 ment of residential real property or real property used primarily for 36 church purposes, provided that for purposes of this clause, residential 37 real property shall include single or multifamily dwellings, facilities 38 in residential developments dedicated to public use or property used on 39 a nonprofit basis for residents, and mobile homes not used on a tran- 40 sient basis; (v) property acquired through the liquidation of defaulted 41 loans described in clause (iv) of this subparagraph; (vi) any regular or 42 residual interest in a REMIC, as such term is defined in section 860D of 43 the internal revenue code and any regular interest in a FASIT, as such 44 term is defined in section 860L of the internal revenue code, but only 45 in the proportion which the assets of such REMIC or FASIT consist of 46 property described in any of the preceding clauses of this subparagraph, 47 except that if ninety-five percent or more of the assets of such REMIC 48 or FASIT are assets described in clauses (i) through (v) of this subpar- 49 agraph, the entire interest in the REMIC or FASIT shall qualify; (vii) 50 any mortgage-backed security which represents ownership of a fractional 51 undivided interest in a trust, the assets of which consist primarily of 52 mortgage loans, provided that the real property which serves as security 53 for the loans is (or from the proceeds of the loan, will become) the 54 type of property described in clause (iv) of this subparagraph and any 55 collateralized mortgage obligation, the security for which consists 56 primarily of mortgage loans, provided that the real property which
S. 5431 25 1 serves as security for the loans is (or from the proceeds of the loan, 2 will become) the type of property described in clause (iv) of this 3 subparagraph; (viii) certificates of deposit in, or obligations of, a 4 corporation organized under a state law which specifically authorizes 5 such corporation to insure the deposits or share accounts of member 6 associations; (ix) loans secured by an interest in real property located 7 within any urban renewal area to be developed for predominantly residen- 8 tial use under an urban renewal plan approved by the Secretary of Hous- 9 ing and Urban Development under part A or part B of title I of the Hous- 10 ing Act of 1949, as amended, or located within any area covered by a 11 program eligible for assistance under section 103 of the Demonstration 12 Cities and Metropolitan Development Act of 1966, as amended, and loans 13 made for the improvement of any such real property; (x) loans secured by 14 an interest in educational, health, or welfare institutions or facili- 15 ties, including structures designed or used primarily for residential 16 purposes for students, residents, and persons under care, employees, or 17 members of the staff of such institutions or facilities; (xi) loans made 18 for the payment of expenses of college or university education or voca- 19 tional training; (xii) property used by the taxpayer in the conduct of 20 business which consists principally of acquiring the savings of the 21 public and investing in loans; (xiii) loans for which the taxpayer is 22 the creditor and which are wholly secured by loans described in clause 23 (iv) of this subparagraph, but excluding loans for which the taxpayer is 24 the creditor to any banking corporation described in paragraphs one 25 through seven of subsection (a) of section fourteen hundred fifty-two of 26 this article or a real estate investment trust, as such term is defined 27 in section 856 of the internal revenue code, and excluding loans which 28 are treated by the taxpayer as subsidiary capital for purposes of the 29 deductions provided by paragraph eleven of subsection (e) of this 30 section; (xiv) small business loans or small farm loans located in low- 31 income or moderate-income census tracts or block numbering areas deline- 32 ated by the United States bureau of the census in the most recent decen- 33 nial census; and (xv) community development loans or community 34 development investments. For purposes of clause (xv) of this subpara- 35 graph, a "community development loan" is a loan that (I) has as its 36 primary purpose community development, (II) has not been reported or 37 collected by the taxpayer for consideration in the taxpayer's community 38 reinvestment act evaluation pursuant to the federal community reinvest- 39 ment act of 1977, as amended, or section twenty-eight-b of the banking 40 law as a mortgage loan described in clause (iv) of this subparagraph or 41 a small business loan, small farm loan, or consumer loan, (III) benefits 42 the taxpayer's assessment area or areas for purposes of the federal 43 community reinvestment act of 1977, as amended or section twenty-eight-b 44 of the banking law or a broader statewide or regional area that includes 45 the taxpayer's assessment area, and (IV) is identified in the taxpayer's 46 books and records as a community development loan for purposes of its 47 community reinvestment act evaluation pursuant to the federal community 48 reinvestment act of 1977, as amended or section twenty-eight-b of the 49 banking law. For purposes of clause (xv) of this subparagraph, a "commu- 50 nity development investment" is an investment in a security which has as 51 its primary purpose community development and which is identified in the 52 taxpayer's books and records as a qualified investment for purposes of 53 its community reinvestment act evaluation pursuant to the federal commu- 54 nity reinvestment act of 1977, as amended or section twenty-eight-b of 55 the banking law. For purposes of the two preceding sentences, "community 56 development" means (I) affordable housing (including multifamily rental
S. 5431 26 1 housing for low-income or moderate-income individuals); (II) community 2 services targeted to low-income or moderate-income individuals; (III) 3 activities that promote economic development by financing businesses or 4 farms that meet the size eligibility standards of the small business 5 administration's development company or small business investment compa- 6 ny programs or have gross annual revenues of one million dollars or 7 less; (IV) activities that revitalize or stabilize low-income or moder- 8 ate-income census tracts or block numbering areas delineated by the 9 United States bureau of the census in the most recent decennial census; 10 or (V) activities that seek to prevent defaults and/or foreclosures in 11 loans included in items (I) and (III) of this sentence. 12 (C) At the election of the taxpayer, the percentage specified in 13 subparagraph (B) of this paragraph shall be applied on the basis of the 14 average assets outstanding during the taxable year, in lieu of the close 15 of the taxable year. For purposes of clause (iv) of subparagraph (B) of 16 this paragraph, if a multifamily structure securing a loan is used in 17 part for nonresidential use purposes, the entire loan is deemed a resi- 18 dential real property loan if the planned residential use exceeds eighty 19 percent of the property's planned use (determined as of the time the 20 loan is made). Also, for purposes of clause (iv) of subparagraph (B) of 21 this paragraph, loans made to finance the acquisition or development of 22 land shall be deemed to be loans secured by an interest in residential 23 real property if there is a reasonable assurance that the property will 24 become residential real property within a period of three years from the 25 date of acquisition of such land; but this sentence shall not apply for 26 any taxable year unless, within such three year period, such land 27 becomes residential real property. For purposes of determining whether 28 any interest in a REMIC qualifies under clause (vi) of subparagraph (B) 29 of this paragraph, any regular interest in another REMIC held by such 30 REMIC shall be treated as a loan described in a preceding clause under 31 principles similar to the principle of such clause (vi); except that if 32 such REMICS are part of a tiered structure, they shall be treated as one 33 REMIC for purposes of such clause (vi). 34 (2) For taxable years beginning before January first, two thousand 35 ten, a thrift institution must exclude from the computation of its 36 entire net income any amount allowed as a deduction for federal income 37 tax purposes pursuant to sections 166, 585 or 593 of the internal reven- 38 ue code. 39 (3) For taxable years beginning before January first, two thousand 40 ten, a thrift institution shall be allowed as a deduction in computing 41 entire net income the amount of a reasonable addition to its reserve for 42 bad debts. This amount shall be equal to the sum of 43 (A) the amount determined to be a reasonable addition to the reserve 44 for losses on nonqualifying loans, computed in the same manner as is 45 provided with respect to additions to the reserves for losses on loans 46 of banks under paragraph one of subsection (i) of this section, plus 47 (B) the amount determined by the taxpayer to be a reasonable addition 48 to the reserve for losses on qualifying real property loans, but such 49 amount shall not exceed the amount determined under paragraph four or 50 five of this subsection, whichever is the larger, but the amount deter- 51 mined under this subparagraph shall in no case be greater than the larg- 52 er of -- 53 (i) the amount determined under such paragraph five, or 54 (ii) the amount which, when added to the amount determined under 55 subparagraph (A) of this paragraph, equals the amount by which twelve 56 percent of the total deposits or withdrawable accounts of depositors of
S. 5431 27 1 the taxpayer at the close of such year exceeds the sum of its surplus, 2 undivided profits and reserves at the beginning of such year (taking 3 into account any portion thereof attributable to the period before the 4 first taxable year beginning after December thirty-first, nineteen 5 hundred fifty-one). 6 The taxpayer must include in its tax return for each year a computa- 7 tion of the amount of the addition to the bad debt reserve determined 8 under this subsection. The use of a particular method in the return for 9 a taxable year is not a binding election by the taxpayer. 10 (4) (A) Subject to subparagraphs (B) and (C) of this paragraph, the 11 amount determined under this paragraph for the taxable year shall be an 12 amount equal to thirty-two percent of the entire net income for such 13 year. 14 (B) The amount determined under subparagraph (A) of this paragraph 15 shall be reduced (but not below 0) by the amount determined under 16 subparagraph (A) of paragraph three of this subsection. 17 (C) The amount determined under this paragraph shall not exceed the 18 amount necessary to increase the balance at the close of the taxable 19 year of the reserve for losses on qualifying real property loans to six 20 percent of such loans outstanding at such time. 21 (D) For purposes of this paragraph, entire net income shall be 22 computed 23 (i) by excluding from income any amount included therein by reason of 24 subparagraph (B) of paragraph eight of this subsection, 25 (ii) without regard to any deduction allowable for any addition to the 26 reserve for bad debts, and 27 (iii) by excluding from income an amount equal to the net gain for the 28 taxable year arising from the sale or exchange of stock of a corporation 29 or of obligations the interest on which is excludable from gross income 30 under section 103 of the internal revenue code. 31 (iv) Whenever a thrift institution is properly includable in a 32 combined return, entire net income, for purposes of this paragraph, 33 shall not exceed the lesser of the thrift institution's separately 34 computed entire net income as adjusted pursuant to clauses (i) through 35 (iii) of this subparagraph or the combined group's entire net income as 36 adjusted pursuant to clauses (i) through (iii) of this subparagraph. 37 (5) The amount determined under this paragraph for the taxable year 38 shall be computed in the same manner as is provided under paragraph one 39 of subsection (i) of this section with respect to additions to reserves 40 for losses on loans of banks. Provided, however, that for any taxable 41 year beginning after nineteen hundred ninety-five, for purposes of such 42 computation, the base year shall be the later of (A) the last taxable 43 year beginning in nineteen hundred ninety-five or (B) the last taxable 44 year before the current year in which the amount determined under the 45 provisions of subparagraph (B) of paragraph three of this subsection 46 exceeded the amount allowable under this subparagraph. 47 (6) (A) (i) Each taxpayer described in paragraph one of this 48 subsection shall establish and maintain a New York reserve for losses on 49 qualifying real property loans, a New York reserve for losses on 50 nonqualifying loans and a supplemental reserve for losses on loans. Such 51 reserves shall be maintained for all subsequent taxable years that this 52 subsection applies to the taxpayer. (ii) For purposes of this 53 subsection, such reserves shall be treated as reserves for bad debts, 54 but no deduction shall be allowed for any addition to the supplemental 55 reserve for losses on loans. (iii) Except as noted below, the balances 56 of each such reserve at the beginning of the first day of the first
S. 5431 28 1 taxable year beginning after December thirty-first, nineteen hundred 2 ninety-five shall be the same as the balances maintained for federal 3 income tax purposes in accordance with section 593(c)(1) of the internal 4 revenue code as in existence on December thirty-first, nineteen hundred 5 ninety-five for the last day of the last tax year beginning before Janu- 6 ary first, nineteen hundred ninety-six. A taxpayer which maintained a 7 New York reserve for loan losses on qualifying real property loans in 8 the last tax year beginning before January first, nineteen hundred nine- 9 ty-six shall have a continuation of such New York reserve balance in 10 lieu of the amount determined under the preceding sentence. (iv) 11 Notwithstanding clause (ii) of this subparagraph, any amount allocated 12 to the reserve for losses on qualifying real property loans pursuant to 13 section 593 (c) (5) of the internal revenue code as in effect immediate- 14 ly prior to the enactment of the Tax Reform Act of 1976 shall not be 15 treated as a reserve for bad debts for any purpose other than determin- 16 ing the amount referred to in subparagraph (B) of paragraph three of 17 this subsection, and for such purpose such amount shall be treated as 18 remaining in such reserve. 19 (B) Any debt becoming worthless or partially worthless in respect of a 20 qualifying real property loan shall be charged to the reserve for losses 21 on such loans and any debt becoming worthless or partially worthless in 22 respect of a nonqualifying loan shall be charged to the reserve for 23 losses on nonqualifying loans, except that any such debt may, at the 24 election of the taxpayer, be charged in whole or in part to the supple- 25 mental reserve for losses on loans. 26 (C) The New York reserve for losses on qualifying real property loans 27 shall be increased by the amount determined under subparagraph (B) of 28 paragraph three of this subsection and the New York reserve for losses 29 on nonqualifying loans shall be increased by the amount determined under 30 subparagraph (A) of paragraph three of this subsection. 31 (7) (A) For purposes of this subsection, the term "qualifying real 32 property loan" shall mean any loan secured by an interest in improved 33 real property or secured by an interest in real property which is to be 34 improved out of the proceeds of the loan. Such term shall include any 35 mortgage-backed security which represents ownership of a fractional 36 undivided interest in a trust, the assets of which consist primarily of 37 mortgage loans, provided that the real property which serves as security 38 for the loans is (or from the proceeds of the loan, will become) the 39 type of property described in clauses (i) through (v) of subparagraph 40 (B) of paragraph one of this subdivision. However, such term shall not 41 include: (i) any loan evidenced by a security (as defined in section 42 165(g) (2) (C) of the internal revenue code); (ii) any loan, whether or 43 not evidenced by a security (as defined in such section 165(g) (2) (C)), 44 the primary obligor of which is (I) a government or political subdivi- 45 sion or instrumentality thereof, (II) a banking corporation, or (III) 46 any corporation sixty-five percent or more of whose voting stock is 47 owned or controlled, directly or indirectly, by the taxpayer or by a 48 banking corporation or bank holding company that owns or controls, 49 directly or indirectly, sixty-five percent or more of the voting stock 50 of the taxpayer; (iii) any loan, to the extent secured by a deposit in 51 or share of the taxpayer; or (iv) any loan which, within a sixty-day 52 period beginning in one taxable year of the creditor and ending in its 53 next taxable year, is made or acquired and then repaid or disposed of, 54 unless the transactions by which such loan was made or acquired and then 55 repaid or disposed of are established to be for bona fide business 56 purposes.
S. 5431 29 1 (B) For purposes of this subsection, the term "nonqualifying loan" 2 shall mean any loan which is not a qualifying real property loan. 3 (C) For purposes of this subsection, the term "loan" shall mean debt, 4 as the term "debt" is used in section 166 of the internal revenue code. 5 (D) A regular or residual interest in a REMIC, as such term is defined 6 in section 860D of the internal revenue code, shall be treated as a 7 qualifying real property loan, except that, if less than ninety-five 8 percent of the assets of such REMIC are qualifying real property loans 9 (determined as if the taxpayer held the assets of the REMIC), such 10 interest shall be so treated only in the proportion which the assets of 11 such REMIC consist of such loans. For purposes of determining whether 12 any interest in a REMIC qualifies under the preceding sentence, any 13 interest in another REMIC held by such REMIC shall be treated as a qual- 14 ifying real property loan under principles similar to the principles of 15 the preceding sentence, except that if such REMICS are part of a tiered 16 structure, they shall be treated as one REMIC for purposes of this para- 17 graph. 18 (8)(A) Any distribution of property (as defined in section 317(a) of 19 the internal revenue code) by a thrift institution to a shareholder with 20 respect to its stock, if such distribution is not allowable as a 21 deduction under section 591 of such code, shall be treated as made 22 (i) first out of its New York earnings and profits accumulated in 23 taxable years beginning after December thirty-first, nineteen hundred 24 fifty-one, to the extent thereof, 25 (ii) then out of the New York reserve for losses on qualifying real 26 property loans, to the extent additions to such reserve exceed the addi- 27 tions which would have been allowed under paragraph five of this 28 subsection, 29 (iii) then out of the supplemental reserve for losses on loans, to the 30 extent thereof, 31 (iv) then out of such other accounts as may be proper. 32 This subparagraph shall apply in the case of any distribution in redemp- 33 tion of stock or in partial or complete liquidation of a thrift institu- 34 tion, except that any such distribution shall be treated as made first 35 out of the amount referred to in clause (ii) of this subparagraph, 36 second out of the amount referred to in clause (iii) of this subpara- 37 graph, third out of the amount referred to in clause (i) of this subpar- 38 agraph and then out of such other accounts as may be proper. This 39 subparagraph shall not apply to any transaction to which section 381 of 40 such code (relating to carryovers and certain corporate acquisitions) 41 applies, or to any distribution to the federal savings and loan insur- 42 ance corporation or the federal deposit insurance corporation in redemp- 43 tion of an interest in an association or institution, if such interest 44 was originally received by the federal savings and loan insurance corpo- 45 ration or the federal deposit insurance corporation in exchange for 46 financial assistance pursuant to section 406(f) of the federal national 47 housing act or pursuant to subsection (c) of section thirteen of the 48 federal deposit insurance act. 49 (B) If any distribution is treated under subparagraph (A) of this 50 paragraph as having been made out of the reserves described in clauses 51 (ii) and (iii) of such subparagraph, the amount charged against such 52 reserve shall be the amount which, when reduced by the amount of tax 53 imposed under the internal revenue code and attributable to the inclu- 54 sion of such amount in gross income, is equal to the amount of such 55 distribution; and the amount so charged against such reserve shall be 56 included in the entire net income of the taxpayer.
S. 5431 30 1 (C) (i) For purposes of clause (ii) of subparagraph (A) of this para- 2 graph, additions to the New York reserve for losses on qualifying real 3 property loans for the taxable year in which the distribution occurs 4 shall be taken into account. 5 (ii) For purposes of computing under this subsection the amount of a 6 reasonable addition to the New York reserve for losses on qualifying 7 real property loans for any taxable year, the amount charged during any 8 year to such reserve pursuant to the provisions of subparagraph (B) of 9 this paragraph shall not be taken into account. 10 (9) A taxpayer which maintains a New York reserve for losses on quali- 11 fying real property loans and which ceases to meet the definition of a 12 thrift institution as defined in paragraph one of this subsection, must 13 include in its entire net income for the last taxable year such para- 14 graph applied the excess of its New York reserve for losses on qualify- 15 ing real property loans over the greater of (A) its reserve for losses 16 on qualifying real property loans as of the last day of the last taxable 17 year such reserve is maintained for federal income tax purposes or (B) 18 the balance of the New York reserve for losses on qualifying real prop- 19 erty loans which would be allowable to the taxpayer for the last taxable 20 year such taxpayer met such definition of a thrift institution if the 21 taxpayer had computed its reserve balance pursuant to the method 22 described in subparagraph (A) of paragraph one of subsection (i) of this 23 section. 24 (i) (1) For taxable years beginning before January first, two thousand 25 ten, a taxpayer subject to the provisions of section 585(c) of the 26 internal revenue code and not subject to subsection (h) of this section 27 may, in computing entire net income, deduct an amount equal to or less 28 than the amount determined pursuant to subparagraph (A) of this para- 29 graph or subparagraph (B) of this paragraph, whichever is greater. 30 Provided, however, in no event shall the deduction be less than the 31 amount determined pursuant to such subparagraph (A). 32 (A) The amount determined pursuant to this subparagraph shall be the 33 amount necessary to increase the balance of its New York reserve for 34 losses on loans (at the close of the taxable year) to the amount which 35 bears the same ratio to loans outstanding at the close of the taxable 36 year as (i) the total bad debts sustained during the taxable year and 37 the five preceding taxable years (or, with the approval of the commis- 38 sioner of taxation and finance, a shorter period), adjusted for recov- 39 eries of bad debts during such period, bears to (ii) the sum of the 40 loans outstanding at the close of such six or fewer taxable years. 41 (B) (i) The amount determined pursuant to this subparagraph shall be 42 the amount necessary to increase the balance of its New York reserve for 43 losses on loans (at the close of the taxable year) to the lower of -- 44 (I) the balance of the reserve at the close of the base year, or 45 (II) if the amount of loans outstanding at the close of the taxable 46 year is less than the amount of loans outstanding at the close of the 47 base year, the amount which bears the same ratio to loans outstanding at 48 the close of the taxable year as the balance of the reserve at the close 49 of the base year bears to the amount of loans outstanding at the close 50 of the base year. 51 (ii) For purposes of this paragraph, the base year shall be (I) for 52 taxable years beginning in nineteen hundred eighty-seven, the last taxa- 53 ble year before the most recent adoption of the experience method for 54 federal income tax purposes or for purposes of this article, whichever 55 is earlier, and (II) for taxable years beginning after nineteen hundred
S. 5431 31 1 eighty-seven, the last taxable year beginning before nineteen hundred 2 eighty-eight. 3 (2) (A) For taxable years beginning before January first, two thousand 4 ten, each taxpayer described in paragraph one of this subsection shall 5 establish and maintain a New York reserve for losses on loans. Such 6 reserve shall be maintained for all subsequent taxable years. The 7 balance of the New York reserve for losses on loans at the beginning of 8 the first day of the first taxable year the taxpayer becomes subject to 9 this subsection shall be the same as the balance at the beginning of 10 such day of the reserve for losses on loans maintained for federal 11 income tax purposes. The New York reserve for losses on loans shall be 12 reduced by an amount equal to the deduction allowed, but not more than 13 the amount allowable, for worthless debts for federal income tax 14 purposes pursuant to section 166 of the internal revenue code plus the 15 amount, if any, charged against its reserve for losses on loans pursuant 16 to section 585(c)(4) of such code. 17 (B) For purposes of subparagraph (A) of this paragraph, a taxpayer 18 which had previously been subject to the provisions of subsection (h) of 19 this section shall establish a New York reserve for losses on loans 20 equal to the sum of (i) the greater of (I) the balance of its federal 21 reserve for losses on qualifying real property loans as of the first day 22 of the first taxable year the taxpayer becomes subject to the provisions 23 of this subsection or (II) the greater of the amounts determined under 24 subparagraphs (A) and (B) of paragraph nine of subsection (h) of this 25 section in the year such paragraph applied to the taxpayer, (ii) the 26 greater of (I) the balance in its federal reserve for losses on nonqual- 27 ifying loans as of the first day of the first taxable year the taxpayer 28 becomes subject to this subsection or (II) the balance in its New York 29 reserve for losses on nonqualifying loans as of the last date the 30 taxpayer was subject to the provisions of subsection (h) of this section 31 and (iii) the balance in its supplemental reserve for losses on loans as 32 of the last date the taxpayer was subject to the provisions of 33 subsection (h) of this section. 34 (3) The determination and treatment of the New York reserve balance, 35 including any additions thereto, subtractions therefrom, or recapture 36 thereof, for 37 (A) any banking corporation which was subject to tax for federal 38 income tax purposes but not subject to tax under this article for prior 39 taxable years, 40 (B) any taxpayer which ceases to be subject to tax under this article, 41 or 42 (C) any other unusual circumstances shall be determined by the commis- 43 sioner of taxation and finance. Provided, however, any banking corpo- 44 ration which was subject to tax for federal income tax purposes but not 45 subject to tax under this article for prior taxable years shall have as 46 its opening New York reserve for losses on loans the amount determined 47 by applying the provisions of subparagraph (A) of paragraph one of this 48 subsection to loans outstanding at the close of its last taxable year 49 for federal income tax purposes ending prior to the first taxable year 50 for which the taxpayer is subject to tax under this article and 51 provided, further, that the provisions of subparagraph (B) of paragraph 52 one of this subsection shall not apply. 53 (j) (1) In the case of property placed in service prior to January 54 first, nineteen hundred seventy-three, for which the taxpayer properly 55 adopted a different method of computing depreciation under section two 56 hundred nineteen-z or section two hundred nineteen-xx of this chapter
S. 5431 32 1 (as such sections were in effect on or before December thirty-first, 2 nineteen hundred seventy-two) than was adopted for federal income tax 3 purposes with respect to such property, entire net income under this 4 article shall be computed without regard to the amount allowable as a 5 deduction for depreciation of such property in computing federal taxable 6 income for the taxable year but, in lieu thereof, shall be computed as 7 if such deduction were determined by the method of depreciation adopted 8 with respect to such property under sections two hundred nineteen-z or 9 two hundred nineteen-xx of this chapter (as such sections were in effect 10 on or before December thirty-first, nineteen hundred seventy-two). 11 (2) In computing entire net income, the amount allowable as a 12 deduction for charitable contributions for federal income tax purposes 13 shall be decreased by any amount allowed as a deduction for federal 14 income tax purposes for the taxable year under section one hundred 15 seventy of the internal revenue code as a carryover of excess contrib- 16 utions which are not made in such taxable year and which were deductible 17 in computing the tax due under article nine-B or nine-C of this chapter 18 (as such articles were in effect on or before December thirty-first, 19 nineteen hundred seventy-two). 20 (3) There shall be excluded from the computation of entire net income 21 any amount allowed as a deduction for federal income tax purposes for 22 the taxable year under section twelve hundred twelve of the internal 23 revenue code as a capital loss carryforward to the taxable year, which 24 was deductible as a loss in computing the tax due under article nine-B 25 or nine-C of this chapter (as such articles were in effect on December 26 thirty-first, nineteen hundred seventy-two). 27 (4) There shall be excluded from the computation of entire net income 28 the amount of any income or gain from the sale of real or personal prop- 29 erty which is includible in determining federal taxable income for the 30 taxable year pursuant to the installment method under section four 31 hundred fifty-three of the internal revenue code, to the extent that 32 such income or gain was includible in the computation of the tax due 33 under article nine-B or nine-C of this chapter (as such articles were in 34 effect on December thirty-first, nineteen hundred seventy-two). 35 (5) To the extent not otherwise provided in this article, there shall 36 be excluded from entire net income the amount necessary to prevent the 37 taxation under this article of any other amount of income or gain which 38 was properly included in income or gain and was taxable under article 39 nine-B or nine-C of this chapter (as such articles were in effect on or 40 before December thirty-first, nineteen hundred seventy-two) and there 41 shall be disallowed as a deduction in computing entire net income any 42 amount which was allowable as a deduction in computing the tax due under 43 such articles (as they were in effect on or before December thirty- 44 first, nineteen hundred seventy-two). 45 (k) (1) At the election of the taxpayer, there shall be deducted from 46 the portion of its entire net income allocated within the state, depre- 47 ciation with respect to any property such as described in paragraph two 48 of this subsection, not exceeding twice the depreciation allowed with 49 respect to the same property for federal income tax purposes. Such 50 deduction shall be allowed only upon condition that entire net income be 51 computed without any deduction for depreciation or amortization of the 52 same property, and the total of all deductions allowed under article 53 nine-B or nine-C of this chapter (as such articles were in effect on or 54 before December thirty-first, nineteen hundred seventy-two) and this 55 article in any taxable year or years with respect to the depreciation of 56 any such property shall not exceed its cost or other basis.
S. 5431 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
S. 5431 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,
S. 5431 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 their discretion to determine such entire net income or 12 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) (1) New York S corporation. In the case of a New York S corpo- 28 ration which is the parent of a qualified subchapter S subsidiary (QSSS) 29 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.
S. 5431 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-four 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) In the case of any sale of a qualified emerging technologies 37 investment held for more than thirty-six months and with respect to 38 which the taxpayer elects the application of this subsection, gain from 39 such sale shall be recognized only to the extent that the amount real- 40 ized on such sale exceeds the cost of any qualified emerging technolo- 41 gies investment purchased by the taxpayer during the three hundred 42 sixty-five-day period beginning on the date of such sale, reduced by any 43 portion of such cost previously taken into account under this 44 subsection. For purposes of this subsection the following shall apply: 45 (1) A qualified investment is stock of a corporation or an interest, 46 other than as a creditor, in a partnership or limited liability company 47 that was acquired by the taxpayer as provided in Internal Revenue Code § 48 1202(c)(1)(B), except that the reference to the term "stock" in such 49 section shall be read as "investment," or by the taxpayer from a person 50 who had acquired such stock or interest in such a manner. 51 (2) A qualified emerging technology investment is a qualified invest- 52 ment, that was held by the taxpayer for at least thirty-six months, in a 53 company defined in paragraph (c) of subdivision one of section thirty- 54 one hundred two-e of the public authorities law or an investment in a 55 partnership or limited liability company that is taxed as a partnership
S. 5431 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) The amount deferred under subsection (p) of this section shall be 10 added to entire net income when the reinvestment in the New York quali- 11 fied emerging technology company which qualified a taxpayer for such 12 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) (1) Definitions. (A) Related member. "Related member" means a 27 related person as defined in subparagraph (c) of paragraph three of 28 subsection (b) of section four hundred sixty-five of the internal reven- 29 ue code, except that "fifty percent" shall be substituted for "ten 30 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
S. 5431 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.
S. 5431 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 4 their discretion, agree to the application or use of alternative adjust- 5 ments or computations when they conclude that in the absence of such 6 agreement the income of the taxpayer would not be properly reflected. 7 (t) For taxable years beginning after December thirty-first, two thou- 8 sand two, upon the disposition of property to which subsection (r) of 9 this section applies, the amount of any gain or loss includible in 10 entire net income shall be adjusted to reflect the inclusions and exclu- 11 sions from entire net income pursuant to paragraph thirteen of 12 subsection (b) of this section attributable to such property. 13 (u) For purposes of subsections (r) and (t) of this section, qualified 14 resurgence zone property shall mean qualified property described in 15 paragraph two of subsection k of section 168 of the internal revenue 16 code substantially all of the use of which is in the resurgence zone, as 17 defined below, and is in the active conduct of a trade or business by 18 the taxpayer in such zone, and the original use of which in the resur- 19 gence zone commences with the taxpayer after December thirty-first, two 20 thousand two. The resurgence zone shall mean the area of New York county 21 bounded on the south by a line running from the intersection of the 22 Hudson River with the Holland Tunnel, and running thence east to Canal 23 Street, then running along the centerline of Canal Street to the inter- 24 section of the Bowery and Canal Street, running thence in a southeaster- 25 ly direction diagonally across Manhattan Bridge Plaza, to the Manhattan 26 Bridge and thence along the centerline of the Manhattan Bridge to the 27 point where the centerline of the Manhattan Bridge would intersect with 28 the easterly bank of the East River, and bounded on the north by a line 29 running from the intersection of the Hudson River with the Holland 30 Tunnel and running thence north along West Avenue to the intersection of 31 Clarkson Street then running east along the centerline of Clarkson 32 Street to the intersection of Washington Avenue, then running south 33 along the centerline of Washington Avenue to the intersection of West 34 Houston Street, then east along the centerline of West Houston Street, 35 then at the intersection of the Avenue of the Americas continuing east 36 along the centerline of East Houston Street to the easterly bank of the 37 East River. 38 (v) Disallowed investment proceeds from a REIT or RIC. (1)(A) As used 39 in this subsection, the term "REIT" means a real estate investment trust 40 as defined in section eight hundred fifty-six of the internal revenue 41 code. 42 (B) As used in this subsection, the term "RIC" means a regulated 43 investment company as defined in section eight hundred fifty-one of the 44 internal revenue code. 45 (C) As used in this subsection, the term "REIT holding company" means 46 a corporation that (i) owns, directly or indirectly, over fifty percent 47 of the capital stock of a REIT, or (ii) in connection with one or more 48 other corporations in its affiliated group (as such term is defined in 49 section fifteen hundred four of the internal revenue code without regard 50 to the exclusions provided for in subsection (b) of such section fifteen 51 hundred four), owns over fifty percent of the capital stock of a REIT. 52 (D) As used in this subsection, the term "RIC holding company" means a 53 corporation that (i) owns, directly or indirectly, over fifty percent of 54 the capital stock of a RIC, or (ii) in connection with one or more other 55 corporations in its affiliated group (as such term is defined in section 56 fifteen hundred four of the internal revenue code without regard to the
S. 5431 40 1 exclusions provided for in subsection (b) of such section fifteen 2 hundred four), owns over fifty percent of the capital stock of a RIC. 3 (2) For purposes of computing entire net income or other applicable 4 taxable base, there shall be no deduction for disallowed investment 5 proceeds as defined in paragraphs three and four of this subsection. 6 (3) For purposes of the deduction of gains in excess of losses under 7 subparagraph (iii) of paragraph eleven of subsection (e) of this 8 section, disallowed investment proceeds means (A) gain or loss from the 9 disposition of an ownership interest in a REIT, (B) gain or loss from 10 the disposition of an ownership interest in a RIC, and (C) gain or loss 11 from the disposition of an ownership interest in a REIT holding company 12 or a RIC holding company to the extent the gain or loss is attributable 13 to such holding company's ownership interest in a REIT or a RIC. 14 (4) For purposes of the deduction of dividend income from subsidiary 15 capital under subparagraph (ii) of paragraph eleven of subsection (e) of 16 this section, disallowed investment proceeds means (A) dividends from a 17 REIT, and (B) dividends from a RIC, (C) dividends from a REIT holding 18 company or a RIC holding company to the extent the dividends are attrib- 19 utable to such holding company's ownership interest in a REIT or a RIC. 20 (5) Notwithstanding paragraphs three and four of this subsection, 21 (A) disallowed investment proceeds shall not include any dividends 22 from, or attributable to, a REIT or a RIC required to be included in a 23 combined report pursuant to subdivisions five or seven of section two 24 hundred nine of this chapter to the extent such dividends were included 25 in the computation of combined entire net income; and 26 (B) a banking corporation, or a group of banking corporations properly 27 included in a combined return, with taxable assets (or combined taxable 28 assets in the case of a combined return) for the taxable year of eight 29 billion dollars or less shall not have any disallowed investment 30 proceeds. 31 § 1453-A. Computation of alternative entire net income. (a) Alterna- 32 tive entire net income means entire net income as determined pursuant to 33 section fourteen hundred fifty-three of this article, except that the 34 deductions described in paragraphs eleven and twelve of subsection (e) 35 of section fourteen hundred fifty-three of this article shall not be 36 allowed. 37 (b) Any election made pursuant to paragraph two of subsection (b) of 38 section fourteen hundred fifty-four of this article with respect to the 39 modification provided for in subsection (f) of section fourteen hundred 40 fifty-three of this article shall be deemed to have been made for 41 purposes of computing alternative entire net income. 42 § 1454. Allocation. (a) In general. If a taxpayer's entire net income, 43 alternative entire net income, or taxable assets are derived from busi- 44 ness carried on within and without the state, the taxpayer shall, for 45 purposes of computing allocation percentages, compute payroll, receipts, 46 and deposits percentages in accordance with the following rules: 47 (1) The taxpayer shall ascertain the percentage which eighty percent 48 of the total wages, salaries and other personal service compensation 49 during the taxable year of employees within the state, except wages, 50 salaries and other personal service compensation of general executive 51 officers, bears to the total wages, salaries and other personal service 52 compensation during the taxable year of all the taxpayer's employees 53 within and without the state, except wages, salaries and other personal 54 service compensation of general executive officers. 55 (2) (A) The taxpayer shall ascertain the percentage which the receipts 56 of the taxpayer arising during the taxable year from:
S. 5431 41 1 (i) loans (including a taxpayer's portion of a participation in a 2 loan) and financing leases within the state, and all other business 3 receipts earned within the state, bear to 4 (ii) the total amount of the taxpayer's receipts from loans (including 5 a taxpayer's portion of a participation in a loan) and financing leases 6 and all other business receipts within and without the state. 7 (B) All interest from loans and financing leases is located where the 8 greater portion of income producing activity related to the loan or 9 financing lease occurred; provided, however: 10 (i) In the case of a taxpayer described in paragraph one, two, three, 11 four, five or seven of subsection (a) of section fourteen hundred 12 fifty-two of this article, a loan or financing lease attributed by such 13 taxpayer to a branch without the state shall be presumed to be properly 14 so attributed provided that such presumption may be rebutted if the tax 15 commission demonstrates that the greater portion of income producing 16 activity related to the loan or financing lease did not occur at such 17 branch. Where such presumption has been rebutted, the loan or financing 18 lease shall be presumed to be within this state if the taxpayer had a 19 branch within this state at the time the loan or financing lease was 20 made. The taxpayer may rebut such presumption by demonstrating that the 21 greater portion of income producing activity related to the loan or 22 financing lease did not occur within the state. In the case of a loan or 23 financing lease which is recorded on the books of a place without the 24 state which is not a branch, it shall be presumed that the greater 25 portion of income producing activity related to such loan or financing 26 lease occurred within this state if the taxpayer had a branch within 27 this state at the time the loan or financing lease was made. The taxpay- 28 er may rebut such presumption by demonstrating that the greater portion 29 of income producing activity related to the loan or financing lease did 30 not occur within this state. 31 (ii) In the case of a taxpayer described in paragraph six or nine of 32 subsection (a) of section fourteen hundred fifty-two of this article, a 33 loan or financing lease attributed by such taxpayer to a bona fide 34 office without the state shall be presumed to be properly so attributed 35 provided that such presumption may be rebutted if the tax commission 36 demonstrates that the greater portion of income producing activity 37 related to the loan or financing lease did not occur without this state. 38 (C) Receipts from lease transactions other than financing leases 39 referred to in subparagraph (B) are located where the property subject 40 to the lease is located. 41 (D) (i) Interest, and fees and penalties in the nature of interest, 42 from bank, credit, travel and entertainment card receivables are earned 43 within the state if the mailing address of the card holder in the 44 records of the taxpayer is in the state; 45 (ii) Service charges and fees from such cards are earned within the 46 state if the mailing address of the card holder in the records of the 47 taxpayer is in the state; and 48 (iii) Receipts from merchant discounts are earned within the state if 49 the merchant is located within the state. 50 (E) The portion of total net gains and other income from trading 51 activities (including but not limited to foreign exchange, options and 52 financial futures), and from investment activities which is attributed 53 within the state shall be ascertained by multiplying such total net 54 gains and other income by a fraction the numerator of which is the aver- 55 age value of trading assets and investment assets attributable to this 56 state and the denominator of which is the average value of all trading
S. 5431 42 1 and investment assets. A trading asset or investment asset is attribut- 2 able to this state if the greater portion of income producing activity 3 related to the trading asset or investment asset occurred within the 4 state. 5 (F) Fees or charges from the issuance of letters of credit, travelers 6 checks and money orders are earned within the state if such letters of 7 credit, travelers checks or money orders are issued within the state. 8 (G) Rules for receipts from certain services to investment companies. 9 (i) For taxable years beginning on or after January first, two thousand 10 one, the portion of receipts received from an investment company arising 11 from the sale of management, administration or distribution services to 12 such investment company determined in accordance with clause (ii) of 13 this subparagraph shall be deemed to arise from services performed with- 14 in the state (such portion referred to herein as the New York portion). 15 (ii) The New York portion shall be the product of (I) the total of 16 such receipts from the sale of such services and (II) a fraction. The 17 numerator of that fraction is the sum of the monthly percentages (as 18 defined hereinafter) determined for each month of the investment compa- 19 ny's taxable year for federal income tax purposes which taxable year 20 ends within the taxable year of the taxpayer (but excluding any month 21 during which the investment company had no outstanding shares). The 22 monthly percentage for each such month is determined by dividing (I) the 23 number of shares in the investment company which are owned on the last 24 day of the month by shareholders which are domiciled in the state by 25 (II) the total number of shares in the investment company outstanding on 26 that date. The denominator of the fraction is the number of such monthly 27 percentages. 28 (iii)(I) For purposes of this subparagraph the term "domicile", in the 29 case of an individual shall have the meaning ascribed to it under arti- 30 cle twenty-two of this chapter; an estate or trust is domiciled in the 31 state if it is a resident estate or trust as defined in paragraph three 32 of subsection (b) of section six hundred five of this chapter; a busi- 33 ness entity is domiciled in the state if the location of the actual seat 34 of management or control is in the state. It shall be presumed that the 35 domicile of a shareholder, with respect to any month, is their or its 36 mailing address on the records of the investment company as of the last 37 day of such month. 38 (II) For purposes of this subparagraph, the term "investment company" 39 shall mean a regulated investment company, as defined in section 851 of 40 the internal revenue code, and a partnership to which section 7704(a) of 41 the internal revenue code applies (by virtue of section 7704(c)(3) of 42 such code) and which meets the requirements of section 851(b) of such 43 code. The preceding sentence shall be applied to the taxable year for 44 federal income tax purposes of the business entity which is asserted to 45 constitute an investment company which ends within the taxable year of 46 the taxpayer. 47 (III) For purposes of this subparagraph, the term "receipts from an 48 investment company" includes amounts received directly from an invest- 49 ment company as well as amounts received from the shareholders in such 50 investment company, in their capacity as such. 51 (IV) For purposes of this subparagraph, the term "management services" 52 means the rendering of investment advice to an investment company, 53 making determinations as to when sales and purchases of securities are 54 to be made on behalf of an investment company, or the selling or 55 purchasing of securities constituting assets of an investment company, 56 and related activities, but only where such activity or activities are
S. 5431 43 1 performed pursuant to a contract with the investment company entered 2 into pursuant to section 15(a) of the federal investment company act of 3 nineteen hundred forty, as amended. 4 (V) For purposes of this subparagraph, the term "distribution 5 services" means the services of advertising, servicing investor accounts 6 (including redemptions), marketing shares or selling shares of an 7 investment company, but, in the case of advertising, servicing investor 8 accounts (including redemptions) or marketing shares, only where such 9 service is performed by a person who is (or was, in the case of a closed 10 end company) also engaged in the service of selling such shares. In the 11 case of an open end company, such service of selling shares must be 12 performed pursuant to a contract entered into pursuant to section 15(b) 13 of the federal investment company act of nineteen hundred forty, as 14 amended. 15 (VI) For purposes of this subparagraph, the term "administration 16 services" includes clerical, accounting, bookkeeping, data processing, 17 internal auditing, legal and tax services performed for an investment 18 company but only if the provider of such service or services during the 19 taxable year in which such service or services are sold also sells 20 management or distribution services, as defined in item (V) of this 21 clause, to such investment company. 22 (H) All receipts from the performance of services not described in 23 this clause are earned within the state if the services are performed in 24 the state. When a service is performed both within and without the 25 state, the receipts shall be allocated within and without the state in 26 accordance with rules and regulations of the tax commission. 27 (I) All other receipts not described in subparagraphs (B) through (H) 28 of this paragraph shall be attributable within and without the state in 29 accordance with rules and regulations issued by the commissioner. 30 (3) The taxpayer shall ascertain the percentage which the average 31 value of deposits maintained at branches within the state during the 32 taxable year, bears to the average value of all the taxpayer's deposits 33 maintained at branches within and without the state during the taxable 34 year. 35 (4) Each percentage computed pursuant to this subsection shall be 36 computed on a cash or accrual basis according to the method of account- 37 ing used for the taxable year. The receipts percentage shall include 38 only receipts which are included in alternative entire net income for 39 the taxable year. The deposits and payroll percentages shall include 40 only deposits and payroll the expenses of which are included in the 41 computation of alternative entire net income for the taxable year. 42 (5) For purposes of this section: 43 (A) The term "bona fide office" means an office at which the taxpayer 44 carries on its business in a regular and systematic manner and which is 45 continuously maintained, occupied and used by employees of the taxpayer. 46 (B) The term "branch" means a bona fide office which is used by the 47 taxpayer on a regular and systematic basis to (i) approve loans (regard- 48 less of whether the approval of certain classes of loans requires review 49 or final approval by another office of the taxpayer), (ii) accept loan 50 repayments, (iii) disburse funds, and (iv) conduct one or more other 51 functions of a banking business. 52 (6) If it shall appear to the tax commission that the allocation 53 percentage determined in subsection (b), (c), or (d) of this section 54 does not properly reflect the activity, business, income or assets of a 55 taxpayer within the state, the tax commission shall be authorized in its 56 discretion to adjust it by (1) excluding one or more of the factors
S. 5431 44 1 therein, (2) including one or more other factors, or (3) any other simi- 2 lar or different method calculated to effect a fair and proper allo- 3 cation of the income or assets reasonably attributable to the state. 4 (7) The tax commission from time to time shall publish all rulings of 5 general public interest with respect to any application of the 6 provisions of paragraph six of this subsection. 7 (b) Allocation of entire net income. 8 (1) If a taxpayer's entire net income is derived from business carried 9 on both within and without the state, the portion thereof which is 10 derived from business carried on within the state shall be determined by 11 multiplying its entire net income by the income allocation percentage 12 determined as follows: add the percentages ascertained under paragraphs 13 one, two and three of subsection (a) of this section, plus, in the case 14 of a taxpayer other than a New York S corporation, an additional 15 percentage equal to the receipts percentage ascertained under paragraph 16 two of such subsection and an additional percentage equal to the depos- 17 its percentage ascertained under paragraph three of such subsection, and 18 divide the result by the number of percentages so added together. 19 (1-a) Notwithstanding the provisions of paragraph one of this 20 subsection, each banking corporation described in paragraph nine of 21 subsection (a) of section fourteen hundred fifty-two of this article 22 subject to the tax imposed by this article that substantially provides 23 management, administrative or distribution services to an investment 24 company, as such terms are defined in subparagraph (G) of paragraph two 25 of subsection (a) of this section, shall determine the portion of its 26 entire net income derived from business carried on within the state by 27 multiplying such income by an income allocation percentage obtained as 28 follows: 29 (A) For taxable years beginning on or after January first, two thou- 30 sand six and before the first day of January, two thousand seven, by 31 adding the following percentages: 32 (i) the product of seventeen percent and the percentage determined 33 under paragraph one of subsection (a) of this section, 34 (ii) the product of fifty percent and the percentage determined under 35 paragraph two of subsection (a) of this section, and 36 (iii) the product of thirty-three percent and the percentage deter- 37 mined under paragraph three of subsection (a) of this section. 38 (B) For taxable years beginning on or after January first, two thou- 39 sand seven and before the first day of January, two thousand eight, by 40 adding the following percentages: 41 (i) the product of ten percent and the percentage determined under 42 paragraph one of subsection (a) of this section, 43 (ii) the product of seventy percent and the percentage determined 44 under paragraph two of subsection (a) of this section, and 45 (iii) the product of twenty percent and the percentage determined 46 under paragraph three of subsection (a) of this section. 47 (C) For taxable years beginning on or after January first, two thou- 48 sand eight, by the percentage ascertained under paragraph two of 49 subsection (a) of this section. 50 (2) (A) In lieu of the modification provided for in subsection (f) of 51 section fourteen hundred fifty-three of this article, (relating to a 52 modification for the adjusted eligible net income of an international 53 banking facility), a taxpayer may, in the manner prescribed by the tax 54 commission, elect to modify on an annual basis its income allocation 55 percentage in the manner described in clauses (i), (ii) and (iii) of 56 this subparagraph:
S. 5431 45 1 (i) wages, salaries and other personal service compensation properly 2 attributable to the production of eligible gross income of the tax- 3 payer's international banking facility shall not be included in the 4 computation of wages, salaries and other personal service compensation 5 of employees within the state, 6 (ii) receipts properly attributable to the production of eligible 7 gross income of the taxpayer's international banking facility shall not 8 be included in the computation of receipts within the state, and 9 (iii) deposits from foreign persons which are properly attributable to 10 the production of eligible gross income of the taxpayer's international 11 banking facility shall not be included in the computation of deposits 12 maintained at branches within the state. 13 (B) For purposes of this paragraph, the term "eligible gross income" 14 refers to such term as set out in subsection (f) of section fourteen 15 hundred fifty-three of this article except that the term "foreign 16 person" as defined in paragraph eight of such subsection (f) shall not 17 include a foreign branch of the taxpayer and in no event shall trans- 18 actions between the taxpayer's international banking facility and its 19 foreign branches be considered. 20 (c) Allocation of alternative entire net income. If a taxpayer's 21 alternative entire net income is derived from business carried on both 22 within and without the state, the portion thereof which is derived from 23 business carried on within the state shall be determined by multiplying 24 its alternative entire net income by the alternative entire net income 25 allocation percentage determined as follows: 26 (1) Recompute the payroll percentage under paragraph one of subsection 27 (a) of this section without giving consideration to the phrase "eighty 28 percent of," add to the resulting percentage the percentages ascertained 29 under paragraphs two and three of such subsection, and divide the result 30 by the number of percentages so added together. 31 (2) When an election has been made pursuant to paragraph two of 32 subsection (b) of this section (relating to international banking facil- 33 ities) the taxpayer shall make the modifications described in such para- 34 graph for purposes of its alternative entire net income allocation 35 percentage. 36 (3) For taxable years beginning on or after January first, two thou- 37 sand six, each banking corporation described in paragraph nine of 38 subsection (a) of section fourteen hundred fifty-two of this article 39 subject to the tax imposed by this article that substantially provides 40 management, administrative or distribution services to an investment 41 company, as such terms are defined in subparagraph (G) of paragraph two 42 of subsection (a) of this section, shall determine the portion of its 43 alternative entire net income derived from business carried on within 44 the state by multiplying such income by the percentage ascertained for 45 the taxable year under paragraph one-a of subsection (b) of this 46 section, except that in computing such percentage (A) for taxable years 47 beginning before January first, two thousand eight, no consideration 48 shall be given to the phrase "eighty percent of" in paragraph one of 49 subsection (a) of this section, (B) for taxable years beginning before 50 January first, two thousand eight, when an election has been made pursu- 51 ant to paragraph two of subsection (b) of this section (relating to an 52 international banking facility) the taxpayer shall make the modifica- 53 tions described in such paragraph, and (C) for taxable years beginning 54 on or after January first, two thousand eight, when an election has been 55 made pursuant to paragraph two of subsection (b) of this section (relat- 56 ing to an international banking facility) the taxpayer shall make the
S. 5431 46 1 modifications described in clause (ii) of subparagraph (A) of such para- 2 graph. 3 (d) Allocation of taxable assets. If the taxpayer's taxable assets are 4 derived from business carried on both within and without the state, the 5 portion thereof which is derived from business carried on within the 6 state shall be determined by multiplying its taxable assets by an asset 7 allocation percentage determined in the same manner as the income allo- 8 cation percentage under subsection (b) of this section, determined as if 9 the election provided for in paragraph two of such subsection has been 10 made, except that the modifications described in clauses (i), (ii) and 11 (iii) of subparagraph (A) of such paragraph shall not be made. 12 § 1455. Computation of tax. The tax imposed by section fourteen 13 hundred fifty-one of this article shall be, in the case of each taxpayer 14 other than a New York S corporation, the greater of the following compu- 15 tations: 16 (a) Basic tax. For taxable years beginning before July first, two 17 thousand, nine percent of the taxpayer's entire net income, or the 18 portion thereof allocated to this state, for the taxable year, or part 19 thereof. For taxable years beginning after June thirtieth, two thousand 20 and before July first, two thousand one, eight and one-half percent of 21 the taxpayer's entire net income, or portion thereof allocated to this 22 state, for the taxable year, or part thereof. For taxable years begin- 23 ning after June thirtieth, two thousand one and before July first, two 24 thousand two, eight percent of the taxpayer's entire net income, or 25 portion thereof allocated to this state, for the taxable year, or part 26 thereof. For taxable years beginning after June thirtieth, two thousand 27 two and before January first, two thousand seven, seven and one-half 28 percent of the taxpayer's entire net income, or portion thereof allo- 29 cated to this state, for the taxable year, or part thereof. For taxable 30 years beginning on or after January first, two thousand seven, seven and 31 one-tenth percent of the taxpayer's entire net income, or the portion 32 thereof allocated to this state, for the taxable year, or part thereof. 33 (b) Alternative minimum tax. If the tax under subsection (a) of this 34 section is less than any of the following amounts, the tax shall be the 35 larger of the following amounts: 36 (1) (i) Except in the case of a taxpayer described in clause (ii), 37 (iii), or (iv) of this paragraph, one-tenth of a mill upon each dollar 38 of taxable assets, or the portion thereof allocated to this state. 39 (ii) In the case of a taxpayer whose net worth ratio is less than five 40 but greater than or equal to four percent and whose total assets are 41 comprised of thirty-three percent or more of mortgages, one-twenty-fifth 42 of a mill upon each dollar of taxable assets, or the portion thereof 43 allocated to this state. 44 (iii) In the case of a taxpayer whose net worth ratio is less than 45 four percent and whose total assets are comprised of thirty-three 46 percent or more of mortgages, one-fiftieth of a mill upon each dollar of 47 taxable assets, or the portion thereof allocated to this state. 48 (iv) For taxable years beginning on or after January first, nineteen 49 hundred eighty-five, a taxpayer (whether or not a qualified institution 50 as defined in subparagraph (B) of paragraph five of subsection (f) of 51 section four hundred six of the federal national housing act, as 52 amended, or as defined in paragraph two of subsection (i) of section 53 thirteen of the federal deposit insurance act, as amended) shall not be 54 subject to the provisions of this paragraph for that portion of the 55 taxable year in which it had outstanding net worth certificates issued 56 in accordance with paragraph five of subsection (f) of section four
S. 5431 47 1 hundred six of the federal national housing act, as amended, or issued 2 in accordance with subsection (i) of section thirteen of the federal 3 deposit insurance act, as amended. 4 (v) For the purposes of this article: 5 (A) The term "taxable assets" shall mean the average value of total 6 assets reduced by any amount of money or other property received from or 7 attributable to amounts received from the federal deposit insurance 8 corporation pursuant to subsection (c) of section thirteen of the feder- 9 al deposit insurance act, as amended, or the federal savings and loan 10 insurance corporation pursuant to paragraph one, two, three or four of 11 subsection (f) of section four hundred six of the federal national hous- 12 ing act, as amended. Total assets are those assets which are properly 13 reflected on a balance sheet the income or expenses of which are proper- 14 ly reflected (or would have been properly reflected if not fully depre- 15 ciated or expensed or depreciated or expensed to a nominal amount) in 16 the computation of alternative entire net income for the taxable year or 17 in the computation of the eligible net income of the taxpayer's interna- 18 tional banking facility for the taxable year. 19 (B) The term "net worth ratio" shall mean the percentage of net worth 20 to assets on the last day of the taxable year. The term "net worth" 21 means the sum of preferred stock, common stock, surplus, capital 22 reserves, undivided profits, mutual capital certificates, reserve for 23 contingencies, reserve for loan losses and reserve for security losses 24 minus assets classified loss. The term "assets" means the sum of mort- 25 gage loans, nonmortgage loans, repossessed assets, real estate held for 26 development or investment or resale, cash, deposits, investment securi- 27 ties, fixed assets and other assets (such as financial futures, goodwill 28 and other intangible assets) minus assets classified loss. In no event 29 shall assets be reduced by reserves for losses. 30 (C) The term "mortgages" shall mean loans secured by real property 31 within or without the state, participations in and securities collater- 32 alized by pools of residential mortgages, whether or not issued or guar- 33 anteed by a United States government agency, and loans secured by stock 34 in a cooperative housing corporation. The percentage of total assets 35 comprised of mortgages shall be an amount equal to the ratio of the 36 average of the four quarterly balances of such mortgages ending within 37 the taxable year, to the average of the four quarterly balances of all 38 assets ending within the taxable year. Such quarterly balances shall be 39 computed in the same manner as the report of condition required for 40 federal deposit insurance corporation or federal savings and loan insur- 41 ance corporation purposes, whether or not such report is required. For 42 taxable periods of less than one year, the taxpayer shall compute such 43 ratio using the number of such quarterly balances ending within such 44 taxable period. 45 (2) Three percent of the taxpayer's alternative entire net income, or 46 portion thereof allocated to this state, for the taxable year, or part 47 thereof. 48 (3) Two hundred fifty dollars. 49 (c) New York S corporations. (1) General. In the case of a New York S 50 corporation, the tax imposed by section fourteen hundred fifty-one of 51 this article shall be the higher of (i) the amount prescribed in 52 subsection (a) of this section reduced by the article twenty-two tax 53 equivalent or (ii) the amount prescribed in paragraph three of 54 subsection (b) of this section.
S. 5431 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-
S. 5431 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
S. 5431 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 twenty-five, a tax surcharge, in addition to the tax imposed 28 under section fourteen hundred fifty-one of this article, at the rate of 29 eighteen 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
S. 5431 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 twenty-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
S. 5431 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 (A) 4 in excess of the monthly constant due during the month of collection and 5 (B) in reduction of the unpaid principal balance of the mortgage; in the 6 absence of clear evidence to the contrary, amounts paid in excess of the 7 monthly constant due during the month of collection shall be deemed to 8 be in reduction of the unpaid principal balance of the mortgage; and (2) 9 "monthly constant" shall mean the amount of principal and interest which 10 is due and payable according to the mortgage documents on each periodic 11 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
S. 5431 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 of this article. 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
S. 5431 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, nine- 16 teen 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 (A) 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 (B) retained not less than five jobs only if initial 26 approval was based on the retention of five or more jobs and (i) 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 (ii) where initial approval was 30 based on the retention of fewer jobs than the number of jobs at the time 31 of the commencement of the project as stated on its application for 32 initial approval, the number of jobs for the taxable year is at least 33 equal to the number approved for retention. For purposes of this para- 34 graph, the phrase "initial approval was based on the retention of five 35 or more jobs" shall mean that such initial approval was given by the job 36 incentive board to an applicant that had not stated in its application 37 for initial approval that it would increase the number of jobs at its 38 facility 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
S. 5431 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 of this 7 article. However, if the amount of credit or carryovers of such credit, 8 or both, allowable under this subdivision for any taxable year reduces 9 the tax to such amount, any amount of credit or carryovers of such cred- 10 it thus not deductible in such taxable year may be carried over to the 11 following year or years and may be deducted from the taxpayer's tax for 12 such year 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
S. 5431 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
S. 5431 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)
S. 5431 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
S. 5431 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 of this article computed without regard to any credit 24 provided for 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 twenty-five and before 44 January first, two thousand twenty-seven, 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
S. 5431 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 they have not been employed for thirty-five or more hours during any 10 week in the one hundred eighty day period immediately prior to their 11 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
S. 5431 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.
S. 5431 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 (A) 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 (B) 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 (C) 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 (C) 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
S. 5431 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 fourteen hundred fifty-three of this article 41 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 fourteen hundred fifty-five of this article. 55 However, if the amount of credit allowable under this subsection for any 56 taxable year reduces the tax to such amount, any amount of credit
S. 5431 64 1 allowed for a taxable year may be carried over to the fifteen taxable 2 years next following such taxable year and may be deducted from the 3 taxpayer's tax for such year or years. In lieu of such carryover, any 4 such taxpayer which qualifies as a new business under paragraph eight of 5 this subsection may elect to treat the amount of such carryover as an 6 overpayment of tax to be credited or refunded in accordance with the 7 provisions of section one thousand eighty-six of this chapter, provided, 8 however, the provisions of subsection (c) of section one thousand eight- 9 y-eight of this chapter notwithstanding no interest shall be paid there- 10 on. 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 their 50 federal 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
S. 5431 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
S. 5431 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 or 15 one hundred eighty-four of article nine; article nine-A or article thir- 16 ty-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 or one hundred eighty-four of 20 article nine; article nine-A or article thirty-three of this chapter; 21 article twenty-three of this chapter or which would have been subject to 22 tax under such article twenty-three (as such article was in effect on 23 January first, nineteen hundred eighty) or the income (or losses) of 24 which is (or was) includable under article twenty-two of this chapter 25 whereby the intent and purpose of this paragraph and paragraph five of 26 this subsection with respect to refunding of credit to new business 27 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
S. 5431 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
S. 5431 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) Long-term care insurance credit. (1) A taxpayer shall be allowed 4 a credit against the tax imposed by this article equal to twenty percent 5 of the premium paid during the taxable year for long-term care insur- 6 ance. In order to qualify for such credit, the taxpayer's premium 7 payment must be for the purchase of or for continuing coverage under a 8 long-term care insurance policy that qualifies for such credit pursuant 9 to section one thousand one hundred 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
S. 5431 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 one thousand 5 eighty-six of this chapter. Provided, however, the provisions of 6 subsection (c) of section one thousand eighty-eight of this chapter 7 notwithstanding, 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 one thousand 23 eighty-six of this chapter. Provided, however, the provisions of 24 subsection (c) of section one thousand eighty-eight of this chapter 25 notwithstanding, 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 one 46 thousand eighty-six of this chapter. Provided, however, the provisions 47 of subsection (c) of section one thousand 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.
S. 5431 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 one 9 thousand eighty-six of this chapter. Provided, however, the provisions 10 of subsection (c) of section one thousand 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
S. 5431 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-six, a taxpayer shall be 40 allowed a credit as hereinafter provided, against the tax imposed by 41 this article, in an amount equal to one hundred percent of the amount of 42 credit allowed the taxpayer with respect to a certified historic struc- 43 ture under subsection (a)(2) of section 47 of the federal internal 44 revenue code with respect to a certified historic structure located 45 within the state. Provided, however, the credit shall not exceed five 46 million dollars. For taxable years beginning on or after January first, 47 two thousand twenty-six, a taxpayer shall be allowed a credit as herein- 48 after provided, against the tax imposed by this article, in an amount 49 equal to thirty percent of the amount of credit allowed the taxpayer 50 with respect to a certified historic structure under subsection (a)(2) 51 of section 47 of the federal internal revenue code with respect to a 52 certified historic structure located within the state. Provided, howev- 53 er, the credit 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
S. 5431 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, as added by 33 section two of part Y of chapter 57 of the laws of 2010, against the tax 34 imposed by this article. 35 (2) Application of credit. The credit allowed under this subdivision 36 for any taxable year shall not reduce the tax due for that year to less 37 than the minimum tax fixed by subsection (b) of section fourteen hundred 38 fifty-five of this article. However, if the amount of credit allowed 39 under this subdivision for any taxable year reduces the tax to such 40 amount, any amount of credit thus not deductible in such taxable year 41 may be carried over to the following year or years and may be deducted 42 from the taxpayer's tax for such year or years. 43 (y) Temporary deferral refundable payout credit. (1) Allowance of 44 credit. A taxpayer shall be allowed a credit, to be computed as provided 45 in subdivision two of section thirty-four of this chapter, as added by 46 section two of part Y of chapter 57 of the laws of 2010, against the tax 47 imposed by this article. 48 (2) Application of credit. In no event shall the credit under this 49 section be allowed in an amount which will reduce the tax to less than 50 the minimum tax fixed by subsection (b) of section fourteen hundred 51 fifty-five of this article. If, however, the amount of credit allowed 52 under this section for any taxable year reduces the tax to such amount, 53 any amount of credit not deductible in such taxable year shall be treat- 54 ed as an overpayment of tax to be refunded in accordance with the 55 provisions of section one thousand eighty-six of this chapter, provided 56 however, that no interest shall be paid thereon.
S. 5431 73 1 (z) Economic transformation and facility redevelopment program tax 2 credit. (1) Allowance of credit. A taxpayer shall be allowed a credit, 3 to be computed as provided in section thirty-five of this chapter, 4 against the tax imposed by this article. 5 (2) The credit allowed under this subsection for any taxable year will 6 not reduce the tax due for such year to less than the minimum tax fixed 7 by paragraph three of subsection (b) of section fourteen hundred fifty- 8 five of this article. However, if the amount of credit allowed under 9 this subsection for any taxable year reduces the tax to such amount, any 10 amount of credit thus not deductible in such taxable year will be treat- 11 ed as an overpayment of tax to be credited or refunded in accordance 12 with the provisions of section one thousand eighty-six of this chapter. 13 Provided, however, the provisions of subsection (c) of section one thou- 14 sand eighty-eight of this chapter notwithstanding, no interest will be 15 paid thereon. 16 (aa) Empire state jobs retention program credit. (1) Allowance of 17 credit. A taxpayer shall be allowed a credit, to be computed as 18 provided in section thirty-six of this chapter, against the taxes 19 imposed by this article. 20 (2) Application of credit. The credit allowed under this subsection 21 for any taxable year will not reduce the tax due for such year to less 22 than the minimum tax fixed by this article. However, if the amount of 23 credit allowed under this subsection for any taxable year reduces the 24 tax to such amount, any amount of credit thus not deductible in such 25 taxable year will be treated as an overpayment of tax to be credited or 26 refunded in accordance with the provisions of section one thousand 27 eighty-six of this chapter. Provided, however, the provisions of 28 subsection (c) of section one thousand eighty-eight of this chapter 29 notwithstanding, no interest will be paid thereon. 30 (bb) Minimum wage reimbursement credit. (1) Allowance of credit. A 31 taxpayer shall be allowed a credit, to be computed as provided under 32 section thirty-eight of this chapter, against the tax imposed by this 33 article. 34 (2) Application of credit. The credit allowed under this subsection 35 for any taxable year shall not, in the aggregate, reduce the tax due for 36 such year to less than the minimum tax fixed by subsection (b) of 37 section fourteen hundred fifty-five of this article. However, if the 38 amount of credit of such credit allowed under this subsection for any 39 taxable year reduces the tax to such amount, then any amount of credit 40 thus not deductible shall be treated as an overpayment of tax to be 41 credited or refunded in accordance with the provisions of section one 42 thousand eighty-six of this chapter. Provided, however, the provisions 43 of subsection (c) of section one thousand eighty-eight of this chapter 44 notwithstanding, no interest shall be paid thereon. 45 § 1460. Declarations of estimated tax. (a) Requirements of declara- 46 tion. Every taxpayer subject to the tax imposed by subsection (a) of 47 section fourteen hundred fifty-one of this article shall make a declara- 48 tion of its estimated tax for the current taxable year, containing such 49 information as the commissioner of taxation and finance may prescribe by 50 regulations or instructions, if such estimated tax can reasonably be 51 expected to exceed one thousand dollars. If a taxpayer is subject to the 52 tax surcharge imposed by section fourteen hundred fifty-five-B of this 53 article and such taxpayer's estimated tax under subsection (a) of 54 section fourteen hundred fifty-one of this article can reasonably be 55 expected to exceed one thousand dollars, such taxpayer shall also make a 56 declaration of its estimated tax surcharge for the current taxable year.
S. 5431 74 1 (b) Definition of estimated tax and estimated tax surcharge. The terms 2 "estimated tax" and "estimated tax surcharge" mean the amounts which a 3 taxpayer estimates to be the tax or tax surcharge imposed by subsection 4 (a) of section fourteen hundred fifty-one of this article or fourteen 5 hundred fifty-five-B of this article, respectively, for the current 6 taxable year, less the amount which it estimates to be the sum of any 7 credits allowable against the tax or tax surcharge, respectively. 8 (c) Time for filing declaration. A declaration of estimated tax and a 9 declaration of estimated tax surcharge shall be filed on or before June 10 fifteenth of the current taxable year in the case of a taxpayer which 11 reports on the basis of a calendar year, except that if the requirements 12 of subsection (a) of this section are first met: 13 (1) after May thirty-first and before September first of such current 14 taxable year, the declaration shall be filed on or before September 15 fifteenth, or 16 (2) after August thirty-first and before December first of such 17 current taxable year, the declaration shall be filed on or before Decem- 18 ber fifteenth. 19 (d) Amendments of declaration. A taxpayer may amend a declaration 20 under regulations of the tax commission. 21 (e) Return as declaration. If, on or before February fifteenth of the 22 succeeding year in the case of a taxpayer whose taxable year is a calen- 23 dar year, a taxpayer files its return for the year for which the decla- 24 ration is required, and pays therewith the balance, if any, of the full 25 amount of the tax or tax surcharge shown to be due on the return: 26 (1) such return shall be considered as its declaration if no declara- 27 tion was required to be filed during the taxable year for which the tax 28 or tax surcharge was imposed, but is otherwise required to be filed on 29 or before December fifteenth pursuant to paragraph two of subsection (c) 30 of this section, and 31 (2) such return shall be considered as the amendment permitted by 32 subsection (d) of this section to be filed on or before December 33 fifteenth if the tax or tax surcharge shown on the return is greater 34 than the estimated tax or estimated tax surcharge, as the case may be, 35 shown on a declaration previously made. 36 (f) Fiscal year. This section shall apply to taxable years of twelve 37 months other than a calendar year by the substitutions of the months of 38 such fiscal year for the corresponding months specified in this section. 39 (g) Short taxable period. If the taxable period for which a tax or tax 40 surcharge is imposed by subsection (a) of section fourteen hundred 41 fifty-one of this article or section fourteen hundred fifty-five-B of 42 this article, respectively, is less than twelve months, every taxpayer 43 required to make a declaration of estimated tax or a declaration of 44 estimated tax surcharge for such taxable period shall make such a decla- 45 ration in accordance with regulations of the commissioner of taxation 46 and finance. 47 (h) Extension of time. The tax commission may grant a reasonable 48 extension of time, not to exceed three months, for the filing of any 49 declaration required pursuant to this section, on such terms and condi- 50 tions as it may require. 51 § 1461. Payments of estimated tax. (a) Estimated tax payment. Every 52 taxpayer subject to the tax imposed by section fourteen hundred fifty- 53 one of this article must pay an amount equal to (1) twenty-five percent 54 of the preceding year's tax if the preceding year's tax exceeded one 55 thousand dollars but was equal to or less than one hundred thousand 56 dollars, or (2) forty percent of the preceding year's tax if the preced-
S. 5431 75 1 ing year's tax exceeded one hundred thousand dollars. The amount must be 2 paid with the return required to be filed for the preceding taxable year 3 or with an application for an extension of the time for filing the 4 return. If the preceding year's tax under section fourteen hundred 5 fifty-one of this article exceeded one thousand dollars and the taxpayer 6 is subject to the tax surcharge imposed by section fourteen hundred 7 fifty-five-B of this article, the taxpayer must also pay with the tax 8 surcharge return required to be filed for the preceding taxable year, or 9 with an application for an extension of the time for filing the return, 10 an amount equal to (A) twenty-five percent of the tax surcharge imposed 11 for the preceding year if the preceding year's tax was equal to or less 12 than one hundred thousand dollars, or (B) forty percent of the tax 13 surcharge imposed for the preceding year if the preceding year's tax 14 exceeded one hundred thousand dollars. 15 (b) Other installments. The estimated tax or estimated tax surcharge 16 for each taxable year with respect to which a declaration of estimated 17 tax or a declaration of estimated tax surcharge, respectively, is 18 required to be filed under this article shall be paid, in the case of a 19 taxpayer which reports on the basis of a calendar year, as follows: 20 (1) If the declaration is filed on or before June fifteenth, the esti- 21 mated tax or estimated tax surcharge shown thereon, after applying ther- 22 eto the amount, if any, paid during the same taxable year pursuant to 23 subsection (a) of this section, shall be paid in three equal install- 24 ments. One of such installments shall be paid at the time of the filing 25 of the declaration, one shall be paid on the following September 26 fifteenth, and one on the following December fifteenth. 27 (2) If the declaration is filed after June fifteenth and not after 28 September fifteenth of such taxable year, and is not required to be 29 filed on or before June fifteenth of such year the estimated tax or 30 estimated tax surcharge shown on such declaration, after applying there- 31 to the amount, if any, paid during the same taxable year pursuant to 32 subsection (a) of this section, shall be paid in two equal installments. 33 One of such installments shall be paid at the time of the filing of the 34 declaration and one shall be paid on the following December fifteenth. 35 (3) If the declaration is filed after September fifteenth of such 36 taxable year, and is not required to be filed on or before September 37 fifteenth of such year, the estimated tax or estimated tax surcharge 38 shown on such declaration, after applying thereto the amount, if any, 39 paid in respect of such year pursuant to subsection (a) of this section 40 shall be paid in full at the time of the filing of the declaration. 41 (4) If the declaration is filed after the time prescribed therefor, or 42 after the expiration of any extension of time therefor, paragraphs two 43 and three of this subsection shall not apply and there shall be paid at 44 the time of such filing all installments of estimated tax or estimated 45 tax surcharge payable at or before such time, and the remaining install- 46 ments shall be paid at the times at which, and in the amounts in which, 47 they would have been payable if the declaration had been filed when due. 48 (c) Amendments of declarations. If any amendment of a declaration is 49 filed, the remaining installments, if any, shall be ratably increased or 50 decreased (as the case may be) to reflect any increase or decrease in 51 the estimated tax or estimated tax surcharge by reason of such amend- 52 ment, and if any amendment is made after September fifteenth of the 53 taxable year, any increase in the estimated tax or estimated tax 54 surcharge by reason thereof shall be paid at the time of making such 55 amendment.
S. 5431 76 1 (d) Application of installments based on the preceding year's tax. (1) 2 Any amount paid pursuant to subsection (a) of this section shall be 3 applied as a first installment against the estimated tax or estimated 4 tax surcharge, respectively, of the taxpayer for the taxable year shown 5 on the declaration required to be filed pursuant to section fourteen 6 hundred sixty of this article, or if no declaration of estimated tax or 7 a declaration of estimated tax surcharge is required to be filed by the 8 taxpayer pursuant to such section, any such amount shall be considered a 9 payment on account of the tax or tax surcharge shown on the return 10 required to be filed by the taxpayer for such taxable year. 11 (2) Any amount paid pursuant to paragraph four of subsection (c) of 12 section six hundred fifty-eight of this chapter on behalf of a taxpayer 13 subject to tax under this article shall be applied against the estimated 14 tax of the taxpayer for the taxable year shown on the declaration 15 required to be filed pursuant to section fourteen hundred sixty of this 16 article, or if no declaration is filed pursuant to such section, any 17 such amount shall be considered a payment on account of tax shown on the 18 return required to be filed by the taxpayer for such taxable year. 19 (e) Interest on certain installments based on the preceding year's 20 tax. Notwithstanding the provisions of section one thousand eighty-eight 21 of this chapter or of section sixteen of the state finance law, if an 22 amount paid pursuant to subsection (a) of this section exceeds the tax 23 or tax surcharge, respectively, shown on the return required to be filed 24 by the taxpayer for the taxable year during which the amount was paid, 25 interest shall be allowed and paid on the amount by which the amount so 26 paid pursuant to such subsection exceeds such tax or tax surcharge, at 27 the overpayment rate set by the commissioner of taxation and finance 28 pursuant to section one thousand ninety-six of this chapter, or if no 29 rate is set, at the rate of six per cent per annum from the date of 30 payment of the amount so paid pursuant to such subsection to the 31 fifteenth day of the third month following the close of the taxable 32 year, provided, however, that no interest shall be allowed or paid under 33 this subsection if the amount thereof is less than one dollar. 34 (f) The preceding year's tax defined. As used in this section, "the 35 preceding year's tax" means the tax imposed upon the taxpayer by 36 subsection (a) of section fourteen hundred fifty-one of this article for 37 the preceding taxable year, or, for purposes of computing the first 38 installment of estimated tax when an application has been filed for 39 extension of the time for filing the return required to be filed for 40 such preceding taxable year, the amount properly estimated pursuant to 41 paragraph one of subsection (b) of section fourteen hundred sixty-three 42 of this article as the tax imposed upon the taxpayer for such taxable 43 year. 44 (g) Application to short taxable period. This section shall apply to a 45 taxable period of less than twelve months in accordance with regulations 46 of the tax commission. 47 (h) Fiscal year. The provisions of this section shall apply to taxable 48 years of twelve months other than a calendar year by the substitution of 49 the months of such fiscal year for the corresponding months specified in 50 such provisions. 51 (i) Extension of time. The commissioner of taxation and finance may 52 grant a reasonable extension of time, not to exceed six months, for 53 payment of any installment of estimated tax or estimated tax surcharge 54 required pursuant to this section, on such terms and conditions as they 55 may require, including the furnishing of a bond or other security by the 56 taxpayer in an amount not exceeding twice the amount for which any
S. 5431 77 1 extension of time for payment is granted, provided, however, that inter- 2 est at the underpayment rate set by the commissioner pursuant to section 3 one thousand ninety-six of this chapter, or if no rate is set, at the 4 rate of six per centum per annum for the period of the extension shall 5 be charged and collected on the amount for which any extension of time 6 for payment is granted under this subsection. 7 (j) Payment of installments in advance. A taxpayer may elect to pay 8 any installment of estimated tax or estimated tax surcharge prior to the 9 date prescribed in this section for payment thereof. 10 § 1462. Returns. (a) Every taxpayer, as well as every other banking 11 corporation having an employee, including any officer, within the state, 12 shall annually on or before the fifteenth day of the third month follow- 13 ing the close of each of its taxable years transmit to the tax commis- 14 sion a return in a form prescribed by it setting forth such information 15 as the tax commission may prescribe and every taxpayer which ceases to 16 exercise its franchise or to be subject to the tax imposed by this arti- 17 cle shall transmit to the tax commission a return on the date of such 18 cessation or at such other time as the tax commission may require cover- 19 ing each year or period for which no return was theretofore filed. In 20 the case of a termination year of an S corporation, the S short year and 21 the C short year shall be treated as separate short taxable years, 22 provided, however, the due date of the report for the S short year shall 23 be the same as the due date of the report for the C short year. 24 (b) Every taxpayer shall also transmit such other returns and such 25 facts and information as the tax commission may require in the adminis- 26 tration of this article. 27 (c) The tax commission may grant a reasonable extension of time for 28 filing returns whenever good cause exists. An automatic extension of six 29 months for the filing of its annual return shall be allowed any taxpay- 30 er, if within the time prescribed by subsection (a) of this section, 31 such taxpayer files with the tax commission an application for extension 32 in such form as said commission may prescribe by regulation and pays on 33 or before the date of such filing the amount properly estimated as its 34 tax. 35 (d) Every return shall have annexed thereto a certification by the 36 president, vice president, treasurer, assistant treasurer, chief 37 accounting officer or any other officer of the taxpayer duly authorized 38 so to act to the effect that the statements contained therein are true. 39 The fact that an individual's name is signed on a certification of the 40 return shall be prima facie evidence that such individual is authorized 41 to sign and certify the return on behalf of the corporation. In the case 42 of an association or publicly traded partnership referred to in para- 43 graph one of subsection (f) of this section, such certification shall be 44 made by any person duly authorized so to act on behalf of such associ- 45 ation or publicly traded partnership. 46 (e) If the amount of taxable income or alternative minimum taxable 47 income for any year of any taxpayer (including any taxpayer which has 48 elected to be taxed under subchapter s of chapter one of the internal 49 revenue code) as returned to the United States treasury department is 50 changed or corrected by the commissioner of internal revenue or other 51 officer of the United States or other competent authority, such taxpayer 52 shall report such change or corrected taxable income or alternative 53 minimum taxable income within ninety days (or one hundred twenty days, 54 in the case of a taxpayer making a combined return under this article 55 for such year) after the final determination of such change or 56 correction or as required by the commissioner, and shall concede the
S. 5431 78 1 accuracy of such determination or state wherein it is erroneous. Any 2 taxpayer filing an amended return with such department shall also file 3 within ninety days (or one hundred twenty days, in the case of a taxpay- 4 er making a combined return under this article for such year) thereafter 5 an amended return with the commissioner which shall contain such infor- 6 mation as the commissioner shall require. The allowance of a tentative 7 carryback adjustment based upon a net capital loss carryback pursuant to 8 section sixty-four hundred eleven of the internal revenue code, shall be 9 treated as a final determination for purposes of this subsection. 10 (f) (1) For purposes of this subsection, the term "bank holding compa- 11 ny" means any corporation subject to article three-A of the banking law, 12 or registered under the federal bank holding company act of nineteen 13 hundred fifty-six, as amended, or registered as a savings and loan hold- 14 ing company (but excluding a diversified savings and loan holding compa- 15 ny) under the federal national housing act, as amended. For purposes of 16 the preceding sentence, the term "corporation" shall include an associ- 17 ation, within the meaning of paragraph three of subsection (a) of 18 section seventy-seven hundred one of the internal revenue code, and a 19 publicly traded partnership treated as a corporation for purposes of the 20 internal revenue code pursuant to section seventy-seven hundred four 21 thereof. 22 (2) (i) Any banking corporation or bank holding company which is exer- 23 cising its corporate franchise or doing business in this state in a 24 corporate or organized capacity, and 25 (A) which owns or controls, directly or indirectly, eighty percent or 26 more of the voting stock of one or more banking corporations or bank 27 holding companies, or 28 (B) whose voting stock is eighty percent or more owned or controlled, 29 directly or indirectly, by a banking corporation or a bank holding 30 company, shall make a return on a combined basis under this article 31 covering itself and such corporations described in this subparagraph and 32 shall set forth such information as the tax commission may require 33 unless the taxpayer or the tax commission shows that the inclusion of 34 such a corporation in the combined return fails to properly reflect the 35 tax liability of such corporation under this article. Provided, however, 36 that no banking corporation or bank holding company not a taxpayer shall 37 be subject to the requirements of this subparagraph unless the tax 38 commission deems that the application of such requirements is necessary 39 in order to properly reflect the tax liability under this article, 40 because of intercompany transactions or some agreement, understanding, 41 arrangement or transaction of the type referred to in subsection (g) of 42 this section. 43 (ii) In the discretion of the tax commission, any banking corporation 44 or bank holding company which is exercising its corporate franchise or 45 doing business in this state in a corporate or organized capacity, and 46 (A) which owns or controls, directly or indirectly, sixty-five percent 47 or more of the voting stock of one or more banking corporations or bank 48 holding companies, or 49 (B) whose voting stock is sixty-five percent or more owned or 50 controlled, directly or indirectly, by a banking corporation or a bank 51 holding company, may be required or permitted to make a return on a 52 combined basis under this article covering itself and such corporations 53 described in this subparagraph and shall set forth such information as 54 the tax commission may require; provided, however, that no combined 55 return shall be required or permitted unless the tax commission deems 56 such report necessary in order to properly reflect the tax liability
S. 5431 79 1 under this article of any one or more of such banking corporations or 2 bank holding companies. 3 (iii) In the discretion of the tax commission, banking corporations or 4 bank holding companies which are sixty-five percent or more owned or 5 controlled, directly or indirectly, by the same interest may be permit- 6 ted or required to make a return on a combined basis under this article 7 and shall set forth such information as the tax commission may require, 8 if at least one such banking corporation or bank holding company is 9 exercising its corporate franchise or doing business in this state in a 10 corporate or organized capacity. No combined return shall be required or 11 permitted unless the tax commission deems such report necessary in order 12 to properly reflect the tax liability under this article of any one or 13 more of such banking corporations or bank holding companies. 14 (iv) (A) Notwithstanding any provision of this paragraph, any bank 15 holding company exercising its corporate franchise or doing business in 16 the state may make a return on a combined basis without seeking the 17 permission of the commissioner with any banking corporation exercising 18 its corporate franchise or doing business in the state in a corporate or 19 organized capacity sixty-five percent or more of whose voting stock is 20 owned or controlled, directly or indirectly, by such bank holding compa- 21 ny, for the first taxable year beginning on or after January first, two 22 thousand and before January first, two thousand twenty-five during which 23 such bank holding company registers for the first time under the federal 24 bank holding company act, as amended, and also elects to be a financial 25 holding company. In addition, for each subsequent taxable year beginning 26 after January first, two thousand and before January first, two thousand 27 twenty-five, any such bank holding company may file on a combined basis 28 without seeking the permission of the commissioner with any banking 29 corporation that is exercising its corporate franchise or doing business 30 in the state and sixty-five percent or more of whose voting stock is 31 owned or controlled, directly or indirectly, by such bank holding compa- 32 ny if either such banking corporation is exercising its corporate fran- 33 chise or doing business in the state in a corporate or organized capaci- 34 ty for the first time during such subsequent taxable year, or sixty-five 35 percent or more of the voting stock of such banking corporation is owned 36 or controlled, directly or indirectly, by such bank holding company for 37 the first time during such subsequent taxable year. Provided however, 38 for each subsequent taxable year beginning after January first, two 39 thousand and before January first, two thousand twenty-five, a banking 40 corporation described in either of the two preceding sentences which 41 filed on a combined basis with any such bank holding company in a previ- 42 ous taxable year, must continue to file on a combined basis with such 43 bank holding company if such banking corporation, during such subsequent 44 taxable year, continues to exercise its corporate franchise or do busi- 45 ness in the state in a corporate or organized capacity and sixty-five 46 percent or more of such banking corporation's voting stock continues to 47 be owned or controlled, directly or indirectly, by such bank holding 48 company, unless the permission of the commissioner has been obtained to 49 file on a separate basis for such subsequent taxable year. Provided 50 further, however, for each subsequent taxable year beginning after Janu- 51 ary first, two thousand and before January first, two thousand twenty- 52 five, a banking corporation described in either of the first two 53 sentences of this clause which did not file on a combined basis with any 54 such bank holding company in a previous taxable year, may not file on a 55 combined basis with such bank holding company during any such subsequent
S. 5431 80 1 taxable year unless the permission of the commissioner has been obtained 2 to file on a combined basis for such subsequent taxable year. 3 (B) Notwithstanding any provision of this paragraph other than clause 4 (A) of this subparagraph, the commissioner may not require a bank hold- 5 ing company which, during a taxable year beginning on or after January 6 first, two thousand and before January first, two thousand twenty-five, 7 registers for the first time during such taxable year under the federal 8 bank holding company act, as amended, and also elects to be a financial 9 holding company, to make a return on a combined basis for any taxable 10 year beginning on or after January first, two thousand and before Janu- 11 ary first, two thousand twenty-five with a banking corporation sixty- 12 five percent or more of whose voting stock is owned or controlled, 13 directly or indirectly, by such bank holding company. 14 (v) A banking corporation doing business in this state solely because 15 it meets one or more of the tests in subparagraphs (i) through (v) of 16 paragraph one of subsection (c) of section fourteen hundred fifty-one of 17 this article (referred to in this subparagraph as the "credit card 18 bank") will not be included in a combined return pursuant to subpara- 19 graph (i) of this paragraph with another banking corporation or bank 20 holding company which is exercising its corporate franchise or doing 21 business in this state unless the credit card bank or the commissioner 22 shows that the inclusion of the credit card bank in the combined return 23 is necessary to properly reflect the tax liability of the credit card 24 bank, the banking corporation or bank holding company under this arti- 25 cle. However, any banking corporation that meets one or more of the 26 tests in subparagraphs (i) through (v) of paragraph one of subsection 27 (c) of section fourteen hundred fifty-one and was included in a combined 28 return for its last taxable year beginning before January first, two 29 thousand eight may continue to be included in a combined return for 30 future taxable years, provided that once that banking corporation has 31 been included in a combined return for any taxable year beginning on or 32 after January first, two thousand eight, it must continue to be included 33 in a combined return until it obtains the consent of the commissioner to 34 cease being included in a combined return because the combined return no 35 longer properly reflects the tax liability under this article of any of 36 the corporations included in the combined return. Further, the credit 37 card bank will be included in a combined return with (A) any banking 38 corporation not subject to tax under this article sixty-five percent or 39 more of whose voting stock is owned or controlled, directly or indirect- 40 ly, by the credit card bank, or (B) any banking corporation or bank 41 holding company not subject to tax under this article which owns or 42 controls, directly or indirectly, sixty-five percent or more of the 43 voting stock of the credit card bank, or (C) any banking corporation not 44 subject to tax under this article sixty-five percent or more of the 45 voting stock of which is owned or controlled, directly or indirectly, by 46 the same corporation or corporations that own or control, directly or 47 indirectly, sixty-five percent or more of the voting stock of the credit 48 card bank, if the corporation or corporations described in this subpara- 49 graph provide services for or support to the credit card bank's oper- 50 ations, unless the credit card bank or the commissioner shows that the 51 inclusion of any of those corporations in the combined return fails to 52 properly reflect the tax liability of the credit card bank. For purposes 53 of this subparagraph, services for or support to the credit card bank's 54 operations include such activities as billing, credit investigation and 55 reporting, marketing, research, advertising, mailing, customer service, 56 information technology, lending and financing services, and communi-
S. 5431 81 1 cations services, but will not include accounting, legal or personnel 2 services. 3 (vi)(A) For purposes of this subparagraph, the term "closest control- 4 ling stockholder" means the corporation that indirectly owns or controls 5 over fifty percent of the voting stock of a captive REIT or captive RIC, 6 is subject to tax under this article, article nine-A or article thirty- 7 three of this chapter or otherwise required to be included in a combined 8 return under this article, article nine-A or article thirty-three of 9 this chapter, and is the fewest tiers of corporations away in the owner- 10 ship structure from the captive REIT or captive RIC. The commissioner is 11 authorized to prescribe by regulation or published guidance the criteria 12 for determining the closest controlling stockholder. 13 (B) A captive REIT or a captive RIC must be included in a combined 14 return with the banking corporation or bank holding company that direct- 15 ly owns or controls over fifty percent of the voting stock of the 16 captive REIT or captive RIC if that banking corporation or bank holding 17 company is subject to tax or required to be included in a combined 18 return under this article. 19 (C) If over fifty percent of the voting stock of a captive REIT or 20 captive RIC is not directly owned or controlled by a banking corporation 21 or bank holding company that is subject to tax or required to be 22 included in a combined return under this article, then the captive REIT 23 or captive RIC must be included in a combined return or report with the 24 corporation that is the closest controlling stockholder of the captive 25 REIT or captive RIC. If the closest controlling stockholder of the 26 captive REIT or captive RIC is a banking corporation or bank holding 27 company that is subject to tax or otherwise required to be included in a 28 combined return under this article, then the captive REIT or captive RIC 29 must be included in a combined return under this article. 30 (D) If the corporation which directly owns or controls the voting 31 stock of the captive REIT or captive RIC is described in subparagraph 32 (ii) or (iv) of paragraph four of this subsection as a corporation not 33 permitted to make a combined return, then the provisions in clause (C) 34 of this subparagraph must be applied to determine the corporation in 35 whose combined return or report the captive REIT or captive RIC should 36 be included. If, under clause (C) of this subparagraph, the corporation 37 that is the closest controlling stockholder of the captive REIT or 38 captive RIC is described in subparagraph (ii) or (iv) of paragraph four 39 of this subsection as a corporation not permitted to make a combined 40 return, then that corporation is deemed to not be in the ownership 41 structure of the captive REIT or captive RIC, and the closest control- 42 ling stockholder will be determined without regard to that corporation. 43 (E) If a captive REIT owns the stock of a qualified REIT subsidiary 44 (as defined in paragraph two of subsection (i) of section eight hundred 45 fifty-six of the internal revenue code), then the qualified REIT subsid- 46 iary must be included in any combined return required to be made by the 47 captive REIT that owns its stock. 48 (F) If a captive REIT or a captive RIC is required under this subpara- 49 graph to be included in a combined return with another corporation, and 50 that other corporation is required to be included in a combined return 51 with another corporation under other provisions of this subsection, the 52 captive REIT or captive RIC must be included in that combined return 53 with those corporations. 54 (G) If the banking corporation or bank holding company that directly 55 or indirectly owns or controls over fifty percent of the voting stock of 56 the captive REIT or captive RIC and is the closest controlling stock-
S. 5431 82 1 holder of the captive REIT or captive RIC is a member of an affiliated 2 group (I) that does not include any corporation that is engaged in a 3 business that a subsidiary of a bank holding company would not be 4 permitted to engage in, unless such business is de minimus, and (II) 5 whose members own assets the combined average value of which does not 6 exceed eight billion dollars, then the captive REIT or captive RIC must 7 not be included in a combined return under this article or article 8 nine-A or article thirty-three of this chapter. In that instance, the 9 captive REIT or captive RIC is subject to the provisions of subdivision 10 five or seven of section two hundred nine of this chapter. The term 11 "affiliated group" means "affiliated group" as defined in section 12 fifteen hundred four of the internal revenue code, but without regard to 13 the exceptions provided for in subsection (b) of such section. 14 (vii) (A) For purposes of this subparagraph, the term "closest 15 controlling stockholder" means the corporation that indirectly owns or 16 controls over fifty percent of the voting stock of an overcapitalized 17 captive insurance company, is subject to tax under this article or arti- 18 cle nine-A of this chapter or otherwise required to be included in a 19 combined return under this article or article nine-A of this chapter, 20 and is the fewest tiers of corporations away in the ownership structure 21 from the overcapitalized captive insurance company. The commissioner is 22 authorized to prescribe by regulation or published guidance the criteria 23 for determining the closest controlling stockholder. 24 (B) An overcapitalized captive insurance company must be included in a 25 combined return with the banking corporation or bank holding company 26 that directly owns or controls over fifty percent of the voting stock of 27 the overcapitalized captive insurance company if that banking corpo- 28 ration or bank holding company is subject to tax or required to be 29 included in a combined return under this article. 30 (C) If over fifty percent of the voting stock of an overcapitalized 31 captive insurance company is not directly owned or controlled by a bank- 32 ing corporation or bank holding company that is subject to tax or 33 required to be included in a combined return under this article, then 34 the overcapitalized captive insurance company must be included in a 35 combined return or report with the corporation that is the closest 36 controlling stockholder of the overcapitalized captive insurance compa- 37 ny. If the closest controlling stockholder of the overcapitalized 38 captive insurance company is a banking corporation or bank holding 39 company that is subject to tax or otherwise required to be included in a 40 combined return under this article, then the overcapitalized captive 41 insurance company must be included in a combined return under this arti- 42 cle. 43 (D) If the corporation that directly owns or controls the voting stock 44 of the overcapitalized captive insurance company is described in subpar- 45 agraph (ii) or (iv) of paragraph four of this subsection as a corpo- 46 ration not permitted to make a combined return, then the provisions in 47 clause (C) of this subparagraph must be applied to determine the corpo- 48 ration in whose combined return or report the overcapitalized captive 49 insurance company should be included. If, under clause (C) of this 50 subparagraph, the corporation that is the closest controlling stockhold- 51 er of the overcapitalized captive insurance company is described in 52 subparagraph (ii) or (iv) of paragraph four of this subsection as a 53 corporation not permitted to make a combined return, then that corpo- 54 ration is deemed not to be in the ownership structure of the overcapi- 55 talized captive insurance company, and the closest controlling stock- 56 holder will be determined without regard to that corporation.
S. 5431 83 1 (E) If an overcapitalized captive insurance company is required under 2 this subparagraph to be included in a combined return with another 3 corporation, and that other corporation is required to be included in a 4 combined return with another corporation under other provisions of this 5 subsection, the overcapitalized captive insurance company must be 6 included in that combined return with those corporations. 7 (3) (i) In the case of a combined return, the tax shall be measured by 8 the combined entire net income, combined alternative entire net income 9 or combined assets of all the corporations included in the return, 10 including any captive REIT, captive RIC or overcapitalized captive 11 insurance company. The allocation percentage shall be computed based on 12 the combined factors with respect to all the corporations included in 13 the combined return. In computing combined entire net income and 14 combined alternative entire net income intercorporate dividends and all 15 other intercorporate transactions shall be eliminated and in computing 16 combined assets intercorporate stockholdings and intercorporate bills, 17 notes and accounts receivable and payable and other intercorporate 18 indebtedness shall be eliminated. 19 (ii) In the case of a captive REIT required under this subsection to 20 be included in a combined return, "entire net income" means "real estate 21 investment trust taxable income" as defined in paragraph two of subdivi- 22 sion (b) of section eight hundred fifty-seven (as modified by section 23 eight hundred fifty-eight) of the internal revenue code, plus the amount 24 taxable under paragraph three of subdivision (b) of section eight 25 hundred fifty-seven of such code, subject to the modifications required 26 by section fourteen hundred fifty-three of this article. In the case of 27 a captive RIC required under this subsection to be included in a 28 combined return, "entire net income" means "investment company taxable 29 income" as defined in paragraph two of subdivision (b) of section eight 30 hundred fifty-two (as modified by section eight hundred fifty-five) of 31 the internal revenue code, plus the amount taxable under paragraph three 32 of subdivision (b) of section eight hundred fifty-two of such code, 33 subject to the modifications required by section fourteen hundred 34 fifty-three of this article. However, the deduction under the internal 35 revenue code for dividends paid by the captive REIT or captive RIC to 36 any member of the affiliated group that includes the corporation that 37 directly or indirectly owns over fifty percent of the voting stock of 38 the captive REIT or captive RIC will be limited to the following 39 percentages: (A) fifty percent for taxable years beginning on or after 40 January first, two thousand eight and before January first, two thousand 41 nine; (B) twenty-five percent for taxable years beginning on or after 42 January first, two thousand nine and before January first, two thousand 43 eleven; and (C) zero percent for taxable years beginning on or after 44 January first, two thousand eleven. The term "affiliated group" means 45 "affiliated group" as defined in section fifteen hundred four of the 46 internal revenue code, but without regard to the exceptions provided for 47 in subsection (b) of such section fifteen hundred four. 48 (iii) In the case of an overcapitalized captive insurance company 49 required under this subsection to be included in a combined return, 50 entire net income must be computed as required by section fourteen 51 hundred fifty-three of this article. 52 (4) (i) In no event shall an item of income or expense of a corpo- 53 ration organized under the laws of a country other than the United 54 States be included in a combined return unless it is includible in 55 entire net income or alternative entire net income, as the case may be,
S. 5431 84 1 nor shall an asset of such a corporation be included in a combined 2 return unless it is included in taxable assets. 3 (ii) In no event shall a corporation organized under the laws of the 4 United States, this state or any other state, be included in a combined 5 return with a corporation organized under the laws of a country other 6 than the United States. 7 (iii) In no event shall a corporation which has made an election 8 pursuant to subsection (d) of section fourteen hundred fifty-two of this 9 article to be subject to the tax imposed by article nine-A of this chap- 10 ter be included in a combined return for those taxable years for which 11 it is subject to the tax imposed by article nine-A of this chapter. 12 (iv) In no event shall a corporation whose net worth ratio is less 13 than five percent and whose total assets are comprised of thirty-three 14 percent or more of mortgages be included in a combined return for those 15 taxable years for which its tax is determined pursuant to subparagraph 16 (ii) or (iii) of paragraph one of subsection (b) of section fourteen 17 hundred fifty-five of this article. 18 (5) Tax liability under this article may be deemed to be improperly 19 reflected because of intercompany transactions or some agreement, under- 20 standing, arrangement or transaction referred to in subsection (g) of 21 this section. 22 (g) In case it shall appear to the tax commission that any agreement, 23 understanding or arrangement exists between the taxpayer and any other 24 corporation or any person or firm, whereby the activity, business, 25 income or assets of the taxpayer within the state is improperly or inac- 26 curately reflected, the tax commission is authorized and empowered, in 27 its discretion and in such manner as it may determine, to adjust items 28 of income or deductions in computing entire net income or alternative 29 entire net income and to adjust assets, and to adjust wages, salaries 30 and other personal service compensation, receipts or deposits in comput- 31 ing any allocation percentage, provided only that entire net income or 32 alternative entire net income be adjusted accordingly and that any asset 33 directly traceable to the elimination of any receipt be eliminated from 34 assets so as to accurately determine the tax. If however, in the deter- 35 mination of the tax commission, such adjustments do not, or cannot 36 effectively provide for the accurate determination of the tax, the 37 commission shall be authorized to require the filing of a combined 38 report by the taxpayer and any such other corporations. Where (1) any 39 taxpayer conducts its activity or business under any agreement, arrange- 40 ment or understanding in such manner as either directly or indirectly to 41 benefit its members or stockholders, or any of them, or any person or 42 persons directly or indirectly interested in such activity or business, 43 by entering into any transaction at more or less than a fair price 44 which, but for such agreement, arrangement or understanding, might have 45 been paid or received therefor, or (2) any taxpayer enters into any 46 transaction with another corporation on such terms as to create an 47 improper loss or net income, the tax commission may include in the 48 entire net income or alternative entire net income of the taxpayer the 49 fair profits which, but for such agreement, arrangement or understand- 50 ing, the taxpayer might have derived from such transaction. 51 § 1463. Payment of tax. (a) To the extent the tax imposed by section 52 fourteen hundred fifty-one of this article shall not have been previous- 53 ly paid pursuant to section fourteen hundred sixty-one, 54 (1) such tax, or the balance thereof, shall be payable to the tax 55 commission in full at the time its return is required to be filed, and
S. 5431 85 1 (2) such tax, or the balance thereof, imposed on any taxpayer which 2 ceased to exercise its franchise or to be subject to the tax imposed by 3 this article shall be payable to the tax commission at the time the 4 return is required to be filed, provided such tax of a domestic corpo- 5 ration which continues to possess its franchise shall be subject to 6 adjustment as the circumstances may require; all other taxes of any such 7 taxpayer, which pursuant to the foregoing provisions of this subsection 8 would otherwise be payable subsequent to the time such return is 9 required to be filed, shall nevertheless be payable at such time. 10 (b) If the taxpayer, within the time prescribed by subsection (c) of 11 section fourteen hundred sixty-two of this article, shall have applied 12 for an automatic extension of time to file its annual return and shall 13 have paid to the commissioner of taxation and finance on or before the 14 date such application is filed an amount properly estimated as provided 15 by said subsection the only amount payable in addition to the tax shall 16 be interest at the underpayment rate set by the commissioner pursuant to 17 section one thousand ninety-six of this chapter, or if no rate is set, 18 at the rate of six per cent per annum upon the amount by which the tax, 19 or portion thereof payable on or before the date the return was required 20 to be filed, exceeds the amount so paid. For the purposes of the preced- 21 ing sentence: 22 (1) an amount so paid shall be deemed properly estimated if it is 23 either (i) not less than ninety per cent of the tax as finally deter- 24 mined, or (ii) not less than the tax shown on the taxpayer's return for 25 the preceding taxable year, if such preceding year was a taxable year of 26 twelve months; and 27 (2) the time when a return is required to be filed shall be determined 28 without regard to any extension of time for filing such return. 29 (c) The tax commission may grant a reasonable extension of time for 30 payment of any tax imposed by this article under such conditions as it 31 deems just and proper. 32 § 1466. Deposit and disposition of revenue. All taxes, interest and 33 penalties collected or received by the tax commission under this article 34 shall be deposited and disposed of pursuant to the provisions of section 35 one hundred seventy-one-a of this chapter, as added by chapter 69 of the 36 laws of 1978. 37 § 1467. Secrecy required of officials; penalty for violation. (a) 38 Except in accordance with the proper judicial order or as otherwise 39 provided by law, it shall be unlawful for the commissioner of taxation 40 and finance, any officer or employee of the department of taxation and 41 finance, or any person who, pursuant to this section, is permitted to 42 inspect any return, or any person engaged or retained by such department 43 on an independent contract basis, or any person who in any manner may 44 acquire knowledge of the contents of a return filed pursuant to this 45 article, to divulge or make known in any manner the amount of income or 46 any particulars set forth or disclosed in any return required under this 47 article. The officers charged with the custody of such returns shall not 48 be required to produce any of them or evidence of anything contained in 49 them in any action or proceedings in any court, except on behalf of the 50 state or the commissioner of taxation and finance in an action or 51 proceeding under the provisions of this chapter or in any other action 52 or proceeding involving the collection of a tax due under this chapter 53 to which the state or the commissioner of taxation and finance is a 54 party or a claimant or on behalf of any party in an action or proceeding 55 under the provisions of this article when the returns or facts shown 56 thereby are directly involved in such action or proceeding, in any of
S. 5431 86 1 which events the court may require the production of and may admit in 2 evidence so much of said returns or the facts shown thereby as are 3 pertinent to the action or proceeding and no more. The commissioner of 4 taxation and finance may, nevertheless, publish a copy or a summary of 5 any determination or decision rendered after the hearing provided for in 6 section one thousand eighty-nine of this chapter. Nothing herein shall 7 be construed to prohibit the delivery to a taxpayer or its duly author- 8 ized representative of a certified copy of any return filed in 9 connection with its tax nor to prohibit the publication of statistics so 10 classified as to prevent the identification of particular returns and 11 the items thereof, or the inspection by the attorney-general or other 12 legal representatives of the state of the return of any taxpayer which 13 shall bring action to set aside or review the tax based thereon, or 14 against which an action or proceeding under this chapter has been recom- 15 mended by the commissioner of taxation and finance or the attorney-gen- 16 eral or has been instituted; or the inspection of the returns of any 17 taxpayer by the comptroller or duly designated officer or employee of 18 the state department of audit and control for purposes of the audit of a 19 refund of any tax paid by such taxpayer under this article, or the 20 disclosing to a state agency, pursuant to section one hundred seventy- 21 one-f of this chapter, of the amount of an overpayment and interest 22 thereon certified to the comptroller to be credited against a past-due 23 legally enforceable debt owed to such agency and of the name and iden- 24 tification number of the taxpayer who made such overpayment, or the 25 disclosing to the commissioner of finance of the city of New York, 26 pursuant to section one hundred seventy-one-l of this chapter, of the 27 amount of an overpayment and interest thereon certified to the comp- 28 troller to be credited against a city of New York tax warrant judgment 29 debt and of the name and identification number of the taxpayer who made 30 such overpayment. Returns shall be preserved for three years and there- 31 after until the commissioner of taxation and finance orders them to be 32 destroyed. 33 (b) (1) Any officer or employee of the state who willfully violates 34 the provisions of subsection (a) of this section shall be dismissed from 35 office and be incapable of holding any public office in this state for a 36 period of five years thereafter. 37 (2) Cross-reference: For criminal penalties, see article thirty-seven 38 of this chapter. 39 (c) Notwithstanding any provisions of this section, the tax commission 40 may permit the secretary of the treasury of the United States or their 41 delegates, or the proper officer of any other state charged with tax 42 administration, or the authorized representative of either such officer, 43 to inspect the returns filed under this article, or may furnish to such 44 officer or their authorized representative an abstract of any return or 45 supply them with information concerning an item contained in any return, 46 or disclosed by an investigation of tax liability under this article, 47 but such permission shall be granted or such information furnished to 48 such officer or their representative only if the laws of the United 49 States or of such other state, as the case may be, grant substantially 50 similar privileges to the commission or officer of this state charged 51 with the administration of the tax imposed by this article and such 52 information is to be used for tax purposes only; and provided further 53 the commissioner of taxation and finance may furnish to the secretary of 54 the treasury of the United States or their delegates such returns filed 55 under this article and other tax information, as they may consider prop- 56 er, for use in court actions or proceedings under the internal revenue
S. 5431 87 1 code, whether civil or criminal, where a written request therefor has 2 been made to the commissioner of taxation and finance by the secretary 3 of the treasury or their delegates provided the laws of the United 4 States grant substantially similar powers to the secretary of the treas- 5 ury or their delegates. Where the commissioner of taxation and finance 6 has so authorized use of returns or other information in such actions or 7 proceedings, officers and employees of the department of taxation and 8 finance may testify in such actions or proceedings in respect to such 9 returns or other tax information. 10 (d) Notwithstanding the provisions of subsection (a) of this section, 11 the tax commission may permit the officer charged with the adminis- 12 tration of a tax on or measured by income imposed by any city of the 13 state of New York, or the authorized representative of such officer, to 14 inspect the returns filed under this article, or may furnish to such 15 officer or their authorized representative an abstract of any such 16 return or supply information concerning an item contained in any such 17 return, or disclosed by any investigation of tax liability under this 18 article, but such permission shall be granted or such information 19 furnished to such officer or their representative only if the local laws 20 of such city grant substantially similar privileges to the commission or 21 officer of this state charged with the administration of the tax imposed 22 by this article and such information is to be used for tax purposes 23 only; and provided further the commissioner of taxation and finance may 24 furnish to such city officer or their delegates and the legal represen- 25 tative of such city such returns filed under this article and other tax 26 information, as they may consider proper, for use in court actions or 27 proceedings under such local law, whether civil or criminal, where a 28 written request therefor has been made to the commissioner of taxation 29 and finance by such city officer or their delegates or by such legal 30 representative of such city, provided the local law of such city grants 31 substantially similar powers to the city officer charged with the admin- 32 istration of the city income tax or their delegates. Where the commis- 33 sioner of taxation and finance has so authorized use of returns or other 34 tax information in such actions or proceedings, officers and employees 35 of the department of taxation and finance may testify in such actions or 36 proceedings in respect to such returns or other tax information. 37 (e) Notwithstanding the provisions of subsection (a) of this section, 38 the tax commission, in its discretion, may require or permit any or all 39 persons liable for any tax imposed by this article, to make payments on 40 account of estimated tax and payment of any tax, penalty or interest 41 imposed by this article to banks, banking houses or trust companies 42 designated by the tax commission and to file declarations of estimated 43 tax, applications for automatic extensions of time to file returns, and 44 returns with such banks, banking houses or trust companies as agents of 45 the tax commission, in lieu of making any such payment directly to the 46 tax commission. However, the tax commission shall designate only such 47 banks, banking houses or trust companies as are or shall be designated 48 by the comptroller as depositories pursuant to section fourteen hundred 49 sixty-six of this article. 50 (f) Notwithstanding the provisions of subsection (a) of this section, 51 the commissioner may disclose to a taxpayer or a taxpayer's related 52 member, as defined in subsection (s) of section fourteen hundred fifty- 53 three of this article, information relating to any royalty paid, 54 incurred or received by such taxpayer or related member to or from the 55 other, including the treatment of such payments by the taxpayer or the
S. 5431 88 1 related member in any report or return transmitted to the commissioner 2 under this chapter. 3 § 1468. Procedural provisions. The provisions of article twenty-seven 4 of this chapter shall apply to the provisions of this article in the 5 same manner and with the same force and effect as if the language of 6 such article twenty-seven had been incorporated in full into this arti- 7 cle and had expressly referred to the tax under this article, except to 8 the extent that any such provision is either inconsistent with a 9 provision of this article or is not relevant to this article. 10 § 2. This act shall take effect immediately and shall apply to taxable 11 years starting January 1, 2026.