§ 2 — Definitions

New York § 2

• Jurisdiction: New York
• Law GCM: General City Model 772/66
• Part 2: General Corporation Tax

Text

§ 2. Definitions. When used in this part:\n 1. "Corporation" includes a joint-stock company or association and any\nbusiness conducted by a trustee or trustees wherein interest or\nownership is evidenced by certificate or other written instrument;\n 2. "Subsidiary" means a corporation of which over fifty per centum of\nthe number of shares of stock entitling the holders thereof to vote for\nthe election of directors or trustees is owned by the taxpayer;\n 3. "Subsidiary capital" means investments in the stock of subsidiaries\nand any indebtedness from subsidiaries, whether or not evidenced by\nwritten instrument, on which interest is not claimed and deducted by the\nsubsidiary for purposes of taxation under this part or part three of\nthis title, provided, however, that, in the discretion of the director\nof finance, there shall be deducted from subsidiary capital any\nliabilities payable by their terms on demand or within one year from the\ndate incurred, other than loans or advances outstanding for more than a\nyear as of any date during the year covered by the report, which are\nattributable to subsidiary capital;\n 4. "Investment capital" means investments in stocks, bonds and other\nsecurities, corporate and governmental, not held for sale to customers\nin the regular course of business, exclusive of subsidiary capital and\nstock issued by the taxpayer, provided, however, that, in the discretion\nof the director of finance there shall be deducted from investment\ncapital any liabilities payable by their terms on demand or within one\nyear from the date incurred, other than loans or advances outstanding\nfor more than a year as of any date during the year covered by the\nreport, which are attributable to investment capital;\n 5. "Investment income" means income, including capital gains in excess\nof capital losses, from investment capital, to the extent included in\ncomputing entire net income, less, (a) in the discretion of the director\nof finance, any deductions allowable in computing entire net income\nwhich are attributable to investment capital or investment income, and\n(b) such portion of any net operating loss deduction allowable in\ncomputing entire net income, as the investment income, before such\ndeduction, bears to entire net income, before such deduction, provided,\nhowever, that in no case shall investment income exceed entire net\nincome;\n 6. "Business capital" means all assets, other than subsidiary capital,\ninvestment capital and stock issued by the taxpayer, less liabilities\nnot deducted from subsidiary or investment capital which are payable by\ntheir terms on demand or within one year from the date incurred, other\nthan loans or advances outstanding for more than a year as of any date\nduring the year covered by the report, except that, subject to the\nprovisions of subdivision six of section four of this part, cash on hand\nand on deposit shall be treated as investment capital or as business\ncapital as the taxpayer may elect;\n 7. "Business income" means entire net income minus investment income;\n 8. "Entire net income" means total net income from all sources which\nshall be the same as the taxpayer's entire federal taxable income\ncomputed without regard to any election under subchapter s of chapter\none of the internal revenue code, except as hereinafter provided, and\nsubject to any modification required by paragraph (d) of subdivision\nthree of section four of this part.\n (a) Entire net income shall not include:\n (1) income, gains and losses from subsidiary capital which do not\ninclude the amount of a recovery in respect of any war loss;\n (2) fifty per centum of dividends other than from subsidiaries;\n (3) bona fide gifts;\n (4) income and deductions with respect to amounts received from school\ndistricts and from corporations and associations, organized and operated\nexclusively for religious, charitable or educational purposes, no part\nof the net earnings of which inures to the benefit of any private\nshareholder or individual, for the operation of school buses; and\n (5) any refund or credit of a tax imposed under this part, or imposed\nby article nine or article nine-A of the tax law, for which tax no\nexclusion or deduction was allowed in determining the taxpayer's entire\nnet income under this part for any prior year;\n (6) in the case of a taxpayer who is separately or as a partner of a\npartnership doing an insurance business as a member of the New York\ninsurance exchange described in paragraph (a) of subdivision one of\nsection four hundred twenty-five-a of the insurance law, any item of\nincome, gain, loss or deduction of such business which is the taxpayer's\ndistributive or pro rata share for federal income tax purposes or which\nthe taxpayer is required to take into account separately for federal\nincome tax purposes.\n (7) for taxable years beginning after December thirty-first, nineteen\nhundred eighty-one, except with respect to property which is a qualified\nmass commuting vehicle described in subparagraph (D) of paragraph eight\nof subsection (f) of section one hundred sixty-eight of the internal\nrevenue code (relating to qualified mass commuting vehicles), any amount\nwhich is included in the taxpayer's federal taxable income solely as a\nresult of an election made pursuant to the provisions of such paragraph\neight as it was in effect for agreements entered into prior to January\nfirst, nineteen hundred eighty-four;\n (8) for taxable years beginning after December thirty-first, nineteen\nhundred eighty-one, except with respect to property which is a qualified\nmass commuting vehicle described in subparagraph (D) of paragraph eight\nof subsection (f) of section one hundred sixty-eight of the internal\nrevenue code (relating to qualified mass commuting vehicles), any amount\nwhich the taxpayer could have excluded from federal taxable income had\nit not made the election provided for in such paragraph eight as it was\nin effect for agreements entered into prior to January first, nineteen\nhundred eighty-four;\n (9) the amount deductible pursuant to paragraph (j) of this\nsubdivision; and\n (10) upon the disposition of recovery property to which paragraph (j)\nof this subdivision applies, the amount, if any, by which the aggregate\nof the amounts described in subparagraph eleven of paragraph (b) of this\nsubdivision attributable to such property exceeds the aggregate of the\namounts described in paragraph (j) of this subdivision attributable to\nsuch property.\n (11) for taxable years ending after September 10, 2001, the amount\ndeductible pursuant to paragraph (1) of this subdivision.\n (b) Entire net income shall be determined without the exclusion,\ndeduction or credit of:\n (1) the amount of any specific exemption or credit allowed in any law\nof the United States imposing any tax on or measured by the income of\ncorporations,\n (2) any part of any income from dividends or interest on any kind of\nstock, securities or indebtedness, except as provided in clauses one and\ntwo of paragraph (a) hereof,\n (3) taxes paid or accrued to the United States on or measured by\nprofits or income or to the state under article nine or nine-a of the\ntax law,\n (4) taxes imposed under this part,\n (4-a) (A) the entire amount allowable as an exclusion or deduction for\nstock transfer taxes imposed by article twelve of the tax law in\ndetermining the entire taxable income which the taxpayer is required to\nreport to the United States treasury department but only to the extent\nthat such taxes are incurred and paid in market making transactions and\n(B) the amount allowed as an exclusion or deduction for sales and use\ntaxes imposed by section eleven hundred seven of the tax law in\ndetermining the entire taxable income which the taxpayer is required to\nreport to the United States treasury department but only such portion of\nsuch exclusion or deduction which is not in excess of the amount of the\ncredit allowed pursuant to section four-b of this part.\n (4-b) the amount allowed as an exclusion or deduction imposed by the\ntax law in determining the entire taxable income which the taxpayer is\nrequired to report to the United States treasury department but only\nsuch portion of such exclusion or deduction which is not in excess of\nthe amount of the credit or part thereof allowed pursuant to section\nfour-c of this part with respect to a taxable year.\n (4-c) the amount allowed as an exclusion or deduction imposed by the\ntax law in determining the entire taxable income which the taxpayer is\nrequired to report to the United States treasury department but only\nsuch portion of such exclusion or deduction which is not in excess of\nthe amount of the credit allowed pursuant to section four-d of this\npart.\n (4-d) The amount allowed as an exclusion or deduction for sales and\nuse taxes imposed by section eleven hundred seven of the tax law in\ndetermining the entire taxable income which the taxpayer is required to\nreport to the United States Treasury Department but only such portion of\nsuch exclusion or deduction which is not in excess of the amount of the\ncredit allowed pursuant to section four-e of this part.\n (4-e) the amount allowed as an exclusion or deduction for sales and\nuse taxes imposed by section eleven hundred seven of the tax law in\ndetermining the entire taxable income which the taxpayer is required to\nreport to the United States treasury department, but only such portion\nof such exclusion or deduction which is not in excess of the amount of\nthe credit allowed pursuant to section four-f of this part.\n (5) ninety per centum of interest on indebtedness directly or\nindirectly owed to any stockholder or shareholder (including\nsubsidiaries of a corporate stockholder or shareholder), or members of\nthe immediate family of an individual stockholder or shareholder, owning\nin the aggregate in excess of five per centum of the issued capital\nstock of the taxpayer, except that such interest may, in any event, be\ndeducted\n (A) up to an amount not exceeding one thousand dollars,\n (B) in full to the extent that it relates to bonds or other evidences\nof indebtedness issued, with stock, pursuant to a bona fide plan of\nreorganization, to persons, who, prior to such reorganization, were bona\nfide creditors of the corporation or its predecessors, but were not\nstockholders or shareholders thereof,\n (C) in full where the investment allocation percentage is applied to\nentire net income, and\n (D) in full to the extent that it is paid to a federally licensed\nsmall business investment company;\n (6) in the discretion of the director of finance, any amount of\ninterest directly or indirectly and any other amount directly\nattributable as a carrying charge or otherwise to subsidiary capital or\nto income, gains or losses from subsidiary capital; and\n (7) any amount by reason of the granting, issuing or assuming of a\nrestricted stock option, as defined in the internal revenue code of\nnineteen hundred fifty-four, or by reason of the transfer of the share\nof stock upon the exercise of the option, unless such share is disposed\nof by the grantee of the option within two years from the date of the\ngranting of the option or within six months after the transfer of such\nshare to him;\n (8) in the case of a taxpayer who is separately or as a partner of a\npartnership doing an insurance business as a member of the New York\ninsurance exchange described in paragraph (a) of subdivision one of\nsection four hundred twenty-five-a of the insurance law, such taxpayer's\ndistributive or pro rata share of the allocated entire net income of\nsuch business as determined under sections fifteen hundred three and\nfifteen hundred four of the tax law, provided however, in the event such\nallocated entire net income is a loss, such taxpayer's distributive or\npro rata share of such loss shall not be subtracted from federal taxable\nincome in computing entire net income under this subdivision.\n (9) for taxable years beginning after December thirty-first, nineteen\nhundred eighty-one, except with respect to property which is a qualified\nmass commuting vehicle described in subparagraph (D) of paragraph eight\nof subsection (f) of section one hundred sixty-eight of the internal\nrevenue code (relating to qualified mass commuting vehicles), any amount\nwhich the taxpayer claimed as a deduction in computing its federal\ntaxable income solely as a result of an election made pursuant to the\nprovisions of such paragraph eight as it was in effect for agreements\nentered into prior to January first, nineteen hundred eighty-four;\n (10) for taxable years beginning after December thirty-first, nineteen\nhundred eighty-one, except with respect to property which is a qualified\nmass commuting vehicle described in subparagraph (D) of paragraph eight\nof subsection (f) of section one hundred sixty-eight of the internal\nrevenue code (relating to qualified mass commuting vehicles), any amount\nwhich the taxpayer would have been required to include in the\ncomputation of its federal taxable income had it not made the election\npermitted pursuant to such paragraph eight as it was in effect for\nagreements entered into prior to January first, nineteen hundred\neighty-four;\n (11) for taxable years beginning after December thirty-first, nineteen\nhundred eighty-one, except with respect to recovery property subject to\nthe provisions of section two hundred eighty-F of the internal revenue\ncode and recovery property placed in service in this state in taxable\nyears beginning after December thirty-first, nineteen hundred\neighty-four the amount allowable as a deduction under section one\nhundred sixty-eight of the internal revenue code;\n (12) upon the disposition of recovery property to which paragraph (j)\nof this subdivision applies, the amount, if any, by which the aggregate\nof the amounts described in such paragraph (j) attributable to such\nproperty exceeds the aggregate of the amounts described in subparagraph\neleven of this paragraph attributable to such property.\n (13) for taxable years ending after September 10, 2001, in the case of\nqualified property described in paragraph 2 of subsection k of section\n168 of the internal revenue code, other than qualified resurgence zone\nproperty described in paragraph (n) of this subdivision, and other than\nqualified New York Liberty Zone property described in paragraph 2 of\nsubsection b of section 1400L of the internal revenue code (without\nregard to clause (i) of subparagraph (C) of such paragraph), the amount\nallowable as a deduction under section 167 of the internal revenue code.\n (c) Entire net income shall include income within and without the\nUnited States;\n (d) The director of finance may, whenever necessary in order properly\nto reflect the entire net income of any taxpayer, determine the year or\nperiod in which any item of income or deduction shall be included,\nwithout regard to the method of accounting employed by the taxpayer;\n (e) The entire net income of any bridge commission created by act of\ncongress to construct a bridge across an international boundary means\nits gross income less the expense of maintaining and operating its\nproperties, the annual interest upon its bonds and other obligations,\nand the annual charge for the retirement of such bonds or obligations at\nmaturity;\n (f) A net operating loss deduction shall be allowed which shall be the\nsame as the net operating loss deduction allowed under section one\nhundred seventy-two of the internal revenue code or which would have\nbeen allowed if the taxpayer had not made an election under subchapter s\nof chapter one of the internal revenue code, except that (1) any net\noperating loss included in determining such deduction shall be adjusted\nto reflect the inclusions and exclusions from entire net income pursuant\nto paragraphs (a), (b), (g) and (h) hereof, (2) such deductions shall\nnot include any net operating loss sustained during any taxable year in\nwhich the taxpayer was not subject to the tax imposed by this part, (3)\nsuch deduction shall not exceed the deduction for the taxable year\nallowable under section one hundred seventy-two of the internal revenue\ncode, or the deduction for the taxable year which would have been\nallowable if the taxpayer had not made an election under subchapter s of\nchapter one of the internal revenue code, and (4) any net operating loss\nfor a taxable year beginning in nineteen hundred eighty-one shall be\ncomputed without regard to the deduction allowed with respect to\nrecovery property under section one hundred sixty-eight of the internal\nrevenue code; in lieu of such deduction, a taxpayer shall be allowed for\nsuch taxable year with respect to such property the depreciation\ndeduction allowable under section one hundred sixty-seven of such code\nas such section was in full force and effect on December thirty-first,\nnineteen hundred eighty;\n (g) At the election of the taxpayer, a deduction shall be allowed for\nexpenditures paid or incurred during the taxable year for the\nconstruction, reconstruction, erection or improvement of industrial\nwaste treatment facilities and air pollution control facilities.\n (1) (A) The term "industrial waste treatment facilities" shall mean\nfacilities for the treatment, neutralization or stabilization of\nindustrial waste (as the term "industrial waste" is defined in section\ntwelve hundred two of the public health law) from a point immediately\npreceding the point of such treatment, neutralization or stabilization\nto the point of disposal, including the necessary pumping and\ntransmitting facilities, but excluding such facilities installed for the\nprimary purpose of salvaging materials which are usable in the\nmanufacturing process or are marketable.\n (B) The term "air pollution control facilities" shall mean facilities\nwhich remove, reduce, or render less noxious air contaminants emitted\nfrom an air contamination source (as the terms "air contaminant" and\n"air contamination source" are defined in section twelve hundred\nsixty-seven of the state public health law) from a point immediately\npreceding the point of such removal, reduction or rendering to the point\nof discharge of air, meeting emission standards as established by the\nair pollution control board, but excluding such facilities installed for\nthe primary purpose of salvaging materials which are usable in the\nmanufacturing process or are marketable and excluding those facilities\nwhich rely for their efficacy on dilution, dispersion or assimilation of\nair contaminants in the ambient air after emission.\n (2) However, such deduction shall be allowed only\n (A) with respect to tangible property which is depreciable, pursuant\nto section one hundred sixty-seven of the internal revenue code, having\na situs in the city and used in the taxpayer's trade or business, the\nconstruction, reconstruction, erection or improvement of which, in the\ncase of industrial waste treatment facilities, is initiated on or after\nJanuary first, nineteen hundred sixty-six, and only for expenditures\npaid or incurred prior to January first, nineteen hundred seventy-two,\nor which, in the case of air pollution control facilities, is initiated\non or after January first, nineteen hundred sixty-six, and\n (B) on condition that such facilities have been certified by the state\ncommissioner of health or his designated representative, pursuant to the\npublic health law, as complying with applicable provisions of the public\nhealth law, the state sanitary code and regulations, permits or orders\nissued pursuant thereto, and\n (C) on condition that entire net income for the taxable year and all\nsucceeding taxable years be computed without any deductions for such\nexpenditures or for depreciation of the same property other than the\ndeductions allowed by this paragraph (g) except to the extent that the\nbasis of the property may be attributable to factors other than such\nexpenditures, or in case a deduction is allowable pursuant to this\nparagraph for only a part of such expenditures, on condition that any\ndeduction allowed for federal income tax purposes for such expenditures\nor for depreciation of the same property be proportionately reduced in\ncomputing entire net income for the taxable year and all succeeding\ntaxable years, and\n (D) where the election provided for in paragraph (d) of subdivision\nthree of section four of this part has not been exercised in respect to\nthe same property.\n (3) (A) If expenditures in respect to an industrial waste treatment\nfacility or an air pollution control facility have been deducted as\nprovided herein and if within ten years from the end of the taxable year\nin which such deduction was allowed such property or any part thereof is\nused for the primary purpose of salvaging materials which are usable in\nthe manufacturing process or are marketable, the taxpayer shall report\nsuch change of use in its report for the first taxable year during which\nit occurs, and the director of finance may recompute the tax for the\nyear or years for which such deduction was allowed and any carryback or\ncarryover year, and may assess any additional tax resulting from such\nrecomputation within the time fixed by paragraph (h) of subdivision\nthree of section seventy-four.\n (B) If a deduction is allowed as herein provided for expenditures paid\nor incurred during any taxable year on the basis of a temporary\ncertificate of compliance issued pursuant to the public health law and\nif the taxpayer fails to obtain a permanent certificate of compliance\nupon completion of the facilities with respect to which such temporary\ncertificate was issued, the taxpayer shall report such failure in its\nreport for the taxable year during which such facilities are completed,\nand the director of finance may recompute the tax for the year or years\nfor which such deduction was allowed and any carryback or carryover\nyear, and may assess any additional tax resulting from such\nrecomputation within the time fixed by paragraph (h) of subdivision\nthree of section seventy-four.\n (4) In any taxable year when property is sold or otherwise disposed\nof, with respect to which a deduction has been allowed pursuant to this\nparagraph, such deduction shall be disregarded in computing gain or\nloss, and the gain or loss on the sale or other disposition of such\nproperty shall be the gain or loss entering into the computation of\nentire taxable income which the taxpayer is required to report to the\nUnited States treasury department for such taxable year;\n (h) With respect to gain derived from the sale or other disposition of\nany property acquired prior to January first, nineteen hundred\nsixty-six, which had a federal adjusted basis on such date (or on the\ndate of its sale or other disposition prior to January first, nineteen\nhundred sixty-six) lower than its fair market value on January first,\nnineteen hundred sixty-six or the date of its sale or other disposition\nprior thereto, except property described in subsections one and four of\nsection twelve hundred twenty-one of the internal revenue code, the\ndifference between---\n (a) the amount of the taxpayer's federal taxable income, and\n (b) the amount of the taxpayer's federal taxable income (if smaller\nthan the amount described in (a)) computed as if the federal adjusted\nbasis of each such property (on the sale or other disposition of which\ngain was derived) on the date of the sale or other disposition had been\nequal to either (i) its fair market value on January first, nineteen\nhundred sixty-six or the date of its sale or other disposition prior to\nJanuary first, nineteen hundred sixty-six, plus or minus all adjustments\nto basis made with respect to such property for federal income tax\npurposes for periods on and after January first, nineteen hundred\nsixty-six or (ii) the amount realized from its sale or disposition,\nwhichever is lower; provided, however, that the total modification\nprovided by this paragraph (h) shall not exceed the amount of the\ntaxpayer's net gain from the sale or other disposition of all such\nproperty.\n (i) If the period covered by a report under this part is other than\nthe period covered by the report to the United States treasury\ndepartment, entire net income shall be determined by multiplying the\nfederal taxable income (as adjusted pursuant to the provisions of this\npart) by the number of calendar months or major parts thereof covered by\nthe report under this part and dividing by the number of calendar months\nor major parts thereof covered by the report to such department. If it\nshall appear that such method of determining entire net income does not\nproperly reflect the taxpayer's income during the period covered by the\nreport under this part, the director of finance shall be authorized in\nhis discretion to determine such entire net income solely on the basis\nof the taxpayer's income during the period covered by its report under\nthis part.\n (j) For taxable years beginning after December thirty-first, nineteen\nhundred eighty-one, except with respect to recovery property subject to\nthe provisions of section two hundred eighty-F of the internal revenue\ncode and recovery property placed in service in this state in taxable\nyears beginning after December thirty-first, nineteen hundred\neighty-four, and provided a deduction has not been excluded from entire\nnet income pursuant to subparagraph nine of paragraph (b) of this\nsubdivision, a taxpayer shall be allowed with respect to recovery\nproperty the depreciation deduction allowable under section one hundred\nsixty-seven of the internal revenue code as such section would have\napplied to property placed in service on December thirty-first, nineteen\nhundred eighty.\n (l) for taxable years ending after September 10, 2001, in the case of\nqualified property described in paragraph 2 of subsection k of section\n168 of the internal revenue code, other than qualified resurgence zone\nproperty described in paragraph (n) of this subdivision, and other than\nqualified New York Liberty Zone property described in paragraph 2 of\nsubsection b of section 1400L of the internal revenue code (without\nregard to clause (i) of subparagraph (C) of such paragraph), a taxpayer\nshall be allowed with respect to such property the depreciation\ndeduction allowable under section 167 of the internal revenue code as\nsuch section would have applied to such property had it been acquired by\nthe taxpayer on September 10, 2001.\n (m) for taxable years ending after September 10, 2001, upon the\ndisposition of property to which paragraph (l) of this subdivision\napplies, the amount of any gain or loss includible in entire net income\nshall be adjusted to reflect the inclusions and exclusions from entire\nnet income pursuant to subparagraph 11 of paragraph (a) and subparagraph\n13 of paragraph (b) of this subdivision attributable to such property.\n (n) for purposes of paragraphs (l) and (m) of this subdivision,\nqualified resurgence zone property shall mean qualified property\ndescribed in paragraph 2 of subsection k of section 168 of the internal\nrevenue code substantially all of the use of which is in the resurgence\nzone, as defined below, and is in the active conduct of a trade or\nbusiness by the taxpayer in such zone, and the original use of which in\nthe resurgence zone commences with the taxpayer after September 10,\n2001. The resurgence zone shall mean the area of New York county bounded\non the south by a line running from the intersection of the Hudson River\nwith the Holland Tunnel, and running thence east to Canal Street, then\nrunning along the centerline of Canal Street to the intersection of the\nBowery and Canal Street, running thence in a southeasterly direction\ndiagonally across Manhattan Bridge Plaza, to the Manhattan Bridge and\nthence along the centerline of the Manhattan Bridge to the point where\nthe centerline of the Manhattan Bridge would intersect with the easterly\nbank of the East River, and bounded on the north by a line running from\nthe intersection of the Hudson River with the Holland Tunnel and running\nthence north along West Avenue to the intersection of Clarkson Street\nthen running east along the centerline of Clarkson Street to the\nintersection of Washington Avenue, then running south along the\ncenterline of Washington Avenue to the intersection of West Houston\nStreet, then east along the centerline of West Houston Street, then at\nthe intersection of the Avenue of the Americas continuing east along the\ncenterline of East Houston Street to the easterly bank of the East\nRiver.\n 9. (a) The term "calendar year" means a period of twelve calendar\nmonths (or any shorter period beginning on the date the taxpayer becomes\nsubject to the tax imposed by this part) ending on the thirty-first day\nof December, provided the taxpayer keeps its books on the basis of such\nperiod or on the basis of any period ending on any day other than the\nlast day of a calendar month, or provided the taxpayer does not keep\nbooks, and includes, in case the taxpayer changes the period on the\nbasis of which it keeps its books from a fiscal year to a calendar year,\nthe period from the close of its last old fiscal year up to and\nincluding the following December thirty-first.\n (b) The term "fiscal year" means a period of twelve calendar months\n(or any shorter period beginning on the date the taxpayer becomes\nsubject to the tax imposed by this part) ending on the last day of any\nmonth other than December, provided the taxpayer keeps its books on the\nbasis of such period, and includes, in case the taxpayer changes the\nperiod on the basis of which it keeps its books from a calendar year to\na fiscal year or from one fiscal year to another fiscal year, the period\nfrom the close of its last old calendar or fiscal year up to the date\ndesignated as the close of its new fiscal year.\n 10. The term "tangible personal property" means corporeal personal\nproperty, such as machinery, tools, implements, goods, wares and\nmerchandise, and does not mean money, deposits in banks, shares of\nstock, bonds, notes, credits or evidences of an interest in property and\nevidences of debt.\n