§ 4-A — Credit relating to stock transfer tax

§ 4-a. Credit relating to stock transfer tax. (1) A taxpayer shall be\nallowed a credit, to be credited or refunded in the manner hereinafter\nprovided in this section, against the tax imposed by this part. The\namount of such credit shall be fifty per cent of the tax incurred in\nmarket making transactions under the provisions of article twelve of the\ntax law on such transactions subject to such tax occurring on and after\nAugust first, nineteen hundred seventy-six and paid by such taxpayer\n(except when such tax shall have been paid pursuant to section two\nhundred seventy-nine-a of such tax law).\n (2) For purposes of this subsection:\n (a) the term "taxpayer" shall mean any corporation subject to tax\nunder this part registered with the United States securities and\nexchange commission in accordance with subsection (b) of section fifteen\nof the securities exchange act of nineteen hundred thirty-four, as\namended, and acting as a dealer in a transaction described in paragraph\n(b) of this subdivision, and\n (b) the term "market making transaction" shall mean any transaction\ninvolving a sale (including a short sale) by a dealer of shares or\ncertificates subject to the tax imposed by article twelve of the tax\nlaw, provided such shares or certificates are sold:\n (i) as stock in trade or inventory or as property held for sale in the\nordinary course of such dealer's trade or business (including transfers\nwhich are part of an underwriting),\n (ii) in (a) a bona fide arbitrage transaction; (b) a bona fide hedge\ntransaction involving a long or short position in any equity security\nand a long or short position in a security entitling the holder to\nacquire or sell such equity security; or (c) a risk arbitrage\ntransaction in connection with a merger, acquisition, tender offer,\nrecapitalization, reorganization, or similar transaction, or\n (iii) to offset a transaction made in error.\n Provided, however, that, except as to subparagraph (ii) (c) of this\nparagraph, the term "market making transaction" shall not include any\nsale of shares or certificates identified in such dealer's records as a\nsecurity held for investment within the meaning of section twelve\nhundred thirty-six of the internal revenue code.\n (3) The credit allowed under this section for any taxable year shall\nbe deemed to be an overpayment of tax by the taxpayer to be credited or\nrefunded in accordance with the provisions of section seventy-seven of\nthis title, except as otherwise provided in subdivision three of section\nsix and subdivision eleven of section eight of this part; provided,\nhowever, that the provisions of this chapter notwithstanding, the amount\nto be refunded pursuant to this section shall not be paid prior to the\nfirst day of the eighth month following the close of the taxable year,\nand the provisions of subdivision three of section seventy-nine of this\ntitle notwithstanding, interest shall be allowed and paid on the\noverpayment of the credit under this section from the first day of the\neleventh month following the close of the taxable year, or three months\nafter a claim for the credit or refund provided for in this section has\nbeen filed, whichever is later.\n (4) Provided, however, that the credit provided under this subsection\nshall be allowed only to the extent that the amount of credit allowable\nwith respect to market making transactions under the provisions of this\nsubsection (determined without regard to the provisions of this\nsubdivision) exceeds fifty percent of all rebates (provided for under\nthe provisions of section two hundred eighty-a of article twelve of the\ntax law) allowed for such taxes incurred in the same market making\ntransactions with respect to which the credit is allowed. No credit\nshall be allowed under this subsection with respect to any tax incurred\nin market making transactions occurring on or after October first,\nnineteen hundred eighty-one.\n