N.Y. General City Law art. 2-D, § 12: City adjusted gross income of a resident individual

§ 12. City adjusted gross income of a resident individual.--(a)

General.--The city adjusted gross income of a resident individual means

his federal adjusted gross income as defined in the laws of the United

States for the taxable year, with the modifications specified in this

section.

(b) Modifications increasing federal adjusted gross income.--There

shall be added to federal adjusted gross income:

(1) Interest income on obligations of any state other than this state

or of a political subdivision of any such other state unless created by

compact or agreement to which this state is a party;

(2) Interest or dividend income on obligations or securities of any

authority, commission, or instrumentality of the United States, which

the laws of the United States exempt from federal income tax but not

from state or local income taxes;

(3) Income taxes imposed by the city, this state or any other taxing

jurisdiction, to the extent deductible in determining federal adjusted

gross income and not credited against federal income tax;

(4) Interest on indebtedness incurred or continued to purchase or

carry obligations or securities the income from which is exempt from tax

under this local law, to the extent deductible in determining federal

adjusted gross income;

(5) Expenses paid or incurred during the taxable year for (A) the

production or collection of income which is exempt from tax under this

local law, or (B) the management, conservation or maintenance of

property held for the production of such income, and the amortizable

bond premium for the taxable year on any bond the interest on which is

exempt from tax under this local law, to the extent that such expenses

and premiums are deductible in determining federal adjusted gross

income; and

(6) In the case of a taxpayer who has exercised the election permitted

by subdivisions (g) or (h) of this section, the amount or amounts

required by said subdivisions to be added to federal adjusted gross

income.

(c) Modifications reducing federal adjusted gross income.--There shall

be subtracted from federal adjusted gross income:

(1) Interest income on obligations of the United States and its

possessions to the extent includible in gross income for federal income

tax purposes;

(2) Interest or dividend income on obligations or securities of any

authority, commission or instrumentality of the United States to the

extent includible in gross income for federal income tax purposes but

exempt from state or local income taxes under the laws of the United

States;

(3) Pensions to officers and employees of this state, its subdivisions

and agencies, to the extent includible in gross income for federal

income tax purposes;

(4) Interest or dividend income on obligations or securities to the

extent exempt from income tax under the laws of this state authorizing

the issuance of such obligations or securities but includible in gross

income for federal income tax purposes;

(5) The amount of any refund or credit for overpayment of income taxes

imposed by the city, the state, or any other taxing jurisdiction, to the

extent properly included in gross income for federal income tax

purposes;

(6) Interest on indebtedness incurred or continued to purchase or

carry obligations or securities the income from which is subject to tax

under this local law but exempt from federal income tax, to the extent

that such interest is not deductible in determining federal adjusted

gross income and is attributable to a trade or business carried on by

the taxpayer;

(7) Ordinary and necessary expenses paid or incurred during the

taxable year for (A) the production or collection of income which is

subject to tax under this local law but exempt from federal income tax,

or (B) the management, conservation or maintenance of property held for

the production of such income, and the amortizable bond premium for the

taxable year on any bond the interest on which is subject to tax under

this local law but exempt from federal income tax, to the extent that

such expenses and premiums are not deductible in determining federal

adjusted gross income and are attributable to a trade or business

carried on by the taxpayer;

(8) In the case of a taxpayer who has exercised the election permitted

by subdivisions (g) or (h) of this section, the amount or amounts

required by said subdivisions to be subtracted from federal adjusted

gross income;

(9) With respect to gain derived from the sale or other disposition of

any property acquired prior to July first, nineteen hundred sixty-six,

except property described in subsections one and four of section twelve

hundred twenty-one of the internal revenue code, the difference

between--

(a) the amount of the taxpayer's federal adjusted gross income or, in

the case of an estate or trust, the taxpayer's taxable income, and

(b) the amount of the taxpayer's federal adjusted gross income or, in

the case of an estate or trust, the taxpayer's taxable income (if

smaller than the amount described in (a)) computed as if the federal

adjusted basis of such property (on the sale or other disposition of

which gain was derived) on the date of the sale or other disposition had

been equal to either (i) its fair market value on July first, nineteen

hundred sixty-six or the date of its sale or other disposition prior to

July first, nineteen hundred sixty-six, plus or minus all adjustments to

basis made with respect to such property for federal income tax purposes

for periods on and after July first, nineteen hundred sixty-six or (ii)

the amount realized from its sale or disposition, whichever is lower;

provided, however, that the total modification provided by this

subparagraph shall not exceed the amount described in (i), (ii) or

(iii)--

(i) if the taxpayer's federal adjusted gross income reflects a net

gain from the sale or other disposition of property, except property

described in subsections one and four of section twelve hundred

twenty-one of the internal revenue code, the amount of such gain plus

one thousand dollars,

(ii) if the taxpayer's federal adjusted gross income reflects a net

loss from the sale or other disposition of property, except property

described in subsections one and four of section twelve hundred

twenty-one of the internal revenue code, the amount by which one

thousand dollars exceeds such loss,

(iii) if the taxpayer's federal adjusted gross income reflects neither

a net gain nor a net loss from the sale or other disposition of

property, other than property described in subsections one and four of

section twelve hundred twenty-one of the internal revenue code, one

thousand dollars.

(d) Modification for city fiduciary adjustment.--There shall be added

to or subtracted from federal adjusted gross income (as the case may be)

the taxpayer's share, as beneficiary of an estate or trust, of the city

fiduciary adjustment determined under section nineteen.

(e) Partners.--The amounts of modifications required to be made under

this section by a partner, which relate to items of income, gain, loss

or deduction of a partnership, shall be determined under section

seventeen.

(f) Husband and wife.--If husband and wife determine their federal

income tax on a joint return but determine their city income taxes

separately, they shall determine their city adjusted gross incomes

separately as if their federal adjusted gross incomes had been

determined separately.

(g) Optional modifications.--At the election of the taxpayer there

shall also be subtracted from federal adjusted gross income either or

both of the items set forth in paragraphs one and two of this

subdivision, except that only one of such items shall be subtracted with

respect to any one item of property.

(1) Depreciation with respect to any property such as described in

paragraph three of this subdivision, not exceeding twice the

depreciation allowed with respect to the same property for federal

income tax purposes. Such modification shall be allowed only upon

condition that any depreciation allowed with respect to the same

property in determining federal adjusted gross income shall be added to

federal adjusted gross income pursuant to paragraph six of subdivision

(b) of this section. The total of all deductions allowed pursuant to

this paragraph in any taxable year or years with respect to any property

shall not exceed its cost or other basis.

(2) Expenditures paid or incurred during the taxable year for the

construction, reconstruction, erection or acquisition of any property

such as described in paragraph three of this subdivision which is used

or to be used for purposes of research and development in the

experimental or laboratory sense. Such purposes shall not be deemed to

include the ordinary testing or inspection of materials or products for

quality control, efficiency surveys, management studies, consumer

surveys, advertising, promotions or research in connection with

literary, historical or similar projects. Such modification shall be

allowed only on condition that, for the taxable years, and all

succeeding years, any deductions allowed for federal income tax purposes

on account of such expenditures or on account of depreciation of the

same property, except to the extent that its basis may be attributable

to factors other than such expenditures, shall be added to federal

adjusted gross income pursuant to paragraph six of subdivision (b) of

this section, or in case a modification is allowable pursuant to this

paragraph for only a part of such expenditures, on condition that a

proportionate part of any such deductions allowed for federal income tax

purposes be added to federal adjusted gross income. With respect to

property which is used or to be used for research and development only

in part, or during only part of its useful life, the modification

allowable pursuant to this paragraph shall be limited to a proportionate

part of the expenditures relating thereto. If a modification shall have

been allowed pursuant to this paragraph for all or part of such

expenditures with respect to any property, and such property is used for

purposes other than research and development to a greater extent than

originally reported, the taxpayer shall report such use in his return

for the first taxable year during which it occurs, and the administrator

may recompute the tax for the year or years for which such deduction was

allowed, and may assess any additional tax resulting from such

recomputation within the time fixed by subdivision (c) of section

sixty-three of this local law.

(3) Such modifications shall be allowed only with respect to tangible

property which is depreciable pursuant to section one hundred

sixty-seven of the internal revenue code, having a situs in the city and

used in the taxpayer's trade or business, (A) the construction,

reconstruction or erection of which is completed after June thirtieth,

nineteen hundred sixty-six, and then only with respect to that portion

of the basis thereof or the expenditures relating thereto which is

properly attributable to such construction, reconstruction or erection

after June thirtieth, nineteen hundred sixty-six, or (B) acquired after

June thirtieth, nineteen hundred sixty-six by purchase as defined in

section one hundred seventy-nine (d) of the internal revenue code, if

the original use of such property commenced with the taxpayer, commenced

in the city and commenced after such date.

(4) If the modifications allowable for any taxable year pursuant to

this subdivision exceed the taxpayer's city adjusted gross income,

determined without the allowance of such modifications, the excess may

be carried over to the following taxable year or years and may be

subtracted from federal adjusted gross income for such year or years.

(5) In any taxable year when property is sold or otherwise disposed

of, with respect to which a modification has been allowed pursuant to

paragraph one or two of this subdivision, the basis of such property

shall be adjusted to reflect the modifications so allowed, and if the

basis as so adjusted is lower than the adjusted basis of the same

property for federal income tax purposes, there shall be added to

federal adjusted gross income the amount of the difference between such

adjusted bases; but if such gain or loss is considered a long-term

capital gain or loss for federal income tax purposes, the amount to be

added shall be limited to fifty percent of the difference between such

adjusted bases.

(h) Optional modification for waste treatment facility

expenditures.--At the election of the taxpayer, there shall also be

subtracted from federal adjusted gross income expenditures paid or

incurred during the taxable year for the construction, reconstruction,

erection or improvement of industrial waste treatment facilities and air

pollution control facilities.

(1) (A) The term "industrial waste treatment facilities" shall mean

facilities for the treatment, neutralization, or stabilization of

industrial waste (as the term "industrial waste" is defined in section

twelve hundred two of the State public health law) from a point

immediately preceding the point of such treatment, neutralization or

stabilization to the point of disposal, including the necessary pumping

and transmitting facilities, but excluding such facilities installed for

the primary purpose of salvaging materials which are usable in the

manufacturing process or are marketable.

(B) The term "air pollution control facilities" shall mean facilities

which remove, reduce, or render less noxious air contaminants emitted

from an air contamination source (as the terms "air contaminant" and

"air contamination source" are defined in section twelve hundred

sixty-seven of the state public health law) from a point immediately

preceding the point of such removal, reduction or rendering the point of

discharge of air, meeting emission standards as established by the air

pollution control board, but excluding such facilities installed for the

primary purpose of salvaging materials which are usable in the

manufacturing process or are marketable and excluding those facilities

which rely for their efficacy on dilution, dispersion or assimilation of

air contaminants in the ambient air after emmission.

(2) Such modifications shall be allowed only

(A) with respect to tangible property which is depreciable, pursuant

to section one hundred sixty-seven of the internal revenue code, having

a situs in the city and used in the taxpayer's trade or business, the

construction, reconstruction, erection or improvement of which, in the

case of industrial waste treatment facilities, is initiated on or after

July first, nineteen hundred sixty-six, and only for expenditures paid

or incurred prior to January first, nineteen hundred seventy-two, or

which, in the case of air pollution control facilities, is initiated on

or after July first, nineteen hundred sixty-six, and

(B) on condition that such facilities have been certified by the state

commissioner of health or his designated representative, pursuant to the

state public health law, as complying with the provisions of the state

public health law, the state sanitary code and regulations, permits or

orders promulgated pursuant thereto, and

(C) on condition that for the taxable year and all succeeding taxable

years, any deductions allowed for federal income tax purposes for such

expenditures or for depreciation of the same property, except to the

extent that its basis may be attributable to factors other than such

expenditures, be added to federal adjusted gross income pursuant to

paragraph six of subdivision (b) of this section, or in case a

modification is allowable pursuant to this paragraph for only a part of

such expenditures, on condition that a proportionate amount of any such

deductions allowed for federal income tax purposes be added to federal

adjusted gross income, and

(D) where the election provided for in subdivision (g) of section

twelve has not been exercised in respect to the same property.

(3) (A) If expenditures in respect to an industrial waste treatment

facility or an air pollution control facility have been allowed as a

modification as provided herein and if within ten years from the end of

the taxable year in which such modification was allowed such property or

any part thereof is used for the primary purpose of salvaging materials

which are usable in the manufacturing process or are marketable, the

taxpayer shall report such change of use in its return for the first

taxable year during which it occurs, and the administrator may recompute

the tax for the year or years for which such modification was allowed,

and may assess any additional tax resulting from such recomputation

within the time fixed by paragraph eight of subdivision (c) of section

sixty-three.

(B) If a modification is allowed as herein provided for expenditures

paid or incurred during any taxable year on the basis of a temporary

certificate of compliance issued pursuant to the state public health

law, and if the taxpayer fails to obtain a permanent certificate of

compliance upon completion of the facilities with respect to which such

temporary certificate was issued, the taxpayer shall report such failure

in its report for the taxable year during which such facilities are

completed, and the administrator may recompute the tax for the year or

years for which such modification was allowed, and may assess any

additional tax resulting from such recomputation within the time fixed

by paragraph eight of subdivision (c) of section sixty-three.

(4) In any taxable year when property is sold or otherwise disposed

of, with respect to which a modification has been allowed pursuant to

this paragraph, such modification shall be disregarded in computing gain

or loss, and the gain or loss on the sale or other disposition of such

property shall be the gain or loss entering into the computation of

federal adjusted gross income for such taxable year.