N.Y. General City Model 772/66 § 106: Unincorporated business deductions

§ 106. Unincorporated business deductions. The unincorporated business

deductions of an unincorporated business means the items of loss and

deduction directly connected with or incurred in the conduct of the

business, which are allowable for federal income tax purposes for the

taxable year (including losses and deductions connected with any

property employed in the business), with the following modifications:

(1) A deduction shall be allowed for charitable contributions of the

unincorporated business, to the extent that such contributions would be

deductible for federal income tax purposes if made by a corporation, but

not in excess of five per centum of the amount by which the

unincorporated business gross income exceeds the unincorporated business

deductions computed without the benefit of any deduction for charitable

contributions.

(2) A deduction shall be allowed for net operating losses incurred by

the unincorporated business in an amount computed in the same manner as

the net operating loss deduction which would be allowable for the

taxable year for federal income tax purposes if the unincorporated

business were an individual taxpayer (but determined solely by reference

to the unincorporated business gross income and unincorporated business

deductions, allocated to the city, of the unincorporated business). Such

deduction shall not include any net operating loss sustained during any

taxable year ending prior to January first, nineteen hundred sixty-six

and for the purposes of this paragraph net operating losses shall be

determined without regard to any deductions allowed pursuant to

subsection (b) of section one hundred eight and any net operating loss

for a taxable year beginning in nineteen hundred eighty-one shall be

computed without regard to the deduction allowed with respect to

recovery property under section one hundred sixty-eight of the internal

revenue code; in lieu of such deduction, a taxpayer shall be allowed for

such taxable year with respect to such property the depreciation

deduction allowable under section one hundred sixty-seven of such code

as such section was in full force and effect on December thirty-first,

nineteen hundred eighty.

(3) No deduction shall be allowed (except as provided in section one

hundred eight) for amounts paid or incurred to a proprietor or partner

for services or for use of capital.

(4) No deduction shall be allowed for income taxes imposed by the

city, this state or any other taxing jurisdiction.

(5) No deduction shall be allowed for (A) interest on indebtedness

incurred or continued to purchase or carry obligations or securities the

income from which is exempt from tax under this title; (B) expenses paid

or incurred for the production or collection of such income or the

management, conservation or maintenance of property held for the

production of such income; or (C) the amortizable bond premium on any

bond the interest income from which is so exempt.

(6) No deduction shall be allowed in respect of the excess of net

long-term capital gain over net short-term capital loss, but capital

losses incurred in the unincorporated business shall be treated as

ordinary losses and shall be allowed in full.

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

by subdivision (b) of section one hundred eight, no deduction shall be

allowed for expenditures with reference to the property to which such

election relates, or for depreciation of such property, except as

permitted by said subdivision.

(8) A deduction shall be allowed for (A) interest on indebtedness

incurred or continued to purchase or carry obligations or securities the

income from which is subject to tax under this title but exempt from

federal income tax; (B) ordinary and necessary expenses paid or incurred

during the taxable year for the production or collection of such income

or the management, conservation or maintenance of property held for the

production of such income; and (C) the amortizable bond premium for the

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

this title but exempt from federal income tax.

(9) At the election of the taxpayer, a deduction shall be allowed for

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.

(A) (i) 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.

(ii) 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 to 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 emission.

(B) However, such deduction shall be allowed only

(i) 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

January 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 January first, nineteen hundred sixty-six, and

(ii) 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

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

taxable years, no deduction for such expenditures or for depreciation of

the same property allowed for federal income tax purposes shall be

allowed under this title, except to the extent that the basis of the

property may be attributable to factors other than such expenditures, or

in case a deduction is allowable pursuant to this paragraph nine, for

only a part of such expenditures, on condition that any deduction

allowed for federal income tax purposes for such expenditures or for

depreciation of the same property be proportionately reduced in

computing unincorporated business deductions for the taxable year and

all succeeding taxable years, and

(iv) where the election provided for in subdivision (b) of section one

hundred eight has not been exercised in respect to the same property.

(C) (i) If expenditures in respect to an industrial waste treatment

facility or an air pollution control facility have been deducted as

provided herein and if within ten years from the end of the taxable year

in which such deduction 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 director of finance may recompute the tax for the

year or years for which such deduction was allowed and any carryback or

carryover year, and may assess any additional tax resulting from such

recomputation within the time fixed by paragraph eight of subdivision

(c) of section one hundred thirty-one.

(ii) If a deduction 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 director of finance may recompute the tax for the

year or years for which such deduction was allowed and any carryback or

carryover year, and may assess any additional tax resulting from such

recomputation within the time fixed by paragraph eight of subdivision

(c) of section one hundred thirty-one.

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

of, with respect to which a deduction has been allowed pursuant to this

paragraph nine, such deduction 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 allowable for federal income tax

purposes for such taxable year.

(10) For taxable years beginning after December thirty-first, nineteen

hundred eighty-one, except with respect to property which is a qualified

mass commuting vehicle described in subparagraph (D) of paragraph eight

of subsection (f) of section one hundred sixty-eight of the internal

revenue code (relating to qualified mass commuting vehicles), a

deduction shall be allowed for any amount which the taxpayer could have

excluded for purposes of this title had it not made the election

provided for in such paragraph eight as it was in effect for agreements

entered into prior to January first, nineteen hundred eighty-four.

(11) For taxable years beginning after December thirty-first, nineteen

hundred eighty-one, except with respect to property which is a qualified

mass commuting vehicle described in subparagraph (D) of paragraph eight

of subsection (f) of section one hundred sixty-eight of the internal

revenue code (relating to qualified mass commuting vehicles), no

deduction shall be allowed for any amount deductible for federal income

tax purposes solely as a result of an election made pursuant to the

provisions of such paragraph eight as it was in effect for agreements

entered into prior to January first, nineteen hundred eighty-four.

(12) For taxable years beginning after December thirty-first, nineteen

hundred eighty-one, except with respect to recovery property subject to

the provisions of section two hundred eighty-F of the internal revenue

code and recovery property placed in service in this state in taxable

years beginning after December thirty-first, nineteen hundred

eighty-four, no deduction shall be allowed for the amount allowable as a

deduction under section one hundred sixty-eight of the internal revenue

code.

(13) For taxable years beginning after December thirty-first, nineteen

hundred eighty-one, except with respect to recovery property subject to

the provisions of section two hundred eighty-F of the internal revenue

code and recovery property placed in service in this state in taxable

years beginning after December thirty-first, nineteen hundred

eighty-four, and provided a deduction has not been disallowed pursuant

to subdivision eleven of this section, a taxpayer shall be allowed with

respect to recovery property the depreciation deduction allowable under

section one hundred sixty-seven of the internal revenue code as such

section would have applied to property placed in service on December

thirty-first, nineteen hundred eighty.

(14) For taxable years ending after September 10, 2001, in the case of

qualified property described in paragraph 2 of subsection k of section

168 of the internal revenue code, other than qualified resurgence zone

property described in subdivision 16 of this section, and other than

qualified New York Liberty Zone property described in paragraph 2 of

subsection b of section 1400L of the internal revenue code (without

regard to clause (i) of subparagraph (C) of such paragraph), no

deduction shall be allowed for the amount allowable as a deduction under

section 167 of the internal revenue code.

(15) For taxable years ending after September 10, 2001, in the case of

qualified property described in paragraph 2 of subsection k of section

168 of the internal revenue code, other than qualified resurgence zone

property described in subdivision 16 of this section, and other than

qualified New York Liberty Zone property described in paragraph 2 of

subsection b of section 1400L of the internal revenue code (without

regard to clause (i) of subparagraph (C) of such paragraph), a deduction

shall be allowed with respect to such property equal to the depreciation

deduction allowable under section 167 of the internal revenue code as

such section would have applied to such property had it been acquired by

the taxpayer on September 10, 2001.

(16) For purposes of subdivisions 14 and 15 of this section, qualified

resurgence zone property shall mean qualified property described in

paragraph 2 of subsection k of section 168 of the internal revenue code

substantially all of the use of which is in the resurgence zone, as

defined below, and is in the active conduct of a trade or business by

the taxpayer in such zone, and the original use of which in the

resurgence zone commences with the taxpayer after September 10, 2001.

The resurgence zone shall mean the area of New York county bounded on

the south by a line running from the intersection of the Hudson River

with the Holland Tunnel, and running thence east to Canal Street, then

running along the centerline of Canal Street to the intersection of the

Bowery and Canal Street, running thence in a southeasterly direction

diagonally across Manhattan Bridge Plaza, to the Manhattan Bridge and

thence along the centerline of the Manhattan Bridge to the point where

the centerline of the Manhattan Bridge would intersect with the easterly

bank of the East River, and bounded on the north by a line running from

the intersection of the Hudson River with the Holland Tunnel and running

thence north along West Avenue to the intersection of Clarkson Street

then running east along the centerline of Clarkson Street to the

intersection of Washington Avenue, then running south along the

centerline of Washington Avenue to the intersection of West Houston

Street, then east along the centerline of West Houston Street, then at

the intersection of the Avenue of the Americas continuing east along the

centerline of East Houston Street to the easterly bank of the East

River.