N.Y. General City Model 772/66 § 21: Deductions

§ 21. Deductions. In computing net income there shall be allowed as

deductions:

1. All the ordinary and necessary expenses paid or incurred during the

year in carrying on business, including a reasonable allowance for

salaries or other compensation for personal services actually rendered,

and including rentals or other payments required to be made as a

condition to the continued use or possession for business purposes of

property to which the taxpayer has not taken or is not taking title or

in which such taxpayer has no equity.

2. All interest paid or accrued during the year on indebtedness.

3. Taxes, other than taxes on income or profits paid or accrued within

the year, imposed, first, by the authority of the United States, or of

any of its possessions, or, second, by the authority of any state, or

territory, or any county, school district, municipality, or other taxing

subdivisions of any state or territory, not including those assessed

against local benefits of a kind tending to increase the value of the

property assessed, or, third, by the authority of any foreign

government, or, fourth, under the franchise tax on banking corporations

imposed by article thirty-two of the tax law, or, fifth, any tax imposed

under this subpart.

4. Losses sustained during the year and not compensated for by

insurance or otherwise, if incurred in business; unless in order to

clearly reflect the income the losses should in the opinion of the

director of finance be accounted for as of a different period. No

deduction shall be allowed for any loss claimed to have been sustained

in any sale or other disposition of shares of stock or securities where

it appears that within thirty days before or after the date of such sale

or other disposition the taxpayer has acquired substantially identical

property, and the property so acquired is held by the taxpayer for any

period after such sale or other disposition, unless such claim is made

with respect to a transaction made in the ordinary course of business.

If such acquisition is to the extent of part only of substantially

identical property, only a proportionate part of the loss shall be

disallowed.

5. Debts ascertained to be worthless and charged off within the year;

or in the discretion of the director of finance a reasonable addition to

a reserve for bad debts. When satisfied that a debt is recoverable only

in part, the director of finance may allow such debt to be charged off

in part.

6. A reasonable allowance for the exhaustion, wear and tear of

property used in business, including a reasonable allowance for

obsolescence. In the case of any such property acquired before January

first, nineteen hundred sixty-six, the amount of such deduction shall be

equal to the deduction properly taken for such property in reporting the

tax due pursuant to article nine-b of the tax law. With respect to

property such as described in subdivision twelve of this section, this

deduction may be computed and allowed as provided therein.

7. If the gross income be derived from business carried on within and

without the city, the deductions allowed by this section shall be

allocated and determined on the basis of separate accounting for each

office or branch or, at the election of the taxpayer, under rules and

regulations to be prescribed by the director of finance.

8. In the case of any taxpayer who establishes or maintains a pension

trust to provide for the payment of reasonable pensions to its

employees, there shall be allowed as a deduction (in addition to the

contributions to such trust during the taxable year to cover the pension

liability accruing during the year, allowed as a deduction under

subdivision one of this section) a reasonable amount transferred or paid

into such trust during the taxable year in excess of such contributions,

but only if such amount (a) has not theretofore been allowable as a

deduction, and (b) is apportioned in equal parts over a period of ten

consecutive years beginning with the year in which the transfer or

payment is made, or, under regulations of the director of finance,

covers not more than one-tenth of the total pension liability with

respect to services rendered prior to such taxable year; provided that

said deduction shall be allowable only with respect to a taxable year

(whether the year of the transfer or payment or a subsequent year) of

the taxpayer ending within or with a taxable year of the trust with

respect to which the trust, by reason of its purposes or activities, is

exempt from federal income tax.

9. The amount of the amortizable bond premium on a bond for the year

shall be allowed as a deduction as hereinafter provided. In computing

such deduction, (a) the amount of the bond premium shall be determined

with reference to the amount of the basis (for determining loss on sale

or exchange) of such bond, and with reference to the amount payable on

maturity or on earlier call date, with adjustments proper to reflect

unamortized bond premium with respect to the bond, for the period prior

to the date as of which this subdivision becomes applicable with respect

to the taxpayer with respect to such bond, and (b) the amortizable bond

premium of the year shall be the amount of the bond premium attributable

to such year. The determination required in the preceding sentence shall

be made in accordance with the method of amortizing bond premium

regularly employed by the holder of such bond, if such method is

reasonable, and in all other cases in accordance with regulations of the

director of finance prescribing reasonable methods of amortizing bond

premium. This subdivision shall apply only if the taxpayer shall so

elect, in accordance with regulations of the director of finance, and

such election shall be made separately with respect to (1) bonds, the

interest of which is wholly taxable, and (2) bonds, the interest of

which is wholly or partially tax exempt, for purposes of the income tax

imposed by chapter one of the internal revenue code. If such election is

made with respect to any bond of the taxpayer described in clauses one

or two hereof, it shall also apply to all bonds in the same class held

by the taxpayer at the beginning of the first year to which the election

applies and to all such bonds thereafter acquired by it and shall be

binding for all subsequent years with respect to all such bonds of the

taxpayer, unless, upon the application by the taxpayer, the director of

finance permits the taxpayer, subject to such conditions as the director

of finance deems necessary, to revoke such election. As used in this

subdivision the term "bond" means any bond, debenture, note or

certificate or other evidence of indebtedness, issued by any corporation

and bearing interest (including any like obligation issued by a

government or political subdivision thereof), with interest coupons or

in registered form, but does not include any such obligation which

constitutes stock in trade of the taxpayer or any such obligation of a

kind which would properly be included in the inventory of the taxpayer

if on hand at the close of the year, or any such obligation held by the

taxpayer primarily for sale to customers in the ordinary course of its

trade or business.

10. In the case of a savings bank and savings and loan association,

amounts paid or credited to depositors or holders of accounts as

interest or dividends on their deposits or withdrawable accounts, if

such amounts are withdrawable on demand subject only to customary notice

of intention to withdraw.

11. A savings bank and savings and loan association may deduct in any

taxable year the amount of the repayment of any loan or advance from the

mutual savings bank fund in computing its net income and the amount of

interest or dividends subject to the minimum tax under subdivision three

of section twelve.

12. (a) At the election of the taxpayer there shall be deducted from

gross income, or if gross income is derived from business carried on

within and without this city, from the portion thereof allocated within

the city, depreciation with respect to any property such as described in

paragraph (b) of this subdivision, not exceeding twice the depreciation

allowed with respect to the same property for federal income tax

purposes.

(b) Such deduction 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 this city

and used in the taxpayer's business, (i) the construction,

reconstruction or erection of which is completed after December

thirty-first, nineteen hundred sixty-five, and then only with respect to

that portion of the basis thereof which is properly attributable to such

construction, reconstruction or erection after December thirty-first,

nineteen hundred sixty-five, or (ii) acquired after December

thirty-first, nineteen hundred sixty-five, 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 this city and commenced after such date.

(c) If the deduction allowable for any taxable year pursuant to this

subdivision exceeds the taxpayer's net income computed without the

allowance of such deduction and without the allowance of any deduction

pursuant to subdivision six of this section with references to the same

property, the excess may be carried over to the following taxable year

or years and may be deducted in computing net income for such year or

years.

(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

subdivision, the gain or loss thereon shall be computed by adjusting the

basis of such property to reflect the deductions so allowed, and if the

taxpayer's gross income is derived from business carried on both within

and without the city, shall be allocated within the city. Provided,

however, that no loss shall be recognized for the purposes of this

paragraph with respect to a sale or other disposition of property to a

person whose acquisition thereof is not a purchase as defined in section

one hundred seventy-nine (d) of the internal revenue code.