N.Y. General City Model 772/66 § 4: Computation of tax

§ 4. Computation of tax. * 1. The tax imposed by subdivision one of

section three of this part shall be, in the case of each taxpayer: (a) a

tax (1) for taxable years beginning on or after January first, nineteen

hundred seventy-eight but before January first, nineteen hundred

eighty-seven, computed at the rate of nine per centum, and for taxable

years beginning on or after January first, nineteen hundred

eighty-seven, computed at the rate of eight and eighty-five one

hundredths per centum on its entire net income, or the portion thereof

allocated within the city as hereinafter provided, subject to any

modification required by paragraph (d) of subdivision three of this

section, or (2) computed at one and one-half mills for each dollar of

its total business and investment capital, or the portion thereof

allocated within the city as hereinafter provided, except that in the

case of a cooperative housing corporation as defined in the internal

revenue code, the applicable rate shall be four-tenths of one mill, or

(3) for taxable years beginning on or after January first, nineteen

hundred seventy-eight but before January first, nineteen hundred

eighty-seven, computed at the rate of nine per centum, and for taxable

years beginning on or after January first, nineteen hundred

eighty-seven, computed at the rate of eight and eighty-five one

hundredths per centum on thirty per centum of the taxpayer's entire net

income plus salaries and other compensation paid to the taxpayer's

elected or appointed officers and to every stockholder owning in excess

of five per centum of its issued capital stock minus fifteen thousand

dollars (except as hereinafter provided) and any net loss for the

reported year, or on the portion of such sum allocated within the city

as hereinafter provided for the allocation of entire net income, subject

to any modification required by paragraph (d) of subdivision three of

this section, or (4) one hundred twenty-five dollars, whichever is the

greatest, plus (b) a tax computed at the rate of three-quarters of a

mill for each dollar of the portion of its subsidiary capital allocated

within the city as hereinafter provided. In the case of a taxpayer which

is not subject to tax for an entire year, or which elects to compute its

tax pursuant to paragraph (b) of subdivision six of section three, the

exemption allowed in clause three of paragraph (a) shall be prorated

according to the period such taxpayer was subject to tax or, in the case

of such an election, the period for which its entire net income is

determined pursuant to such paragraph (b) of subdivision six of section

three.

* NB Effective until December 31, 2020

* 1. The tax imposed by subdivision one of section three of this part

shall be, in the case of each taxpayer: (a) a tax (1) computed at the

rate of five and one-half per centum, or as an alternative for taxable

years beginning on or after January first, nineteen hundred seventy-one,

at the rate of six and seven-tenths per centum, on its entire net

income, or the portion thereof allocated within the city as hereinafter

provided, subject to any modification required by paragraph (d) of

subdivision three of this section, or (2) computed at one mill for each

dollar of its total business and investment capital, or the portion

thereof allocated within the city as hereinafter provided, except that

in the case of a cooperative housing corporation as defined in the

internal revenue code, the applicable rate shall be one-quarter of one

mill, or (3) computed at the rate of five and one-half per centum, or as

an alternative for taxable years beginning on or after January first,

nineteen hundred seventy-one, at the rate of six and seven-tenths per

centum, on thirty per centum of the taxpayer's entire net income plus

salaries and other compensation paid to the taxpayer's elected or

appointed officers and to every stockholder owning in excess of five per

centum of its issued capital stock minus fifteen thousand dollars

(except as hereinafter provided) and any net loss for the reported year,

or on the portion of such sum allocated within the city as hereinafter

provided for the allocation of entire net income, subject to any

modification required by paragraph (d) of subdivision three of this

section, or (4) twenty-five dollars, whichever is the greatest, plus (b)

a tax computed at the rate of one-half mill for each dollar of the

portion of its subsidiary capital allocated within the city as

hereinafter provided. In the case of a taxpayer which is not subject to

tax for an entire year, or which elects to compute its tax pursuant to

paragraph (b) of subdivision six of section three, the exemption allowed

in clause three of paragraph (a) shall be prorated according to the

period such taxpayer was subject to tax or, in the case of such an

election, the period for which its entire net income is determined

pursuant to such paragraph (b) of subdivision six of section three.

* NB Effective December 31, 2020

2. The amount of subsidiary capital, investment capital and business

capital shall each be determined by taking the average fair market value

of the gross assets included therein (less, in the case of business

capital, average liabilities deductible therefrom which are payable by

their terms on demand or within one year from the date incurred, other

than loans or advances outstanding for more than a year as of any date

during the year covered by the report), and, if the period covered by

the report is other than a period of twelve calendar months, by

multiplying such value by the number of calendar months or major parts

thereof included in such period, and dividing the product thus obtained

by twelve.

3. The portion of the entire net income of a taxpayer to be allocated

within the city shall be determined as follows:

(a) multiply its business income by a business allocation percentage

to be determined by

(1) ascertaining the percentage which the average value of the

taxpayer's real and tangible personal property within the city during

the period covered by its report bears to the average value of all the

taxpayer's real and tangible personal property wherever situated during

such period;

(2) ascertaining the percentage which the receipts of the taxpayer,

computed on the cash or accrual basis according to the method of

accounting used in the computation of its entire net income, arising

during such period from

(A) sales of its tangible personal property located within the city at

the time of the receipt of or appropriation to the orders, where

shipments are made to points within the city,

(B) sales of its tangible personal property not located at the time of

the receipt of or appropriation to the orders at any permanent or

continuous place of business maintained by the taxpayer without the city

where the orders were received or accepted within the city and where

shipments are made to points within the city,

(C) sales of its tangible personal property located within the city at

the time of the receipt of or appropriation to the orders where shipment

is made to points outside of the city and sales of its tangible personal

property (except sales described in clause (B)) located without the city

at the time of the receipt of or appropriation to the orders where

shipment is made to points within the city, but only to the extent of

fifty per centum of the receipts from the sales referred to in this

clause,

(D) sales of its tangible personal property not located at the time of

the receipt of or appropriation to the orders at any permanent or

continuous place of business maintained by the taxpayer without the

city, where the orders were received or accepted within the city and

where shipment is made between points outside the city, but only to the

extent of fifty per centum of the receipts from the sales referred to in

this clause. For purposes of this clause and clause (B) an order shall

be deemed received or accepted within the city if it has been received

or accepted by an employee, agent, agency or independent contractor

chiefly situated at, connected with, by contract or otherwise, or sent

out from a permanent or continuous place of business of the taxpayer

within the city,

(E) services performed within the city,

(F) rentals from property situated and royalties from the use of

patents or copyrights, within the city, and

(G) all other business receipts earned within the city,

bear to the total amount of the taxpayer's receipts, similarly computed,

arising during such period from all sales of its tangible personal

property, services, rentals, royalties and all other business

transactions, whether within or without the city;

(3) ascertaining the percentage of the total wages, salaries and other

personal service compensation, similarly computed, during such period of

employees within the city, except general executive officers, to the

total wages, salaries and other personal service compensation, similarly

computed, during such period of all the taxpayer's employees within and

without the city, except general executive officers, and

(4) adding together the percentages so determined and dividing the

result by the number of percentages; provided, however, that if the

taxpayer does not have a regular place of business outside the city

other than a statutory office, the business allocation percentage shall

be one hundred per centum; and

(b) multiply its investment income by an investment allocation

percentage to be determined by

(1) multiplying the amount of its investment capital invested in each

stock, bond or other security (other than governmental securities)

during the period covered by its report by the percentage, if any, of

the entire capital or the issued capital stock, or the gross direct

premiums, or the net income, as the case may be, of the issuer or

obligor thereof required to be allocated within the city on the report

or reports, if any, required of any such issuer or obligor under part

II, part III, part IV, or part V or under a local law of the city

imposing a tax on utilities for the preceding year, provided, however,

that for taxable years ending in or with calendar year nineteen hundred

sixty-six, such percentage shall be presumed to be that percentage, if

any, of the entire capital or the issued capital stock, or the gross

direct premiums, or the net income, as the case may be, of the issuer or

obligor thereof required to be allocated within the state on the report

or reports, if any, required of any such issuer or obligor under the tax

law or the insurance law for the preceding year, unless the taxpayer

establishes the actual percentage which such issuer or obligor would

have been required to allocate within the city had part II, part III,

part IV, or part V been in effect for such year, or which such issuer or

obligor did allocate within the city under a local law of the city

imposing a tax on utilities, but without regard to any minimum,

(2) adding together the sum so obtained, and

(3) dividing the result so obtained by the total of its investment

capital invested during such period in stocks, bonds and other

securities (other than obligations of the United States and its

instrumentalities and obligations of the state of New York, its

political subdivisions and its instrumentalities); provided, however,

that in case any investment capital is invested in any stock, bond or

other security during only a portion of the period covered by the

report, only such portion of such capital shall be taken into account;

and provided further, that if a taxpayer's investment allocation

percentage is zero, interest received on bank accounts, on obligations

of the United States and its instrumentalities and on obligations of the

state of New York, its political subdivisions and its instrumentalities

shall be multiplied by its business allocation percentage; and

(c) add the products so obtained.

(d) At the election of the taxpayer there shall be deducted from the

portion of its entire net income allocated within the city either or

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

paragraph, except that only one of such deductions shall be allowed with

respect to any one items of property.

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

subparagraph three of this paragraph, not exceeding twice the

depreciation allowed with respect to the same property for federal

income tax purposes. Such deduction shall be allowed only upon condition

that entire net income be computed without any deduction for the

depreciation of the same property, and the total of all deductions

allowed pursuant to the preceding sentence 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 subparagraph three of this paragraph 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 deduction shall be

allowed only on condition that entire net income for the taxable year

and all succeeding taxable years be computed without the deduction of

any such expenditures and without any deduction for depreciation of the

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

to factors other than such expenditures, or in case a deduction is

allowable pursuant to this subparagraph for only a part of such

expenditures, on condition that any deduction allowed for federal income

tax purposes on account of such expenditures or on account of

depreciation of the same property be proportionately reduced in

computing entire net income for the taxable year and all succeeding

taxable years. 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, a proportionate part of such expenditures shall be deductible. If

all or part of such expenditures with respect to any property shall have

been deducted as provided herein, 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 its report 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 may assess any additional tax resulting from such

recomputation regardless of the time limitations set forth in section

seventy-four of this title.

(3) Such deductions 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 December

thirty-first, nineteen hundred sixty-five, 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 December thirty-first, nineteen hundred sixty-five, or

(B) 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 the city and commenced after such date.

(4) If the deductions allowable for any taxable year, pursuant to this

subdivision, exceed the portion of the taxpayer's entire net income

allocated to the city for such year, the excess may be carried over to

the following taxable year or years and may be deducted from the portion

of the taxpayer's entire net income allocated to the city for such year

or years.

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

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

subparagraph one or two of this paragraph, the gain or loss thereon

entering into the computation of federal taxable income shall be

disregarded in computing entire net income, and there shall be added to

or subtracted from the portion of entire net income allocated within the

city the gain or loss upon such sale or other disposition. In computing

such gain or loss the basis of the property sold or disposed of shall be

adjusted to reflect the deduction allowed with respect to such property

pursuant to subparagraph one or two of this paragraph. Provided,

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

subparagraph 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.

4. The portion of the business capital of a taxpayer to be allocated

within the city shall be determined by multiplying the amount thereof by

the business allocation percentage determined as hereinabove provided.

5. The portion of the investment capital of a taxpayer to be allocated

within the city shall be determined by multiplying the amount thereof by

the investment allocation percentage determined as hereinabove provided.

6. Any taxpayer not taxed upon the basis of a combined report, the

investment income of which is less than twenty-five per centum of its

entire net income and the investment capital of which is less than

twenty-five per centum of its total business and investment capital, may

at its election apply its business allocation percentage to its entire

net income and its total business and investment capital. Any taxpayer

not taxed upon the basis of a combined report, the investment income of

which is more than eighty-five per centum of its entire net income and

the investment capital of which is more than eighty-five per centum of

its total business and investment capital, may at its election apply its

investment allocation percentage to its entire net income and its total

business and investment capital. Any taxpayer not taxed upon the basis

of a combined report, the subsidiary capital of which (computed without

regard to this sentence) is more than eighty-five per centum of its

total capital, exclusive of cash on hand and on deposit, obligations of

the United States and its instrumentalities and obligations of the state

of New York, its political subdivisions and its instrumentalities, may

at its election treat as subsidiary capital a proportion of such cash

and obligations not in excess of the proportion of its subsidiary

capital (so computed) to its total capital.

7. The portion of the subsidiary capital of a taxpayer to be allocated

within the city shall be determined by (a) multiplying the amount of its

subsidiary capital invested in each subsidiary during the period covered

by its report (or, in the case of any such capital so invested during

only a portion of such period, such portion of such capital) by the

percentage, if any, of the entire capital or the issued capital stock,

or the gross direct premiums, or the net income, as the case may be, of

such subsidiary required to be allocated within the city on the report

or reports, if any, required of such subsidiary under this title for the

preceding year, or which would have been required for such year had this

title been in effect, but without regard to any minimum, (b) multiplying

the proportion of cash and obligations of the United States and its

instrumentalities and obligations of the state of New York, its

political subdivisions and its instrumentalities treated as subsidiary

capital, by the weighted average of the percentages used in clause (a)

hereof, and (c) adding together the sums so obtained.

8. If it shall appear to the director of finance that any business or

investment allocation percentage determined as hereinabove provided does

not properly reflect the activity, business, income or capital of a

taxpayer within the city, the director of finance shall be authorized in

his discretion, in the case of a business allocation percentage, to

adjust it by (a) excluding one or more of the factors therein, (b)

including one or more other factors, such as expenses, purchases,

contract values (minus subcontract values), (c) excluding one or more

assets in computing such allocation percentage, provided the income

therefrom is also excluded in determining entire net income, or (d) any

other similar or different method calculated to effect a fair and proper

allocation of the income and capital reasonably attributable to the

city, and in the case of an investment allocation percentage to adjust

it by excluding one or more assets in computing such percentage provided

the income therefrom is also excluded in determining entire net income.

The director of finance from time to time shall publish all rulings of

general public interest with respect to any application of the

provisions of this subdivision.

9. If it shall appear to the director of finance that any business

allocation percentage determined as hereinabove provided does not

properly reflect the activity, business, income or capital of a taxpayer

within the city, the director of finance shall be authorized in his

discretion to adjust it by (a) excluding one or more of the factors

therein, (b) including one or more other factors, such as expenses,

purchases, contract values (minus subcontract values), (c) excluding one

or more assets in computing such allocation percentage, provided the

income therefrom is also excluded in determining entire net income, or

(d) any other similar or different method calculated to effect a fair

and proper allocation of the income and capital reasonably attributable

to the city, and in the case of an investment allocation percentage, to

adjust it by excluding one or more assets in computing such percentage

provided the income therefrom is also excluded in determining entire net

income. The director of finance from time to time shall publish all

rulings of general public interest with respect to any application of

the provisions of this subdivision.

10. For purposes of this section the taxpayer's real property shall

include not only such property owned by the taxpayer but also such

property rented to it.