N.Y. Tax Law § 1504: Allocation

§ 1504. Allocation. (a) Allocation of entire net income. The portion

of entire net income of a taxpayer to be allocated within the state

shall be the amount determined by multiplying such income by the income

allocation percentage determined by:

(1) ascertaining the percentage which the taxpayer's New York premiums

for the taxable year bear to the taxpayer's total premiums for the

taxable year, and multiplying such percentage by nine,

(2) ascertaining the percentage which total wages, salaries, personal

service compensation and commissions for the taxable year of employees,

agents and representatives of the taxpayer within New York bear to the

total wages, salaries, personal service compensation and commissions for

the taxable year of all the taxpayer's employees, agents and

representatives, and

(3) adding the amounts determined under paragraphs one and two and

dividing the sum by ten.

(b) Definition of premiums. (1) For purposes of paragraph one of

subdivision (a), the term "premium" includes all amounts received as

consideration for insurance contracts, reinsurance contracts and annuity

contracts and shall include premium deposits, assessments, policy fees,

membership fees and every other compensation for such contract. The term

"total premiums" means total gross premiums or deposit premiums or

assessments, less returns thereon, on all policies, annuity contracts,

certificates, renewals, policies subsequently cancelled, insurance and

reinsurance executed, issued or delivered on property or risks,

including premiums for reinsurance assumed, less dividends on such total

premiums, including unused or unabsorbed portions of premium deposits

paid or credited to policyholders but not including deferred dividends

paid in cash to policyholders on maturing policies, nor cash surrender

values, and less premiums on reinsurance ceded.

(2) For purposes of paragraph one of subdivision (a), "New York

premiums" shall be determined as follows:

(A) For all premiums other than premiums described in subparagraph (B)

or (C) of this paragraph, "New York premiums" means that portion of

total premiums written, procured or received on property or risks

located or resident in New York and shall also include premiums written,

procured or received in this state on business which cannot be

specifically assigned as located or resident in any other state or

states, other than premiums described in subdivision (b) of section

fifteen hundred twelve. Provided however, in the case of special risk

premiums, "New York premiums" shall include only those premiums written,

procured or received in this state on property or risks located or

resident in this state.

(B) For premiums on reinsurance, "New York premiums" shall be

determined as provided in subparagraph (A) of this paragraph except that

where the location or residence of the property or risk covered by the

reinsurance cannot be ascertained, "New York premiums" shall mean the

portion of premiums for reinsurance determined by multiplying the amount

of premiums from reinsurance ceded by each company to the taxpayer by

the percentage determined under paragraph one of subdivision (a) of this

section for each such ceding company for the preceding taxable year.

(C) For premiums from marine insurance, "New York premiums" means (i)

that portion of premiums from such marine insurance as are written,

procured or received on property or risks located or resident in this

state and, (ii) to the extent not otherwise includible in "New York

premiums" under clause (i) hereof, the premiums for such marine

insurance written within this state on property or risks which cannot be

specifically assigned as located or resident in any other state or

country, provided however, in the case of special risk premiums, "New

York premiums" shall include only those premiums written, procured or

received in this state on property or risks located or resident in this

state. For purposes of this subparagraph, marine insurance means

insurance written, procured or received upon hulls, freights or

disbursements, or upon goods, wares, merchandise and all other personal

property and interests therein, in the course of exportation from,

importation into any country, or transportation coastwise, including

transportation by land or water from point of origin to final

destination in respect to, appertaining to, or in connection with, any

and all risks or perils of navigation, transit or transportation, and

while being prepared for, and while awaiting shipment, and during any

delays, storage, transshipment or reshipment incident thereto, including

war risks and marine builder's risks.

(3) For the purpose of paragraph one of subdivision (a), "total

premiums" shall not include special risk premiums unless the special

risk premium was written, procured or received in this state on property

or risks located or resident in this state. "Total premiums" shall be

reported on a written basis or on a paid-for basis, consistent with the

basis required by the annual statement filed with the superintendent of

financial services pursuant to section three hundred seven of the

insurance law.

(c) Allocation of capital. (1) Business capital and investment

capital. The portion of the taxpayer's business and investment capital

of a taxpayer to be allocated within the state shall be determined by

multiplying the amount thereof by the allocation percentage determined

as provided in subdivision (a) of this section.

(2) Subsidiary capital. The portion of the taxpayer's subsidiary

capital to be allocated within the state shall be determined by

multiplying the amount of subsidiary capital invested in each subsidiary

during the period covered by its return (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 net income, as the case may be, of such

subsidiary required to be allocated within the state on the return or

returns, if any, required of such subsidiary under this chapter for the

preceding year, and adding the sums so obtained.

(d) If it shall appear to the tax commission that the income

allocation percentage determined as hereinabove provided does not

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

the state, the tax commission shall be authorized, in its discretion, to

adjust it by:

(1) excluding one or more factors therein;

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

purchases, receipts other than premiums, real property or tangible

personal property;

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

fair and proper allocation of the income and capital reasonably

attributable to the state. The tax commission from time to time shall

publish all rulings of general public interest with respect to any

application of the provisions of this subdivision.