N.Y. Tax Law § 16: QEZE tax reduction credit

§ 16. QEZE tax reduction credit. (a) Allowance of credit. A taxpayer

which is a qualified empire zone enterprise (QEZE), or which is a sole

proprietor of a QEZE or a member of a partnership which is a QEZE, and

which is subject to tax under article nine-A, twenty-two or thirty-three

of this chapter, shall be allowed a credit against such tax, pursuant to

the provisions referenced in subdivision (g) of this section, to be

computed as hereinafter provided.

(b) Amount of credit. The amount of the credit shall be the product of

(i) the benefit period factor, (ii) the employment increase factor,

(iii) the zone allocation factor and (iv) the tax factor.

(c) Benefit period factor. The benefit period factor for the taxable

year shall be as prescribed in subdivision (c) of section fifteen of

this article.

(d) Employment increase factor. The employment increase factor for the

taxable year shall be as prescribed in subdivision (d) of section

fifteen of this article.

(e) Zone allocation factor. The zone allocation factor shall be the

percentage representing the QEZE's economic presence in empire zones

with respect to which the QEZE is certified under article eighteen-B of

the general municipal law. This percentage shall be computed by:

(1) ascertaining the percentage which the average value of the QEZE's

real and tangible personal property, whether owned or rented to it, in

empire zones with respect to which the QEZE is certified under article

eighteen-B of the general municipal law during the period covered by the

taxpayer's report or return bears to the average value of the QEZE's

real and tangible personal property, whether owned or rented to it,

within the state during such period; provided that the term "value of

the QEZE's real and tangible personal property" shall have the same

meaning as such term has in subparagraph one of paragraph (a) of

subdivision three of section two hundred ten of this chapter; and

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

personal service compensation, similarly computed, during such period of

employees, except general executive officers, of the QEZE in empire

zones with respect to which the QEZE is certified under article

eighteen-B of the general municipal law, to the total wages, salaries

and other personal service compensation, similarly computed, during such

period, of all the QEZE's employees within the state, except general

executive officers; and

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

result by the number of percentages.

For purposes of article twenty-two of this chapter, references in this

subdivision to property, wages, salaries and other personal service

compensation shall be deemed to be references to such items connected

with the conduct of a business.

(f) Tax factor. (1) General. The tax factor shall be, in the case of

article nine-A of this chapter, the amount of tax determined for the

taxable year under paragraph (a) of subdivision one of section two

hundred ten of such article. The tax factor shall be, in the case of

article twenty-two of this chapter, the tax determined for the taxable

year under subsections (a) through (d) of section six hundred one of

such article. The tax factor shall be, in the case of article

thirty-three of this chapter, the larger of the amounts of tax

determined for the taxable year under paragraphs one and three of

subdivision (a) of section fifteen hundred two of such article.

(2) Sole proprietors, partners and S corporation shareholders. (A)

Where the taxpayer is a sole proprietor of a qualified empire zone

enterprise, the taxpayer's tax factor shall be that portion of the

amount determined in paragraph one of this subdivision which is

attributable to the income of the qualified empire zone enterprise. Such

attribution shall be made in accordance with the ratio of the taxpayer's

income from the qualified empire zone enterprise allocated within the

state, entering into New York adjusted gross income, to the taxpayer's

New York adjusted gross income, or in accordance with such other methods

as the commissioner may prescribe as providing an apportionment which

reasonably reflects the portion of the taxpayer's tax attributable to

the income of the qualified empire zone enterprise. In no event may the

ratio so determined exceed 1.0.

(B)(i) Where the taxpayer is a member of a partnership which is a

qualified empire zone enterprise, the taxpayer's tax factor shall be

that portion of the amount determined in paragraph one of this

subdivision which is attributable to the income of the partnership. Such

attribution shall be made in accordance with the ratio of the partner's

income from the partnership allocated within the state to the partner's

entire income, or in accordance with such other methods as the

commissioner may prescribe as providing an apportionment which

reasonably reflects the portion of the partner's tax attributable to the

income of the partnership. In no event may the ratio so determined

exceed 1.0.

(ii) For purposes of article nine-A of this chapter, the term

"partner's income from the partnership" means partnership items of

income, gain, loss and deduction, and New York modifications thereto,

entering into business income and the term "partner's entire income"

means business income allocated within the state. For purposes of

article thirty-three of this chapter, the term "partner's income from

the partnership" means partnership items of income, gain, loss and

deduction, and New York modifications thereto, entering into entire net

income or entire net income plus compensation and the term "partner's

entire income" means entire net income, or entire net income plus

compensation, allocated within the state. For purposes of article

twenty-two of this chapter, the term "partner's income from the

partnership" means partnership items of income, gain, loss and

deduction, and New York modifications thereto, entering into New York

adjusted gross income, and the term "partner's entire income" means New

York adjusted gross income.

(C) Where the taxpayer is a shareholder of a New York S corporation

which is a qualified empire zone enterprise, the shareholder's tax

factor shall be that portion of the amount determined in paragraph one

of this subdivision which is attributable to the income of the S

corporation. Such attribution shall be made in accordance with the ratio

of the shareholder's income from the S corporation allocated within the

state, entering into New York adjusted gross income, to the

shareholder's New York adjusted gross income, or in accordance with such

other methods as the commissioner may prescribe as providing an

apportionment which reasonably reflects the portion of the shareholder's

tax attributable to the income of the qualified empire zone enterprise.

In no event may the ratio so determined exceed 1.0.

(3) Combined returns or reports. (A) Where the taxpayer is a

qualified empire zone enterprise and is required or permitted to make a

return or report on a combined basis under article nine-A or article

thirty-three of this chapter, the taxpayer's tax factor shall be the

amount determined in paragraph one of this subdivision which is

attributable to the income of the qualified empire zone enterprise. Such

attribution shall be made in accordance with the ratio of the qualified

empire zone enterprise's income allocated within the state to the

combined group's income, or in accordance with such other methods as the

commissioner may prescribe as providing an apportionment which

reasonably reflects the portion of the combined group's tax attributable

to the income of the qualified empire zone enterprise. In no event may

the ratio so determined exceed 1.0.

(B) The term "income of the qualified empire zone enterprise" means

entire net income, minimum taxable income, alternative entire net income

or entire net income plus compensation calculated as if the taxpayer was

filing separately and the term "combined group's income" means entire

net income, minimum taxable income, alternative entire net income or

entire net income plus compensation as shown on the combined return or

report, allocated within the state.

(4) If the amount determined in paragraph one of this subdivision is

less than zero, a taxpayer shall not be allowed a credit under this

section.

(g) Definitions and cross-references. For definitions of terms used in

this section see sections fourteen and fifteen of this article. For

application of the credit provided for in this section, see the

following provisions of this chapter:

(1) Article 9-A: Section 210-B: subdivision 6.

(2) Article 22: Section 606: subsections (i) and (cc).

(3) Article 33: Section 1511: subdivision (s).