N.Y. Tax Law § 210-a: Apportionment

§ 210-A. Apportionment. 1. General. Business income and capital shall

be apportioned to the state by the apportionment factor determined

pursuant to this section. The apportionment factor is a fraction,

determined by including only those receipts, net income, net gains, and

other items described in this section that are included in the

computation of the taxpayer's business income (determined without regard

to the modification provided in subparagraph nineteen of paragraph (a)

of subdivision nine of section two hundred eight of this article) for

the taxable year. The numerator of the apportionment fraction shall be

equal to the sum of all the amounts required to be included in the

numerator pursuant to the provisions of this section and the denominator

of the apportionment fraction shall be equal to the sum of all the

amounts required to be included in the denominator pursuant to the

provisions of this section.

2. Sales of tangible personal property, electricity, and real

property. (a) Receipts from sales of tangible personal property where

shipments are made to points within the state or the destination of the

property is a point in the state shall be included in the numerator of

the apportionment fraction. Receipts from sales of tangible personal

property where shipments are made to points within and without the state

or the destination is within and without the state shall be included in

the denominator of the apportionment fraction.

(b) Receipts from sales of electricity delivered to points within the

state shall be included in the numerator of the apportionment fraction.

Receipts from sales of electricity delivered to points within and

without the state shall be included in the denominator of the

apportionment fraction.

(c) Receipts from sales of tangible personal property and electricity

that are traded as commodities, as the term "commodity" is defined in

section 475 of the internal revenue code, are included in the

apportionment fraction in accordance with clause (I) of subparagraph two

of paragraph (a) of subdivision five of this section.

(d) Net gains (not less than zero) from the sales of real property

located within the state shall be included in the numerator of the

apportionment fraction. Net gains (not less than zero) from the sales of

real property located within and without the state shall be included in

the denominator of the apportionment fraction.

3. Rentals and royalties. (a) Receipts from rentals of real and

tangible personal property located within the state are included in the

numerator of the apportionment fraction. Receipts from rentals of real

and tangible personal property located within and without the state

shall be included in the denominator of the apportionment fraction.

(b) Receipts of royalties from the use of patents, copyrights,

trademarks, and similar intangible personal property within the state

are included in the numerator of the apportionment fraction. Receipts of

royalties from the use of patents, copyrights, trademarks and similar

intangibles within and without the state are included in the denominator

of the apportionment fraction. A patent, copyright, trademark or similar

intangible property is used in the state to the extent that the

activities thereunder are carried on in the state.

(c) Receipts from the sales of rights for closed-circuit and cable

television transmissions of an event (other than events occurring on a

regularly scheduled basis) taking place within the state as a result of

the rendition of services by employees of the corporation, as athletes,

entertainers or performing artists are included in the numerator of the

apportionment fraction to the extent that such receipts are attributable

to such transmissions received or exhibited within the state. Receipts

from all sales of rights for closed-circuit and cable television

transmissions of an event are included in the denominator of the

apportionment fraction.

4. Digital products. (a) For purposes of determining the apportionment

fraction under this section, the term "digital product" means any

property or service, or combination thereof, of whatever nature

delivered to the purchaser through the use of wire, cable, fiber-optic,

laser, microwave, radio wave, satellite or similar successor media, or

any combination thereof. Digital product includes, but is not limited

to, an audio work, audiovisual work, visual work, book or literary work,

graphic work, game, information or entertainment service, storage of

digital products and computer software by whatever means delivered. The

term "delivered to" includes furnished or provided to or accessed by. A

digital product does not include legal, medical, accounting,

architectural, research, analytical, engineering or consulting services

provided by the taxpayer.

(b) Receipts from the sale of, licence to use, or granting of remote

access to digital products within the state, determined according to the

hierarchy of methods set forth in subparagraphs one through four of

paragraph (c) of this subdivision, shall be included in the numerator of

the apportionment fraction. Receipts from the sale of, license to use,

or granting of remote access to digital products within and without the

state shall be included in the denominator of the apportionment

fraction. The taxpayer must exercise due diligence under each method

described in paragraph (c) of this subdivision before rejecting it and

proceeding to the next method in the hierarchy, and must base its

determination on information known to the taxpayer or information that

would be known to the taxpayer upon reasonable inquiry. If the receipt

for a digital product is comprised of a combination of property and

services, it cannot be divided into separate components and is

considered to be one receipt regardless of whether it is separately

stated for billing purposes. The entire receipt must be allocated by

this hierarchy.

(c) Hierarchy of sourcing methods. (1) The customer's primary use

location of the digital product;

(2) The location where the digital product is received by the

customer, or is received by a person designated for receipt by the

customer;

(3) The apportionment fraction determined pursuant to this subdivision

for the preceding taxable year for such digital product; or

(4) The apportionment fraction in the current taxable year for those

digital products that can be sourced using the hierarchy of sourcing

methods in subparagraphs one and two of this paragraph.

5. Financial transactions. (a) Financial instruments. A financial

instrument is a "nonqualified financial instrument" if it is not a

qualified financial instrument. A qualified financial instrument means a

financial instrument that is of a type described in any of clauses (A),

(B), (C), (D), (G), (H) or (I) of subparagraph two of this paragraph and

that has been marked to market in the taxable year by the taxpayer under

section 475 or section 1256 of the internal revenue code. Further, if

the taxpayer has in the taxable year marked to market a financial

instrument of the type described in any of the clauses (A), (B), (C),

(D), (G), (H) or (I) of subparagraph two of this paragraph, then any

financial instrument within that type described in the above specified

clause or clauses that has not been marked to market by the taxpayer

under section 475 or section 1256 of the internal revenue code is a

qualified financial instrument in the taxable year. Notwithstanding the

two preceding sentences, (i) a loan secured by real property shall not

be a qualified financial instrument, (ii) if the only loans that are

marked to market by the taxpayer under section 475 or section 1256 of

the internal revenue code are loans secured by real property, then no

loans shall be qualified financial instruments, (iii) stock that is

investment capital as defined in paragraph (a) of subdivision five of

section two hundred eight of this article shall not be a qualified

financial instrument, and (iv) stock that generates other exempt income

as defined in subdivision six-a of section two hundred eight of this

article and that is not marked to market under section 475 or section

1256 of the internal revenue code shall not constitute a qualified

financial instrument with respect to the income from that stock that is

described in such subdivision six-a. If a corporation is included in a

combined report, the definition of qualified financial instrument shall

be determined on a combined basis. In the case of a RIC or a REIT that

is not a captive RIC or a captive REIT, a qualified financial instrument

means a financial instrument that is of a type described in any of

clauses (A), (B), (C), (D), (G), (H) or (I) of subparagraph two of this

paragraph, other than (i) a loan secured by real property, (ii) stock

that is investment capital as defined in paragraph (a) of subdivision

five of section two hundred eight of this article, and (iii) stock that

generates other exempt income as defined in subdivision six-a of section

two hundred eight of this article with respect to the income from that

stock that is described in such subdivision six-a.

(1) Fixed percentage method for qualified financial instruments. In

determining the inclusion of receipts and net gains from qualified

financial instruments in the apportionment fraction, taxpayers may elect

to use the fixed percentage method described in this subparagraph for

qualified financial instruments. The election is irrevocable, applies to

all qualified financial instruments, and must be made on an annual basis

on the taxpayer's original, timely filed return, determined with regard

to extensions of time for filing. If the taxpayer elects the fixed

percentage method, then all income, gain or loss, including marked to

market net gains as defined in clause (J) of subparagraph two of this

paragraph, from qualified financial instruments constitutes business

income, gain or loss. If the taxpayer does not elect to use the fixed

percentage method, then receipts and net gains are included in the

apportionment fraction in accordance with the customer sourcing method

described in subparagraph two of this paragraph. Under the fixed

percentage method, eight percent of all net income (not less than zero)

from qualified financial instruments is included in the numerator of the

apportionment fraction. All net income (not less than zero) from

qualified financial instruments is included in the denominator of the

apportionment fraction.

(2) Customer sourcing method. Receipts and net gains from qualified

financial instruments, in cases where the taxpayer did not elect to use

the fixed percentage method described in subparagraph one of this

paragraph, and from nonqualified financial instruments are included in

the apportionment fraction in accordance with this subparagraph. For

purposes of this paragraph, an individual is deemed to be located in the

state if his or her billing address is in the state. A business entity

is deemed to be located in the state if its commercial domicile is

located in the state.

(A) Loans. (i) Receipts constituting interest from loans secured by

real property located within the state shall be included in the

numerator of the apportionment fraction. Receipts constituting interest

from loans secured by real property located within and without the state

shall be included in the denominator of the apportionment fraction.

(ii) Receipts constituting interest from loans not secured by real

property shall be included in the numerator of the apportionment

fraction if the borrower is located in the state. Receipts constituting

interest from loans not secured by real property, whether the borrower

is located within or without the state, shall be included in the

denominator of the apportionment fraction.

(iii) Net gains (not less than zero) from sales of loans secured by

real property are included in the numerator of the apportionment

fraction as provided in this subclause. The amount of net gains from the

sale of loans secured by real property included in the numerator of the

apportionment fraction is determined by multiplying the net gains by a

fraction the numerator of which is the amount of gross proceeds from

sales of loans secured by real property located within the state and the

denominator of which is the gross proceeds from sales of loans secured

by real property within and without the state. Gross proceeds shall be

determined after the deduction of any cost incurred to acquire the loans

but shall not be less than zero. Net gains (not less than zero) from

sales of loans secured by real property within and without the state are

included in the denominator of the apportionment fraction.

(iv) Net gains (not less than zero) from sales of loans not secured by

real property are included in the numerator of the apportionment

fraction as provided in this subclause. The amount of net gains from the

sale of loans not secured by real property included in the numerator of

the apportionment fraction is determined by multiplying the net gains by

a fraction, the numerator of which is the amount of gross proceeds from

sales of loans not secured by real property to purchasers located within

the state and the denominator of which is the amount of gross proceeds

from sales of loans not secured by real property to purchasers located

within and without the state. Gross proceeds shall be determined after

the deduction of any cost incurred to acquire the loans but shall not be

less than zero. Net gains (not less than zero) from sales of loans not

secured by real property are included in the denominator of the

apportionment fraction.

(v) For purposes of this subdivision, a loan is secured by real

property if fifty percent or more of the value of the collateral used to

secure the loan, when valued at fair market value as of the time the

loan was entered into, consists of real property.

(B) Federal, state, and municipal debt. Receipts constituting interest

and net gains from sales of debt instruments issued by the United

States, any state, or political subdivision of a state shall not be

included in the numerator of the apportionment fraction. Receipts

constituting interest and net gains (not less than zero) from sales of

debt instruments issued by the United States and the state of New York

or its political subdivisions shall be included in the denominator of

the apportionment fraction. Fifty percent of the receipts constituting

interest and net gains (not less than zero) from sales of debt

instruments issued by other states or their political subdivisions shall

be included in the denominator of the apportionment fraction.

(C) Asset backed securities and other government agency debt. Eight

percent of the interest income from asset backed securities or other

securities issued by government agencies, including but not limited to

securities issued by the Government National Mortgage Association

(GNMA), the Federal National Mortgage Association (FNMA), the Federal

Home Loan Mortgage Corporation (FHLMC), or the Small Business

Administration, or asset backed securities issued by other entities

shall be included in the numerator of the apportionment fraction. Eight

percent of the net gains (not less than zero) from (i) sales of asset

backed securities or other securities issued by government agencies,

including but not limited to securities issued by GNMA, FNMA, or FHLMC,

the Small Business Administration, or (ii) sales of other asset backed

securities that are sold through a registered securities broker or

dealer or through a licensed exchange, shall be included in the

numerator of the apportionment fraction. The amount of net gains (not

less than zero) from sales of other asset backed securities not

referenced in subclause (i) or (ii) of this clause included in the

numerator of the apportionment fraction is determined by multiplying

such net gains by a fraction, the numerator of which is the amount of

gross proceeds from such sales to purchasers located in the state and

the denominator of which is the amount of gross proceeds from such sales

to purchasers located within and without the state. Receipts

constituting interest from asset backed securities and other securities

referenced in this clause and net gains (not less than zero) from sales

of asset backed securities and other securities referenced in this

clause are included in the denominator of the apportionment fraction.

Gross proceeds shall be determined after the deduction of any cost to

acquire the securities but shall not be less than zero.

(D) Corporate bonds. Receipts constituting interest from corporate

bonds are included in the numerator of the apportionment fraction if the

commercial domicile of the issuing corporation is in the state. Eight

percent of the net gains (not less than zero) from sales of corporate

bonds sold through a registered securities broker or dealer or through a

licensed exchange is included in the numerator of the apportionment

fraction. The amount of net gains (not less than zero) from other sales

of corporate bonds included in the numerator of the apportionment

fraction is determined by multiplying such net gains by a fraction, the

numerator of which is the amount of gross proceeds from such sales to

purchasers located in the state and the denominator of which is the

amount of gross proceeds from sales to purchasers located within and

without the state. Receipts constituting interest from corporate bonds,

whether the issuing corporation's commercial domicile is within or

without the state, and net gains (not less than zero) from sales of

corporate bonds to purchasers within and without the state are included

in the denominator of the apportionment fraction. Gross proceeds shall

be determined after the deduction of any cost to acquire the bonds but

shall not be less than zero.

(E) Reverse repurchase agreements and securities borrowing agreements.

Eight percent of net interest income (not less than zero) from reverse

repurchase agreements and securities borrowing agreements shall be

included in the numerator of the apportionment fraction. Net interest

income (not less than zero) from reverse repurchase agreements and

securities borrowing agreements is included in the denominator of the

apportionment fraction. Net interest income from reverse repurchase

agreements and securities borrowing agreements is determined for

purposes of this subdivision after the deduction of the interest expense

from the taxpayer's repurchase agreements and securities lending

agreements but cannot be less than zero. For this calculation, the

amount of such interest expense is the interest expense associated with

the sum of the value of the taxpayer's repurchase agreements where it is

the seller/borrower plus the value of the taxpayer's securities lending

agreements where it is the securities lender, provided such sum is

limited to the sum of the value of the taxpayer's reverse repurchase

agreements where it is the purchaser/lender plus the value of the

taxpayer's securities lending agreements where it is the securities

borrower.

(F) Federal funds. Eight percent of the net interest (not less than

zero) from federal funds is included in the numerator of the

apportionment fraction. The net interest (not less than zero) from

federal funds is included in the denominator of the apportionment

fraction. Net interest from federal funds is determined after deduction

of interest expense from federal funds.

(G) Dividends and net gains from sales of stock or partnership

interests. Dividends from stock, net gains (not less than zero) from

sales of stock and net gains (not less than zero) from the sale of

partnership interests are not included in either the numerator or

denominator of the apportionment fraction unless the commissioner

determines pursuant to subdivision eleven of this section that inclusion

of such dividends and net gains (not less than zero) is necessary to

properly reflect the business income or capital of the taxpayer.

(H) Other financial instruments. (i) Receipts constituting interest

from other financial instruments shall be included in the numerator of

the apportionment fraction if the payor is located in the state.

Receipts constituting interest from other financial instruments, whether

the payor is within or without the state, are included in the

denominator of the apportionment fraction.

(ii) Net gains (not less than zero) from sales of other financial

instruments and other income (not less than zero) from other financial

instruments where the purchaser or payor is located in the state are

included in the numerator of the apportionment fraction, provided that,

if the purchaser or payor is a registered securities broker or dealer or

the transaction is made through a licensed exchange, then eight percent

of the net gains (not less than zero) or other income (not less than

zero) is included in the numerator of the apportionment fraction. Net

gains (not less than zero) from sales of other financial instruments and

other income (not less than zero) from other financial instruments are

included in the denominator of the apportionment fraction.

(I) Physical commodities. Net income (not less than zero) from sales

of physical commodities are included in the numerator of the

apportionment fraction as provided in this clause. The amount of net

income from sales of physical commodities included in the numerator of

the apportionment fraction is determined by multiplying the net income

from sales of physical commodities by a fraction, the numerator of which

is the amount of receipts from sales of physical commodities actually

delivered to points within the state or, if there is no actual delivery

of the physical commodity, sold to purchasers located in the state, and

the denominator of which is the amount of receipts from sales of

physical commodities actually delivered to points within and without the

state or, if there is no actual delivery of the physical commodity, sold

to purchasers located within and without the state. Net income (not less

than zero) from sales of physical commodities is included in the

denominator of the apportionment fraction. Net income (not less than

zero) from sales of physical commodities is determined after the

deduction of the cost to acquire or produce the physical commodities.

(J) Marked to market net gains. (i) For purposes of this subdivision,

"marked to market" means that a financial instrument is, under section

475 or section 1256 of the internal revenue code, treated by the

taxpayer as sold for its fair market value on the last business day of

the taxpayer's taxable year. "Marked to market gain or loss" means the

gain or loss recognized by the taxpayer under section 475 or section

1256 of the internal revenue code because the financial instrument is

treated as sold for its fair market value on the last business day of

the taxpayer's taxable year.

(ii) The amount of marked to market net gains (not less than zero)

from each type of financial instrument that is marked to market included

in the numerator of the apportionment fraction is determined by

multiplying the marked to market net gains (but not less than zero) from

such type of the financial instrument by a fraction, the numerator of

which is the numerator of the apportionment fraction for the net gains

from that type of financial instrument determined under the applicable

clause of this subparagraph and the denominator of which is the

denominator of the apportionment fraction for the net gains for that

type of financial instrument determined under the applicable clause of

this subparagraph. Marked to market net gains (not less than zero) from

financial instruments for which the numerator of the apportionment

fraction is determined under the immediately preceding sentence are

included in the denominator of the apportionment fraction.

(iii) If the type of financial instrument that is marked to market is

not otherwise sourced by the taxpayer under this subparagraph, or if the

taxpayer has a net loss from the sales of that type of financial

instrument under the applicable clause of this subparagraph, the amount

of marked to market net gains (not less than zero) from that type of

financial instrument included in the numerator of the apportionment

fraction is determined by multiplying the marked to market net gains

(but not less than zero) from that type of financial instrument by a

fraction, the numerator of which is the sum of the amount of receipts

included in the numerator of the apportionment fraction under clauses

(A), (B), (C), (D), (E), (F), (G), (H) and (I) of this subparagraph and

subclause (ii) of this clause, and the denominator of which is the sum

of the amount of receipts included in the denominator of the

apportionment fraction under clauses (A), (B), (C), (D), (E), (F), (G),

(H) and (I) and subclause (ii) of this clause. Marked to market net

gains (not less than zero) for which the amount to be included in the

numerator of the apportionment fraction is determined under the

immediately preceding sentence are included in the denominator of the

apportionment fraction.

(b) Other receipts from broker or dealer activities. Receipts of a

registered securities broker or dealer from securities or commodities

broker or dealer activities described in this paragraph shall be deemed

to be generated within the state as described in subparagraphs one

through eight of this paragraph. Receipts from such activities generated

within the state shall be included in the numerator of the apportionment

fraction. Receipts from such activities generated within and without the

state shall be included in the denominator of the apportionment

fraction. For the purposes of this paragraph, the term "securities"

shall have the same meaning as in section 475(c)(2) of the internal

revenue code and the term "commodities" shall have the same meaning as

in section 475(e)(2) of the internal revenue code.

(1) Receipts constituting brokerage commissions derived from the

execution of securities or commodities purchase or sales orders for the

accounts of customers shall be deemed to be generated within the state

if the mailing address in the records of the taxpayer of the customer

who is responsible for paying such commissions is within the state.

(2) Receipts constituting margin interest earned on behalf of

brokerage accounts shall be deemed to be generated within the state if

the mailing address in the records of the taxpayer of the customer who

is responsible for paying such margin interest is within the state.

(3)(A) Receipts constituting fees earned by the taxpayer for advisory

services to a customer in connection with the underwriting of securities

for such customer (such customer being the entity that is contemplating

issuing or is issuing securities) or fees earned by the taxpayer for

managing an underwriting shall be deemed to be generated within the

state if the mailing address in the records of the taxpayer of such

customer who is responsible for paying such fees is within the state.

(B) Receipts constituting the primary spread of selling concession

from underwritten securities shall be deemed to be generated within the

state if the customer is located in the state.

(C) The term "primary spread" means the difference between the price

paid by the taxpayer to the issuer of the securities being marketed and

the price received from the subsequent sale of the underwritten

securities at the initial public offering price, less any selling

concession and any fees paid to the taxpayer for advisory services or

any manager's fees, if such fees are not paid by the customer to the

taxpayer separately. The term "public offering price" means the price

agreed upon by the taxpayer and the issuer at which the securities are

to be offered to the public. The term "selling concession" means the

amount paid to the taxpayer for participating in the underwriting of a

security where the taxpayer is not the lead underwriter.

(4) Receipts constituting account maintenance fees shall be deemed to

be generated within the state if the mailing address in the record of

the taxpayer of the customer who is responsible for paying such account

maintenance fees is within the state.

(5) Receipts constituting fees for management or advisory services,

including fees for advisory services in relation to merger or

acquisition activities, but excluding fees paid for services described

in paragraph (d) of this subdivision, shall be deemed to be generated

within the state if the mailing address in the records of the taxpayer

of the customer who is responsible for paying such fees is within the

state.

(6) Receipts constituting interest earned by the taxpayer on loans and

advances made by the taxpayer to a corporation affiliated with the

taxpayer but with which the taxpayer is not permitted or required to

file a combined report pursuant to section two hundred ten-C of this

article shall be deemed to arise from services performed at the

principal place of business of such affiliated corporation.

(7) If the taxpayer receives any of the receipts enumerated in

subparagraphs one through four of this paragraph as a result of a

securities correspondent relationship such taxpayer has with another

broker or dealer with the taxpayer acting in this relationship as the

clearing firm, such receipts shall be deemed to be generated within the

state to extent set forth in each of such subparagraphs. The amount of

such receipts shall exclude the amount the taxpayer is required to pay

to the correspondent firm for such correspondent relationship. If the

taxpayer receives any of the receipts enumerated in subparagraphs one

through four of this paragraph as as result of a securities

correspondent relationship such taxpayer has with another broker or

dealer with the taxpayer acting in this relationship as the introducing

firm, such receipts shall be deemed to be generated within the state to

the extent set forth in each of such subparagraphs.

(8) If, for purposes of subparagraphs one, two, clause (A) of

subparagraph three, four, or five of this paragraph the taxpayer is

unable from its records to determine the mailing address of the

customer, eight percent of the receipts is included in the numerator of

the apportionment fraction.

(c) Receipts from credit card and similar activities. Receipts

relating to the bank, credit, travel and entertainment card activities

described in this paragraph shall be deemed to be generated within the

state as described in subparagraphs one through four of this paragraph.

Receipts from such activities generated within the state shall be

included in the numerator of the apportionment fraction. Receipts from

such activities generated within and without the state shall be included

in the denominator of the apportionment fraction.

(1) Receipts constituting interest, and fees and penalties in the

nature of interest, from bank, credit, travel and entertainment card

receivables shall be deemed to be generated within the state if the

mailing address of the card holder in the records of the taxpayer is in

the state;

(2) Receipts from service charges and fees from such cards shall be

deemed to be generated within the state if the mailing address of the

card holder in the records of the taxpayer is in the state; and

(3) Receipts from merchant discounts shall be deemed to be generated

within the state if the merchant is located within the state. In the

case of a merchant with locations both within and without New York

state, only receipts from merchant discounts attributable to sales made

from locations within New York state are allocated to New York state. It

shall be presumed that the location of the merchant is the address of

the merchant shown on the invoice submitted by the merchant to the

taxpayer.

(4) Receipts from credit card authorization processing, and clearing

and settlement processing received by credit card processors shall be

deemed to be generated within the state if the location where the credit

card processor's customer accesses the credit card processor's network

is located within the state. The amount of all other receipts received

by credit card processors not specifically addressed in subdivisions one

through nine of this section deemed to be generated within the state

shall be determined by multiplying the total amount of such other

receipts by the average of (i) eight percent and (ii) the percent of its

New York access points. The percent of New York access points is the

number of locations in New York from which the credit card processor's

customers access the credit card processor's network divided by the

total number of locations in the United States where the credit card

processor's customers access the credit card processor's network.

(d) Receipts from certain services to investment companies. Receipts

received from an investment company arising from the sale of management,

administration or distribution services to such investment company are

included in the denominator of the apportionment fraction. The portion

of such receipts included in the numerator of the apportionment fraction

(such portion referred to herein as the New York portion) shall be

determined as provided in this paragraph.

(1) The New York portion shall be the product of the total of such

receipts from the sale of such services and a fraction. The numerator of

that fraction is the sum of the monthly percentages (as defined

hereinafter) determined for each month of the investment company's

taxable year for federal income tax purposes which taxable year ends

within the taxable year of the taxpayer (but excluding any month during

which the investment company had no outstanding shares). The monthly

percentage for each such month is determined by dividing the number of

shares in the investment company that are owned on the last day of the

month by shareholders that are located in the state by the total number

of shares in the investment company outstanding on that date. The

denominator of the fraction is the number of such monthly percentages.

(2)(A) For purposes of this paragraph, an individual, estate or trust

is deemed to be located in the state if his, her or its mailing address

on the records of the investment company is in the state. A business

entity is deemed to be located in the state if its commercial domicile

is located in the state.

(B) For purposes of this paragraph, the term "investment company"

means a regulated investment company, as defined in section 851 of the

internal revenue code, and a partnership to which section 7704(a) of the

internal revenue code applies (by virtue of section 7704(c)(3) of such

code) and that meets the requirements of section 851(b) of such code.

The preceding sentence shall be applied to the taxable year for federal

income tax purposes of the business entity that is asserted to

constitute an investment company that ends within the taxable year of

the taxpayer.

(C) For purposes of this paragraph the term "receipts from an

investment company" includes amounts received directly from an

investment company as well as amounts received from the shareholders in

such investment company, in their capacity as such.

(D) For purposes of this paragraph, the term "management services"

means the rendering of investment advice to an investment company,

making determinations as to when sales and purchases of securities are

to be made on behalf of an investment company, or the selling or

purchasing of securities constituting assets of an investment company,

and related activities, but only where such activity or activities are

performed pursuant to a contract with the investment company entered

into pursuant to section 15(a) of the federal investment company act of

nineteen hundred forty, as amended.

(E) For purposes of this paragraph, the term "distribution services"

means the services of advertising, servicing investor accounts

(including redemptions), marketing shares or selling shares of an

investment company, but, in the case of advertising, servicing investor

accounts (including redemptions) or marketing shares, only where such

service is performed by a person who is (or was, in the case of a closed

end company) also engaged in the service of selling such shares. In the

case of an open end company, such service of selling shares must be

performed pursuant to a contract entered into pursuant to section 15(b)

of the federal investment company act of nineteen hundred forty, as

amended.

(F) For purposes of this paragraph, the term "administration services"

includes clerical, accounting, bookkeeping, data processing, internal

auditing, legal and tax services performed for an investment company but

only if the provider of such service or services during the taxable year

in which such service or services are sold also sells management or

distribution services, as defined hereinabove, to such investment

company.

(e) For purposes of this subdivision, a taxpayer shall use the

following hierarchy to determine the commercial domicile of a business

entity, based on the information known to the taxpayer or information

that would be known upon reasonable inquiry: (i) the seat of management

and control of the business entity; and (ii) the billing address of the

business entity in the taxpayer's records. The taxpayer must exercise

due diligence before rejecting the first method in this hierarchy and

proceeding to the next method.

(f) For purposes of this subdivision, the term "registered securities

broker or dealer" means a broker or dealer registered as such by the

securities and exchange commission or a broker or dealer registered as

such by the commodities futures trading commission, and shall include an

OTC derivatives dealer as defined under regulations of the securities

and exchange commission at title 17, part 240, section 3b-12 of the code

of federal regulations (17 CFR 240.3b-12).

5-a. Global intangible low-taxed income. (a) Notwithstanding any other

provision of this section, global intangible low-taxed income shall be

included in the apportionment fraction as provided in this subdivision.

(b) For New York C corporations, global intangible low-taxed income

shall not be included in the numerator of the apportionment fraction.

Five percent of global intangible low-taxed income shall be included in

the denominator of the apportionment fraction.

(c) For New York S corporations, global intangible low-taxed income

shall not be included in the numerator of the apportionment fraction.

Global intangible low-taxed income shall be included in the denominator

of the apportionment fraction.

(d) For purposes of this subdivision, the term "global intangible

low-taxed income" means the amount required to be included in the

taxpayer's federal gross income pursuant to subsection (a) of section

951A of the internal revenue code.

6. Receipts from railroad and trucking business. Receipts from the

conduct of a railroad business (including surface railroad, whether or

not operated by steam, subway railroad, elevated railroad, palace car or

sleeping car business) or a trucking business are included in the

numerator of the apportionment fraction as follows. The amount of

receipts from the conduct of a railroad business or a trucking business

included in the numerator of the apportionment fraction is determined by

multiplying the amount of receipts from such business by a fraction, the

numerator of which is the miles in such business within the state during

the period covered by the taxpayer's report and the denominator of which

is the miles in such business within and without the state during such

period. Receipts from the conduct of the railroad business or a trucking

business are included in the denominator of the apportionment fraction.

6-a. Receipts from the operation of vessels. Receipts from the

operation of vessels are included in the numerator of the apportionment

fraction as follows. The amount of receipts from the operation of

vessels included in the numerator of the apportionment fraction is

determined by multiplying the amount of such receipts by a fraction, the

numerator of which is the aggregate number of working days of the

vessels owned or leased by the taxpayer in territorial waters of the

state during the period covered by the taxpayer's report and the

denominator of which is the aggregate number of working days of all

vessels owned or leased by the taxpayer during such period. Receipts

from the operation of vessels are included in the denominator of the

apportionment fraction.

7. Receipts from aviation services. (a) Air freight forwarding.

Receipts of a taxpayer from the activity of air freight forwarding

acting as principal and like indirect air carrier receipts arising from

such activity shall be included in the numerator of the apportionment

fraction as follows: one hundred percent of such receipts if both the

pickup and delivery associated with such receipts are made in the state

and fifty percent of such receipts if either the pickup or delivery

associated with such receipts is made in this state. Such receipts,

whether the pickup or delivery associated with the receipts is within or

without the state, shall be included in the denominator of the

apportionment fraction.

(b) Other aviation services. (1)(A) The portion of receipts of a

taxpayer from aviation services (other than services described in

paragraph (a) of this subdivision, but including the receipts of a

qualified air freight forwarder) to be included in the numerator of the

apportionment fraction shall be determined by multiplying its receipts

from such aviation services by a percentage which is equal to the

arithmetic average of the following three percentages:

(i) the percentage determined by dividing sixty percent of the

aircraft arrivals and departures within this state by the taxpayer

during the period covered by its report by the total aircraft arrivals

and departures within and without this state during such period;

provided, however, arrivals and departures solely for maintenance or

repair, refueling (where no debarkation or embarkation of traffic

occurs), arrivals and departures of ferry and personnel training flights

or arrivals and departures in the event of emergency situations shall

not be included in computing such arrival and departure percentage;

provided, further, the commissioner may also exempt from such percentage

aircraft arrivals and departures of all non-revenue flights including

flights involving the transportation of officers or employees receiving

air transportation to perform maintenance or repair services or where

such officers or employees are transported in conjunction with an

emergency situation or the investigation of an air disaster (other than

on a scheduled flight); provided, however, that arrivals and departures

of flights transporting officers and employees receiving air

transportation for purposes other than specified above (without regard

to remuneration) shall be included in computing such arrival and

departure percentage;

(ii) the percentage determined by dividing sixty percent of the

revenue tons handled by the taxpayer at airports within this state

during such period by the total revenue tons handled by it at airports

within and without this state during such period; and

(iii) the percentage determined by dividing sixty percent of the

taxpayer's originating revenue within this state for such period by its

total originating revenue within and without this state for such period.

(B) As used herein the term "aircraft arrivals and departures" means

the number of landings and takeoffs of the aircraft of the taxpayer and

the number of air pickups and deliveries by the aircraft of such

taxpayer; the term "originating revenue" means revenue to the taxpayer

from the transportation or revenue passengers and revenue property first

received by the taxpayer either as originating or connecting traffic at

airports; and the term "revenue tons handled" by the taxpayer at

airports means the weight in tons of revenue passengers (at two hundred

pounds per passenger) and revenue cargo first received either as

originating or connecting traffic or finally discharged by the taxpayer

at airports;

(2) All such receipts of a taxpayer from aviation services described

in this paragraph are included in the denominator of the apportionment

fraction.

(3) A corporation is a qualified air freight forwarder with respect to

another corporation:

(A) if it owns or controls either directly or indirectly all of the

capital stock of such other corporation, or if all of its capital stock

is owned or controlled either directly or indirectly by such other

corporation, or if all of the capital stock of both corporations is

owned or controlled either directly or indirectly by the same interests,

(B) if it is principally engaged in the business of air freight

forwarding, and

(C) if its air freight forwarding business is carried on principally

with the airline or airlines operated by such other corporation.

8. Receipts from sales of advertising. (a) The amount of receipts from

sales of advertising in newspapers or periodicals included in the

numerator of the apportionment fraction is determined by multiplying the

total of such receipts by a fraction, the numerator of which is the

number of newspapers and periodicals delivered to points within the

state and the denominator of which is the number of newspapers and

periodicals delivered to points within and without the state. The total

of such receipts from sales of advertising in newspapers or periodicals

is included in the denominator of the apportionment fraction.

(b) The amount of receipts from sales of advertising on television or

radio included in the numerator of the apportionment fraction is

determined by multiplying the total of such receipts by a fraction, the

numerator of which is the number of viewers or listeners within the

state and the denominator of which is the number of viewers or listeners

within and without the state. The total of such receipts from sales of

advertising on television and radio is included in the denominator of

the apportionment fraction.

(c) The amount of receipts from sales of advertising not described in

paragraph (a) or (b) of this subdivision that is furnished, provided or

delivered to, or accessed by the viewer or listener through the use of

wire, cable, fiber-optic, laser, microwave, radio wave, satellite or

similar successor media or any combination thereof, included in the

numerator of the apportionment fraction is determined by multiplying the

total of such receipts by a fraction, the numerator of which is the

number of viewers or listeners within the state and the denominator of

which is the number of viewers or listeners within and without the

state. The total of such receipts from sales of advertising described in

this paragraph is included in the denominator of the apportionment

fraction.

9. Receipts from transportation or transmission of gas through pipes.

Receipts from the transportation or transmission of gas through pipes

are included in the numerator of the apportionment fraction as follows.

The amount of receipts from the transportation or transmission of gas

through pipes included in the numerator of the apportionment fraction is

determined by multiplying the total amount of such receipts by a

fraction, the numerator of which is the taxpayer's transportation units

within the state and the denominator of which is the taxpayer's

transportation units within and without the state. A transportation unit

is the transportation of one cubic foot of gas over a distance of one

mile. The total amount of receipts from the transportation or

transmission of gas through pipes is included in the denominator of the

apportionment fraction.

10. (a) Receipts from other services and other business receipts.

Receipts from services not addressed in subdivisions one through nine of

this section and other business receipts not addressed in such

subdivisions shall be included in the numerator of the apportionment

fraction if the location of the customer is within the state. Such

receipts from customers within and without the state are included in the

denominator of the apportionment fraction. Whether the receipts are

included in the numerator of the apportionment fraction is determined

according to the hierarchy of method set forth in paragraph (b) of this

subdivision. The taxpayer must exercise due diligence under each method

described in such paragraph (b) before rejecting it and proceeding to

the next method in the hierarchy, and must base its determination on

information known to the taxpayer or information that would be known to

the taxpayer upon reasonable inquiry.

(b) Hierarchy of methods. (1) The benefit is received in this state;

(2) Delivery destination;

(3) The apportionment fraction for such receipts within the state

determined pursuant to this subdivision for the preceding taxable year;

or

(4) The apportionment fraction in the current taxable year determined

pursuant to this subdivision for those receipts that can be sourced

using the hierarchy of sourcing methods in subparagraphs one and two of

this paragraph.

11. If it shall appear that the apportionment fraction determined

pursuant to this section does not result in a proper reflection of the

taxpayer's business income or capital within the state, the commissioner

is authorized in his or her discretion to adjust it, or the taxpayer may

request that the commissioner adjust it, by (a) excluding one or more

items in such determination, (b) including one or more other items in

such determination, or (c) any other similar or different method

calculated to effect a fair and proper apportionment of the business

income and capital reasonably attributed to the state. The party seeking

the adjustment shall bear the burden of proof to demonstrate that the

apportionment fraction determined pursuant to this section does not

result in a proper reflection of the taxpayer's business income or

capital within the state and that the proposed adjustment is

appropriate.