N.Y. Tax Law § 210-c: Combined reports

§ 210-C. Combined reports. 1. Tax. (a) The tax on a combined report

shall be the highest of (i) the combined business income base multiplied

by the tax rate specified in paragraph (a) of subdivision one of section

two hundred ten of this article; (ii) the combined capital base

multiplied by the tax rate specified in paragraph (b) of subdivision one

of section two hundred ten of this article, but not exceeding the

limitation provided for in that paragraph (b); or (iii) the fixed dollar

minimum that is attributable to the designated agent of the combined

group. In addition, the tax on a combined report shall include the fixed

dollar minimum tax specified in paragraph (d) of subdivision one of

section two hundred ten of this article for each member of the combined

group, other than the designated agent, that is a taxpayer.

(b) The combined business income base is the amount of the combined

business income of the combined group that is apportioned to the state,

reduced by any prior net operating loss conversion subtraction and any

net operating loss deduction for the combined group. The combined

capital base is the amount of the combined capital of the combined group

that is apportioned to the state.

2. Combined reports required. (a) Except as provided in paragraph (c)

of this subdivision, any taxpayer (i) which owns or controls either

directly or indirectly more than fifty percent of the voting power of

the capital stock of one or more other corporations, or (ii) more than

fifty percent of the voting power of the capital stock of which is owned

or controlled either directly or indirectly by one or more other

corporations, or (iii) more than fifty percent of the voting power of

the capital stock of which and the capital stock of one or more other

corporations, is owned or controlled, directly or indirectly, by the

same interests, and (iv) that is engaged in a unitary business with

those corporations (hereinafter referred to as "related corporations"),

shall make a combined report with those other corporations.

(b) A corporation required to make a combined report within the

meaning of this section shall also include (i) a captive REIT and a

captive RIC if the captive REIT or captive RIC is not required to be

included in a combined report under article thirty-three of this

chapter; (ii) a combinable captive insurance company; and (iii) an alien

corporation that satisfies the conditions in paragraph (a) of this

subdivision if (I) under any provision of the internal revenue code,

that corporation is treated as a "domestic corporation" as defined in

section seven thousand seven hundred one of the internal revenue code,

or (II) it has effectively connected income for the taxable year

pursuant to clause (iv) of the opening paragraph of subdivision nine of

section two hundred eight of this article.

(c) A corporation required or permitted to make a combined report

under this section does not include (i) a corporation that is taxable

under a franchise tax imposed by article nine or article thirty-three of

this chapter or would be taxable under a franchise tax imposed by

article nine or thirty-three of this chapter if subject to tax; (ii) a

REIT that is not a captive REIT, and a RIC that is not a captive RIC;

(iii) a New York S corporation; or (iv) an alien corporation that under

any provision of the internal revenue code is not treated as a "domestic

corporation" as defined in section seven thousand seven hundred one of

such code and has no effectively connected income for the taxable year

pursuant to clause (iv) of the opening paragraph of subdivision nine of

section two hundred eight of this article. If a corporation is subject

to tax under this article solely as a result of its ownership of a

limited partner interest in a limited partnership that is doing

business, employing capital, owning or leasing property, maintaining an

office in this state, or deriving receipts from activity in this state,

and none of the corporation's related corporations are subject to tax

under this article, such corporation shall not be required or permitted

to file a combined report under this section with such related

corporations.

(d) A combined report shall be filed by the designated agent of the

combined group as determined under subdivision seven of this section.

3. Commonly owned group election. (a) Subject to the provisions of

paragraph (c) of subdivision two of this section, a taxpayer may elect

to treat as its combined group all corporations that meet the ownership

requirements described in paragraph (a) of subdivision two of this

section (such corporations collectively referred to in this subdivision

as the "commonly owned group"). If that election is made, the commonly

owned group shall calculate the combined business income, combined

capital, and fixed dollar minimum bases of all members of the group in

accordance with subdivision four of this section, whether or not that

business income or business capital is from a single unitary business.

(b) The election under this subdivision shall be made on an original,

timely filed return of the combined group, determined with regard to

extensions of time for filing. Any corporation entering a commonly owned

group subsequent to the year of election shall be included in the

combined group and is considered to have waived any objection to its

inclusion in the combined group.

(c) The election shall be irrevocable, and binding for and applicable

to the taxable year for which it is made and for the next six taxable

years. The election will automatically be renewed for another seven

taxable years after it has been in effect for seven taxable years unless

it is affirmatively revoked. The revocation shall be made on an

original, timely filed return for the first taxable year after the

completion of a seven year period for which an election under this

subdivision was in place. In the case of a revocation, a new election

under this subdivision shall not be permitted in any of the immediately

following three taxable years. In determining the seven and three year

periods described in this paragraph, short taxable years shall not be

considered or counted.

4. Computation of tax bases on a combined report. (a) In computing the

tax bases for a combined report, the combined group shall generally be

treated as a single corporation, except as otherwise provided, and

subject to any regulations or guidance issued by the commissioner or the

department.

(b)(i) In computing combined business income, all intercorporate

dividends shall be eliminated, and all other intercorporate transactions

shall be deferred in a manner similar to the United States Treasury

regulations relating to intercompany transactions under section fifteen

hundred two of the internal revenue code.

(ii) In computing combined capital, all intercorporate stockholdings,

intercorporate bills, intercorporate notes receivable and payable,

intercorporate accounts receivable and payable, and other intercorporate

indebtedness, shall be eliminated.

(c) Qualification for credits, including any limitations thereon,

shall be determined separately for each of the members of the combined

group, and shall not be determined on a combined group basis, except as

otherwise provided. However, the credits shall be applied against the

combined tax of the group. To the extent that a provision of section two

hundred ten-B of this article limits a credit to the fixed dollar

minimum amount prescribed in paragraph (d) of subdivision one of section

two hundred ten of this article, such fixed dollar minimum amount shall

be the fixed dollar minimum amount that is attributable to the

designated agent of the combined group.

(d) (i) A net operating loss deduction is allowed in computing the

combined business income base. Such deduction may reduce the tax on the

combined business income base to the higher of the tax on the combined

capital base or the fixed dollar minimum amount that is attributable to

the designated agent of the combined group. A combined net operating

loss deduction is equal to the amount of combined net operating loss or

losses from one or more taxable years that are carried forward or

carried back to a particular taxable year. A combined net operating loss

is the combined business loss incurred in a particular taxable year

multiplied by the combined apportionment factor for that year determined

as provided in subdivision five of this section.

(ii) The combined net operating loss deduction and combined net

operating loss are also subject to the provisions contained in clauses

one through seven of subparagraph (ix) of paragraph (a) of subdivision

one of section two hundred ten of this article.

(iii) In the case of a corporation that files a combined report,

either in the year the net operating loss is incurred or in the year in

which a deduction is claimed on account of the loss, the combined net

operating loss deduction is determined as if the combined group is a

single corporation and, to the extent possible and not otherwise

inconsistent with this subdivision, is subject to the same limitations

that would apply for federal income tax purposes under the internal

revenue code and the code of federal regulations as if such corporation

had filed for such taxable year a consolidated federal income tax return

with the same corporations included in the combined report. If a

corporation files a combined report, regardless of whether it filed a

separate return or consolidated return for federal income tax purposes,

the net operating loss and net operating loss deduction for the combined

group must be computed as if the corporation had filed a consolidated

return for the same corporations for federal income tax purposes.

(iv) In general, any net operating loss carryover from a year in which

a combined report was filed shall be based on the combined net operating

loss of the group of corporations filing such report. The portion of the

combined loss attributable to any member of the group that files a

separate report for a succeeding taxable year will be an amount bearing

the same relation to the combined loss as the net operating loss of such

corporation bears to the total net operating loss of all members of the

group having such losses to the extent that they are taken into account

in computing the combined net operating loss.

(d-1) A prior net operating loss conversion subtraction is allowed in

computing the combined business income base, as provided in subparagraph

(viii) of paragraph (a) of subdivision one of section two hundred ten of

this article. Such subtraction may reduce the tax on the combined

business income base to the higher of the tax on the combined capital

base or the fixed dollar minimum amount that is attributable to the

designated agent of the combined group.

(e) (i) Any election made pursuant to paragraph (b) of subdivision

six, paragraphs (b) and (c) of subdivision six-a of section two hundred

eight, and item (IV) of subclause two of clause (B) of subparagraph

(viii) and clause seven of subparagraph (ix) of paragraph (a) of

subdivision one of section two hundred ten of this article shall apply

to all members of the combined group.

(ii) The determination of whether or not the limitation on investment

income provided in subparagraph (iii) of paragraph (a) of subdivision

six of section two hundred eight of this article applies to the combined

group shall be based on the investment income of the combined group,

determined without regard to interest expenses attributable to

investment capital or investment income, and the entire net income of

the combined group.

(f)(i) In the case of a captive REIT or captive RIC required under

this section to be included in a combined report, entire net income

shall be computed as required under subdivision five (in the case of a

captive REIT) or subdivision seven (in the case of a captive RIC) of

section two hundred nine of this article. However, the deduction under

the internal revenue code for dividends paid by the captive REIT or

captive RIC to any member of the affiliated group that includes the

corporation that directly or indirectly owns over fifty percent of the

voting stock of the captive REIT or captive RIC shall not be allowed.

For purposes of this subparagraph, the term "affiliated group" means

"affiliated group" as defined in section fifteen hundred four of the

internal revenue code, but without regard to the exceptions provided for

in subsection (b) of that section.

(ii) In the case of a combinable captive insurance company required

under this section to be included in a combined report, entire net

income shall be computed as required by subdivision nine of section two

hundred eight of this article.

(g) If more than one member of a combined group is eligible for any of

the modifications described in paragraphs (r), (s) and (t) of

subdivision nine of section two hundred eight of this article, all such

members must utilize the same modification.

5. Apportionment on a combined report. (a) In determining the

apportionment factor for a combined report, the receipts, net income,

net gains and other items of all members of the combined group, whether

or not they are a taxpayer, are included and intercorporate receipts,

income and gains are eliminated. Receipts, net income, net gains and

other items are sourced, and the amounts allowed in the apportionment

factor are determined, as provided in section two hundred ten-A of this

article.

(b) An election made to apportion income and gains from qualifying

financial instruments pursuant to subparagraph one of paragraph (a) of

subdivision five of section two hundred ten-A of this article shall

apply to all members of the combined group.

6. Liability of combined group members. Every member of the combined

group that is subject to tax under this article shall be jointly and

severally liable for the tax due pursuant to a combined report.

7. Designated agent. Each combined group shall have one designated

agent for the combined group, which shall be a taxpayer. Only the

designated agent may act on behalf of the members of the combined group

for matters relating to the combined report.