Bill Text: NY S03456 | 2019-2020 | General Assembly | Introduced


Bill Title: Reinstates a bank tax based on the highest of four bases: a tax on allocated entire net income, a tax on allocated alternative entire net income, a tax on allocated taxable assets, or a fixed dollar minimum tax; prohibits banks from segregating their income and capital into business and investment varieties.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Introduced) 2019-02-07 - REFERRED TO BUDGET AND REVENUE [S03456 Detail]

Download: New_York-2019-S03456-Introduced.html


                STATE OF NEW YORK
        ________________________________________________________________________
                                          3456
                               2019-2020 Regular Sessions
                    IN SENATE
                                    February 7, 2019
                                       ___________
        Introduced  by Sens. SKOUFIS, SANDERS -- read twice and ordered printed,
          and when printed to be committed to the Committee on Budget and Reven-
          ue
        AN ACT to amend the tax law, in relation to  franchise  tax  on  banking
          corporations
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
     1    Section 1. The tax law is amended by adding a new article 32  to  read
     2  as follows:
     3                                 ARTICLE 32
     4                    FRANCHISE TAX ON BANKING CORPORATIONS
     5  Section 1450.   General definitions.
     6          1451.   Imposition of tax.
     7          1452.   Banking corporation defined; exempt corporations.
     8          1453.   Computations of entire net income.
     9          1453-A. Computation of alternative entire net income.
    10          1454.   Allocation.
    11          1455.   Computation of tax.
    12          1455-A. Tax surcharge.
    13          1455-B. Temporary   metropolitan   transportation  business  tax
    14                    surcharge on banks.
    15          1456.   Credits.
    16          1460.   Declarations of estimated tax.
    17          1461.   Payments of estimated tax.
    18          1462.   Returns.
    19          1463.   Payment of tax.
    20          1466.   Deposit and disposition of revenue.
    21          1467.   Secrecy required of officials; penalty for violation.
    22          1468.   Procedural provisions.
    23    § 1450. General definitions. As used in this article:
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD07753-02-9

        S. 3456                             2
     1    (a) The word "taxpayer" means a corporation or association subject  to
     2  a tax imposed by this article.
     3    (b)  The  phrase  "taxable year" means the taxpayer's taxable year for
     4  federal income tax purposes,  or  the  part  thereof  during  which  the
     5  taxpayer is subject to the tax imposed by this article.
     6    (c)  The  term "international banking facility" shall mean an interna-
     7  tional banking facility located in New York state  and  shall  have  the
     8  same  meaning as is set forth in the New York state banking law or regu-
     9  lations of the New York state department of financial services or as  is
    10  set  forth  in the laws of the United States or regulations of the board
    11  of governors of the federal reserve system.
    12    (d) The term "subsidiary" means a corporation or association of  which
    13  over  fifty percent of the number of shares of stock entitling the hold-
    14  ers thereof to vote for the election of directors or trustees  is  owned
    15  by the taxpayer.
    16    (e)  The  term  "subsidiary capital" means investments in the stock of
    17  subsidiaries  and  any  indebtedness  from  subsidiaries,  exclusive  of
    18  accounts receivable acquired in the ordinary course of trade or business
    19  for  services  rendered or for sales of property held primarily for sale
    20  to customers, whether or not evidenced by written instrument,  on  which
    21  interest  is  not claimed and deducted by the subsidiary for purposes of
    22  taxation under this article, article  nine-A  or  thirty-three  of  this
    23  chapter,  provided,  however,  there  shall  be deducted from subsidiary
    24  capital any liabilities payable by their terms on demand or  within  one
    25  year  from  the  date incurred, other than loans or advances outstanding
    26  for more than a year as of any date  during  the  year  covered  by  the
    27  return, which are attributable to subsidiary capital.
    28    (f) The terms "New York S corporation", "New York S year", "New York S
    29  election",  "New  York  C  corporation", "New York C year", "termination
    30  year", "S short year", "C short year", and "New York S termination year"
    31  shall have the same meaning as those terms have under subdivision  one-A
    32  of  section two hundred eight of this chapter, except that references in
    33  such subdivision to article nine-A of this  chapter  shall  be  read  as
    34  references to this article.
    35    (g)  The term "QSSS" means a corporation which is a qualified subchap-
    36  ter S subsidiary as defined in subparagraph (B) of  paragraph  three  of
    37  subsection  (b)  of  section  thirteen hundred sixty-one of the internal
    38  revenue code. The term "exempt QSSS" means a QSSS exempt from tax  under
    39  this  article  as provided in subsection (o) of section fourteen hundred
    40  fifty-three of this article, or  a  QSSS  described  in  clause  (i)  of
    41  subparagraph  (B) of paragraph two of subsection (o) of section fourteen
    42  hundred fifty-three, wherein the  parent  corporation  of  the  QSSS  is
    43  subject  to  tax under this article, and the assets, liabilities, income
    44  and deductions of the QSSS  are  treated  as  the  assets,  liabilities,
    45  income  and  deductions  of  the  parent corporation. Where a QSSS is an
    46  exempt QSSS, then for all purposes under this article:
    47    (1) the assets, liabilities, income,  deductions,  property,  payroll,
    48  receipts, capital, credits, and all other tax attributes and elements of
    49  economic  activity of the QSSS shall be deemed to be those of the parent
    50  corporation,
    51    (2) the stocks, bonds and other securities issued by, and any  indebt-
    52  edness  from,  the  QSSS  shall  not be subsidiary capital of the parent
    53  corporation,
    54    (3) transactions between the parent corporation and the QSSS,  includ-
    55  ing  the  payment  of  interest  and  dividends, shall not be taken into
    56  account, and

        S. 3456                             3
     1    (4) general executive officers of the  QSSS  shall  be  deemed  to  be
     2  general executive officers of the parent corporation.
     3    (h)  The  term  "financial  holding company" means a corporation that,
     4  pursuant to subsection (l) of section 4  of  the  federal  bank  holding
     5  company  act  of  nineteen hundred fifty-six, as amended, has filed with
     6  the federal reserve board a written  declaration  that  the  corporation
     7  elects to be a financial holding company and whose election has not been
     8  found to be ineffective by the federal reserve board.
     9    §  1451.  Imposition  of  tax. (a) For the privilege of exercising its
    10  franchise or doing business in this state in a  corporate  or  organized
    11  capacity,  a  tax, computed under section fourteen hundred fifty-five of
    12  this article, is hereby annually imposed on  every  banking  corporation
    13  for  each  of  its  taxable  years, or any part thereof, beginning on or
    14  after January first, nineteen hundred seventy-three.
    15    (b) In the case of a taxpayer whose  taxable  year  is  other  than  a
    16  calendar  year, there is hereby imposed a tax for the privilege of exer-
    17  cising its franchise or doing business in this state in a  corporate  or
    18  organized  capacity  for  the  period  beginning January first, nineteen
    19  hundred seventy-three and extending through the subsequent part  of  its
    20  first  such  taxable  year  ending  after  such  date. Such tax shall be
    21  computed under section fourteen hundred fifty-five of  this  article  on
    22  the  basis  of  such  taxpayer's  entire net income, or other applicable
    23  basis as the case may be, for such period  and  shall  be  paid  with  a
    24  return which shall be separately filed with the tax commission not later
    25  than  the  fifteenth day of the third month succeeding the close of such
    26  period. The requirements of sections fourteen hundred sixty and fourteen
    27  hundred sixty-one of this article, relating to declarations and payments
    28  of estimated tax, except subsection  (a)  of  section  fourteen  hundred
    29  sixty-one of this article, shall not be applicable to the tax imposed by
    30  this subsection.
    31    (c)(1)  A  banking  corporation  is  doing business in this state in a
    32  corporate or organized capacity if (i) it has issued credit cards to one
    33  thousand or more customers who have a mailing address within this  state
    34  as  of  the  last day of its taxable year, (ii) it has merchant customer
    35  contracts with merchants and the total number of  locations  covered  by
    36  those  contracts  equals one thousand or more locations in this state to
    37  whom the banking corporation remitted payments for  credit  card  trans-
    38  actions  during  the  taxable year, (iii) it has receipts of one million
    39  dollars or more in the taxable year from its  customers  who  have  been
    40  issued  credit  cards  by  the  banking  corporation  and have a mailing
    41  address within this state, (iv) it has receipts of one  million  dollars
    42  or more arising from merchant customer contracts with merchants relating
    43  to  locations  in  this state, or (v) the sum of the number of customers
    44  described in subparagraph (i) of  this  paragraph  plus  the  number  of
    45  locations  covered  by  its  contracts described in subparagraph (ii) of
    46  this paragraph equals one  thousand  or  more,  or  the  amount  of  its
    47  receipts  described  in  subparagraphs  (iii) and (iv) of this paragraph
    48  equals one million dollars or more.  For  purposes  of  this  paragraph,
    49  receipts  from processing credit card transactions for merchants include
    50  merchant discount fees received by the banking corporation.
    51    (2) As used in this subsection, the term "credit card" includes  bank,
    52  credit, travel and entertainment cards.
    53    §  1452. Banking corporation defined; exempt corporations. (a) For the
    54  purpose of this article, a banking corporation means:

        S. 3456                             4
     1    (1) Every corporation or association organized under the laws of  this
     2  state  which is authorized to do a banking business, or which is doing a
     3  banking business;
     4    (2)  every  corporation or association organized under the laws of any
     5  other state or country which is doing a banking business;
     6    (3) every national banking association organized under  the  authority
     7  of the United States which is doing a banking business;
     8    (4) every federal savings bank which is doing a banking business;
     9    (5)  every federal savings and loan association which is doing a bank-
    10  ing business;
    11    (6) a production credit association organized under the  federal  farm
    12  credit  act  of  nineteen hundred thirty-three, which is doing a banking
    13  business and all of whose stock held by the  federal  production  credit
    14  corporation has been retired;
    15    (7) every other corporation or association organized under the author-
    16  ity of the United States which is doing a banking business;
    17    (8)  the  mortgage  facilities  corporation  created  by  chapter five
    18  hundred sixty-four of the laws of nineteen hundred fifty-six;
    19    (9) any corporation sixty-five percent or more of whose  voting  stock
    20  is  owned  or  controlled,  directly  or indirectly, by a corporation or
    21  corporations subject to article three-A of the banking  law,  or  regis-
    22  tered  under  the  federal  bank holding company act of nineteen hundred
    23  fifty-six, as amended, or registered  as  a  savings  and  loan  holding
    24  company  (but  excluding a diversified savings and loan holding company)
    25  under the federal national housing act, as amended, or by a  corporation
    26  or  corporations  described  in  any of the foregoing paragraphs of this
    27  subsection, provided the corporation whose voting stock is so  owned  or
    28  controlled  is  principally  engaged  in a business, regardless of where
    29  conducted, which (i)  might  be  lawfully  conducted  by  a  corporation
    30  subject  to  article  three  of the banking law or by a national banking
    31  association, or (ii) is so closely related to  banking  or  managing  or
    32  controlling  banks  as  to be a proper incident thereto, as set forth in
    33  paragraph eight of subsection (c) or subparagraph (F) of paragraph  four
    34  of  subsection  (k)  of section four of the federal bank holding company
    35  act of nineteen hundred  fifty-six,  as  amended,  or  (iii)  holds  and
    36  manages  investment  assets,  including but not limited to bonds, notes,
    37  debentures and other obligations for the payment of money, stocks, part-
    38  nership interests or other equity interests, and other investment  secu-
    39  rities and which is not a business described in subparagraph (i) or (ii)
    40  of  this  paragraph;  and  provided,  further,  that in no event shall a
    41  corporation principally engaged in a business described in  section  one
    42  hundred  eighty-three or one hundred eighty-four, or section one hundred
    43  eighty-six as it  was  in  effect  on  December  thirty-first,  nineteen
    44  hundred ninety-nine, of this chapter be subject to the tax imposed under
    45  this  article  if  any  of  its  business receipts from such principally
    46  engaged in business are from other than a corporation (A) which owns  or
    47  controls,  directly  or  indirectly,  sixty-five  percent or more of its
    48  voting stock, or (B) sixty-five percent or more of whose voting stock is
    49  owned or controlled, directly or indirectly, by the corporation  engaged
    50  in  such  business,  or  (C)  sixty-five percent or more of whose voting
    51  stock is owned or controlled, directly or indirectly, by the same inter-
    52  est.
    53    (b) Banking business defined. The words "banking business" as used  in
    54  this  section  mean such business as a corporation or association may be
    55  created to do under article three, three-B, five, five-A, five-C, six or
    56  ten of the banking law or any business which a  corporation  or  associ-

        S. 3456                             5
     1  ation  is  authorized  by such article to do. However, with respect to a
     2  national banking association organized under the authority of the United
     3  States, a federal savings bank, a federal savings and  loan  association
     4  or a production credit association, the words "banking business" as used
     5  in  this  section  mean such business as a national banking association,
     6  federal savings bank, federal savings and loan association or production
     7  credit association, respectively, may be created to do or is  authorized
     8  to  do  under  the  laws  of  the United States or this state. The words
     9  "banking business" as used in this section shall also mean such business
    10  as any corporation or association organized under the authority  of  the
    11  United  States or organized under the laws of any other state or country
    12  has authority to do which is substantially similar to the business which
    13  a corporation or association may be created to do under  article  three,
    14  three-B,  five,  five-A,  five-C,  six  or ten of the banking law or any
    15  business which a corporation or association is authorized by such  arti-
    16  cle to do.
    17    (c) Exempt corporations. A trust company all of whose capital stock is
    18  owned by twenty or more savings banks organized under New York law shall
    19  be exempt from the tax under this article.
    20    (d)  Corporations  taxable  under  article nine-A. Notwithstanding the
    21  provisions of this article, all corporations of classes now  or  hereto-
    22  fore  taxable  under article nine-A of this chapter shall continue to be
    23  taxable under such article nine-A, except:  (1)  corporations  organized
    24  under  article  five-A  of  the banking law; (2) corporations subject to
    25  article three-A of the banking law, or registered under the federal bank
    26  holding company act of nineteen hundred fifty-six, as amended, or regis-
    27  tered as a savings and loan holding company (but excluding a diversified
    28  savings and loan holding company) under  the  federal  national  housing
    29  act,  as  amended,  which make a combined return under the provisions of
    30  subsection (f) of section fourteen hundred sixty-two  of  this  article;
    31  (3)  banking  corporations described in paragraph nine of subsection (a)
    32  of this section; (4) any captive REIT or captive RIC that is required to
    33  be included in a combined return under the provisions of subsection  (f)
    34  of section fourteen hundred sixty-two of this article; and (5) any over-
    35  capitalized  captive  insurance  company  required  to  be included in a
    36  combined return under subsection (f) of section fourteen hundred  sixty-
    37  two  of this article. Provided, however, that a corporation described in
    38  paragraph three of this subsection which was subject to the tax  imposed
    39  by  article  nine-A  of  this chapter for its taxable year ending during
    40  nineteen hundred eighty-four may, on or before the due date  for  filing
    41  its  return  (determined with regard to extensions) for its taxable year
    42  ending during nineteen hundred eighty-five, make a one time election  to
    43  continue  to  be  taxable under such article nine-A. Such election shall
    44  continue to be in effect until revoked by the taxpayer.    In  no  event
    45  shall such election or revocation be for a part of a taxable year.
    46    (e) Corporations taxable under article thirty-three. Except for corpo-
    47  rations  described  in subsection (1) of section fourteen hundred fifty-
    48  three of this article, corporations liable to tax under article  thirty-
    49  three of this chapter shall not be subject to tax under this article.
    50    (f) For exemption from tax of a qualified subchapter S subsidiary, see
    51  subsection (o) of section fourteen hundred fifty-three of this article.
    52    (g)  A  banking  corporation organized under the laws of a country, or
    53  any political subdivision thereof, other than the  United  States  shall
    54  not  be  deemed to be doing business in this state under this article if
    55  its activities in this state are limited  solely  to  (1)  investing  or
    56  trading  in stocks and securities for its own account within the meaning

        S. 3456                             6
     1  of clause (ii) of subparagraph (A) of paragraph (2) of subsection (b) of
     2  section eight hundred sixty-four of the internal  revenue  code  or  (2)
     3  investing or trading in commodities for its own account within the mean-
     4  ing  of  clause  (ii) of subparagraph (B) of paragraph (2) of subsection
     5  (b) of section eight hundred sixty-four of the internal revenue code  or
     6  (3) any combination of activities described in paragraphs one and two of
     7  this subsection.
     8    (h)  Transitional provisions relating to the enactment and implementa-
     9  tion of the federal Gramm-Leach-Bliley act. (1) Notwithstanding anything
    10  to the contrary contained in this section other than subsection  (n)  of
    11  this  section, a corporation that was in existence before January first,
    12  two thousand and was subject to tax under such article  nine-A  of  this
    13  chapter  for  its  last taxable year beginning before January first, two
    14  thousand, shall continue to be taxable under such article nine-A for all
    15  taxable years beginning on or after  January  first,  two  thousand  and
    16  before January first, two thousand one. The preceding sentence shall not
    17  apply  to  any  taxable  year during which such corporation is a banking
    18  corporation described in paragraphs one through eight of subsection  (a)
    19  of  this  section. Notwithstanding anything to the contrary contained in
    20  this section other than subsection (n) of this section, a banking corpo-
    21  ration that was in existence before January first, two thousand and  was
    22  subject  to  tax  under this article for its last taxable year beginning
    23  before January first, two thousand, shall continue to be  taxable  under
    24  this  article for all taxable years beginning on or after January first,
    25  two thousand and before  January  first,  two  thousand  one.  Provided,
    26  however,  that  nothing  in this subsection shall prohibit a corporation
    27  that elected pursuant to subsection (d) of this section  to  be  taxable
    28  under  article  nine-A  of  this  chapter from revoking that election in
    29  accordance with such subsection (d).
    30    For purposes of this paragraph, a corporation shall be  considered  to
    31  be  subject  to  tax  under article nine-A of this chapter for a taxable
    32  year if such corporation was not a taxpayer but was properly included in
    33  a combined report filed pursuant to section two hundred eleven  of  this
    34  chapter  for  such taxable year and a corporation shall be considered to
    35  be subject to tax under this article for a taxable year if  such  corpo-
    36  ration was not a taxpayer but was properly included in a combined return
    37  filed  pursuant  to  subsection  (f)  or (g) of section fourteen hundred
    38  sixty-two of this article for such taxable year. A corporation that  was
    39  in  existence  before  January  first,  two thousand but first becomes a
    40  taxpayer in a taxable year beginning on  or  after  January  first,  two
    41  thousand and before January first, two thousand one, shall be considered
    42  for purposes of this paragraph to have been subject to tax under article
    43  nine-A  of this chapter for its last taxable year beginning before Janu-
    44  ary first, two thousand if such corporation would have been  subject  to
    45  tax  under  such article for such taxable year if it had been a taxpayer
    46  during such taxable year. A corporation that  was  in  existence  before
    47  January  first,  two  thousand but first becomes a taxpayer in a taxable
    48  year beginning on or after January first, two thousand and before  Janu-
    49  ary  first,  two  thousand one, shall be considered for purposes of this
    50  paragraph to have been subject to tax under this article  for  its  last
    51  taxable year beginning before January first, two thousand if such corpo-
    52  ration  would have been subject to tax under this article for such taxa-
    53  ble year if it had been a taxpayer during such taxable year.
    54    (2) Notwithstanding anything to the contrary contained in this section
    55  other than subsection (n) of this section, a corporation  formed  on  or
    56  after January first, two thousand and before January first, two thousand

        S. 3456                             7
     1  one  may  elect to be subject to tax under this article or under article
     2  nine-A of this chapter for its first taxable year beginning on or  after
     3  January  first,  two thousand and before January first, two thousand one
     4  in  which  either  (i) sixty-five percent or more of its voting stock is
     5  owned or controlled, directly  or  indirectly  by  a  financial  holding
     6  company,  provided  the  corporation  whose  voting stock is so owned or
     7  controlled is principally engaged in activities that  are  described  in
     8  section  4(k)(4)  or  4(k)(5) of the federal bank holding company act of
     9  nineteen hundred fifty-six, as amended and the  regulations  promulgated
    10  pursuant  to  the  authority  of such section, or (ii) it is a financial
    11  subsidiary. An election under this paragraph may not be made by a corpo-
    12  ration described in paragraphs one through eight of  subsection  (a)  of
    13  this  section  or  in  subsection  (e)  of this section. In addition, an
    14  election under this paragraph may not be made by a corporation that is a
    15  party to a reorganization, as defined in subsection (a) of  section  368
    16  of  the  internal  revenue  code  of  1986, as amended, of a corporation
    17  described in paragraph one of this subsection if both corporations  were
    18  sixty-five  percent or more owned or controlled, directly or indirectly,
    19  by the same interests at the time of the reorganization.
    20    An election under this paragraph must be made by the  taxpayer  on  or
    21  before  the  due  date  for filing its return (determined with regard to
    22  extensions of time for filing) for  the  applicable  taxable  year.  The
    23  election  to be taxed under article nine-A of this chapter shall be made
    24  by the taxpayer by filing the report required pursuant  to  section  two
    25  hundred  eleven  of this chapter and the election to be taxed under this
    26  article shall be made by the taxpayer  by  filing  the  return  required
    27  pursuant  to  section  fourteen  hundred  sixty-two of this article. Any
    28  election made pursuant to this paragraph shall be irrevocable and  shall
    29  apply  to  each  subsequent  taxable  year beginning on or after January
    30  first, two thousand and before January first, two thousand one, provided
    31  that the stock ownership requirements described in subparagraph  (i)  of
    32  this  paragraph  are  met  or such corporation described in subparagraph
    33  (ii) of this paragraph continues as a financial subsidiary.
    34    (3) For purposes of this  section,  a  financial  subsidiary  means  a
    35  corporation  (i)  sixty-five  percent  or  more of whose voting stock is
    36  owned or controlled, directly or indirectly  by  a  banking  corporation
    37  described  in  paragraph  one,  two  or  three of subsection (a) of this
    38  section and (ii) is described in section 5136A(g) of the  revised  stat-
    39  utes of the United States or section 46 of the federal deposit insurance
    40  act.  For purposes of this article, the term "banking corporation" shall
    41  include a corporation electing to be taxed under this  article  pursuant
    42  to  paragraph  two of this subsection for so long as such election shall
    43  be in effect.
    44    (i) Transitional provisions relating to the enactment and  implementa-
    45  tion of the federal Gramm-Leach-Bliley act. (1) Notwithstanding anything
    46  to  the  contrary contained in this section other than subsection (n) of
    47  this section, a corporation that was in existence before January  first,
    48  two  thousand  one  and  was subject to tax under article nine-A of this
    49  chapter for its last taxable year beginning before  January  first,  two
    50  thousand  one, shall continue to be taxable under article nine-A for all
    51  taxable years beginning on or after January first, two thousand one  and
    52  before  January  first, two thousand three. The preceding sentence shall
    53  not apply to any taxable year during which such corporation is a banking
    54  corporation described in paragraphs one through eight of subsection  (a)
    55  of  this  section. Notwithstanding anything to the contrary contained in
    56  this section other than subsection (n) of this section, a banking corpo-

        S. 3456                             8
     1  ration that was in existence before January first, two thousand one  and
     2  was  subject  to tax under this article for its last taxable year begin-
     3  ning before January first, two thousand one, shall continue to be  taxa-
     4  ble under this article for all taxable years beginning on or after Janu-
     5  ary  first,  two  thousand  one  and  before January first, two thousand
     6  three. Provided, however, that nothing in this subsection shall prohibit
     7  a corporation that elected pursuant to subsection (d) of this section to
     8  be taxable under article nine-A  of  this  chapter  from  revoking  that
     9  election in accordance with such subsection (d).
    10    For  purposes  of this paragraph, a corporation shall be considered to
    11  be subject to tax under article nine-A of this  chapter  for  a  taxable
    12  year if such corporation was not a taxpayer but was properly included in
    13  a  combined  report filed pursuant to section two hundred eleven of this
    14  chapter for such taxable year and a corporation shall be  considered  to
    15  be  subject  to tax under this article for a taxable year if such corpo-
    16  ration was not a taxpayer but was properly included in a combined return
    17  filed pursuant to subsection (f) or  (g)  of  section  fourteen  hundred
    18  sixty-two  of this article for such taxable year. A corporation that was
    19  in existence before January first, two thousand one but first becomes  a
    20  taxpayer  in  a  taxable  year  beginning on or after January first, two
    21  thousand one and before January first,  two  thousand  three,  shall  be
    22  considered  for  purposes  of this paragraph to have been subject to tax
    23  under article nine-A of this chapter for its last taxable year beginning
    24  before January first, two thousand one if such  corporation  would  have
    25  been  subject  to tax under such article for such taxable year if it had
    26  been a taxpayer during such taxable year.  A  corporation  that  was  in
    27  existence  before  January  first,  two thousand one but first becomes a
    28  taxpayer in a taxable year beginning on  or  after  January  first,  two
    29  thousand  one  and  before  January  first, two thousand three, shall be
    30  considered for purposes of this paragraph to have been  subject  to  tax
    31  under  this  article  for its last taxable year beginning before January
    32  first, two thousand one if such corporation would have been  subject  to
    33  tax  under  this article for such taxable year if it had been a taxpayer
    34  during such taxable year.
    35    (2) Notwithstanding anything to the contrary contained in this section
    36  other than subsection (n) of this section, a corporation  formed  on  or
    37  after  January  first,  two  thousand  one and before January first, two
    38  thousand three may elect to be subject to  tax  under  this  article  or
    39  under  article  nine-A of this chapter for its first taxable year begin-
    40  ning on or after January first, two  thousand  one  and  before  January
    41  first, two thousand three in which either (i) sixty-five percent or more
    42  of  its voting stock is owned or controlled, directly or indirectly by a
    43  financial holding company, provided the corporation whose  voting  stock
    44  is  so owned or controlled is principally engaged in activities that are
    45  described in section 4(k)(4) or 4(k)(5)  of  the  federal  bank  holding
    46  company  act  of  nineteen  hundred  fifty-six, as amended and the regu-
    47  lations promulgated pursuant to the authority of such section,  or  (ii)
    48  it is a financial subsidiary.
    49    An  election  under  this  paragraph  may not be made by a corporation
    50  described in paragraphs one through eight  of  subsection  (a)  of  this
    51  section  or  in subsection (e) of this section. In addition, an election
    52  under this paragraph may not be made by a corporation that is a party to
    53  a reorganization, as defined in subsection (a) of  section  368  of  the
    54  internal revenue code of 1986, as amended, of a corporation described in
    55  paragraph  one  of  this subsection if both corporations were sixty-five
    56  percent or more owned or controlled, directly or indirectly, by the same

        S. 3456                             9
     1  interests at the time of the  reorganization.  An  election  under  this
     2  paragraph  must  be  made  by the taxpayer on or before the due date for
     3  filing its return (determined with regard  to  extensions  of  time  for
     4  filing)  for the applicable taxable year. The election to be taxed under
     5  article nine-A of this chapter shall be made by the taxpayer  by  filing
     6  the report required pursuant to section two hundred eleven of this chap-
     7  ter and the election to be taxed under this article shall be made by the
     8  taxpayer  by  filing  the  return  required pursuant to section fourteen
     9  hundred sixty-two of this article. Any election made  pursuant  to  this
    10  paragraph  shall be irrevocable and shall apply to each subsequent taxa-
    11  ble year beginning on or after  January  first,  two  thousand  one  and
    12  before January first, two thousand three, provided that the stock owner-
    13  ship  requirements  described  in subparagraph (i) of this paragraph are
    14  met or such corporation described in subparagraph (ii) of this paragraph
    15  continues as a financial subsidiary.
    16    (3) For purposes of this  section,  a  financial  subsidiary  means  a
    17  corporation  (i)  sixty-five  percent  or  more of whose voting stock is
    18  owned or controlled, directly or indirectly  by  a  banking  corporation
    19  described  in  paragraph  one,  two  or  three of subsection (a) of this
    20  section and (ii) is described in section 5136A(g) of the  revised  stat-
    21  utes of the United States or section 46 of the federal deposit insurance
    22  act.  For purposes of this article, the term "banking corporation" shall
    23  include a corporation electing to be taxed under this  article  pursuant
    24  to  paragraph  two of this subsection for so long as such election shall
    25  be in effect.
    26    (j) Transitional provisions relating to the enactment and  implementa-
    27  tion of the federal Gramm-Leach-Bliley act. (1) Notwithstanding anything
    28  to  the  contrary contained in this section other than subsection (n) of
    29  this section, a corporation that was in existence before January  first,
    30  two  thousand  three and was subject to tax under article nine-A of this
    31  chapter for its last taxable year beginning before  January  first,  two
    32  thousand  three,  shall continue to be taxable under such article nine-A
    33  for all taxable years beginning on or after January first, two  thousand
    34  three  and  before  January  first,  two  thousand  four.  The preceding
    35  sentence shall not apply to any taxable year during  which  such  corpo-
    36  ration  is  a  banking  corporation  described in paragraphs one through
    37  eight of subsection (a) of this section. Notwithstanding anything to the
    38  contrary contained in this section other than  subsection  (n)  of  this
    39  section,  a  banking  corporation  that  was in existence before January
    40  first, two thousand three and was subject to tax under this article  for
    41  its  last  taxable  year  beginning  before  January first, two thousand
    42  three, shall continue to be taxable under this article for  all  taxable
    43  years beginning on or after January first, two thousand three and before
    44  January  first,  two  thousand  four. Provided, however, that nothing in
    45  this subsection shall prohibit a corporation that  elected  pursuant  to
    46  subsection  (d)  of  this  section to be taxable under article nine-A of
    47  this chapter  from  revoking  that  election  in  accordance  with  such
    48  subsection (d).
    49    For  purposes  of this paragraph, a corporation shall be considered to
    50  be subject to tax under article nine-A of this  chapter  for  a  taxable
    51  year if such corporation was not a taxpayer but was properly included in
    52  a  combined  report filed pursuant to section two hundred eleven of this
    53  chapter for such taxable year and a corporation shall be  considered  to
    54  be  subject  to tax under this article for a taxable year if such corpo-
    55  ration was not a taxpayer but was properly included in a combined return
    56  filed pursuant to subsection (f) or  (g)  of  section  fourteen  hundred

        S. 3456                            10
     1  sixty-two  of this article for such taxable year. A corporation that was
     2  in existence before January first, two thousand three but first  becomes
     3  a  taxpayer  in  a taxable year beginning on or after January first, two
     4  thousand  three  and  before  January first, two thousand four, shall be
     5  considered for purposes of this paragraph to have been  subject  to  tax
     6  under article nine-A of this chapter for its last taxable year beginning
     7  before  January first, two thousand three if such corporation would have
     8  been subject to tax under such article for such taxable year if  it  had
     9  been  a  taxpayer  during  such  taxable year. A corporation that was in
    10  existence before January first, two thousand three but first  becomes  a
    11  taxpayer  in  a  taxable  year  beginning on or after January first, two
    12  thousand three and before January first, two  thousand  four,  shall  be
    13  considered  for  purposes  of this paragraph to have been subject to tax
    14  under this article for its last taxable year  beginning  before  January
    15  first, two thousand three if such corporation would have been subject to
    16  tax  under  this article for such taxable year if it had been a taxpayer
    17  during such taxable year.
    18    (2) Notwithstanding anything to the contrary contained in this section
    19  other than subsection (n) of this section, a corporation  formed  on  or
    20  after  January  first,  two thousand three and before January first, two
    21  thousand four may elect to be subject to tax under this article or under
    22  article nine-A of this chapter for its first taxable year  beginning  on
    23  or after January first, two thousand three and before January first, two
    24  thousand  four  in  which  either  (i) sixty-five percent or more of its
    25  voting stock is owned or controlled, directly or indirectly by a  finan-
    26  cial  holding company, provided the corporation whose voting stock is so
    27  owned or controlled  is  principally  engaged  in  activities  that  are
    28  described  in  section  4(k)(4)  or  4(k)(5) of the federal bank holding
    29  company act of nineteen hundred fifty-six,  as  amended  and  the  regu-
    30  lations  promulgated  pursuant to the authority of such section, or (ii)
    31  it is a financial subsidiary.
    32    An election under this paragraph may not  be  made  by  a  corporation
    33  described  in  paragraphs  one  through  eight of subsection (a) of this
    34  section or in subsection (e) of this section. In addition,  an  election
    35  under this paragraph may not be made by a corporation that is a party to
    36  a  reorganization,  as  defined  in subsection (a) of section 368 of the
    37  internal revenue code of 1986, as amended, of a corporation described in
    38  paragraph one of this subsection if both  corporations  were  sixty-five
    39  percent or more owned or controlled, directly or indirectly, by the same
    40  interests  at  the  time  of  the reorganization. An election under this
    41  paragraph must be made by the taxpayer on or before  the  due  date  for
    42  filing  its  return  (determined  with  regard to extensions of time for
    43  filing) for the applicable taxable year. The election to be taxed  under
    44  article  nine-A  of this chapter shall be made by the taxpayer by filing
    45  the report required pursuant to section two hundred eleven of this chap-
    46  ter and the election to be taxed under this article shall be made by the
    47  taxpayer by filing the return  required  pursuant  to  section  fourteen
    48  hundred  sixty-two  of  this article. Any election made pursuant to this
    49  paragraph shall be irrevocable and shall apply to each subsequent  taxa-
    50  ble  year  beginning  on  or after January first, two thousand three and
    51  before January first, two thousand four, provided that the stock  owner-
    52  ship  requirements  described  in subparagraph (i) of this paragraph are
    53  met or such corporation described in subparagraph (ii) of this paragraph
    54  continues as a financial subsidiary.
    55    (3) For purposes of this  section,  a  financial  subsidiary  means  a
    56  corporation  (i)  sixty-five  percent  or  more of whose voting stock is

        S. 3456                            11
     1  owned or controlled, directly or indirectly  by  a  banking  corporation
     2  described  in  paragraph  one,  two  or  three of subsection (a) of this
     3  section and (ii) is described in section 5136A(g) of the  revised  stat-
     4  utes of the United States or section 46 of the federal deposit insurance
     5  act.  For purposes of this article, the term "banking corporation" shall
     6  include a corporation electing to be taxed under this  article  pursuant
     7  to  paragraph  two of this subsection for so long as such election shall
     8  be in effect.
     9    (k) Transitional provisions relating to the enactment and  implementa-
    10  tion of the federal Gramm-Leach-Bliley act. (1) Notwithstanding anything
    11  to  the  contrary contained in this section other than subsection (n) of
    12  this section, a corporation that was in existence before January  first,
    13  two  thousand  four  and was subject to tax under article nine-A of this
    14  chapter for its last taxable year beginning before  January  first,  two
    15  thousand  four,  shall  continue to be taxable under such article nine-A
    16  for all taxable years beginning on or after January first, two  thousand
    17  four  and before January first, two thousand six. The preceding sentence
    18  shall not apply to any taxable year during which such corporation  is  a
    19  banking  corporation  described  in  paragraphs  one  through  eight  of
    20  subsection (a) of this section. Notwithstanding anything to the contrary
    21  contained in this section other than subsection (n) of this  section,  a
    22  banking  corporation  that  was  in  existence before January first, two
    23  thousand four and was subject to tax under this  article  for  its  last
    24  taxable  year  beginning  before January first, two thousand four, shall
    25  continue to be taxable under this article for all taxable  years  begin-
    26  ning  on  or  after  January first, two thousand four and before January
    27  first, two  thousand  six.  Provided,  however,  that  nothing  in  this
    28  subsection  shall  prohibit  a  corporation  that  elected  pursuant  to
    29  subsection (d) of this section to be taxable  under  article  nine-A  of
    30  this  chapter  from  revoking  that  election  in  accordance  with such
    31  subsection (d).
    32    For purposes of this paragraph, a corporation shall be  considered  to
    33  be  subject  to  tax  under article nine-A of this chapter for a taxable
    34  year if such corporation was not a taxpayer but was properly included in
    35  a combined report filed pursuant to section two hundred eleven  of  this
    36  chapter  for  such taxable year and a corporation shall be considered to
    37  be subject to tax under this article for a taxable year if  such  corpo-
    38  ration was not a taxpayer but was properly included in a combined return
    39  filed  pursuant  to  subsection  (f)  or (g) of section fourteen hundred
    40  sixty-two of this article for such taxable year. A corporation that  was
    41  in existence before January first, two thousand four but first becomes a
    42  taxpayer  in  a  taxable  year  beginning on or after January first, two
    43  thousand four and before January  first,  two  thousand  six,  shall  be
    44  considered  for  purposes  of this paragraph to have been subject to tax
    45  under article nine-A of this chapter for its last taxable year beginning
    46  before January first, two thousand four, if such corporation would  have
    47  been  subject  to tax under such article for such taxable year if it had
    48  been a taxpayer during such taxable year.  A  corporation  that  was  in
    49  existence  before  January first, two thousand four, but first becomes a
    50  taxpayer in a taxable year beginning on  or  after  January  first,  two
    51  thousand  four  and  before  January  first,  two thousand six, shall be
    52  considered for purposes of this paragraph to have been  subject  to  tax
    53  under  this  article  for its last taxable year beginning before January
    54  first, two thousand four if such corporation would have been subject  to
    55  tax  under  this article for such taxable year if it had been a taxpayer
    56  during such taxable year.

        S. 3456                            12
     1    (2) Notwithstanding anything to the contrary contained in this section
     2  other than subsection (n) of this section, a corporation  formed  on  or
     3  after  January  first,  two  thousand four and before January first, two
     4  thousand six may elect to be subject to tax under this article or  under
     5  article  nine-A  of this chapter for its first taxable year beginning on
     6  or after January first, two thousand four and before January first,  two
     7  thousand  six  in  which  either  (i)  sixty-five percent or more of its
     8  voting stock is owned or controlled, directly or indirectly by a  finan-
     9  cial  holding company, provided the corporation whose voting stock is so
    10  owned or controlled  is  principally  engaged  in  activities  that  are
    11  described  in  section  4(k)(4)  or  4(k)(5) of the federal bank holding
    12  company act of nineteen hundred fifty-six,  as  amended  and  the  regu-
    13  lations  promulgated  pursuant to the authority of such section, or (ii)
    14  it is a financial subsidiary.
    15    An election under this paragraph may not  be  made  by  a  corporation
    16  described  in  paragraphs  one  through  eight of subsection (a) of this
    17  section or in subsection (e) of this section. In addition,  an  election
    18  under this paragraph may not be made by a corporation that is a party to
    19  a  reorganization, as defined in subsection (a) of section three hundred
    20  sixty-eight of the internal revenue  code  of  nineteen  eighty-six,  as
    21  amended,  of a corporation described in paragraph one of this subsection
    22  if  both  corporations  were  sixty-five  percent  or  more   owned   or
    23  controlled, directly or indirectly, by the same interests at the time of
    24  the reorganization. An election under this paragraph must be made by the
    25  taxpayer  on  or  before  the due date for filing its return (determined
    26  with regard to extensions of time for filing) for the applicable taxable
    27  year. The election to be taxed under  article  nine-A  of  this  chapter
    28  shall  be made by the taxpayer by filing the report required pursuant to
    29  section two hundred eleven of this chapter and the election to be  taxed
    30  under  this  article  shall be made by the taxpayer by filing the return
    31  required pursuant to section fourteen hundred sixty-two of this article.
    32  Any election made pursuant to this paragraph shall  be  irrevocable  and
    33  shall  apply to each subsequent taxable year beginning on or after Janu-
    34  ary first, two thousand four and before January first, two thousand six,
    35  provided that the stock ownership requirements described in subparagraph
    36  (i) of this paragraph are met or such corporation described in  subpara-
    37  graph (ii) of this paragraph continues as a financial subsidiary.
    38    (3)  For  purposes  of  this  section,  a financial subsidiary means a
    39  corporation (i) sixty-five percent or more  of  whose  voting  stock  is
    40  owned  or  controlled,  directly  or indirectly by a banking corporation
    41  described in paragraph one, two or  three  of  subsection  (a)  of  this
    42  section  and  (ii) is described in section 5136A(g) of the revised stat-
    43  utes of the United States or section forty-six of  the  federal  deposit
    44  insurance  act.  For  purposes of this article, the term "banking corpo-
    45  ration" shall include a corporation electing  to  be  taxed  under  this
    46  article pursuant to paragraph two of this subsection for so long as such
    47  election shall be in effect.
    48    (l)  Transitional provisions relating to the enactment and implementa-
    49  tion of the federal Gramm-Leach-Bliley act. (1) Notwithstanding anything
    50  to the contrary contained in this section other than subsection  (n)  of
    51  this  section, a corporation that was in existence before January first,
    52  two thousand six and was subject to tax under  article  nine-A  of  this
    53  chapter  for  its  last taxable year beginning before January first, two
    54  thousand six, shall continue to be taxable under article nine-A for  all
    55  taxable  years beginning on or after January first, two thousand six and
    56  before January first, two thousand eight. The preceding  sentence  shall

        S. 3456                            13
     1  not apply to any taxable year during which such corporation is a banking
     2  corporation  described in paragraphs one through eight of subsection (a)
     3  of this section. Notwithstanding anything to the contrary  contained  in
     4  this section other than subsection (n) of this section, a banking corpo-
     5  ration  that was in existence before January first, two thousand six and
     6  was subject to tax under this article for its last taxable  year  begin-
     7  ning  before January first, two thousand six, shall continue to be taxa-
     8  ble under this article for all taxable years beginning on or after Janu-
     9  ary first, two thousand six  and  before  January  first,  two  thousand
    10  eight. Provided, however, that nothing in this subsection shall prohibit
    11  a corporation that elected pursuant to subsection (d) of this section to
    12  be  taxable  under  article  nine-A  of  this chapter from revoking that
    13  election in accordance with such subsection (d).
    14    For purposes of this paragraph, a corporation shall be  considered  to
    15  be  subject  to  tax  under article nine-A of this chapter for a taxable
    16  year if such corporation was not a taxpayer but was properly included in
    17  a combined report filed pursuant to section two hundred eleven  of  this
    18  chapter  for  such taxable year and a corporation shall be considered to
    19  be subject to tax under this article for a taxable year if  such  corpo-
    20  ration was not a taxpayer but was properly included in a combined return
    21  filed  pursuant  to  subsection  (f)  or (g) of section fourteen hundred
    22  sixty-two of this article for such taxable year. A corporation that  was
    23  in  existence before January first, two thousand six but first becomes a
    24  taxpayer in a taxable year beginning on  or  after  January  first,  two
    25  thousand  six  and  before  January  first, two thousand eight, shall be
    26  considered for purposes of this paragraph to have been  subject  to  tax
    27  under article nine-A of this chapter for its last taxable year beginning
    28  before  January  first,  two thousand six if such corporation would have
    29  been subject to tax under such article for such taxable year if  it  had
    30  been  a  taxpayer  during  such  taxable year. A corporation that was in
    31  existence before January first, two thousand six  but  first  becomes  a
    32  taxpayer  in  a  taxable  year  beginning on or after January first, two
    33  thousand six and before January first,  two  thousand  eight,  shall  be
    34  considered  for  purposes  of this paragraph to have been subject to tax
    35  under this article for its last taxable year  beginning  before  January
    36  first,  two  thousand six if such corporation would have been subject to
    37  tax under this article for such taxable year if it had been  a  taxpayer
    38  during such taxable year.
    39    (2) Notwithstanding anything to the contrary contained in this section
    40  other  than  subsection  (n) of this section, a corporation formed on or
    41  after January first, two thousand six  and  before  January  first,  two
    42  thousand  eight  may  elect  to  be subject to tax under this article or
    43  under article nine-A of this chapter for its first taxable  year  begin-
    44  ning  on  or  after  January  first, two thousand six and before January
    45  first, two thousand eight in which either (i) sixty-five percent or more
    46  of its voting stock is owned or controlled, directly or indirectly by  a
    47  financial  holding  company, provided the corporation whose voting stock
    48  is so owned or controlled is principally engaged in activities that  are
    49  described  in  section  4(k)(4)  or  4(k)(5) of the federal bank holding
    50  company act of nineteen hundred fifty-six,  as  amended  and  the  regu-
    51  lations  promulgated  pursuant to the authority of such section, or (ii)
    52  it is a financial subsidiary. An election under this paragraph  may  not
    53  be  made  by  a corporation described in paragraphs one through eight of
    54  subsection (a) of this section or in subsection (e) of this section.  In
    55  addition, an election under this paragraph may not be made by  a  corpo-
    56  ration that is a party to a reorganization, as defined in subsection (a)

        S. 3456                            14
     1  of  section  368  of the internal revenue code of 1986, as amended, of a
     2  corporation described in paragraph one of this subsection if both corpo-
     3  rations were sixty-five percent or more owned or controlled, directly or
     4  indirectly, by the same interests at the time of the reorganization.
     5    An  election  under  this paragraph must be made by the taxpayer on or
     6  before the due date for filing its return  (determined  with  regard  to
     7  extensions  of  time  for  filing)  for the applicable taxable year. The
     8  election to be taxed under article nine-A of this chapter shall be  made
     9  by  the  taxpayer  by filing the report required pursuant to section two
    10  hundred eleven of this chapter and the election to be taxed  under  this
    11  article  shall  be  made  by  the taxpayer by filing the return required
    12  pursuant to section fourteen hundred  sixty-two  of  this  article.  Any
    13  election  made pursuant to this paragraph shall be irrevocable and shall
    14  apply to each subsequent taxable year  beginning  on  or  after  January
    15  first,  two  thousand  six and before January first, two thousand eight,
    16  provided that the stock ownership requirements described in subparagraph
    17  (i) of this paragraph are met or such corporation described in  subpara-
    18  graph (ii) of this paragraph continues as a financial subsidiary.
    19    (3)  For  purposes  of  this  section,  a financial subsidiary means a
    20  corporation (i) sixty-five percent or more  of  whose  voting  stock  is
    21  owned  or  controlled,  directly  or indirectly by a banking corporation
    22  described in paragraph one, two or  three  of  subsection  (a)  of  this
    23  section  and  (ii) is described in section 5136A(g) of the revised stat-
    24  utes of the United States or section 46 of the federal deposit insurance
    25  act. For purposes of this article, the term "banking corporation"  shall
    26  include  a  corporation electing to be taxed under this article pursuant
    27  to paragraph two of this subsection for so long as such  election  shall
    28  be in effect.
    29    (m)  Transitional provisions relating to the enactment and implementa-
    30  tion  of  the  federal  Gramm-Leach-Bliley  act.    (1)  Notwithstanding
    31  anything to the contrary contained in this section other than subsection
    32  (n)  of this section, a corporation that was in existence before January
    33  first, two thousand twelve and was subject to tax under  article  nine-A
    34  of  this  chapter  for  its  last  taxable year beginning before January
    35  first, two thousand twelve, shall continue  to  be  taxable  under  such
    36  article  for  all taxable years beginning on or after January first, two
    37  thousand twelve and before January first,  two  thousand  nineteen.  The
    38  preceding sentence shall not apply to any taxable year during which such
    39  corporation is a banking corporation described in paragraphs one through
    40  eight  of  subsection  (a) of this section.  Notwithstanding anything to
    41  the contrary contained in this section other than subsection (n) of this
    42  section, a banking corporation or  corporation  that  was  in  existence
    43  before  January  first, two thousand twelve and was subject to tax under
    44  this article for its last taxable year beginning before  January  first,
    45  two thousand twelve, shall continue to be taxable under this article for
    46  all  taxable  years  beginning  on  or after January first, two thousand
    47  twelve and before January first,  two  thousand  nineteen  only  if  the
    48  corporation  is  a  banking  corporation as defined in subsection (a) of
    49  this section or the corporation satisfies the requirements for a  corpo-
    50  ration to elect to be taxable under this article. Provided further, that
    51  nothing  in  this  subsection  shall prohibit a corporation that elected
    52  pursuant to subsection (d) of this section to be taxable  under  article
    53  nine-A  of  this  chapter from revoking that election in accordance with
    54  such subsection (d).
    55    For purposes of this paragraph, a corporation shall be  considered  to
    56  be  subject  to  tax  under article nine-A of this chapter for a taxable

        S. 3456                            15
     1  year if such corporation was not a taxpayer but was properly included in
     2  a combined report filed pursuant to section two hundred eleven  of  this
     3  chapter  for  such taxable year and a corporation shall be considered to
     4  be  subject  to tax under this article for a taxable year if such corpo-
     5  ration was not a taxpayer but was properly included in a combined return
     6  filed pursuant to subsection (f) or  (g)  of  section  fourteen  hundred
     7  sixty-two  of this article for such taxable year. A corporation that was
     8  in existence before January first, two thousand twelve but first becomes
     9  a taxpayer in a taxable year beginning on or after  January  first,  two
    10  thousand  twelve  and before January first, two thousand nineteen, shall
    11  be considered for purposes of this paragraph to have been subject to tax
    12  under article nine-A of this chapter for its last taxable year beginning
    13  before January first, two thousand twelve if such corporation would have
    14  been subject to tax under such article for such taxable year if  it  had
    15  been  a  taxpayer  during  such  taxable year. A corporation that was in
    16  existence before January first, two thousand twelve but first becomes  a
    17  taxpayer  in  a  taxable  year  beginning on or after January first, two
    18  thousand twelve and before January first, two thousand  nineteen,  shall
    19  be considered for purposes of this paragraph to have been subject to tax
    20  under  this  article  for its last taxable year beginning before January
    21  first, two thousand twelve if such corporation would have  been  subject
    22  to tax under this article for such taxable year if it had been a taxpay-
    23  er during such taxable year.
    24    (2) Notwithstanding anything to the contrary contained in this section
    25  other  than  subsection  (n) of this section, a corporation formed on or
    26  after January first, two thousand twelve and before January  first,  two
    27  thousand  nineteen  may elect to be subject to tax under this article or
    28  under article nine-A of this chapter for its first taxable  year  begin-
    29  ning  on  or after January first, two thousand twelve and before January
    30  first, two thousand nineteen in which either (i) sixty-five  percent  or
    31  more  of its voting stock is owned or controlled, directly or indirectly
    32  by a financial holding company, provided the  corporation  whose  voting
    33  stock  is  so  owned  or controlled is principally engaged in activities
    34  that are described in section 4(k)(4) or 4(k)(5)  of  the  federal  bank
    35  holding  company  act  of nineteen hundred fifty-six, as amended and the
    36  regulations promulgated pursuant to the authority of  such  section,  or
    37  (ii)  it is a financial subsidiary. An election under this paragraph may
    38  not be made by a corporation described in paragraphs one  through  eight
    39  of  subsection (a) of this section or in subsection (e) of this section.
    40  In addition, an election under this paragraph  may  not  be  made  by  a
    41  corporation  that  is  a  party  to  a  reorganization,  as  defined  in
    42  subsection (a) of section 368 of the internal revenue code of  1986,  as
    43  amended,  of a corporation described in paragraph one of this subsection
    44  if  both  corporations  were  sixty-five  percent  or  more   owned   or
    45  controlled, directly or indirectly, by the same interests at the time of
    46  the reorganization.
    47    An  election  under  this paragraph must be made by the taxpayer on or
    48  before the due date for filing its return  (determined  with  regard  to
    49  extensions  of  time  for  filing)  for the applicable taxable year. The
    50  election to be taxed under article nine-A of this chapter shall be  made
    51  by  the  taxpayer  by filing the report required pursuant to section two
    52  hundred eleven of this chapter and the election to be taxed  under  this
    53  article  shall  be  made  by  the taxpayer by filing the return required
    54  pursuant to section fourteen hundred  sixty-two  of  this  article.  Any
    55  election  made pursuant to this paragraph shall be irrevocable and shall
    56  apply to each subsequent taxable year  beginning  on  or  after  January

        S. 3456                            16
     1  first,  two thousand twelve and before January first, two thousand nine-
     2  teen, provided that the  stock  ownership  and  activities  requirements
     3  described  in  subparagraph (i) of this paragraph are met or such corpo-
     4  ration  described  in subparagraph (ii) of this paragraph continues as a
     5  financial subsidiary.
     6    (3) For purposes of this  section,  a  financial  subsidiary  means  a
     7  corporation  (i)  sixty-five  percent  or  more of whose voting stock is
     8  owned or controlled, directly or indirectly  by  a  banking  corporation
     9  described  in  paragraph  one,  two  or  three of subsection (a) of this
    10  section and (ii) is described in section 5136A(g) of the  revised  stat-
    11  utes of the United States or section 46 of the federal deposit insurance
    12  act.  For purposes of this article, the term "banking corporation" shall
    13  include a corporation electing to be taxed under this  article  pursuant
    14  to  paragraph  two of this subsection for so long as such election shall
    15  be in effect.
    16    (4) The provisions of this subsection shall not  apply  to  a  captive
    17  REIT, a captive RIC or an overcapitalized captive insurance company.
    18    (n)(1)  Notwithstanding  anything  in this article to the contrary, if
    19  any of the conditions described in paragraph three  of  this  subsection
    20  apply  to  a corporation that has made either the election to be taxable
    21  under article nine-A of this chapter pursuant to the  Gramm-Leach-Bliley
    22  transitional  provisions  in  this  section, or the election pursuant to
    23  subsection (d) of this section to continue to be taxable  under  article
    24  nine-A  of  this  chapter (hereinafter the "electing corporation"), then
    25  such corporation shall be deemed to have revoked the election as of  the
    26  first day of the taxable year in which such condition applied.
    27    (2)  Notwithstanding  anything in this article to the contrary, if any
    28  of the conditions described in paragraph three of this subsection  apply
    29  to  a  corporation  required  to be taxable under article nine-A of this
    30  chapter pursuant to the Gramm-Leach-Bliley  transitional  provisions  in
    31  this  section (hereinafter the "grandfathered corporation"), such corpo-
    32  ration, if it is otherwise described in subsection (a) of this  section,
    33  shall  be  taxable under this article as of the first day of the taxable
    34  year in which such condition applied.
    35    (3) The  provisions  of  paragraph  one  and  paragraph  two  of  this
    36  subsection shall apply if any of the following conditions exist or occur
    37  with  respect  to  the  electing corporation or the grandfathered corpo-
    38  ration in a taxable year (including any short taxable year) beginning on
    39  or after January first, two thousand seven:
    40    (A) the corporation ceases to be a taxpayer under  article  nine-A  of
    41  this chapter;
    42    (B)  the  corporation  becomes subject to the fixed dollar minimum tax
    43  under paragraph (d) of subdivision one of section  two  hundred  ten  of
    44  this chapter;
    45    (C)  the  corporation  has  no wages or receipts allocable to New York
    46  state pursuant to subdivision three of section two hundred ten  of  this
    47  chapter, or is otherwise inactive; provided that this subparagraph shall
    48  not  apply  to a corporation which is engaged in the active conduct of a
    49  trade or business, or substantially all of the assets of which are stock
    50  and  securities  of  corporations  which  are  directly  or   indirectly
    51  controlled  by  it  and  are engaged in the active conduct of a trade or
    52  business;
    53    (D) sixty-five percent or more of the voting stock of the  corporation
    54  becomes  owned or controlled directly by a corporation that acquired the
    55  stock in a transaction (or series of related transactions)  that  quali-
    56  fies  as  a purchase within the meaning of paragraph three of subsection

        S. 3456                            17
     1  (h) of section three hundred thirty-eight of the internal  revenue  code
     2  unless  the  corporation  whose  stock  was acquired and the corporation
     3  acquiring the stock were, immediately prior to such purchase, members of
     4  the  same  affiliated  group (as such term is defined in section fifteen
     5  hundred four of the internal revenue code without regard to  the  exclu-
     6  sions provided for in subsection (b) of such section); provided that any
     7  acquisition  that was completed on or before January third, two thousand
     8  seven shall be treated for purposes of this subparagraph as an  acquisi-
     9  tion made before January first, two thousand seven; or
    10    (E)  the  corporation,  in  a  transaction or series of related trans-
    11  actions, acquires assets, whether by contribution, purchase,  or  other-
    12  wise, having an average value (determined in accordance with subdivision
    13  two of section two hundred ten of this chapter), or, if greater, a total
    14  tax  basis,  in  excess  of  forty  percent of the average value, or, if
    15  greater, the total tax basis, of all the assets of the corporation imme-
    16  diately prior to such acquisition and as a result  of  such  acquisition
    17  the  corporation  is principally engaged in a business that is different
    18  from the business immediately prior to such acquisition,  provided  that
    19  such  different business is described in subparagraph (i), (ii) or (iii)
    20  of paragraph nine of subsection (a) of this section.
    21    § 1453. Computations of entire net income. (a) Entire net income means
    22  total net income from all sources which shall be the same as the  entire
    23  taxable income (but not alternative minimum taxable income).
    24    (1)  which  the  taxpayer  is  required to report to the United States
    25  treasury department, or
    26    (2) which the taxpayer, in the case of a corporation which  is  exempt
    27  from  federal income tax (other than the tax on unrelated business taxa-
    28  ble income imposed under section 511 of the internal revenue  code)  but
    29  is subject to tax under this article, would have been required to report
    30  to the United States treasury department but for such exemption, or
    31    (3)  which, in the case of a corporation organized under the laws of a
    32  country other than the United States, is effectively connected with  the
    33  conduct  of  a  trade or business within the United States as determined
    34  under section 882 of the internal revenue code subject to the  modifica-
    35  tions and adjustments hereinafter provided, or
    36    (4)  which  the  taxpayer  would  have  been required to report to the
    37  United States treasury department if it had not made the election  under
    38  subchapter s of chapter one of the internal revenue code.
    39    (b)  Entire  net  income  shall  be  computed without the deduction or
    40  exclusion of:
    41    (1) (A) in the case of a corporation organized under  the  laws  of  a
    42  country  other  than  the United States, (i) any part of any income from
    43  dividends or interest on any kind of stock, securities or  indebtedness,
    44  but  only  if  such  income is treated as effectively connected with the
    45  conduct of a trade or business in the United States pursuant to  section
    46  eight  hundred  sixty-four of the internal revenue code, (ii) any income
    47  exempt from federal taxable income under any treaty  obligation  of  the
    48  United  States,  but only if such income would be treated as effectively
    49  connected in absence of such exemption, provided that such treaty  obli-
    50  gation  does  not  preclude  the  taxation of such income by a state, or
    51  (iii) any income which would be treated as effectively connected if such
    52  income were not excluded from gross income pursuant to subsection (a) of
    53  section one hundred three of the internal revenue code; (B) in the  case
    54  of  any  other  corporation,  any  part  of any income from dividends or
    55  interest on any kind of stock, securities or  indebtedness;  (C)  except
    56  that  for  purposes of subparagraphs (A) and (B) of this paragraph there

        S. 3456                            18
     1  shall be excluded any amounts treated as dividends pursuant  to  section
     2  seventy-eight  of the internal revenue code and any amounts described in
     3  paragraphs eleven and twelve of subsection (e) of this section;
     4    (2)  taxes  on or measured by income or profits paid or accrued within
     5  the taxable year to the United States, or any of its possessions  or  to
     6  any foreign country;
     7    (3)  premiums paid for environmental remediation insurance, as defined
     8  in section twenty-three of this chapter,  and  deducted  in  determining
     9  federal taxable income, to the extent of the amount of the environmental
    10  remediation insurance credit allowed under such section twenty-three and
    11  subsection (s) of section fourteen hundred fifty-six of this article;
    12    (4)  taxes  imposed  under  this article, sections one hundred eighty-
    13  three and one hundred eighty-four and article nine-A of this chapter;
    14    (5) in those instances where a credit for the special additional mort-
    15  gage recording tax is allowed under paragraph one of subsection  (c)  of
    16  section  fourteen  hundred fifty-six of this article, the amount allowed
    17  as an exclusion or deduction for the special additional mortgage record-
    18  ing tax imposed by subdivision one-a of section two hundred  fifty-three
    19  of  this  chapter  in  determining  the  entire taxable income which the
    20  taxpayer is required to report to the United States treasury  department
    21  for such taxable year; and
    22    (6)  Unless  the  credit allowed pursuant to subsection (c) of section
    23  fourteen hundred fifty-six of this article is reflected in the  computa-
    24  tion  of the gain or loss so as to result in an increase in such gain or
    25  decrease of such loss, for federal income tax purposes, from the sale or
    26  other disposition of the property with  respect  to  which  the  special
    27  additional  mortgage recording tax imposed pursuant to subdivision one-a
    28  of section two hundred fifty-three of this chapter was paid, the  amount
    29  of  the special additional mortgage recording tax imposed by subdivision
    30  one-a of section two hundred fifty-three of this chapter which was  paid
    31  and  which  is reflected in the computation of the basis of the property
    32  so as to result in a decrease in such gain or increase in such loss  for
    33  federal  income  tax  purposes from the sale or other disposition of the
    34  property with respect to which such tax was paid.
    35    (7) for taxable years beginning after December thirty-first,  nineteen
    36  hundred eighty-one, except with respect to property which is a qualified
    37  mass  commuting vehicle described in subparagraph (D) of paragraph eight
    38  of subsection (f) of section one hundred  sixty-eight  of  the  internal
    39  revenue code (relating to qualified mass commuting vehicles), any amount
    40  which the taxpayer claimed as a deduction in computing its federal taxa-
    41  ble  income  solely  as  a  result  of  an election made pursuant to the
    42  provisions of such paragraph eight as it was in  effect  for  agreements
    43  entered into prior to January first, nineteen hundred eighty-four;
    44    (8)  for taxable years beginning after December thirty-first, nineteen
    45  hundred eighty-one, except with respect to property which is a qualified
    46  mass commuting vehicle described in subparagraph (D) of paragraph  eight
    47  of  subsection  (f)  of  section one hundred sixty-eight of the internal
    48  revenue code (relating to qualified mass commuting vehicles), any amount
    49  which the taxpayer would have been required to include in  the  computa-
    50  tion  of its federal taxable income had it not made the election permit-
    51  ted pursuant to such paragraph eight as it was in effect for  agreements
    52  entered into prior to January first, nineteen hundred eighty-four;
    53    (9)  in the case of property placed in service in taxable years begin-
    54  ning before nineteen hundred ninety-four, for  taxable  years  beginning
    55  after  December  thirty-first,  nineteen hundred eighty-one, except with
    56  respect to property subject to the provisions  of  section  two  hundred

        S. 3456                            19
     1  eighty-F  of  the  internal  revenue  code  and  property subject to the
     2  provisions of section one hundred sixty-eight of  the  internal  revenue
     3  code which is placed in service in this state in taxable years beginning
     4  after  December  thirty-first,  nineteen hundred eighty-four, the amount
     5  allowable as a deduction determined under  section  one  hundred  sixty-
     6  eight of the internal revenue code;
     7    (10)  upon  the  disposition  of  property to which paragraph seven of
     8  subsection (e) of this section applies, the amount, if any, by which the
     9  aggregate of the amounts described in such paragraph seven  attributable
    10  to such property exceeds the aggregate of the amounts described in para-
    11  graph nine of this subsection attributable to such property,
    12    (11)  for  taxable  years beginning before January first, two thousand
    13  ten, in the case of a taxpayer subject  to  the  provisions  of  section
    14  585(c)  of  the internal revenue code, the amount allowed as a deduction
    15  pursuant to section 166 of such code, and
    16    (12) for taxable years beginning before January  first,  two  thousand
    17  ten,  for  taxpayers subject to the provisions of subsection (i) of this
    18  section, twenty percent of the  excess  of  (A)  the  amount  determined
    19  pursuant  to  such  subsection  (i) over (B) the amount which would have
    20  been allowable had such institution maintained its bad debt reserve  for
    21  all taxable years on the basis of actual experience.
    22    (13)  for  taxable  years  beginning  after December thirty-first, two
    23  thousand two, in the case of qualified property described  in  paragraph
    24  two  of  subsection k of section 168 of the internal revenue code, other
    25  than qualified resurgence zone property described in subsection  (u)  of
    26  this  section,  and  other than qualified New York Liberty Zone property
    27  described in paragraph two of subsection  b  of  section  1400L  of  the
    28  internal  revenue code (without regard to clause (i) of subparagraph (C)
    29  of such paragraph), which was placed in service on or after June  first,
    30  two  thousand  three,  the amount allowable as a deduction under section
    31  167 of the internal revenue code.
    32    (14) The amount of any  deduction  allowed  pursuant  to  section  one
    33  hundred ninety-nine of the internal revenue code.
    34    (15) The amount of any federal deduction for taxes imposed under arti-
    35  cle twenty-three of this chapter.
    36    (c) (1) Except as otherwise provided in paragraphs two, three and four
    37  of this subsection, in the case of the sale or exchange of property by a
    38  taxpayer  which  has  been  subject  to article nine-B or nine-C of this
    39  chapter (as such articles were in effect on or before  December  thirty-
    40  first,  nineteen  hundred  seventy-two)  where the property has a higher
    41  adjusted basis for New York tax purposes than for federal tax  purposes,
    42  there  shall  be  allowed  as  a  deduction  from entire net income, the
    43  portion of any gain or loss on such sale which equals the difference  in
    44  such basis.
    45    (2)  In case of property of a taxpayer, other than a savings bank or a
    46  savings and loan association, acquired prior to January first,  nineteen
    47  hundred  twenty-six,  and  disposed  of  thereafter,  the computation of
    48  entire net income shall be modified as follows:
    49    (i) no gain shall be deemed to have been derived if either the cost or
    50  the fair market price or value on January first, nineteen hundred  twen-
    51  ty-six, exceeds the value realized;
    52    (ii) no loss shall be deemed to have been sustained if either the cost
    53  or  the  fair  market  price or value on January first, nineteen hundred
    54  twenty-six, is less than the value realized;
    55    (iii) where both the cost and the fair market price or value on  Janu-
    56  ary  first,  nineteen  hundred twenty-six, are less than the value real-

        S. 3456                            20
     1  ized, the basis for computing gain shall be the cost or the fair  market
     2  price or value on such date, whichever is higher;
     3    (iv) where both the cost and the fair market price or value on January
     4  first, nineteen hundred twenty-six, are in excess of the value realized,
     5  the  basis for computing loss shall be the cost or the fair market price
     6  or value on such date, whichever is lower.
     7    (3) In case of property of a savings bank acquired  prior  to  January
     8  first,  nineteen  hundred  forty-four,  and  disposed  of thereafter, in
     9  computing entire net income the basis of  such  property  shall  be  the
    10  value  as of December thirty-first, nineteen hundred forty-three, as set
    11  forth in such bank's report of surplus and undivided earnings filed with
    12  the tax commission as of that date.
    13    (4) In case of property of a savings and  loan  association,  acquired
    14  prior  to  January  first, nineteen hundred fifty-three, and disposed of
    15  thereafter, the computation of entire net income shall  be  modified  as
    16  follows:
    17    (i) no gain shall be deemed to have been derived if either the cost or
    18  the  fair  market  price  or  value  on  January first, nineteen hundred
    19  fifty-three, exceeds the value realized;
    20    (ii) no loss shall be deemed to have been sustained if either the cost
    21  or the fair market price or value on  January  first,  nineteen  hundred
    22  fifty-three, is less than the value realized;
    23    (iii)  where both the cost and the fair market price or value on Janu-
    24  ary first, nineteen hundred fifty-three, are less than the  value  real-
    25  ized,  the basis for computing gain shall be the cost or the fair market
    26  price or value on such date, whichever is higher;
    27    (iv) where both the cost and the fair market price or value on January
    28  first, nineteen hundred fifty-three, are in excess of  the  value  real-
    29  ized,  the basis for computing loss shall be the cost or the fair market
    30  price or value on such date, whichever is lower.
    31    (d) Entire net income shall not include any refund or credit of a  tax
    32  for  which  no  exclusion  or  deduction  was allowed in determining the
    33  taxpayer's entire net income under this article or  articles  nine-A  or
    34  twenty-three of this chapter for any prior year.
    35    (e)  There  shall  be allowed as a deduction in determining entire net
    36  income, to the extent not  deductible  in  determining  federal  taxable
    37  income:
    38    (1)  interest  on  indebtedness  incurred  or continued to purchase or
    39  carry obligations or securities the income from which is subject to  tax
    40  under this article but exempt from federal income tax,
    41    (2)  ordinary and necessary expenses paid or incurred during the taxa-
    42  ble year attributable to income which is subject to tax under this arti-
    43  cle but exempt from federal income tax,
    44    (3) the amortizable bond premium for the taxable year on any bond  the
    45  interest  on  which is subject to tax under this article but exempt from
    46  federal income tax,
    47    (4) that portion of wages or salaries paid or incurred for the taxable
    48  year for which a deduction is not allowed pursuant to the provisions  of
    49  section two hundred eighty-C of the internal revenue code,
    50    (5)  for taxable years beginning after December thirty-first, nineteen
    51  hundred eighty-one, except with respect to property which is a qualified
    52  mass commuting vehicle described in subparagraph (D) of paragraph  eight
    53  of  subsection  (f)  of  section one hundred sixty-eight of the internal
    54  revenue code (relating to qualified mass commuting vehicles), any amount
    55  which is included in the taxpayer's federal taxable income solely  as  a
    56  result  of an election made pursuant to the provisions of such paragraph

        S. 3456                            21
     1  eight as it was in effect for agreements entered into prior  to  January
     2  first, nineteen hundred eighty-four,
     3    (6)  for taxable years beginning after December thirty-first, nineteen
     4  hundred eighty-one, except with respect to property which is a qualified
     5  mass commuting vehicle described in subparagraph (D) of paragraph  eight
     6  of  subsection  (f)  of  section one hundred sixty-eight of the internal
     7  revenue code (relating to qualified mass commuting vehicles), any amount
     8  which the taxpayer could have excluded from federal taxable  income  had
     9  it  not made the election provided for in such paragraph eight as it was
    10  in effect for agreements entered into prior to January  first,  nineteen
    11  hundred eighty-four,
    12    (7)  in the case of property placed in service in taxable years begin-
    13  ning before nineteen hundred ninety-four, for  taxable  years  beginning
    14  after  December  thirty-first,  nineteen hundred eighty-one, except with
    15  respect to property subject to the provisions  of  section  two  hundred
    16  eighty-F  of  the  internal  revenue  code  and  property subject to the
    17  provisions of section one hundred sixty-eight of  the  internal  revenue
    18  code which is placed in service in this state in taxable years beginning
    19  after  December thirty-first, nineteen hundred eighty-four, and provided
    20  a deduction has not been excluded from entire  net  income  pursuant  to
    21  paragraph  seven  of  subsection  (b)  of  this  section, an amount with
    22  respect to property which is subject to the provisions  of  section  one
    23  hundred  sixty-eight  of  the  internal revenue code equal to the amount
    24  allowable as  the  depreciation  deduction  under  section  one  hundred
    25  sixty-seven  of  the  internal  revenue  code as such section would have
    26  applied to property placed in service on December thirty-first, nineteen
    27  hundred eighty,
    28    (8) upon the disposition of property to which paragraph seven of  this
    29  subsection  applies,  the  amount, if any, by which the aggregate of the
    30  amounts described in paragraph nine of subsection (b)  of  this  section
    31  attributable  to  such  property  exceeds  the  aggregate of the amounts
    32  described in paragraph seven of this  subsection  attributable  to  such
    33  property,
    34    (9)  any  amount  of money or other property received from the federal
    35  deposit insurance corporation pursuant  to  subsection  (c)  of  section
    36  thirteen of the federal deposit insurance act, as amended, regardless of
    37  whether any note or other instrument is issued in exchange therefor,
    38    (10)  any  amount of money or other property received from the federal
    39  savings and loan insurance corporation pursuant to paragraph  one,  two,
    40  three  or  four  of  subsection  (f)  of section four hundred six of the
    41  federal national housing act, as amended, regardless of whether any note
    42  or other instrument is issued in exchange therefor,
    43    (11) (i) seventeen percent of interest income from subsidiary capital,
    44  and
    45    (ii) sixty percent of dividend income from subsidiary  capital  except
    46  as provided in paragraph eighteen of this subsection, and
    47    (iii) sixty percent of the amount by which gains from subsidiary capi-
    48  tal  exceed losses from subsidiary capital, to the extent such gains and
    49  losses were taken into account in determining the entire taxable  income
    50  referred to in subsection (a) of this section,
    51    (12) twenty-two and one-half percent of interest income on obligations
    52  of  New  York  state, or of any political subdivision thereof, or of the
    53  United States, other than obligations held for resale in connection with
    54  regular trading activities,
    55    (13) for taxable years beginning before January  first,  two  thousand
    56  ten,  in  the  case  of  a  taxpayer which recaptures its balance of the

        S. 3456                            22
     1  reserve for losses on loans for federal income tax purposes pursuant  to
     2  section  585(c)  of  the  internal  revenue  code,  any  amount which is
     3  included in federal taxable income pursuant to section  585(c)  of  such
     4  code,
     5    (14)  for  taxable  years beginning before January first, two thousand
     6  ten, in the case of a taxpayer subject  to  the  provisions  of  section
     7  585(c)  of  the  internal  revenue code, any amount which is included in
     8  federal taxable income as a result of a recovery of a loan.
     9    (15) for taxable years beginning before January  first,  two  thousand
    10  ten, in the case of a taxpayer which is currently or has previously been
    11  subject  to subsection (h) of this section, any amount which is included
    12  in federal taxable income pursuant to section 593(e)(2) of the  internal
    13  revenue code, and any other amount so included as a result of a recovery
    14  of  or  termination  from  the  use  of a bad debt reserve as defined in
    15  section 593 of such code as in existence on December thirty-first, nine-
    16  teen hundred ninety-five as a  result  of  federal  legislation  enacted
    17  after December thirty-first, nineteen hundred ninety-five.
    18    (16) the amount deductible pursuant to subsection (p) of this section.
    19    (17)  one  hundred  percent of dividend income from subsidiary capital
    20  received during the taxable year if that  dividend  income  is  directly
    21  attributable  to a dividend from a captive REIT or captive RIC for which
    22  the captive REIT  or  captive  RIC  claimed  a  federal  dividends  paid
    23  deduction and that captive REIT or captive RIC is included in a combined
    24  report  or  return under article nine-A, this article or article thirty-
    25  three of this chapter.
    26    (f) Provided the taxpayer has not made an election pursuant  to  para-
    27  graph  two  of  subsection (b) of section fourteen hundred fifty-four of
    28  this article, there shall be  allowed  as  a  deduction  in  determining
    29  entire  net  income, to the extent not deductible in determining federal
    30  taxable income, the adjusted eligible net  income  of  an  international
    31  banking facility determined as follows:
    32    (1) The eligible net income of an international banking facility shall
    33  be the amount remaining after subtracting from the eligible gross income
    34  the applicable expenses.
    35    (2)  Eligible  gross  income  shall  be the gross income derived by an
    36  international banking facility from:
    37    (A) making, arranging for,  placing  or  servicing  loans  to  foreign
    38  persons,  provided,  however, that in the case of a foreign person which
    39  is an individual, or which is a foreign branch of a domestic corporation
    40  (other than a bank), or which is a foreign corporation or foreign  part-
    41  nership  which  is eighty per centum or more owned or controlled, either
    42  directly or indirectly, by one or more domestic corporations (other than
    43  banks), domestic partnerships or resident individuals, substantially all
    44  the proceeds of the loan are for use outside of the United States;
    45    (B) making or placing deposits with foreign persons which are banks or
    46  foreign branches of banks (including  foreign  subsidiaries  or  foreign
    47  branches  of  the  taxpayer) or with other international banking facili-
    48  ties; or
    49    (C) entering into foreign exchange  trading  or  hedging  transactions
    50  related to any of the transactions described in this paragraph.
    51    (3)  Applicable  expenses  shall  be  any expenses or other deductions
    52  attributable, directly or  indirectly,  to  the  eligible  gross  income
    53  described in paragraph two of this subsection.
    54    (4)  Adjusted  eligible  net income shall be determined by subtracting
    55  from eligible net income the ineligible funding amount, and by subtract-
    56  ing from the amount then remaining the floor amount.

        S. 3456                            23
     1    (5) The ineligible funding amount shall be the amount, if any,  deter-
     2  mined by multiplying eligible net income by a fraction, the numerator of
     3  which  is  the  average  aggregate  amount  for  the taxable year of all
     4  liabilities, including deposits, and  other  sources  of  funds  of  the
     5  international  banking  facility which were not owed to or received from
     6  foreign persons, and the denominator of which is the  average  aggregate
     7  amount  for  the taxable year of all liabilities, including deposits and
     8  other sources of funds of the international banking facility.
     9    (6) The floor amount shall be the amount, if any, determined by multi-
    10  plying the amount remaining after  subtracting  the  ineligible  funding
    11  amount from the eligible net income by a fraction, not greater than one,
    12  which is determined as follows:
    13    (A) The numerator shall be
    14    (i)  the  percentage,  as  set forth in subparagraph (C) of this para-
    15  graph, of the average  aggregate  amount  of  the  taxpayer's  loans  to
    16  foreign  persons  and  deposits  with foreign persons which are banks or
    17  foreign branches of banks (including  foreign  subsidiaries  or  foreign
    18  branches of the taxpayer), which loans and deposits were recorded in the
    19  financial  accounts  of  the  taxpayer  for  its  branches, agencies and
    20  offices within the state for taxable  years  nineteen  hundred  seventy-
    21  five,  nineteen  hundred seventy-six and nineteen hundred seventy-seven,
    22  minus
    23    (ii) the average aggregate amount of such loans and such deposits  for
    24  the  taxable year of the taxpayer (other than such loans and deposits of
    25  an international banking facility), provided, however, that in  no  case
    26  shall  the amount determined in this clause exceed the amount determined
    27  in clause (i) of this subparagraph; and
    28    (B) The denominator shall be the average aggregate amount of the loans
    29  to foreign persons and deposits with foreign persons which are banks  or
    30  foreign  branches  of  banks  (including foreign subsidiaries or foreign
    31  branches of the taxpayer), which loans and deposits were recorded in the
    32  financial accounts of the taxpayer's international banking facility  for
    33  the taxable year.
    34    (C)  The percentage shall be one hundred percent for the first taxable
    35  year in which the taxpayer establishes an international banking facility
    36  and for the next succeeding four taxable years. The percentage shall  be
    37  eighty percent for the fifth, sixty percent for the sixth, forty percent
    38  for  the  seventh,  and  twenty percent for the eighth taxable year next
    39  succeeding the year such taxpayer establishes such international banking
    40  facility, and zero in the ninth succeeding year and thereafter.
    41    (7) In the event adjusted eligible net income is a loss, the amount of
    42  such loss shall be added to entire net income.
    43    (8) For the purposes of this  subsection  the  term  "foreign  person"
    44  means
    45    (A) an individual who is not a resident of the United States,
    46    (B)  a  foreign corporation, a foreign partnership or a foreign trust,
    47  as defined in section seventy-seven hundred one of the internal  revenue
    48  code, other than a domestic branch thereof,
    49    (C)  a foreign branch of a domestic corporation (including the taxpay-
    50  er),
    51    (D) a foreign government or an international organization or an agency
    52  of either, or
    53    (E) an international banking facility.
    54    For purposes of this paragraph, the  terms  "foreign"  and  "domestic"
    55  shall  have  the  same  meaning  as  set  forth in section seventy-seven
    56  hundred one of the internal revenue code.

        S. 3456                            24
     1    (g) Entire  net  income  shall  be  computed  without  regard  to  the
     2  reduction  in  the  basis  of property that is required by section three
     3  hundred sixty-two of the internal revenue code, because of any amount of
     4  money or other property received  from  the  federal  deposit  insurance
     5  corporation pursuant to subsection (c) of section thirteen of the feder-
     6  al  deposit  insurance  act, as amended, or from the federal savings and
     7  loan insurance corporation pursuant to paragraph one, two, three or four
     8  of subsection (f) of section four hundred six of  the  federal  national
     9  housing act, as amended.
    10    (h)  (1)  For purposes of this subsection, a "thrift institution" is a
    11  banking corporation which satisfies the  requirements  of  subparagraphs
    12  (A) and (B) of this paragraph.
    13    (A)  Such  banking  corporation  must  be (i) a banking corporation as
    14  defined in paragraph one of subsection (a) of section  fourteen  hundred
    15  fifty-two  of  this  article  created or authorized to do business under
    16  article six or ten of the banking law, (ii)  a  banking  corporation  as
    17  defined  in paragraph two or seven of subsection (a) of section fourteen
    18  hundred fifty-two of this article which is doing a business substantial-
    19  ly similar to the business which a corporation  or  association  may  be
    20  created  to  do under article six or ten of the banking law or any busi-
    21  ness which a corporation or association is authorized by such article to
    22  do, or (iii) a banking corporation as defined in paragraph four or  five
    23  of subsection (a) of section fourteen hundred fifty-two of this article.
    24    (B)  At  least sixty percent of the amount of the total assets (at the
    25  close of the taxable year) of such banking corporation must  consist  of
    26  (i)  cash;  (ii) obligations of the United States or of a state or poli-
    27  tical subdivision thereof, and stock or  obligations  of  a  corporation
    28  which  is an instrumentality of the United States or of a state or poli-
    29  tical subdivision thereof, but not including obligations the interest on
    30  which is excludable from gross income under section 103 of the  internal
    31  revenue  code;  (iii)  loans  secured by a deposit or share of a member;
    32  (iv) loans secured by an interest in real property which is (or from the
    33  proceeds of the loan, will become) residential  real  property  or  real
    34  property used primarily for church purposes, loans made for the improve-
    35  ment  of  residential  real property or real property used primarily for
    36  church purposes, provided that for purposes of this clause,  residential
    37  real  property shall include single or multifamily dwellings, facilities
    38  in residential developments dedicated to public use or property used  on
    39  a  nonprofit  basis  for residents, and mobile homes not used on a tran-
    40  sient basis; (v) property acquired through the liquidation of  defaulted
    41  loans described in clause (iv) of this subparagraph; (vi) any regular or
    42  residual interest in a REMIC, as such term is defined in section 860D of
    43  the  internal  revenue code and any regular interest in a FASIT, as such
    44  term is defined in section 860L of the internal revenue code,  but  only
    45  in  the  proportion  which  the assets of such REMIC or FASIT consist of
    46  property described in any of the preceding clauses of this subparagraph,
    47  except that if ninety-five percent or more of the assets of  such  REMIC
    48  or FASIT are assets described in clauses (i) through (v) of this subpar-
    49  agraph,  the  entire interest in the REMIC or FASIT shall qualify; (vii)
    50  any mortgage-backed security which represents ownership of a  fractional
    51  undivided  interest in a trust, the assets of which consist primarily of
    52  mortgage loans, provided that the real property which serves as security
    53  for the loans is (or from the proceeds of the  loan,  will  become)  the
    54  type  of  property described in clause (iv) of this subparagraph and any
    55  collateralized mortgage obligation,  the  security  for  which  consists
    56  primarily  of  mortgage  loans,  provided  that  the real property which

        S. 3456                            25
     1  serves as security for the loans is (or from the proceeds of  the  loan,
     2  will  become)  the  type  of  property  described in clause (iv) of this
     3  subparagraph; (viii) certificates of deposit in, or  obligations  of,  a
     4  corporation  organized  under  a state law which specifically authorizes
     5  such corporation to insure the deposits  or  share  accounts  of  member
     6  associations; (ix) loans secured by an interest in real property located
     7  within any urban renewal area to be developed for predominantly residen-
     8  tial  use under an urban renewal plan approved by the Secretary of Hous-
     9  ing and Urban Development under part A or part B of title I of the Hous-
    10  ing Act of 1949, as amended, or located within any  area  covered  by  a
    11  program  eligible  for assistance under section 103 of the Demonstration
    12  Cities and Metropolitan Development Act of 1966, as amended,  and  loans
    13  made for the improvement of any such real property; (x) loans secured by
    14  an  interest  in educational, health, or welfare institutions or facili-
    15  ties, including structures designed or used  primarily  for  residential
    16  purposes  for students, residents, and persons under care, employees, or
    17  members of the staff of such institutions or facilities; (xi) loans made
    18  for the payment of expenses of college or university education or  voca-
    19  tional  training;  (xii) property used by the taxpayer in the conduct of
    20  business which consists principally of  acquiring  the  savings  of  the
    21  public  and  investing  in loans; (xiii) loans for which the taxpayer is
    22  the creditor and which are wholly secured by loans described  in  clause
    23  (iv) of this subparagraph, but excluding loans for which the taxpayer is
    24  the  creditor  to  any  banking  corporation described in paragraphs one
    25  through seven of subsection (a) of section fourteen hundred fifty-two of
    26  this article or a real estate investment trust, as such term is  defined
    27  in  section  856 of the internal revenue code, and excluding loans which
    28  are treated by the taxpayer as subsidiary capital for  purposes  of  the
    29  deductions  provided  by  paragraph  eleven  of  subsection  (e) of this
    30  section; (xiv) small business loans or small farm loans located in  low-
    31  income or moderate-income census tracts or block numbering areas deline-
    32  ated by the United States bureau of the census in the most recent decen-
    33  nial   census;   and  (xv)  community  development  loans  or  community
    34  development investments. For purposes of clause (xv)  of  this  subpara-
    35  graph,  a  "community  development  loan"  is a loan that (I) has as its
    36  primary purpose community development, (II) has  not  been  reported  or
    37  collected  by the taxpayer for consideration in the taxpayer's community
    38  reinvestment act evaluation pursuant to the federal community  reinvest-
    39  ment  act  of 1977, as amended, or section twenty-eight-b of the banking
    40  law as a mortgage loan described in clause (iv) of this subparagraph  or
    41  a small business loan, small farm loan, or consumer loan, (III) benefits
    42  the  taxpayer's  assessment  area  or  areas for purposes of the federal
    43  community reinvestment act of 1977, as amended or section twenty-eight-b
    44  of the banking law or a broader statewide or regional area that includes
    45  the taxpayer's assessment area, and (IV) is identified in the taxpayer's
    46  books and records as a community development loan for  purposes  of  its
    47  community  reinvestment act evaluation pursuant to the federal community
    48  reinvestment act of 1977, as amended or section  twenty-eight-b  of  the
    49  banking law. For purposes of clause (xv) of this subparagraph, a "commu-
    50  nity development investment" is an investment in a security which has as
    51  its primary purpose community development and which is identified in the
    52  taxpayer's  books  and records as a qualified investment for purposes of
    53  its community reinvestment act evaluation pursuant to the federal commu-
    54  nity reinvestment act of 1977, as amended or section  twenty-eight-b  of
    55  the banking law. For purposes of the two preceding sentences, "community
    56  development"  means (I) affordable housing (including multifamily rental

        S. 3456                            26
     1  housing for low-income or moderate-income individuals);  (II)  community
     2  services  targeted  to  low-income or moderate-income individuals; (III)
     3  activities that promote economic development by financing businesses  or
     4  farms  that  meet  the  size eligibility standards of the small business
     5  administration's development company or small business investment compa-
     6  ny programs or have gross annual revenues  of  one  million  dollars  or
     7  less;  (IV) activities that revitalize or stabilize low-income or moder-
     8  ate-income census tracts or block  numbering  areas  delineated  by  the
     9  United  States bureau of the census in the most recent decennial census;
    10  or (V) activities that seek to prevent defaults and/or  foreclosures  in
    11  loans included in items (I) and (III) of this sentence.
    12    (C)  At  the  election  of  the  taxpayer, the percentage specified in
    13  subparagraph (B) of this paragraph shall be applied on the basis of  the
    14  average assets outstanding during the taxable year, in lieu of the close
    15  of  the taxable year. For purposes of clause (iv) of subparagraph (B) of
    16  this paragraph, if a multifamily structure securing a loan  is  used  in
    17  part  for nonresidential use purposes, the entire loan is deemed a resi-
    18  dential real property loan if the planned residential use exceeds eighty
    19  percent of the property's planned use (determined as  of  the  time  the
    20  loan  is made). Also, for purposes of clause (iv) of subparagraph (B) of
    21  this paragraph, loans made to finance the acquisition or development  of
    22  land  shall  be deemed to be loans secured by an interest in residential
    23  real property if there is a reasonable assurance that the property  will
    24  become residential real property within a period of three years from the
    25  date  of acquisition of such land; but this sentence shall not apply for
    26  any taxable year unless,  within  such  three  year  period,  such  land
    27  becomes  residential  real property. For purposes of determining whether
    28  any interest in a REMIC qualifies under clause (vi) of subparagraph  (B)
    29  of  this  paragraph,  any regular interest in another REMIC held by such
    30  REMIC shall be treated as a loan described in a preceding  clause  under
    31  principles  similar to the principle of such clause (vi); except that if
    32  such REMICS are part of a tiered structure, they shall be treated as one
    33  REMIC for purposes of such clause (vi).
    34    (2) For taxable years beginning before  January  first,  two  thousand
    35  ten,  a  thrift  institution  must  exclude  from the computation of its
    36  entire net income any amount allowed as a deduction for  federal  income
    37  tax purposes pursuant to sections 166, 585 or 593 of the internal reven-
    38  ue code.
    39    (3)  For  taxable  years  beginning before January first, two thousand
    40  ten, a thrift institution shall be allowed as a deduction  in  computing
    41  entire net income the amount of a reasonable addition to its reserve for
    42  bad debts. This amount shall be equal to the sum of
    43    (A)  the  amount determined to be a reasonable addition to the reserve
    44  for losses on nonqualifying loans, computed in the  same  manner  as  is
    45  provided  with  respect to additions to the reserves for losses on loans
    46  of banks under paragraph one of subsection (i) of this section, plus
    47    (B) the amount determined by the taxpayer to be a reasonable  addition
    48  to  the  reserve  for losses on qualifying real property loans, but such
    49  amount shall not exceed the amount determined under  paragraph  four  or
    50  five  of this subsection, whichever is the larger, but the amount deter-
    51  mined under this subparagraph shall in no case be greater than the larg-
    52  er of
    53    (i) the amount determined under such paragraph five, or
    54    (ii) the amount which, when  added  to  the  amount  determined  under
    55  subparagraph  (A)  of  this paragraph, equals the amount by which twelve
    56  percent of the total deposits or withdrawable accounts of depositors  of

        S. 3456                            27
     1  the  taxpayer  at the close of such year exceeds the sum of its surplus,
     2  undivided profits and reserves at the beginning  of  such  year  (taking
     3  into  account  any portion thereof attributable to the period before the
     4  first  taxable  year  beginning  after  December  thirty-first, nineteen
     5  hundred fifty-one).
     6    The taxpayer must include in its tax return for each year  a  computa-
     7  tion  of  the  amount of the addition to the bad debt reserve determined
     8  under this subsection. The use of a particular method in the return  for
     9  a taxable year is not a binding election by the taxpayer.
    10    (4)  (A)  Subject  to subparagraphs (B) and (C) of this paragraph, the
    11  amount determined under this paragraph for the taxable year shall be  an
    12  amount  equal  to  thirty-two  percent of the entire net income for such
    13  year.
    14    (B) The amount determined under subparagraph  (A)  of  this  paragraph
    15  shall  be  reduced  (but  not  below  0)  by the amount determined under
    16  subparagraph (A) of paragraph three of this subsection.
    17    (C) The amount determined under this paragraph shall  not  exceed  the
    18  amount  necessary  to  increase  the balance at the close of the taxable
    19  year of the reserve for losses on qualifying real property loans to  six
    20  percent of such loans outstanding at such time.
    21    (D)  For  purposes  of  this  paragraph,  entire  net  income shall be
    22  computed
    23    (i) by excluding from income any amount included therein by reason  of
    24  subparagraph (B) of paragraph eight of this subsection,
    25    (ii) without regard to any deduction allowable for any addition to the
    26  reserve for bad debts, and
    27    (iii) by excluding from income an amount equal to the net gain for the
    28  taxable year arising from the sale or exchange of stock of a corporation
    29  or  of obligations the interest on which is excludable from gross income
    30  under section 103 of the internal revenue code.
    31    (iv) Whenever  a  thrift  institution  is  properly  includable  in  a
    32  combined  return,  entire  net  income,  for purposes of this paragraph,
    33  shall not exceed the  lesser  of  the  thrift  institution's  separately
    34  computed  entire  net income as adjusted pursuant to clauses (i) through
    35  (iii) of this subparagraph or the combined group's entire net income  as
    36  adjusted pursuant to clauses (i) through (iii) of this subparagraph.
    37    (5)  The  amount  determined under this paragraph for the taxable year
    38  shall be computed in the same manner as is provided under paragraph  one
    39  of  subsection (i) of this section with respect to additions to reserves
    40  for losses on loans of banks. Provided, however, that  for  any  taxable
    41  year  beginning after nineteen hundred ninety-five, for purposes of such
    42  computation, the base year shall be the later of (A)  the  last  taxable
    43  year  beginning  in nineteen hundred ninety-five or (B) the last taxable
    44  year before the current year in which the amount  determined  under  the
    45  provisions  of  subparagraph  (B)  of paragraph three of this subsection
    46  exceeded the amount allowable under this subparagraph.
    47    (6)  (A)  (i)  Each  taxpayer  described  in  paragraph  one  of  this
    48  subsection shall establish and maintain a New York reserve for losses on
    49  qualifying  real  property  loans,  a  New  York  reserve  for losses on
    50  nonqualifying loans and a supplemental reserve for losses on loans. Such
    51  reserves shall be maintained for all subsequent taxable years that  this
    52  subsection   applies   to   the  taxpayer. (ii)  For  purposes  of  this
    53  subsection, such reserves shall be treated as reserves  for  bad  debts,
    54  but  no  deduction shall be allowed for any addition to the supplemental
    55  reserve for losses on loans. (iii) Except as noted below,  the  balances
    56  of  each  such  reserve  at  the beginning of the first day of the first

        S. 3456                            28
     1  taxable year beginning after  December  thirty-first,  nineteen  hundred
     2  ninety-five  shall  be  the  same as the balances maintained for federal
     3  income tax purposes in accordance with section 593(c)(1) of the internal
     4  revenue  code as in existence on December thirty-first, nineteen hundred
     5  ninety-five for the last day of the last tax year beginning before Janu-
     6  ary first, nineteen hundred ninety-six. A taxpayer  which  maintained  a
     7  New  York  reserve  for loan losses on qualifying real property loans in
     8  the last tax year beginning before January first, nineteen hundred nine-
     9  ty-six shall have a continuation of such New  York  reserve  balance  in
    10  lieu  of  the  amount  determined  under  the  preceding  sentence. (iv)
    11  Notwithstanding clause (ii) of this subparagraph, any  amount  allocated
    12  to  the reserve for losses on qualifying real property loans pursuant to
    13  section 593 (c) (5) of the internal revenue code as in effect immediate-
    14  ly prior to the enactment of the Tax Reform Act of  1976  shall  not  be
    15  treated  as a reserve for bad debts for any purpose other than determin-
    16  ing the amount referred to in subparagraph (B)  of  paragraph  three  of
    17  this  subsection,  and  for such purpose such amount shall be treated as
    18  remaining in such reserve.
    19    (B) Any debt becoming worthless or partially worthless in respect of a
    20  qualifying real property loan shall be charged to the reserve for losses
    21  on such loans and any debt becoming worthless or partially worthless  in
    22  respect  of  a  nonqualifying  loan  shall be charged to the reserve for
    23  losses on nonqualifying loans, except that any such  debt  may,  at  the
    24  election  of the taxpayer, be charged in whole or in part to the supple-
    25  mental reserve for losses on loans.
    26    (C) The New York reserve for losses on qualifying real property  loans
    27  shall  be  increased  by the amount determined under subparagraph (B) of
    28  paragraph three of this subsection and the New York reserve  for  losses
    29  on nonqualifying loans shall be increased by the amount determined under
    30  subparagraph (A) of paragraph three of this subsection.
    31    (7)  (A)  For  purposes  of this subsection, the term "qualifying real
    32  property loan" shall mean any loan secured by an  interest  in  improved
    33  real  property or secured by an interest in real property which is to be
    34  improved out of the proceeds of the loan. Such term  shall  include  any
    35  mortgage-backed  security  which  represents  ownership  of a fractional
    36  undivided interest in a trust, the assets of which consist primarily  of
    37  mortgage loans, provided that the real property which serves as security
    38  for  the  loans  is  (or from the proceeds of the loan, will become) the
    39  type of property described in clauses (i) through  (v)  of  subparagraph
    40  (B)  of  paragraph one of this subdivision. However, such term shall not
    41  include: (i) any loan evidenced by a security  (as  defined  in  section
    42  165(g)  (2) (C) of the internal revenue code); (ii) any loan, whether or
    43  not evidenced by a security (as defined in such section 165(g) (2) (C)),
    44  the primary obligor of which is (I) a government or  political  subdivi-
    45  sion  or  instrumentality  thereof, (II) a banking corporation, or (III)
    46  any corporation sixty-five percent or more  of  whose  voting  stock  is
    47  owned  or  controlled,  directly  or indirectly, by the taxpayer or by a
    48  banking corporation or bank  holding  company  that  owns  or  controls,
    49  directly  or  indirectly, sixty-five percent or more of the voting stock
    50  of the taxpayer; (iii) any loan, to the extent secured by a  deposit  in
    51  or  share  of  the  taxpayer; or (iv) any loan which, within a sixty-day
    52  period beginning in one taxable year of the creditor and ending  in  its
    53  next  taxable  year, is made or acquired and then repaid or disposed of,
    54  unless the transactions by which such loan was made or acquired and then
    55  repaid or disposed of are established  to  be  for  bona  fide  business
    56  purposes.

        S. 3456                            29
     1    (B)  For  purposes  of  this subsection, the term "nonqualifying loan"
     2  shall mean any loan which is not a qualifying real property loan.
     3    (C)  For purposes of this subsection, the term "loan" shall mean debt,
     4  as the term "debt" is used in section 166 of the internal revenue code.
     5    (D) A regular or residual interest in a REMIC, as such term is defined
     6  in section 860D of the internal revenue code,  shall  be  treated  as  a
     7  qualifying  real  property  loan,  except that, if less than ninety-five
     8  percent of the assets of such REMIC are qualifying real  property  loans
     9  (determined  as  if  the  taxpayer  held  the assets of the REMIC), such
    10  interest shall be so treated only in the proportion which the assets  of
    11  such  REMIC  consist  of such loans. For purposes of determining whether
    12  any interest in a REMIC qualifies  under  the  preceding  sentence,  any
    13  interest in another REMIC held by such REMIC shall be treated as a qual-
    14  ifying  real property loan under principles similar to the principles of
    15  the preceding sentence, except that if such REMICS are part of a  tiered
    16  structure, they shall be treated as one REMIC for purposes of this para-
    17  graph.
    18    (8)(A)  Any  distribution of property (as defined in section 317(a) of
    19  the internal revenue code) by a thrift institution to a shareholder with
    20  respect to its stock,  if  such  distribution  is  not  allowable  as  a
    21  deduction under section 591 of such code, shall be treated as made
    22    (i)  first  out  of  its  New York earnings and profits accumulated in
    23  taxable years beginning after December  thirty-first,  nineteen  hundred
    24  fifty-one, to the extent thereof,
    25    (ii)  then  out  of the New York reserve for losses on qualifying real
    26  property loans, to the extent additions to such reserve exceed the addi-
    27  tions which would  have  been  allowed  under  paragraph  five  of  this
    28  subsection,
    29    (iii) then out of the supplemental reserve for losses on loans, to the
    30  extent thereof,
    31    (iv) then out of such other accounts as may be proper.
    32  This subparagraph shall apply in the case of any distribution in redemp-
    33  tion of stock or in partial or complete liquidation of a thrift institu-
    34  tion,  except  that any such distribution shall be treated as made first
    35  out of the amount referred to  in  clause  (ii)  of  this  subparagraph,
    36  second  out  of  the amount referred to in clause (iii) of this subpara-
    37  graph, third out of the amount referred to in clause (i) of this subpar-
    38  agraph and then out of such  other  accounts  as  may  be  proper.  This
    39  subparagraph  shall not apply to any transaction to which section 381 of
    40  such code (relating to carryovers and  certain  corporate  acquisitions)
    41  applies,  or  to any distribution to the federal savings and loan insur-
    42  ance corporation or the federal deposit insurance corporation in redemp-
    43  tion of an interest in an association or institution, if  such  interest
    44  was originally received by the federal savings and loan insurance corpo-
    45  ration  or  the  federal  deposit  insurance corporation in exchange for
    46  financial assistance pursuant to section 406(f) of the federal  national
    47  housing  act  or  pursuant  to subsection (c) of section thirteen of the
    48  federal deposit insurance act.
    49    (B) If any distribution is treated  under  subparagraph  (A)  of  this
    50  paragraph  as  having been made out of the reserves described in clauses
    51  (ii) and (iii) of such subparagraph, the  amount  charged  against  such
    52  reserve  shall  be  the  amount which, when reduced by the amount of tax
    53  imposed under the internal revenue code and attributable to  the  inclu-
    54  sion  of  such  amount  in  gross income, is equal to the amount of such
    55  distribution; and the amount so charged against such  reserve  shall  be
    56  included in the entire net income of the taxpayer.

        S. 3456                            30
     1    (C)  (i) For purposes of clause (ii) of subparagraph (A) of this para-
     2  graph, additions to the New York reserve for losses on  qualifying  real
     3  property  loans  for  the  taxable year in which the distribution occurs
     4  shall be taken into account.
     5    (ii)  For  purposes of computing under this subsection the amount of a
     6  reasonable addition to the New York reserve  for  losses  on  qualifying
     7  real  property loans for any taxable year, the amount charged during any
     8  year to such reserve pursuant to the provisions of subparagraph  (B)  of
     9  this paragraph shall not be taken into account.
    10    (9) A taxpayer which maintains a New York reserve for losses on quali-
    11  fying  real  property loans and which ceases to meet the definition of a
    12  thrift institution as defined in paragraph one of this subsection,  must
    13  include  in  its  entire net income for the last taxable year such para-
    14  graph applied the excess of its New York reserve for losses on  qualify-
    15  ing  real  property loans over the greater of (A) its reserve for losses
    16  on qualifying real property loans as of the last day of the last taxable
    17  year such reserve is maintained for federal income tax purposes  or  (B)
    18  the  balance of the New York reserve for losses on qualifying real prop-
    19  erty loans which would be allowable to the taxpayer for the last taxable
    20  year such taxpayer met such definition of a thrift  institution  if  the
    21  taxpayer  had  computed  its  reserve  balance  pursuant  to  the method
    22  described in subparagraph (A) of paragraph one of subsection (i) of this
    23  section.
    24    (i) (1) For taxable years beginning before January first, two thousand
    25  ten, a taxpayer subject to the  provisions  of  section  585(c)  of  the
    26  internal  revenue code and not subject to subsection (h) of this section
    27  may, in computing entire net income, deduct an amount equal to  or  less
    28  than  the  amount  determined pursuant to subparagraph (A) of this para-
    29  graph or subparagraph (B)  of  this  paragraph,  whichever  is  greater.
    30  Provided,  however,  in  no  event  shall the deduction be less than the
    31  amount determined pursuant to such subparagraph (A).
    32    (A) The amount determined pursuant to this subparagraph shall  be  the
    33  amount  necessary  to  increase  the balance of its New York reserve for
    34  losses on loans (at the close of the taxable year) to the  amount  which
    35  bears  the  same  ratio to loans outstanding at the close of the taxable
    36  year as (i) the total bad debts sustained during the  taxable  year  and
    37  the  five  preceding taxable years (or, with the approval of the commis-
    38  sioner of taxation and finance, a shorter period), adjusted  for  recov-
    39  eries  of  bad  debts  during  such period, bears to (ii) the sum of the
    40  loans outstanding at the close of such six or fewer taxable years.
    41    (B) (i) The amount determined pursuant to this subparagraph  shall  be
    42  the amount necessary to increase the balance of its New York reserve for
    43  losses on loans (at the close of the taxable year) to the lower of --
    44    (I) the balance of the reserve at the close of the base year, or
    45    (II)  if  the  amount of loans outstanding at the close of the taxable
    46  year is less than the amount of loans outstanding at the  close  of  the
    47  base year, the amount which bears the same ratio to loans outstanding at
    48  the close of the taxable year as the balance of the reserve at the close
    49  of  the  base year bears to the amount of loans outstanding at the close
    50  of the base year.
    51    (ii) For purposes of this paragraph, the base year shall  be  (I)  for
    52  taxable years beginning in nineteen hundred eighty-seven, the last taxa-
    53  ble  year  before  the most recent adoption of the experience method for
    54  federal income tax purposes or for purposes of this  article,  whichever
    55  is  earlier, and (II) for taxable years beginning after nineteen hundred

        S. 3456                            31
     1  eighty-seven, the last taxable year beginning  before  nineteen  hundred
     2  eighty-eight.
     3    (2) (A) For taxable years beginning before January first, two thousand
     4  ten,  each  taxpayer described in paragraph one of this subsection shall
     5  establish and maintain a New York reserve  for  losses  on  loans.  Such
     6  reserve  shall  be  maintained  for  all  subsequent  taxable years. The
     7  balance of the New York reserve for losses on loans at the beginning  of
     8  the  first day of the first taxable year the taxpayer becomes subject to
     9  this subsection shall be the same as the balance  at  the  beginning  of
    10  such  day  of  the  reserve  for  losses on loans maintained for federal
    11  income tax purposes. The New York reserve for losses on loans  shall  be
    12  reduced  by  an amount equal to the deduction allowed, but not more than
    13  the amount  allowable,  for  worthless  debts  for  federal  income  tax
    14  purposes  pursuant  to section 166 of the internal revenue code plus the
    15  amount, if any, charged against its reserve for losses on loans pursuant
    16  to section 585(c)(4) of such code.
    17    (B) For purposes of subparagraph (A) of  this  paragraph,  a  taxpayer
    18  which had previously been subject to the provisions of subsection (h) of
    19  this  section  shall  establish  a  New York reserve for losses on loans
    20  equal to the sum of (i) the greater of (I) the balance  of  its  federal
    21  reserve for losses on qualifying real property loans as of the first day
    22  of the first taxable year the taxpayer becomes subject to the provisions
    23  of  this  subsection or (II) the greater of the amounts determined under
    24  subparagraphs (A) and (B) of paragraph nine of subsection  (h)  of  this
    25  section  in  the  year  such paragraph applied to the taxpayer, (ii) the
    26  greater of (I) the balance in its federal reserve for losses on nonqual-
    27  ifying loans as of the first day of the first taxable year the  taxpayer
    28  becomes  subject  to this subsection or (II) the balance in its New York
    29  reserve for losses on nonqualifying  loans  as  of  the  last  date  the
    30  taxpayer was subject to the provisions of subsection (h) of this section
    31  and (iii) the balance in its supplemental reserve for losses on loans as
    32  of  the  last  date  the  taxpayer  was  subject  to  the  provisions of
    33  subsection (h) of this section.
    34    (3) The determination and treatment of the New York  reserve  balance,
    35  including  any  additions  thereto, subtractions therefrom, or recapture
    36  thereof, for
    37    (A) any banking corporation which  was  subject  to  tax  for  federal
    38  income  tax purposes but not subject to tax under this article for prior
    39  taxable years,
    40    (B) any taxpayer which ceases to be subject to tax under this article,
    41  or
    42    (C) any other unusual circumstances
    43  shall be  determined  by  the  commissioner  of  taxation  and  finance.
    44  Provided,  however, any banking corporation which was subject to tax for
    45  federal income tax purposes but not subject to tax  under  this  article
    46  for  prior  taxable years shall have as its opening New York reserve for
    47  losses on loans the amount determined  by  applying  the  provisions  of
    48  subparagraph  (A) of paragraph one of this subsection to loans outstand-
    49  ing at the close of  its  last  taxable  year  for  federal  income  tax
    50  purposes  ending  prior to the first taxable year for which the taxpayer
    51  is subject to tax under this article and  provided,  further,  that  the
    52  provisions of subparagraph (B) of paragraph one of this subsection shall
    53  not apply.
    54    (j)  (1)  In  the  case of property placed in service prior to January
    55  first, nineteen hundred seventy-three, for which the  taxpayer  properly
    56  adopted  a  different method of computing depreciation under section two

        S. 3456                            32
     1  hundred nineteen-z or section two hundred nineteen-xx  of  this  chapter
     2  (as  such  sections  were  in effect on or before December thirty-first,
     3  nineteen hundred seventy-two) than was adopted for  federal  income  tax
     4  purposes  with  respect  to  such property, entire net income under this
     5  article shall be computed without regard to the amount  allowable  as  a
     6  deduction for depreciation of such property in computing federal taxable
     7  income  for  the taxable year but, in lieu thereof, shall be computed as
     8  if such deduction were determined by the method of depreciation  adopted
     9  with  respect  to such property under sections two hundred nineteen-z or
    10  two hundred nineteen-xx of this chapter (as such sections were in effect
    11  on or before December thirty-first, nineteen hundred seventy-two).
    12    (2) In  computing  entire  net  income,  the  amount  allowable  as  a
    13  deduction  for  charitable contributions for federal income tax purposes
    14  shall be decreased by any amount allowed  as  a  deduction  for  federal
    15  income  tax  purposes  for  the  taxable  year under section one hundred
    16  seventy of the internal revenue code as a carryover of  excess  contrib-
    17  utions which are not made in such taxable year and which were deductible
    18  in  computing the tax due under article nine-B or nine-C of this chapter
    19  (as such articles were in effect on  or  before  December  thirty-first,
    20  nineteen hundred seventy-two).
    21    (3)  There shall be excluded from the computation of entire net income
    22  any amount allowed as a deduction for federal income  tax  purposes  for
    23  the  taxable  year  under  section twelve hundred twelve of the internal
    24  revenue code as a capital loss carryforward to the taxable  year,  which
    25  was  deductible  as a loss in computing the tax due under article nine-B
    26  or nine-C of this chapter (as such articles were in effect  on  December
    27  thirty-first, nineteen hundred seventy-two).
    28    (4)  There shall be excluded from the computation of entire net income
    29  the amount of any income or gain from the sale of real or personal prop-
    30  erty which is includible in determining federal taxable income  for  the
    31  taxable  year  pursuant  to  the  installment  method under section four
    32  hundred fifty-three of the internal revenue code,  to  the  extent  that
    33  such  income  or  gain  was includible in the computation of the tax due
    34  under article nine-B or nine-C of this chapter (as such articles were in
    35  effect on December thirty-first, nineteen hundred seventy-two).
    36    (5) To the extent not otherwise provided in this article, there  shall
    37  be  excluded  from entire net income the amount necessary to prevent the
    38  taxation under this article of any other amount of income or gain  which
    39  was  properly  included  in income or gain and was taxable under article
    40  nine-B or nine-C of this chapter (as such articles were in effect on  or
    41  before  December  thirty-first,  nineteen hundred seventy-two) and there
    42  shall be disallowed as a deduction in computing entire  net  income  any
    43  amount which was allowable as a deduction in computing the tax due under
    44  such  articles  (as  they  were  in effect on or before December thirty-
    45  first, nineteen hundred seventy-two).
    46    (k) (1) At the election of the taxpayer, there shall be deducted  from
    47  the  portion of its entire net income allocated within the state, depre-
    48  ciation with respect to any property such as described in paragraph  two
    49  of  this  subsection,  not exceeding twice the depreciation allowed with
    50  respect to the same property  for  federal  income  tax  purposes.  Such
    51  deduction shall be allowed only upon condition that entire net income be
    52  computed  without  any deduction for depreciation or amortization of the
    53  same property, and the total of all  deductions  allowed  under  article
    54  nine-B  or nine-C of this chapter (as such articles were in effect on or
    55  before December thirty-first, nineteen  hundred  seventy-two)  and  this

        S. 3456                            33
     1  article in any taxable year or years with respect to the depreciation of
     2  any such property shall not exceed its cost or other basis.
     3    (2)  Such  deduction  shall  be  allowed only with respect to tangible
     4  property which is depreciable pursuant to section one hundred sixty-sev-
     5  en of the internal revenue code, having a situs in this state  and  used
     6  in  the  taxpayer's  business, (i) constructed, reconstructed or erected
     7  after December thirty-first, nineteen hundred sixty-three, pursuant to a
     8  contract which was, on or before December thirty-first, nineteen hundred
     9  sixty-seven, and at all times thereafter, binding on  the  taxpayer  or,
    10  property, the physical construction, reconstruction or erection of which
    11  began  on  or before December thirty-first, nineteen hundred sixty-seven
    12  or which began after such date pursuant to an order placed on or  before
    13  December  thirty-first, nineteen hundred sixty-seven, and then only with
    14  respect to that portion of the basis thereof which is properly attribut-
    15  able to such construction, reconstruction  or  erection  after  December
    16  thirty-first,  nineteen  hundred  sixty-three,  or  (ii)  acquired after
    17  December thirty-first,  nineteen  hundred  sixty-three,  pursuant  to  a
    18  contract which was, on or before December thirty-first, nineteen hundred
    19  sixty-seven,  and  at  all  times thereafter, binding on the taxpayer or
    20  pursuant to an order placed on or before December thirty-first, nineteen
    21  hundred sixty-seven, by purchase  as  defined  in  section  one  hundred
    22  seventy-nine  (d)  of  the internal revenue code, if the original use of
    23  such property commenced with the taxpayer, commenced in this  state  and
    24  commenced  after December thirty-first, nineteen hundred sixty-three, or
    25  (iii) acquired, constructed, reconstructed,  or  erected  subsequent  to
    26  December thirty-first nineteen hundred sixty-seven, if such acquisition,
    27  construction,  reconstruction  or  erection is pursuant to a plan of the
    28  taxpayer which was in existence December thirty-first, nineteen  hundred
    29  sixty-seven and not thereafter substantially modified, and such acquisi-
    30  tion,  construction,  reconstruction or erection would qualify under the
    31  rules in paragraphs four, five or  six  of  subsection  (h)  of  section
    32  forty-eight of the internal revenue code provided all references in such
    33  paragraphs  four,  five  and  six  to  the  dates October nine, nineteen
    34  hundred sixty-six, and October ten, nineteen hundred sixty-six, shall be
    35  read as December thirty-first, nineteen hundred sixty-seven. A  taxpayer
    36  shall  be  allowed  a deduction under clauses (i), (ii) or (iii) of this
    37  paragraph only if the  tangible  property  shall  be  delivered  or  the
    38  construction, reconstruction or erection shall be completed on or before
    39  December  thirty-first,  nineteen hundred sixty-nine, except in the case
    40  of tangible property which is acquired,  constructed,  reconstructed  or
    41  erected  pursuant to a contract which was, on or before December thirty-
    42  first, nineteen hundred sixty-seven, and at all times thereafter,  bind-
    43  ing  on  the taxpayer. Provided, however, for any taxable year beginning
    44  on or after January first,  nineteen  hundred  sixty-eight,  a  taxpayer
    45  shall  not be allowed a deduction under paragraph one of this subsection
    46  with respect to tangible personal property leased by  it  to  any  other
    47  person  or  corporation.  For  purposes  of  the preceding sentence, any
    48  contract or agreement to lease or rent or for  a  license  to  use  such
    49  property shall be considered a lease. With respect to property which the
    50  taxpayer uses itself for purposes other than leasing for part of a taxa-
    51  ble  year and leases for a part of a taxable year, the taxpayer shall be
    52  allowed a deduction under paragraph one of this subsection in proportion
    53  to the part of the year it uses such property.
    54    (3) If the deduction allowable for any taxable year pursuant  to  this
    55  subsection exceeds the portion of the taxpayer's entire net income allo-
    56  cated to this state for such year, the excess may be carried over to the

        S. 3456                            34
     1  following  taxable year or years and may be deducted from the portion of
     2  the taxpayer's entire net income allocated to this state for  such  year
     3  or years.
     4    (4)  In  any  taxable year when property is sold or otherwise disposed
     5  of, with respect to which a deduction has been allowed pursuant to  this
     6  subsection,  subdivision  twelve  of  section  two hundred nineteen-z or
     7  subdivision ten of section two hundred nineteen-xx of this  chapter  (as
     8  such  subdivisions  were  in  effect on or before December thirty-first,
     9  nineteen hundred seventy-two), the gain or loss entering into the compu-
    10  tation of federal taxable  income  shall  be  disregarded  in  computing
    11  entire  net  income,  and  there  shall  be added or subtracted from the
    12  portion of entire net income allocated within the state the gain or loss
    13  upon such sale or other disposition. In computing such gain or loss  the
    14  basis  of  the property sold or disposed of shall be adjusted to reflect
    15  the deduction allowed with respect to such property  pursuant  to  para-
    16  graph  one  of  this subsection. Provided however, that no loss shall be
    17  recognized for the purposes of this paragraph with respect to a sale  or
    18  other  disposition  of property to a person whose acquisition thereof is
    19  not a purchase as defined in section one hundred seventy-nine (d) of the
    20  internal revenue code.
    21    (k-1) A net operating loss deduction shall be allowed which  shall  be
    22  presumably  the  same  as the net operating loss deduction allowed under
    23  section one hundred seventy-two of the  internal  revenue  code,  except
    24  that  in every instance where such deduction is allowed under this arti-
    25  cle:
    26    (1) any net operating loss  included  in  determining  such  deduction
    27  shall  be  adjusted to reflect the inclusions and exclusions from entire
    28  net income required by the other provisions of this section,
    29    (2) such deduction shall not include any net operating loss  sustained
    30  during  any  taxable year beginning prior to January first, two thousand
    31  one, or during any taxable year in which the taxpayer was not subject to
    32  the tax imposed by this article,
    33    (3) such deduction shall not exceed the deduction for the taxable year
    34  allowed under section one hundred seventy-two of  the  internal  revenue
    35  code augmented by the excess of the amount allowed as a deduction pursu-
    36  ant  to  subsection (h) or (i) of this section, whichever is applicable,
    37  over the amount allowed as a deduction pursuant to section 166 or 585 of
    38  the internal revenue code, for each taxable year in which  the  taxpayer
    39  had  a  net  operating  loss which is carried to the taxable year of the
    40  deduction under this provision, in the aggregate, (except to the  extent
    41  such excess was previously deducted in computing entire net income), and
    42    (4) the net operating loss deduction allowed under section one hundred
    43  seventy-two  of  the  internal  revenue  code shall for purposes of this
    44  subsection be determined as if  the  taxpayer  had  elected  under  such
    45  section  to  relinquish  the entire carryback period with respect to net
    46  operating losses.
    47    (l) In the case of a savings and insurance bank which conducts a  life
    48  insurance business through a life insurance department under the author-
    49  ity  of former article six-A of the banking law, entire net income means
    50  the federal taxable income which such bank is required to report to  the
    51  United  States treasury department under paragraph one of subsection (a)
    52  of section five hundred ninety-four of the internal revenue code and the
    53  modifications required by this section in computing  entire  net  income
    54  shall only be made with respect to such federal taxable income.

        S. 3456                            35
     1    (m) If the period covered by a return under this article is other than
     2  the  period  covered by the return to the United States treasury depart-
     3  ment,
     4    (1) except as provided in paragraph two of this subsection, entire net
     5  income  and  alternative entire net income shall be determined by multi-
     6  plying the taxable income  reported  to  such  department  (as  adjusted
     7  pursuant  to  the  provisions of this article) by the number of calendar
     8  months or major parts thereof covered by the return under  this  article
     9  and  dividing  by  the  number of calendar months or major parts thereof
    10  covered by the return to such department. If it shall appear  that  such
    11  method of determining entire net income or alternative entire net income
    12  does  not  properly  reflect  the  taxpayer's  income  during the period
    13  covered by the return under this  article,  the  commissioner  shall  be
    14  authorized  in his or her discretion to determine such entire net income
    15  or alternative entire net income solely on the basis of  the  taxpayer's
    16  income during the period covered by its return under this article.
    17    (2)  in the case of a New York S termination year, an equal portion of
    18  entire net income shall be assigned  to  each  day  of  such  year.  The
    19  portion  of  such entire net income thereby assigned to the S short year
    20  and the C short year shall be included in the respective returns for the
    21  S short year and the C short year under  this  article.  However,  where
    22  paragraph  three of subsection (s) of section six hundred twelve of this
    23  chapter applies, the portion of such entire net income assigned to the S
    24  short year and the  C  short  year  shall  be  determined  under  normal
    25  accounting rules.
    26    (n)  The  tax  commission may, whenever necessary in order properly to
    27  reflect the entire net income of any taxpayer,  determine  the  year  or
    28  period in which any item of income or deduction shall be included, with-
    29  out regard to the method of accounting employed by the taxpayer.
    30    (o)  QSSS.  (1)  New  York  S corporation. In the case of a New York S
    31  corporation which is the parent of a qualified subchapter  S  subsidiary
    32  (QSSS) with respect to a taxable year:
    33    (A) where the QSSS is not an excluded corporation,
    34    (i)  in  determining the entire net income of such parent corporation,
    35  all assets, liabilities, income and deductions  of  the  QSSS  shall  be
    36  treated  as  assets,  liabilities,  income  and deductions of the parent
    37  corporation, and
    38    (ii) the QSSS shall be exempt from all taxes imposed by this  article,
    39  and
    40    (B)  where  the QSSS is an excluded corporation, the entire net income
    41  of the parent corporation shall be determined as  if  the  federal  QSSS
    42  election had not been made.
    43    (2)  New  York  C corporation. In the case of a New York C corporation
    44  which is the parent of a QSSS with respect to a taxable year:
    45    (A) where the QSSS is a taxpayer,
    46    (i) in determining the entire net income of such  parent  corporation,
    47  all  assets,  liabilities,  income  and  deductions of the QSSS shall be
    48  treated as assets, liabilities, income  and  deductions  of  the  parent
    49  corporation, and
    50    (ii)  the QSSS shall be exempt from all taxes imposed by this article,
    51  and
    52    (B) where the QSSS is not a taxpayer,
    53    (i) if the QSSS is not an excluded corporation, the parent corporation
    54  may make a QSSS inclusion election to include all  assets,  liabilities,
    55  income  and  deductions  of  the QSSS as assets, liabilities, income and
    56  deductions of the parent corporation, and

        S. 3456                            36
     1    (ii) in the absence of such election, or where the QSSS is an excluded
     2  corporation, the entire net income of the parent  corporation  shall  be
     3  determined as if the federal QSSS election had not been made.
     4    (3)  Non-New  York  S  corporation  not  excluded. In the case of an S
     5  corporation which is not a taxpayer and not an excluded corporation, and
     6  which is the parent of a QSSS which is a taxpayer, the  shareholders  of
     7  the parent corporation shall be entitled to make the New York S election
     8  under subsection (a) of section six hundred sixty of this chapter.
     9    (A)  For  any  taxable  year for which such election is in effect, the
    10  parent corporation shall be subject to tax under this article as  a  New
    11  York  S corporation, and the provisions of subparagraph (A) of paragraph
    12  one of this subsection shall apply.
    13    (B) For any taxable year for which such election is not in effect, the
    14  QSSS shall be a New York C corporation, and the entire net income of the
    15  QSSS shall be determined as if the federal QSSS election  had  not  been
    16  made. For purposes of such determination, the taxable year of the parent
    17  corporation  shall  constitute  the taxable year of the QSSS, excluding,
    18  however, any portion of such year during which the QSSS is not a taxpay-
    19  er.
    20    (4) S corporation excluded. In the case of an S corporation  which  is
    21  an  excluded  corporation  and  which is the parent of a QSSS which is a
    22  taxpayer, the QSSS shall be a New York C corporation and the  provisions
    23  of subparagraph (B) of paragraph three of this subsection shall apply.
    24    (5)  Excluded  corporation.  The  term  "excluded corporation" means a
    25  corporation subject to  tax  under  sections  one  hundred  eighty-three
    26  through  one  hundred eighty-five of this chapter, inclusive, or article
    27  nine-A or thirty-three of this chapter, or  a  foreign  corporation  not
    28  taxable by this state which, if it were taxable, would be subject to tax
    29  under any of such sections or articles.
    30    (6)  Taxpayer.  For  purposes  of  this paragraph, the term "taxpayer"
    31  means a parent corporation or QSSS subject to tax  under  this  article,
    32  determined without regard to the provisions of this paragraph.
    33    (7) QSSS inclusion election. The election under clause (i) of subpara-
    34  graph (B) of paragraph two of this subsection shall be effective for the
    35  taxable  year for which made and for all succeeding taxable years of the
    36  corporation until such election is terminated.  An  election  or  termi-
    37  nation shall be made on such form and in such manner as the commissioner
    38  may prescribe by regulation or instruction.
    39    (p)  Emerging  technology investment deferral. In the case of any sale
    40  of a qualified emerging technologies investment held for more than thir-
    41  ty-six months and with respect to which the taxpayer elects the applica-
    42  tion of this subsection, gain from such sale shall be recognized only to
    43  the extent that the amount realized on such sale exceeds the cost of any
    44  qualified emerging technologies investment  purchased  by  the  taxpayer
    45  during  the three hundred sixty-five-day period beginning on the date of
    46  such sale, reduced by any portion of such  cost  previously  taken  into
    47  account  under  this  subsection.  For  purposes  of this subsection the
    48  following shall apply:
    49    (1) A qualified investment is stock of a corporation or  an  interest,
    50  other  than as a creditor, in a partnership or limited liability company
    51  that was acquired by the taxpayer as provided in Internal Revenue Code §
    52  1202(c)(1)(B), except that the reference to the  term  "stock"  in  such
    53  section  shall be read as "investment," or by the taxpayer from a person
    54  who had acquired such stock or interest in such a manner.
    55    (2) A qualified emerging technology investment is a qualified  invest-
    56  ment, that was held by the taxpayer for at least thirty-six months, in a

        S. 3456                            37
     1  company  defined  in paragraph (c) of subdivision one of section thirty-
     2  one hundred two-e of the public authorities law or an  investment  in  a
     3  partnership  or limited liability company that is taxed as a partnership
     4  to the extent that such partnership or limited liability company invests
     5  in qualified emerging technology companies.
     6    (3)  For  purposes  of  determining whether the nonrecognition of gain
     7  under this subsection  applies  to  a  qualified  emerging  technologies
     8  investment  that is sold, the taxpayer's holding period for such invest-
     9  ment  and  the  qualified  emerging  technologies  investment  that   is
    10  purchased  shall be determined without regard to Internal Revenue Code §
    11  1223.
    12    (q) Amounts deferred. The amount deferred under subsection (p) of this
    13  section shall be added to entire net income when the reinvestment in the
    14  New York qualified emerging technology company which qualified a taxpay-
    15  er for such deferral is sold.
    16    (r) For taxable years beginning after December thirty-first, two thou-
    17  sand two, in the case of qualified property described in  paragraph  two
    18  of  subsection k of section 168 of the internal revenue code, other than
    19  qualified resurgence zone property described in subsection (u)  of  this
    20  section,  and  other  than  qualified  New  York  Liberty  Zone property
    21  described in paragraph two of subsection  b  of  section  1400L  of  the
    22  internal  revenue code (without regard to clause (i) of subparagraph (C)
    23  of such paragraph), which was placed in service on or after June  first,
    24  two  thousand  three,  a  taxpayer shall be allowed with respect to such
    25  property the depreciation deduction allowable under section 167  of  the
    26  internal revenue code as such section would have applied to such proper-
    27  ty had it been acquired by the taxpayer on September tenth, two thousand
    28  one.
    29    (s)  Related  members  expense  add back. (1) Definitions. (A) Related
    30  member. "Related member" means a related person as defined  in  subpara-
    31  graph  (c)  of paragraph three of subsection (b) of section four hundred
    32  sixty-five of the internal revenue code,  except  that  "fifty  percent"
    33  shall be substituted for "ten percent".
    34    (B)  Effective  rate  of tax. "Effective rate of tax" means, as to any
    35  state or U.S. possession, the maximum statutory rate of tax  imposed  by
    36  the  state or possession on or measured by a related member's net income
    37  multiplied by the apportionment percentage, if any,  applicable  to  the
    38  related member under the laws of said jurisdiction. For purposes of this
    39  definition, the effective rate of tax as to any state or U.S. possession
    40  is  zero  where  the  related  member's net income tax liability in said
    41  jurisdiction is reported on a combined or consolidated return  including
    42  both the taxpayer and the related member where the reported transactions
    43  between  the  taxpayer  and the related member are eliminated or offset.
    44  Also, for purposes of this definition, when computing the effective rate
    45  of tax for a jurisdiction in which a  related  member's  net  income  is
    46  eliminated or offset by a credit or similar adjustment that is dependent
    47  upon  the related member either maintaining or managing intangible prop-
    48  erty or collecting interest income in  that  jurisdiction,  the  maximum
    49  statutory rate of tax imposed by said jurisdiction shall be decreased to
    50  reflect  the statutory rate of tax that applies to the related member as
    51  effectively reduced by such credit or similar adjustment.
    52    (C) Royalty payments. Royalty payments are payments directly connected
    53  to the acquisition, use, maintenance  or  management,  ownership,  sale,
    54  exchange,  or any other disposition of licenses, trademarks, copyrights,
    55  trade names, trade dress, service  marks,  mask  works,  trade  secrets,
    56  patents  and  any other similar types of intangible assets as determined

        S. 3456                            38
     1  by  the  commissioner,  and  include  amounts  allowable   as   interest
     2  deductions under section one hundred sixty-three of the internal revenue
     3  code  to the extent such amounts are directly or indirectly for, related
     4  to  or  in  connection with the acquisition, use, maintenance or manage-
     5  ment, ownership,  sale,  exchange  or  disposition  of  such  intangible
     6  assets.
     7    (D)  Valid  business  purpose. A valid business purpose is one or more
     8  business purposes, other than the avoidance or  reduction  of  taxation,
     9  which alone or in combination constitute the primary motivation for some
    10  business  activity or transaction, which activity or transaction changes
    11  in a meaningful way, apart from tax effects, the  economic  position  of
    12  the taxpayer. The economic position of the taxpayer includes an increase
    13  in  the  market share of the taxpayer, or the entry by the taxpayer into
    14  new business markets.
    15    (2) Royalty expense add backs. (A) Except where a taxpayer is included
    16  in a combined return with a related member pursuant to subsection (f) of
    17  section fourteen hundred sixty-two of this article, for the  purpose  of
    18  computing  entire  net income, a taxpayer must add back royalty payments
    19  directly or indirectly paid, accrued, or incurred in connection with one
    20  or more direct or indirect transactions with one or more related members
    21  during the taxable year to the extent deductible in calculating  federal
    22  taxable income.
    23    (B)  Exceptions.  (i) The adjustment required in this subsection shall
    24  not apply to the portion of the royalty payment that the taxpayer estab-
    25  lishes, by clear and convincing evidence of the type  and  in  the  form
    26  specified  by the commissioner, meets all of the following requirements:
    27  (I) the related member was subject to tax in this state or another state
    28  or possession of the United States or a foreign nation or some  combina-
    29  tion  thereof  on  a  tax  base  that included the royalty payment paid,
    30  accrued or incurred by the taxpayer; (II) the related member during  the
    31  same  taxable year directly or indirectly paid, accrued or incurred such
    32  portion to a person that is not a related member; and (III)  the  trans-
    33  action  giving  rise to the royalty payment between the taxpayer and the
    34  related member was undertaken for a valid business purpose.
    35    (ii) The adjustment required in this subsection shall not apply if the
    36  taxpayer establishes, by clear and convincing evidence of the  type  and
    37  in  the form specified by the commissioner, that: (I) the related member
    38  was subject to tax on or measured by its net income  in  this  state  or
    39  another  state  or  possession  of the United States or some combination
    40  thereof; (II) the tax base for said tax  included  the  royalty  payment
    41  paid,  accrued  or  incurred  by  the  taxpayer; and (III) the aggregate
    42  effective rate of tax applied to the related member in  those  jurisdic-
    43  tions  is  no less than eighty percent of the statutory rate of tax that
    44  applied to the taxpayer under section  fourteen  hundred  fifty-five  of
    45  this article for the taxable year.
    46    (iii)  The  adjustment  required in this subsection shall not apply if
    47  the taxpayer establishes, by clear and convincing evidence of  the  type
    48  and  in  the  form  specified by the commissioner, that: (I) the royalty
    49  payment was paid, accrued or incurred  to  a  related  member  organized
    50  under  the  laws  of  a  country  other than the United States; (II) the
    51  related member's income from the transaction was subject to a comprehen-
    52  sive income tax treaty between such country and the United States; (III)
    53  the related member was subject to tax in a foreign nation on a tax  base
    54  that  included  the  royalty  payment  paid,  accrued or incurred by the
    55  taxpayer; (IV) the related member's  income  from  the  transaction  was
    56  taxed in such country at an effective rate of tax at least equal to that

        S. 3456                            39
     1  imposed  by this state; and (V) the royalty payment was paid, accrued or
     2  incurred pursuant to a transaction that was undertaken for a valid busi-
     3  ness purpose and using terms that reflect an arm's length relationship.
     4    (iv) The adjustment required in this subsection shall not apply if the
     5  taxpayer and the commissioner agree in writing to the application or use
     6  of alternative adjustments or computations. The commissioner may, in his
     7  or  her  discretion,  agree  to  the  application  or use of alternative
     8  adjustments or computations when he or she concludes that in the absence
     9  of such agreement the income of  the  taxpayer  would  not  be  properly
    10  reflected.
    11    (t) For taxable years beginning after December thirty-first, two thou-
    12  sand  two,  upon  the disposition of property to which subsection (r) of
    13  this section applies, the amount of  any  gain  or  loss  includible  in
    14  entire net income shall be adjusted to reflect the inclusions and exclu-
    15  sions   from  entire  net  income  pursuant  to  paragraph  thirteen  of
    16  subsection (b) of this section attributable to such property.
    17    (u) For purposes of subsections (r) and (t) of this section, qualified
    18  resurgence zone property shall  mean  qualified  property  described  in
    19  paragraph  two  of  subsection  k of section 168 of the internal revenue
    20  code substantially all of the use of which is in the resurgence zone, as
    21  defined below, and is in the active conduct of a trade  or  business  by
    22  the  taxpayer  in such zone, and the original use of which in the resur-
    23  gence zone commences with the taxpayer after December thirty-first,  two
    24  thousand two. The resurgence zone shall mean the area of New York county
    25  bounded  on  the  south  by  a line running from the intersection of the
    26  Hudson River with the Holland Tunnel, and running thence east  to  Canal
    27  Street,  then running along the centerline of Canal Street to the inter-
    28  section of the Bowery and Canal Street, running thence in a southeaster-
    29  ly direction diagonally across Manhattan Bridge Plaza, to the  Manhattan
    30  Bridge  and  thence  along the centerline of the Manhattan Bridge to the
    31  point where the centerline of the Manhattan Bridge would intersect  with
    32  the  easterly bank of the East River, and bounded on the north by a line
    33  running from the intersection of  the  Hudson  River  with  the  Holland
    34  Tunnel and running thence north along West Avenue to the intersection of
    35  Clarkson  Street  then  running  east  along  the centerline of Clarkson
    36  Street to the intersection of  Washington  Avenue,  then  running  south
    37  along  the  centerline  of Washington Avenue to the intersection of West
    38  Houston Street, then east along the centerline of West  Houston  Street,
    39  then  at  the intersection of the Avenue of the Americas continuing east
    40  along the centerline of East Houston Street to the easterly bank of  the
    41  East River.
    42    (v)  Disallowed investment proceeds from a REIT or RIC. (1)(A) As used
    43  in this subsection, the term "REIT" means a real estate investment trust
    44  as defined in section eight hundred fifty-six of  the  internal  revenue
    45  code.
    46    (B)  As  used  in  this  subsection,  the term "RIC" means a regulated
    47  investment company as defined in section eight hundred fifty-one of  the
    48  internal revenue code.
    49    (C)  As used in this subsection, the term "REIT holding company" means
    50  a corporation that (i) owns, directly or indirectly, over fifty  percent
    51  of  the  capital stock of a REIT, or (ii) in connection with one or more
    52  other corporations in its affiliated group (as such term is  defined  in
    53  section fifteen hundred four of the internal revenue code without regard
    54  to the exclusions provided for in subsection (b) of such section fifteen
    55  hundred four), owns over fifty percent of the capital stock of a REIT.

        S. 3456                            40
     1    (D) As used in this subsection, the term "RIC holding company" means a
     2  corporation that (i) owns, directly or indirectly, over fifty percent of
     3  the capital stock of a RIC, or (ii) in connection with one or more other
     4  corporations in its affiliated group (as such term is defined in section
     5  fifteen  hundred four of the internal revenue code without regard to the
     6  exclusions provided for  in  subsection  (b)  of  such  section  fifteen
     7  hundred four), owns over fifty percent of the capital stock of a RIC.
     8    (2)  For  purposes  of computing entire net income or other applicable
     9  taxable base, there shall be  no  deduction  for  disallowed  investment
    10  proceeds as defined in paragraphs three and four of this subsection.
    11    (3)  For  purposes of the deduction of gains in excess of losses under
    12  subparagraph (iii)  of  paragraph  eleven  of  subsection  (e)  of  this
    13  section,  disallowed investment proceeds means (A) gain or loss from the
    14  disposition of an ownership interest in a REIT, (B) gain  or  loss  from
    15  the  disposition of an ownership interest in a RIC, and (C) gain or loss
    16  from the disposition of an ownership interest in a REIT holding  company
    17  or  a RIC holding company to the extent the gain or loss is attributable
    18  to such holding company's ownership interest in a REIT or a RIC.
    19    (4) For purposes of the deduction of dividend income  from  subsidiary
    20  capital under subparagraph (ii) of paragraph eleven of subsection (e) of
    21  this  section, disallowed investment proceeds means (A) dividends from a
    22  REIT, and (B) dividends from a RIC, (C) dividends from  a  REIT  holding
    23  company or a RIC holding company to the extent the dividends are attrib-
    24  utable to such holding company's ownership interest in a REIT or a RIC.
    25    (5) Notwithstanding paragraphs three and four of this subsection,
    26    (A)  disallowed  investment  proceeds  shall not include any dividends
    27  from, or attributable to, a REIT or a RIC required to be included  in  a
    28  combined  report  pursuant  to subdivisions five or seven of section two
    29  hundred nine of this chapter to the extent such dividends were  included
    30  in the computation of combined entire net income; and
    31    (B) a banking corporation, or a group of banking corporations properly
    32  included  in a combined return, with taxable assets (or combined taxable
    33  assets in the case of a combined return) for the taxable year  of  eight
    34  billion  dollars  or  less  shall  not  have  any  disallowed investment
    35  proceeds.
    36    § 1453-A. Computation of alternative entire net income.  (a)  Alterna-
    37  tive entire net income means entire net income as determined pursuant to
    38  section  fourteen  hundred  fifty-three of this article, except that the
    39  deductions described in paragraphs eleven and twelve of  subsection  (e)
    40  of  section  fourteen  hundred  fifty-three of this article shall not be
    41  allowed.
    42    (b) Any election made pursuant to paragraph two of subsection  (b)  of
    43  section  fourteen hundred fifty-four of this article with respect to the
    44  modification provided for in subsection (f) of section fourteen  hundred
    45  fifty-three  of  this  article  shall  be  deemed  to have been made for
    46  purposes of computing alternative entire net income.
    47    § 1454. Allocation. (a) In general. If a taxpayer's entire net income,
    48  alternative entire net income, or taxable assets are derived from  busi-
    49  ness  carried  on  within and without the state, the taxpayer shall, for
    50  purposes of computing allocation percentages, compute payroll, receipts,
    51  and deposits percentages in accordance with the following rules:
    52    (1) The taxpayer shall ascertain the percentage which  eighty  percent
    53  of  the  total  wages,  salaries and other personal service compensation
    54  during the taxable year of employees within  the  state,  except  wages,
    55  salaries  and  other  personal service compensation of general executive
    56  officers, bears to the total wages, salaries and other personal  service

        S. 3456                            41
     1  compensation  during  the  taxable  year of all the taxpayer's employees
     2  within and without the state, except wages, salaries and other  personal
     3  service compensation of general executive officers.
     4    (2) (A) The taxpayer shall ascertain the percentage which the receipts
     5  of the taxpayer arising during the taxable year from:
     6    (i)  loans  (including  a  taxpayer's  portion of a participation in a
     7  loan) and financing leases within the  state,  and  all  other  business
     8  receipts earned within the state, bear to
     9    (ii) the total amount of the taxpayer's receipts from loans (including
    10  a  taxpayer's portion of a participation in a loan) and financing leases
    11  and all other business receipts within and without the state.
    12    (B) All interest from loans and financing leases is located where  the
    13  greater  portion  of  income  producing  activity related to the loan or
    14  financing lease occurred; provided, however:
    15    (i) In the case of a taxpayer described in paragraph one, two,  three,
    16  four,  five  or  seven  of  subsection  (a)  of section fourteen hundred
    17  fifty-two of this article, a loan or financing lease attributed by  such
    18  taxpayer  to a branch without the state shall be presumed to be properly
    19  so attributed provided that such presumption may be rebutted if the  tax
    20  commission  demonstrates  that  the  greater portion of income producing
    21  activity related to the loan or financing lease did not  occur  at  such
    22  branch.  Where such presumption has been rebutted, the loan or financing
    23  lease shall be presumed to be within this state if the  taxpayer  had  a
    24  branch  within  this  state  at the time the loan or financing lease was
    25  made. The taxpayer may rebut such presumption by demonstrating that  the
    26  greater  portion  of  income  producing  activity related to the loan or
    27  financing lease did not occur within the state. In the case of a loan or
    28  financing lease which is recorded on the books of a  place  without  the
    29  state  which  is  not  a  branch,  it shall be presumed that the greater
    30  portion of income producing activity related to such loan  or  financing
    31  lease  occurred  within  this  state if the taxpayer had a branch within
    32  this state at the time the loan or financing lease was made. The taxpay-
    33  er may rebut such presumption by demonstrating that the greater  portion
    34  of  income producing activity related to the loan or financing lease did
    35  not occur within this state.
    36    (ii) In the case of a taxpayer described in paragraph six or  nine  of
    37  subsection  (a) of section fourteen hundred fifty-two of this article, a
    38  loan or financing lease attributed by  such  taxpayer  to  a  bona  fide
    39  office  without the state shall be presumed to be properly so attributed
    40  provided that such presumption may be rebutted  if  the  tax  commission
    41  demonstrates  that  the  greater  portion  of  income producing activity
    42  related to the loan or financing lease did not occur without this state.
    43    (C) Receipts from  lease  transactions  other  than  financing  leases
    44  referred  to  in subparagraph (B) are located where the property subject
    45  to the lease is located.
    46    (D) (i) Interest, and fees and penalties in the  nature  of  interest,
    47  from  bank, credit, travel and entertainment card receivables are earned
    48  within the state if the mailing  address  of  the  card  holder  in  the
    49  records of the taxpayer is in the state;
    50    (ii)  Service  charges  and fees from such cards are earned within the
    51  state if the mailing address of the card holder in the  records  of  the
    52  taxpayer is in the state; and
    53    (iii)  Receipts from merchant discounts are earned within the state if
    54  the merchant is located within the state.
    55    (E) The portion of total net  gains  and  other  income  from  trading
    56  activities  (including  but not limited to foreign exchange, options and

        S. 3456                            42
     1  financial futures), and from investment activities which  is  attributed
     2  within  the  state  shall  be  ascertained by multiplying such total net
     3  gains and other income by a fraction the numerator of which is the aver-
     4  age  value  of trading assets and investment assets attributable to this
     5  state and the denominator of which is the average value of  all  trading
     6  and  investment assets. A trading asset or investment asset is attribut-
     7  able to this state if the greater portion of income  producing  activity
     8  related  to  the  trading  asset or investment asset occurred within the
     9  state.
    10    (F) Fees or charges from the issuance of letters of credit,  travelers
    11  checks  and  money orders are earned within the state if such letters of
    12  credit, travelers checks or money orders are issued within the state.
    13    (G) Rules for receipts from certain services to investment  companies.
    14  (1)  For taxable years beginning on or after January first, two thousand
    15  one, the portion of receipts received from an investment company arising
    16  from the sale of management, administration or distribution services  to
    17  such investment company determined in accordance with clause two of this
    18  subparagraph shall be deemed to arise from services performed within the
    19  state (such portion referred to herein as the New York portion).
    20    (2) The New York portion shall be the product of (i) the total of such
    21  receipts from the sale of such services and (ii) a fraction. The numera-
    22  tor  of  that fraction is the sum of the monthly percentages (as defined
    23  hereinafter) determined for each month of the investment company's taxa-
    24  ble year for federal income tax purposes which taxable year ends  within
    25  the  taxable  year of the taxpayer (but excluding any month during which
    26  the investment company had no outstanding shares).  The monthly percent-
    27  age for each such month is determined by  dividing  (i)  the  number  of
    28  shares  in the investment company which are owned on the last day of the
    29  month by shareholders which are domiciled in the state by (ii) the total
    30  number of shares in the investment company outstanding on that date. The
    31  denominator of the fraction is the number of such monthly percentages.
    32    (3)(i) For purposes of this subparagraph the term "domicile",  in  the
    33  case  of an individual shall have the meaning ascribed to it under arti-
    34  cle twenty-two of this chapter; an estate or trust is domiciled  in  the
    35  state  if it is a resident estate or trust as defined in paragraph three
    36  of subsection (b) of section six hundred five of this chapter;  a  busi-
    37  ness entity is domiciled in the state if the location of the actual seat
    38  of  management or control is in the state. It shall be presumed that the
    39  domicile of a shareholder, with respect to any month, is his, her or its
    40  mailing address on the records of the investment company as of the  last
    41  day of such month.
    42    (ii)  For purposes of this subparagraph, the term "investment company"
    43  shall mean a regulated investment company, as defined in section 851  of
    44  the internal revenue code, and a partnership to which section 7704(a) of
    45  the  internal  revenue  code applies (by virtue of section 7704(c)(3) of
    46  such code) and which meets the requirements of section  851(b)  of  such
    47  code.  The  preceding  sentence shall be applied to the taxable year for
    48  federal income tax purposes of the business entity which is asserted  to
    49  constitute  an  investment company which ends within the taxable year of
    50  the taxpayer.
    51    (iii) For purposes of this subparagraph, the term  "receipts  from  an
    52  investment  company"  includes amounts received directly from an invest-
    53  ment company as well as amounts received from the shareholders  in  such
    54  investment company, in their capacity as such.
    55    (iv) For purposes of this subparagraph, the term "management services"
    56  means  the  rendering  of  investment  advice  to an investment company,

        S. 3456                            43
     1  making determinations as to when sales and purchases of  securities  are
     2  to  be  made  on  behalf  of  an  investment  company, or the selling or
     3  purchasing of securities constituting assets of an  investment  company,
     4  and  related  activities, but only where such activity or activities are
     5  performed pursuant to a contract with  the  investment  company  entered
     6  into  pursuant to section 15(a) of the federal investment company act of
     7  nineteen hundred forty, as amended.
     8    (v)  For  purposes  of  this  subparagraph,  the  term   "distribution
     9  services" means the services of advertising, servicing investor accounts
    10  (including  redemptions),  marketing  shares  or  selling  shares  of an
    11  investment company, but, in the case of advertising, servicing  investor
    12  accounts  (including  redemptions)  or marketing shares, only where such
    13  service is performed by a person who is (or was, in the case of a closed
    14  end company) also engaged in the service of selling such shares. In  the
    15  case  of  an  open  end  company, such service of selling shares must be
    16  performed pursuant to a contract entered into pursuant to section  15(b)
    17  of  the  federal  investment  company  act of nineteen hundred forty, as
    18  amended.
    19    (vi) For purposes  of  this  subparagraph,  the  term  "administration
    20  services"  includes  clerical, accounting, bookkeeping, data processing,
    21  internal auditing, legal and tax services performed  for  an  investment
    22  company  but only if the provider of such service or services during the
    23  taxable year in which such service  or  services  are  sold  also  sells
    24  management  or  distribution  services,  as  defined in item (v) of this
    25  clause, to such investment company.
    26    (H) All receipts from the performance of  services  not  described  in
    27  this clause are earned within the state if the services are performed in
    28  the  state.    When  a  service is performed both within and without the
    29  state, the receipts shall be allocated within and without the  state  in
    30  accordance with rules and regulations of the tax commission.
    31    (I)  All other receipts not described in subparagraphs (B) through (H)
    32  of this paragraph shall be attributable within and without the state  in
    33  accordance with rules and regulations issued by the commissioner.
    34    (3)  The  taxpayer  shall  ascertain  the percentage which the average
    35  value of deposits maintained at branches within  the  state  during  the
    36  taxable  year, bears to the average value of all the taxpayer's deposits
    37  maintained at branches within and without the state during  the  taxable
    38  year.
    39    (4)  Each  percentage  computed  pursuant  to this subsection shall be
    40  computed on a cash or accrual basis according to the method of  account-
    41  ing  used  for  the  taxable year. The receipts percentage shall include
    42  only receipts which are included in alternative entire  net  income  for
    43  the  taxable  year.  The  deposits and payroll percentages shall include
    44  only deposits and payroll the expenses of  which  are  included  in  the
    45  computation of alternative entire net income for the taxable year.
    46    (5) For purposes of this section:
    47    (A)  The term "bona fide office" means an office at which the taxpayer
    48  carries on its business in a regular and systematic manner and which  is
    49  continuously maintained, occupied and used by employees of the taxpayer.
    50    (B)  The  term  "branch" means a bona fide office which is used by the
    51  taxpayer on a regular and systematic basis to (i) approve loans (regard-
    52  less of whether the approval of certain classes of loans requires review
    53  or final approval by another office of the taxpayer), (ii)  accept  loan
    54  repayments,  (iii)  disburse  funds,  and (iv) conduct one or more other
    55  functions of a banking business.

        S. 3456                            44
     1    (6) If it shall appear to  the  tax  commission  that  the  allocation
     2  percentage  determined  in  subsection  (b), (c), or (d) of this section
     3  does not properly reflect the activity, business, income or assets of  a
     4  taxpayer within the state, the tax commission shall be authorized in its
     5  discretion  to  adjust  it  by  (1) excluding one or more of the factors
     6  therein, (2) including one or more other factors, or (3) any other simi-
     7  lar or different method calculated to effect a  fair  and  proper  allo-
     8  cation of the income or assets reasonably attributable to the state.
     9    (7)  The tax commission from time to time shall publish all rulings of
    10  general  public  interest  with  respect  to  any  application  of   the
    11  provisions of paragraph six of this subsection.
    12    (b) Allocation of entire net income.
    13    (1) If a taxpayer's entire net income is derived from business carried
    14  on  both  within  and  without  the  state, the portion thereof which is
    15  derived from business carried on within the state shall be determined by
    16  multiplying its entire net income by the  income  allocation  percentage
    17  determined  as follows: add the percentages ascertained under paragraphs
    18  one, two and three of subsection (a) of this section, plus, in the  case
    19  of  a  taxpayer  other  than  a  New  York  S corporation, an additional
    20  percentage equal to the receipts percentage ascertained under  paragraph
    21  two  of such subsection and an additional percentage equal to the depos-
    22  its percentage ascertained under paragraph three of such subsection, and
    23  divide the result by the number of percentages so added together.
    24    (1-a)  Notwithstanding  the  provisions  of  paragraph  one  of   this
    25  subsection,  each  banking  corporation  described  in paragraph nine of
    26  subsection (a) of section fourteen hundred  fifty-two  of  this  article
    27  subject  to  the tax imposed by this article that substantially provides
    28  management, administrative or distribution  services  to  an  investment
    29  company,  as such terms are defined in subparagraph (G) of paragraph two
    30  of subsection (a) of this section, shall determine the  portion  of  its
    31  entire  net  income derived from business carried on within the state by
    32  multiplying such income by an income allocation percentage  obtained  as
    33  follows:
    34    (A)  For  taxable years beginning on or after January first, two thou-
    35  sand six and before the first day of January,  two  thousand  seven,  by
    36  adding the following percentages:
    37    (i)  the  product  of  seventeen percent and the percentage determined
    38  under paragraph one of subsection (a) of this section,
    39    (ii) the product of fifty percent and the percentage determined  under
    40  paragraph two of subsection (a) of this section, and
    41    (iii)  the  product  of thirty-three percent and the percentage deter-
    42  mined under paragraph three of subsection (a) of this section.
    43    (B) For taxable years beginning on or after January first,  two  thou-
    44  sand  seven  and before the first day of January, two thousand eight, by
    45  adding the following percentages:
    46    (i) the product of ten percent and  the  percentage  determined  under
    47  paragraph one of subsection (a) of this section,
    48    (ii)  the  product  of  seventy  percent and the percentage determined
    49  under paragraph two of subsection (a) of this section, and
    50    (iii) the product of twenty  percent  and  the  percentage  determined
    51  under paragraph three of subsection (a) of this section.
    52    (C)  For  taxable years beginning on or after January first, two thou-
    53  sand eight,  by  the  percentage  ascertained  under  paragraph  two  of
    54  subsection (a) of this section.
    55    (2)  (A) In lieu of the modification provided for in subsection (f) of
    56  section fourteen hundred fifty-three of this  article,  (relating  to  a

        S. 3456                            45
     1  modification  for  the  adjusted eligible net income of an international
     2  banking facility), a taxpayer may, in the manner prescribed by  the  tax
     3  commission,  elect  to  modify  on an annual basis its income allocation
     4  percentage  in  the  manner  described in clauses (i), (ii) and (iii) of
     5  this subparagraph:
     6    (i) wages, salaries and other personal service  compensation  properly
     7  attributable  to  the  production  of  eligible gross income of the tax-
     8  payer's international banking facility shall  not  be  included  in  the
     9  computation  of  wages, salaries and other personal service compensation
    10  of employees within the state,
    11    (ii) receipts properly attributable  to  the  production  of  eligible
    12  gross  income of the taxpayer's international banking facility shall not
    13  be included in the computation of receipts within the state, and
    14    (iii) deposits from foreign persons which are properly attributable to
    15  the production of eligible gross income of the taxpayer's  international
    16  banking  facility  shall  not be included in the computation of deposits
    17  maintained at branches within the state.
    18    (B) For purposes of this paragraph, the term "eligible  gross  income"
    19  refers  to  such  term  as set out in subsection (f) of section fourteen
    20  hundred fifty-three of  this  article  except  that  the  term  "foreign
    21  person"  as  defined in paragraph eight of such subsection (f) shall not
    22  include a foreign branch of the taxpayer and in no  event  shall  trans-
    23  actions  between  the  taxpayer's international banking facility and its
    24  foreign branches be considered.
    25    (c) Allocation of alternative  entire  net  income.  If  a  taxpayer's
    26  alternative  entire  net income is derived from business carried on both
    27  within and without the state, the portion thereof which is derived  from
    28  business  carried on within the state shall be determined by multiplying
    29  its alternative entire net income by the alternative entire  net  income
    30  allocation percentage determined as follows:
    31    (1) Recompute the payroll percentage under paragraph one of subsection
    32  (a)  of  this section without giving consideration to the phrase "eighty
    33  percent of," add to the resulting percentage the percentages ascertained
    34  under paragraphs two and three of such subsection, and divide the result
    35  by the number of percentages so added together.
    36    (2) When an election has  been  made  pursuant  to  paragraph  two  of
    37  subsection (b) of this section (relating to international banking facil-
    38  ities) the taxpayer shall make the modifications described in such para-
    39  graph  for  purposes  of  its  alternative  entire net income allocation
    40  percentage.
    41    (3) For taxable years beginning on or after January first,  two  thou-
    42  sand  six,  each  banking  corporation  described  in  paragraph nine of
    43  subsection (a) of section fourteen hundred  fifty-two  of  this  article
    44  subject  to  the tax imposed by this article that substantially provides
    45  management, administrative or distribution  services  to  an  investment
    46  company,  as such terms are defined in subparagraph (G) of paragraph two
    47  of subsection (a) of this section, shall determine the  portion  of  its
    48  alternative  entire  net  income derived from business carried on within
    49  the state by multiplying such income by the percentage  ascertained  for
    50  the  taxable  year  under  paragraph  one-a  of  subsection  (b) of this
    51  section, except that in computing such percentage (A) for taxable  years
    52  beginning  before  January  first,  two thousand eight, no consideration
    53  shall be given to the phrase "eighty percent of"  in  paragraph  one  of
    54  subsection  (a)  of this section, (B) for taxable years beginning before
    55  January first, two thousand eight, when an election has been made pursu-
    56  ant to paragraph two of subsection (b) of this section (relating  to  an

        S. 3456                            46
     1  international  banking  facility)  the taxpayer shall make the modifica-
     2  tions described in such paragraph, and (C) for taxable  years  beginning
     3  on or after January first, two thousand eight, when an election has been
     4  made pursuant to paragraph two of subsection (b) of this section (relat-
     5  ing  to  an  international banking facility) the taxpayer shall make the
     6  modifications described in clause (ii) of subparagraph (A) of such para-
     7  graph.
     8    (d) Allocation of taxable assets. If the taxpayer's taxable assets are
     9  derived from business carried on both within and without the state,  the
    10  portion  thereof  which  is  derived from business carried on within the
    11  state shall be determined by multiplying its taxable assets by an  asset
    12  allocation  percentage determined in the same manner as the income allo-
    13  cation percentage under subsection (b) of this section, determined as if
    14  the election provided for in paragraph two of such subsection  has  been
    15  made,  except  that the modifications described in clauses (i), (ii) and
    16  (iii) of subparagraph (A) of such paragraph shall not be made.
    17    § 1455. Computation of  tax.  The  tax  imposed  by  section  fourteen
    18  hundred fifty-one of this article shall be, in the case of each taxpayer
    19  other than a New York S corporation, the greater of the following compu-
    20  tations:
    21    (a)  Basic  tax.  For  taxable  years beginning before July first, two
    22  thousand, nine percent of the  taxpayer's  entire  net  income,  or  the
    23  portion  thereof  allocated to this state, for the taxable year, or part
    24  thereof. For taxable years beginning after June thirtieth, two  thousand
    25  and  before  July first, two thousand one, eight and one-half percent of
    26  the taxpayer's entire net income, or portion thereof allocated  to  this
    27  state,  for  the taxable year, or part thereof. For taxable years begin-
    28  ning after June thirtieth, two thousand one and before July  first,  two
    29  thousand  two,  eight  percent  of  the taxpayer's entire net income, or
    30  portion thereof allocated to this state, for the taxable year,  or  part
    31  thereof.  For taxable years beginning after June thirtieth, two thousand
    32  two and before January first, two thousand  seven,  seven  and  one-half
    33  percent  of  the  taxpayer's entire net income, or portion thereof allo-
    34  cated to this state, for the taxable year, or part thereof. For  taxable
    35  years beginning on or after January first, two thousand seven, seven and
    36  one-tenth  percent  of  the taxpayer's entire net income, or the portion
    37  thereof allocated to this state, for the taxable year, or part thereof.
    38    (b) Alternative minimum tax. If the tax under subsection (a)  of  this
    39  section  is less than any of the following amounts, the tax shall be the
    40  larger of the following amounts:
    41    (1) (i) Except in the case of a taxpayer  described  in  clause  (ii),
    42  (iii),  or  (iv) of this paragraph, one-tenth of a mill upon each dollar
    43  of taxable assets, or the portion thereof allocated to this state.
    44    (ii) In the case of a taxpayer whose net worth ratio is less than five
    45  but greater than or equal to four percent and  whose  total  assets  are
    46  comprised of thirty-three percent or more of mortgages, one-twenty-fifth
    47  of  a  mill  upon  each dollar of taxable assets, or the portion thereof
    48  allocated to this state.
    49    (iii) In the case of a taxpayer whose net worth  ratio  is  less  than
    50  four  percent  and  whose  total  assets  are  comprised of thirty-three
    51  percent or more of mortgages, one-fiftieth of a mill upon each dollar of
    52  taxable assets, or the portion thereof allocated to this state.
    53    (iv) For taxable years beginning on or after January  first,  nineteen
    54  hundred  eighty-five, a taxpayer (whether or not a qualified institution
    55  as defined in subparagraph (B) of paragraph five of  subsection  (f)  of
    56  section  four  hundred  six  of  the  federal  national  housing act, as

        S. 3456                            47
     1  amended, or as defined in paragraph two of  subsection  (i)  of  section
     2  thirteen  of the federal deposit insurance act, as amended) shall not be
     3  subject to the provisions of this paragraph  for  that  portion  of  the
     4  taxable  year  in which it had outstanding net worth certificates issued
     5  in accordance with paragraph five of  subsection  (f)  of  section  four
     6  hundred  six  of the federal national housing act, as amended, or issued
     7  in accordance with subsection (i) of section  thirteen  of  the  federal
     8  deposit insurance act, as amended.
     9    (v) For the purposes of this article:
    10    (A)  The  term  "taxable assets" shall mean the average value of total
    11  assets reduced by any amount of money or other property received from or
    12  attributable to amounts received  from  the  federal  deposit  insurance
    13  corporation pursuant to subsection (c) of section thirteen of the feder-
    14  al  deposit  insurance  act, as amended, or the federal savings and loan
    15  insurance corporation pursuant to paragraph one, two, three or  four  of
    16  subsection (f) of section four hundred six of the federal national hous-
    17  ing  act,  as  amended. Total assets are those assets which are properly
    18  reflected on a balance sheet the income or expenses of which are proper-
    19  ly reflected (or would have been properly reflected if not fully  depre-
    20  ciated  or  expensed  or depreciated or expensed to a nominal amount) in
    21  the computation of alternative entire net income for the taxable year or
    22  in the computation of the eligible net income of the taxpayer's interna-
    23  tional banking facility for the taxable year.
    24    (B) The term "net worth ratio" shall mean the percentage of net  worth
    25  to  assets  on  the  last  day of the taxable year. The term "net worth"
    26  means the  sum  of  preferred  stock,  common  stock,  surplus,  capital
    27  reserves,  undivided  profits,  mutual capital certificates, reserve for
    28  contingencies, reserve for loan losses and reserve for  security  losses
    29  minus  assets  classified loss. The term "assets" means the sum of mort-
    30  gage loans, nonmortgage loans, repossessed assets, real estate held  for
    31  development  or investment or resale, cash, deposits, investment securi-
    32  ties, fixed assets and other assets (such as financial futures, goodwill
    33  and other intangible assets) minus assets classified loss. In  no  event
    34  shall assets be reduced by reserves for losses.
    35    (C)  The  term  "mortgages"  shall mean loans secured by real property
    36  within or without the state, participations in and securities  collater-
    37  alized by pools of residential mortgages, whether or not issued or guar-
    38  anteed  by a United States government agency, and loans secured by stock
    39  in a cooperative housing corporation. The  percentage  of  total  assets
    40  comprised  of  mortgages  shall  be  an amount equal to the ratio of the
    41  average of the four quarterly balances of such mortgages  ending  within
    42  the  taxable  year, to the average of the four quarterly balances of all
    43  assets ending within the taxable year. Such quarterly balances shall  be
    44  computed  in  the  same  manner  as the report of condition required for
    45  federal deposit insurance corporation or federal savings and loan insur-
    46  ance corporation purposes, whether or not such report is required.   For
    47  taxable  periods  of less than one year, the taxpayer shall compute such
    48  ratio using the number of such quarterly  balances  ending  within  such
    49  taxable period.
    50    (2)  Three percent of the taxpayer's alternative entire net income, or
    51  portion thereof allocated to this state, for the taxable year,  or  part
    52  thereof.
    53    (3) Two hundred fifty dollars.
    54    (c)  New York S corporations. (1) General. In the case of a New York S
    55  corporation, the tax imposed by section fourteen  hundred  fifty-one  of
    56  this  article  shall  be  the  higher  of  (i)  the amount prescribed in

        S. 3456                            48
     1  subsection (a) of this section reduced by  the  article  twenty-two  tax
     2  equivalent   or  (ii)  the  amount  prescribed  in  paragraph  three  of
     3  subsection (b) of this section.
     4    (2) The article twenty-two tax equivalent is the amount computed under
     5  subsection  (a) of this section by substituting for the rate therein the
     6  rate of 7.875 percent.
     7    (3) Termination year. In the case of a termination year, the  tax  for
     8  the  S  short  year  shall  be  computed  under  paragraph  one  of this
     9  subsection without regard to the amount prescribed in paragraph three of
    10  subsection (b) of this section, and the tax for the C short  year  shall
    11  be the larger of the taxes computed under subsection (a) of this section
    12  or  paragraph  one  or  two of subsection (b) of this section, but in no
    13  event shall the sum of the tax for the S short year and the tax for  the
    14  C  short  year  be  less  than  the tax prescribed in paragraph three of
    15  subsection (b) of this section.
    16    § 1455-A. Tax surcharge. (a) In addition  to  the  tax  imposed  under
    17  section  fourteen  hundred  fifty-one  of  this article, there is hereby
    18  imposed, (1) for taxable years ending  after  June  thirtieth,  nineteen
    19  hundred  eighty-nine  and  before July first, nineteen hundred ninety, a
    20  tax surcharge at the rate of two and one-half percent of the tax imposed
    21  under  section  fourteen  hundred  fifty-one  of  this  article,  before
    22  deduction  of  any  credits  against  tax otherwise allowable under this
    23  article for all or any parts of such  taxable  years,  (2)  for  taxable
    24  years  ending  after  June thirtieth, nineteen hundred ninety and before
    25  July first, nineteen hundred ninety-four, and until such rate is  super-
    26  seded, a tax surcharge at the rate of fifteen percent of the tax imposed
    27  under   section  fourteen  hundred  fifty-one  of  this  article,  after
    28  deduction of any credits against  tax  otherwise  allowable  under  this
    29  article,  (3)  for  taxable  years ending after June thirtieth, nineteen
    30  hundred ninety-four and before July first, nineteen hundred ninety-five,
    31  and until such rate is superseded, a tax surcharge at the  rate  of  ten
    32  percent  of  the tax imposed under section fourteen hundred fifty-one of
    33  this article, after deduction of any credits against the  tax  otherwise
    34  allowable  under  this  article, (4) for taxable years ending after June
    35  thirtieth, nineteen hundred ninety-five and before July first,  nineteen
    36  hundred  ninety-six,  and until such rate is superseded, a tax surcharge
    37  at the rate of five percent of the tax imposed  under  section  fourteen
    38  hundred  fifty-one  of  this  article,  after  deduction  of any credits
    39  against the tax otherwise allowable under this article and (5) for taxa-
    40  ble years ending after June thirtieth, nineteen hundred  ninety-six  and
    41  before July first, nineteen hundred ninety-seven, a tax surcharge at the
    42  rate  of  zero percent of the tax imposed under section fourteen hundred
    43  fifty-one of this article, after deduction of any  credits  against  the
    44  tax  otherwise  allowable under this article. However, the tax surcharge
    45  imposed by this section at the rate of two and  one-half  percent  shall
    46  not  be  imposed  upon any taxpayer for more than twelve months, the tax
    47  surcharge imposed by this section at the rate of fifteen  percent  shall
    48  not  be  imposed upon any taxpayer for more than forty-eight months, and
    49  the tax surcharges imposed by this section at the rates of ten  percent,
    50  five  percent  and zero percent shall not, respectively, be imposed upon
    51  any taxpayer for more than twelve months,  and  the  commissioner  shall
    52  prescribe  by  regulation or instructions a method of proration designed
    53  to effectuate such result. The credits against tax  otherwise  allowable
    54  under  section  fourteen  hundred fifty-six of this article shall not be
    55  allowed as a credit against the tax surcharge imposed by this section.

        S. 3456                            49
     1    (b) (1) The  provisions  concerning  returns  under  section  fourteen
     2  hundred  sixty-two  of this article shall be applicable to this section,
     3  except that for purposes of an automatic extension for  six  months  for
     4  filing  a  return covering the taxes imposed by this article, such auto-
     5  matic  extension  shall  be  allowed, for taxable years to which the tax
     6  surcharge imposed by this section apply, only if a taxpayer  files  with
     7  the  commissioner  an  application  for  extension  in  such form as the
     8  commissioner may prescribe and pays on or before the date of such filing
     9  in addition to any other amounts required under this  article,  two  and
    10  one-half  percent,  fifteen  percent,  ten percent, five percent or zero
    11  percent, whichever is the rate applicable to the taxable  year  pursuant
    12  to  subsection  (a) of this section, of the amount properly estimated as
    13  provided in subsection (b) of section fourteen  hundred  sixty-three  of
    14  this article as its tax payable under section fourteen hundred fifty-one
    15  of  this  article, before deduction of any credits against tax otherwise
    16  allowable under section fourteen hundred fifty-six of  this  article  in
    17  the  case  of  the tax surcharge imposed at the rate of two and one-half
    18  percent, and after deduction of any credits against tax otherwise allow-
    19  able under section fourteen hundred fifty-six of  this  article  in  the
    20  case  of  the tax surcharge imposed at the rate of fifteen, ten, five or
    21  zero percent.  The tax surcharge imposed by this section shall be  paya-
    22  ble to the commissioner in full at the time the return is required to be
    23  filed.
    24    (2)  Except  as  otherwise  provided  in  this  section,  all  of  the
    25  provisions of this article, except for section fourteen  hundred  fifty-
    26  five-B  of  this article, presently applicable are applicable to the tax
    27  surcharge imposed by this section with  such  modifications  as  may  be
    28  necessary  to  adapt  such language to the tax surcharge imposed by this
    29  section. Such provisions shall apply with the same force and  effect  as
    30  if those provisions had been set forth in full in this section except to
    31  the extent that any provision is either inconsistent with a provision of
    32  this  section  or  not  relevant  to  the  tax surcharge imposed by this
    33  section and to that end a reference in this article to the  tax  imposed
    34  by section fourteen hundred fifty-one of this article shall be read as a
    35  reference  to  the tax surcharge imposed by this section, and to the sum
    36  of such tax and such tax surcharge in  the  case  of  sections  fourteen
    37  hundred  sixty  and  fourteen hundred sixty-one of this article and such
    38  other provisions requiring such  reading  in  order  to  effectuate  the
    39  purposes  of  this  provision,  unless  a  different  meaning is clearly
    40  required.
    41    (c) Coordination with section fourteen hundred  fifty-five-B  of  this
    42  article.  The  amount  of tax surcharge imposed pursuant to this section
    43  shall not be included in any calculation  of  a  tax  surcharge  imposed
    44  pursuant to section fourteen hundred fifty-five-B of this article.
    45    (d)  Insofar  as  subsection (a) of this section establishes a rate of
    46  fifteen percent in the case of taxable years ending after  June  thirti-
    47  eth,  nineteen  hundred  ninety  and before July first, nineteen hundred
    48  ninety-four and until such rate is superseded, a rate of ten percent  in
    49  the  case of taxable years ending after June thirtieth, nineteen hundred
    50  ninety-four and before July  first,  nineteen  hundred  ninety-five  and
    51  until  such  rate  is  superseded, a rate of five percent in the case of
    52  taxable years ending after June thirtieth, nineteen hundred  ninety-five
    53  and  before  July first, nineteen hundred ninety-six and until such rate
    54  is superseded, and a rate of zero percent in the case of  taxable  years
    55  ending after June thirtieth, nineteen hundred ninety-six and before July
    56  first,  nineteen  hundred ninety-seven, the transition from such rate of

        S. 3456                            50
     1  fifteen percent to such rate of ten  percent,  from  such  rate  of  ten
     2  percent to such rate of five percent, and from such rate of five percent
     3  to such rate of zero percent, shall be deemed to occur, respectively, on
     4  the  first  day of the seventh month of each of such taxable years, with
     5  the result that for purposes of implementation of such changes in rates,
     6  and notwithstanding such subsection (a), there is  hereby  imposed  with
     7  respect  to  all  taxable  years  ending  after June thirtieth, nineteen
     8  hundred ninety-four and before July first, nineteen hundred ninety-five,
     9  including taxable years of fewer than twelve months, a tax surcharge  at
    10  the  rate  of  twelve and one-half percent; there is hereby imposed with
    11  respect to all taxable  years  ending  after  June  thirtieth,  nineteen
    12  hundred  ninety-five and before July first, nineteen hundred ninety-six,
    13  including taxable years of fewer than twelve months, a tax surcharge  at
    14  the rate of seven and one-half percent; and there is hereby imposed with
    15  respect  to  all  taxable  years  ending  after June thirtieth, nineteen
    16  hundred ninety-six and before July first, nineteen hundred ninety-seven,
    17  including taxable years of fewer than twelve months, a tax surcharge  at
    18  the  rate  of  two  and  one-half  percent. In addition, for purposes of
    19  implementation of all the provisions of this section references  to  ten
    20  percent  shall  be  read  as  references to twelve and one-half percent,
    21  references to five percent shall be read  as  references  to  seven  and
    22  one-half  percent and references to zero percent shall be read as refer-
    23  ences to two and one-half percent.
    24    § 1455-B. Temporary metropolitan transportation business tax surcharge
    25  on banks. (a) For the privilege of exercising  its  franchise  or  doing
    26  business  in  the  metropolitan  commuter  transportation  district in a
    27  corporate or organized  capacity,  there  is  hereby  imposed  on  every
    28  taxpayer  subject  to  tax  under  this article, other than a New York S
    29  corporation, for the taxable years commencing on or after January first,
    30  nineteen hundred eighty-two but ending before December thirty-first, two
    31  thousand nineteen, a tax surcharge, in addition to the tax imposed under
    32  section fourteen hundred fifty-one of this article, at the rate of eigh-
    33  teen percent of the tax imposed  under  such  section  fourteen  hundred
    34  fifty-one  of  this  article, for such taxable years or any part of such
    35  taxable years ending  before  December  thirty-first,  nineteen  hundred
    36  eighty-three  after  the  deduction  of  any credits otherwise allowable
    37  under this article, and at the rate of  seventeen  percent  of  the  tax
    38  imposed  under  such  section for such taxable years or any part of such
    39  taxable years ending on or after December thirty-first, nineteen hundred
    40  eighty-three after the deduction  of  any  credits  otherwise  allowable
    41  under  this  article; provided however, that such rates of tax surcharge
    42  shall be applied only to that portion of the tax imposed  under  section
    43  fourteen  hundred  fifty-one  of this article after the deduction of any
    44  credits otherwise allowable under this article which is attributable  to
    45  the  taxpayer's  business  activity  carried  on within the metropolitan
    46  commuter transportation district; and provided, further,  that  the  tax
    47  surcharge imposed by this section shall not be imposed upon any taxpayer
    48  for more than four hundred thirty-two months. Provided however, that for
    49  taxable  years  commencing  on  or  after July first, two thousand, such
    50  surcharge shall be calculated as if the rate of the basic  tax  computed
    51  under  subsection  (a)  of  section  fourteen hundred fifty-five of this
    52  article was nine percent.
    53    (b) If the tax imposed under section  fourteen  hundred  fifty-one  of
    54  this  article  is  derived from business activity carried on both within
    55  and without  the  metropolitan  commuter  transportation  district,  the
    56  portion  of  the tax attributable to business activity carried on in the

        S. 3456                            51
     1  metropolitan commuter transportation district  shall  be  determined  in
     2  accordance with rules and regulations promulgated by the tax commission.
     3    (c)  The  provisions concerning returns under section fourteen hundred
     4  sixty-two of this article shall be applicable to  this  section,  except
     5  that  for purposes of an automatic extension for six months for filing a
     6  return covering the tax surcharge imposed by this section, such automat-
     7  ic extension shall be allowed only if a taxpayer files with the  commis-
     8  sioner  an  application  for extension in such form as said commissioner
     9  may prescribe by regulation and pays on  or  before  the  date  of  such
    10  filing  in  addition  to  any other amounts required under this article,
    11  either ninety percent of the entire tax surcharge required  to  be  paid
    12  under  this  section for the applicable period, or not less than the tax
    13  surcharge shown on the taxpayer's return for the preceding taxable year,
    14  if such preceding taxable year was a taxable year of twelve months.  The
    15  tax  surcharge  imposed  by this section shall be payable to the commis-
    16  sioner in full at the time the return is required to be filed, and  such
    17  tax  surcharge  or  the  balance  thereof, imposed on any taxpayer which
    18  ceases to exercise its franchise or be  subject  to  the  tax  surcharge
    19  imposed by this section shall be payable to the commissioner at the time
    20  the  return  is  required  to be filed, provided such tax surcharge of a
    21  domestic corporation which continues to possess its franchise  shall  be
    22  subject  to  adjustment  as the circumstances may require; all other tax
    23  surcharges of  any  such  taxpayer,  which  pursuant  to  the  foregoing
    24  provisions  of this section would otherwise be payable subsequent to the
    25  time such return is required to be filed, shall nevertheless be  payable
    26  at such time. All of the provisions of this article presently applicable
    27  are applicable to the tax surcharge imposed by this section.
    28    (d) Notwithstanding any contrary provisions of state or local law, the
    29  tax  surcharge  imposed  under  this  section  shall not be allowed as a
    30  deduction in the computation of any state or  local  tax  imposed  under
    31  this  chapter  or  any  chapter  or  local law. Furthermore, the credits
    32  otherwise allowable under this article shall not be allowed against  the
    33  tax surcharge imposed by this section.
    34    (e)  The term metropolitan commuter transportation district as used in
    35  this section shall be defined pursuant to section twelve hundred  sixty-
    36  two of the public authorities law.
    37    §  1456.  Credits.  (a) Credit for servicing certain mortgages.  Every
    38  bank, as defined in section two thousand four hundred two of the  public
    39  authorities law, which shall have entered into a contract with the state
    40  of New York mortgage agency to service mortgages acquired by such agency
    41  pursuant  to the state of New York mortgage agency act, shall have cred-
    42  ited to it annually to apply upon or in lieu of the payment of  any  tax
    43  to which it may be subject under this article an amount equal to two and
    44  ninety-three  one hundredths percentum of the total principal and inter-
    45  est collected by the bank during its taxable year on each such  mortgage
    46  secured by a lien on real estate improved by a one-family to four-family
    47  residential  structure  and an amount equal to the interest collected by
    48  the bank during its taxable year on each such mortgage secured by a lien
    49  on real property improved by a structure occupied as  the  residence  of
    50  five  or more families living independently of each other, multiplied by
    51  a fraction the denominator of which shall be the interest  rate  payable
    52  on  the  mortgage (computed to five decimal places) and the numerator of
    53  which shall be .00125 in the case of such a mortgage  acquired  by  such
    54  agency for less than one million dollars, and .00100 in the case of such
    55  a  mortgage  acquired  by  such  agency for one million dollars or more;
    56  provided, however, that there shall in no case be credited to  any  such

        S. 3456                            52
     1  bank  an  amount  in  excess  of the amount due from such bank for taxes
     2  payable to the state under this article for the taxable year  for  which
     3  such  credit is given. In computing such tax credit for the servicing of
     4  mortgages  on one-family to four-family residential structures, the bank
     5  shall be entitled to no credit for the  collection  of  curtailments  or
     6  payments  in  discharge  of  any such mortgage. For the purposes of this
     7  section, (1) a "curtailment" shall mean amounts paid by  mortgagors  (i)
     8  in excess of the monthly constant due during the month of collection and
     9  (ii)  in  reduction  of the unpaid principal balance of the mortgage; in
    10  the absence of clear evidence to the contrary, amounts paid in excess of
    11  the monthly constant due during the month of collection shall be  deemed
    12  to  be in reduction of the unpaid principal balance of the mortgage; and
    13  (2) "monthly constant" shall mean the amount of principal  and  interest
    14  which  is  due  and  payable according to the mortgage documents on each
    15  periodic payment date.
    16    (b) Eligible business facility credit.
    17    (1) On or after April first, nineteen hundred eighty-three, for  taxa-
    18  ble years beginning before January first, two thousand, a credit against
    19  the  tax  imposed  by  this  article shall be allowed only to a taxpayer
    20  owning or operating an eligible business facility, where  such  taxpayer
    21  has  received a certificate of eligibility for tax credits, or a renewal
    22  or extension thereof, for such facility from  the  New  York  state  job
    23  incentive  board prior to April first, nineteen hundred eighty-three, or
    24  has received a certificate of eligibility for tax credits, or a  renewal
    25  or  extension  thereof,  for such facility from the state tax commission
    26  subsequent to such date pursuant to paragraph eight of this  subsection,
    27  and  only  with  respect to such facility, to be computed as hereinafter
    28  provided.
    29    (2) The amount of the credit allowable in any taxable  year  shall  be
    30  the  sum determined by multiplying the tax otherwise due by a percentage
    31  to be determined by:
    32    (A) ascertaining the percentage which the total of  eligible  property
    33  values  during the period covered by its return, as defined in paragraph
    34  four of this subsection, bears to the average value of all  the  taxpay-
    35  er's real and tangible personal property except for inventory within the
    36  state  during  such  period. For the purposes of this subparagraph only,
    37  the taxpayer's real and tangible personal  property  shall  include  not
    38  only such property owned by the taxpayer but also property rented to it,
    39  and  the  value of rented property shall be deemed to be eight times the
    40  net annual rental rate, that is, the annual  rental  rate  paid  by  the
    41  taxpayer  less  any  annual  rental  rate  received by the taxpayer from
    42  subrentals;
    43    (B) ascertaining the percentage which the total  wages,  salaries  and
    44  other  personal  service  compensation during such period, of employees,
    45  except general executive officers and that portion of employee's  wages,
    46  salaries  and other personal service compensation attributable, directly
    47  or indirectly, to the production of adjusted eligible net  income  which
    48  is  allowed  as  a  deduction  from  entire  net  income as set forth in
    49  subsection (f) of section fourteen hundred fifty-three of this  article,
    50  serving  in  jobs  created  or retained in an eligible area (as the term
    51  "eligible area" was defined  by  section  one  hundred  fifteen  of  the
    52  commerce  law  as  it  existed  on  March thirty-first, nineteen hundred
    53  eighty-three) by such business facility, bears to the total wages, sala-
    54  ries and other personal service compensation, during such period, of all
    55  the taxpayer's employees within  the  state,  except  general  executive
    56  officers; and

        S. 3456                            53
     1    (C)  adding  together  the  percentages so determined and dividing the
     2  result by two; provided, however, that if no wages,  salaries  or  other
     3  personal  service  compensation  were  paid  or incurred by the taxpayer
     4  during such period to employees within  the  state  other  than  general
     5  executive  officers,  subparagraph (B) of this paragraph shall be disre-
     6  garded and the amount of credit allowable shall be determined by  multi-
     7  plying the tax otherwise due by the percentage specified in subparagraph
     8  (A) of this paragraph.
     9    (3) In no event shall the credit herein provided for be allowed in any
    10  amount  which will reduce the tax payable to less than the dollar amount
    11  fixed as a minimum tax by subsection (b)  of  section  fourteen  hundred
    12  fifty-five.
    13    (4) (A) Eligible property values, for the purposes of this subsection,
    14  shall  include  such  part of the value of depreciable real and tangible
    15  personal property included in an eligible business facility  as  repres-
    16  ents:
    17    (i) expenditures paid or incurred by the taxpayer for capital improve-
    18  ments  consisting  of  the  construction,  reconstruction,  erection  or
    19  improvement of real property included in  an  eligible  facility,  which
    20  construction, reconstruction, erection or improvements were commenced on
    21  or after July first, nineteen hundred sixty-eight;
    22    (ii)  in the case of real property leased by the taxpayer from another
    23  party, eight times the portion of the net annual rental  rate  attribut-
    24  able  to  such  construction,  reconstruction,  erection  or improvement
    25  commenced on or after July first, nineteen hundred sixty-eight;
    26    (iii) expenditures paid or incurred by the taxpayer for  the  purchase
    27  of  tangible  personal  property,  other  than  vehicles, included in an
    28  eligible business facility, provided such property was purchased  on  or
    29  after July first, nineteen hundred sixty-eight; and
    30    (iv)  in  the case of tangible personal property, other than vehicles,
    31  leased by the taxpayer from another party and included  in  an  eligible
    32  business  facility, eight times the net annual rental rate, provided the
    33  period for which such property was leased by the taxpayer  began  on  or
    34  after July first, nineteen hundred sixty-eight.
    35    (B)  Provided,  however, eligible property values for purposes of this
    36  subdivision shall not include expenditures paid or  incurred  more  than
    37  one  year  prior  to  the  filing of an application for a certificate of
    38  eligibility pursuant to section one hundred  nineteen  of  the  commerce
    39  law,  as  such  section  existed on March thirty-first, nineteen hundred
    40  eighty-three.
    41    (C) Provided further that, for purposes of this  subsection,  eligible
    42  property  values shall not include that portion of the value of property
    43  which is used in the production of adjusted eligible net income which is
    44  allowed as a deduction from entire net income as set forth in subsection
    45  (f) of section fourteen hundred fifty-three of this article.
    46    (5) The total of all credits allowed pursuant to  this  subsection  in
    47  any taxable year or years with reference to any eligible business facil-
    48  ity shall not exceed the total eligible property values included.
    49    (6)  If a credit is allowed for any taxable year as herein provided on
    50  the basis of a certificate of eligibility, and if  such  certificate  is
    51  revoked  or  modified,  the  taxpayer  shall  report  such revocation or
    52  modification in its return for the taxable year during which it  occurs,
    53  and  the  tax  commission shall recompute such credit and may assess any
    54  additional tax resulting from such recomputation within the  time  fixed
    55  by  paragraph nine of subsection (c) of section ten hundred eighty-three
    56  of this chapter.

        S. 3456                            54
     1    (7) If a business facility owned or operated by a taxpayer shall be an
     2  eligible business facility for only part of a taxable year,  the  credit
     3  allowed  by  this  subdivision shall be prorated according to the period
     4  such facility was an eligible business facility, and if the total of the
     5  eligible  property  values shall have changed during any taxable year, a
     6  pro-rata adjustment shall be made in computing such credit.
     7    (8) The state tax commission shall be empowered,  on  or  after  April
     8  first,  nineteen  hundred eighty-three, to issue a certificate of eligi-
     9  bility for tax credits to a taxpayer for an eligible  business  facility
    10  with  regard  to  which such taxpayer has, prior to July first, nineteen
    11  hundred eighty-three, received from the New  York  state  job  incentive
    12  board  initial  approval  of an application for such certificate by such
    13  board as evidenced by the minutes of the meeting of the board  at  which
    14  such  application  was  approved,  or  a  letter of intent authorized by
    15  section 102.4 of part one hundred two of title five of the codes,  rules
    16  and  regulations  of the state of New York regarding such certificate of
    17  eligibility and to renew, extend, revoke  or  modify  a  certificate  of
    18  eligibility  for  tax credits, pursuant to section one hundred twenty of
    19  the commerce law as such section existed on March thirty-first, nineteen
    20  hundred eighty-three.
    21    (9) For purposes of the requirement for  eligibility  for  the  credit
    22  allowed under this subdivision that a business facility create or retain
    23  not  less  than  five jobs as provided in subdivision (c) of section one
    24  hundred eighteen of the commerce law as such section  existed  on  March
    25  thirty-first,  nineteen  hundred eighty-three, a business facility shall
    26  have (i) created not less than five jobs only if the number of jobs  for
    27  the taxable year exceeds the number of jobs at the time of the commence-
    28  ment of the project as stated on its application for initial approval by
    29  five  or  more; or (ii) retained not less than five jobs only if initial
    30  approval was based on the retention of five or more  jobs  and  (A)  the
    31  number  of  jobs for the taxable year is at least equal to the number of
    32  jobs at the time of the commencement of the project  as  stated  on  its
    33  application for initial approval or (B) where initial approval was based
    34  on  the  retention  of fewer jobs than the number of jobs at the time of
    35  the commencement of the project as stated on its application for initial
    36  approval, the number of jobs for the taxable year is at least  equal  to
    37  the  number  approved for retention. For purposes of this paragraph, the
    38  phrase "initial approval was based on the  retention  of  five  or  more
    39  jobs"  shall mean that such initial approval was given by the job incen-
    40  tive board to an applicant that had not stated in  its  application  for
    41  initial approval that it would increase the number of jobs at its facil-
    42  ity by at least five.
    43    (c)  Mortgage  recording tax credit. (1) A taxpayer shall be allowed a
    44  credit, to be credited against the tax  imposed  by  this  article.  The
    45  amount of the credit shall be the amount of the special additional mort-
    46  gage  recording  tax  paid by the taxpayer pursuant to the provisions of
    47  subdivision one-a of section two hundred fifty-three of this chapter  on
    48  mortgages  recorded  on and after January first, nineteen hundred seven-
    49  ty-nine. Provided, however, no credit shall be allowed with respect to a
    50  mortgage of real property principally improved or to be improved by  one
    51  or  more  structures containing in the aggregate not more than six resi-
    52  dential dwelling units, each dwelling unit having its own separate cook-
    53  ing facilities, where the real property is located in one or more of the
    54  counties comprising the metropolitan  commuter  transportation  district
    55  and  where  the  mortgage  is  recorded  on or after May first, nineteen
    56  hundred eighty-seven. Provided, however, no credit shall be allowed with

        S. 3456                            55
     1  respect to a mortgage of real property principally  improved  or  to  be
     2  improved  by one or more structures containing in the aggregate not more
     3  than six residential dwelling units, each dwelling unit having  its  own
     4  separate  cooking  facilities, where the real property is located in the
     5  county of Erie and where the mortgage is recorded on or after May first,
     6  nineteen hundred eighty-seven.
     7    (2) In no event shall the credit herein provided for,  and  carryovers
     8  of  such  credit,  in  the aggregate, be allowed in an amount which will
     9  reduce the tax payable to less than the dollar amount fixed as a minimum
    10  tax by subsection (b) of section fourteen hundred  fifty-five.  However,
    11  if the amount of credit or carryovers of such credit, or both, allowable
    12  under  this  subdivision  for  any  taxable year reduces the tax to such
    13  amount, any amount of credit or  carryovers  of  such  credit  thus  not
    14  deductible  in  such  taxable  year may be carried over to the following
    15  year or years and may be deducted from the taxpayer's tax for such  year
    16  or years.
    17    (d) Empire zone capital credit.
    18    (1)  A  taxpayer  shall be allowed a credit against the tax imposed by
    19  this article. The amount of the credit shall  be  equal  to  twenty-five
    20  percent  of  the sum of the following investments and contributions made
    21  during the taxable year and certified by the  commissioner  of  economic
    22  development:  (A)  for taxable years beginning before January first, two
    23  thousand five, qualified investments made in, or  contributions  in  the
    24  form  of donations made to, one or more empire zone capital corporations
    25  established pursuant to section nine hundred sixty-four of  the  general
    26  municipal  law  prior to January first, two thousand five, (B) qualified
    27  investments in certified zone businesses which during the  twelve  month
    28  period  immediately preceding the month in which such investment is made
    29  employed full-time within the state an average  number  of  individuals,
    30  excluding  general  executive  officers,  of two hundred fifty or fewer,
    31  computed pursuant to the provisions of subparagraph (C) of paragraph two
    32  of subsection (e) of this section, except for investments made by or  on
    33  behalf  of  an  owner  of the business, including, but not limited to, a
    34  stockholder, partner or sole  proprietor,  or  any  related  person,  as
    35  defined  in  subparagraph  (C)  of  paragraph three of subsection (b) of
    36  section four hundred sixty-five of the internal revenue  code,  and  (C)
    37  contributions  of  money to community development projects as defined in
    38  regulations promulgated by the  commissioner  of  economic  development.
    39  "Qualified  investments"  means the contribution of property to a corpo-
    40  ration in exchange for original issue capital stock or  other  ownership
    41  interest,  the contribution of property to a partnership in exchange for
    42  an interest in the partnership, and similar contributions in the case of
    43  a business entity not in corporate or partnership form in  exchange  for
    44  an  ownership interest in such entity. The total amount of credit allow-
    45  able to a taxpayer under this provision for  all  years,  taken  in  the
    46  aggregate,  shall  not  exceed three hundred thousand dollars, and shall
    47  not exceed one hundred thousand dollars with respect to the  investments
    48  and contributions described in each of subparagraphs (A), (B) and (C) of
    49  this paragraph.
    50    (2)  The  credit  and  carryover  of  such  credit  allowed under this
    51  subsection for any taxable year shall not, in the aggregate, reduce  the
    52  tax  due  for such year to less than the minimum tax fixed by subsection
    53  (b) of section fourteen hundred fifty-five of this article. However,  if
    54  the  amount  of  credit  or  carryovers of such credit, or both, allowed
    55  under this subsection for any taxable  year  reduces  the  tax  to  such
    56  amount,  or  if  any part of the credit or carryovers of such credit may

        S. 3456                            56
     1  not be deducted from the tax  otherwise  due  by  reason  of  the  final
     2  sentence  of  this paragraph, any amount of credit or carryovers of such
     3  credit thus not deductible in such taxable year may be carried  over  to
     4  the  following  year  or years and may be deducted from the tax for such
     5  year or years. In addition, the amount of such credit, and carryovers of
     6  such credit to the taxable year, deducted from the tax otherwise due may
     7  not, in the aggregate, exceed fifty percent of  the  tax  imposed  under
     8  section  fourteen  hundred  fifty-five  of this article computed without
     9  regard to any credit provided for under this article.
    10    (2-a) Any carryover of a credit from prior taxable years will  not  be
    11  allowed  to  an empire zone enterprise which is the basis of the credit,
    12  if an empire zone retention certificate is not  issued  to  such  entity
    13  pursuant  to  subdivision  (w) of section nine hundred fifty-nine of the
    14  general municipal law.
    15    (3) Where the stock, partnership interest or other ownership  interest
    16  arising  from  a  qualified investment as described in subparagraphs (A)
    17  and (B) of paragraph one of this subsection is disposed of, the  taxpay-
    18  er's  entire  net  income  shall  be  computed,  pursuant to regulations
    19  promulgated by the commissioner, so as to properly reflect  the  reduced
    20  cost  thereof  arising  from  the application of the credit provided for
    21  herein.
    22    (4)(A) Where a taxpayer sells,  transfers  or  otherwise  disposes  of
    23  corporate  stock,  a  partnership  interest  or other ownership interest
    24  arising from the making of a qualified investment which was  the  basis,
    25  in  whole or in part, for the allowance of the credit provided for under
    26  this subsection, or where a contribution or  investment  which  was  the
    27  basis  for  such allowance is in any manner, in whole or in part, recov-
    28  ered by such taxpayer, and such disposition or  recovery  occurs  during
    29  the taxable year or within thirty-six months from the close of the taxa-
    30  ble  year with respect to which such credit is allowed, subparagraph (B)
    31  of this paragraph shall apply.
    32    (B) The taxpayer shall add back with respect to the  taxable  year  in
    33  which  the disposition or recovery described in subparagraph (A) of this
    34  paragraph  occurred  the  required  portion  of  the  credit  originally
    35  allowed.
    36    (C) The required portion of the credit originally allowed shall be the
    37  product  of  (i) the portion of such credit attributable to the property
    38  disposed of or the payment or contribution recovered and (ii) the appli-
    39  cable percentage.
    40    (D) The applicable percentage shall be:
    41    (i) one hundred percent, if the disposition or recovery occurs  within
    42  the  taxable  year with respect to which the credit is allowed or within
    43  twelve months of the end of such taxable year,
    44    (ii) sixty-seven percent, if the disposition or recovery  occurs  more
    45  than  twelve  but  not more than twenty-four months after the end of the
    46  taxable year with respect to which the credit is allowed, or
    47    (iii) thirty-three percent, if the disposition or recovery occurs more
    48  than twenty-four but not more than thirty-six months after  the  end  of
    49  the taxable year with respect to which the credit is allowed.
    50    (5)  If  the  designation of an area as an empire zone is no longer in
    51  effect because the designations of all empire zones pursuant to  article
    52  eighteen-B  of  the  general municipal law have expired, a taxpayer that
    53  has made a contribution of  money  on  or  before  the  day  immediately
    54  preceding  the  day  the empire zones expired to a community development
    55  project approved by the commissioner of economic  development  shall  be
    56  deemed  eligible  to claim the empire zone capital credit under subpara-

        S. 3456                            57
     1  graph (C) of paragraph one of this subsection  for  additional  contrib-
     2  utions made prior to April first, two thousand fourteen and certified by
     3  the  commissioner  of economic development to that community development
     4  project as payment of a commitment made by the taxpayer to that communi-
     5  ty development project before the empire zones expired.
     6    (e)  Empire  zone  wage  tax credit. (1) A taxpayer shall be allowed a
     7  credit, to be computed as hereinafter provided, against the tax  imposed
     8  by  this article where the taxpayer has been certified pursuant to arti-
     9  cle eighteen-B of the general municipal law. The amount of  such  credit
    10  shall be as prescribed in paragraph four hereof.
    11    (2)  For  purposes  of this subsection, the following terms shall have
    12  the following meanings: (A) "Empire zone wages" means wages paid by  the
    13  taxpayer for full-time employment, other than to general executive offi-
    14  cers, during the taxable year in an area designated or previously desig-
    15  nated  as  an  empire  zone  or zone equivalent area pursuant to article
    16  eighteen-B of the general municipal law where such employment  is  in  a
    17  job  created  in the area (i) during the period of its designation as an
    18  empire zone, (ii) within four years of the  expiration  of  such  desig-
    19  nation,  or  (iii)  during the ten year period immediately following the
    20  date of designation as a zone equivalent area, provided,  however,  that
    21  if  the taxpayer's certification under article eighteen-B of the general
    22  municipal law is revoked with respect to an empire zone or  zone  equiv-
    23  alent  area,  any  wages paid by the taxpayer, on or after the effective
    24  date of such decertification, for employment  in  such  zone  shall  not
    25  constitute empire zone wages.
    26    (B)  "Targeted employee" means a New York resident who receives empire
    27  zone wages and who is (i) an eligible individual under the provisions of
    28  the targeted jobs tax credit (section fifty-one of the internal  revenue
    29  code),  (ii) eligible for benefits under the provisions of the workforce
    30  investment act as a dislocated worker  or  low-income  individual  (P.L.
    31  105-220,  as  amended), (iii) a recipient of public assistance benefits,
    32  (iv) an individual whose income is below the most  recently  established
    33  poverty rate promulgated by the United States department of commerce, or
    34  a  member  of  a  family  whose family income is below the most recently
    35  established poverty rate promulgated by the appropriate  federal  agency
    36  or  (v) an honorably discharged member of any branch of the armed forces
    37  of the United States.
    38    An individual who satisfies the criteria  set  forth  in  clause  (i),
    39  (ii), (iv) or (v) of this subparagraph at the time of initial employment
    40  in the job with respect to which the credit is claimed, or who satisfies
    41  the  criterion  set  forth  in clause (iii) of this subparagraph at such
    42  time or at any time within the previous two years, shall be  a  targeted
    43  employee  so  long  as  such individual continues to receive empire zone
    44  wages.
    45    (C) "Average number of individuals, excluding general executive  offi-
    46  cers,  employed  full-time" shall be computed by ascertaining the number
    47  of such individuals employed by the taxpayer on the thirty-first day  of
    48  March, the thirtieth day of June, the thirtieth day of September and the
    49  thirty-first  day of December during each taxable year or other applica-
    50  ble period, by adding together the number  of  such  individuals  ascer-
    51  tained  on  each  of  such dates and dividing the sum so obtained by the
    52  number of such dates occurring within such taxable year or other  appli-
    53  cable period.
    54    (3)  The  credit  provided  for herein shall be allowed only where the
    55  average number of individuals,  excluding  general  executive  officers,
    56  employed  full-time  by  the  taxpayer in (A) (i) the state and (ii) the

        S. 3456                            58
     1  empire zone or area previously constituting such zone or zone equivalent
     2  area, during the taxable year exceeds the average number of  such  indi-
     3  viduals employed full-time by the taxpayer in (B) (i) the state and (ii)
     4  such  zone  or area subsequently or previously constituting such zone or
     5  such zone equivalent area, respectively, during  the  four  years  imme-
     6  diately  preceding the first taxable year in which the credit is claimed
     7  with respect to such zone or area. Where the taxpayer provided full-time
     8  employment within (C) (i) the state or (ii) such  zone  or  area  during
     9  only a portion of such four-year period, then for purposes of this para-
    10  graph  the  term  "four  years" shall be deemed to refer instead to such
    11  portion, if any.
    12    The credit shall be allowed only with respect  to  the  first  taxable
    13  year  during which payments of empire zone wages are made and the condi-
    14  tions set forth in this paragraph are satisfied,  and  with  respect  to
    15  each of the four taxable years next following (but only, with respect to
    16  each  of  such  years,  if such conditions are satisfied), in accordance
    17  with paragraph four of this subsection. Subsequent certifications of the
    18  taxpayer pursuant to article eighteen-B of the general municipal law, at
    19  the same or a different location in the same empire zone or zone  equiv-
    20  alent  area  or  at a location in a different empire zone or zone equiv-
    21  alent area, shall not extend the five taxable year  time  limitation  on
    22  the  allowance  of  the  credit  set  forth  in  the preceding sentence.
    23  Provided, further, however, that no credit shall be allowed with respect
    24  to any taxable year beginning more than four years following the taxable
    25  year in which designation as an empire zone expired  or  more  than  ten
    26  years after the designation as a zone equivalent area.
    27    (4) The amount of the credit shall equal the sum of (A) the product of
    28  three  thousand dollars and the average number of individuals (excluding
    29  general executive officers) employed full-time by the taxpayer, computed
    30  pursuant to the provisions of subparagraph (C) of paragraph two of  this
    31  subsection, who (i) received empire zone wages for more than half of the
    32  taxable year, (ii) received, with respect to more than half of the peri-
    33  od of employment by the taxpayer during the taxable year, an hourly wage
    34  which  was  at least one hundred thirty-five percent of the minimum wage
    35  specified in section six hundred fifty-two of the labor law,  and  (iii)
    36  are targeted employees; and
    37    (B)  the  product of fifteen hundred dollars and the average number of
    38  individuals  (excluding  general  executive  officers  and   individuals
    39  described  in  subparagraph (A) of this paragraph) employed full-time by
    40  the taxpayer, computed pursuant to the provisions of subparagraph (C) of
    41  paragraph two of this subsection, who received  empire  zone  wages  for
    42  more than half of the taxable year.
    43    (C)  For purposes of calculating the amount of the credit, individuals
    44  employed within an empire zone or zone equivalent area within the  imme-
    45  diately  preceding  sixty  months  by  a related person, as such term is
    46  defined in subparagraph (c) of paragraph  three  of  subsection  (b)  of
    47  section  four hundred sixty-five of the internal revenue code, shall not
    48  be included in the average number of individuals described  in  subpara-
    49  graph  (A)  or  subparagraph  (B) of this paragraph, unless such related
    50  person was never allowed a credit under this subsection with respect  to
    51  such  employees.  For  the  purposes  of  this  subparagraph, a "related
    52  person" shall include an entity which would have qualified as a "related
    53  person" to the taxpayer if it had not been dissolved, liquidated, merged
    54  with another entity or otherwise ceased to exist or operate.
    55    (D) If a taxpayer is certified in  an  empire  zone  designated  under
    56  subdivision (a) or (d) of section nine hundred fifty-eight of the gener-

        S. 3456                            59
     1  al municipal law, the dollar amounts specified under subparagraph (A) or
     2  (B)  of  this  paragraph  shall be increased by five hundred dollars for
     3  each qualifying individual under such subparagraph who received,  during
     4  the taxable year, wages in excess of forty thousand dollars.
     5    (E)  The  requirement  in this paragraph that an employee must receive
     6  empire zone wages for more than half the taxable year shall not apply in
     7  the first taxable year of a taxpayer satisfying the criteria  set  forth
     8  in  this  subparagraph.  In  such  a case, the credit allowed under this
     9  subsection shall be computed by  utilizing  the  number  of  individuals
    10  (excluding general executive officers) employed full time by the taxpay-
    11  er  on  the last day of its first taxable year. A taxpayer shall satisfy
    12  the following criteria: (i) such  taxpayer  acquired  real  or  tangible
    13  personal  property during its first taxable year from an entity which is
    14  not a related person (as such term is  defined  in  subdivision  (g)  of
    15  section  fourteen  of this chapter); (ii) the first taxable year of such
    16  taxpayer shall be a short taxable year of not more than seven months  in
    17  duration;  and (iii) the number of individuals employed full-time on the
    18  last day of such first taxable year shall be at least one hundred ninety
    19  and substantially all of such  individuals  must  have  been  previously
    20  employed by the entity from whom such taxpayer purchased its assets.
    21    Provided,  further,  however, that the credit provided for herein with
    22  respect to the taxable year, and carryovers of such credit to the  taxa-
    23  ble  year,  deducted  from the tax otherwise due, may not, in the aggre-
    24  gate, exceed fifty percent of the tax  imposed  under  section  fourteen
    25  hundred  fifty-five  computed  without regard to any credit provided for
    26  under this article.
    27    (5) The credit and  carryovers  of  such  credit  allowed  under  this
    28  subsection  for any taxable year shall not, in the aggregate, reduce the
    29  tax due for such year to less than the minimum tax fixed  by  subsection
    30  (b)  of section fourteen hundred fifty-five of this article. However, if
    31  the amount of credit or carryovers of  such  credit,  or  both,  allowed
    32  under  this  subsection  for  any  taxable  year reduces the tax to such
    33  amount, or if any part of the credit or carryovers of  such  credit  may
    34  not  be  deducted  from  the  tax  otherwise  due by reason of the final
    35  sentence in paragraph four hereof, any amount of credit or carryovers of
    36  such credit thus not deductible in such taxable year may be carried over
    37  to the following year or years and may be deducted from  the  taxpayer's
    38  tax for such year or years.
    39    (5-a)  Any carry over of a credit from prior taxable years will not be
    40  allowed if an empire zone retention certificate is not  issued  pursuant
    41  to  subdivision  (w)  of  section nine hundred fifty-nine of the general
    42  municipal law to the empire zone enterprise which is the  basis  of  the
    43  credit.
    44    (e-1)  Hire  a  vet credit. (1) Allowance of credit. For taxable years
    45  beginning on or after January first, two thousand  nineteen  and  before
    46  January  first,  two  thousand twenty-one, a taxpayer shall be allowed a
    47  credit, to be computed as provided in this subsection, against  the  tax
    48  imposed by this article, for hiring and employing, for not less than one
    49  year  and  for  not  less  than thirty-five hours each week, a qualified
    50  veteran within the state. The taxpayer may claim the credit in the  year
    51  in  which  the qualified veteran completes one year of employment by the
    52  taxpayer.  If  the  taxpayer  claims  the  credit  allowed  under   this
    53  subsection,  the  taxpayer may not use the hiring of a qualified veteran
    54  that is the basis for this credit in  the  basis  of  any  other  credit
    55  allowed in this article.
    56    (2) Qualified veteran. A qualified veteran is an individual:

        S. 3456                            60
     1    (A)  who  served  on  active duty in the United States army, navy, air
     2  force, marine corps, coast guard or the reserves thereof, or who  served
     3  in  active military service of the United States as a member of the army
     4  national guard, air national guard, New York guard  or  New  York  naval
     5  militia;  who  was  released  from  active  duty by general or honorable
     6  discharge after September eleventh, two thousand one;
     7    (B) who commences employment by the qualified  taxpayer  on  or  after
     8  January  first,  two  thousand  fourteen,  and before January first, two
     9  thousand seventeen; and
    10    (C) who certifies by signed affidavit, under penalty of perjury,  that
    11  he or she has not been employed for thirty-five or more hours during any
    12  week  in  the  one hundred eighty day period immediately prior to his or
    13  her employment by the taxpayer.
    14    (3) Employer prohibition. An employer shall not discharge an  employee
    15  and  hire  a qualifying veteran solely for the purpose of qualifying for
    16  this credit.
    17    (4) Amount of credit. The amount of the credit shall be ten percent of
    18  the total amount of wages paid  to  the  qualified  veteran  during  the
    19  veteran's first full year of employment. Provided, however, that, if the
    20  qualified  veteran is a disabled veteran, as defined in paragraph (b) of
    21  subdivision one of section eighty-five of the  civil  service  law,  the
    22  amount  of  the  credit  shall be fifteen percent of the total amount of
    23  wages paid to the qualified veteran during the veteran's first full year
    24  of employment. The credit allowed pursuant to this subsection shall  not
    25  exceed  in  any  taxable  year,  five thousand dollars for any qualified
    26  veteran and fifteen thousand dollars for any qualified veteran who is  a
    27  disabled veteran.
    28    (5)  Carryover. The credit allowed under this subsection for any taxa-
    29  ble year shall not reduce the tax due for such year  to  less  than  the
    30  amount  prescribed in paragraph three of subsection (b) of section four-
    31  teen hundred fifty-five of this article. However, if the amount of cred-
    32  it allowable under this subsection for any taxable year reduces the  tax
    33  to such amount, any amount of credit not deductible in such taxable year
    34  may  be  carried  over  to the following three years and may be deducted
    35  from the taxpayer's tax for such year or years.
    36    (f) Credit for employment of persons with disabilities. (1)  Allowance
    37  of credit. A taxpayer shall be allowed a credit, to be computed as here-
    38  inafter provided, against the tax imposed by this article, for employing
    39  within the state a qualified employee.
    40    (2) Qualified employee. A qualified employee is an individual:
    41    (A) who is certified by the education department, or in the case of an
    42  individual  who  is  blind  or visually handicapped, by the state agency
    43  responsible for provision of vocational rehabilitation services  to  the
    44  blind  and visually handicapped: (i) as a person with a disability which
    45  constitutes or results in a substantial handicap to employment and  (ii)
    46  as  having  completed  or  as receiving services under an individualized
    47  written rehabilitation plan approved  by  the  education  department  or
    48  other  state  agency responsible for providing vocational rehabilitation
    49  services to such individual; and
    50    (B) who has worked on a full-time basis for the employer who is claim-
    51  ing the credit for at least one hundred  eighty  days  or  four  hundred
    52  hours.
    53    (3)  Amount  of  credit.  Except as provided in paragraph four of this
    54  subsection, the amount of credit shall be  thirty-five  percent  of  the
    55  first  six thousand dollars in qualified first-year wages earned by each
    56  qualified employee. "Qualified first-year wages"  means  wages  paid  or

        S. 3456                            61
     1  incurred  by the taxpayer during the taxable year to qualified employees
     2  which are attributable, with respect to any such employee,  to  services
     3  rendered  during the one-year period beginning with the day the employee
     4  begins work for the taxpayer.
     5    (4)  Credit  where  federal  work opportunity tax credit applies. With
     6  respect to any qualified employee whose qualified first-year wages under
     7  paragraph three of this subsection also constitute qualified  first-year
     8  wages  for  purposes  of  the work opportunity tax credit for vocational
     9  rehabilitation referrals under section fifty-one of the internal revenue
    10  code, the amount of credit under this subsection  shall  be  thirty-five
    11  percent of the first six thousand dollars in qualified second-year wages
    12  earned  by each such employee. "Qualified second-year wages" means wages
    13  paid or incurred by the taxpayer during the taxable  year  to  qualified
    14  employees which are attributable, with respect to any such employees, to
    15  services  rendered  during  the one-year period beginning one year after
    16  the employee begins work for the taxpayer.
    17    (5) Carryover. The credit and carryovers of such credit allowed  under
    18  this subsection for any taxable year shall not, in the aggregate, reduce
    19  the  tax  due  for  such  year  to  less  than  the minimum tax fixed by
    20  subsection (b) of section fourteen hundred fifty-five of  this  article.
    21  However,  if the amount of credit or carryovers of such credit, or both,
    22  allowed under this subdivision for any taxable year reduces the  tax  to
    23  such amount, then any amount of credit or carryovers of such credit thus
    24  not deductible in such taxable year may be carried over to the following
    25  year  or years and may be deducted from the taxpayer's tax for such year
    26  or years.
    27    (6)  Coordination  with  federal  work  opportunity  tax  credit.  The
    28  provisions  of  sections fifty-one and fifty-two of the internal revenue
    29  code, as such sections applied on October first, nineteen hundred  nine-
    30  ty-six,  that  apply  to  the work opportunity tax credit for vocational
    31  rehabilitation referrals shall apply to the credit under this subsection
    32  to the extent that  such  sections  are  consistent  with  the  specific
    33  provisions  of this subsection, provided that in the event of a conflict
    34  the provisions of this subsection shall control.
    35    (g) Order of credits.  Credits  allowable  under  this  article  which
    36  cannot  be  carried  over and which are not refundable shall be deducted
    37  first.  Credits allowable under this article which can be carried  over,
    38  and  carryovers  of such credits, shall be deducted next, and among such
    39  credits, those whose carryover is of limited duration shall be  deducted
    40  before  those whose carryover is of unlimited duration; provided, howev-
    41  er, that the credit allowable under subsection (e) of this section shall
    42  be deducted prior to all  other  credits  described  in  this  sentence.
    43  Credits  allowable  under  this  article  which  are refundable shall be
    44  deducted last.
    45    (h)  Credits  for  New  York  S  corporations.   Notwithstanding   the
    46  provisions  of  this  section, no carryover of credit allowable in a New
    47  York C year shall be deducted from the  tax  otherwise  due  under  this
    48  article  in  a  New York S year, and no credit allowable in a New York S
    49  year, or carryover of such  credit,  shall  be  deducted  from  the  tax
    50  imposed by this article.  However, a New York S year shall be treated as
    51  a  taxable  year for purposes of determining the number of taxable years
    52  to which a credit may be carried over under this section.  Notwithstand-
    53  ing  the  first sentence of this subsection, however, the credit for the
    54  special additional mortgage recording tax shall be allowed  as  provided
    55  in  subsection (c) of this section, and the carryover of any such credit

        S. 3456                            62
     1  shall be determined without regard to whether the credit is carried from
     2  a New York C year to a New York S year or vice-versa.
     3    (i)  Investment  tax  credit  (ITC). (1) A taxpayer shall be allowed a
     4  credit, to be computed as hereinafter provided, against the tax  imposed
     5  by this article. Provided, however, a taxpayer shall not be allowed such
     6  credit  provided  by this paragraph unless (i) eighty percent or more of
     7  the  employees  performing  the  administrative  and  support  functions
     8  resulting  from  or related to the qualifying uses of such equipment are
     9  located in this state, or (ii) the  average  number  of  employees  that
    10  perform  the  administrative  and  support  functions  resulting from or
    11  related to the qualifying uses of such equipment and are located in this
    12  state during the taxable year for which the credit is claimed  is  equal
    13  to  or greater than ninety-five percent of the average number of employ-
    14  ees that perform these functions and are located in  this  state  during
    15  the thirty-six months immediately preceding the year for which the cred-
    16  it  is  claimed,  or (iii) the number of employees located in this state
    17  during the taxable year for which the credit is claimed is equal  to  or
    18  greater  than  ninety percent of the number of employees located in this
    19  state on December thirty-first, nineteen hundred ninety-eight or, if the
    20  taxpayer was not a calendar year taxpayer in  nineteen  hundred  ninety-
    21  eight,  the  last  day  of  its first taxable year ending after December
    22  thirty-first, nineteen hundred ninety-eight.  If  the  taxpayer  becomes
    23  subject  to  tax in this state after the taxable year beginning in nine-
    24  teen hundred ninety-eight, then the taxpayer is not required to  satisfy
    25  the  employment test provided in the preceding sentence of this subpara-
    26  graph for its first taxable year. For the purposes of subparagraph (iii)
    27  of this paragraph the employment test will be based  on  the  number  of
    28  employees  located  in  this  state on the last day of the first taxable
    29  year the taxpayer is subject to tax in this state. If the  uses  of  the
    30  property must be aggregated to determine whether the property is princi-
    31  pally  used  in  qualifying  uses,  then either each affiliate using the
    32  property must satisfy this employment test or this employment test  must
    33  be  satisfied  through the aggregation of the employees of the taxpayer,
    34  its affiliated  regulated  broker,  dealer,  and  registered  investment
    35  adviser  using  the  property.  The  amount  of  the credit shall be the
    36  percent provided for herein below of the  investment  credit  base.  The
    37  investment credit base is the cost or other basis for federal income tax
    38  purposes  of  tangible  personal  property  and other tangible property,
    39  including buildings and structural components of buildings, described in
    40  paragraph two of this subsection, less the amount  of  the  nonqualified
    41  nonrecourse  financing  with respect to such property to the extent such
    42  financing would be excludible from the credit base pursuant  to  section
    43  46(c)(8) of the Internal Revenue Code (treating such property as section
    44  thirty-eight  property irrespective of whether or not it in fact consti-
    45  tutes section thirty-eight property).   If, at the close  of  a  taxable
    46  year  following  the  taxable  year in which such property was placed in
    47  service, there is a net decrease in the amount of  nonqualified  nonrec-
    48  ourse  financing  with respect to such property, such net decrease shall
    49  be treated as if it were the cost or other basis of  property  described
    50  in paragraph two of this subsection acquired, constructed, reconstructed
    51  or erected during the year of the decrease in the amount of nonqualified
    52  nonrecourse financing. In the case of a combined report the term invest-
    53  ment  credit  base  shall  mean the sum of the investment credit base of
    54  each corporation included on such report. The percentage to be  used  to
    55  compute the credit allowed pursuant to this subsection shall be
    56       For taxable years beginning after

        S. 3456                            63
     1       1997   ..................................  five  percent  with
     2       respect to the first three hundred fifty  million  dollars  of
     3       the  investment  credit base, and four percent with respect to
     4       the investment credit base in excess of  three  hundred  fifty
     5       million dollars.
     6    (2)  A  credit  shall be allowed under this subsection with respect to
     7  tangible personal property and other tangible property, including build-
     8  ings and structural components  of  buildings,  which  are:  depreciable
     9  pursuant  to  section  one  hundred  sixty-seven of the Internal Revenue
    10  Code, have a useful life of four years or more, are acquired by purchase
    11  as defined in section one  hundred  seventy-nine  (d)  of  the  Internal
    12  Revenue Code, have a situs in this state and are (A) principally used in
    13  the  ordinary  course of the taxpayer's trade or business as a broker or
    14  dealer in connection with the purchase or sale (which shall include  but
    15  not  be  limited  to  the  issuance,  entering into, assumption, offset,
    16  assignment, termination, or transfer) of stocks, bonds or other  securi-
    17  ties  as  defined  in  section  four hundred seventy-five (c) (2) of the
    18  Internal Revenue Code, or of commodities  as  defined  in  section  four
    19  hundred seventy-five (e) of the Internal Revenue Code, or (B) principal-
    20  ly  used  in  the ordinary course of the taxpayer's trade or business of
    21  providing investment advisory services for a regulated investment compa-
    22  ny as defined in section eight hundred fifty-one of the Internal Revenue
    23  Code, or lending, loan  arrangement  or  loan  origination  services  to
    24  customers  in  connection with the purchase or sale (which shall include
    25  but not be limited to the issuance, entering into,  assumption,  offset,
    26  assignment,  termination,  or  transfer)  of  securities  as  defined in
    27  section four hundred seventy-five (c) (2) of the Internal Revenue  Code.
    28  For  purposes  of  subparagraphs (A) and (B) of this paragraph, property
    29  purchased by a taxpayer affiliated with a regulated broker,  dealer,  or
    30  registered  investment adviser is allowed a credit under this subsection
    31  if the property is used by its affiliated regulated broker,  dealer,  or
    32  registered  investment  adviser  in accordance with this subsection. For
    33  purposes of determining if the property is principally used in  qualify-
    34  ing  uses,  the  uses by the taxpayer described in subparagraphs (A) and
    35  (B) of this paragraph may be aggregated. In addition, the  uses  by  the
    36  taxpayer, its affiliated regulated broker, dealer and registered invest-
    37  ment  adviser  under  either or both of such subparagraphs may be aggre-
    38  gated.
    39    (3) A taxpayer shall not be allowed a  credit  under  this  subsection
    40  with  respect  to  any  property  described  in  paragraph  two  of this
    41  subsection if such property qualifies for the  deduction  allowed  under
    42  subsection  (k) of section one thousand four hundred fifty-three of this
    43  article whether or not such amount shall have been deducted.
    44    (4) A taxpayer shall not be allowed a  credit  under  this  subsection
    45  with  respect to tangible personal property and other tangible property,
    46  including buildings and structural components  of  buildings,  which  it
    47  leases to any other person or corporation except where a taxpayer leases
    48  property  to  an  affiliated  broker,  dealer,  or registered investment
    49  adviser that uses such property in accordance with subparagraph  (A)  or
    50  (B)  of  paragraph two of this subsection. For purposes of the preceding
    51  sentence, any contract or agreement to lease or rent or for a license to
    52  use such property shall be considered a lease.
    53    (5) Except as otherwise provided in this paragraph, the credit allowed
    54  under this subsection for any taxable year shall not reduce the tax  due
    55  for  such  year to less than the dollar amount fixed as a minimum tax by
    56  subsection (b) of section one thousand four hundred fifty-five  of  this

        S. 3456                            64
     1  article.   However,  if  the  amount  of  credit  allowable  under  this
     2  subsection for any taxable year reduces the  tax  to  such  amount,  any
     3  amount  of  credit allowed for a taxable year may be carried over to the
     4  fifteen  taxable  years  next  following  such  taxable  year and may be
     5  deducted from the taxpayer's tax for such year or years. In lieu of such
     6  carryover, any such taxpayer which qualifies as  a  new  business  under
     7  paragraph eight of this subsection may elect to treat the amount of such
     8  carryover as an overpayment of tax to be credited or refunded in accord-
     9  ance  with  the  provisions  of  section one thousand eighty-six of this
    10  chapter, provided, however, the provisions of subsection (c) of  section
    11  one  thousand  eighty-eight  of this chapter notwithstanding no interest
    12  shall be paid thereon.
    13    (6) At the option of the taxpayer an eligible  business  facility  for
    14  which  a  credit  is allowed under subsection (b) of this section may be
    15  treated as property (A) principally used in the ordinary course  of  the
    16  taxpayer's  trade  or  business as a broker or dealer in connection with
    17  the purchase or sale (which shall include but  not  be  limited  to  the
    18  issuance, entering into, assumption, offset, assignment, termination, or
    19  transfer)  of  stocks,  bonds  or other securities as defined in section
    20  four hundred seventy-five (c) (2) of the Internal Revenue  Code,  or  of
    21  commodities  as  defined in section four hundred seventy-five (e) of the
    22  Internal Revenue Code, or (B) principally used in the ordinary course of
    23  the taxpayer's  trade  or  business  of  providing  investment  advisory
    24  services  for a regulated investment company as defined in section eight
    25  hundred fifty-one  of  the  Internal  Revenue  Code,  or  lending,  loan
    26  arrangement or loan origination services to customers in connection with
    27  the  purchase  or  sale  (which  shall include but not be limited to the
    28  issuance, entering into, assumption, offset, assignment, termination, or
    29  transfer) of securities as defined in section four hundred  seventy-five
    30  (c)  (2)  of  the  Internal Revenue Code provided the property otherwise
    31  qualifies under paragraph two of this subsection, in which event a cred-
    32  it shall not be allowed under subsection (b) of this section.
    33    (7)(A) With respect to  property  which  is  depreciable  pursuant  to
    34  section  one hundred sixty-seven of the Internal Revenue Code but is not
    35  subject to the provisions of section one  hundred  sixty-eight  of  such
    36  code  and which is disposed of or ceases to be in qualified use prior to
    37  the end of the taxable year in which the credit  is  to  be  taken,  the
    38  amount of the credit shall be that portion of the credit provided for in
    39  this subsection which represents the ratio which the months of qualified
    40  use  bear  to the months of useful life. If property on which credit has
    41  been taken is disposed of or ceases to be in qualified use prior to  the
    42  end  of its useful life, the difference between the credit taken and the
    43  credit allowed for actual use must be added back in the year of disposi-
    44  tion. Provided, however, if such property is disposed of or ceases to be
    45  in qualified use after it has been in qualified use for more than twelve
    46  consecutive years, it shall not be necessary to add back the  credit  as
    47  provided  in  this subparagraph. The amount of credit allowed for actual
    48  use shall be determined by multiplying the original credit by the  ratio
    49  which the months of qualified use bear to the months of useful life. For
    50  purposes of this subparagraph, useful life of property shall be the same
    51  as the taxpayer uses for depreciation purposes when computing his feder-
    52  al income tax liability.
    53    (B)  Except with respect to that property to which subparagraph (D) of
    54  this paragraph applies, with respect to three-year property, as  defined
    55  in  subsection  (e)  of  section one hundred sixty-eight of the Internal
    56  Revenue Code, which is disposed of or ceases  to  be  in  qualified  use

        S. 3456                            65
     1  prior to the end of the taxable year in which the credit is to be taken,
     2  the  amount  of  the credit shall be that portion of the credit provided
     3  for in this subsection which represents the ratio which  the  months  of
     4  qualified  use  bear to thirty-six. If property on which credit has been
     5  taken is disposed of or ceases to be in qualified use prior to  the  end
     6  of  thirty-six  months,  the difference between the credit taken and the
     7  credit allowed for actual use must be added back in the year of disposi-
     8  tion. The amount of credit allowed for actual use shall be determined by
     9  multiplying the original credit by the ratio which the months of  quali-
    10  fied use bear to thirty-six.
    11    (C)  Except with respect to that property to which subparagraph (D) of
    12  this  paragraph  applies,  with  respect  to  property  subject  to  the
    13  provisions  of  section  one hundred sixty-eight of the Internal Revenue
    14  Code, other than three-year property as defined  in  subsection  (e)  of
    15  such  section  one hundred sixty-eight which is disposed of or ceases to
    16  be in qualified use prior to the end of the taxable year  in  which  the
    17  credit is to be taken, the amount of the credit shall be that portion of
    18  the  credit  provided  for in this subsection which represents the ratio
    19  which the months of qualified use bear to sixty. If  property  on  which
    20  credit  has  been  taken is disposed of or ceases to be in qualified use
    21  prior to the end of sixty months,  the  difference  between  the  credit
    22  taken  and  the  credit allowed for actual use must be added back in the
    23  year of disposition. The amount of credit allowed for actual  use  shall
    24  be  determined by multiplying the original credit by the ratio which the
    25  months of qualified use bear to sixty.
    26    (D) With respect to any property to which section one  hundred  sixty-
    27  eight  of  the  Internal  Revenue Code applies, which is a building or a
    28  structural component of a building and which is disposed of or ceases to
    29  be in a qualified use prior to the end of the taxable year in which  the
    30  credit is to be taken, the amount of the credit shall be that portion of
    31  the  credit  provided  for in this subsection which represents the ratio
    32  which the months of qualified use bear to the  total  number  of  months
    33  over  which the taxpayer chooses to deduct the property under the Inter-
    34  nal Revenue Code. If property on which credit has been taken is disposed
    35  of or ceases to be in qualified use prior to the end of the period  over
    36  which  the  taxpayer  chooses  to deduct the property under the Internal
    37  Revenue Code, the difference between the credit  taken  and  the  credit
    38  allowed  for  actual  use must be added back in the year of disposition.
    39  Provided, however, if such property is disposed of or ceases  to  be  in
    40  qualified  use  after  it has been in qualified use for more than twelve
    41  consecutive years, it shall not be necessary to add back the  credit  as
    42  provided  in  this subparagraph. The amount of credit allowed for actual
    43  use shall be determined by multiplying the original credit by the  ratio
    44  which  the  months  of  qualified use bear to the total number of months
    45  over which the taxpayer chooses to deduct the property under the  Inter-
    46  nal Revenue Code.
    47    (E)  For  taxable years commencing on or after January first, nineteen
    48  hundred ninety-eight the amount required to be added  back  pursuant  to
    49  this  paragraph  shall be augmented by an amount equal to the product of
    50  such amount and the underpayment rate of  interest  (without  regard  to
    51  compounding),  set  by  the  commissioner  pursuant to subsection (e) of
    52  section one thousand ninety-six of this chapter, in effect on  the  last
    53  day of the taxable year.
    54    (F)  If,  as of the close of the taxable year, there is a net increase
    55  with respect to the taxpayer in the amount of  nonqualified  nonrecourse
    56  financing (within the meaning of section 46(c)(8) of the Internal Reven-

        S. 3456                            66
     1  ue  Code)  with respect to any property with respect to which the credit
     2  under this subsection was limited  based  on  attributable  nonqualified
     3  nonrecourse  financing,  then  an  amount  equal to the decrease in such
     4  credit  which  would  have resulted from reducing, by the amount of such
     5  net increase, the cost or other basis taken into account with respect to
     6  such property must be added back in such taxable  year.  The  amount  of
     7  nonqualified  nonrecourse financing shall not be treated as increased by
     8  reason of a transfer of (or agreement to transfer) any  evidence  of  an
     9  indebtedness if such transfer occurs (or such agreement is entered into)
    10  more than one year after the date such indebtedness was incurred.
    11    (8)  For purposes of paragraph five of this subsection, a new business
    12  shall include any corporation, except a corporation which:
    13    (A) over fifty percent of the number of shares of stock entitling  the
    14  holders  thereof  to  vote  for the election of directors or trustees is
    15  owned or controlled,  either  directly  or  indirectly,  by  a  taxpayer
    16  subject to tax under this article; section one hundred eighty-three, one
    17  hundred  eighty-four or one hundred eighty-five of article nine; article
    18  nine-A or article thirty-three of this chapter; or
    19    (B) is substantially similar in operation and in ownership to a  busi-
    20  ness  entity  (or  entities)  taxable, or previously taxable, under this
    21  article; section one hundred eighty-three, one  hundred  eighty-four  or
    22  one hundred eighty-five of article nine; article nine-A or article thir-
    23  ty-three  of this chapter; article twenty-three of this chapter or which
    24  would have been subject to tax under such article twenty-three (as  such
    25  article  was in effect on January first, nineteen hundred eighty) or the
    26  income (or losses) of which is (or was) includable under  article  twen-
    27  ty-two  of this chapter whereby the intent and purpose of this paragraph
    28  and paragraph five of this subsection with respect to refunding of cred-
    29  it to new business would be evaded; or
    30    (C) has been subject to tax under this  article  for  more  than  five
    31  taxable years (excluding short taxable years).
    32    (9)(A)(i)  If  a  taxpayer  is  required  by  paragraph  seven of this
    33  subsection to add back a portion of the credit  taken  because  property
    34  was destroyed or ceased to be in qualified use as a direct result of the
    35  September  eleventh,  two  thousand one terrorist attacks, such taxpayer
    36  may elect to defer the amount to be recaptured for all such property  to
    37  the  taxable  year  next  succeeding  the  taxable  year  in  which  the
    38  destruction or cessation of qualified use occurred. The taxable year  in
    39  which  the  destruction  or cessation of qualified use occurred shall be
    40  hereinafter referred to as the "recapture event taxable  year".  If  the
    41  taxpayer's  total  employment number in the state on the last day of the
    42  taxable year next succeeding the  recapture  event  taxable  year  is  a
    43  significant percentage of the taxpayer's average total employment number
    44  in the state for the taxpayer's recapture event taxable year and the two
    45  taxable  years  immediately  preceding the recapture event taxable year,
    46  then the taxpayer shall not be required to  recapture  any  credit  with
    47  respect  to  such property. If the taxpayer's total employment number in
    48  the state on the last day of the taxable year next succeeding the recap-
    49  ture event taxable year is not a significant percentage of  the  taxpay-
    50  er's  average  total  employment  number in the state for the taxpayer's
    51  recapture event taxable year  and  the  two  taxable  years  immediately
    52  preceding  the  recapture  event  taxable  year,  the  taxpayer shall be
    53  required to recapture  the  portion  of  the  credit  taken  under  this
    54  subsection,  as  required by paragraph seven of this subsection, for all
    55  of its property destroyed or which ceased to be in qualified  use  as  a
    56  direct  result  of  the  September  eleventh, two thousand one terrorist

        S. 3456                            67
     1  attacks. The amount required to be  recaptured  shall  be  augmented  as
     2  required  pursuant  to  subparagraph  (E)  of  paragraph  seven  of this
     3  subsection by using an interest rate equal to  two  times  the  rate  of
     4  interest specified in such subparagraph seven applicable for the taxable
     5  year in which the recapture occurs.
     6    (ii)  The taxpayer's total employment number shall include all employ-
     7  ees of the taxpayer employed full-time by the taxpayer in the state. The
     8  average total employment number for the recapture event taxable year and
     9  the two taxable years immediately preceding the recapture event  taxable
    10  year  shall  be  computed by determining the taxpayer's total employment
    11  number on the thirty-first day of March, the thirtieth day of June,  the
    12  thirtieth  day  of September and the thirty-first day of December during
    13  the applicable taxable years, adding together the number of  such  indi-
    14  viduals  determined to be so employed on each of such dates and dividing
    15  the sum so obtained by the number of such dates  occurring  within  such
    16  applicable taxable years. However, in the case of the taxable year which
    17  included September eleventh, two thousand one, the average total employ-
    18  ment number for such taxable year shall be determined by using the total
    19  employment  number  on  September  first,  two  thousand  one in lieu of
    20  September thirtieth, two thousand one and, if such taxable year included
    21  December thirty-first, two thousand one, by excluding the total  employ-
    22  ment number on December thirty-first, two thousand one.
    23    (B)  In  lieu  of  subparagraph  (A) of this paragraph, a taxpayer may
    24  elect  to  recapture  the  portion  of  the  credit  taken  under   this
    25  subsection,  as  required by paragraph seven of this subsection, for all
    26  of its property destroyed or which ceased to be in qualified  use  as  a
    27  direct  result  of  the  September  eleventh, two thousand one terrorist
    28  attacks, in the taxable year in which the destruction  or  cessation  of
    29  qualified use occurred. If the taxpayer makes such election and acquires
    30  property  (hereinafter referred to as "replacement property") to replace
    31  any property destroyed as a direct result of the September eleventh, two
    32  thousand one terrorist attacks (regardless of  when  such  property  was
    33  placed  in  service  and  whether  a credit was claimed on that property
    34  pursuant to this subsection), and such replacement property  is  similar
    35  or  related in service or use to such destroyed property, the investment
    36  credit base of the replacement  property  shall  be  determined  without
    37  regard  to  any basis reduction required pursuant to section 1033 of the
    38  internal revenue code.
    39    (C) The election made by the taxpayer under subparagraph (A) or (B) of
    40  this paragraph shall be made in the manner and form  prescribed  by  the
    41  commissioner.
    42    (D) A taxpayer, over fifty percent of whose employees died as a direct
    43  result  of  the  September eleventh, two thousand one terrorist attacks,
    44  may make the election provided for in subparagraph  (A)  of  this  para-
    45  graph, and shall not be required to recapture any credit with respect to
    46  property which was destroyed or which ceased to be in qualified use as a
    47  direct  result  of  such attacks, whether or not it meets the employment
    48  test specified in clause (i) of subparagraph (A) of this paragraph.
    49    (j) Credit for purchase of  an  automated  external  defibrillator.  A
    50  taxpayer  shall be allowed a credit as hereinafter provided, against the
    51  tax imposed by this article for the purchase, other than for resale,  of
    52  an  automated external defibrillator, as such term is defined in section
    53  three thousand-b of the public health law.  The  amount  of  the  credit
    54  shall  be  the cost to the taxpayer of automated external defibrillators
    55  purchased during the taxable  year,  such  credit  not  to  exceed  five
    56  hundred  dollars with respect to each unit purchased. The credit allowed

        S. 3456                            68
     1  under this subsection for any taxable year shall not reduce the tax  due
     2  for  such  year  to less than the minimum tax fixed by subsection (b) of
     3  section fourteen hundred fifty-five of this article.
     4    (k)  (1)  A taxpayer shall be allowed a credit against the tax imposed
     5  by this article equal to twenty percent of the premium paid  during  the
     6  taxable  year for long-term care insurance. In order to qualify for such
     7  credit, the taxpayer's premium payment must be for the  purchase  of  or
     8  for  continuing  coverage  under  a long-term care insurance policy that
     9  qualifies for such credit pursuant to section one thousand  one  hundred
    10  seventeen of the insurance law.
    11    (2)  In  no event shall the credit herein provided for, and carryovers
    12  of such credit, be allowed in an amount which will reduce the tax  paya-
    13  ble  to less than the dollar amount fixed as a minimum tax by subsection
    14  (b) of section fourteen hundred fifty-five of this article. If, however,
    15  the amount of credit or carryovers of such credit,  or  both,  allowable
    16  under  this  subsection  for  any  taxable  year reduces the tax to such
    17  amount, any amount of credit or  carryovers  of  such  credit  thus  not
    18  deductible  in  such  taxable  year may be carried over to the following
    19  year or years and may be deducted from the taxpayer's tax for such  year
    20  or years.
    21    (l)  Low-income  housing  credit.  (1) Allowance of credit. A taxpayer
    22  shall be allowed a credit against the tax imposed by this  article  with
    23  respect  to  the ownership of eligible low-income buildings, computed as
    24  provided in section eighteen of this chapter.
    25    (2) Application of credit. The credit and carryovers  of  such  credit
    26  allowed  under  this  subsection  for any taxable year shall not, in the
    27  aggregate, reduce the tax due for such year to less than the minimum tax
    28  fixed by subsection (b) of section fourteen hundred fifty-five  of  this
    29  article.  However, if the amount of credit or carryovers of such credit,
    30  or both, allowed under this subsection for any taxable year reduces  the
    31  tax  to  such  amount,  then  any amount of credit or carryovers of such
    32  credit thus not deductible in such taxable year may be carried  over  to
    33  the  following year or years and may be deducted from the taxpayer's tax
    34  for such year or years.
    35    (3) Credit recapture. For provisions requiring  recapture  of  credit,
    36  see subdivision (b) of section eighteen of this chapter.
    37    (m)  Green  building credit. (1) Allowance of credit. A taxpayer shall
    38  be allowed a credit, to be computed as provided in section  nineteen  of
    39  this chapter, against the tax imposed by this article.
    40    (2)  Carryover. The credit and carryovers of such credit allowed under
    41  this subsection for any taxable year shall not, in the aggregate, reduce
    42  the tax due for such  year  to  less  than  the  minimum  tax  fixed  by
    43  subsection  (b)  of section fourteen hundred fifty-five of this article.
    44  However, if the amount of credit or carryovers of such credit, or  both,
    45  allowed  under  this  subsection for any taxable year reduces the tax to
    46  such amount, then any amount of credit or carryovers of such credit thus
    47  not deductible in such taxable year may be carried over to the following
    48  year or years and may be deducted from the taxpayer's tax for such  year
    49  or years.
    50    (n) Credit for transportation improvement contributions. (1) Allowance
    51  of  credit.  A  taxpayer  shall  be  allowed a credit, to be computed as
    52  provided in section twenty of this chapter, against the tax  imposed  by
    53  this article.
    54    (2)  Application  of  credit. The credit allowed under this subsection
    55  for any taxable year shall not reduce the tax due for such year to  less
    56  than the minimum tax fixed by subsection (b) of section fourteen hundred

        S. 3456                            69
     1  fifty-five  of  this  article.  However, if the amount of credit allowed
     2  under this subsection for any taxable  year  reduces  the  tax  to  such
     3  amount,  then  any  amount of credit thus not deductible in such taxable
     4  year  shall  be  treated  as  an  overpayment  of  tax to be credited or
     5  refunded in accordance with  the  provisions  of  section  one  thousand
     6  eighty-six  of  this  chapter.  Provided,  however,  the  provisions  of
     7  subsection (c) of section one  thousand  eighty-eight  of  this  chapter
     8  notwithstanding, no interest shall be paid thereon.
     9    (3)  Credit  recapture.  For provisions requiring recapture of credit,
    10  see subdivision (c) of section twenty of this chapter.
    11    (o) QEZE credit for real property taxes. (1) Allowance  of  credit.  A
    12  taxpayer  which is a qualified empire zone enterprise shall be allowed a
    13  credit for eligible real property taxes, to be computed as  provided  in
    14  section  fifteen  of this chapter, against the tax imposed by this arti-
    15  cle.
    16    (2) Application of credit. The credit allowed  under  this  subsection
    17  for  any taxable year shall not reduce the tax due for such year to less
    18  than the minimum tax fixed by subsection (b) of section fourteen hundred
    19  fifty-five of this article. However, if the  amount  of  credit  allowed
    20  under  this  subsection  for  any  taxable  year reduces the tax to such
    21  amount, then any amount of credit thus not deductible  in  such  taxable
    22  year  shall  be  treated  as  an  overpayment  of  tax to be credited or
    23  refunded in accordance with  the  provisions  of  section  one  thousand
    24  eighty-six  of  this  chapter.  Provided,  however,  the  provisions  of
    25  subsection (c) of section one  thousand  eighty-eight  of  this  chapter
    26  notwithstanding, no interest shall be paid thereon.
    27    (p)  QEZE  tax  reduction  credit. (1) Allowance of credit. A taxpayer
    28  which is a qualified empire zone enterprise shall be allowed a QEZE  tax
    29  reduction  credit, to be computed as provided in section sixteen of this
    30  chapter, against the tax imposed by this article.
    31    (2) Application of credit. The credit allowed  under  this  subsection
    32  for  any taxable year shall not reduce the tax due for such year to less
    33  than the minimum tax fixed by  paragraph  three  of  subsection  (b)  of
    34  section fourteen hundred fifty-five of this article.
    35    (q)  Brownfield  redevelopment  tax credit. (1) Allowance of credit. A
    36  taxpayer shall be allowed a  credit,  to  be  computed  as  provided  in
    37  section  twenty-one  of  this  chapter,  against the tax imposed by this
    38  article.
    39    (2) Application of credit. The credit allowed  under  this  subsection
    40  for  any taxable year shall not reduce the tax due for such year to less
    41  than the minimum tax fixed by  paragraph  three  of  subsection  (b)  of
    42  section  fourteen  hundred  fifty-five  of this article. However, if the
    43  amount of credits allowed under this subsection  for  any  taxable  year
    44  reduces the tax to such amount, any amount of credit thus not deductible
    45  in  such  taxable  year  shall be treated as an overpayment of tax to be
    46  credited or refunded in accordance with the provisions  of  section  one
    47  thousand  eighty-six  of this chapter. Provided, however, the provisions
    48  of subsection (c) of section one thousand eighty-eight of  this  chapter
    49  notwithstanding, no interest shall be paid thereon.
    50    (r) Remediated brownfield credit for real property taxes for qualified
    51  sites.    (1)  Allowance of credit. A taxpayer which is a developer of a
    52  qualified site shall be allowed a  credit  for  eligible  real  property
    53  taxes,  to be computed as provided in subdivision (b) of section twenty-
    54  two of this chapter, against  the  tax  imposed  by  this  article.  For
    55  purposes  of this subsection, the terms "qualified site" and "developer"

        S. 3456                            70
     1  shall have the same meaning as set forth in paragraphs  two  and  three,
     2  respectively, of subdivision (a) of section twenty-two of this chapter.
     3    (2)  Application  of  credit. The credit allowed under this subsection
     4  for any taxable year shall not reduce the tax due for such year to  less
     5  than  the  minimum  tax  fixed  by  paragraph three of subsection (b) of
     6  section fourteen hundred fifty-five of this  article.  However,  if  the
     7  amount  of  credit  allowed  under  this subsection for any taxable year
     8  reduces the tax to such amount, any amount of credit thus not deductible
     9  in such taxable year shall be treated as an overpayment  of  tax  to  be
    10  credited  or  refunded  in accordance with the provisions of section one
    11  thousand eighty-six of this chapter. Provided, however,  the  provisions
    12  of  subsection  (c) of section one thousand eighty-eight of this chapter
    13  notwithstanding, no interest shall be paid thereon.
    14    (s) Environmental remediation insurance credit. (1) Allowance of cred-
    15  it. A taxpayer shall be allowed a credit, to be computed as provided  in
    16  section  twenty-three  of  this chapter, against the tax imposed by this
    17  article.
    18    (2) Application of credit. The credit allowed under  this  subdivision
    19  for  any taxable year shall not reduce the tax due for such year to less
    20  than the minimum tax fixed by  paragraph  three  of  subsection  (b)  of
    21  section  fourteen  hundred  fifty-five  of this article. However, if the
    22  amount of credits allowed under this subdivision for  any  taxable  year
    23  reduces the tax to such amount, any amount of credit thus not deductible
    24  in  such  taxable  year  shall be treated as an overpayment of tax to be
    25  credited or refunded in accordance with the provisions  of  section  one
    26  thousand  eighty-six  of this chapter. Provided, however, the provisions
    27  of subsection (c) of section one thousand eighty-eight of  this  chapter
    28  notwithstanding, no interest shall be paid thereon.
    29    (t)  Security training tax credit. (1) Allowance of credit. A taxpayer
    30  shall be allowed a credit, to be computed as provided in  section  twen-
    31  ty-six of this chapter, against the tax imposed by this article.
    32    (2)  Application  of  credit. The credit allowed under this subsection
    33  for any taxable year shall not reduce the tax due for such year to  less
    34  than  the  minimum  tax  fixed  by  paragraph three of subsection (b) of
    35  section fourteen hundred fifty-five of this  article.  However,  if  the
    36  amount  of  credits  allowed  under this subsection for any taxable year
    37  reduces the tax to such amount, any amount of credit thus not deductible
    38  in such taxable year shall be treated as an overpayment  of  tax  to  be
    39  credited  or  refunded  in accordance with the provisions of section one
    40  thousand eighty-six of this chapter. Provided, however,  the  provisions
    41  of  subsection  (c) of section one thousand eighty-eight of this chapter
    42  notwithstanding, no interest shall be paid thereon.
    43    (u) Credit for fuel cell electric generating  equipment  expenditures.
    44  (1)  Allowance  of  credit.  For  taxable years beginning before January
    45  first, two thousand nine, a taxpayer shall be allowed a  credit  against
    46  the  tax imposed by this article, equal to its qualified fuel cell elec-
    47  tric generating equipment expenditures. This credit shall not exceed one
    48  thousand five hundred dollars per generating unit with  respect  to  any
    49  taxable  year.  The  credit  provided  for  in  this subsection shall be
    50  allowed with respect to the taxable year in which the fuel cell electric
    51  generating equipment is placed in service.
    52    (2) Qualified fuel cell electric  generating  equipment  expenditures.
    53  (A)  Qualified  fuel cell electric generating equipment expenditures are
    54  the costs, incurred on or after July first, two thousand  five,  associ-
    55  ated with the purchase of on-site electricity generation units utilizing
    56  proton exchange membrane fuel cells, providing a rated baseload capacity

        S. 3456                            71
     1  of  no  less than one kilowatt and no more than one hundred kilowatts of
     2  electricity, which are located in this state at the time  the  qualified
     3  fuel cell electric generating equipment is placed in service.
     4    (B)  Qualified  fuel  cell  electric generating equipment expenditures
     5  shall also include costs, incurred on or after July first, two  thousand
     6  five,  for  materials,  labor  for  on-site  preparation,  assembly  and
     7  original installation, engineering services, designs and plans  directly
     8  related to construction or installation and utility compliance costs.
     9    (C)  Such  qualified  expenditures shall not include interest or other
    10  finance charges.
    11    (D) The amount of any federal, state or local grant  received  by  the
    12  taxpayer,  which  was  used  for the purpose and/or installation of such
    13  equipment and which was not included in the federal gross income of  the
    14  taxpayer, shall not be included in the amount of such qualified expendi-
    15  tures.
    16    (3)  Application  of  credit. The credit allowed under this subsection
    17  for any taxable year shall not reduce the tax due for such year to  less
    18  than  the  minimum  tax  fixed  by  paragraph three of subsection (b) of
    19  section fourteen hundred fifty-five of this  article.  However,  if  the
    20  amount  of  credit  allowed  under  this subsection for any taxable year
    21  reduces the tax to such amount, any amount of credit thus not deductible
    22  in such taxable year may be carried over to the following year or  years
    23  and may be deducted from the taxpayer's tax for such year or years.
    24    (v)  Excelsior  jobs  program  tax  credit. (1) Allowance of credit. A
    25  taxpayer will be allowed a credit, to be computed as provided in section
    26  thirty-one of this chapter, against the tax imposed by this article.
    27    (2) The credit allowed under this subsection for any taxable year will
    28  not reduce the tax due for such year to less than the minimum tax  fixed
    29  by  paragraph three of subsection (b) of section fourteen hundred fifty-
    30  five of this article. However, if the amount  of  credit  allowed  under
    31  this subsection for any taxable year reduces the tax to such amount, any
    32  amount of credit thus not deductible in such taxable year will be treat-
    33  ed  as  an  overpayment  of tax to be credited or refunded in accordance
    34  with the provisions of section one thousand eighty-six of this  chapter.
    35  Provided, however, the provisions of subsection (c) of section one thou-
    36  sand  eighty-eight  of this chapter notwithstanding, no interest will be
    37  paid thereon.
    38    (w) Credit for rehabilitation of  historic  properties.  (1)  (A)  For
    39  taxable  years beginning on or after January first, two thousand ten and
    40  before January first, two thousand twenty, a taxpayer shall be allowed a
    41  credit as hereinafter provided, against the tax imposed by this article,
    42  in an amount equal to one  hundred  percent  of  the  amount  of  credit
    43  allowed  the  taxpayer  with  respect  to a certified historic structure
    44  under subsection (a)(2) of section 47 of the  federal  internal  revenue
    45  code  with  respect to a certified historic structure located within the
    46  state. Provided, however, the  credit  shall  not  exceed  five  million
    47  dollars.  For  taxable  years  beginning  on or after January first, two
    48  thousand twenty, a taxpayer shall be allowed  a  credit  as  hereinafter
    49  provided, against the tax imposed by this article, in an amount equal to
    50  thirty percent of the amount of credit allowed the taxpayer with respect
    51  to  a certified historic structure under subsection (a)(2) of section 47
    52  of the federal internal revenue code with respect to a certified histor-
    53  ic structure located within the state.  Provided,  however,  the  credit
    54  shall not exceed one hundred thousand dollars.
    55    (B)  If the taxpayer is a partner in a partnership or a shareholder of
    56  a New York S corporation, then the credit caps imposed  in  subparagraph

        S. 3456                            72
     1  (A)  of this paragraph shall be applied at the entity level, so that the
     2  aggregate credit allowed to all the partners  or  shareholders  of  each
     3  such  entity  in the taxable year does not exceed the credit cap that is
     4  applicable in that taxable year.
     5    (2)  Tax  credits allowed pursuant to this subsection shall be allowed
     6  in the taxable year that  the  qualified  rehabilitation  is  placed  in
     7  service under section 167 of the federal internal revenue code.
     8    (3)  If  the credit allowed the taxpayer pursuant to section 47 of the
     9  internal revenue code with respect  to  a  qualified  rehabilitation  is
    10  recaptured  pursuant  to  subsection  (a)  of section 50 of the internal
    11  revenue code, a portion of the credit allowed under this subsection must
    12  be added back in the same taxable year and in the same proportion as the
    13  federal recapture.
    14    (4) The credit allowed under this  subsection  for  any  taxable  year
    15  shall not reduce the tax to less than the dollar amount fixed as a mini-
    16  mum tax by subsection (b) of section fourteen hundred fifty-five of this
    17  article.  However, if the amount of credit allowed under this subsection
    18  for any taxable year reduces the tax to such amount, any amount of cred-
    19  it thus not deductible in such taxable year shall be treated as an over-
    20  payment of tax to  be  credited  or  refunded  in  accordance  with  the
    21  provisions of section one thousand eighty-six of this chapter. Provided,
    22  however, the provisions of subsection (c) of section one thousand eight-
    23  y-eight of this chapter notwithstanding, no interest shall be paid ther-
    24  eon.
    25    (5)  To be eligible for the credit allowable under this subsection the
    26  rehabilitation project shall be in whole or in  part  located  within  a
    27  census  tract  which  is  identified  as  being  at or below one hundred
    28  percent of the state median family income as calculated  as  of  January
    29  first  of  each  year  using the most recent five year estimate from the
    30  American community survey published by the United States Census bureau.
    31    (x) Temporary deferral nonrefundable payout credit. (1)  Allowance  of
    32  credit. A taxpayer shall be allowed a credit, to be computed as provided
    33  in  subdivision  one of section thirty-four of this chapter, against the
    34  tax imposed by this article.
    35    (2) Application of credit. The credit allowed under  this  subdivision
    36  for  any taxable year shall not reduce the tax due for that year to less
    37  than the minimum tax fixed by subsection (b) of section fourteen hundred
    38  fifty-five of this article. However, if the  amount  of  credit  allowed
    39  under  this  subdivision  for  any  taxable year reduces the tax to such
    40  amount, any amount of credit thus not deductible in  such  taxable  year
    41  may  be  carried over to the following year or years and may be deducted
    42  from the taxpayer's tax for such year or years.
    43    (y) Temporary deferral refundable  payout  credit.  (1)  Allowance  of
    44  credit. A taxpayer shall be allowed a credit, to be computed as provided
    45  in  subdivision  two of section thirty-four of this chapter, against the
    46  tax imposed by this article.
    47    (2) Application of credit. In no event shall  the  credit  under  this
    48  section  be  allowed in an amount which will reduce the tax to less than
    49  the minimum tax fixed by subsection  (b)  of  section  fourteen  hundred
    50  fifty-five  of  this  article. If, however, the amount of credit allowed
    51  under this section for any taxable year reduces the tax to such  amount,
    52  any amount of credit not deductible in such taxable year shall be treat-
    53  ed  as  an  overpayment  of  tax  to  be refunded in accordance with the
    54  provisions of section one thousand eighty-six of this chapter,  provided
    55  however, that no interest shall be paid thereon.

        S. 3456                            73
     1    (z)  Economic  transformation  and  facility redevelopment program tax
     2  credit. (1) Allowance of credit. A taxpayer shall be allowed  a  credit,
     3  to  be  computed  as  provided  in  section thirty-five of this chapter,
     4  against the tax imposed by this article.
     5    (2) The credit allowed under this subsection for any taxable year will
     6  not  reduce the tax due for such year to less than the minimum tax fixed
     7  by paragraph three of subsection (b) of section fourteen hundred  fifty-
     8  five  of  this  article.  However, if the amount of credit allowed under
     9  this subsection for any taxable year reduces the tax to such amount, any
    10  amount of credit thus not deductible in such taxable year will be treat-
    11  ed as an overpayment of tax to be credited  or  refunded  in  accordance
    12  with  the provisions of section one thousand eighty-six of this chapter.
    13  Provided, however, the provisions of subsection (c) of section one thou-
    14  sand eighty-eight of this chapter notwithstanding, no interest  will  be
    15  paid thereon.
    16    (aa)  Empire  state  jobs  retention  program credit. (1) Allowance of
    17  credit.   A taxpayer shall be  allowed  a  credit,  to  be  computed  as
    18  provided  in  section  thirty-six  of  this  chapter,  against the taxes
    19  imposed by this article.
    20    (2) Application of credit. The credit allowed  under  this  subsection
    21  for  any  taxable year will not reduce the tax due for such year to less
    22  than the minimum tax fixed by this article. However, if  the  amount  of
    23  credit  allowed  under  this subsection for any taxable year reduces the
    24  tax to such amount, any amount of credit thus  not  deductible  in  such
    25  taxable  year will be treated as an overpayment of tax to be credited or
    26  refunded in accordance with  the  provisions  of  section  one  thousand
    27  eighty-six  of  this  chapter.  Provided,  however,  the  provisions  of
    28  subsection (c) of section one  thousand  eighty-eight  of  this  chapter
    29  notwithstanding, no interest will be paid thereon.
    30    (bb)  Minimum  wage  reimbursement  credit. (1) Allowance of credit. A
    31  taxpayer shall be allowed a credit, to be  computed  as  provided  under
    32  section  thirty-eight  of  this chapter, against the tax imposed by this
    33  article.
    34    (2) Application of credit. The credit allowed  under  this  subsection
    35  for any taxable year shall not, in the aggregate, reduce the tax due for
    36  such  year  to  less  than  the  minimum  tax fixed by subsection (b) of
    37  section fourteen hundred fifty-five of this  article.  However,  if  the
    38  amount  of  credit  of such credit allowed under this subsection for any
    39  taxable year reduces the tax to such amount, then any amount  of  credit
    40  thus  not  deductible  shall  be  treated as an overpayment of tax to be
    41  credited or refunded in accordance with the provisions  of  section  one
    42  thousand  eighty-six  of this chapter. Provided, however, the provisions
    43  of subsection (c) of section one thousand eighty-eight of  this  chapter
    44  notwithstanding, no interest shall be paid thereon.
    45    §  1460.  Declarations  of estimated tax. (a) Requirements of declara-
    46  tion. Every taxpayer subject to the tax imposed  by  subsection  (a)  of
    47  section fourteen hundred fifty-one of this article shall make a declara-
    48  tion  of its estimated tax for the current taxable year, containing such
    49  information as the commissioner of taxation and finance may prescribe by
    50  regulations or instructions, if such estimated  tax  can  reasonably  be
    51  expected to exceed one thousand dollars. If a taxpayer is subject to the
    52  tax  surcharge  imposed by section fourteen hundred fifty-five-B of this
    53  article and such  taxpayer's  estimated  tax  under  subsection  (a)  of
    54  section  fourteen  hundred  fifty-one  of this article can reasonably be
    55  expected to exceed one thousand dollars, such taxpayer shall also make a
    56  declaration of its estimated tax surcharge for the current taxable year.

        S. 3456                            74
     1    (b) Definition of estimated tax and estimated tax surcharge. The terms
     2  "estimated tax" and "estimated tax surcharge" mean the amounts  which  a
     3  taxpayer  estimates to be the tax or tax surcharge imposed by subsection
     4  (a) of section fourteen hundred fifty-one of this  article  or  fourteen
     5  hundred  fifty-five-B  of  this  article,  respectively, for the current
     6  taxable year, less the amount which it estimates to be the  sum  of  any
     7  credits allowable against the tax or tax surcharge, respectively.
     8    (c)  Time for filing declaration. A declaration of estimated tax and a
     9  declaration of estimated tax surcharge shall be filed on or before  June
    10  fifteenth  of  the  current taxable year in the case of a taxpayer which
    11  reports on the basis of a calendar year, except that if the requirements
    12  of subsection (a) of this section are first met:
    13    (1) after May thirty-first and before September first of such  current
    14  taxable  year,  the  declaration  shall  be filed on or before September
    15  fifteenth, or
    16    (2) after August  thirty-first  and  before  December  first  of  such
    17  current taxable year, the declaration shall be filed on or before Decem-
    18  ber fifteenth.
    19    (d)  Amendments  of  declaration.  A  taxpayer may amend a declaration
    20  under regulations of the tax commission.
    21    (e) Return as declaration. If, on or before February fifteenth of  the
    22  succeeding year in the case of a taxpayer whose taxable year is a calen-
    23  dar  year, a taxpayer files its return for the year for which the decla-
    24  ration is required, and pays therewith the balance, if any, of the  full
    25  amount of the tax or tax surcharge shown to be due on the return:
    26    (1)  such return shall be considered as its declaration if no declara-
    27  tion was required to be filed during the taxable year for which the  tax
    28  or  tax  surcharge was imposed, but is otherwise required to be filed on
    29  or before December fifteenth pursuant to paragraph two of subsection (c)
    30  of this section, and
    31    (2) such return shall be considered  as  the  amendment  permitted  by
    32  subsection  (d)  of  this  section  to  be  filed  on or before December
    33  fifteenth if the tax or tax surcharge shown on  the  return  is  greater
    34  than  the  estimated tax or estimated tax surcharge, as the case may be,
    35  shown on a declaration previously made.
    36    (f) Fiscal year. This section shall apply to taxable years  of  twelve
    37  months  other than a calendar year by the substitutions of the months of
    38  such fiscal year for the corresponding months specified in this section.
    39    (g) Short taxable period. If the taxable period for which a tax or tax
    40  surcharge is imposed by  subsection  (a)  of  section  fourteen  hundred
    41  fifty-one  of  this  article or section fourteen hundred fifty-five-B of
    42  this article, respectively, is less than twelve months,  every  taxpayer
    43  required  to  make  a  declaration  of estimated tax or a declaration of
    44  estimated tax surcharge for such taxable period shall make such a decla-
    45  ration in accordance with regulations of the  commissioner  of  taxation
    46  and finance.
    47    (h)  Extension  of  time.  The  tax  commission may grant a reasonable
    48  extension of time, not to exceed three months, for  the  filing  of  any
    49  declaration  required pursuant to this section, on such terms and condi-
    50  tions as it may require.
    51    § 1461. Payments of estimated tax. (a) Every taxpayer subject  to  the
    52  tax  imposed  by section fourteen hundred fifty-one of this article must
    53  pay an amount equal to (i) twenty-five percent of the  preceding  year's
    54  tax  if  the  preceding year's tax exceeded one thousand dollars but was
    55  equal to or less than  one  hundred  thousand  dollars,  or  (ii)  forty
    56  percent of the preceding year's tax if the preceding year's tax exceeded

        S. 3456                            75
     1  one  hundred  thousand  dollars. The amount must be paid with the return
     2  required to be filed for the preceding taxable year or with an  applica-
     3  tion  for an extension of the time for filing the return. If the preced-
     4  ing  year's tax under section fourteen hundred fifty-one of this article
     5  exceeded one thousand dollars and the taxpayer is  subject  to  the  tax
     6  surcharge imposed by section fourteen hundred fifty-five-B of this arti-
     7  cle,  the  taxpayer must also pay with the tax surcharge return required
     8  to be filed for the preceding taxable year, or with an  application  for
     9  an  extension  of the time for filing the return, an amount equal to (i)
    10  twenty-five percent of the tax surcharge imposed for the preceding  year
    11  if  the preceding year's tax was equal to or less than one hundred thou-
    12  sand dollars, or (ii) forty percent of the tax surcharge imposed for the
    13  preceding year if the preceding year's tax exceeded one hundred thousand
    14  dollars.
    15    (b) Other installments. The estimated tax or estimated  tax  surcharge
    16  for  each  taxable year with respect to which a declaration of estimated
    17  tax or a  declaration  of  estimated  tax  surcharge,  respectively,  is
    18  required  to be filed under this article shall be paid, in the case of a
    19  taxpayer which reports on the basis of a calendar year, as follows:
    20    (1) If the declaration is filed on or before June fifteenth, the esti-
    21  mated tax or estimated tax surcharge shown thereon, after applying ther-
    22  eto the amount, if any, paid during the same taxable  year  pursuant  to
    23  subsection  (a)  of  this section, shall be paid in three equal install-
    24  ments. One of such installments shall be paid at the time of the  filing
    25  of  the  declaration,  one  shall  be  paid  on  the following September
    26  fifteenth, and one on the following December fifteenth.
    27    (2) If the declaration is filed after June  fifteenth  and  not  after
    28  September  fifteenth  of  such  taxable  year, and is not required to be
    29  filed on or before June fifteenth of such  year  the  estimated  tax  or
    30  estimated tax surcharge shown on such declaration, after applying there-
    31  to  the  amount,  if  any, paid during the same taxable year pursuant to
    32  subsection (a) of this section, shall be paid in two equal installments.
    33  One of such installments shall be paid at the time of the filing of  the
    34  declaration and one shall be paid on the following December fifteenth.
    35    (3)  If  the  declaration  is  filed after September fifteenth of such
    36  taxable year, and is not required to be filed  on  or  before  September
    37  fifteenth  of  such  year,  the estimated tax or estimated tax surcharge
    38  shown on such declaration, after applying thereto the  amount,  if  any,
    39  paid  in respect of such year pursuant to subsection (a) of this section
    40  shall be paid in full at the time of the filing of the declaration.
    41    (4) If the declaration is filed after the time prescribed therefor, or
    42  after the expiration of any extension of time therefor,  paragraphs  two
    43  and  three of this subsection shall not apply and there shall be paid at
    44  the time of such filing all installments of estimated tax  or  estimated
    45  tax surcharge payable at or before such time, and the remaining install-
    46  ments  shall be paid at the times at which, and in the amounts in which,
    47  they would have been payable if the declaration had been filed when due.
    48    (c) Amendments of declarations. If any amendment of a  declaration  is
    49  filed, the remaining installments, if any, shall be ratably increased or
    50  decreased  (as  the  case may be) to reflect any increase or decrease in
    51  the estimated tax or estimated tax surcharge by reason  of  such  amend-
    52  ment,  and  if  any  amendment  is made after September fifteenth of the
    53  taxable year, any  increase  in  the  estimated  tax  or  estimated  tax
    54  surcharge  by  reason  thereof  shall be paid at the time of making such
    55  amendment.

        S. 3456                            76
     1    (d) Application of installments based on the preceding year's tax. (1)
     2  Any amount paid pursuant to subsection (a)  of  this  section  shall  be
     3  applied  as  a  first installment against the estimated tax or estimated
     4  tax surcharge, respectively, of the taxpayer for the taxable year  shown
     5  on  the  declaration  required  to be filed pursuant to section fourteen
     6  hundred sixty of this article, or if no declaration of estimated tax  or
     7  a  declaration of estimated tax surcharge is required to be filed by the
     8  taxpayer pursuant to such section, any such amount shall be considered a
     9  payment on account of the tax or  tax  surcharge  shown  on  the  return
    10  required to be filed by the taxpayer for such taxable year.
    11    (2)  Any  amount  paid pursuant to paragraph four of subsection (c) of
    12  section six hundred fifty-eight of this chapter on behalf of a  taxpayer
    13  subject to tax under this article shall be applied against the estimated
    14  tax  of  the  taxpayer  for  the  taxable  year shown on the declaration
    15  required to be filed pursuant to section fourteen hundred sixty of  this
    16  article,  or  if  no  declaration is filed pursuant to such section, any
    17  such amount shall be considered a payment on account of tax shown on the
    18  return required to be filed by the taxpayer for such taxable year.
    19    (e) Interest on certain installments based  on  the  preceding  year's
    20  tax. Notwithstanding the provisions of section one thousand eighty-eight
    21  of  this  chapter  or of section sixteen of the state finance law, if an
    22  amount paid pursuant to subsection (a) of this section exceeds  the  tax
    23  or tax surcharge, respectively, shown on the return required to be filed
    24  by  the  taxpayer for the taxable year during which the amount was paid,
    25  interest shall be allowed and paid on the amount by which the amount  so
    26  paid  pursuant  to such subsection exceeds such tax or tax surcharge, at
    27  the overpayment rate set by the commissioner  of  taxation  and  finance
    28  pursuant  to  section  one thousand ninety-six of this chapter, or if no
    29  rate is set, at the rate of six per cent per  annum  from  the  date  of
    30  payment  of  the  amount  so  paid  pursuant  to  such subsection to the
    31  fifteenth day of the third month following  the  close  of  the  taxable
    32  year, provided, however, that no interest shall be allowed or paid under
    33  this subsection if the amount thereof is less than one dollar.
    34    (f)  The  preceding  year's tax defined. As used in this section, "the
    35  preceding year's tax"  means  the  tax  imposed  upon  the  taxpayer  by
    36  subsection (a) of section fourteen hundred fifty-one of this article for
    37  the  preceding  taxable  year,  or,  for purposes of computing the first
    38  installment of estimated tax when an  application  has  been  filed  for
    39  extension  of  the  time  for filing the return required to be filed for
    40  such preceding taxable year, the amount properly estimated  pursuant  to
    41  paragraph  one of subsection (b) of section fourteen hundred sixty-three
    42  of this article as the tax imposed upon the taxpayer  for  such  taxable
    43  year.
    44    (g) Application to short taxable period. This section shall apply to a
    45  taxable period of less than twelve months in accordance with regulations
    46  of the tax commission.
    47    (h) Fiscal year. The provisions of this section shall apply to taxable
    48  years of twelve months other than a calendar year by the substitution of
    49  the months of such fiscal year for the corresponding months specified in
    50  such provisions.
    51    (i)  Extension  of  time. The commissioner of taxation and finance may
    52  grant a reasonable extension of time, not  to  exceed  six  months,  for
    53  payment  of  any installment of estimated tax or estimated tax surcharge
    54  required pursuant to this section, on such terms and  conditions  as  he
    55  may require, including the furnishing of a bond or other security by the
    56  taxpayer  in  an  amount  not  exceeding  twice the amount for which any

        S. 3456                            77
     1  extension of time for payment is granted, provided, however, that inter-
     2  est at the underpayment rate set by the commissioner pursuant to section
     3  one thousand ninety-six of this chapter, or if no rate is  set,  at  the
     4  rate  of  six per centum per annum for the period of the extension shall
     5  be charged and collected on the amount for which any extension  of  time
     6  for payment is granted under this subsection.
     7    (j)  Payment  of  installments in advance. A taxpayer may elect to pay
     8  any installment of estimated tax or estimated tax surcharge prior to the
     9  date prescribed in this section for payment thereof.
    10    § 1462. Returns. (a) Every taxpayer, as well as  every  other  banking
    11  corporation having an employee, including any officer, within the state,
    12  shall annually on or before the fifteenth day of the third month follow-
    13  ing  the  close of each of its taxable years transmit to the tax commis-
    14  sion a return in a form prescribed by it setting forth such  information
    15  as  the  tax commission may prescribe and every taxpayer which ceases to
    16  exercise its franchise or to be subject to the tax imposed by this arti-
    17  cle shall transmit to the tax commission a return on the  date  of  such
    18  cessation or at such other time as the tax commission may require cover-
    19  ing  each  year  or period for which no return was theretofore filed. In
    20  the case of a termination year of an S corporation, the S short year and
    21  the C short year shall be  treated  as  separate  short  taxable  years,
    22  provided, however, the due date of the report for the S short year shall
    23  be the same as the due date of the report for the C short year.
    24    (b)  Every  taxpayer  shall  also transmit such other returns and such
    25  facts and information as the tax commission may require in the  adminis-
    26  tration of this article.
    27    (c)  The  tax  commission may grant a reasonable extension of time for
    28  filing returns whenever good cause exists. An automatic extension of six
    29  months for the filing of its annual return shall be allowed any  taxpay-
    30  er,  if  within  the  time prescribed by subsection (a) of this section,
    31  such taxpayer files with the tax commission an application for extension
    32  in such form as said commission may prescribe by regulation and pays  on
    33  or  before  the date of such filing the amount properly estimated as its
    34  tax.
    35    (d) Every return shall have annexed thereto  a  certification  by  the
    36  president,   vice   president,  treasurer,  assistant  treasurer,  chief
    37  accounting officer or any other officer of the taxpayer duly  authorized
    38  so  to act to the effect that the statements contained therein are true.
    39  The fact that an individual's name is signed on a certification  of  the
    40  return  shall be prima facie evidence that such individual is authorized
    41  to sign and certify the return on behalf of the corporation. In the case
    42  of an association or publicly traded partnership referred  to  in  para-
    43  graph one of subsection (f) of this section, such certification shall be
    44  made  by  any person duly authorized so to act on behalf of such associ-
    45  ation or publicly traded partnership.
    46    (e) If the amount of taxable income  or  alternative  minimum  taxable
    47  income  for  any  year of any taxpayer (including any taxpayer which has
    48  elected to be taxed under subchapter s of chapter one  of  the  internal
    49  revenue  code)  as  returned to the United States treasury department is
    50  changed or corrected by the commissioner of internal  revenue  or  other
    51  officer of the United States or other competent authority, such taxpayer
    52  shall  report  such  change  or  corrected taxable income or alternative
    53  minimum taxable income within ninety days (or one hundred  twenty  days,
    54  in  the  case  of a taxpayer making a combined return under this article
    55  for  such  year)  after  the  final  determination  of  such  change  or
    56  correction  or  as  required  by the commissioner, and shall concede the

        S. 3456                            78
     1  accuracy of such determination or state wherein  it  is  erroneous.  Any
     2  taxpayer  filing  an amended return with such department shall also file
     3  within ninety days (or one hundred twenty days, in the case of a taxpay-
     4  er making a combined return under this article for such year) thereafter
     5  an  amended return with the commissioner which shall contain such infor-
     6  mation as the commissioner shall require. The allowance of  a  tentative
     7  carryback adjustment based upon a net capital loss carryback pursuant to
     8  section sixty-four hundred eleven of the internal revenue code, shall be
     9  treated as a final determination for purposes of this subsection.
    10    (f) (1) For purposes of this subsection, the term "bank holding compa-
    11  ny" means any corporation subject to article three-A of the banking law,
    12  or  registered  under  the  federal bank holding company act of nineteen
    13  hundred fifty-six, as amended, or registered as a savings and loan hold-
    14  ing company (but excluding a diversified savings and loan holding compa-
    15  ny) under the federal national housing act, as amended. For purposes  of
    16  the  preceding sentence, the term "corporation" shall include an associ-
    17  ation, within the meaning  of  paragraph  three  of  subsection  (a)  of
    18  section  seventy-seven  hundred  one of the internal revenue code, and a
    19  publicly traded partnership treated as a corporation for purposes of the
    20  internal revenue code pursuant to  section  seventy-seven  hundred  four
    21  thereof.
    22    (2) (i) Any banking corporation or bank holding company which is exer-
    23  cising  its  corporate  franchise  or  doing business in this state in a
    24  corporate or organized capacity, and
    25    (A) which owns or controls, directly or indirectly, eighty percent  or
    26  more  of  the  voting  stock of one or more banking corporations or bank
    27  holding companies, or
    28    (B) whose voting stock is eighty percent or more owned or  controlled,
    29  directly  or  indirectly,  by  a  banking  corporation or a bank holding
    30  company, shall make a return on a  combined  basis  under  this  article
    31  covering itself and such corporations described in clause (A) or (B) and
    32  shall  set  forth  such  information  as  the tax commission may require
    33  unless the taxpayer or the tax commission shows that  the  inclusion  of
    34  such  a corporation in the combined return fails to properly reflect the
    35  tax liability of such corporation under this article. Provided, however,
    36  that no banking corporation or bank holding company not a taxpayer shall
    37  be subject to the requirements  of  this  subparagraph  unless  the  tax
    38  commission  deems that the application of such requirements is necessary
    39  in order to properly reflect  the  tax  liability  under  this  article,
    40  because  of  intercompany transactions or some agreement, understanding,
    41  arrangement or transaction of the type referred to in subsection (g)  of
    42  this section.
    43    (ii)  In the discretion of the tax commission, any banking corporation
    44  or bank holding company which is exercising its corporate  franchise  or
    45  doing business in this state in a corporate or organized capacity, and
    46    (A) which owns or controls, directly or indirectly, sixty-five percent
    47  or  more of the voting stock of one or more banking corporations or bank
    48  holding companies, or
    49    (B) whose  voting  stock  is  sixty-five  percent  or  more  owned  or
    50  controlled,  directly  or indirectly, by a banking corporation or a bank
    51  holding company, may be required or permitted to  make  a  return  on  a
    52  combined  basis under this article covering itself and such corporations
    53  described in clause (A) or (B) and shall set forth such  information  as
    54  the  tax  commission  may  require;  provided, however, that no combined
    55  return shall be required or permitted unless the  tax  commission  deems
    56  such  report  necessary  in  order to properly reflect the tax liability

        S. 3456                            79
     1  under this article of any one or more of such  banking  corporations  or
     2  bank holding companies.
     3    (iii) In the discretion of the tax commission, banking corporations or
     4  bank  holding  companies  which  are sixty-five percent or more owned or
     5  controlled, directly or indirectly, by the same interest may be  permit-
     6  ted  or required to make a return on a combined basis under this article
     7  and shall set forth such information as the tax commission may  require,
     8  if  at  least  one  such  banking corporation or bank holding company is
     9  exercising its corporate franchise or doing business in this state in  a
    10  corporate or organized capacity. No combined return shall be required or
    11  permitted unless the tax commission deems such report necessary in order
    12  to  properly  reflect the tax liability under this article of any one or
    13  more of such banking corporations or bank holding companies.
    14    (iv) (A) Notwithstanding any provision of  this  paragraph,  any  bank
    15  holding  company exercising its corporate franchise or doing business in
    16  the state may make a return on a  combined  basis  without  seeking  the
    17  permission  of  the commissioner with any banking corporation exercising
    18  its corporate franchise or doing business in the state in a corporate or
    19  organized capacity sixty-five percent or more of whose voting  stock  is
    20  owned or controlled, directly or indirectly, by such bank holding compa-
    21  ny,  for the first taxable year beginning on or after January first, two
    22  thousand and before January first, two thousand  nineteen  during  which
    23  such bank holding company registers for the first time under the federal
    24  bank  holding company act, as amended, and also elects to be a financial
    25  holding company. In addition, for each subsequent taxable year beginning
    26  after January first, two thousand and before January first, two thousand
    27  nineteen, any such bank holding company may file  on  a  combined  basis
    28  without  seeking  the  permission  of  the commissioner with any banking
    29  corporation that is exercising its corporate franchise or doing business
    30  in the state and sixty-five percent or more of  whose  voting  stock  is
    31  owned or controlled, directly or indirectly, by such bank holding compa-
    32  ny  if either such banking corporation is exercising its corporate fran-
    33  chise or doing business in the state in a corporate or organized capaci-
    34  ty for the first time during such subsequent taxable year, or sixty-five
    35  percent or more of the voting stock of such banking corporation is owned
    36  or controlled, directly or indirectly, by such bank holding company  for
    37  the  first  time during such subsequent taxable year.  Provided however,
    38  for each subsequent taxable year  beginning  after  January  first,  two
    39  thousand  and  before  January  first,  two thousand nineteen, a banking
    40  corporation described in either of the  two  preceding  sentences  which
    41  filed on a combined basis with any such bank holding company in a previ-
    42  ous  taxable  year,  must continue to file on a combined basis with such
    43  bank holding company if such banking corporation, during such subsequent
    44  taxable year, continues to exercise its corporate franchise or do  busi-
    45  ness  in  the  state in a corporate or organized capacity and sixty-five
    46  percent or more of such banking corporation's voting stock continues  to
    47  be  owned  or  controlled,  directly or indirectly, by such bank holding
    48  company, unless the permission of the commissioner has been obtained  to
    49  file  on  a  separate  basis  for such subsequent taxable year. Provided
    50  further, however, for each subsequent taxable year beginning after Janu-
    51  ary first, two thousand and before January first, two thousand nineteen,
    52  a banking corporation described in either of the first two sentences  of
    53  this  clause  which  did not file on a combined basis with any such bank
    54  holding company in a previous taxable year, may not file on  a  combined
    55  basis  with such bank holding company during any such subsequent taxable

        S. 3456                            80
     1  year unless the permission of the commissioner has been obtained to file
     2  on a combined basis for such subsequent taxable year.
     3    (B)  Notwithstanding any provision of this paragraph other than clause
     4  (A) of this subparagraph, the commissioner may not require a bank  hold-
     5  ing  company  which, during a taxable year beginning on or after January
     6  first, two thousand and before January  first,  two  thousand  nineteen,
     7  registers  for the first time during such taxable year under the federal
     8  bank holding company act, as amended, and also elects to be a  financial
     9  holding  company,  to  make a return on a combined basis for any taxable
    10  year beginning on or after January first, two thousand and before  Janu-
    11  ary  first,  two thousand nineteen with a banking corporation sixty-five
    12  percent or more of whose voting stock is owned or  controlled,  directly
    13  or indirectly, by such bank holding company.
    14    (v)  A banking corporation doing business in this state solely because
    15  it meets one or more of the tests in subparagraphs (i)  through  (v)  of
    16  paragraph one of subsection (c) of section fourteen hundred fifty-one of
    17  this  article  (referred  to  in  this  subparagraph as the "credit card
    18  bank") will not be included in a combined return  pursuant  to  subpara-
    19  graph  (i)  of  this  paragraph with another banking corporation or bank
    20  holding company which is exercising its  corporate  franchise  or  doing
    21  business  in  this state unless the credit card bank or the commissioner
    22  shows that the inclusion of the credit card bank in the combined  return
    23  is  necessary  to  properly reflect the tax liability of the credit card
    24  bank, the banking corporation or bank holding company under  this  arti-
    25  cle.  However,  any  banking  corporation  that meets one or more of the
    26  tests in subparagraphs (i) through (v) of paragraph  one  of  subsection
    27  (c) of section fourteen hundred fifty-one and was included in a combined
    28  return  for  its  last  taxable year beginning before January first, two
    29  thousand eight may continue to be included  in  a  combined  return  for
    30  future  taxable  years,  provided that once that banking corporation has
    31  been included in a combined return for any taxable year beginning on  or
    32  after January first, two thousand eight, it must continue to be included
    33  in a combined return until it obtains the consent of the commissioner to
    34  cease being included in a combined return because the combined return no
    35  longer  properly reflects the tax liability under this article of any of
    36  the corporations included in the combined return.  Further,  the  credit
    37  card  bank  will  be  included in a combined return with (i) any banking
    38  corporation not subject to tax under this article sixty-five percent  or
    39  more of whose voting stock is owned or controlled, directly or indirect-
    40  ly,  by  the  credit  card bank, or (ii) any banking corporation or bank
    41  holding company not subject to tax under  this  article  which  owns  or
    42  controls,  directly  or  indirectly,  sixty-five  percent or more of the
    43  voting stock of the credit card bank, or (iii) any  banking  corporation
    44  not  subject to tax under this article sixty-five percent or more of the
    45  voting stock of which is owned or controlled, directly or indirectly, by
    46  the same corporation or corporations that own or  control,  directly  or
    47  indirectly, sixty-five percent or more of the voting stock of the credit
    48  card  bank, if the corporation or corporations described in clauses (i),
    49  (ii) and (iii) of this subparagraph provide services for or  support  to
    50  the  credit  card  bank's operations, unless the credit card bank or the
    51  commissioner shows that the inclusion of any of  those  corporations  in
    52  the  combined  return fails to properly reflect the tax liability of the
    53  credit card bank. For purposes of this  subparagraph,  services  for  or
    54  support  to the credit card bank's operations include such activities as
    55  billing, credit investigation and reporting, marketing, research, adver-
    56  tising, mailing, customer service, information technology,  lending  and

        S. 3456                            81
     1  financing  services,  and  communications services, but will not include
     2  accounting, legal or personnel services.
     3    (vi)(A)  For purposes of this subparagraph, the term "closest control-
     4  ling stockholder" means the corporation that indirectly owns or controls
     5  over fifty percent of the voting stock of a captive REIT or captive RIC,
     6  is subject to tax under this article, article nine-A or article  thirty-
     7  three of this chapter or otherwise required to be included in a combined
     8  return  under  this  article,  article nine-A or article thirty-three of
     9  this chapter, and is the fewest tiers of corporations away in the owner-
    10  ship structure from the captive REIT or captive RIC. The commissioner is
    11  authorized to prescribe by regulation or published guidance the criteria
    12  for determining the closest controlling stockholder.
    13    (B) A captive REIT or a captive RIC must be  included  in  a  combined
    14  return with the banking corporation or bank holding company that direct-
    15  ly  owns  or  controls  over  fifty  percent  of the voting stock of the
    16  captive REIT or captive RIC if that banking corporation or bank  holding
    17  company  is  subject  to  tax  or  required to be included in a combined
    18  return under this article.
    19    (C) If over fifty percent of the voting stock of  a  captive  REIT  or
    20  captive RIC is not directly owned or controlled by a banking corporation
    21  or  bank  holding  company  that  is  subject  to  tax or required to be
    22  included in a combined return under this article, then the captive  REIT
    23  or  captive RIC must be included in a combined return or report with the
    24  corporation that is the closest controlling stockholder of  the  captive
    25  REIT  or  captive  RIC.  If  the  closest controlling stockholder of the
    26  captive REIT or captive RIC is a banking  corporation  or  bank  holding
    27  company that is subject to tax or otherwise required to be included in a
    28  combined return under this article, then the captive REIT or captive RIC
    29  must be included in a combined return under this article.
    30    (D)  If  the  corporation  which  directly owns or controls the voting
    31  stock of the captive REIT or captive RIC is  described  in  subparagraph
    32  (ii)  or  (iv) of paragraph four of this subsection as a corporation not
    33  permitted to make a combined return, then the provisions in  clause  (C)
    34  of  this  subparagraph  must  be applied to determine the corporation in
    35  whose combined return or report the captive REIT or captive  RIC  should
    36  be  included. If, under clause (C) of this subparagraph, the corporation
    37  that is the closest controlling  stockholder  of  the  captive  REIT  or
    38  captive  RIC is described in subparagraph (ii) or (iv) of paragraph four
    39  of this subsection as a corporation not permitted  to  make  a  combined
    40  return,  then  that  corporation  is  deemed  to not be in the ownership
    41  structure of the captive REIT or captive RIC, and the  closest  control-
    42  ling stockholder will be determined without regard to that corporation.
    43    (E)  If  a  captive REIT owns the stock of a qualified REIT subsidiary
    44  (as defined in paragraph two of subsection (i) of section eight  hundred
    45  fifty-six of the internal revenue code), then the qualified REIT subsid-
    46  iary  must be included in any combined return required to be made by the
    47  captive REIT that owns its stock.
    48    (F) If a captive REIT or a captive RIC is required under this subpara-
    49  graph to be included in a combined return with another corporation,  and
    50  that  other  corporation is required to be included in a combined return
    51  with another corporation under other provisions of this subsection,  the
    52  captive  REIT  or  captive  RIC must be included in that combined return
    53  with those corporations.
    54    (G) If the banking corporation or bank holding company  that  directly
    55  or indirectly owns or controls over fifty percent of the voting stock of
    56  the  captive  REIT  or captive RIC and is the closest controlling stock-

        S. 3456                            82
     1  holder of the captive REIT or captive RIC is a member of  an  affiliated
     2  group  (1)  that  does  not include any corporation that is engaged in a
     3  business that a subsidiary of  a  bank  holding  company  would  not  be
     4  permitted  to  engage  in,  unless  such business is de minimus, and (2)
     5  whose members own assets the combined average value of  which  does  not
     6  exceed  eight billion dollars, then the captive REIT or captive RIC must
     7  not be included in a combined  return  under  this  article  or  article
     8  nine-A  or  article  thirty-three of this chapter. In that instance, the
     9  captive REIT or captive RIC is subject to the provisions of  subdivision
    10  five  or  seven  of  section  two hundred nine of this chapter. The term
    11  "affiliated group"  means  "affiliated  group"  as  defined  in  section
    12  fifteen hundred four of the internal revenue code, but without regard to
    13  the exceptions provided for in subsection (b) of that section.
    14    (vii)  (A)  For  purposes  of  this  subparagraph,  the  term "closest
    15  controlling stockholder" means the corporation that indirectly  owns  or
    16  controls  over  fifty  percent of the voting stock of an overcapitalized
    17  captive insurance company, is subject to tax under this article or arti-
    18  cle nine-A of this chapter or otherwise required to  be  included  in  a
    19  combined  return  under  this article or article nine-A of this chapter,
    20  and is the fewest tiers of corporations away in the ownership  structure
    21  from  the overcapitalized captive insurance company. The commissioner is
    22  authorized to prescribe by regulation or published guidance the criteria
    23  for determining the closest controlling stockholder.
    24    (B) An overcapitalized captive insurance company must be included in a
    25  combined return with the banking corporation  or  bank  holding  company
    26  that directly owns or controls over fifty percent of the voting stock of
    27  the  overcapitalized  captive  insurance  company if that banking corpo-
    28  ration or bank holding company is subject  to  tax  or  required  to  be
    29  included in a combined return under this article.
    30    (C)  If  over  fifty percent of the voting stock of an overcapitalized
    31  captive insurance company is not directly owned or controlled by a bank-
    32  ing corporation or bank holding  company  that  is  subject  to  tax  or
    33  required  to  be  included in a combined return under this article, then
    34  the overcapitalized captive insurance company  must  be  included  in  a
    35  combined  return  or  report  with  the  corporation that is the closest
    36  controlling stockholder of the overcapitalized captive insurance  compa-
    37  ny.  If  the  closest  controlling  stockholder  of  the overcapitalized
    38  captive insurance company is  a  banking  corporation  or  bank  holding
    39  company that is subject to tax or otherwise required to be included in a
    40  combined  return  under  this  article, then the overcapitalized captive
    41  insurance company must be included in a combined return under this arti-
    42  cle.
    43    (D) If the corporation that directly owns or controls the voting stock
    44  of the overcapitalized captive insurance company is described in subpar-
    45  agraph (ii) or (iv) of paragraph four of this  subsection  as  a  corpo-
    46  ration  not  permitted to make a combined return, then the provisions in
    47  clause (C) of this subparagraph must be applied to determine the  corpo-
    48  ration  in  whose  combined return or report the overcapitalized captive
    49  insurance company should be included.  If,  under  clause  (C)  of  this
    50  subparagraph, the corporation that is the closest controlling stockhold-
    51  er  of  the  overcapitalized  captive  insurance company is described in
    52  subparagraph (ii) or (iv) of paragraph four  of  this  subsection  as  a
    53  corporation  not  permitted  to make a combined return, then that corpo-
    54  ration is deemed not to be in the ownership structure of  the  overcapi-
    55  talized  captive  insurance  company, and the closest controlling stock-
    56  holder will be determined without regard to that corporation.

        S. 3456                            83
     1    (E) If an overcapitalized captive insurance company is required  under
     2  this  subparagraph  to  be  included  in  a combined return with another
     3  corporation, and that other corporation is required to be included in  a
     4  combined  return with another corporation under other provisions of this
     5  subsection,  the  overcapitalized  captive  insurance  company  must  be
     6  included in that combined return with those corporations.
     7    (3) (i) In the case of a combined return, the tax shall be measured by
     8  the combined entire net income, combined alternative entire  net  income
     9  or  combined  assets  of  all  the  corporations included in the return,
    10  including any captive  REIT,  captive  RIC  or  overcapitalized  captive
    11  insurance  company. The allocation percentage shall be computed based on
    12  the combined factors with respect to all the  corporations  included  in
    13  the  combined  return.  In  computing  combined  entire  net  income and
    14  combined alternative entire net income intercorporate dividends and  all
    15  other  intercorporate  transactions shall be eliminated and in computing
    16  combined assets intercorporate stockholdings and  intercorporate  bills,
    17  notes  and  accounts  receivable  and  payable  and other intercorporate
    18  indebtedness shall be eliminated.
    19    (ii) In the case of a captive REIT required under this  subsection  to
    20  be included in a combined return, "entire net income" means "real estate
    21  investment trust taxable income" as defined in paragraph two of subdivi-
    22  sion  (b)  of  section eight hundred fifty-seven (as modified by section
    23  eight hundred fifty-eight) of the internal revenue code, plus the amount
    24  taxable under paragraph  three  of  subdivision  (b)  of  section  eight
    25  hundred  fifty-seven of that code, subject to the modifications required
    26  by section fourteen hundred fifty-three of this article. In the case  of
    27  a  captive  RIC  required  under  this  subsection  to  be included in a
    28  combined return, "entire net income" means "investment  company  taxable
    29  income"  as defined in paragraph two of subdivision (b) of section eight
    30  hundred fifty-two (as modified by section eight hundred  fifty-five)  of
    31  the internal revenue code, plus the amount taxable under paragraph three
    32  of  subdivision  (b)  of  section  eight hundred fifty-two of that code,
    33  subject to  the  modifications  required  by  section  fourteen  hundred
    34  fifty-three  of  this article. However, the deduction under the internal
    35  revenue code for dividends paid by the captive REIT or  captive  RIC  to
    36  any  member  of  the affiliated group that includes the corporation that
    37  directly or indirectly owns over fifty percent of the  voting  stock  of
    38  the  captive  REIT  or  captive  RIC  will  be  limited to the following
    39  percentages: (A) fifty percent for taxable years beginning on  or  after
    40  January first, two thousand eight and before January first, two thousand
    41  nine;  (B)  twenty-five  percent for taxable years beginning on or after
    42  January first, two thousand nine and before January first, two  thousand
    43  eleven;  and  (C)  zero  percent for taxable years beginning on or after
    44  January first, two thousand eleven. The term  "affiliated  group"  means
    45  "affiliated  group"  as  defined  in section fifteen hundred four of the
    46  internal revenue code, but without regard to the exceptions provided for
    47  in subsection (b) of such section fifteen hundred four.
    48    (iii) In the case of  an  overcapitalized  captive  insurance  company
    49  required  under  this  subsection  to  be included in a combined return,
    50  entire net income must be  computed  as  required  by  section  fourteen
    51  hundred fifty-three of this article.
    52    (4)  (i)  In  no  event shall an item of income or expense of a corpo-
    53  ration organized under the laws of  a  country  other  than  the  United
    54  States  be  included  in  a  combined  return unless it is includible in
    55  entire net income or alternative entire net income, as the case may  be,

        S. 3456                            84
     1  nor  shall  an  asset  of  such  a corporation be included in a combined
     2  return unless it is included in taxable assets.
     3    (ii)  In  no event shall a corporation organized under the laws of the
     4  United States, this state or any other state, be included in a  combined
     5  return  with  a  corporation organized under the laws of a country other
     6  than the United States.
     7    (iii) In no event shall a  corporation  which  has  made  an  election
     8  pursuant to subsection (d) of section fourteen hundred fifty-two of this
     9  article to be subject to the tax imposed by article nine-A of this chap-
    10  ter  be  included in a combined return for those taxable years for which
    11  it is subject to the tax imposed by article nine-A of this chapter.
    12    (iv) In no event shall a corporation whose net  worth  ratio  is  less
    13  than  five  percent and whose total assets are comprised of thirty-three
    14  percent or more of mortgages be included in a combined return for  those
    15  taxable  years  for which its tax is determined pursuant to subparagraph
    16  (ii) or (iii) of paragraph one of subsection  (b)  of  section  fourteen
    17  hundred fifty-five of this article.
    18    (5)  Tax  liability  under this article may be deemed to be improperly
    19  reflected because of intercompany transactions or some agreement, under-
    20  standing, arrangement or transaction referred to in  subsection  (g)  of
    21  this section.
    22    (g)  In case it shall appear to the tax commission that any agreement,
    23  understanding or arrangement exists between the taxpayer and  any  other
    24  corporation  or  any  person  or  firm,  whereby the activity, business,
    25  income or assets of the taxpayer within the state is improperly or inac-
    26  curately reflected, the tax commission is authorized and  empowered,  in
    27  its  discretion  and in such manner as it may determine, to adjust items
    28  of income or deductions in computing entire net  income  or  alternative
    29  entire  net  income  and to adjust assets, and to adjust wages, salaries
    30  and other personal service compensation, receipts or deposits in comput-
    31  ing any allocation percentage, provided only that entire net  income  or
    32  alternative entire net income be adjusted accordingly and that any asset
    33  directly  traceable to the elimination of any receipt be eliminated from
    34  assets so as to accurately determine the tax. If however, in the  deter-
    35  mination  of  the  tax  commission,  such  adjustments do not, or cannot
    36  effectively provide for the  accurate  determination  of  the  tax,  the
    37  commission  shall  be  authorized  to  require  the filing of a combined
    38  report by the taxpayer and any such other corporations.  Where  (1)  any
    39  taxpayer conducts its activity or business under any agreement, arrange-
    40  ment or understanding in such manner as either directly or indirectly to
    41  benefit  its  members  or stockholders, or any of them, or any person or
    42  persons directly or indirectly interested in such activity or  business,
    43  by  entering  into  any  transaction  at  more or less than a fair price
    44  which, but for such agreement, arrangement or understanding, might  have
    45  been  paid  or  received  therefor,  or (2) any taxpayer enters into any
    46  transaction with another corporation on  such  terms  as  to  create  an
    47  improper  loss  or  net  income,  the  tax commission may include in the
    48  entire net income or alternative entire net income of the  taxpayer  the
    49  fair  profits  which, but for such agreement, arrangement or understand-
    50  ing, the taxpayer might have derived from such transaction.
    51    § 1463. Payment of tax. (a) To the extent the tax imposed  by  section
    52  fourteen hundred fifty-one of this article shall not have been previous-
    53  ly paid pursuant to section fourteen hundred sixty-one,
    54    (1)  such  tax,  or  the  balance thereof, shall be payable to the tax
    55  commission in full at the time its return is required to be filed, and

        S. 3456                            85
     1    (2) such tax, or the balance thereof, imposed on  any  taxpayer  which
     2  ceased  to exercise its franchise or to be subject to the tax imposed by
     3  this article shall be payable to the tax  commission  at  the  time  the
     4  return  is  required to be filed, provided such tax of a domestic corpo-
     5  ration  which  continues  to  possess  its franchise shall be subject to
     6  adjustment as the circumstances may require; all other taxes of any such
     7  taxpayer, which pursuant to the foregoing provisions of this  subsection
     8  would  otherwise  be  payable  subsequent  to  the  time  such return is
     9  required to be filed, shall nevertheless be payable at such time.
    10    (b) If the taxpayer, within the time prescribed by subsection  (c)  of
    11  section  fourteen  hundred sixty-two of this article, shall have applied
    12  for an automatic extension of time to file its annual return  and  shall
    13  have  paid  to the commissioner of taxation and finance on or before the
    14  date such application is filed an amount properly estimated as  provided
    15  by  said subsection the only amount payable in addition to the tax shall
    16  be interest at the underpayment rate set by the commissioner pursuant to
    17  section one thousand ninety-six of this chapter, or if no rate  is  set,
    18  at  the rate of six per cent per annum upon the amount by which the tax,
    19  or portion thereof payable on or before the date the return was required
    20  to be filed, exceeds the amount so paid. For the purposes of the preced-
    21  ing sentence:
    22    (1) an amount so paid shall be deemed  properly  estimated  if  it  is
    23  either  (i)  not  less than ninety per cent of the tax as finally deter-
    24  mined, or (ii) not less than the tax shown on the taxpayer's return  for
    25  the preceding taxable year, if such preceding year was a taxable year of
    26  twelve months; and
    27    (2) the time when a return is required to be filed shall be determined
    28  without regard to any extension of time for filing such return.
    29    (c)  The  tax  commission may grant a reasonable extension of time for
    30  payment of any tax imposed by this article under such conditions  as  it
    31  deems just and proper.
    32    §  1466.  Deposit  and disposition of revenue. All taxes, interest and
    33  penalties collected or received by the tax commission under this article
    34  shall be deposited and disposed of pursuant to the provisions of section
    35  one hundred seventy-one-a of this chapter.
    36    § 1467. Secrecy required of  officials;  penalty  for  violation.  (a)
    37  Except  in  accordance  with  the  proper judicial order or as otherwise
    38  provided by law, it shall be unlawful for the commissioner  of  taxation
    39  and  finance,  any officer or employee of the department of taxation and
    40  finance, or any person who, pursuant to this section,  is  permitted  to
    41  inspect any return, or any person engaged or retained by such department
    42  on  an  independent  contract basis, or any person who in any manner may
    43  acquire knowledge of the contents of a return  filed  pursuant  to  this
    44  article,  to divulge or make known in any manner the amount of income or
    45  any particulars set forth or disclosed in any return required under this
    46  article. The officers charged with the custody of such returns shall not
    47  be required to produce any of them or evidence of anything contained  in
    48  them  in any action or proceedings in any court, except on behalf of the
    49  state or the commissioner of  taxation  and  finance  in  an  action  or
    50  proceeding  under  the provisions of this chapter or in any other action
    51  or proceeding involving the collection of a tax due under  this  chapter
    52  to  which  the  state  or  the commissioner of taxation and finance is a
    53  party or a claimant or on behalf of any party in an action or proceeding
    54  under the provisions of this article when the  returns  or  facts  shown
    55  thereby  are  directly  involved in such action or proceeding, in any of
    56  which events the court may require the production of and  may  admit  in

        S. 3456                            86
     1  evidence  so  much  of  said  returns  or the facts shown thereby as are
     2  pertinent to the action or proceeding and no more. The  commissioner  of
     3  taxation  and  finance may, nevertheless, publish a copy or a summary of
     4  any determination or decision rendered after the hearing provided for in
     5  section  one  thousand eighty-nine of this chapter. Nothing herein shall
     6  be construed to prohibit the delivery to a taxpayer or its duly  author-
     7  ized  representative  of  a  certified  copy  of  any  return  filed  in
     8  connection with its tax nor to prohibit the publication of statistics so
     9  classified as to prevent the identification of  particular  returns  and
    10  the  items  thereof,  or the inspection by the attorney-general or other
    11  legal representatives of the state of the return of any  taxpayer  which
    12  shall  bring  action  to  set  aside or review the tax based thereon, or
    13  against which an action or proceeding under this chapter has been recom-
    14  mended by the commissioner of taxation and finance or the  attorney-gen-
    15  eral  or  has  been  instituted; or the inspection of the returns of any
    16  taxpayer by the comptroller or duly designated officer  or  employee  of
    17  the state department of audit and control for purposes of the audit of a
    18  refund  of  any  tax  paid  by  such taxpayer under this article, or the
    19  disclosing to a state agency, pursuant to section one  hundred  seventy-
    20  one-f  of  this  chapter,  of  the amount of an overpayment and interest
    21  thereon certified to the comptroller to be credited against  a  past-due
    22  legally  enforceable  debt owed to such agency and of the name and iden-
    23  tification number of the taxpayer who  made  such  overpayment,  or  the
    24  disclosing  to  the  commissioner  of  finance  of the city of New York,
    25  pursuant to section one hundred seventy-one-l of this  chapter,  of  the
    26  amount  of  an  overpayment  and interest thereon certified to the comp-
    27  troller to be credited against a city of New York tax  warrant  judgment
    28  debt  and of the name and identification number of the taxpayer who made
    29  such overpayment. Returns shall be preserved for three years and  there-
    30  after  until  the commissioner of taxation and finance orders them to be
    31  destroyed.
    32    (b) (1) Any officer or employee of the state  who  willfully  violates
    33  the provisions of subsection (a) of this section shall be dismissed from
    34  office and be incapable of holding any public office in this state for a
    35  period of five years thereafter.
    36    (2)  Cross-reference: For criminal penalties, see article thirty-seven
    37  of this chapter.
    38    (c) Notwithstanding any provisions of this section, the tax commission
    39  may permit the secretary of the treasury of the  United  States  or  his
    40  delegates,  or  the  proper  officer of any other state charged with tax
    41  administration, or the authorized representative of either such officer,
    42  to inspect the returns filed under this article, or may furnish to  such
    43  officer  or  his  authorized representative an abstract of any return or
    44  supply him with information concerning an item contained in any  return,
    45  or  disclosed  by  an investigation of tax liability under this article,
    46  but such permission shall be granted or such  information  furnished  to
    47  such officer or his representative only if the laws of the United States
    48  or  of such other state, as the case may be, grant substantially similar
    49  privileges to the commission or officer of this state charged  with  the
    50  administration  of  the tax imposed by this article and such information
    51  is to be used for tax purposes only; and provided  further  the  commis-
    52  sioner of taxation and finance may furnish to the secretary of the trea-
    53  sury of the United States or his delegates such returns filed under this
    54  article and other tax information, as he may consider proper, for use in
    55  court  actions  or  proceedings under the internal revenue code, whether
    56  civil or criminal, where a written request therefor has been made to the

        S. 3456                            87
     1  commissioner of taxation and finance by the secretary of the treasury or
     2  his delegates provided the laws of the United States grant substantially
     3  similar powers to the secretary of the treasury or his delegates.  Where
     4  the  commissioner  of  taxation  and  finance  has  so authorized use of
     5  returns or other information in such actions  or  proceedings,  officers
     6  and  employees  of the department of taxation and finance may testify in
     7  such actions or proceedings in respect to  such  returns  or  other  tax
     8  information.
     9    (d)  Notwithstanding the provisions of subsection (a) of this section,
    10  the tax commission may permit the  officer  charged  with  the  adminis-
    11  tration  of  a  tax  on or measured by income imposed by any city of the
    12  state of New York, or the authorized representative of such officer,  to
    13  inspect  the  returns  filed  under this article, or may furnish to such
    14  officer or his authorized representative an abstract of any such  return
    15  or  supply  information concerning an item contained in any such return,
    16  or disclosed by any investigation of tax liability under  this  article,
    17  but  such  permission  shall be granted or such information furnished to
    18  such officer or his representative only if the local laws of  such  city
    19  grant  substantially  similar privileges to the commission or officer of
    20  this state charged with the administration of the tax  imposed  by  this
    21  article  and  such  information is to be used for tax purposes only; and
    22  provided further the commissioner of taxation and finance may furnish to
    23  such city officer or his delegates and the legal representative of  such
    24  city such returns filed under this article and other tax information, as
    25  he  may  consider  proper, for use in court actions or proceedings under
    26  such local law, whether civil  or  criminal,  where  a  written  request
    27  therefor  has  been  made to the commissioner of taxation and finance by
    28  such city officer or his delegates or by such  legal  representative  of
    29  such  city,  provided  the  local  law of such city grants substantially
    30  similar powers to the city officer charged with  the  administration  of
    31  the city income tax or his delegates. Where the commissioner of taxation
    32  and finance has so authorized use of returns or other tax information in
    33  such actions or proceedings, officers and employees of the department of
    34  taxation  and  finance  may  testify  in  such actions or proceedings in
    35  respect to such returns or other tax information.
    36    (e) Notwithstanding the provisions of subsection (a) of this  section,
    37  the  tax commission, in its discretion, may require or permit any or all
    38  persons liable for any tax imposed by this article, to make payments  on
    39  account  of  estimated  tax  and payment of any tax, penalty or interest
    40  imposed by this article to banks,  banking  houses  or  trust  companies
    41  designated  by  the tax commission and to file declarations of estimated
    42  tax, applications for automatic extensions of time to file returns,  and
    43  returns  with such banks, banking houses or trust companies as agents of
    44  the tax commission, in lieu of making any such payment directly  to  the
    45  tax  commission.  However,  the tax commission shall designate only such
    46  banks, banking houses or trust companies as are or shall  be  designated
    47  by  the comptroller as depositories pursuant to section fourteen hundred
    48  sixty-six of this article.
    49    (f) Notwithstanding the provisions of subsection (a) of this  section,
    50  the  commissioner  may  disclose  to  a taxpayer or a taxpayer's related
    51  member, as defined in subsection (s) of section fourteen hundred  fifty-
    52  three  of  this  article,  information  relating  to  any  royalty paid,
    53  incurred or received by such taxpayer or related member to or  from  the
    54  other,  including  the treatment of such payments by the taxpayer or the
    55  related member in any report or return transmitted to  the  commissioner
    56  under this chapter.

        S. 3456                            88
     1    §  1468. Procedural provisions. The provisions of article twenty-seven
     2  of this chapter shall apply to the provisions of  this  article  in  the
     3  same  manner  and  with  the same force and effect as if the language of
     4  such article twenty-seven had been incorporated in full into this  arti-
     5  cle  and had expressly referred to the tax under this article, except to
     6  the extent that  any  such  provision  is  either  inconsistent  with  a
     7  provision of this article or is not relevant to this article.
     8    § 2. This act shall take effect immediately and shall apply to taxable
     9  years starting January 1, 2020.
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