A 7636: 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.

  
  STATE OF NEW YORK ________________________________________________________________________ 7636 2025-2026 Regular Sessions  IN ASSEMBLY April 4, 2025 ___________ Introduced by M. of A. KIM -- read once and referred to the Committee on Ways and Means 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: 24 (a) The word "taxpayer" means a corporation or association subject to 25 a tax imposed by this article. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD08765-01-5 
 A. 7636 2 1 (b) The phrase "taxable year" means the taxpayer's taxable year for 2 federal income tax purposes, or the part thereof during which the 3 taxpayer is subject to the tax imposed by this article. 4 (c) The term "international banking facility" shall mean an interna- 5 tional banking facility located in New York state and shall have the 6 same meaning as is set forth in the New York state banking law or regu- 7 lations of the New York state department of financial services or as is 8 set forth in the laws of the United States or regulations of the board 9 of governors of the federal reserve system. 10 (d) The term "subsidiary" means a corporation or association of which 11 over fifty percent of the number of shares of stock entitling the hold- 12 ers thereof to vote for the election of directors or trustees is owned 13 by the taxpayer. 14 (e) The term "subsidiary capital" means investments in the stock of 15 subsidiaries and any indebtedness from subsidiaries, exclusive of 16 accounts receivable acquired in the ordinary course of trade or business 17 for services rendered or for sales of property held primarily for sale 18 to customers, whether or not evidenced by written instrument, on which 19 interest is not claimed and deducted by the subsidiary for purposes of 20 taxation under this article, article nine-A or thirty-three of this 21 chapter, provided, however, there shall be deducted from subsidiary 22 capital any liabilities payable by their terms on demand or within one 23 year from the date incurred, other than loans or advances outstanding 24 for more than a year as of any date during the year covered by the 25 return, which are attributable to subsidiary capital. 26 (f) The terms "New York S corporation", "New York S year", "New York S 27 election", "New York C corporation", "New York C year", "termination 28 year", "S short year", "C short year", and "New York S termination year" 29 shall have the same meaning as those terms have under subdivision one-A 30 of section two hundred eight of this chapter, except that references in 31 such subdivision to article nine-A of this chapter shall be read as 32 references to this article. 33 (g) The term "QSSS" means a corporation which is a qualified subchap- 34 ter S subsidiary as defined in subparagraph (B) of paragraph three of 35 subsection (b) of section thirteen hundred sixty-one of the internal 36 revenue code. The term "exempt QSSS" means a QSSS exempt from tax under 37 this article as provided in subsection (o) of section fourteen hundred 38 fifty-three of this article, or a QSSS described in clause (i) of 39 subparagraph (B) of paragraph two of subsection (o) of section fourteen 40 hundred fifty-three, wherein the parent corporation of the QSSS is 41 subject to tax under this article, and the assets, liabilities, income 42 and deductions of the QSSS are treated as the assets, liabilities, 43 income and deductions of the parent corporation. Where a QSSS is an 44 exempt QSSS, then for all purposes under this article: 45 (1) the assets, liabilities, income, deductions, property, payroll, 46 receipts, capital, credits, and all other tax attributes and elements of 47 economic activity of the QSSS shall be deemed to be those of the parent 48 corporation, 49 (2) the stocks, bonds and other securities issued by, and any indebt- 50 edness from, the QSSS shall not be subsidiary capital of the parent 51 corporation, 52 (3) transactions between the parent corporation and the QSSS, includ- 53 ing the payment of interest and dividends, shall not be taken into 54 account, and 55 (4) general executive officers of the QSSS shall be deemed to be 56 general executive officers of the parent corporation. 
 A. 7636 3 1 (h) The term "financial holding company" means a corporation that, 2 pursuant to subsection (l) of section 4 of the federal bank holding 3 company act of nineteen hundred fifty-six, as amended, has filed with 4 the federal reserve board a written declaration that the corporation 5 elects to be a financial holding company and whose election has not been 6 found to be ineffective by the federal reserve board. 7 § 1451. Imposition of tax. (a) For the privilege of exercising its 8 franchise or doing business in this state in a corporate or organized 9 capacity, a tax, computed under section fourteen hundred fifty-five of 10 this article, is hereby annually imposed on every banking corporation 11 for each of its taxable years, or any part thereof, beginning on or 12 after January first, nineteen hundred seventy-three. 13 (b) In the case of a taxpayer whose taxable year is other than a 14 calendar year, there is hereby imposed a tax for the privilege of exer- 15 cising its franchise or doing business in this state in a corporate or 16 organized capacity for the period beginning January first, nineteen 17 hundred seventy-three and extending through the subsequent part of its 18 first such taxable year ending after such date. Such tax shall be 19 computed under section fourteen hundred fifty-five of this article on 20 the basis of such taxpayer's entire net income, or other applicable 21 basis as the case may be, for such period and shall be paid with a 22 return which shall be separately filed with the tax commission not later 23 than the fifteenth day of the third month succeeding the close of such 24 period. The requirements of sections fourteen hundred sixty and fourteen 25 hundred sixty-one of this article, relating to declarations and payments 26 of estimated tax, except subsection (a) of section fourteen hundred 27 sixty-one of this article, shall not be applicable to the tax imposed by 28 this subsection. 29 (c)(1) A banking corporation is doing business in this state in a 30 corporate or organized capacity if (i) it has issued credit cards to one 31 thousand or more customers who have a mailing address within this state 32 as of the last day of its taxable year, (ii) it has merchant customer 33 contracts with merchants and the total number of locations covered by 34 those contracts equals one thousand or more locations in this state to 35 whom the banking corporation remitted payments for credit card trans- 36 actions during the taxable year, (iii) it has receipts of one million 37 dollars or more in the taxable year from its customers who have been 38 issued credit cards by the banking corporation and have a mailing 39 address within this state, (iv) it has receipts of one million dollars 40 or more arising from merchant customer contracts with merchants relating 41 to locations in this state, or (v) the sum of the number of customers 42 described in subparagraph (i) of this paragraph plus the number of 43 locations covered by its contracts described in subparagraph (ii) of 44 this paragraph equals one thousand or more, or the amount of its 45 receipts described in subparagraphs (iii) and (iv) of this paragraph 46 equals one million dollars or more. For purposes of this paragraph, 47 receipts from processing credit card transactions for merchants include 48 merchant discount fees received by the banking corporation. 49 (2) As used in this subsection, the term "credit card" includes bank, 50 credit, travel and entertainment cards. 51 § 1452. Banking corporation defined; exempt corporations. (a) For the 52 purpose of this article, a banking corporation means: 53 (1) Every corporation or association organized under the laws of this 54 state which is authorized to do a banking business, or which is doing a 55 banking business; 
 A. 7636 4 1 (2) every corporation or association organized under the laws of any 2 other state or country which is doing a banking business; 3 (3) every national banking association organized under the authority 4 of the United States which is doing a banking business; 5 (4) every federal savings bank which is doing a banking business; 6 (5) every federal savings and loan association which is doing a bank- 7 ing business; 8 (6) a production credit association organized under the federal farm 9 credit act of nineteen hundred thirty-three, which is doing a banking 10 business and all of whose stock held by the federal production credit 11 corporation has been retired; 12 (7) every other corporation or association organized under the author- 13 ity of the United States which is doing a banking business; 14 (8) the mortgage facilities corporation created by chapter five 15 hundred sixty-four of the laws of nineteen hundred fifty-six; 16 (9) any corporation sixty-five percent or more of whose voting stock 17 is owned or controlled, directly or indirectly, by a corporation or 18 corporations subject to article three-A of the banking law, or regis- 19 tered under the federal bank holding company act of nineteen hundred 20 fifty-six, as amended, or registered as a savings and loan holding 21 company (but excluding a diversified savings and loan holding company) 22 under the federal national housing act, as amended, or by a corporation 23 or corporations described in any of the foregoing paragraphs of this 24 subsection, provided the corporation whose voting stock is so owned or 25 controlled is principally engaged in a business, regardless of where 26 conducted, which (i) might be lawfully conducted by a corporation 27 subject to article three of the banking law or by a national banking 28 association, or (ii) is so closely related to banking or managing or 29 controlling banks as to be a proper incident thereto, as set forth in 30 paragraph eight of subsection (c) or subparagraph (F) of paragraph four 31 of subsection (k) of section four of the federal bank holding company 32 act of nineteen hundred fifty-six, as amended, or (iii) holds and 33 manages investment assets, including but not limited to bonds, notes, 34 debentures and other obligations for the payment of money, stocks, part- 35 nership interests or other equity interests, and other investment secu- 36 rities and which is not a business described in subparagraph (i) or (ii) 37 of this paragraph; and provided, further, that in no event shall a 38 corporation principally engaged in a business described in section one 39 hundred eighty-three or one hundred eighty-four, or section one hundred 40 eighty-six as it was in effect on December thirty-first, nineteen 41 hundred ninety-nine, of this chapter be subject to the tax imposed under 42 this article if any of its business receipts from such principally 43 engaged in business are from other than a corporation (A) which owns or 44 controls, directly or indirectly, sixty-five percent or more of its 45 voting stock, or (B) sixty-five percent or more of whose voting stock is 46 owned or controlled, directly or indirectly, by the corporation engaged 47 in such business, or (C) sixty-five percent or more of whose voting 48 stock is owned or controlled, directly or indirectly, by the same inter- 49 est. 50 (b) Banking business defined. The words "banking business" as used in 51 this section mean such business as a corporation or association may be 52 created to do under article three, three-B, five, five-A, five-C, six or 53 ten of the banking law or any business which a corporation or associ- 54 ation is authorized by such article to do. However, with respect to a 55 national banking association organized under the authority of the United 56 States, a federal savings bank, a federal savings and loan association 
 A. 7636 5 1 or a production credit association, the words "banking business" as used 2 in this section mean such business as a national banking association, 3 federal savings bank, federal savings and loan association or production 4 credit association, respectively, may be created to do or is authorized 5 to do under the laws of the United States or this state. The words 6 "banking business" as used in this section shall also mean such business 7 as any corporation or association organized under the authority of the 8 United States or organized under the laws of any other state or country 9 has authority to do which is substantially similar to the business which 10 a corporation or association may be created to do under article three, 11 three-B, five, five-A, five-C, six or ten of the banking law or any 12 business which a corporation or association is authorized by such arti- 13 cle to do. 14 (c) Exempt corporations. A trust company all of whose capital stock is 15 owned by twenty or more savings banks organized under New York law shall 16 be exempt from the tax under this article. 17 (d) Corporations taxable under article nine-A. Notwithstanding the 18 provisions of this article, all corporations of classes now or hereto- 19 fore taxable under article nine-A of this chapter shall continue to be 20 taxable under such article nine-A, except: (1) corporations organized 21 under article five-A of the banking law; (2) corporations subject to 22 article three-A of the banking law, or registered under the federal bank 23 holding company act of nineteen hundred fifty-six, as amended, or regis- 24 tered as a savings and loan holding company (but excluding a diversified 25 savings and loan holding company) under the federal national housing 26 act, as amended, which make a combined return under the provisions of 27 subsection (f) of section fourteen hundred sixty-two of this article; 28 (3) banking corporations described in paragraph nine of subsection (a) 29 of this section; (4) any captive REIT or captive RIC that is required to 30 be included in a combined return under the provisions of subsection (f) 31 of section fourteen hundred sixty-two of this article; and (5) any over- 32 capitalized captive insurance company required to be included in a 33 combined return under subsection (f) of section fourteen hundred sixty- 34 two of this article. Provided, however, that a corporation described in 35 paragraph three of this subsection which was subject to the tax imposed 36 by article nine-A of this chapter for its taxable year ending during 37 nineteen hundred eighty-four may, on or before the due date for filing 38 its return (determined with regard to extensions) for its taxable year 39 ending during nineteen hundred eighty-five, make a one time election to 40 continue to be taxable under such article nine-A. Such election shall 41 continue to be in effect until revoked by the taxpayer. In no event 42 shall such election or revocation be for a part of a taxable year. 43 (e) Corporations taxable under article thirty-three. Except for corpo- 44 rations described in subsection (1) of section fourteen hundred fifty- 45 three of this article, corporations liable to tax under article thirty- 46 three of this chapter shall not be subject to tax under this article. 47 (f) For exemption from tax of a qualified subchapter S subsidiary, see 48 subsection (o) of section fourteen hundred fifty-three of this article. 49 (g) A banking corporation organized under the laws of a country, or 50 any political subdivision thereof, other than the United States shall 51 not be deemed to be doing business in this state under this article if 52 its activities in this state are limited solely to (1) investing or 53 trading in stocks and securities for its own account within the meaning 54 of clause (ii) of subparagraph (A) of paragraph (2) of subsection (b) of 55 section eight hundred sixty-four of the internal revenue code or (2) 56 investing or trading in commodities for its own account within the mean- 
 A. 7636 6 1 ing of clause (ii) of subparagraph (B) of paragraph (2) of subsection 2 (b) of section eight hundred sixty-four of the internal revenue code or 3 (3) any combination of activities described in paragraphs one and two of 4 this subsection. 5 (h) Transitional provisions relating to the enactment and implementa- 6 tion of the federal Gramm-Leach-Bliley act. (1) Notwithstanding anything 7 to the contrary contained in this section other than subsection (n) of 8 this section, a corporation that was in existence before January first, 9 two thousand and was subject to tax under such article nine-A of this 10 chapter for its last taxable year beginning before January first, two 11 thousand, shall continue to be taxable under such article nine-A for all 12 taxable years beginning on or after January first, two thousand and 13 before January first, two thousand one. The preceding sentence shall not 14 apply to any taxable year during which such corporation is a banking 15 corporation described in paragraphs one through eight of subsection (a) 16 of this section. Notwithstanding anything to the contrary contained in 17 this section other than subsection (n) of this section, a banking corpo- 18 ration that was in existence before January first, two thousand and was 19 subject to tax under this article for its last taxable year beginning 20 before January first, two thousand, shall continue to be taxable under 21 this article for all taxable years beginning on or after January first, 22 two thousand and before January first, two thousand one. Provided, 23 however, that nothing in this subsection shall prohibit a corporation 24 that elected pursuant to subsection (d) of this section to be taxable 25 under article nine-A of this chapter from revoking that election in 26 accordance with such subsection (d). 27 For purposes of this paragraph, a corporation shall be considered to 28 be subject to tax under article nine-A of this chapter for a taxable 29 year if such corporation was not a taxpayer but was properly included in 30 a combined report filed pursuant to section two hundred eleven of this 31 chapter for such taxable year and a corporation shall be considered to 32 be subject to tax under this article for a taxable year if such corpo- 33 ration was not a taxpayer but was properly included in a combined return 34 filed pursuant to subsection (f) or (g) of section fourteen hundred 35 sixty-two of this article for such taxable year. A corporation that was 36 in existence before January first, two thousand but first becomes a 37 taxpayer in a taxable year beginning on or after January first, two 38 thousand and before January first, two thousand one, shall be considered 39 for purposes of this paragraph to have been subject to tax under article 40 nine-A of this chapter for its last taxable year beginning before Janu- 41 ary first, two thousand if such corporation would have been subject to 42 tax under such article for such taxable year if it had been a taxpayer 43 during such taxable year. A corporation that was in existence before 44 January first, two thousand but first becomes a taxpayer in a taxable 45 year beginning on or after January first, two thousand and before Janu- 46 ary first, two thousand one, shall be considered for purposes of this 47 paragraph to have been subject to tax under this article for its last 48 taxable year beginning before January first, two thousand if such corpo- 49 ration would have been subject to tax under this article for such taxa- 50 ble year if it had been a taxpayer during such taxable year. 51 (2) Notwithstanding anything to the contrary contained in this section 52 other than subsection (n) of this section, a corporation formed on or 53 after January first, two thousand and before January first, two thousand 54 one may elect to be subject to tax under this article or under article 55 nine-A of this chapter for its first taxable year beginning on or after 56 January first, two thousand and before January first, two thousand one 
 A. 7636 7 1 in which either (i) sixty-five percent or more of its voting stock is 2 owned or controlled, directly or indirectly by a financial holding 3 company, provided the corporation whose voting stock is so owned or 4 controlled is principally engaged in activities that are described in 5 section 4(k)(4) or 4(k)(5) of the federal bank holding company act of 6 nineteen hundred fifty-six, as amended and the regulations promulgated 7 pursuant to the authority of such section, or (ii) it is a financial 8 subsidiary. An election under this paragraph may not be made by a corpo- 9 ration described in paragraphs one through eight of subsection (a) of 10 this section or in subsection (e) of this section. In addition, an 11 election under this paragraph may not be made by a corporation that is a 12 party to a reorganization, as defined in subsection (a) of section 368 13 of the internal revenue code of 1986, as amended, of a corporation 14 described in paragraph one of this subsection if both corporations were 15 sixty-five percent or more owned or controlled, directly or indirectly, 16 by the same interests at the time of the reorganization. 17 An election under this paragraph must be made by the taxpayer on or 18 before the due date for filing its return (determined with regard to 19 extensions of time for filing) for the applicable taxable year. The 20 election to be taxed under article nine-A of this chapter shall be made 21 by the taxpayer by filing the report required pursuant to section two 22 hundred eleven of this chapter and the election to be taxed under this 23 article shall be made by the taxpayer by filing the return required 24 pursuant to section fourteen hundred sixty-two of this article. Any 25 election made pursuant to this paragraph shall be irrevocable and shall 26 apply to each subsequent taxable year beginning on or after January 27 first, two thousand and before January first, two thousand one, provided 28 that the stock ownership requirements described in subparagraph (i) of 29 this paragraph are met or such corporation described in subparagraph 30 (ii) of this paragraph continues as a financial subsidiary. 31 (3) For purposes of this section, a financial subsidiary means a 32 corporation (i) sixty-five percent or more of whose voting stock is 33 owned or controlled, directly or indirectly by a banking corporation 34 described in paragraph one, two or three of subsection (a) of this 35 section and (ii) is described in section 5136A(g) of the revised stat- 36 utes of the United States or section 46 of the federal deposit insurance 37 act. For purposes of this article, the term "banking corporation" shall 38 include a corporation electing to be taxed under this article pursuant 39 to paragraph two of this subsection for so long as such election shall 40 be in effect. 41 (i) Transitional provisions relating to the enactment and implementa- 42 tion of the federal Gramm-Leach-Bliley act. (1) Notwithstanding anything 43 to the contrary contained in this section other than subsection (n) of 44 this section, a corporation that was in existence before January first, 45 two thousand one and was subject to tax under article nine-A of this 46 chapter for its last taxable year beginning before January first, two 47 thousand one, shall continue to be taxable under article nine-A for all 48 taxable years beginning on or after January first, two thousand one and 49 before January first, two thousand three. The preceding sentence shall 50 not apply to any taxable year during which such corporation is a banking 51 corporation described in paragraphs one through eight of subsection (a) 52 of this section. Notwithstanding anything to the contrary contained in 53 this section other than subsection (n) of this section, a banking corpo- 54 ration that was in existence before January first, two thousand one and 55 was subject to tax under this article for its last taxable year begin- 56 ning before January first, two thousand one, shall continue to be taxa- 
 A. 7636 8 1 ble under this article for all taxable years beginning on or after Janu- 2 ary first, two thousand one and before January first, two thousand 3 three. Provided, however, that nothing in this subsection shall prohibit 4 a corporation that elected pursuant to subsection (d) of this section to 5 be taxable under article nine-A of this chapter from revoking that 6 election in accordance with such subsection (d). 7 For purposes of this paragraph, a corporation shall be considered to 8 be subject to tax under article nine-A of this chapter for a taxable 9 year if such corporation was not a taxpayer but was properly included in 10 a combined report filed pursuant to section two hundred eleven of this 11 chapter for such taxable year and a corporation shall be considered to 12 be subject to tax under this article for a taxable year if such corpo- 13 ration was not a taxpayer but was properly included in a combined return 14 filed pursuant to subsection (f) or (g) of section fourteen hundred 15 sixty-two of this article for such taxable year. A corporation that was 16 in existence before January first, two thousand one but first becomes a 17 taxpayer in a taxable year beginning on or after January first, two 18 thousand one and before January first, two thousand three, shall be 19 considered for purposes of this paragraph to have been subject to tax 20 under article nine-A of this chapter for its last taxable year beginning 21 before January first, two thousand one if such corporation would have 22 been subject to tax under such article for such taxable year if it had 23 been a taxpayer during such taxable year. A corporation that was in 24 existence before January first, two thousand one but first becomes a 25 taxpayer in a taxable year beginning on or after January first, two 26 thousand one and before January first, two thousand three, shall be 27 considered for purposes of this paragraph to have been subject to tax 28 under this article for its last taxable year beginning before January 29 first, two thousand one if such corporation would have been subject to 30 tax under this article for such taxable year if it had been a taxpayer 31 during such taxable year. 32 (2) Notwithstanding anything to the contrary contained in this section 33 other than subsection (n) of this section, a corporation formed on or 34 after January first, two thousand one and before January first, two 35 thousand three may elect to be subject to tax under this article or 36 under article nine-A of this chapter for its first taxable year begin- 37 ning on or after January first, two thousand one and before January 38 first, two thousand three in which either (i) sixty-five percent or more 39 of its voting stock is owned or controlled, directly or indirectly by a 40 financial holding company, provided the corporation whose voting stock 41 is so owned or controlled is principally engaged in activities that are 42 described in section 4(k)(4) or 4(k)(5) of the federal bank holding 43 company act of nineteen hundred fifty-six, as amended and the regu- 44 lations promulgated pursuant to the authority of such section, or (ii) 45 it is a financial subsidiary. 46 An election under this paragraph may not be made by a corporation 47 described in paragraphs one through eight of subsection (a) of this 48 section or in subsection (e) of this section. In addition, an election 49 under this paragraph may not be made by a corporation that is a party to 50 a reorganization, as defined in subsection (a) of section 368 of the 51 internal revenue code of 1986, as amended, of a corporation described in 52 paragraph one of this subsection if both corporations were sixty-five 53 percent or more owned or controlled, directly or indirectly, by the same 54 interests at the time of the reorganization. An election under this 55 paragraph must be made by the taxpayer on or before the due date for 56 filing its return (determined with regard to extensions of time for 
 A. 7636 9 1 filing) for the applicable taxable year. The election to be taxed under 2 article nine-A of this chapter shall be made by the taxpayer by filing 3 the report required pursuant to section two hundred eleven of this chap- 4 ter and the election to be taxed under this article shall be made by the 5 taxpayer by filing the return required pursuant to section fourteen 6 hundred sixty-two of this article. Any election made pursuant to this 7 paragraph shall be irrevocable and shall apply to each subsequent taxa- 8 ble year beginning on or after January first, two thousand one and 9 before January first, two thousand three, provided that the stock owner- 10 ship requirements described in subparagraph (i) of this paragraph are 11 met or such corporation described in subparagraph (ii) of this paragraph 12 continues as a financial subsidiary. 13 (3) For purposes of this section, a financial subsidiary means a 14 corporation (i) sixty-five percent or more of whose voting stock is 15 owned or controlled, directly or indirectly by a banking corporation 16 described in paragraph one, two or three of subsection (a) of this 17 section and (ii) is described in section 5136A(g) of the revised stat- 18 utes of the United States or section 46 of the federal deposit insurance 19 act. For purposes of this article, the term "banking corporation" shall 20 include a corporation electing to be taxed under this article pursuant 21 to paragraph two of this subsection for so long as such election shall 22 be in effect. 23 (j) Transitional provisions relating to the enactment and implementa- 24 tion of the federal Gramm-Leach-Bliley act. (1) Notwithstanding anything 25 to the contrary contained in this section other than subsection (n) of 26 this section, a corporation that was in existence before January first, 27 two thousand three and was subject to tax under article nine-A of this 28 chapter for its last taxable year beginning before January first, two 29 thousand three, shall continue to be taxable under such article nine-A 30 for all taxable years beginning on or after January first, two thousand 31 three and before January first, two thousand four. The preceding 32 sentence shall not apply to any taxable year during which such corpo- 33 ration is a banking corporation described in paragraphs one through 34 eight of subsection (a) of this section. Notwithstanding anything to the 35 contrary contained in this section other than subsection (n) of this 36 section, a banking corporation that was in existence before January 37 first, two thousand three and was subject to tax under this article for 38 its last taxable year beginning before January first, two thousand 39 three, shall continue to be taxable under this article for all taxable 40 years beginning on or after January first, two thousand three and before 41 January first, two thousand four. Provided, however, that nothing in 42 this subsection shall prohibit a corporation that elected pursuant to 43 subsection (d) of this section to be taxable under article nine-A of 44 this chapter from revoking that election in accordance with such 45 subsection (d). 46 For purposes of this paragraph, a corporation shall be considered to 47 be subject to tax under article nine-A of this chapter for a taxable 48 year if such corporation was not a taxpayer but was properly included in 49 a combined report filed pursuant to section two hundred eleven of this 50 chapter for such taxable year and a corporation shall be considered to 51 be subject to tax under this article for a taxable year if such corpo- 52 ration was not a taxpayer but was properly included in a combined return 53 filed pursuant to subsection (f) or (g) of section fourteen hundred 54 sixty-two of this article for such taxable year. A corporation that was 55 in existence before January first, two thousand three but first becomes 56 a taxpayer in a taxable year beginning on or after January first, two 
 A. 7636 10 1 thousand three and before January first, two thousand four, shall be 2 considered for purposes of this paragraph to have been subject to tax 3 under article nine-A of this chapter for its last taxable year beginning 4 before January first, two thousand three if such corporation would have 5 been subject to tax under such article for such taxable year if it had 6 been a taxpayer during such taxable year. A corporation that was in 7 existence before January first, two thousand three but first becomes a 8 taxpayer in a taxable year beginning on or after January first, two 9 thousand three and before January first, two thousand four, shall be 10 considered for purposes of this paragraph to have been subject to tax 11 under this article for its last taxable year beginning before January 12 first, two thousand three if such corporation would have been subject to 13 tax under this article for such taxable year if it had been a taxpayer 14 during such taxable year. 15 (2) Notwithstanding anything to the contrary contained in this section 16 other than subsection (n) of this section, a corporation formed on or 17 after January first, two thousand three and before January first, two 18 thousand four may elect to be subject to tax under this article or under 19 article nine-A of this chapter for its first taxable year beginning on 20 or after January first, two thousand three and before January first, two 21 thousand four in which either (i) sixty-five percent or more of its 22 voting stock is owned or controlled, directly or indirectly by a finan- 23 cial holding company, provided the corporation whose voting stock is so 24 owned or controlled is principally engaged in activities that are 25 described in section 4(k)(4) or 4(k)(5) of the federal bank holding 26 company act of nineteen hundred fifty-six, as amended and the regu- 27 lations promulgated pursuant to the authority of such section, or (ii) 28 it is a financial subsidiary. 29 An election under this paragraph may not be made by a corporation 30 described in paragraphs one through eight of subsection (a) of this 31 section or in subsection (e) of this section. In addition, an election 32 under this paragraph may not be made by a corporation that is a party to 33 a reorganization, as defined in subsection (a) of section 368 of the 34 internal revenue code of 1986, as amended, of a corporation described in 35 paragraph one of this subsection if both corporations were sixty-five 36 percent or more owned or controlled, directly or indirectly, by the same 37 interests at the time of the reorganization. An election under this 38 paragraph must be made by the taxpayer on or before the due date for 39 filing its return (determined with regard to extensions of time for 40 filing) for the applicable taxable year. The election to be taxed under 41 article nine-A of this chapter shall be made by the taxpayer by filing 42 the report required pursuant to section two hundred eleven of this chap- 43 ter and the election to be taxed under this article shall be made by the 44 taxpayer by filing the return required pursuant to section fourteen 45 hundred sixty-two of this article. Any election made pursuant to this 46 paragraph shall be irrevocable and shall apply to each subsequent taxa- 47 ble year beginning on or after January first, two thousand three and 48 before January first, two thousand four, provided that the stock owner- 49 ship requirements described in subparagraph (i) of this paragraph are 50 met or such corporation described in subparagraph (ii) of this paragraph 51 continues as a financial subsidiary. 52 (3) For purposes of this section, a financial subsidiary means a 53 corporation (i) sixty-five percent or more of whose voting stock is 54 owned or controlled, directly or indirectly by a banking corporation 55 described in paragraph one, two or three of subsection (a) of this 56 section and (ii) is described in section 5136A(g) of the revised stat- 
 A. 7636 11 1 utes of the United States or section 46 of the federal deposit insurance 2 act. For purposes of this article, the term "banking corporation" shall 3 include a corporation electing to be taxed under this article pursuant 4 to paragraph two of this subsection for so long as such election shall 5 be in effect. 6 (k) Transitional provisions relating to the enactment and implementa- 7 tion of the federal Gramm-Leach-Bliley act. (1) Notwithstanding anything 8 to the contrary contained in this section other than subsection (n) of 9 this section, a corporation that was in existence before January first, 10 two thousand four and was subject to tax under article nine-A of this 11 chapter for its last taxable year beginning before January first, two 12 thousand four, shall continue to be taxable under such article nine-A 13 for all taxable years beginning on or after January first, two thousand 14 four and before January first, two thousand six. The preceding sentence 15 shall not apply to any taxable year during which such corporation is a 16 banking corporation described in paragraphs one through eight of 17 subsection (a) of this section. Notwithstanding anything to the contrary 18 contained in this section other than subsection (n) of this section, a 19 banking corporation that was in existence before January first, two 20 thousand four and was subject to tax under this article for its last 21 taxable year beginning before January first, two thousand four, shall 22 continue to be taxable under this article for all taxable years begin- 23 ning on or after January first, two thousand four and before January 24 first, two thousand six. Provided, however, that nothing in this 25 subsection shall prohibit a corporation that elected pursuant to 26 subsection (d) of this section to be taxable under article nine-A of 27 this chapter from revoking that election in accordance with such 28 subsection (d). 29 For purposes of this paragraph, a corporation shall be considered to 30 be subject to tax under article nine-A of this chapter for a taxable 31 year if such corporation was not a taxpayer but was properly included in 32 a combined report filed pursuant to section two hundred eleven of this 33 chapter for such taxable year and a corporation shall be considered to 34 be subject to tax under this article for a taxable year if such corpo- 35 ration was not a taxpayer but was properly included in a combined return 36 filed pursuant to subsection (f) or (g) of section fourteen hundred 37 sixty-two of this article for such taxable year. A corporation that was 38 in existence before January first, two thousand four but first becomes a 39 taxpayer in a taxable year beginning on or after January first, two 40 thousand four and before January first, two thousand six, shall be 41 considered for purposes of this paragraph to have been subject to tax 42 under article nine-A of this chapter for its last taxable year beginning 43 before January first, two thousand four, if such corporation would have 44 been subject to tax under such article for such taxable year if it had 45 been a taxpayer during such taxable year. A corporation that was in 46 existence before January first, two thousand four, but first becomes a 47 taxpayer in a taxable year beginning on or after January first, two 48 thousand four and before January first, two thousand six, shall be 49 considered for purposes of this paragraph to have been subject to tax 50 under this article for its last taxable year beginning before January 51 first, two thousand four if such corporation would have been subject to 52 tax under this article for such taxable year if it had been a taxpayer 53 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 four and before January first, two 
 A. 7636 12 1 thousand six may elect to be subject to tax under this article or under 2 article nine-A of this chapter for its first taxable year beginning on 3 or after January first, two thousand four and before January first, two 4 thousand six in which either (i) sixty-five percent or more of its 5 voting stock is owned or controlled, directly or indirectly by a finan- 6 cial holding company, provided the corporation whose voting stock is so 7 owned or controlled is principally engaged in activities that are 8 described in section 4(k)(4) or 4(k)(5) of the federal bank holding 9 company act of nineteen hundred fifty-six, as amended and the regu- 10 lations promulgated pursuant to the authority of such section, or (ii) 11 it is a financial subsidiary. 12 An election under this paragraph may not be made by a corporation 13 described in paragraphs one through eight of subsection (a) of this 14 section or in subsection (e) of this section. In addition, an election 15 under this paragraph may not be made by a corporation that is a party to 16 a reorganization, as defined in subsection (a) of section three hundred 17 sixty-eight of the internal revenue code of nineteen eighty-six, as 18 amended, of a corporation described in paragraph one of this subsection 19 if both corporations were sixty-five percent or more owned or 20 controlled, directly or indirectly, by the same interests at the time of 21 the reorganization. An election under this paragraph must be made by the 22 taxpayer on or before the due date for filing its return (determined 23 with regard to extensions of time for filing) for the applicable taxable 24 year. The election to be taxed under article nine-A of this chapter 25 shall be made by the taxpayer by filing the report required pursuant to 26 section two hundred eleven of this chapter and the election to be taxed 27 under this article shall be made by the taxpayer by filing the return 28 required pursuant to section fourteen hundred sixty-two of this article. 29 Any election made pursuant to this paragraph shall be irrevocable and 30 shall apply to each subsequent taxable year beginning on or after Janu- 31 ary first, two thousand four and before January first, two thousand six, 32 provided that the stock ownership requirements described in subparagraph 33 (i) of this paragraph are met or such corporation described in subpara- 34 graph (ii) of this paragraph continues as a financial subsidiary. 35 (3) For purposes of this section, a financial subsidiary means a 36 corporation (i) sixty-five percent or more of whose voting stock is 37 owned or controlled, directly or indirectly by a banking corporation 38 described in paragraph one, two or three of subsection (a) of this 39 section and (ii) is described in section 5136A(g) of the revised stat- 40 utes of the United States or section forty-six of the federal deposit 41 insurance act. For purposes of this article, the term "banking corpo- 42 ration" shall include a corporation electing to be taxed under this 43 article pursuant to paragraph two of this subsection for so long as such 44 election shall be in effect. 45 (l) Transitional provisions relating to the enactment and implementa- 46 tion of the federal Gramm-Leach-Bliley act. (1) Notwithstanding anything 47 to the contrary contained in this section other than subsection (n) of 48 this section, a corporation that was in existence before January first, 49 two thousand six and was subject to tax under article nine-A of this 50 chapter for its last taxable year beginning before January first, two 51 thousand six, shall continue to be taxable under article nine-A for all 52 taxable years beginning on or after January first, two thousand six and 53 before January first, two thousand eight. The preceding sentence shall 54 not apply to any taxable year during which such corporation is a banking 55 corporation described in paragraphs one through eight of subsection (a) 56 of this section. Notwithstanding anything to the contrary contained in 
 A. 7636 13 1 this section other than subsection (n) of this section, a banking corpo- 2 ration that was in existence before January first, two thousand six and 3 was subject to tax under this article for its last taxable year begin- 4 ning before January first, two thousand six, shall continue to be taxa- 5 ble under this article for all taxable years beginning on or after Janu- 6 ary first, two thousand six and before January first, two thousand 7 eight. Provided, however, that nothing in this subsection shall prohibit 8 a corporation that elected pursuant to subsection (d) of this section to 9 be taxable under article nine-A of this chapter from revoking that 10 election in accordance with such subsection (d). 11 For purposes of this paragraph, a corporation shall be considered to 12 be subject to tax under article nine-A of this chapter for a taxable 13 year if such corporation was not a taxpayer but was properly included in 14 a combined report filed pursuant to section two hundred eleven of this 15 chapter for such taxable year and a corporation shall be considered to 16 be subject to tax under this article for a taxable year if such corpo- 17 ration was not a taxpayer but was properly included in a combined return 18 filed pursuant to subsection (f) or (g) of section fourteen hundred 19 sixty-two of this article for such taxable year. A corporation that was 20 in existence before January first, two thousand six but first becomes a 21 taxpayer in a taxable year beginning on or after January first, two 22 thousand six and before January first, two thousand eight, shall be 23 considered for purposes of this paragraph to have been subject to tax 24 under article nine-A of this chapter for its last taxable year beginning 25 before January first, two thousand six if such corporation would have 26 been subject to tax under such article for such taxable year if it had 27 been a taxpayer during such taxable year. A corporation that was in 28 existence before January first, two thousand six but first becomes a 29 taxpayer in a taxable year beginning on or after January first, two 30 thousand six and before January first, two thousand eight, shall be 31 considered for purposes of this paragraph to have been subject to tax 32 under this article for its last taxable year beginning before January 33 first, two thousand six if such corporation would have been subject to 34 tax under this article for such taxable year if it had been a taxpayer 35 during such taxable year. 36 (2) Notwithstanding anything to the contrary contained in this section 37 other than subsection (n) of this section, a corporation formed on or 38 after January first, two thousand six and before January first, two 39 thousand eight may elect to be subject to tax under this article or 40 under article nine-A of this chapter for its first taxable year begin- 41 ning on or after January first, two thousand six and before January 42 first, two thousand eight in which either (i) sixty-five percent or more 43 of its voting stock is owned or controlled, directly or indirectly by a 44 financial holding company, provided the corporation whose voting stock 45 is so owned or controlled is principally engaged in activities that are 46 described in section 4(k)(4) or 4(k)(5) of the federal bank holding 47 company act of nineteen hundred fifty-six, as amended and the regu- 48 lations promulgated pursuant to the authority of such section, or (ii) 49 it is a financial subsidiary. An election under this paragraph may not 50 be made by a corporation described in paragraphs one through eight of 51 subsection (a) of this section or in subsection (e) of this section. In 52 addition, an election under this paragraph may not be made by a corpo- 53 ration that is a party to a reorganization, as defined in subsection (a) 54 of section 368 of the internal revenue code of 1986, as amended, of a 55 corporation described in paragraph one of this subsection if both corpo- 
 A. 7636 14 1 rations were sixty-five percent or more owned or controlled, directly or 2 indirectly, by the same interests at the time of the reorganization. 3 An election under this paragraph must be made by the taxpayer on or 4 before the due date for filing its return (determined with regard to 5 extensions of time for filing) for the applicable taxable year. The 6 election to be taxed under article nine-A of this chapter shall be made 7 by the taxpayer by filing the report required pursuant to section two 8 hundred eleven of this chapter and the election to be taxed under this 9 article shall be made by the taxpayer by filing the return required 10 pursuant to section fourteen hundred sixty-two of this article. Any 11 election made pursuant to this paragraph shall be irrevocable and shall 12 apply to each subsequent taxable year beginning on or after January 13 first, two thousand six and before January first, two thousand eight, 14 provided that the stock ownership requirements described in subparagraph 15 (i) of this paragraph are met or such corporation described in subpara- 16 graph (ii) of this paragraph continues as a financial subsidiary. 17 (3) For purposes of this section, a financial subsidiary means a 18 corporation (i) sixty-five percent or more of whose voting stock is 19 owned or controlled, directly or indirectly by a banking corporation 20 described in paragraph one, two or three of subsection (a) of this 21 section and (ii) is described in section 5136A(g) of the revised stat- 22 utes of the United States or section 46 of the federal deposit insurance 23 act. For purposes of this article, the term "banking corporation" shall 24 include a corporation electing to be taxed under this article pursuant 25 to paragraph two of this subsection for so long as such election shall 26 be in effect. 27 (m) Transitional provisions relating to the enactment and implementa- 28 tion of the federal Gramm-Leach-Bliley act. (1) Notwithstanding 29 anything to the contrary contained in this section other than subsection 30 (n) of this section, a corporation that was in existence before January 31 first, two thousand twelve and was subject to tax under article nine-A 32 of this chapter for its last taxable year beginning before January 33 first, two thousand twelve, shall continue to be taxable under such 34 article for all taxable years beginning on or after January first, two 35 thousand twelve and before January first, two thousand twenty-five. The 36 preceding sentence shall not apply to any taxable year during which such 37 corporation is a banking corporation described in paragraphs one through 38 eight of subsection (a) of this section. Notwithstanding anything to 39 the contrary contained in this section other than subsection (n) of this 40 section, a banking corporation or corporation that was in existence 41 before January first, two thousand twelve and was subject to tax under 42 this article for its last taxable year beginning before January first, 43 two thousand twelve, shall continue to be taxable under this article for 44 all taxable years beginning on or after January first, two thousand 45 twelve and before January first, two thousand twenty-five only if the 46 corporation is a banking corporation as defined in subsection (a) of 47 this section or the corporation satisfies the requirements for a corpo- 48 ration to elect to be taxable under this article. Provided further, that 49 nothing in this subsection shall prohibit a corporation that elected 50 pursuant to subsection (d) of this section to be taxable under article 51 nine-A of this chapter from revoking that election in accordance with 52 such subsection (d). 53 For purposes of this paragraph, a corporation shall be considered to 54 be subject to tax under article nine-A of this chapter for a taxable 55 year if such corporation was not a taxpayer but was properly included in 56 a combined report filed pursuant to section two hundred eleven of this 
 A. 7636 15 1 chapter for such taxable year and a corporation shall be considered to 2 be subject to tax under this article for a taxable year if such corpo- 3 ration was not a taxpayer but was properly included in a combined return 4 filed pursuant to subsection (f) or (g) of section fourteen hundred 5 sixty-two of this article for such taxable year. A corporation that was 6 in existence before January first, two thousand twelve but first becomes 7 a taxpayer in a taxable year beginning on or after January first, two 8 thousand twelve and before January first, two thousand twenty-five, 9 shall be considered for purposes of this paragraph to have been subject 10 to tax under article nine-A of this chapter for its last taxable year 11 beginning before January first, two thousand twelve if such corporation 12 would have been subject to tax under such article for such taxable year 13 if it had been a taxpayer during such taxable year. A corporation that 14 was in existence before January first, two thousand twelve but first 15 becomes a taxpayer in a taxable year beginning on or after January 16 first, two thousand twelve and before January first, two thousand twen- 17 ty-five, shall be considered for purposes of this paragraph to have been 18 subject to tax under this article for its last taxable year beginning 19 before January first, two thousand twelve if such corporation would have 20 been subject to tax under this article for such taxable year if it had 21 been a taxpayer during such taxable year. 22 (2) Notwithstanding anything to the contrary contained in this section 23 other than subsection (n) of this section, a corporation formed on or 24 after January first, two thousand twelve and before January first, two 25 thousand twenty-five may elect to be subject to tax under this article 26 or under article nine-A of this chapter for its first taxable year 27 beginning on or after January first, two thousand twelve and before 28 January first, two thousand twenty-five in which either (i) sixty-five 29 percent or more of its voting stock is owned or controlled, directly or 30 indirectly by a financial holding company, provided the corporation 31 whose voting stock is so owned or controlled is principally engaged in 32 activities that are described in section 4(k)(4) or 4(k)(5) of the 33 federal bank holding company act of nineteen hundred fifty-six, as 34 amended and the regulations promulgated pursuant to the authority of 35 such section, or (ii) it is a financial subsidiary. An election under 36 this paragraph may not be made by a corporation described in paragraphs 37 one through eight of subsection (a) of this section or in subsection (e) 38 of this section. In addition, an election under this paragraph may not 39 be made by a corporation that is a party to a reorganization, as defined 40 in subsection (a) of section 368 of the internal revenue code of 1986, 41 as amended, of a corporation described in paragraph one of this 42 subsection if both corporations were sixty-five percent or more owned or 43 controlled, directly or indirectly, by the same interests at the time of 44 the reorganization. 45 An election under this paragraph must be made by the taxpayer on or 46 before the due date for filing its return (determined with regard to 47 extensions of time for filing) for the applicable taxable year. The 48 election to be taxed under article nine-A of this chapter shall be made 49 by the taxpayer by filing the report required pursuant to section two 50 hundred eleven of this chapter and the election to be taxed under this 51 article shall be made by the taxpayer by filing the return required 52 pursuant to section fourteen hundred sixty-two of this article. Any 53 election made pursuant to this paragraph shall be irrevocable and shall 54 apply to each subsequent taxable year beginning on or after January 55 first, two thousand twelve and before January first, two thousand twen- 56 ty-five, provided that the stock ownership and activities requirements 
 A. 7636 16 1 described in subparagraph (i) of this paragraph are met or such corpo- 2 ration described in subparagraph (ii) of this paragraph continues as a 3 financial subsidiary. 4 (3) For purposes of this section, a financial subsidiary means a 5 corporation (i) sixty-five percent or more of whose voting stock is 6 owned or controlled, directly or indirectly by a banking corporation 7 described in paragraph one, two or three of subsection (a) of this 8 section and (ii) is described in section 5136A(g) of the revised stat- 9 utes of the United States or section 46 of the federal deposit insurance 10 act. For purposes of this article, the term "banking corporation" shall 11 include a corporation electing to be taxed under this article pursuant 12 to paragraph two of this subsection for so long as such election shall 13 be in effect. 14 (4) The provisions of this subsection shall not apply to a captive 15 REIT, a captive RIC or an overcapitalized captive insurance company. 16 (n)(1) Notwithstanding anything in this article to the contrary, if 17 any of the conditions described in paragraph three of this subsection 18 apply to a corporation that has made either the election to be taxable 19 under article nine-A of this chapter pursuant to the Gramm-Leach-Bliley 20 transitional provisions in this section, or the election pursuant to 21 subsection (d) of this section to continue to be taxable under article 22 nine-A of this chapter (hereinafter the "electing corporation"), then 23 such corporation shall be deemed to have revoked the election as of the 24 first day of the taxable year in which such condition applied. 25 (2) Notwithstanding anything in this article to the contrary, if any 26 of the conditions described in paragraph three of this subsection apply 27 to a corporation required to be taxable under article nine-A of this 28 chapter pursuant to the Gramm-Leach-Bliley transitional provisions in 29 this section (hereinafter the "grandfathered corporation"), such corpo- 30 ration, if it is otherwise described in subsection (a) of this section, 31 shall be taxable under this article as of the first day of the taxable 32 year in which such condition applied. 33 (3) The provisions of paragraph one and paragraph two of this 34 subsection shall apply if any of the following conditions exist or occur 35 with respect to the electing corporation or the grandfathered corpo- 36 ration in a taxable year (including any short taxable year) beginning on 37 or after January first, two thousand seven: 38 (A) the corporation ceases to be a taxpayer under article nine-A of 39 this chapter; 40 (B) the corporation becomes subject to the fixed dollar minimum tax 41 under paragraph (d) of subdivision one of section two hundred ten of 42 this chapter; 43 (C) the corporation has no wages or receipts allocable to New York 44 state pursuant to subdivision three of section two hundred ten of this 45 chapter, or is otherwise inactive; provided that this subparagraph shall 46 not apply to a corporation which is engaged in the active conduct of a 47 trade or business, or substantially all of the assets of which are stock 48 and securities of corporations which are directly or indirectly 49 controlled by it and are engaged in the active conduct of a trade or 50 business; 51 (D) sixty-five percent or more of the voting stock of the corporation 52 becomes owned or controlled directly by a corporation that acquired the 53 stock in a transaction (or series of related transactions) that quali- 54 fies as a purchase within the meaning of paragraph three of subsection 55 (h) of section three hundred thirty-eight of the internal revenue code 56 unless the corporation whose stock was acquired and the corporation 
 A. 7636 17 1 acquiring the stock were, immediately prior to such purchase, members of 2 the same affiliated group (as such term is defined in section fifteen 3 hundred four of the internal revenue code without regard to the exclu- 4 sions provided for in subsection (b) of such section); provided that any 5 acquisition that was completed on or before January third, two thousand 6 seven shall be treated for purposes of this subparagraph as an acquisi- 7 tion made before January first, two thousand seven; or 8 (E) the corporation, in a transaction or series of related trans- 9 actions, acquires assets, whether by contribution, purchase, or other- 10 wise, having an average value (determined in accordance with subdivision 11 two of section two hundred ten of this chapter), or, if greater, a total 12 tax basis, in excess of forty percent of the average value, or, if 13 greater, the total tax basis, of all the assets of the corporation imme- 14 diately prior to such acquisition and as a result of such acquisition 15 the corporation is principally engaged in a business that is different 16 from the business immediately prior to such acquisition, provided that 17 such different business is described in subparagraph (i), (ii) or (iii) 18 of paragraph nine of subsection (a) of this section. 19 § 1453. Computations of entire net income. (a) Entire net income means 20 total net income from all sources which shall be the same as the entire 21 taxable income (but not alternative minimum taxable income). 22 (1) which the taxpayer is required to report to the United States 23 treasury department, or 24 (2) which the taxpayer, in the case of a corporation which is exempt 25 from federal income tax (other than the tax on unrelated business taxa- 26 ble income imposed under section 511 of the internal revenue code) but 27 is subject to tax under this article, would have been required to report 28 to the United States treasury department but for such exemption, or 29 (3) which, in the case of a corporation organized under the laws of a 30 country other than the United States, is effectively connected with the 31 conduct of a trade or business within the United States as determined 32 under section 882 of the internal revenue code subject to the modifica- 33 tions and adjustments hereinafter provided, or 34 (4) which the taxpayer would have been required to report to the 35 United States treasury department if it had not made the election under 36 subchapter s of chapter one of the internal revenue code. 37 (b) Entire net income shall be computed without the deduction or 38 exclusion of: 39 (1) (A) in the case of a corporation organized under the laws of a 40 country other than the United States, (i) any part of any income from 41 dividends or interest on any kind of stock, securities or indebtedness, 42 but only if such income is treated as effectively connected with the 43 conduct of a trade or business in the United States pursuant to section 44 eight hundred sixty-four of the internal revenue code, (ii) any income 45 exempt from federal taxable income under any treaty obligation of the 46 United States, but only if such income would be treated as effectively 47 connected in absence of such exemption, provided that such treaty obli- 48 gation does not preclude the taxation of such income by a state, or 49 (iii) any income which would be treated as effectively connected if such 50 income were not excluded from gross income pursuant to subsection (a) of 51 section one hundred three of the internal revenue code; (B) in the case 52 of any other corporation, any part of any income from dividends or 53 interest on any kind of stock, securities or indebtedness; (C) except 54 that for purposes of subparagraphs (A) and (B) of this paragraph there 55 shall be excluded any amounts treated as dividends pursuant to section 
 A. 7636 18 1 seventy-eight of the internal revenue code and any amounts described in 2 paragraphs eleven and twelve of subsection (e) of this section; 3 (2) taxes on or measured by income or profits paid or accrued within 4 the taxable year to the United States, or any of its possessions or to 5 any foreign country; 6 (3) premiums paid for environmental remediation insurance, as defined 7 in section twenty-three of this chapter, and deducted in determining 8 federal taxable income, to the extent of the amount of the environmental 9 remediation insurance credit allowed under such section twenty-three and 10 subsection (s) of section fourteen hundred fifty-six of this article; 11 (4) taxes imposed under this article, sections one hundred eighty- 12 three and one hundred eighty-four and article nine-A of this chapter; 13 (5) in those instances where a credit for the special additional mort- 14 gage recording tax is allowed under paragraph one of subsection (c) of 15 section fourteen hundred fifty-six of this article, the amount allowed 16 as an exclusion or deduction for the special additional mortgage record- 17 ing tax imposed by subdivision one-a of section two hundred fifty-three 18 of this chapter in determining the entire taxable income which the 19 taxpayer is required to report to the United States treasury department 20 for such taxable year; and 21 (6) Unless the credit allowed pursuant to subsection (c) of section 22 fourteen hundred fifty-six of this article is reflected in the computa- 23 tion of the gain or loss so as to result in an increase in such gain or 24 decrease of such loss, for federal income tax purposes, from the sale or 25 other disposition of the property with respect to which the special 26 additional mortgage recording tax imposed pursuant to subdivision one-a 27 of section two hundred fifty-three of this chapter was paid, the amount 28 of the special additional mortgage recording tax imposed by subdivision 29 one-a of section two hundred fifty-three of this chapter which was paid 30 and which is reflected in the computation of the basis of the property 31 so as to result in a decrease in such gain or increase in such loss for 32 federal income tax purposes from the sale or other disposition of the 33 property with respect to which such tax was paid. 34 (7) for taxable years beginning after December thirty-first, nineteen 35 hundred eighty-one, except with respect to property which is a qualified 36 mass commuting vehicle described in subparagraph (D) of paragraph eight 37 of subsection (f) of section one hundred sixty-eight of the internal 38 revenue code (relating to qualified mass commuting vehicles), any amount 39 which the taxpayer claimed as a deduction in computing its federal taxa- 40 ble income solely as a result of an election made pursuant to the 41 provisions of such paragraph eight as it was in effect for agreements 42 entered into prior to January first, nineteen hundred eighty-four; 43 (8) for taxable years beginning after December thirty-first, nineteen 44 hundred eighty-one, except with respect to property which is a qualified 45 mass commuting vehicle described in subparagraph (D) of paragraph eight 46 of subsection (f) of section one hundred sixty-eight of the internal 47 revenue code (relating to qualified mass commuting vehicles), any amount 48 which the taxpayer would have been required to include in the computa- 49 tion of its federal taxable income had it not made the election permit- 50 ted pursuant to such paragraph eight as it was in effect for agreements 51 entered into prior to January first, nineteen hundred eighty-four; 52 (9) in the case of property placed in service in taxable years begin- 53 ning before nineteen hundred ninety-four, for taxable years beginning 54 after December thirty-first, nineteen hundred eighty-one, except with 55 respect to property subject to the provisions of section two hundred 56 eighty-F of the internal revenue code and property subject to the 
 A. 7636 19 1 provisions of section one hundred sixty-eight of the internal revenue 2 code which is placed in service in this state in taxable years beginning 3 after December thirty-first, nineteen hundred eighty-four, the amount 4 allowable as a deduction determined under section one hundred sixty- 5 eight of the internal revenue code; 6 (10) upon the disposition of property to which paragraph seven of 7 subsection (e) of this section applies, the amount, if any, by which the 8 aggregate of the amounts described in such paragraph seven attributable 9 to such property exceeds the aggregate of the amounts described in para- 10 graph nine of this subsection attributable to such property, 11 (11) for taxable years beginning before January first, two thousand 12 ten, in the case of a taxpayer subject to the provisions of section 13 585(c) of the internal revenue code, the amount allowed as a deduction 14 pursuant to section 166 of such code, and 15 (12) for taxable years beginning before January first, two thousand 16 ten, for taxpayers subject to the provisions of subsection (i) of this 17 section, twenty percent of the excess of (A) the amount determined 18 pursuant to such subsection (i) over (B) the amount which would have 19 been allowable had such institution maintained its bad debt reserve for 20 all taxable years on the basis of actual experience. 21 (13) for taxable years beginning after December thirty-first, two 22 thousand two, in the case of qualified property described in paragraph 23 two of subsection k of section 168 of the internal revenue code, other 24 than qualified resurgence zone property described in subsection (u) of 25 this section, and other than qualified New York Liberty Zone property 26 described in paragraph two of subsection b of section 1400L of the 27 internal revenue code (without regard to clause (i) of subparagraph (C) 28 of such paragraph), which was placed in service on or after June first, 29 two thousand three, the amount allowable as a deduction under section 30 167 of the internal revenue code. 31 (14) The amount of any deduction allowed pursuant to section one 32 hundred ninety-nine of the internal revenue code. 33 (15) The amount of any federal deduction for taxes imposed under arti- 34 cle twenty-three of this chapter. 35 (c) (1) Except as otherwise provided in paragraphs two, three and four 36 of this subsection, in the case of the sale or exchange of property by a 37 taxpayer which has been subject to article nine-B or nine-C of this 38 chapter (as such articles were in effect on or before December thirty- 39 first, nineteen hundred seventy-two) where the property has a higher 40 adjusted basis for New York tax purposes than for federal tax purposes, 41 there shall be allowed as a deduction from entire net income, the 42 portion of any gain or loss on such sale which equals the difference in 43 such basis. 44 (2) In case of property of a taxpayer, other than a savings bank or a 45 savings and loan association, acquired prior to January first, nineteen 46 hundred twenty-six, and disposed of thereafter, the computation of 47 entire net income shall be modified as follows: 48 (i) no gain shall be deemed to have been derived if either the cost or 49 the fair market price or value on January first, nineteen hundred twen- 50 ty-six, exceeds the value realized; 51 (ii) no loss shall be deemed to have been sustained if either the cost 52 or the fair market price or value on January first, nineteen hundred 53 twenty-six, is less than the value realized; 54 (iii) where both the cost and the fair market price or value on Janu- 55 ary first, nineteen hundred twenty-six, are less than the value real- 
 A. 7636 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 
 A. 7636 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 seventeen 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 
 A. 7636 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. 
 A. 7636 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. 
 A. 7636 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 
 A. 7636 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 
 A. 7636 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 
 A. 7636 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 
 A. 7636 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. 
 A. 7636 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. 
 A. 7636 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 
 A. 7636 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 shall be determined by the commis- 43 sioner of taxation and finance. Provided, however, any banking corpo- 44 ration which was subject to tax for federal income tax purposes but not 45 subject to tax under this article for prior taxable years shall have as 46 its opening New York reserve for losses on loans the amount determined 47 by applying the provisions of subparagraph (A) of paragraph one of this 48 subsection to loans outstanding at the close of its last taxable year 49 for federal income tax purposes ending prior to the first taxable year 50 for which the taxpayer is subject to tax under this article and 51 provided, further, that the provisions of subparagraph (B) of paragraph 52 one of this subsection shall not apply. 53 (j) (1) In the case of property placed in service prior to January 54 first, nineteen hundred seventy-three, for which the taxpayer properly 55 adopted a different method of computing depreciation under section two 56 hundred nineteen-z or section two hundred nineteen-xx of this chapter 
 A. 7636 32 1 (as such sections were in effect on or before December thirty-first, 2 nineteen hundred seventy-two) than was adopted for federal income tax 3 purposes with respect to such property, entire net income under this 4 article shall be computed without regard to the amount allowable as a 5 deduction for depreciation of such property in computing federal taxable 6 income for the taxable year but, in lieu thereof, shall be computed as 7 if such deduction were determined by the method of depreciation adopted 8 with respect to such property under sections two hundred nineteen-z or 9 two hundred nineteen-xx of this chapter (as such sections were in effect 10 on or before December thirty-first, nineteen hundred seventy-two). 11 (2) In computing entire net income, the amount allowable as a 12 deduction for charitable contributions for federal income tax purposes 13 shall be decreased by any amount allowed as a deduction for federal 14 income tax purposes for the taxable year under section one hundred 15 seventy of the internal revenue code as a carryover of excess contrib- 16 utions which are not made in such taxable year and which were deductible 17 in computing the tax due under article nine-B or nine-C of this chapter 18 (as such articles were in effect on or before December thirty-first, 19 nineteen hundred seventy-two). 20 (3) There shall be excluded from the computation of entire net income 21 any amount allowed as a deduction for federal income tax purposes for 22 the taxable year under section twelve hundred twelve of the internal 23 revenue code as a capital loss carryforward to the taxable year, which 24 was deductible as a loss in computing the tax due under article nine-B 25 or nine-C of this chapter (as such articles were in effect on December 26 thirty-first, nineteen hundred seventy-two). 27 (4) There shall be excluded from the computation of entire net income 28 the amount of any income or gain from the sale of real or personal prop- 29 erty which is includible in determining federal taxable income for the 30 taxable year pursuant to the installment method under section four 31 hundred fifty-three of the internal revenue code, to the extent that 32 such income or gain was includible in the computation of the tax due 33 under article nine-B or nine-C of this chapter (as such articles were in 34 effect on December thirty-first, nineteen hundred seventy-two). 35 (5) To the extent not otherwise provided in this article, there shall 36 be excluded from entire net income the amount necessary to prevent the 37 taxation under this article of any other amount of income or gain which 38 was properly included in income or gain and was taxable under article 39 nine-B or nine-C of this chapter (as such articles were in effect on or 40 before December thirty-first, nineteen hundred seventy-two) and there 41 shall be disallowed as a deduction in computing entire net income any 42 amount which was allowable as a deduction in computing the tax due under 43 such articles (as they were in effect on or before December thirty- 44 first, nineteen hundred seventy-two). 45 (k) (1) At the election of the taxpayer, there shall be deducted from 46 the portion of its entire net income allocated within the state, depre- 47 ciation with respect to any property such as described in paragraph two 48 of this subsection, not exceeding twice the depreciation allowed with 49 respect to the same property for federal income tax purposes. Such 50 deduction shall be allowed only upon condition that entire net income be 51 computed without any deduction for depreciation or amortization of the 52 same property, and the total of all deductions allowed under article 53 nine-B or nine-C of this chapter (as such articles were in effect on or 54 before December thirty-first, nineteen hundred seventy-two) and this 55 article in any taxable year or years with respect to the depreciation of 56 any such property shall not exceed its cost or other basis. 
 A. 7636 33 1 (2) Such deduction shall be allowed only with respect to tangible 2 property which is depreciable pursuant to section one hundred sixty-sev- 3 en of the internal revenue code, having a situs in this state and used 4 in the taxpayer's business, (i) constructed, reconstructed or erected 5 after December thirty-first, nineteen hundred sixty-three, pursuant to a 6 contract which was, on or before December thirty-first, nineteen hundred 7 sixty-seven, and at all times thereafter, binding on the taxpayer or, 8 property, the physical construction, reconstruction or erection of which 9 began on or before December thirty-first, nineteen hundred sixty-seven 10 or which began after such date pursuant to an order placed on or before 11 December thirty-first, nineteen hundred sixty-seven, and then only with 12 respect to that portion of the basis thereof which is properly attribut- 13 able to such construction, reconstruction or erection after December 14 thirty-first, nineteen hundred sixty-three, or (ii) acquired after 15 December thirty-first, nineteen hundred sixty-three, pursuant to a 16 contract which was, on or before December thirty-first, nineteen hundred 17 sixty-seven, and at all times thereafter, binding on the taxpayer or 18 pursuant to an order placed on or before December thirty-first, nineteen 19 hundred sixty-seven, by purchase as defined in section one hundred 20 seventy-nine (d) of the internal revenue code, if the original use of 21 such property commenced with the taxpayer, commenced in this state and 22 commenced after December thirty-first, nineteen hundred sixty-three, or 23 (iii) acquired, constructed, reconstructed, or erected subsequent to 24 December thirty-first nineteen hundred sixty-seven, if such acquisition, 25 construction, reconstruction or erection is pursuant to a plan of the 26 taxpayer which was in existence December thirty-first, nineteen hundred 27 sixty-seven and not thereafter substantially modified, and such acquisi- 28 tion, construction, reconstruction or erection would qualify under the 29 rules in paragraphs four, five or six of subsection (h) of section 30 forty-eight of the internal revenue code provided all references in such 31 paragraphs four, five and six to the dates October nine, nineteen 32 hundred sixty-six, and October ten, nineteen hundred sixty-six, shall be 33 read as December thirty-first, nineteen hundred sixty-seven. A taxpayer 34 shall be allowed a deduction under clauses (i), (ii) or (iii) of this 35 paragraph only if the tangible property shall be delivered or the 36 construction, reconstruction or erection shall be completed on or before 37 December thirty-first, nineteen hundred sixty-nine, except in the case 38 of tangible property which is acquired, constructed, reconstructed or 39 erected pursuant to a contract which was, on or before December thirty- 40 first, nineteen hundred sixty-seven, and at all times thereafter, bind- 41 ing on the taxpayer. Provided, however, for any taxable year beginning 42 on or after January first, nineteen hundred sixty-eight, a taxpayer 43 shall not be allowed a deduction under paragraph one of this subsection 44 with respect to tangible personal property leased by it to any other 45 person or corporation. For purposes of the preceding sentence, any 46 contract or agreement to lease or rent or for a license to use such 47 property shall be considered a lease. With respect to property which the 48 taxpayer uses itself for purposes other than leasing for part of a taxa- 49 ble year and leases for a part of a taxable year, the taxpayer shall be 50 allowed a deduction under paragraph one of this subsection in proportion 51 to the part of the year it uses such property. 52 (3) If the deduction allowable for any taxable year pursuant to this 53 subsection exceeds the portion of the taxpayer's entire net income allo- 54 cated to this state for such year, the excess may be carried over to the 55 following taxable year or years and may be deducted from the portion of 
 A. 7636 34 1 the taxpayer's entire net income allocated to this state for such year 2 or years. 3 (4) In any taxable year when property is sold or otherwise disposed 4 of, with respect to which a deduction has been allowed pursuant to this 5 subsection, subdivision twelve of section two hundred nineteen-z or 6 subdivision ten of section two hundred nineteen-xx of this chapter (as 7 such subdivisions were in effect on or before December thirty-first, 8 nineteen hundred seventy-two), the gain or loss entering into the compu- 9 tation of federal taxable income shall be disregarded in computing 10 entire net income, and there shall be added or subtracted from the 11 portion of entire net income allocated within the state the gain or loss 12 upon such sale or other disposition. In computing such gain or loss the 13 basis of the property sold or disposed of shall be adjusted to reflect 14 the deduction allowed with respect to such property pursuant to para- 15 graph one of this subsection. Provided however, that no loss shall be 16 recognized for the purposes of this paragraph with respect to a sale or 17 other disposition of property to a person whose acquisition thereof is 18 not a purchase as defined in section one hundred seventy-nine (d) of the 19 internal revenue code. 20 (k-1) A net operating loss deduction shall be allowed which shall be 21 presumably the same as the net operating loss deduction allowed under 22 section one hundred seventy-two of the internal revenue code, except 23 that in every instance where such deduction is allowed under this arti- 24 cle: 25 (1) any net operating loss included in determining such deduction 26 shall be adjusted to reflect the inclusions and exclusions from entire 27 net income required by the other provisions of this section, 28 (2) such deduction shall not include any net operating loss sustained 29 during any taxable year beginning prior to January first, two thousand 30 one, or during any taxable year in which the taxpayer was not subject to 31 the tax imposed by this article, 32 (3) such deduction shall not exceed the deduction for the taxable year 33 allowed under section one hundred seventy-two of the internal revenue 34 code augmented by the excess of the amount allowed as a deduction pursu- 35 ant to subsection (h) or (i) of this section, whichever is applicable, 36 over the amount allowed as a deduction pursuant to section 166 or 585 of 37 the internal revenue code, for each taxable year in which the taxpayer 38 had a net operating loss which is carried to the taxable year of the 39 deduction under this provision, in the aggregate, (except to the extent 40 such excess was previously deducted in computing entire net income), and 41 (4) the net operating loss deduction allowed under section one hundred 42 seventy-two of the internal revenue code shall for purposes of this 43 subsection be determined as if the taxpayer had elected under such 44 section to relinquish the entire carryback period with respect to net 45 operating losses. 46 (l) In the case of a savings and insurance bank which conducts a life 47 insurance business through a life insurance department under the author- 48 ity of former article six-A of the banking law, entire net income means 49 the federal taxable income which such bank is required to report to the 50 United States treasury department under paragraph one of subsection (a) 51 of section five hundred ninety-four of the internal revenue code and the 52 modifications required by this section in computing entire net income 53 shall only be made with respect to such federal taxable income. 54 (m) If the period covered by a return under this article is other than 55 the period covered by the return to the United States treasury depart- 56 ment, 
 A. 7636 35 1 (1) except as provided in paragraph two of this subsection, entire net 2 income and alternative entire net income shall be determined by multi- 3 plying the taxable income reported to such department (as adjusted 4 pursuant to the provisions of this article) by the number of calendar 5 months or major parts thereof covered by the return under this article 6 and dividing by the number of calendar months or major parts thereof 7 covered by the return to such department. If it shall appear that such 8 method of determining entire net income or alternative entire net income 9 does not properly reflect the taxpayer's income during the period 10 covered by the return under this article, the commissioner shall be 11 authorized in their discretion to determine such entire net income or 12 alternative entire net income solely on the basis of the taxpayer's 13 income during the period covered by its return under this article. 14 (2) in the case of a New York S termination year, an equal portion of 15 entire net income shall be assigned to each day of such year. The 16 portion of such entire net income thereby assigned to the S short year 17 and the C short year shall be included in the respective returns for the 18 S short year and the C short year under this article. However, where 19 paragraph three of subsection (s) of section six hundred twelve of this 20 chapter applies, the portion of such entire net income assigned to the S 21 short year and the C short year shall be determined under normal 22 accounting rules. 23 (n) The tax commission may, whenever necessary in order properly to 24 reflect the entire net income of any taxpayer, determine the year or 25 period in which any item of income or deduction shall be included, with- 26 out regard to the method of accounting employed by the taxpayer. 27 (o) (1) New York S corporation. In the case of a New York S corpo- 28 ration which is the parent of a qualified subchapter S subsidiary (QSSS) 29 with respect to a taxable year: 30 (A) where the QSSS is not an excluded corporation, 31 (i) in determining the entire net income of such parent corporation, 32 all assets, liabilities, income and deductions of the QSSS shall be 33 treated as assets, liabilities, income and deductions of the parent 34 corporation, and 35 (ii) the QSSS shall be exempt from all taxes imposed by this article, 36 and 37 (B) where the QSSS is an excluded corporation, the entire net income 38 of the parent corporation shall be determined as if the federal QSSS 39 election had not been made. 40 (2) New York C corporation. In the case of a New York C corporation 41 which is the parent of a QSSS with respect to a taxable year: 42 (A) where the QSSS is a taxpayer, 43 (i) in determining the entire net income of such parent corporation, 44 all assets, liabilities, income and deductions of the QSSS shall be 45 treated as assets, liabilities, income and deductions of the parent 46 corporation, and 47 (ii) the QSSS shall be exempt from all taxes imposed by this article, 48 and 49 (B) where the QSSS is not a taxpayer, 50 (i) if the QSSS is not an excluded corporation, the parent corporation 51 may make a QSSS inclusion election to include all assets, liabilities, 52 income and deductions of the QSSS as assets, liabilities, income and 53 deductions of the parent corporation, and 54 (ii) in the absence of such election, or where the QSSS is an excluded 55 corporation, the entire net income of the parent corporation shall be 56 determined as if the federal QSSS election had not been made. 
 A. 7636 36 1 (3) Non-New York S corporation not excluded. In the case of an S 2 corporation which is not a taxpayer and not an excluded corporation, and 3 which is the parent of a QSSS which is a taxpayer, the shareholders of 4 the parent corporation shall be entitled to make the New York S election 5 under subsection (a) of section six hundred sixty of this chapter. 6 (A) For any taxable year for which such election is in effect, the 7 parent corporation shall be subject to tax under this article as a New 8 York S corporation, and the provisions of subparagraph (A) of paragraph 9 one of this subsection shall apply. 10 (B) For any taxable year for which such election is not in effect, the 11 QSSS shall be a New York C corporation, and the entire net income of the 12 QSSS shall be determined as if the federal QSSS election had not been 13 made. For purposes of such determination, the taxable year of the parent 14 corporation shall constitute the taxable year of the QSSS, excluding, 15 however, any portion of such year during which the QSSS is not a taxpay- 16 er. 17 (4) S corporation excluded. In the case of an S corporation which is 18 an excluded corporation and which is the parent of a QSSS which is a 19 taxpayer, the QSSS shall be a New York C corporation and the provisions 20 of subparagraph (B) of paragraph three of this subsection shall apply. 21 (5) Excluded corporation. The term "excluded corporation" means a 22 corporation subject to tax under sections one hundred eighty-three 23 through one hundred eighty-four of this chapter, inclusive, or article 24 nine-A or thirty-three of this chapter, or a foreign corporation not 25 taxable by this state which, if it were taxable, would be subject to tax 26 under any of such sections or articles. 27 (6) Taxpayer. For purposes of this paragraph, the term "taxpayer" 28 means a parent corporation or QSSS subject to tax under this article, 29 determined without regard to the provisions of this paragraph. 30 (7) QSSS inclusion election. The election under clause (i) of subpara- 31 graph (B) of paragraph two of this subsection shall be effective for the 32 taxable year for which made and for all succeeding taxable years of the 33 corporation until such election is terminated. An election or termi- 34 nation shall be made on such form and in such manner as the commissioner 35 may prescribe by regulation or instruction. 36 (p) In the case of any sale of a qualified emerging technologies 37 investment held for more than thirty-six months and with respect to 38 which the taxpayer elects the application of this subsection, gain from 39 such sale shall be recognized only to the extent that the amount real- 40 ized on such sale exceeds the cost of any qualified emerging technolo- 41 gies investment purchased by the taxpayer during the three hundred 42 sixty-five-day period beginning on the date of such sale, reduced by any 43 portion of such cost previously taken into account under this 44 subsection. For purposes of this subsection the following shall apply: 45 (1) A qualified investment is stock of a corporation or an interest, 46 other than as a creditor, in a partnership or limited liability company 47 that was acquired by the taxpayer as provided in Internal Revenue Code § 48 1202(c)(1)(B), except that the reference to the term "stock" in such 49 section shall be read as "investment," or by the taxpayer from a person 50 who had acquired such stock or interest in such a manner. 51 (2) A qualified emerging technology investment is a qualified invest- 52 ment, that was held by the taxpayer for at least thirty-six months, in a 53 company defined in paragraph (c) of subdivision one of section thirty- 54 one hundred two-e of the public authorities law or an investment in a 55 partnership or limited liability company that is taxed as a partnership 
 A. 7636 37 1 to the extent that such partnership or limited liability company invests 2 in qualified emerging technology companies. 3 (3) For purposes of determining whether the nonrecognition of gain 4 under this subsection applies to a qualified emerging technologies 5 investment that is sold, the taxpayer's holding period for such invest- 6 ment and the qualified emerging technologies investment that is 7 purchased shall be determined without regard to Internal Revenue Code § 8 1223. 9 (q) The amount deferred under subsection (p) of this section shall be 10 added to entire net income when the reinvestment in the New York quali- 11 fied emerging technology company which qualified a taxpayer for such 12 deferral is sold. 13 (r) For taxable years beginning after December thirty-first, two thou- 14 sand two, in the case of qualified property described in paragraph two 15 of subsection k of section 168 of the internal revenue code, other than 16 qualified resurgence zone property described in subsection (u) of this 17 section, and other than qualified New York Liberty Zone property 18 described in paragraph two of subsection b of section 1400L of the 19 internal revenue code (without regard to clause (i) of subparagraph (C) 20 of such paragraph), which was placed in service on or after June first, 21 two thousand three, a taxpayer shall be allowed with respect to such 22 property the depreciation deduction allowable under section 167 of the 23 internal revenue code as such section would have applied to such proper- 24 ty had it been acquired by the taxpayer on September tenth, two thousand 25 one. 26 (s) (1) Definitions. (A) Related member. "Related member" means a 27 related person as defined in subparagraph (c) of paragraph three of 28 subsection (b) of section four hundred sixty-five of the internal reven- 29 ue code, except that "fifty percent" shall be substituted for "ten 30 percent". 31 (B) Effective rate of tax. "Effective rate of tax" means, as to any 32 state or U.S. possession, the maximum statutory rate of tax imposed by 33 the state or possession on or measured by a related member's net income 34 multiplied by the apportionment percentage, if any, applicable to the 35 related member under the laws of said jurisdiction. For purposes of this 36 definition, the effective rate of tax as to any state or U.S. possession 37 is zero where the related member's net income tax liability in said 38 jurisdiction is reported on a combined or consolidated return including 39 both the taxpayer and the related member where the reported transactions 40 between the taxpayer and the related member are eliminated or offset. 41 Also, for purposes of this definition, when computing the effective rate 42 of tax for a jurisdiction in which a related member's net income is 43 eliminated or offset by a credit or similar adjustment that is dependent 44 upon the related member either maintaining or managing intangible prop- 45 erty or collecting interest income in that jurisdiction, the maximum 46 statutory rate of tax imposed by said jurisdiction shall be decreased to 47 reflect the statutory rate of tax that applies to the related member as 48 effectively reduced by such credit or similar adjustment. 49 (C) Royalty payments. Royalty payments are payments directly connected 50 to the acquisition, use, maintenance or management, ownership, sale, 51 exchange, or any other disposition of licenses, trademarks, copyrights, 52 trade names, trade dress, service marks, mask works, trade secrets, 53 patents and any other similar types of intangible assets as determined 54 by the commissioner, and include amounts allowable as interest 55 deductions under section one hundred sixty-three of the internal revenue 56 code to the extent such amounts are directly or indirectly for, related 
 A. 7636 38 1 to or in connection with the acquisition, use, maintenance or manage- 2 ment, ownership, sale, exchange or disposition of such intangible 3 assets. 4 (D) Valid business purpose. A valid business purpose is one or more 5 business purposes, other than the avoidance or reduction of taxation, 6 which alone or in combination constitute the primary motivation for some 7 business activity or transaction, which activity or transaction changes 8 in a meaningful way, apart from tax effects, the economic position of 9 the taxpayer. The economic position of the taxpayer includes an increase 10 in the market share of the taxpayer, or the entry by the taxpayer into 11 new business markets. 12 (2) Royalty expense add backs. (A) Except where a taxpayer is included 13 in a combined return with a related member pursuant to subsection (f) of 14 section fourteen hundred sixty-two of this article, for the purpose of 15 computing entire net income, a taxpayer must add back royalty payments 16 directly or indirectly paid, accrued, or incurred in connection with one 17 or more direct or indirect transactions with one or more related members 18 during the taxable year to the extent deductible in calculating federal 19 taxable income. 20 (B) Exceptions. (i) The adjustment required in this subsection shall 21 not apply to the portion of the royalty payment that the taxpayer estab- 22 lishes, by clear and convincing evidence of the type and in the form 23 specified by the commissioner, meets all of the following requirements: 24 (I) the related member was subject to tax in this state or another state 25 or possession of the United States or a foreign nation or some combina- 26 tion thereof on a tax base that included the royalty payment paid, 27 accrued or incurred by the taxpayer; (II) the related member during the 28 same taxable year directly or indirectly paid, accrued or incurred such 29 portion to a person that is not a related member; and (III) the trans- 30 action giving rise to the royalty payment between the taxpayer and the 31 related member was undertaken for a valid business purpose. 32 (ii) The adjustment required in this subsection shall not apply if the 33 taxpayer establishes, by clear and convincing evidence of the type and 34 in the form specified by the commissioner, that: (I) the related member 35 was subject to tax on or measured by its net income in this state or 36 another state or possession of the United States or some combination 37 thereof; (II) the tax base for said tax included the royalty payment 38 paid, accrued or incurred by the taxpayer; and (III) the aggregate 39 effective rate of tax applied to the related member in those jurisdic- 40 tions is no less than eighty percent of the statutory rate of tax that 41 applied to the taxpayer under section fourteen hundred fifty-five of 42 this article for the taxable year. 43 (iii) The adjustment required in this subsection shall not apply if 44 the taxpayer establishes, by clear and convincing evidence of the type 45 and in the form specified by the commissioner, that: (I) the royalty 46 payment was paid, accrued or incurred to a related member organized 47 under the laws of a country other than the United States; (II) the 48 related member's income from the transaction was subject to a comprehen- 49 sive income tax treaty between such country and the United States; (III) 50 the related member was subject to tax in a foreign nation on a tax base 51 that included the royalty payment paid, accrued or incurred by the 52 taxpayer; (IV) the related member's income from the transaction was 53 taxed in such country at an effective rate of tax at least equal to that 54 imposed by this state; and (V) the royalty payment was paid, accrued or 55 incurred pursuant to a transaction that was undertaken for a valid busi- 56 ness purpose and using terms that reflect an arm's length relationship. 
 A. 7636 39 1 (iv) The adjustment required in this subsection shall not apply if the 2 taxpayer and the commissioner agree in writing to the application or use 3 of alternative adjustments or computations. The commissioner may, in 4 their discretion, agree to the application or use of alternative adjust- 5 ments or computations when they conclude that in the absence of such 6 agreement the income of the taxpayer would not be properly reflected. 7 (t) For taxable years beginning after December thirty-first, two thou- 8 sand two, upon the disposition of property to which subsection (r) of 9 this section applies, the amount of any gain or loss includible in 10 entire net income shall be adjusted to reflect the inclusions and exclu- 11 sions from entire net income pursuant to paragraph thirteen of 12 subsection (b) of this section attributable to such property. 13 (u) For purposes of subsections (r) and (t) of this section, qualified 14 resurgence zone property shall mean qualified property described in 15 paragraph two of subsection k of section 168 of the internal revenue 16 code substantially all of the use of which is in the resurgence zone, as 17 defined below, and is in the active conduct of a trade or business by 18 the taxpayer in such zone, and the original use of which in the resur- 19 gence zone commences with the taxpayer after December thirty-first, two 20 thousand two. The resurgence zone shall mean the area of New York county 21 bounded on the south by a line running from the intersection of the 22 Hudson River with the Holland Tunnel, and running thence east to Canal 23 Street, then running along the centerline of Canal Street to the inter- 24 section of the Bowery and Canal Street, running thence in a southeaster- 25 ly direction diagonally across Manhattan Bridge Plaza, to the Manhattan 26 Bridge and thence along the centerline of the Manhattan Bridge to the 27 point where the centerline of the Manhattan Bridge would intersect with 28 the easterly bank of the East River, and bounded on the north by a line 29 running from the intersection of the Hudson River with the Holland 30 Tunnel and running thence north along West Avenue to the intersection of 31 Clarkson Street then running east along the centerline of Clarkson 32 Street to the intersection of Washington Avenue, then running south 33 along the centerline of Washington Avenue to the intersection of West 34 Houston Street, then east along the centerline of West Houston Street, 35 then at the intersection of the Avenue of the Americas continuing east 36 along the centerline of East Houston Street to the easterly bank of the 37 East River. 38 (v) Disallowed investment proceeds from a REIT or RIC. (1)(A) As used 39 in this subsection, the term "REIT" means a real estate investment trust 40 as defined in section eight hundred fifty-six of the internal revenue 41 code. 42 (B) As used in this subsection, the term "RIC" means a regulated 43 investment company as defined in section eight hundred fifty-one of the 44 internal revenue code. 45 (C) As used in this subsection, the term "REIT holding company" means 46 a corporation that (i) owns, directly or indirectly, over fifty percent 47 of the capital stock of a REIT, or (ii) in connection with one or more 48 other corporations in its affiliated group (as such term is defined in 49 section fifteen hundred four of the internal revenue code without regard 50 to the exclusions provided for in subsection (b) of such section fifteen 51 hundred four), owns over fifty percent of the capital stock of a REIT. 52 (D) As used in this subsection, the term "RIC holding company" means a 53 corporation that (i) owns, directly or indirectly, over fifty percent of 54 the capital stock of a RIC, or (ii) in connection with one or more other 55 corporations in its affiliated group (as such term is defined in section 56 fifteen hundred four of the internal revenue code without regard to the 
 A. 7636 40 1 exclusions provided for in subsection (b) of such section fifteen 2 hundred four), owns over fifty percent of the capital stock of a RIC. 3 (2) For purposes of computing entire net income or other applicable 4 taxable base, there shall be no deduction for disallowed investment 5 proceeds as defined in paragraphs three and four of this subsection. 6 (3) For purposes of the deduction of gains in excess of losses under 7 subparagraph (iii) of paragraph eleven of subsection (e) of this 8 section, disallowed investment proceeds means (A) gain or loss from the 9 disposition of an ownership interest in a REIT, (B) gain or loss from 10 the disposition of an ownership interest in a RIC, and (C) gain or loss 11 from the disposition of an ownership interest in a REIT holding company 12 or a RIC holding company to the extent the gain or loss is attributable 13 to such holding company's ownership interest in a REIT or a RIC. 14 (4) For purposes of the deduction of dividend income from subsidiary 15 capital under subparagraph (ii) of paragraph eleven of subsection (e) of 16 this section, disallowed investment proceeds means (A) dividends from a 17 REIT, and (B) dividends from a RIC, (C) dividends from a REIT holding 18 company or a RIC holding company to the extent the dividends are attrib- 19 utable to such holding company's ownership interest in a REIT or a RIC. 20 (5) Notwithstanding paragraphs three and four of this subsection, 21 (A) disallowed investment proceeds shall not include any dividends 22 from, or attributable to, a REIT or a RIC required to be included in a 23 combined report pursuant to subdivisions five or seven of section two 24 hundred nine of this chapter to the extent such dividends were included 25 in the computation of combined entire net income; and 26 (B) a banking corporation, or a group of banking corporations properly 27 included in a combined return, with taxable assets (or combined taxable 28 assets in the case of a combined return) for the taxable year of eight 29 billion dollars or less shall not have any disallowed investment 30 proceeds. 31 § 1453-A. Computation of alternative entire net income. (a) Alterna- 32 tive entire net income means entire net income as determined pursuant to 33 section fourteen hundred fifty-three of this article, except that the 34 deductions described in paragraphs eleven and twelve of subsection (e) 35 of section fourteen hundred fifty-three of this article shall not be 36 allowed. 37 (b) Any election made pursuant to paragraph two of subsection (b) of 38 section fourteen hundred fifty-four of this article with respect to the 39 modification provided for in subsection (f) of section fourteen hundred 40 fifty-three of this article shall be deemed to have been made for 41 purposes of computing alternative entire net income. 42 § 1454. Allocation. (a) In general. If a taxpayer's entire net income, 43 alternative entire net income, or taxable assets are derived from busi- 44 ness carried on within and without the state, the taxpayer shall, for 45 purposes of computing allocation percentages, compute payroll, receipts, 46 and deposits percentages in accordance with the following rules: 47 (1) The taxpayer shall ascertain the percentage which eighty percent 48 of the total wages, salaries and other personal service compensation 49 during the taxable year of employees within the state, except wages, 50 salaries and other personal service compensation of general executive 51 officers, bears to the total wages, salaries and other personal service 52 compensation during the taxable year of all the taxpayer's employees 53 within and without the state, except wages, salaries and other personal 54 service compensation of general executive officers. 55 (2) (A) The taxpayer shall ascertain the percentage which the receipts 56 of the taxpayer arising during the taxable year from: 
 A. 7636 41 1 (i) loans (including a taxpayer's portion of a participation in a 2 loan) and financing leases within the state, and all other business 3 receipts earned within the state, bear to 4 (ii) the total amount of the taxpayer's receipts from loans (including 5 a taxpayer's portion of a participation in a loan) and financing leases 6 and all other business receipts within and without the state. 7 (B) All interest from loans and financing leases is located where the 8 greater portion of income producing activity related to the loan or 9 financing lease occurred; provided, however: 10 (i) In the case of a taxpayer described in paragraph one, two, three, 11 four, five or seven of subsection (a) of section fourteen hundred 12 fifty-two of this article, a loan or financing lease attributed by such 13 taxpayer to a branch without the state shall be presumed to be properly 14 so attributed provided that such presumption may be rebutted if the tax 15 commission demonstrates that the greater portion of income producing 16 activity related to the loan or financing lease did not occur at such 17 branch. Where such presumption has been rebutted, the loan or financing 18 lease shall be presumed to be within this state if the taxpayer had a 19 branch within this state at the time the loan or financing lease was 20 made. The taxpayer may rebut such presumption by demonstrating that the 21 greater portion of income producing activity related to the loan or 22 financing lease did not occur within the state. In the case of a loan or 23 financing lease which is recorded on the books of a place without the 24 state which is not a branch, it shall be presumed that the greater 25 portion of income producing activity related to such loan or financing 26 lease occurred within this state if the taxpayer had a branch within 27 this state at the time the loan or financing lease was made. The taxpay- 28 er may rebut such presumption by demonstrating that the greater portion 29 of income producing activity related to the loan or financing lease did 30 not occur within this state. 31 (ii) In the case of a taxpayer described in paragraph six or nine of 32 subsection (a) of section fourteen hundred fifty-two of this article, a 33 loan or financing lease attributed by such taxpayer to a bona fide 34 office without the state shall be presumed to be properly so attributed 35 provided that such presumption may be rebutted if the tax commission 36 demonstrates that the greater portion of income producing activity 37 related to the loan or financing lease did not occur without this state. 38 (C) Receipts from lease transactions other than financing leases 39 referred to in subparagraph (B) are located where the property subject 40 to the lease is located. 41 (D) (i) Interest, and fees and penalties in the nature of interest, 42 from bank, credit, travel and entertainment card receivables are earned 43 within the state if the mailing address of the card holder in the 44 records of the taxpayer is in the state; 45 (ii) Service charges and fees from such cards are earned within the 46 state if the mailing address of the card holder in the records of the 47 taxpayer is in the state; and 48 (iii) Receipts from merchant discounts are earned within the state if 49 the merchant is located within the state. 50 (E) The portion of total net gains and other income from trading 51 activities (including but not limited to foreign exchange, options and 52 financial futures), and from investment activities which is attributed 53 within the state shall be ascertained by multiplying such total net 54 gains and other income by a fraction the numerator of which is the aver- 55 age value of trading assets and investment assets attributable to this 56 state and the denominator of which is the average value of all trading 
 A. 7636 42 1 and investment assets. A trading asset or investment asset is attribut- 2 able to this state if the greater portion of income producing activity 3 related to the trading asset or investment asset occurred within the 4 state. 5 (F) Fees or charges from the issuance of letters of credit, travelers 6 checks and money orders are earned within the state if such letters of 7 credit, travelers checks or money orders are issued within the state. 8 (G) Rules for receipts from certain services to investment companies. 9 (i) For taxable years beginning on or after January first, two thousand 10 one, the portion of receipts received from an investment company arising 11 from the sale of management, administration or distribution services to 12 such investment company determined in accordance with clause (ii) of 13 this subparagraph shall be deemed to arise from services performed with- 14 in the state (such portion referred to herein as the New York portion). 15 (ii) The New York portion shall be the product of (I) the total of 16 such receipts from the sale of such services and (II) a fraction. The 17 numerator of that fraction is the sum of the monthly percentages (as 18 defined hereinafter) determined for each month of the investment compa- 19 ny's taxable year for federal income tax purposes which taxable year 20 ends within the taxable year of the taxpayer (but excluding any month 21 during which the investment company had no outstanding shares). The 22 monthly percentage for each such month is determined by dividing (I) the 23 number of shares in the investment company which are owned on the last 24 day of the month by shareholders which are domiciled in the state by 25 (II) the total number of shares in the investment company outstanding on 26 that date. The denominator of the fraction is the number of such monthly 27 percentages. 28 (iii)(I) For purposes of this subparagraph the term "domicile", in the 29 case of an individual shall have the meaning ascribed to it under arti- 30 cle twenty-two of this chapter; an estate or trust is domiciled in the 31 state if it is a resident estate or trust as defined in paragraph three 32 of subsection (b) of section six hundred five of this chapter; a busi- 33 ness entity is domiciled in the state if the location of the actual seat 34 of management or control is in the state. It shall be presumed that the 35 domicile of a shareholder, with respect to any month, is their or its 36 mailing address on the records of the investment company as of the last 37 day of such month. 38 (II) For purposes of this subparagraph, the term "investment company" 39 shall mean a regulated investment company, as defined in section 851 of 40 the internal revenue code, and a partnership to which section 7704(a) of 41 the internal revenue code applies (by virtue of section 7704(c)(3) of 42 such code) and which meets the requirements of section 851(b) of such 43 code. The preceding sentence shall be applied to the taxable year for 44 federal income tax purposes of the business entity which is asserted to 45 constitute an investment company which ends within the taxable year of 46 the taxpayer. 47 (III) For purposes of this subparagraph, the term "receipts from an 48 investment company" includes amounts received directly from an invest- 49 ment company as well as amounts received from the shareholders in such 50 investment company, in their capacity as such. 51 (IV) For purposes of this subparagraph, the term "management services" 52 means the rendering of investment advice to an investment company, 53 making determinations as to when sales and purchases of securities are 54 to be made on behalf of an investment company, or the selling or 55 purchasing of securities constituting assets of an investment company, 56 and related activities, but only where such activity or activities are 
 A. 7636 43 1 performed pursuant to a contract with the investment company entered 2 into pursuant to section 15(a) of the federal investment company act of 3 nineteen hundred forty, as amended. 4 (V) For purposes of this subparagraph, the term "distribution 5 services" means the services of advertising, servicing investor accounts 6 (including redemptions), marketing shares or selling shares of an 7 investment company, but, in the case of advertising, servicing investor 8 accounts (including redemptions) or marketing shares, only where such 9 service is performed by a person who is (or was, in the case of a closed 10 end company) also engaged in the service of selling such shares. In the 11 case of an open end company, such service of selling shares must be 12 performed pursuant to a contract entered into pursuant to section 15(b) 13 of the federal investment company act of nineteen hundred forty, as 14 amended. 15 (VI) For purposes of this subparagraph, the term "administration 16 services" includes clerical, accounting, bookkeeping, data processing, 17 internal auditing, legal and tax services performed for an investment 18 company but only if the provider of such service or services during the 19 taxable year in which such service or services are sold also sells 20 management or distribution services, as defined in item (V) of this 21 clause, to such investment company. 22 (H) All receipts from the performance of services not described in 23 this clause are earned within the state if the services are performed in 24 the state. When a service is performed both within and without the 25 state, the receipts shall be allocated within and without the state in 26 accordance with rules and regulations of the tax commission. 27 (I) All other receipts not described in subparagraphs (B) through (H) 28 of this paragraph shall be attributable within and without the state in 29 accordance with rules and regulations issued by the commissioner. 30 (3) The taxpayer shall ascertain the percentage which the average 31 value of deposits maintained at branches within the state during the 32 taxable year, bears to the average value of all the taxpayer's deposits 33 maintained at branches within and without the state during the taxable 34 year. 35 (4) Each percentage computed pursuant to this subsection shall be 36 computed on a cash or accrual basis according to the method of account- 37 ing used for the taxable year. The receipts percentage shall include 38 only receipts which are included in alternative entire net income for 39 the taxable year. The deposits and payroll percentages shall include 40 only deposits and payroll the expenses of which are included in the 41 computation of alternative entire net income for the taxable year. 42 (5) For purposes of this section: 43 (A) The term "bona fide office" means an office at which the taxpayer 44 carries on its business in a regular and systematic manner and which is 45 continuously maintained, occupied and used by employees of the taxpayer. 46 (B) The term "branch" means a bona fide office which is used by the 47 taxpayer on a regular and systematic basis to (i) approve loans (regard- 48 less of whether the approval of certain classes of loans requires review 49 or final approval by another office of the taxpayer), (ii) accept loan 50 repayments, (iii) disburse funds, and (iv) conduct one or more other 51 functions of a banking business. 52 (6) If it shall appear to the tax commission that the allocation 53 percentage determined in subsection (b), (c), or (d) of this section 54 does not properly reflect the activity, business, income or assets of a 55 taxpayer within the state, the tax commission shall be authorized in its 56 discretion to adjust it by (1) excluding one or more of the factors 
 A. 7636 44 1 therein, (2) including one or more other factors, or (3) any other simi- 2 lar or different method calculated to effect a fair and proper allo- 3 cation of the income or assets reasonably attributable to the state. 4 (7) The tax commission from time to time shall publish all rulings of 5 general public interest with respect to any application of the 6 provisions of paragraph six of this subsection. 7 (b) Allocation of entire net income. 8 (1) If a taxpayer's entire net income is derived from business carried 9 on both within and without the state, the portion thereof which is 10 derived from business carried on within the state shall be determined by 11 multiplying its entire net income by the income allocation percentage 12 determined as follows: add the percentages ascertained under paragraphs 13 one, two and three of subsection (a) of this section, plus, in the case 14 of a taxpayer other than a New York S corporation, an additional 15 percentage equal to the receipts percentage ascertained under paragraph 16 two of such subsection and an additional percentage equal to the depos- 17 its percentage ascertained under paragraph three of such subsection, and 18 divide the result by the number of percentages so added together. 19 (1-a) Notwithstanding the provisions of paragraph one of this 20 subsection, each banking corporation described in paragraph nine of 21 subsection (a) of section fourteen hundred fifty-two of this article 22 subject to the tax imposed by this article that substantially provides 23 management, administrative or distribution services to an investment 24 company, as such terms are defined in subparagraph (G) of paragraph two 25 of subsection (a) of this section, shall determine the portion of its 26 entire net income derived from business carried on within the state by 27 multiplying such income by an income allocation percentage obtained as 28 follows: 29 (A) For taxable years beginning on or after January first, two thou- 30 sand six and before the first day of January, two thousand seven, by 31 adding the following percentages: 32 (i) the product of seventeen percent and the percentage determined 33 under paragraph one of subsection (a) of this section, 34 (ii) the product of fifty percent and the percentage determined under 35 paragraph two of subsection (a) of this section, and 36 (iii) the product of thirty-three percent and the percentage deter- 37 mined under paragraph three of subsection (a) of this section. 38 (B) For taxable years beginning on or after January first, two thou- 39 sand seven and before the first day of January, two thousand eight, by 40 adding the following percentages: 41 (i) the product of ten percent and the percentage determined under 42 paragraph one of subsection (a) of this section, 43 (ii) the product of seventy percent and the percentage determined 44 under paragraph two of subsection (a) of this section, and 45 (iii) the product of twenty percent and the percentage determined 46 under paragraph three of subsection (a) of this section. 47 (C) For taxable years beginning on or after January first, two thou- 48 sand eight, by the percentage ascertained under paragraph two of 49 subsection (a) of this section. 50 (2) (A) In lieu of the modification provided for in subsection (f) of 51 section fourteen hundred fifty-three of this article, (relating to a 52 modification for the adjusted eligible net income of an international 53 banking facility), a taxpayer may, in the manner prescribed by the tax 54 commission, elect to modify on an annual basis its income allocation 55 percentage in the manner described in clauses (i), (ii) and (iii) of 56 this subparagraph: 
 A. 7636 45 1 (i) wages, salaries and other personal service compensation properly 2 attributable to the production of eligible gross income of the tax- 3 payer's international banking facility shall not be included in the 4 computation of wages, salaries and other personal service compensation 5 of employees within the state, 6 (ii) receipts properly attributable to the production of eligible 7 gross income of the taxpayer's international banking facility shall not 8 be included in the computation of receipts within the state, and 9 (iii) deposits from foreign persons which are properly attributable to 10 the production of eligible gross income of the taxpayer's international 11 banking facility shall not be included in the computation of deposits 12 maintained at branches within the state. 13 (B) For purposes of this paragraph, the term "eligible gross income" 14 refers to such term as set out in subsection (f) of section fourteen 15 hundred fifty-three of this article except that the term "foreign 16 person" as defined in paragraph eight of such subsection (f) shall not 17 include a foreign branch of the taxpayer and in no event shall trans- 18 actions between the taxpayer's international banking facility and its 19 foreign branches be considered. 20 (c) Allocation of alternative entire net income. If a taxpayer's 21 alternative entire net income is derived from business carried on both 22 within and without the state, the portion thereof which is derived from 23 business carried on within the state shall be determined by multiplying 24 its alternative entire net income by the alternative entire net income 25 allocation percentage determined as follows: 26 (1) Recompute the payroll percentage under paragraph one of subsection 27 (a) of this section without giving consideration to the phrase "eighty 28 percent of," add to the resulting percentage the percentages ascertained 29 under paragraphs two and three of such subsection, and divide the result 30 by the number of percentages so added together. 31 (2) When an election has been made pursuant to paragraph two of 32 subsection (b) of this section (relating to international banking facil- 33 ities) the taxpayer shall make the modifications described in such para- 34 graph for purposes of its alternative entire net income allocation 35 percentage. 36 (3) For taxable years beginning on or after January first, two thou- 37 sand six, each banking corporation described in paragraph nine of 38 subsection (a) of section fourteen hundred fifty-two of this article 39 subject to the tax imposed by this article that substantially provides 40 management, administrative or distribution services to an investment 41 company, as such terms are defined in subparagraph (G) of paragraph two 42 of subsection (a) of this section, shall determine the portion of its 43 alternative entire net income derived from business carried on within 44 the state by multiplying such income by the percentage ascertained for 45 the taxable year under paragraph one-a of subsection (b) of this 46 section, except that in computing such percentage (A) for taxable years 47 beginning before January first, two thousand eight, no consideration 48 shall be given to the phrase "eighty percent of" in paragraph one of 49 subsection (a) of this section, (B) for taxable years beginning before 50 January first, two thousand eight, when an election has been made pursu- 51 ant to paragraph two of subsection (b) of this section (relating to an 52 international banking facility) the taxpayer shall make the modifica- 53 tions described in such paragraph, and (C) for taxable years beginning 54 on or after January first, two thousand eight, when an election has been 55 made pursuant to paragraph two of subsection (b) of this section (relat- 56 ing to an international banking facility) the taxpayer shall make the 
 A. 7636 46 1 modifications described in clause (ii) of subparagraph (A) of such para- 2 graph. 3 (d) Allocation of taxable assets. If the taxpayer's taxable assets are 4 derived from business carried on both within and without the state, the 5 portion thereof which is derived from business carried on within the 6 state shall be determined by multiplying its taxable assets by an asset 7 allocation percentage determined in the same manner as the income allo- 8 cation percentage under subsection (b) of this section, determined as if 9 the election provided for in paragraph two of such subsection has been 10 made, except that the modifications described in clauses (i), (ii) and 11 (iii) of subparagraph (A) of such paragraph shall not be made. 12 § 1455. Computation of tax. The tax imposed by section fourteen 13 hundred fifty-one of this article shall be, in the case of each taxpayer 14 other than a New York S corporation, the greater of the following compu- 15 tations: 16 (a) Basic tax. For taxable years beginning before July first, two 17 thousand, nine percent of the taxpayer's entire net income, or the 18 portion thereof allocated to this state, for the taxable year, or part 19 thereof. For taxable years beginning after June thirtieth, two thousand 20 and before July first, two thousand one, eight and one-half percent of 21 the taxpayer's entire net income, or portion thereof allocated to this 22 state, for the taxable year, or part thereof. For taxable years begin- 23 ning after June thirtieth, two thousand one and before July first, two 24 thousand two, eight percent of the taxpayer's entire net income, or 25 portion thereof allocated to this state, for the taxable year, or part 26 thereof. For taxable years beginning after June thirtieth, two thousand 27 two and before January first, two thousand seven, seven and one-half 28 percent of the taxpayer's entire net income, or portion thereof allo- 29 cated to this state, for the taxable year, or part thereof. For taxable 30 years beginning on or after January first, two thousand seven, seven and 31 one-tenth percent of the taxpayer's entire net income, or the portion 32 thereof allocated to this state, for the taxable year, or part thereof. 33 (b) Alternative minimum tax. If the tax under subsection (a) of this 34 section is less than any of the following amounts, the tax shall be the 35 larger of the following amounts: 36 (1) (i) Except in the case of a taxpayer described in clause (ii), 37 (iii), or (iv) of this paragraph, one-tenth of a mill upon each dollar 38 of taxable assets, or the portion thereof allocated to this state. 39 (ii) In the case of a taxpayer whose net worth ratio is less than five 40 but greater than or equal to four percent and whose total assets are 41 comprised of thirty-three percent or more of mortgages, one-twenty-fifth 42 of a mill upon each dollar of taxable assets, or the portion thereof 43 allocated to this state. 44 (iii) In the case of a taxpayer whose net worth ratio is less than 45 four percent and whose total assets are comprised of thirty-three 46 percent or more of mortgages, one-fiftieth of a mill upon each dollar of 47 taxable assets, or the portion thereof allocated to this state. 48 (iv) For taxable years beginning on or after January first, nineteen 49 hundred eighty-five, a taxpayer (whether or not a qualified institution 50 as defined in subparagraph (B) of paragraph five of subsection (f) of 51 section four hundred six of the federal national housing act, as 52 amended, or as defined in paragraph two of subsection (i) of section 53 thirteen of the federal deposit insurance act, as amended) shall not be 54 subject to the provisions of this paragraph for that portion of the 55 taxable year in which it had outstanding net worth certificates issued 56 in accordance with paragraph five of subsection (f) of section four 
 A. 7636 47 1 hundred six of the federal national housing act, as amended, or issued 2 in accordance with subsection (i) of section thirteen of the federal 3 deposit insurance act, as amended. 4 (v) For the purposes of this article: 5 (A) The term "taxable assets" shall mean the average value of total 6 assets reduced by any amount of money or other property received from or 7 attributable to amounts received from the federal deposit insurance 8 corporation pursuant to subsection (c) of section thirteen of the feder- 9 al deposit insurance act, as amended, or the federal savings and loan 10 insurance corporation pursuant to paragraph one, two, three or four of 11 subsection (f) of section four hundred six of the federal national hous- 12 ing act, as amended. Total assets are those assets which are properly 13 reflected on a balance sheet the income or expenses of which are proper- 14 ly reflected (or would have been properly reflected if not fully depre- 15 ciated or expensed or depreciated or expensed to a nominal amount) in 16 the computation of alternative entire net income for the taxable year or 17 in the computation of the eligible net income of the taxpayer's interna- 18 tional banking facility for the taxable year. 19 (B) The term "net worth ratio" shall mean the percentage of net worth 20 to assets on the last day of the taxable year. The term "net worth" 21 means the sum of preferred stock, common stock, surplus, capital 22 reserves, undivided profits, mutual capital certificates, reserve for 23 contingencies, reserve for loan losses and reserve for security losses 24 minus assets classified loss. The term "assets" means the sum of mort- 25 gage loans, nonmortgage loans, repossessed assets, real estate held for 26 development or investment or resale, cash, deposits, investment securi- 27 ties, fixed assets and other assets (such as financial futures, goodwill 28 and other intangible assets) minus assets classified loss. In no event 29 shall assets be reduced by reserves for losses. 30 (C) The term "mortgages" shall mean loans secured by real property 31 within or without the state, participations in and securities collater- 32 alized by pools of residential mortgages, whether or not issued or guar- 33 anteed by a United States government agency, and loans secured by stock 34 in a cooperative housing corporation. The percentage of total assets 35 comprised of mortgages shall be an amount equal to the ratio of the 36 average of the four quarterly balances of such mortgages ending within 37 the taxable year, to the average of the four quarterly balances of all 38 assets ending within the taxable year. Such quarterly balances shall be 39 computed in the same manner as the report of condition required for 40 federal deposit insurance corporation or federal savings and loan insur- 41 ance corporation purposes, whether or not such report is required. For 42 taxable periods of less than one year, the taxpayer shall compute such 43 ratio using the number of such quarterly balances ending within such 44 taxable period. 45 (2) Three percent of the taxpayer's alternative entire net income, or 46 portion thereof allocated to this state, for the taxable year, or part 47 thereof. 48 (3) Two hundred fifty dollars. 49 (c) New York S corporations. (1) General. In the case of a New York S 50 corporation, the tax imposed by section fourteen hundred fifty-one of 51 this article shall be the higher of (i) the amount prescribed in 52 subsection (a) of this section reduced by the article twenty-two tax 53 equivalent or (ii) the amount prescribed in paragraph three of 54 subsection (b) of this section. 
 A. 7636 48 1 (2) The article twenty-two tax equivalent is the amount computed under 2 subsection (a) of this section by substituting for the rate therein the 3 rate of 7.875 percent. 4 (3) Termination year. In the case of a termination year, the tax for 5 the S short year shall be computed under paragraph one of this 6 subsection without regard to the amount prescribed in paragraph three of 7 subsection (b) of this section, and the tax for the C short year shall 8 be the larger of the taxes computed under subsection (a) of this section 9 or paragraph one or two of subsection (b) of this section, but in no 10 event shall the sum of the tax for the S short year and the tax for the 11 C short year be less than the tax prescribed in paragraph three of 12 subsection (b) of this section. 13 § 1455-A. Tax surcharge. (a) In addition to the tax imposed under 14 section fourteen hundred fifty-one of this article, there is hereby 15 imposed, (1) for taxable years ending after June thirtieth, nineteen 16 hundred eighty-nine and before July first, nineteen hundred ninety, a 17 tax surcharge at the rate of two and one-half percent of the tax imposed 18 under section fourteen hundred fifty-one of this article, before 19 deduction of any credits against tax otherwise allowable under this 20 article for all or any parts of such taxable years, (2) for taxable 21 years ending after June thirtieth, nineteen hundred ninety and before 22 July first, nineteen hundred ninety-four, and until such rate is super- 23 seded, a tax surcharge at the rate of fifteen percent of the tax imposed 24 under section fourteen hundred fifty-one of this article, after 25 deduction of any credits against tax otherwise allowable under this 26 article, (3) for taxable years ending after June thirtieth, nineteen 27 hundred ninety-four and before July first, nineteen hundred ninety-five, 28 and until such rate is superseded, a tax surcharge at the rate of ten 29 percent of the tax imposed under section fourteen hundred fifty-one of 30 this article, after deduction of any credits against the tax otherwise 31 allowable under this article, (4) for taxable years ending after June 32 thirtieth, nineteen hundred ninety-five and before July first, nineteen 33 hundred ninety-six, and until such rate is superseded, a tax surcharge 34 at the rate of five percent of the tax imposed under section fourteen 35 hundred fifty-one of this article, after deduction of any credits 36 against the tax otherwise allowable under this article and (5) for taxa- 37 ble years ending after June thirtieth, nineteen hundred ninety-six and 38 before July first, nineteen hundred ninety-seven, a tax surcharge at the 39 rate of zero percent of the tax imposed under section fourteen hundred 40 fifty-one of this article, after deduction of any credits against the 41 tax otherwise allowable under this article. However, the tax surcharge 42 imposed by this section at the rate of two and one-half percent shall 43 not be imposed upon any taxpayer for more than twelve months, the tax 44 surcharge imposed by this section at the rate of fifteen percent shall 45 not be imposed upon any taxpayer for more than forty-eight months, and 46 the tax surcharges imposed by this section at the rates of ten percent, 47 five percent and zero percent shall not, respectively, be imposed upon 48 any taxpayer for more than twelve months, and the commissioner shall 49 prescribe by regulation or instructions a method of proration designed 50 to effectuate such result. The credits against tax otherwise allowable 51 under section fourteen hundred fifty-six of this article shall not be 52 allowed as a credit against the tax surcharge imposed by this section. 53 (b) (1) The provisions concerning returns under section fourteen 54 hundred sixty-two of this article shall be applicable to this section, 55 except that for purposes of an automatic extension for six months for 56 filing a return covering the taxes imposed by this article, such auto- 
 A. 7636 49 1 matic extension shall be allowed, for taxable years to which the tax 2 surcharge imposed by this section apply, only if a taxpayer files with 3 the commissioner an application for extension in such form as the 4 commissioner may prescribe and pays on or before the date of such filing 5 in addition to any other amounts required under this article, two and 6 one-half percent, fifteen percent, ten percent, five percent or zero 7 percent, whichever is the rate applicable to the taxable year pursuant 8 to subsection (a) of this section, of the amount properly estimated as 9 provided in subsection (b) of section fourteen hundred sixty-three of 10 this article as its tax payable under section fourteen hundred fifty-one 11 of this article, before deduction of any credits against tax otherwise 12 allowable under section fourteen hundred fifty-six of this article in 13 the case of the tax surcharge imposed at the rate of two and one-half 14 percent, and after deduction of any credits against tax otherwise allow- 15 able under section fourteen hundred fifty-six of this article in the 16 case of the tax surcharge imposed at the rate of fifteen, ten, five or 17 zero percent. The tax surcharge imposed by this section shall be paya- 18 ble to the commissioner in full at the time the return is required to be 19 filed. 20 (2) Except as otherwise provided in this section, all of the 21 provisions of this article, except for section fourteen hundred fifty- 22 five-B of this article, presently applicable are applicable to the tax 23 surcharge imposed by this section with such modifications as may be 24 necessary to adapt such language to the tax surcharge imposed by this 25 section. Such provisions shall apply with the same force and effect as 26 if those provisions had been set forth in full in this section except to 27 the extent that any provision is either inconsistent with a provision of 28 this section or not relevant to the tax surcharge imposed by this 29 section and to that end a reference in this article to the tax imposed 30 by section fourteen hundred fifty-one of this article shall be read as a 31 reference to the tax surcharge imposed by this section, and to the sum 32 of such tax and such tax surcharge in the case of sections fourteen 33 hundred sixty and fourteen hundred sixty-one of this article and such 34 other provisions requiring such reading in order to effectuate the 35 purposes of this provision, unless a different meaning is clearly 36 required. 37 (c) Coordination with section fourteen hundred fifty-five-B of this 38 article. The amount of tax surcharge imposed pursuant to this section 39 shall not be included in any calculation of a tax surcharge imposed 40 pursuant to section fourteen hundred fifty-five-B of this article. 41 (d) Insofar as subsection (a) of this section establishes a rate of 42 fifteen percent in the case of taxable years ending after June thirti- 43 eth, nineteen hundred ninety and before July first, nineteen hundred 44 ninety-four and until such rate is superseded, a rate of ten percent in 45 the case of taxable years ending after June thirtieth, nineteen hundred 46 ninety-four and before July first, nineteen hundred ninety-five and 47 until such rate is superseded, a rate of five percent in the case of 48 taxable years ending after June thirtieth, nineteen hundred ninety-five 49 and before July first, nineteen hundred ninety-six and until such rate 50 is superseded, and a rate of zero percent in the case of taxable years 51 ending after June thirtieth, nineteen hundred ninety-six and before July 52 first, nineteen hundred ninety-seven, the transition from such rate of 53 fifteen percent to such rate of ten percent, from such rate of ten 54 percent to such rate of five percent, and from such rate of five percent 55 to such rate of zero percent, shall be deemed to occur, respectively, on 56 the first day of the seventh month of each of such taxable years, with 
 A. 7636 50 1 the result that for purposes of implementation of such changes in rates, 2 and notwithstanding such subsection (a), there is hereby imposed with 3 respect to all taxable years ending after June thirtieth, nineteen 4 hundred ninety-four and before July first, nineteen hundred ninety-five, 5 including taxable years of fewer than twelve months, a tax surcharge at 6 the rate of twelve and one-half percent; there is hereby imposed with 7 respect to all taxable years ending after June thirtieth, nineteen 8 hundred ninety-five and before July first, nineteen hundred ninety-six, 9 including taxable years of fewer than twelve months, a tax surcharge at 10 the rate of seven and one-half percent; and there is hereby imposed with 11 respect to all taxable years ending after June thirtieth, nineteen 12 hundred ninety-six and before July first, nineteen hundred ninety-seven, 13 including taxable years of fewer than twelve months, a tax surcharge at 14 the rate of two and one-half percent. In addition, for purposes of 15 implementation of all the provisions of this section references to ten 16 percent shall be read as references to twelve and one-half percent, 17 references to five percent shall be read as references to seven and 18 one-half percent and references to zero percent shall be read as refer- 19 ences to two and one-half percent. 20 § 1455-B. Temporary metropolitan transportation business tax surcharge 21 on banks. (a) For the privilege of exercising its franchise or doing 22 business in the metropolitan commuter transportation district in a 23 corporate or organized capacity, there is hereby imposed on every 24 taxpayer subject to tax under this article, other than a New York S 25 corporation, for the taxable years commencing on or after January first, 26 nineteen hundred eighty-two but ending before December thirty-first, two 27 thousand twenty-five, a tax surcharge, in addition to the tax imposed 28 under section fourteen hundred fifty-one of this article, at the rate of 29 eighteen percent of the tax imposed under such section fourteen hundred 30 fifty-one of this article, for such taxable years or any part of such 31 taxable years ending before December thirty-first, nineteen hundred 32 eighty-three after the deduction of any credits otherwise allowable 33 under this article, and at the rate of seventeen percent of the tax 34 imposed under such section for such taxable years or any part of such 35 taxable years ending on or after December thirty-first, nineteen hundred 36 eighty-three after the deduction of any credits otherwise allowable 37 under this article; provided however, that such rates of tax surcharge 38 shall be applied only to that portion of the tax imposed under section 39 fourteen hundred fifty-one of this article after the deduction of any 40 credits otherwise allowable under this article which is attributable to 41 the taxpayer's business activity carried on within the metropolitan 42 commuter transportation district; and provided, further, that the tax 43 surcharge imposed by this section shall not be imposed upon any taxpayer 44 for more than four hundred thirty-two months. Provided however, that for 45 taxable years commencing on or after July first, two thousand, such 46 surcharge shall be calculated as if the rate of the basic tax computed 47 under subsection (a) of section fourteen hundred fifty-five of this 48 article was nine percent. 49 (b) If the tax imposed under section fourteen hundred fifty-one of 50 this article is derived from business activity carried on both within 51 and without the metropolitan commuter transportation district, the 52 portion of the tax attributable to business activity carried on in the 53 metropolitan commuter transportation district shall be determined in 54 accordance with rules and regulations promulgated by the tax commission. 55 (c) The provisions concerning returns under section fourteen hundred 56 sixty-two of this article shall be applicable to this section, except 
 A. 7636 51 1 that for purposes of an automatic extension for six months for filing a 2 return covering the tax surcharge imposed by this section, such automat- 3 ic extension shall be allowed only if a taxpayer files with the commis- 4 sioner an application for extension in such form as said commissioner 5 may prescribe by regulation and pays on or before the date of such 6 filing in addition to any other amounts required under this article, 7 either ninety percent of the entire tax surcharge required to be paid 8 under this section for the applicable period, or not less than the tax 9 surcharge shown on the taxpayer's return for the preceding taxable year, 10 if such preceding taxable year was a taxable year of twelve months. The 11 tax surcharge imposed by this section shall be payable to the commis- 12 sioner in full at the time the return is required to be filed, and such 13 tax surcharge or the balance thereof, imposed on any taxpayer which 14 ceases to exercise its franchise or be subject to the tax surcharge 15 imposed by this section shall be payable to the commissioner at the time 16 the return is required to be filed, provided such tax surcharge of a 17 domestic corporation which continues to possess its franchise shall be 18 subject to adjustment as the circumstances may require; all other tax 19 surcharges of any such taxpayer, which pursuant to the foregoing 20 provisions of this section would otherwise be payable subsequent to the 21 time such return is required to be filed, shall nevertheless be payable 22 at such time. All of the provisions of this article presently applicable 23 are applicable to the tax surcharge imposed by this section. 24 (d) Notwithstanding any contrary provisions of state or local law, the 25 tax surcharge imposed under this section shall not be allowed as a 26 deduction in the computation of any state or local tax imposed under 27 this chapter or any chapter or local law. Furthermore, the credits 28 otherwise allowable under this article shall not be allowed against the 29 tax surcharge imposed by this section. 30 (e) The term metropolitan commuter transportation district as used in 31 this section shall be defined pursuant to section twelve hundred sixty- 32 two of the public authorities law. 33 § 1456. Credits. (a) Credit for servicing certain mortgages. Every 34 bank, as defined in section twenty-four hundred two of the public 35 authorities law, which shall have entered into a contract with the state 36 of New York mortgage agency to service mortgages acquired by such agency 37 pursuant to the state of New York mortgage agency act, shall have cred- 38 ited to it annually to apply upon or in lieu of the payment of any tax 39 to which it may be subject under this article an amount equal to two and 40 ninety-three one hundredths percentum of the total principal and inter- 41 est collected by the bank during its taxable year on each such mortgage 42 secured by a lien on real estate improved by a one-family to four-family 43 residential structure and an amount equal to the interest collected by 44 the bank during its taxable year on each such mortgage secured by a lien 45 on real property improved by a structure occupied as the residence of 46 five or more families living independently of each other, multiplied by 47 a fraction the denominator of which shall be the interest rate payable 48 on the mortgage (computed to five decimal places) and the numerator of 49 which shall be .00125 in the case of such a mortgage acquired by such 50 agency for less than one million dollars, and .00100 in the case of such 51 a mortgage acquired by such agency for one million dollars or more; 52 provided, however, that there shall in no case be credited to any such 53 bank an amount in excess of the amount due from such bank for taxes 54 payable to the state under this article for the taxable year for which 55 such credit is given. In computing such tax credit for the servicing of 56 mortgages on one-family to four-family residential structures, the bank 
 A. 7636 52 1 shall be entitled to no credit for the collection of curtailments or 2 payments in discharge of any such mortgage. For the purposes of this 3 section, (1) a "curtailment" shall mean amounts paid by mortgagors (A) 4 in excess of the monthly constant due during the month of collection and 5 (B) in reduction of the unpaid principal balance of the mortgage; in the 6 absence of clear evidence to the contrary, amounts paid in excess of the 7 monthly constant due during the month of collection shall be deemed to 8 be in reduction of the unpaid principal balance of the mortgage; and (2) 9 "monthly constant" shall mean the amount of principal and interest which 10 is due and payable according to the mortgage documents on each periodic 11 payment date. 12 (b) Eligible business facility credit. 13 (1) On or after April first, nineteen hundred eighty-three, for taxa- 14 ble years beginning before January first, two thousand, a credit against 15 the tax imposed by this article shall be allowed only to a taxpayer 16 owning or operating an eligible business facility, where such taxpayer 17 has received a certificate of eligibility for tax credits, or a renewal 18 or extension thereof, for such facility from the New York state job 19 incentive board prior to April first, nineteen hundred eighty-three, or 20 has received a certificate of eligibility for tax credits, or a renewal 21 or extension thereof, for such facility from the state tax commission 22 subsequent to such date pursuant to paragraph eight of this subsection, 23 and only with respect to such facility, to be computed as hereinafter 24 provided. 25 (2) The amount of the credit allowable in any taxable year shall be 26 the sum determined by multiplying the tax otherwise due by a percentage 27 to be determined by: 28 (A) ascertaining the percentage which the total of eligible property 29 values during the period covered by its return, as defined in paragraph 30 four of this subsection, bears to the average value of all the taxpay- 31 er's real and tangible personal property except for inventory within the 32 state during such period. For the purposes of this subparagraph only, 33 the taxpayer's real and tangible personal property shall include not 34 only such property owned by the taxpayer but also property rented to it, 35 and the value of rented property shall be deemed to be eight times the 36 net annual rental rate, that is, the annual rental rate paid by the 37 taxpayer less any annual rental rate received by the taxpayer from 38 subrentals; 39 (B) ascertaining the percentage which the total wages, salaries and 40 other personal service compensation during such period, of employees, 41 except general executive officers and that portion of employee's wages, 42 salaries and other personal service compensation attributable, directly 43 or indirectly, to the production of adjusted eligible net income which 44 is allowed as a deduction from entire net income as set forth in 45 subsection (f) of section fourteen hundred fifty-three of this article, 46 serving in jobs created or retained in an eligible area (as the term 47 "eligible area" was defined by section one hundred fifteen of the 48 commerce law as it existed on March thirty-first, nineteen hundred 49 eighty-three) by such business facility, bears to the total wages, sala- 50 ries and other personal service compensation, during such period, of all 51 the taxpayer's employees within the state, except general executive 52 officers; and 53 (C) adding together the percentages so determined and dividing the 54 result by two; provided, however, that if no wages, salaries or other 55 personal service compensation were paid or incurred by the taxpayer 56 during such period to employees within the state other than general 
 A. 7636 53 1 executive officers, subparagraph (B) of this paragraph shall be disre- 2 garded and the amount of credit allowable shall be determined by multi- 3 plying the tax otherwise due by the percentage specified in subparagraph 4 (A) of this paragraph. 5 (3) In no event shall the credit herein provided for be allowed in any 6 amount which will reduce the tax payable to less than the dollar amount 7 fixed as a minimum tax by subsection (b) of section fourteen hundred 8 fifty-five of this article. 9 (4) (A) Eligible property values, for the purposes of this subsection, 10 shall include such part of the value of depreciable real and tangible 11 personal property included in an eligible business facility as repres- 12 ents: 13 (i) expenditures paid or incurred by the taxpayer for capital improve- 14 ments consisting of the construction, reconstruction, erection or 15 improvement of real property included in an eligible facility, which 16 construction, reconstruction, erection or improvements were commenced on 17 or after July first, nineteen hundred sixty-eight; 18 (ii) in the case of real property leased by the taxpayer from another 19 party, eight times the portion of the net annual rental rate attribut- 20 able to such construction, reconstruction, erection or improvement 21 commenced on or after July first, nineteen hundred sixty-eight; 22 (iii) expenditures paid or incurred by the taxpayer for the purchase 23 of tangible personal property, other than vehicles, included in an 24 eligible business facility, provided such property was purchased on or 25 after July first, nineteen hundred sixty-eight; and 26 (iv) in the case of tangible personal property, other than vehicles, 27 leased by the taxpayer from another party and included in an eligible 28 business facility, eight times the net annual rental rate, provided the 29 period for which such property was leased by the taxpayer began on or 30 after July first, nineteen hundred sixty-eight. 31 (B) Provided, however, eligible property values for purposes of this 32 subdivision shall not include expenditures paid or incurred more than 33 one year prior to the filing of an application for a certificate of 34 eligibility pursuant to section one hundred nineteen of the commerce 35 law, as such section existed on March thirty-first, nineteen hundred 36 eighty-three. 37 (C) Provided further that, for purposes of this subsection, eligible 38 property values shall not include that portion of the value of property 39 which is used in the production of adjusted eligible net income which is 40 allowed as a deduction from entire net income as set forth in subsection 41 (f) of section fourteen hundred fifty-three of this article. 42 (5) The total of all credits allowed pursuant to this subsection in 43 any taxable year or years with reference to any eligible business facil- 44 ity shall not exceed the total eligible property values included. 45 (6) If a credit is allowed for any taxable year as herein provided on 46 the basis of a certificate of eligibility, and if such certificate is 47 revoked or modified, the taxpayer shall report such revocation or 48 modification in its return for the taxable year during which it occurs, 49 and the tax commission shall recompute such credit and may assess any 50 additional tax resulting from such recomputation within the time fixed 51 by paragraph nine of subsection (c) of section ten hundred eighty-three 52 of this chapter. 53 (7) If a business facility owned or operated by a taxpayer shall be an 54 eligible business facility for only part of a taxable year, the credit 55 allowed by this subdivision shall be prorated according to the period 56 such facility was an eligible business facility, and if the total of the 
 A. 7636 54 1 eligible property values shall have changed during any taxable year, a 2 pro-rata adjustment shall be made in computing such credit. 3 (8) The state tax commission shall be empowered, on or after April 4 first, nineteen hundred eighty-three, to issue a certificate of eligi- 5 bility for tax credits to a taxpayer for an eligible business facility 6 with regard to which such taxpayer has, prior to July first, nineteen 7 hundred eighty-three, received from the New York state job incentive 8 board initial approval of an application for such certificate by such 9 board as evidenced by the minutes of the meeting of the board at which 10 such application was approved, or a letter of intent authorized by 11 section 102.4 of part one hundred two of title five of the codes, rules 12 and regulations of the state of New York regarding such certificate of 13 eligibility and to renew, extend, revoke or modify a certificate of 14 eligibility for tax credits, pursuant to section one hundred twenty of 15 the commerce law (as such section existed on March thirty-first, nine- 16 teen hundred eighty-three). 17 (9) For purposes of the requirement for eligibility for the credit 18 allowed under this subdivision that a business facility create or retain 19 not less than five jobs as provided in subdivision (c) of section one 20 hundred eighteen of the commerce law (as such section existed on March 21 thirty-first, nineteen hundred eighty-three), a business facility shall 22 have (A) created not less than five jobs only if the number of jobs for 23 the taxable year exceeds the number of jobs at the time of the commence- 24 ment of the project as stated on its application for initial approval by 25 five or more; or (B) retained not less than five jobs only if initial 26 approval was based on the retention of five or more jobs and (i) the 27 number of jobs for the taxable year is at least equal to the number of 28 jobs at the time of the commencement of the project as stated on its 29 application for initial approval or (ii) where initial approval was 30 based on the retention of fewer jobs than the number of jobs at the time 31 of the commencement of the project as stated on its application for 32 initial approval, the number of jobs for the taxable year is at least 33 equal to the number approved for retention. For purposes of this para- 34 graph, the phrase "initial approval was based on the retention of five 35 or more jobs" shall mean that such initial approval was given by the job 36 incentive board to an applicant that had not stated in its application 37 for initial approval that it would increase the number of jobs at its 38 facility by at least five. 39 (c) Mortgage recording tax credit. (1) A taxpayer shall be allowed a 40 credit, to be credited against the tax imposed by this article. The 41 amount of the credit shall be the amount of the special additional mort- 42 gage recording tax paid by the taxpayer pursuant to the provisions of 43 subdivision one-a of section two hundred fifty-three of this chapter on 44 mortgages recorded on and after January first, nineteen hundred seven- 45 ty-nine. Provided, however, no credit shall be allowed with respect to a 46 mortgage of real property principally improved or to be improved by one 47 or more structures containing in the aggregate not more than six resi- 48 dential dwelling units, each dwelling unit having its own separate cook- 49 ing facilities, where the real property is located in one or more of the 50 counties comprising the metropolitan commuter transportation district 51 and where the mortgage is recorded on or after May first, nineteen 52 hundred eighty-seven. Provided, however, no credit shall be allowed with 53 respect to a mortgage of real property principally improved or to be 54 improved by one or more structures containing in the aggregate not more