N.Y. TAX Law § 208 — New York Code / Act TAX / Article 9-A / Section 208
Definitions
Status: in_force

§ 208. Definitions. As used in this article:\n  1. The term "corporation" includes (a) an association within the\nmeaning of paragraph three of subsection (a) of section seventy-seven\nhundred one of the internal revenue code (including a limited liability\ncompany), (b) a joint-stock company or association, (c) a publicly\ntraded partnership treated as a corporation for purposes of the internal\nrevenue code pursuant to section seventy-seven hundred four thereof and\n(d) any business conducted by a trustee or trustees wherein interest or\nownership is evidenced by certificate or other written instrument.\n"DISC" and "former DISC" mean any corporation which meets the\nrequirements of subsection (a) of section nine hundred ninety-two of the\ninternal revenue code.\n  1-A. The term "New York S corporation" means, with respect to any\ntaxable year, a corporation subject to tax under this article for which\nan election is in effect pursuant to subsection (a) of section six\nhundred sixty of this chapter for such year, any such year shall be\ndenominated a "New York S year", and such election shall be denominated\na "New York S election". The term "New York C corporation" means, with\nrespect to any taxable year, a corporation subject to tax under this\narticle which is not a New York S corporation, and any such year shall\nbe denominated a "New York C year". The term "termination year" means\nany taxable year of a corporation during which the New York S election\nterminates on a day other than the first day of such year. The portion\nof the taxable year ending before the first day for which such\ntermination is effective shall be denominated the "S short year", and\nthe portion of such year beginning on such first day shall be\ndenominated the "C short year". The term "New York S termination year"\nmeans any termination year which is not also an S termination year for\nfederal purposes.\n  1-B. The term "QSSS" means a corporation which is a qualified\nsubchapter S subsidiary as defined in subparagraph (B) of paragraph\nthree of subsection (b) of section thirteen hundred sixty-one of the\ninternal revenue code. The term "exempt QSSS" means a QSSS exempt from\ntax under this article as provided in paragraph (k) of subdivision nine\nof this section, or a QSSS described in subclause (i) of clause (B) of\nsubparagraph two of paragraph (k) of subdivision nine of this section,\nwherein the parent corporation of the QSSS is subject to tax under this\narticle, and the assets, liabilities, income and deductions of the QSSS\nare treated as the assets, liabilities, income and deductions of the\nparent corporation. Where a QSSS is an exempt QSSS, then for all\npurposes under this article:\n  (a) the assets, liabilities, income, deductions, property, payroll,\nreceipts, capital, credits, and all other tax attributes and elements of\neconomic activity of the QSSS shall be deemed to be those of the parent\ncorporation,\n  (b) the stocks, bonds and other securities issued by, and any\nindebtedness from, the QSSS shall not be investment or business capital\nof the parent corporation,\n  (c) transactions between the parent corporation and the QSSS,\nincluding the payment of interest and dividends, shall not be taken into\naccount, and\n  (d) general executive officers of the QSSS shall be deemed to be\ngeneral executive officers of the parent corporation.\n  2. The term "taxpayer" means any corporation subject to tax under this\narticle.\n  3. The term "subsidiary" means a corporation of which over fifty\npercent of the number of shares of stock entitling the holders thereof\nto vote for the election of directors or trustees is owned by the\ntaxpayer.\n  4. The term "stock" means an interest in a corporation that is treated\nas equity for federal income tax purposes.\n  5. (a) The term "investment capital" means investments in stocks that\n(i) satisfy the definition of a capital asset under section 1221 of the\ninternal revenue code at all times the taxpayer owned such stock during\nthe taxable year, (ii) are held by the taxpayer for investment for more\nthan one year, (iii) the dispositions of which are, or would be, treated\nby the taxpayer as generating long-term capital gains or losses under\nthe internal revenue code, (iv) for stocks acquired on or after January\nfirst, two thousand fifteen, at any time after the close of the day in\nwhich they are acquired, have never been held for sale to customers in\nthe regular course of business, and (v) before the close of the day on\nwhich the stock was acquired, are clearly identified in the taxpayer's\nrecords as stock held for investment in the same manner as required\nunder section 1236(a)(1) of the internal revenue code for the stock of a\ndealer in securities to be eligible for capital gain treatment (whether\nor not the taxpayer is a dealer of securities subject to section 1236),\nprovided, however, that for stock acquired prior to October first, two\nthousand fifteen that was not subject to section 1236(a) of the internal\nrevenue code, such identification in the taxpayer's records must occur\nbefore October first, two thousand fifteen. Stock in a corporation that\nis conducting a unitary business with the taxpayer, stock in a\ncorporation that is included in a combined report with the taxpayer\npursuant to the commonly owned group election in subdivision three of\nsection two hundred ten-C of this article, and stock issued by the\ntaxpayer shall not constitute investment capital. For purposes of this\nsubdivision, if the taxpayer owns or controls, directly or indirectly,\nless than twenty percent of the voting power of the stock of a\ncorporation, that corporation will be presumed to be conducting a\nbusiness that is not unitary with the business of the taxpayer.\n  (b) There shall be deducted from investment capital any liabilities\nwhich are directly or indirectly attributable to investment capital. If\nthe amount of those liabilities exceeds the amount of investment\ncapital, the amount of investment capital will be zero.\n  (c) Investment capital shall not include any such investments the\nincome from which is excluded from entire net income pursuant to the\nprovisions of paragraph (c-1) of subdivision nine of this section, and\nthat investment capital shall be computed without regard to liabilities\ndirectly or indirectly attributable to such investments, but only if air\ncarriers organized in the United States and operating in the foreign\ncountry or countries in which the taxpayer has its major base of\noperations and in which it is organized, resident or headquartered (if\nnot in the same country as its major base of operations) are not subject\nto any tax based on or measured by capital imposed by such foreign\ncountry or countries or any political subdivision thereof, or if taxed,\nare provided an exemption, equivalent to that provided for herein, from\nany tax based on or measured by capital imposed by such foreign country\nor countries and from any such tax imposed by any political subdivision\nthereof.\n  (d) If a taxpayer acquires stock that is a capital asset under section\n1221 of the internal revenue code during the taxable year and owns that\nstock on the last day of the taxable year, it will be presumed, solely\nfor purposes of determining whether that stock should be classified as\ninvestment capital after it is acquired, that the taxpayer held that\nstock for more than one year. However, if the taxpayer does not in fact\nown that stock at the time it actually files its original report for the\ntaxable year in which it acquired the stock, then the presumption in the\npreceding sentence shall not apply and the actual period of time during\nwhich the taxpayer owned the stock shall be used to determine whether\nthe stock should be classified as investment capital after it is\nacquired. If the taxpayer relies on the presumption in the first\nsentence of this paragraph but does not own the stock for more than one\nyear, the taxpayer must increase its total business capital in the\nimmediately succeeding taxable year by the amount included in investment\ncapital for that stock, net of any liabilities attributable to that\nstock computed as provided in paragraph (b) of this subdivision and must\nincrease its business income in the immediately succeeding taxable year\nby the amount of income and net gains (but not less than zero) from that\nstock included in investment income, less any interest deductions\ndirectly or indirectly attributable to that stock, as provided in\nsubdivision six of this section.\n  (e) When income or gain from a debt obligation or other security\ncannot be apportioned to the state using the apportionment factor\ndetermined under section two hundred ten-A of this article as a result\nof United States constitutional principles, the debt obligation or other\nsecurity will be included in investment capital.\n  6. (a) (i) The term "investment income" means income, including\ncapital gains in excess of capital losses, from investment capital, to\nthe extent included in computing entire net income, less, in the\ndiscretion of the commissioner, any interest deductions allowable in\ncomputing entire net income which are directly or indirectly\nattributable to investment capital or investment income, provided,\nhowever, that in no case shall investment income exceed entire net\nincome. (ii) If the amount of interest deductions subtracted under\nsubparagraph (i) of this paragraph exceeds investment income, the excess\nof such amount over investment income must be added back to entire net\nincome. (iii) If the taxpayer's investment income determined without\nregard to the interest deductions subtracted under subparagraph (i) of\nthis paragraph comprises more than eight percent of the taxpayer's\nentire net income, investment income determined without regard to such\ninterest deductions cannot exceed eight percent of the taxpayer's entire\nnet income.\n  (b) In lieu of subtracting from investment income the amount of those\ninterest deductions, the taxpayer may make a revocable election to\nreduce its total investment income, determined after applying the\nlimitation in subparagraph (iii) of paragraph (a) of this subdivision,\nby forty percent. If the taxpayer makes this election, the taxpayer must\nalso make the elections provided for in paragraphs (b) and (c) of\nsubdivision six-a of this section. If the taxpayer subsequently revokes\nthis election, the taxpayer must revoke the elections provided for in\nparagraphs (b) and (c) of subdivision six-a of this section. A taxpayer\nthat does not make this election because it has no investment capital\nwill not be precluded from making those other elections.\n  (c) Investment income shall not include any amount treated as\ndividends pursuant to section seventy-eight of the internal revenue\ncode.\n  6-a. (a) The term "other exempt income" means the sum of exempt CFC\nincome and exempt unitary corporation dividends.\n  (b) "Exempt CFC income" means (i) except to the extent described in\nsubparagraph (ii) of this paragraph, the income required to be included\nin the taxpayer's federal gross income pursuant to subsection (a) of\nsection 951 of the internal revenue code, received from a corporation\nthat is conducting a unitary business with the taxpayer but is not\nincluded in a combined report with the taxpayer, (ii) such income\nrequired to be included in the taxpayer's federal gross income pursuant\nto subsection (a) of such section 951 of the internal revenue code by\nreason of subsection (a) of section 965 of the internal revenue code, as\nadjusted by subsection (b) of section 965 of the internal revenue code,\nand without regard to subsection (c) of such section, received from a\ncorporation that is not included in a combined report with the taxpayer,\nand (iii) ninety-five percent of the income required to be included in\nthe taxpayer's federal gross income pursuant to subsection (a) of\nsection 951A of the internal revenue code, without regard to the\ndeduction under section 250 of the internal revenue code, received from\na corporation that is not included in a combined report with the\ntaxpayer, less, (iv) in the discretion of the commissioner, any interest\ndeductions directly or indirectly attributable to that income. In lieu\nof subtracting from its exempt CFC income the amount of those interest\ndeductions, the taxpayer may make a revocable election to reduce its\ntotal exempt CFC income by forty percent. If the taxpayer makes this\nelection, the taxpayer must also make the elections provided for in\nparagraph (b) of subdivision six of this section and paragraph (c) of\nthis subdivision. If the taxpayer subsequently revokes this election,\nthe taxpayer must revoke the elections provided for in paragraph (b) of\nsubdivision six of this section and paragraph (c) of this subdivision. A\ntaxpayer which does not make this election because it has no exempt CFC\nincome will not be precluded from making those other elections. The\nincome described in subparagraphs (ii) and (iii) of this paragraph shall\nnot constitute investment income. The income described in subparagraph\n(iii) of this paragraph shall not constitute exempt unitary corporation\ndividends.\n  (c) "Exempt unitary corporation dividends" means those dividends from\na corporation that is conducting a unitary business with the taxpayer\nbut is not included in a combined report with the taxpayer, less, in the\ndiscretion of the commissioner, any interest deductions directly or\nindirectly attributable to such income. Other than dividend income\nreceived from corporations that are taxable under a franchise tax\nimposed by article nine or article thirty-three of this chapter or would\nbe taxable under a franchise tax imposed by article nine or article\nthirty-three of this chapter if subject to tax, in lieu of subtracting\nfrom this dividend income those interest deductions, the taxpayer may\nmake a revocable election to reduce the total amount of this dividend\nincome by forty percent. If the taxpayer makes this election, the\ntaxpayer must also make the elections provided for in paragraph (b) of\nsubdivision six of this section and paragraph (b) of this subdivision.\nIf the taxpayer subsequently revokes this election, the taxpayer must\nalso revoke the elections provided for in paragraph (b) of subdivision\nsix of this section and paragraph (b) of this subdivision. A taxpayer\nwhich does not make this election because it has not received any exempt\nunitary corporation dividends or is precluded from making this election\nfor dividends received from corporations taxable under a franchise tax\nimposed by article nine or article thirty-three of this chapter or would\nbe taxable under a franchise tax imposed by article nine or article\nthirty-three of this chapter if subject to tax will not be precluded\nfrom making those other elections.\n  (d) If the taxpayer attributes interest deductions to other exempt\nincome and the amount subtracted exceeds other exempt income, the excess\nof the interest deductions over other exempt income must be added back\nto entire net income. In no case shall other exempt income exceed entire\nnet income.\n  (e) Other exempt income shall not include any amount treated as\ndividends pursuant to section seventy-eight of the internal revenue\ncode.\n  7. (a) The term "business capital" means all assets, other than\ninvestment capital and stock issued by the taxpayer, less liabilities\nnot deducted from investment capital. Business capital shall include\nonly those assets the income, loss or expense of which are properly\nreflected (or would have been properly reflected if not fully\ndepreciated or expensed or depreciated or expensed to a nominal amount)\nin the computation of entire net income for the taxable year.\n  (b) Provided, however, "business capital" shall not include assets to\nthe extent employed for the purpose of generating income which is\nexcluded from entire net income pursuant to the provisions of paragraph\n(c-1) of subdivision nine of this section and shall be computed without\nregard to liabilities directly or indirectly attributable to such\nassets, but only if air carriers organized in the United States and\noperating in the foreign country or countries in which the taxpayer has\nits major base of operations and in which it is organized, resident or\nheadquartered (if not in the same country as its major base of\noperations) are not subject to any tax based on or measured by capital\nimposed by such foreign country or countries or any political\nsubdivision thereof, or if taxed, are provided an exemption, equivalent\nto that provided for herein, from any tax based on or measured by\ncapital imposed by such foreign country or countries and from any such\ntax imposed by any political subdivision thereof.\n  8. The term "business income" means entire net income minus investment\nincome and other exempt income. In no event shall the sum of investment\nincome and other exempt income exceed entire net income. If the taxpayer\nmakes the election provided for in subparagraph one of paragraph (a) of\nsubdivision five of section two hundred ten-A of this article, then all\nincome from qualified financial instruments shall constitute business\nincome.\n  8-A. Provided, however, that with respect to a DISC or a former DISC,\nthe following provisions shall apply:\n  (a) investments in the stocks, bonds or other securities of a DISC or\nany indebtedness from a DISC shall not be treated as investment capital\nunder subdivision five of this section,\n  (b) any amounts deemed distributed from a DISC or a former DISC which\nare taxable as dividends pursuant to subsection (b) of section nine\nhundred ninety-five of the internal revenue code of nineteen hundred\nfifty-four shall be treated as business income, except any such amounts\nfrom a former DISC attributable to amounts includible in a taxpayer's\nentire net income for a prior taxable year under subparagraph (B) of\nparagraph (i) of subdivision nine of this section shall be excluded from\nentire net income,\n  (c) any gain recognized for federal income tax purposes on the\ndisposition of stock in a DISC, and any gain recognized on the\ndisposition of stock in a former DISC, includible in gross income as a\ndividend pursuant to subsection (c) of section nine hundred ninety-five\nof the internal revenue code of nineteen hundred fifty-four, shall be\ntreated as business income, and\n  (d) except as provided in paragraph (i) of subdivision nine of this\nsection, any actual distribution from a DISC or a former DISC shall be\ntreated as business income except an actual distribution which for\nfederal income tax purposes is treated as made out of "other earnings\nand profits" under section nine hundred ninety-six of the internal\nrevenue code of nineteen hundred fifty-four, in which case such actual\ndistribution shall be treated as investment income under this article.\n  9. The term "entire net income" means total net income from all\nsources, which shall be presumably the same as the entire taxable\nincome, which, except as hereinafter provided in this subdivision,\n  (i) the taxpayer is required to report to the United States treasury\ndepartment, or\n  (ii) the taxpayer would have been required to report to the United\nStates treasury department if it had not made an election under\nsubchapter s of chapter one of the internal revenue code, or\n  (iii) the taxpayer, in the case of a corporation which is exempt from\nfederal income tax (other than the tax on unrelated business taxable\nincome imposed under section 511 of the internal revenue code) but which\nis subject to tax under this article, would have been required to report\nto the United States treasury department but for such exemption, or\n  (iv) in the case of an alien corporation that under any provision of\nthe internal revenue code is not treated as a "domestic corporation" as\ndefined in section seven thousand seven hundred one of such code is\neffectively connected with the conduct of a trade or business within the\nUnited States as determined under section 882 of the Internal Revenue\nCode.\n  (a) Entire net income shall not include:\n  (3) bona fide gifts,\n  (4) income and deductions with respect to amounts received from school\ndistricts and from corporations and associations, organized and operated\nexclusively for religious, charitable or educational purposes, no part\nof the net earnings of which inures to the benefit of any private\nshareholder or individual, for the operation of school buses,\n  (5) (i) any refund or credit of a tax imposed under this article,\narticle twenty-three, or former article thirty-two of this chapter, for\nwhich tax no exclusion or deduction was allowed in determining the\ntaxpayer's entire net income under this article, article twenty-three,\nor former article thirty-two of this chapter for any prior year, or (ii)\nany refund or credit of a tax imposed under sections one hundred\neighty-three, one hundred eighty-three-a, one hundred eighty-four or one\nhundred eighty-four-a of this chapter;\n  (6) any amount treated as dividends pursuant to section seventy-eight\nof the internal revenue code to the extent that such dividends are not\ndeducted under section two hundred fifty of such code;\n  (7) that portion of wages and salaries paid or incurred for the\ntaxable year for which a deduction is not allowed pursuant to the\nprovisions of section two hundred eighty-C of the internal revenue code.\n  (9) for taxable years beginning after December thirty-first, nineteen\nhundred eighty-one, except with respect to property which is a qualified\nmass commuting vehicle described in subparagraph (D) of paragraph eight\nof subsection (f) of section one hundred sixty-eight of the internal\nrevenue code (relating to qualified mass commuting vehicles) and\nproperty of a taxpayer principally engaged in the conduct of aviation\n(other than air freight forwarders acting as principal and like indirect\nair carriers) which is placed in service before taxable years beginning\nin nineteen hundred eighty-nine, any amount which is included in the\ntaxpayer's federal taxable income solely as a result of an election made\npursuant to the provisions of such paragraph eight as it was in effect\nfor agreements entered into prior to January first, nineteen hundred\neighty-four;\n  (10) for taxable years beginning after December thirty-first, nineteen\nhundred eighty-one, except with respect to property which is a qualified\nmass commuting vehicle described in subparagraph (D) of paragraph eight\nof subsection (f) of section one hundred sixty-eight of the internal\nrevenue code (relating to qualified mass commuting vehicles) and\nproperty of a taxpayer principally engaged in the conduct of aviation\n(other than air freight forwarders acting as principal and like indirect\nair carriers) which is placed in service before taxable years beginning\nin nineteen hundred eighty-nine, any amount which the taxpayer could\nhave excluded from federal taxable income had it not made the election\nprovided for in such paragraph eight as it was in effect for agreements\nentered into prior to January first, nineteen hundred eighty-four;\n  (11) the amount deductible pursuant to paragraph (j) of this\nsubdivision; and\n  (12) upon the disposition of property to which paragraph (j) of this\nsubdivision applies, the amount, if any, by which the aggregate of the\namounts described in subparagraph ten of paragraph (b) of this\nsubdivision attributable to such property exceeds the aggregate of the\namounts described in paragraph (j) of this subdivision attributable to\nsuch property; and\n  (14) The amount deductible pursuant to paragraph (l) of this\nsubdivision.\n  (16) In the case of a taxpayer subject to the modification provided by\nsubparagraph sixteen of paragraph (b) of this subdivision, the amount\nrequired to be recaptured pursuant to subsection (d) of section 179 of\nthe internal revenue code with respect to property upon which such\nmodification was based.\n  (17) for taxable years beginning after December thirty-first, two\nthousand two, the amount deductible pursuant to paragraph (n-1) of this\nsubdivision.\n  (18) the amount of income or gain included in federal taxable income\nof a taxpayer that is a partner in a qualified entity or is a qualified\nentity that is located both within and without a New York state\ninnovation hot spot, to the extent that the income or gain is\nattributable to the operations of a qualified entity at or as part of\nthe New York state innovation hot spot as provided in section\nthirty-eight of this chapter.\n  (19) the amount computed pursuant to paragraph (r), (s) or (t) of this\nsubdivision, but only the amount determined pursuant to one of such\nparagraphs.\n  (20) Any amount excepted, for purposes of subsection (a) of section\none hundred eighteen of the internal revenue code, from the term\n"contribution to the capital of the taxpayer" by paragraph two of\nsubsection (b) of section one hundred eighteen of the internal revenue\ncode.\n  (21) The amount of any gain added back to determine entire net income\nin a previous taxable year pursuant to subparagraph twenty-seven of\nparagraph (b) of subdivision nine of this section that is included in\nfederal gross income for the taxable year.\n  (22) Grants received pursuant to the COVID-19 pandemic small business\nrecovery grant program, established in section 16-ff of the New York\nstate urban development corporation act, to the extent includable in\nfederal taxable income.\n  (23) The amount of any federal deduction disallowed pursuant to\nsection 280E of the internal revenue code related to the production and\ndistribution of adult-use cannabis products, as defined by article\ntwenty-C of this chapter, not used as the basis for any other tax\ndeduction, exemption, or credit and not otherwise required to be added\nback by paragraph (b) of this subdivision in computing entire net\nincome.\n  (24) For taxable years beginning on or after January first, two\nthousand twenty-five, in the case of qualified production property\ndescribed in paragraph two of subsection (n) of section one hundred\nsixty-eight of the internal revenue code, the amount of any deduction\nallowed pursuant to subsection (a) of section one hundred sixty-seven of\nthe internal revenue code as if the taxpayer has not made an election\npursuant to subsection (n) of section one hundred sixty-eight of the\ninternal revenue code.\n  (25) For taxable years beginning on or after January first, two\nthousand twenty-five, the amount of any foreign and domestic research or\nexperimental expenditures, as defined in sections one hundred\nseventy-four and 174A of the internal revenue code, paid or incurred in\neach taxable year on and after January first, two thousand twenty-five,\namortized over a sixty-month period as if the election in subsection (c)\nof section 174A of the internal revenue code applied to such foreign and\ndomestic research or experimental expenditures.\n  (26) For taxable years beginning on or after January first, two\nthousand twenty-five, the remaining amount of any foreign and domestic\nresearch or experimental expenditures, as defined in sections one\nhundred seventy-four and 174A of the internal revenue code, paid or\nincurred prior to January first, two thousand twenty-five, determined as\nif section one hundred seventy-four of the internal revenue code in\neffect as of January first, two thousand twenty-two, applied to such\nexpenditures.\n  (b) Entire net income shall be determined without the exclusion,\ndeduction or credit of:\n  (1) in the case of an alien corporation that under any provision of\nthe internal revenue code is not treated as a "domestic corporation" as\ndefined in section seven thousand seven hundred one of such code, (i)\nany part of any income from dividends or interest on any kind of stock,\nsecurities or indebtedness, but only if such income is treated as\neffectively connected with the conduct of a trade or business in the\nUnited States pursuant to section 864 of the internal revenue code, (ii)\nany income exempt from federal taxable income under any treaty\nobligation of the United States, but only if such income would be\ntreated as effectively connected in absence of such exemption provided\nthat such treaty obligation does not preclude the taxation of such\nincome by a state, or (iii) any income which would be treated as\neffectively connected if such income were not excluded from gross income\npursuant to subsection (a) of section 103 of the internal revenue code;\n  (2) any part of any income from dividends or interest on any kind of\nstock, securities or indebtedness,\n  (3) taxes on or measured by profits or income paid or accrued to the\nUnited States or any of its possessions, territories or commonwealths,\nincluding taxes in lieu of any of the foregoing taxes otherwise\ngenerally imposed by any possession, territory or commonwealth of the\nUnited States,\n  (3-a) taxes on or measured by profits or income, or which include\nprofits or income as a measure, paid or accrued to any other state of\nthe United States, or any political subdivision thereof, or to the\nDistrict of Columbia, including taxes expressly in lieu of any of the\nforegoing taxes otherwise generally imposed by any other state of the\nUnited States, or any political subdivision thereof, or the District of\nColumbia;\n  (4) taxes imposed under this article and article thirty-two as in\neffect on December thirty-first, two thousand fourteen and sections one\nhundred eighty-three, one hundred eighty-three-a, one hundred\neighty-four and one hundred eighty-four-a of this chapter,\n  (4-a)(A) in those instances where a credit for the special additional\nmortgage recording tax credit is allowed under subdivision nine of\nsection two hundred ten-B of this article, the amount allowed as an\nexclusion or deduction for the special additional mortgage recording tax\nimposed by subdivision one-a of section two hundred fifty-three of this\nchapter in determining the entire taxable income which the taxpayer is\nrequired to report to the United States treasury department, and (B)\nunless the credit allowed pursuant to subdivision nine of section two\nhundred ten-B of this article is reflected in the computation of the\ngain or loss so as to result in an increase in such gain or decrease of\nsuch loss, for federal income tax purposes, from the sale or other\ndisposition of the property with respect to which the special additional\nmortgage recording tax imposed pursuant to subdivision one-a of section\ntwo hundred fifty-three of this chapter was paid, the amount of the\nspecial additional mortgage recording tax imposed by subdivision one-a\nof section two hundred fifty-three of this chapter which was paid and\nwhich is reflected in the computation of the basis of the property so as\nto result in a decrease in such gain or increase in such loss for\nfederal income tax purposes from the sale or other disposition of the\nproperty with respect to which such tax was paid.\n  (6) any amount allowed as a deduction for the taxable year under\nsection 172 of the internal revenue code, including carryovers of\ndeductions from prior taxable years.\n  (8) for taxable years beginning after December thirty-first, nineteen\nhundred eighty-one, except with respect to property which is a qualified\nmass commuting vehicle described in subparagraph (D) of paragraph eight\nof subsection (f) of section one hundred sixty-eight of the internal\nrevenue code (relating to qualified mass commuting vehicles) and\nproperty of a taxpayer principally engaged in the conduct of aviation\n(other than air freight forwarders acting as principal and like indirect\nair carriers) which is placed in service before taxable years beginning\nin nineteen hundred eighty-nine, any amount which the taxpayer claimed\nas a deduction in computing its federal taxable income solely as a\nresult of an election made pursuant to the provisions of such paragraph\neight as it was in effect for agreements entered into prior to January\nfirst, nineteen hundred eighty-four;\n  (9) for taxable years beginning after December thirty-first, nineteen\nhundred eighty-one, except with respect to property which is a qualified\nmass commuting vehicle described in subparagraph (D) of paragraph eight\nof subsection (f) of section one hundred sixty-eight of the internal\nrevenue code (relating to qualified mass commuting vehicles) and\nproperty of a taxpayer principally engaged in the conduct of aviation\n(other than air freight forwarders acting as principal and like indirect\nair carriers) which is placed in service before taxable years beginning\nin nineteen hundred eighty-nine, any amount which the taxpayer would\nhave been required to include in the computation of its federal taxable\nincome had it not made the election permitted pursuant to such paragraph\neight as it was in effect for agreements entered into prior to January\nfirst, nineteen hundred eighty-four;\n  (10) in the case of property placed in service in taxable years\nbeginning before nineteen hundred ninety-four, for taxable years\nbeginning after December thirty-first, nineteen hundred eighty-one,\nexcept with respect to property subject to the provisions of section two\nhundred eighty-F of the internal revenue code, property subject to the\nprovisions of section one hundred sixty-eight of the internal revenue\ncode which is placed in service in this state in taxable years beginning\nafter December thirty-first, nineteen hundred eighty-four and property\nof a taxpayer principally engaged in the conduct of aviation (other than\nair freight forwarders acting as principal and like indirect air\ncarriers) which is placed in service before taxable years beginning in\nnineteen hundred eighty-nine, the amount allowable as a deduction\ndetermined under section one hundred sixty-eight of the internal revenue\ncode;\n  (11) upon the disposition of property to which paragraph (j) of this\nsubdivision applies, the amount, if any, by which the aggregate of the\namounts described in such paragraph (j) attributable to such property\nexceeds the aggregate of the amounts described in subparagraph ten of\nthis paragraph attributable to such property.\n  (15) Real property taxes paid on qualified agricultural property and\ndeducted in determining federal taxable income, to the extent of the\namount of the agricultural property tax credit allowed under subdivision\neleven of section two hundred ten-B of this article.\n  (16) In the case of a taxpayer which is not an eligible farmer as\ndefined in paragraph (b) of subdivision eleven of section two hundred\nten-B of this article, the amount of any deduction claimed pursuant to\nsection 179 of the internal revenue code with respect to a sport utility\nvehicle which is not a passenger automobile as defined in paragraph 5 of\nsubsection (d) of section 280F of the internal revenue code.\n  (17) for taxable years beginning after December thirty-first, two\nthousand two, in the case of qualified property described in paragraph\ntwo of subsection k of section 168 of the internal revenue code, other\nthan qualified resurgence zone property described in paragraph (q) of\nthis subdivision, and other than qualified New York Liberty Zone\nproperty described in paragraph two of subsection b of section 1400L of\nthe internal revenue code (without regard to clause (i) of subparagraph\n(C) of such paragraph), which was placed in service on or after June\nfirst, two thousand three, the amount allowable as a deduction under\nsection 167 of the internal revenue code.\n  (18) Premiums paid for environmental remediation insurance, as defined\nin section twenty-three of this chapter, and deducted in determining\nfederal taxable income, to the extent of the amount of the environmental\nremediation insurance credit allowed under such section twenty-three and\nsubdivision nineteen of section two hundred ten-B of this article.\n  (19) The amount of any deduction allowed pursuant to section one\nhundred ninety-nine of the internal revenue code.\n  (20) The amount of any federal deduction for taxes imposed under\narticle twenty-three of this chapter.\n  (20-a) The amount of any federal deduction for the excise tax on\ntelecommunication services to the extent such taxes are used as the\nbasis of the calculation of the tax-free NY area excise tax on\ntelecommunication services credit allowed under subdivision forty-four\nof section two hundred ten-B of this article.\n  (21) The amount of any federal deduction for real property taxes to\nthe extent such taxes are used as the basis of the calculation of the\nreal property tax credit for manufacturers allowed under subdivision\nforty-three of section two hundred ten-B of this article.\n  (22) the amount of any deduction for charitable contributions allowed\nunder section one hundred seventy of the internal revenue code to the\nextent such contributions are used as the basis of the calculation of\nthe farm donations to food pantries credit under subdivision fifty-two\nof section two hundred ten-B of this article.\n  (23) The amount of any federal deduction allowed pursuant to\nsubsection (c) of section 965 of the internal revenue code.\n  (24) The amount of any federal deduction allowed pursuant to section\n250(a)(1)(A) of the internal revenue code.\n  (25) The amount of any federal deduction allowed pursuant to section\n250(a)(1)(B)(i) of the internal revenue code.\n  (26) For taxable years beginning in two thousand nineteen and two\nthousand twenty, the amount of the increase in the federal interest\ndeduction allowed pursuant to section 163(j)(10)(A)(i) of the internal\nrevenue code.\n  (27) The amount of any gain excluded from federal gross income for the\ntaxable year by subparagraph (A) of paragraph (1) of subsection (a) of\nsection 1400Z-2 of the internal revenue code.\n  (28) For taxable years beginning on or after January first, two\nthousand twenty-five, in the case of qualified production property\ndescribed in paragraph two of subsection (n) of section one hundred\nsixty-eight of the internal revenue code, any amount which the taxpayer\nclaimed as a deduction under subsection (a) of section one hundred\nsixty-seven of the internal revenue code that included an allowance\nsolely as a result of an election made pursuant to subsection (n) of\nsection one hundred sixty-eight of the internal revenue code.\n  (29) For taxable years beginning on or after January first, two\nthousand twenty-five, any amount claimed as a deduction under sections\none hundred seventy-four and 174A of the internal revenue code in effect\nas of January first, two thousand twenty-five, and any amount claimed as\na deduction pursuant to federal Public Law 119-21, title VII, section\n70302(f)(2)(a), for foreign and domestic research or experimental\nexpenditures, as defined in sections one hundred seventy-four and 174A\nof the internal revenue code.\n  (c-1)(1) Notwithstanding any other provision of this article, in the\ncase of a taxpayer which is a foreign air carrier holding a foreign air\ncarrier permit issued by the United States department of transportation\npursuant to section four hundred two of the federal aviation act of\nnineteen hundred fifty-eight, as amended, and which is qualified under\nsubparagraph two of this paragraph, entire net income shall not include,\nand shall be computed without the deduction of, amounts directly or\nindirectly attributable to, (i) any income derived from the\ninternational operation of aircraft as described in and subject to the\nprovisions of section eight hundred eighty-three of the internal revenue\ncode, (ii) income without the United States which is derived from the\noperation of aircraft, and (iii) income without the United States which\nis of a type described in subdivision (a) of section eight hundred\neighty-one of the internal revenue code except that it is derived from\nsources without the United States. Entire net income shall include\nincome described in clauses (i), (ii) and (iii) of this subparagraph in\nthe case of taxpayers not described in the previous sentence.\n  (2) A taxpayer is qualified under this subparagraph if air carriers\norganized in the United States and operating in the foreign country or\ncountries in which the taxpayer has its major base of operations and in\nwhich it is organized, resident or headquartered (if not in the same\ncountry as its major base of operations) are not subject to any income\ntax or other tax based on or measured by income or receipts imposed by\nsuch foreign country or countries or any political subdivision thereof,\nor if so subject to such tax, are provided an exemption from such tax\nequivalent to that provided for herein.\n  (c-2) Adjustments by qualified public utilities. (1) In the case of a\ntaxpayer which is a qualified public utility, entire net income shall be\ncomputed with the adjustments set forth in this paragraph.\n  (2) Definitions. (A) Qualified public utility. The term "qualified\npublic utility" means a taxpayer which: (i) on December thirty-first,\nnineteen hundred ninety-nine, was subject to the ratemaking supervision\nof the state department of public service, and (ii) for the year ending\non December thirty-first, nineteen hundred ninety-nine, was subject to\ntax under former section one hundred eighty-six of this chapter.\n  (B) Transition property. The term "transition property" means property\nplaced in service by the taxpayer before January first, two thousand,\nfor which a depreciation deduction is allowed under section one hundred\nsixty-seven of the internal revenue code.\n  (3) Federal depreciation disallowed. With respect to transition\nproperty, the deduction for federal income tax purposes for depreciation\nshall not be allowed.\n  (4) New York depreciation. With respect to transition property, a\ndeduction shall be allowed for the depreciation expense shown on the\nbooks and records of the taxpayer for the taxable year and determined in\naccordance with generally accepted accounting principles.\n  (5) Regulatory assets. A deduction shall be allowed for amounts\nrecognized as expense on the books and records of the taxpayer for the\ntaxable year, which amounts were recognized as expense for federal\nincome tax purposes in a taxable year ending on or before December\nthirty-first, nineteen hundred ninety-nine, where: (A) such amounts\nrepresent expenditures which, when made, were charged to a deferred\ndebit account or similar asset account on the books and records of the\ntaxpayer, and where (B) the recognition of expense on the books and\nrecords of the taxpayer is matched by revenue stemming from a procedure\nor adjustment allowing the recovery of such expenditures, and where (C)\nsuch revenue is recognized for federal income tax purposes in the\ntaxable year.\n  (6) Basis for gain or loss. (A) Recognition transactions. (i) General\nrule - book basis. Except as provided in subclause (ii) of this clause,\nwhere transition property is sold or otherwise disposed of in the\ntaxable year in a transaction of the type requiring recognition of gain\nor loss for federal income tax purposes, the basis for determining the\namount of such gain or loss under this article shall be the cost of the\nproperty less the accumulated depreciation on the property determined on\nthe books and records of the taxpayer in accordance with generally\naccepted accounting principles.\n  (ii) Qualified gain - New York basis. Where a sale or disposition\ndescribed in subclause (i) of this clause results in recognition of gain\nfor federal income tax purposes, and where either (I) such recognition\noccurs in a taxable year ending after nineteen hundred ninety-nine and\nbefore two thousand ten, or (II) such recognition is with respect to a\nnuclear electric generating facility, the basis for determining the\namount of such gain under this article shall be the cost of the property\nless the aggregate of the New York depreciation deductions on the\nproperty determined under subparagraph four of this paragraph.\n  (iii) No conversion of gain to loss. In the event that the basis\ndetermined under subclause (ii) of this clause results in determination\nof a loss on the sale or disposition of the property, no gain or loss\nshall be recognized under this article with respect to such sale or\ndisposition.\n  (B) Nonrecognition transactions. (i) Carryover basis. (I) where\ntransition property is disposed of ("original disposition") in a\ntransaction of a type requiring deferral of recognition of gain or loss\nfor federal income tax purposes, and where (II) there is a subsequent\nrecognition of gain or loss for federal income tax purposes ("clause B\ngain or loss"), the amount of which is determined by reference, in whole\nor in part, to the basis of such transition property ("underlying\ntransition property"), then (III) the amount of such clause B gain or\nloss under this article shall be adjusted as provided in subclause (ii)\nor (iii) of this clause.\n  (ii) General rule - book basis adjustment. Except as provided in\nsubclause (iii) of this clause, the amount of clause B gain shall be\nreduced, or the amount of clause B loss increased, by the amount by\nwhich the book basis of the underlying transition property on the date\nof original disposition (determined using the provisions of subclause\n(i) of clause (A) of this subparagraph) exceeds the federal income tax\nbasis of such property on such date.\n  (iii) Qualified gain - New York basis adjustment. Where clause B gain\neither (I) occurs in a taxable year ending after nineteen hundred\nninety-nine and before two thousand ten, or (II) is with respect to a\nnuclear electric generating facility, the amount of such gain under this\narticle shall be reduced, but not below zero, by the amount by which the\nNew York basis of the underlying transition property on the date of\noriginal disposition (determined using the provisions of subclause (ii)\nof clause (A) of this subparagraph) exceeds the federal income tax basis\nof such property on such date.\n  (iv) Application to replacement property and transferee taxpayers.\nThis clause shall apply whether the clause B gain or loss: (I) is with\nrespect to either transition property or depreciable property the basis\nof which is determined by reference to transition property, or (II) is\nrecognized by either a qualified public utility or by a taxpayer which\nis a transferee of transition property (whether or not such transferee\nis a qualified public utility, notwithstanding subparagraph one of this\nparagraph).\n  (c-3) Depreciation adjustments by qualified power producers and\npipeline companies. (1) In the case of a qualified taxpayer, entire net\nincome shall be computed with the depreciation adjustments set forth in\nthis paragraph.\n  (2) Definitions. (A) Qualified taxpayer. The term "qualified taxpayer"\nmeans a qualified power producer or a qualified pipeline.\n  (B) Qualified power producer. The term "qualified power producer"\nmeans a taxpayer which: (i) on December thirty-first, nineteen hundred\nninety-nine, was not subject to the ratemaking supervision of the state\ndepartment of public service, and (ii) for the year ending on December\nthirty-first, nineteen hundred ninety-nine, was subject to tax under\nformer section one hundred eighty-six of this chapter on account of its\nbeing principally engaged in the business of supplying electricity.\n  (C) Qualified pipeline. The term "qualified pipeline" means a taxpayer\nwhich: (i) on December thirty-first, nineteen hundred ninety-nine, was\nsubject to the ratemaking supervision of either the federal energy\nregulatory commission or the state department of public service, and\n(ii) for the year ending on December thirty-first, nineteen hundred\nninety-nine, was subject to tax under sections one hundred eighty-three\nand one hundred eighty-four of this chapter on account of its being\nprincipally engaged in the business of pipeline transmission.\n  (D) Transition property. The term "transition property" means property\nplaced in service by a qualified taxpayer before January first, two\nthousand, for which a depreciation deduction is allowed under section\none hundred sixty-seven of the internal revenue code.\n  (3) Federal depreciation disallowed. With respect to transition\nproperty, the deduction for federal income tax purposes for depreciation\nshall not be allowed.\n  (4) New York depreciation. With respect to transition property, a\ndeduction shall be allowed for the depreciation expense computed as\nprovided in this subparagraph. (A) All transition property shown on the\nbooks and records of the taxpayer on January first, two thousand shall\nbe treated as a single asset placed in service on such date. The New\nYork basis for purposes of computing the depreciation deduction on such\nsingle asset shall be the net book value of such transition property\ndetermined on the first day of the federal taxable year ending in two\nthousand (or on the date any such property is placed in service, if\nlater) adjusted as provided in clause (B) of this subparagraph.\n  (B) If transition property is sold or otherwise disposed of, the New\nYork basis of the single asset shall be reduced on the date of such sale\nor disposition by the amount of the adjusted federal tax basis of such\nproperty on such date.\n  (C) The New York depreciation deduction allowed for any taxable year\nwith respect to such single asset shall be computed using the\nstraight-line method, a twenty-year life, and a salvage value of zero.\n  (D) For purposes of this subparagraph, the term "net book value" means\ncost reduced by accumulated depreciation shown on the books and records\nof the taxpayer and determined, in the case of a qualified power\nproducer, in accordance with generally accepted accounting principles;\nand in the case of a qualified pipeline, in accordance with the\ntaxpayer's regulatory reports filed with the federal energy regulatory\ncommission or state department of public service.\n  (c-4) Depreciation and interest deduction adjustments for covered\nproperties owned by an institutional real estate investor. (1)\nNotwithstanding any other provision of this section, in the case of a\ncorporation or combined group that is an institutional real estate\ninvestor or a partner, member or shareholder of an entity that is an\ninstitutional real estate investor, entire net income shall be computed\nwith the adjustments for depreciation and interest related to covered\nproperties as set forth in this paragraph.\n  (2) Definitions. (A) "Institutional real estate investor" means an\nentity or combined group that, directly or indirectly (i) owns ten or\nmore covered properties, (ii) manages funds pooled from investors and\nacts as a fiduciary with respect to one or more investors, and (iii) has\nthirty million dollars or more in net value or assets under management\non any day during the taxable year. An entity is considered owning a\ncovered property if it directly owns the covered property or indirectly\nowns ten percent or more of the covered property.\n  (B) "Covered property" means a residential property consisting of no\nmore than two dwelling units located in New York state.\n  (3) Depreciation deductions. With respect to covered properties, no\ndeduction for depreciation allowed under the internal revenue code or\nthis section shall be allowed.\n  (4) Interest deductions. With respect to covered properties, the\ninterest deduction for federal income tax purposes allowed under section\none hundred sixty-three of the internal revenue code shall not be\nallowed and must be added back in the computation of entire net income,\nexcept with respect to interest paid or accrued in the taxable year when\nsuch covered property is sold to an individual for use as the principal\nresidence of such individual or sold to a nonprofit organization that\nhas as its principal purpose the creation, development, or preservation\nof affordable housing. For purposes of this subparagraph, any amount of\ninterest that would have been allowed under section one hundred\nsixty-three of the internal revenue code in connection with a covered\nproperty but for an election to treat such interest as chargeable to\ncapital account shall be treated as an amount allowed under section one\nhundred sixty-three of the internal revenue code.\n  (d) The commissioner may, whenever necessary in order properly to\nreflect the entire net income of any taxpayer, determine the year or\nperiod in which any item of income or deduction shall be included,\nwithout regard to the method of accounting employed by the taxpayer.\n  (e) The entire net income of any bridge commission created by act of\ncongress to construct a bridge across an international boundary means\nits gross income less the expense of maintaining and operating its\nproperties, the annual interest upon its bonds and other obligations,\nand the annual charge for the retirement of such bonds or obligations at\nmaturity.\n  (h) If the period covered by a report under this article is other than\nthe period covered by the report to the United States treasury\ndepartment,\n  (1) except as provided in subparagraph two hereof, entire net income\nshall be determined by multiplying the taxable income reported to such\ndepartment (as adjusted pursuant to the provisions of this article) by\nthe number of calendar months or major parts thereof covered by the\nreport under this article and dividing by the number of calendar months\nor major parts thereof covered by the report to such department. If it\nshall appear that such method of determining entire net income does not\nproperly reflect the taxpayer's income during the period covered by the\nreport under this article, the commissioner shall be authorized in its\ndiscretion to determine such entire net income solely on the basis of\nthe taxpayer's income during the period covered by its report under this\narticle.\n  (2) In the case of a New York S termination year, an equal portion of\nentire net income shall be assigned to each day of such year. The\nportion of such entire net income thereby assigned to the S short year\nand the C short year shall be included in the respective reports for the\nS short year and the C short year under this article. However, where\nparagraph three of subsection (s) of section six hundred twelve of this\nchapter applies, the portion of such entire net income assigned to the S\nshort year and the C short year shall be determined under normal tax\naccounting rules.\n  (i) With respect to a DISC which during any taxable year or reporting\nyear (1) received more than five percent of its gross sales from the\nsale of inventory or other property which it purchased from its\nstockholders, (2) received more than five percent of its gross rentals\nfrom the rental of property which it purchased or rented from its\nstockholders or (3) received more than five percent of its total\nreceipts other than sales and rentals from its stockholders, the\nfollowing provisions shall apply.\n  (A) For any taxable year in which sub-paragraph (B) of this paragraph\nis in effect and not rendered invalid, a DISC meeting the above test\nshall be exempt from all taxes imposed by this article.\n  (B) Supplemental to the provisions of subdivision five of section two\nhundred eleven of this article, any taxpayer required to compute a tax\nunder this article, which during the taxable year being reported was a\nstockholder in any DISC meeting the test prescribed in this paragraph,\nshall for any taxable year ending after December thirty-first, nineteen\nhundred seventy-one adjust each item of its receipts, expenses, assets\nand liabilities, as otherwise computed under this article, by adding\nthereto its attributable share of each such DISC's receipts, expenses,\nassets and liabilities as reportable by each such DISC to the United\nStates Treasury Department for its annual reporting period ending during\nthe current taxable year of such taxpayer; provided, however, (1) that\nall transactions between the taxpayer and each such DISC shall be\neliminated from the taxpayer's adjusted receipts, expenses, assets and\nliabilities; (2) that the taxpayer's entire net income as otherwise\ncomputed under this section, shall be reduced by subtracting the amount\nof the deemed distribution of current income, if any, from each such\nDISC already included in the entire net income of such taxpayer by\nvirtue of having been included in its entire taxable income for that\ntaxable year as reported to the United States Treasury Department; and\n(3) that in the event this paragraph should be rendered invalid, all\nDISC's and their stockholders taxable hereunder shall be taxed instead\nunder the remaining portions of this article.\n  (j) in the case of property placed in service in taxable years\nbeginning before nineteen hundred ninety-four, for taxable years\nbeginning after December thirty-first, nineteen hundred eighty-one,\nexcept with respect to property subject to the provisions of section two\nhundred eighty-F of the internal revenue code and property subject to\nthe provisions of section one hundred sixty-eight of the internal\nrevenue code which is placed in service in this state in taxable years\nbeginning after December thirty-first, nineteen hundred eighty-four, and\nprovided a deduction has not been excluded from entire net income\npursuant to subparagraph eight of paragraph (b) of this subdivision, a\ntaxpayer shall be allowed with respect to property which is subject to\nthe provisions of section one hundred sixty-eight of the internal\nrevenue code the depreciation deduction allowable under section one\nhundred sixty-seven of the internal revenue code as such section would\nhave applied to property placed in service on December thirty-first,\nnineteen hundred eighty. This paragraph shall not apply to property of a\ntaxpayer principally engaged in the conduct of aviation (other than air\nfreight forwarders acting as principal and like indirect air carriers)\nwhich is placed in service before taxable years beginning in nineteen\nhundred eighty-nine.\n  (k) QSSS. (1) New York S corporation. In the case of a New York S\ncorporation which is the parent of a qualified subchapter S subsidiary\n(QSSS) with respect to a taxable year:\n  (A) where the QSSS is not an excluded corporation,\n  (i) in determining the entire net income of such parent corporation,\nall assets, liabilities, income and deductions of the QSSS shall be\ntreated as assets, liabilities, income and deductions of the parent\ncorporation, and\n  (ii) the QSSS shall be exempt from all taxes imposed by this article,\nand\n  (B) where the QSSS is an excluded corporation, the entire net income\nof the parent corporation shall be determined as if the federal QSSS\nelection had not been made.\n  (2) New York C corporation. In the case of a New York C corporation\nwhich is the parent of a QSSS with respect to a taxable year:\n  (A) where the QSSS is a taxpayer,\n  (i) in determining the entire net income of such parent corporation,\nall assets, liabilities, income and deductions of the QSSS shall be\ntreated as assets, liabilities, income and deductions of the parent\ncorporation, and\n  (ii) the QSSS shall be exempt from all taxes imposed by this article,\nand\n  (B) where the QSSS is not a taxpayer,\n  (i) if the QSSS is not an excluded corporation, the parent corporation\nmay make a QSSS inclusion election to include all assets, liabilities,\nincome and deductions of the QSSS as assets, liabilities, income and\ndeductions of the parent corporation, and\n  (ii) in the absence of such election, or where the QSSS is an excluded\ncorporation, the entire net income of the parent corporation shall be\ndetermined as if the federal QSSS election had not been made.\n  (3) Non-New York S corporation not excluded. In the case of an S\ncorporation which is not a taxpayer and not an excluded corporation, and\nwhich is the parent of a QSSS which is a taxpayer, the shareholders of\nthe parent corporation shall be entitled to make the New York S election\nunder subsection (a) of section six hundred sixty of this chapter.\n  (A) For any taxable year for which such election is in effect, the\nparent corporation shall be subject to tax under this article as a New\nYork S corporation, and the provisions of clause (A) of subparagraph one\nof this paragraph shall apply.\n  (B) For any taxable year for which such election is not in effect, the\nQSSS shall be a New York C corporation, and the entire net income of the\nQSSS shall be determined as if the federal QSSS election had not been\nmade. For purposes of such determination, the taxable year of the parent\ncorporation shall constitute the taxable year of the QSSS, excluding,\nhowever, any portion of such year during which the QSSS is not a\ntaxpayer.\n  (4) S corporation excluded. In the case of an S corporation which is\nan excluded corporation and which is the parent of a QSSS which is a\ntaxpayer, the QSSS shall be a New York C corporation and the provisions\nof clause (B) of subparagraph three of this paragraph shall apply.\n  (5) Excluded corporation. The term "excluded corporation" means a\ncorporation subject to tax under sections one hundred eighty-three\nthrough one hundred eighty-six, inclusive, or article thirty-three of\nthis chapter, or a foreign corporation not taxable by this state which,\nif it were taxable, would be subject to tax under any of such sections\nor article.\n  (6) Taxpayer. For purposes of this paragraph, the term "taxpayer"\nmeans a parent corporation or QSSS subject to tax under this article,\ndetermined without regard to the provisions of this paragraph.\n  (7) QSSS inclusion election. The election under subclause (i) of\nclause (B) of subparagraph two of this paragraph shall be effective for\nthe taxable year for which made and for all succeeding taxable years of\nthe corporation until such election is terminated. An election or\ntermination shall be made on such form and in such manner as the\ncommissioner may prescribe by regulation or instruction.\n  (l) Emerging technology investment deferral. In the case of any sale\nof a qualified emerging technologies investment held for more than\nthirty-six months and with respect to which the taxpayer elects the\napplication of this paragraph, gain from such sale shall be recognized\nonly to the extent that the amount realized on such sale exceeds the\ncost of any qualified emerging technologies investment purchased by the\ntaxpayer during the three hundred sixty-five-day period beginning on the\ndate of such sale, reduced by any portion of such cost previously taken\ninto account under this paragraph. For purposes of this paragraph the\nfollowing shall apply:\n  (1) A qualified investment is stock of a corporation or an interest,\nother than as a creditor, in a partnership or limited liability company\nthat was acquired by the taxpayer as provided in Internal Revenue Code §\n1202(c)(1)(B), except that the reference to the term "stock" in such\nsection shall be read as "investment," or by the taxpayer from a person\nwho had acquired such stock or interest in such a manner.\n  (2) A qualified emerging technology investment is a qualified\ninvestment, that was held by the taxpayer for at least thirty-six\nmonths, in a company defined in paragraph (c) of subdivision one of\nsection thirty-one hundred two-e of the public authorities law or an\ninvestment in a partnership or limited liability company that is taxed\nas a partnership to the extent that such partnership or limited\nliability company invests in qualified emerging technology companies.\n  (3) For purposes of determining whether the nonrecognition of gain\nunder this subsection applies to a qualified emerging technologies\ninvestment that is sold, the taxpayer's holding period for such\ninvestment and the qualified emerging technologies investment that is\npurchased shall be determined without regard to Internal Revenue Code §\n1223.\n  (m) Amounts deferred. The amount deferred under paragraph (l) of this\nsubdivision shall be added to entire net income when the reinvestment in\nthe New York qualified emerging technology company which qualified a\ntaxpayer for such deferral is sold.\n  (n-1) For taxable years beginning after December thirty-first, two\nthousand two, in the case of qualified property described in paragraph\ntwo of subsection k of section 168 of the internal revenue code, other\nthan qualified resurgence zone property described in paragraph (q) of\nthis subdivision, and other than qualified New York Liberty Zone\nproperty described in paragraph two of subsection b of section 1400L of\nthe internal revenue code (without regard to clause (i) of subparagraph\n(C) of such paragraph), which was placed in service on or after June\nfirst, two thousand three, a taxpayer shall be allowed with respect to\nsuch property the depreciation deduction allowable under section 167 of\nthe internal revenue code as such section would have applied to such\nproperty had it been acquired by the taxpayer on September tenth, two\nthousand one.\n  (o) Related members expense add back. (1) Definitions. (A) Related\nmember. "Related member" means a related person as defined in\nsubparagraph (c) of paragraph three of subsection (b) of section four\nhundred sixty-five of the internal revenue code, except that "fifty\npercent" shall be substituted for "ten percent".\n  (B) Effective rate of tax. "Effective rate of tax" means, as to any\nstate or U.S. possession, the maximum statutory rate of tax imposed by\nthe state or possession on or measured by a related member's net income\nmultiplied by the apportionment percentage, if any, applicable to the\nrelated member under the laws of said jurisdiction. For purposes of this\ndefinition, the effective rate of tax as to any state or U.S. possession\nis zero where the related member's net income tax liability in said\njurisdiction is reported on a combined or consolidated return including\nboth the taxpayer and the related member where the reported transactions\nbetween the taxpayer and the related member are eliminated or offset.\nAlso, for purposes of this definition, when computing the effective rate\nof tax for a jurisdiction in which a related member's net income is\neliminated or offset by a credit or similar adjustment that is dependent\nupon the related member either maintaining or managing intangible\nproperty or collecting interest income in that jurisdiction, the maximum\nstatutory rate of tax imposed by said jurisdiction shall be decreased to\nreflect the statutory rate of tax that applies to the related member as\neffectively reduced by such credit or similar adjustment.\n  (C) Royalty payments. Royalty payments are payments directly connected\nto the acquisition, use, maintenance or management, ownership, sale,\nexchange, or any other disposition of licenses, trademarks, copyrights,\ntrade names, trade dress, service marks, mask works, trade secrets,\npatents and any other similar types of intangible assets as determined\nby the commissioner, and include amounts allowable as interest\ndeductions under section one hundred sixty-three of the internal revenue\ncode to the extent such amounts are directly or indirectly for, related\nto or in connection with the acquisition, use, maintenance or\nmanagement, ownership, sale, exchange or disposition of such intangible\nassets.\n  (D) Valid Business Purpose. A valid business purpose is one or more\nbusiness purposes, other than the avoidance or reduction of taxation,\nwhich alone or in combination constitute the primary motivation for some\nbusiness activity or transaction, which activity or transaction changes\nin a meaningful way, apart from tax effects, the economic position of\nthe taxpayer. The economic position of the taxpayer includes an increase\nin the market share of the taxpayer, or the entry by the taxpayer into\nnew business markets.\n  (2) Royalty expense add backs. (A) Except where a taxpayer is included\nin a combined report with a related member pursuant to section two\nhundred ten-C of this article, for the purpose of computing entire net\nincome or other applicable taxable basis, a taxpayer must add back\nroyalty payments directly or indirectly paid, accrued, or incurred in\nconnection with one or more direct or indirect transactions with one or\nmore related members during the taxable year to the extent deductible in\ncalculating federal taxable income.\n  (B) Exceptions. (i) The adjustment required in this paragraph shall\nnot apply to the portion of the royalty payment that the taxpayer\nestablishes, by clear and convincing evidence of the type and in the\nform specified by the commissioner, meets all of the following\nrequirements: (I) the related member was subject to tax in this state or\nanother state or possession of the United States or a foreign nation or\nsome combination thereof on a tax base that included the royalty payment\npaid, accrued or incurred by the taxpayer; (II) the related member\nduring the same taxable year directly or indirectly paid, accrued or\nincurred such portion to a person that is not a related member; and\n(III) the transaction giving rise to the royalty payment between the\ntaxpayer and the related member was undertaken for a valid business\npurpose.\n  (ii) The adjustment required in this paragraph shall not apply if the\ntaxpayer establishes, by clear and convincing evidence of the type and\nin the form specified by the commissioner, that: (I) the related member\nwas subject to tax on or measured by its net income in this state or\nanother state or possession of the United States or some combination\nthereof; (II) the tax base for said tax included the royalty payment\npaid, accrued or incurred by the taxpayer; and (III) the aggregate\neffective rate of tax applied to the related member in those\njurisdictions is no less than eighty percent of the statutory rate of\ntax that applied to the taxpayer under section two hundred ten of this\narticle for the taxable year.\n  (iii) The adjustment required in this paragraph shall not apply if the\ntaxpayer establishes, by clear and convincing evidence of the type and\nin the form specified by the commissioner, that: (I) the royalty payment\nwas paid, accrued or incurred to a related member organized under the\nlaws of a country other than the United States; (II) the related\nmember's income from the transaction was subject to a comprehensive\nincome tax treaty between such country and the United States; (III) the\nrelated member was subject to tax in a foreign nation on a tax base that\nincluded the royalty payment paid, accrued or incurred by the taxpayer;\n(IV) the related member's income from the transaction was taxed in such\ncountry at an effective rate of tax at least equal to that imposed by\nthis state; and (V) the royalty payment was paid, accrued or incurred\npursuant to a transaction that was undertaken for a valid business\npurpose and using terms that reflect an arm's length relationship.\n  (iv) The adjustment required in this paragraph shall not apply if the\ntaxpayer and the commissioner agree in writing to the application or use\nof alternative adjustments or computations. The commissioner may, in his\nor her discretion, agree to the application or use of alternative\nadjustments or computations when he or she concludes that in the absence\nof such agreement the income of the taxpayer would not be properly\nreflected.\n  (p) For taxable years beginning after December thirty-first, two\nthousand two, upon the disposition of property to which paragraph (n-1)\nof this subdivision applies, the amount of any gain or loss includible\nin entire net income shall be adjusted to reflect the inclusions and\nexclusions from entire net income pursuant to subparagraph seventeen of\nparagraph (a) and subparagraph seventeen of paragraph (b) of this\nsubdivision attributable to such property.\n  (q) For purposes of paragraphs (n-1) and (p) of this subdivision,\nqualified resurgence zone property shall mean qualified property\ndescribed in paragraph two of subsection k of section 168 of the\ninternal revenue code substantially all of the use of which is in the\nresurgence zone, as defined below, and is in the active conduct of a\ntrade or business by the taxpayer in such zone, and the original use of\nwhich in the resurgence zone commences with the taxpayer after December\nthirty-first, two thousand two. The resurgence zone shall mean the area\nof New York county bounded on the south by a line running from the\nintersection of the Hudson River with the Holland Tunnel, and running\nthence east to Canal Street, then running along the centerline of Canal\nStreet to the intersection of the Bowery and Canal Street, running\nthence in a southeasterly direction diagonally across Manhattan Bridge\nPlaza, to the Manhattan Bridge and thence along the centerline of the\nManhattan Bridge to the point where the centerline of the Manhattan\nBridge would intersect with the easterly bank of the East River, and\nbounded on the north by a line running from the intersection of the\nHudson River with the Holland Tunnel and running thence north along West\nAvenue to the intersection of Clarkson Street then running east along\nthe centerline of Clarkson Street to the intersection of Washington\nAvenue, then running south along the centerline of Washington Avenue to\nthe intersection of West Houston Street, then east along the centerline\nof West Houston Street, then at the intersection of the Avenue of the\nAmericas continuing east along the centerline of East Houston Street to\nthe easterly bank of the East River.\n  (r) Subtraction modification for qualified residential loan\nportfolios.  (1)(A) A taxpayer that is either a thrift institution as\ndefined in subparagraph three of this paragraph or a qualified community\nbank as defined in subparagraph two of paragraph (s) of this subdivision\nand maintains a qualified residential loan portfolio as defined in\nsubparagraph two of this paragraph shall be allowed as a deduction in\ncomputing entire net income the amount, if any, by which (i) thirty-two\npercent of its entire net income determined without regard to this\nparagraph exceeds (ii) the amounts deducted by the taxpayer pursuant to\nsections 166 and 585 of the Internal Revenue Code less any amounts\nincluded in federal taxable income as a result of a recovery of a loan.\n  (B)(i) If the taxpayer is in a combined report under section two\nhundred ten-C of this article, this deduction will be computed on a\ncombined basis. In that instance, the entire net income of the combined\nreporting group for purposes of this paragraph shall be multiplied by a\nfraction, the numerator of which is the average total assets of all the\nthrift institutions and qualified community banks included in the\ncombined report and the denominator of which is the average total assets\nof all the corporations included in the combined report.\n  (ii) Measurement of assets. For purposes of this paragraph: (I) Total\nassets are those assets that are properly reflected on a balance sheet,\ncomputed in the same manner as is required by the banking regulator of\nthe taxpayers included in the combined return. In addition, total assets\nincludes leased real property that is not properly reflected on a\nbalance sheet.\n  (II) Assets will only be included if the income or expenses of which\nare properly reflected (or would have been properly reflected if not\nfully depreciated or expensed, or depreciated or expensed to a nominal\namount) in the computation of the combined group's entire net income for\nthe taxable year. Assets will not include deferred tax assets and\nintangible assets identified as "goodwill".\n  (III) Tangible real and personal property, such as buildings, land,\nmachinery, and equipment shall be valued at cost. Leased real property\nthat is not properly reflected on a balance sheet will be valued at the\nannual lease payment multiplied by eight. Intangible property, such as\nloans and investments, shall be valued at book value exclusive of\nreserves.\n  (IV) Intercorporate stockholdings and bills, notes and accounts\nreceivable, and other intercorporate indebtedness between the\ncorporations included in the combined report shall be eliminated.\n  (V) Average assets are computed using the assets measured on the first\nday of the taxable year, and on the last day of each subsequent quarter\nof the taxable year or month or day during the taxable year.\n  (2) Qualified residential loan portfolio. (A) A taxpayer maintains a\nqualified residential loan portfolio if at least sixty percent of the\namount of the total assets at the close of the taxable year of the\nthrift institution or qualified community bank consists of the assets\ndescribed in items (i) through (xii) of this clause, with the\napplication of the rule in item (xiii). If the taxpayer is a member of a\ncombined group, the determination of whether there is a qualified\nresidential loan portfolio will be made by aggregating the assets of the\nthrift institutions and qualified community banks that are members of\nthe combined group.\n  Assets:\n  (i) cash, which includes cash and cash equivalents including cash\nitems in the process of collection, deposit with other financial\ninstitutions, including corporate credit unions, balances with federal\nreserve banks and federal home loan banks, federal funds sold, and cash\nand cash equivalents on hand. Cash shall not include any balances\nserving as collateral for securities lending transactions;\n  (ii) obligations of the United States or of a state or political\nsubdivision thereof, and stock or obligations of a corporation which is\nan instrumentality or a government sponsored enterprise of the United\nStates or of a state or political subdivision thereof;\n  (iii) loans secured by a deposit or share of a member;\n  (iv) loans secured by an interest in real property which is (or from\nthe proceeds of the loan, will become) residential real property or real\nproperty used primarily for church purposes, loans made for the\nimprovement of residential real property or real property used primarily\nfor church purposes, provided that for purposes of this item,\nresidential real property shall include single or multi-family\ndwellings, facilities in residential developments dedicated to public\nuse or property used on a nonprofit basis for residents, and mobile\nhomes not used on a transient basis;\n  (v) property acquired through the liquidation of defaulted loans\ndescribed in item (iv) of this clause;\n  (vi) any regular or residual interest in a REMIC, as such term is\ndefined in section 860D of the internal revenue code, but only in the\nproportion which the assets of such REMIC consist of property described\nin any of the preceding items of this clause, except that if ninety-five\npercent or more of the assets of such REMIC are assets described in\nitems (i) through (v) of this clause, the entire interest in the REMIC\nshall qualify;\n  (vii) any mortgage-backed security which represents ownership of a\nfractional undivided interest in a trust, the assets of which consist\nprimarily of mortgage loans, provided that the real property which\nserves as security for the loans is (or from the proceeds of the loan,\nwill become) the type of property described in item (iv) of this clause\nand any collateralized mortgage obligation, the security for which\nconsists primarily of mortgage loans that maintain as security the type\nof property described in item (iv) of this clause;\n  (viii) certificates of deposit in, or obligations of, a corporation\norganized under a state law which specifically authorizes such\ncorporation to insure the deposits or share accounts of member\nassociations;\n  (ix) loans secured by an interest in educational, health, or welfare\ninstitutions or facilities, including structures designed or used\nprimarily for residential purposes for students, residents, and persons\nunder care, employees, or members of the staff of such institutions or\nfacilities;\n  (x) loans made for the payment of expenses of college or university\neducation or vocational training;\n  (xi) property used by the taxpayer in support of business which\nconsists principally of acquiring the savings of the public and\ninvesting in loans; and\n  (xii) loans for which the taxpayer is the creditor and which are\nwholly secured by loans described in item (iv) of this clause.\n  (xiii) The value of accrued interest receivable and any loss-sharing\ncommitment or other loan guaranty by a governmental agency will be\nconsidered part of the basis in the loans to which the accrued interest\nor loss protection applies.\n  (B) At the election of the taxpayer, the percentage specified in\nclause (A) of this subparagraph shall be applied on the basis of the\naverage assets outstanding during the taxable year, in lieu of the close\nof the taxable year. The taxpayer can elect to compute an average using\nthe assets measured on the first day of the taxable year and on the last\nday of each subsequent quarter, or month or day during the taxable year.\nThis election may be made annually.\n  (C) For purposes of item (iv) of clause (A) of this subparagraph, if a\nmultifamily structure securing a loan is used in part for nonresidential\nuse purposes, the entire loan is deemed a residential real property loan\nif the planned residential use exceeds eighty percent of the property's\nplanned use (measured, at the taxpayer's election, by using square\nfootage or gross rental revenue, and determined as of the time the loan\nis made).\n  (D) For purposes of item (iv) of clause (A) of this subparagraph,\nloans made to finance the acquisition or development of land shall be\ndeemed to be loans secured by an interest in residential real property\nif there is a reasonable assurance that the property will become\nresidential real property within a period of three years from the date\nof acquisition of such land; but this sentence shall not apply for any\ntaxable year unless, within such three year period, such land becomes\nresidential real property. For purposes of determining whether any\ninterest in a REMIC qualifies under item (vi) of clause (A) of this\nsubparagraph, any regular interest in another REMIC held by such REMIC\nshall be treated as a loan described in a preceding item under\nprinciples similar to the principle of such item (vi), except that is\nsuch REMICs are part of a tiered structure, they shall be treated as one\nREMIC for purposes of such item (vi).\n  (3) For purposes of this paragraph, a "thrift institution" is a\nsavings bank, a savings and loan association, or other savings\ninstitution chartered and supervised as such under federal or state law.\n  (s) Subtraction modification for community banks and small thrifts.\n(1) A taxpayer that is a qualified community bank as defined in\nsubparagraph two of this paragraph or a small thrift institution as\ndefined in subparagraph two-a of this paragraph shall be allowed a\ndeduction in computing entire net income equal to the amount computed\nunder subparagraph three of this paragraph.\n  (2) To be a qualified community bank, a taxpayer must satisfy the\nfollowing conditions.\n  (A) It is a bank or trust company organized under or subject to the\nprovisions of article three of the banking law or a comparable provision\nof the laws of another state, or a national banking association.\n  (B) The average value during the taxable year of the assets of the\ntaxpayer, or, if the taxpayer is included in a combined report, the\nassets of the combined reporting group of the taxpayer under section two\nhundred ten-C of this article, must not exceed eight billion dollars.\n  (2-a) To be a small thrift institution, a taxpayer must satisfy the\nfollowing conditions.\n  (A) It is a savings bank, a savings and loan association, or other\nsavings institution chartered and supervised as such under federal or\nstate law.\n  (B) The average value during the taxable year of the assets of the\ntaxpayer, or, if the taxpayer is included in a combined report, the\nassets of the combined reporting group of the taxpayer under section two\nhundred ten-C of this article, must not exceed eight billion dollars.\n  (3)(A) The subtraction modification shall be computed as follows:\n  (i) Multiply the taxpayer's net interest income from loans during the\ntaxable year by a fraction, the numerator of which is the gross interest\nincome during the taxable year from qualifying loans and the denominator\nof which is the gross interest income during the taxable year from all\nloans.\n  (ii) Multiply the amount determined in clause (i) by fifty percent.\nThis product is the amount of the deduction allowed under this\nparagraph.\n  (B)(i) Net interest income from loans shall mean gross interest income\nfrom loans less gross interest expense from loans. Gross interest\nexpense from loans is determined by multiplying gross interest expense\nby a fraction, the numerator of which is the average total value of\nloans owned by the thrift institution or community bank during the\ntaxable year and the denominator of which is the average total assets of\nthe thrift institution or community bank during the taxable year.\n  (ii) Measurement of assets. (I) Total assets are those assets that are\nproperly reflected on a balance sheet, computed in the same manner as is\nrequired by the banking regulator of the taxpayers included in the\ncombined return. In addition, total assets includes leased real property\nthat is not properly reflected on a balance sheet.\n  (II) Assets will only be included if the income or expenses of which\nare properly reflected (or would have been properly reflected if not\nfully depreciated or expensed, or depreciated or expensed to a nominal\namount) in the computation of the taxpayer's entire net income for the\ntaxable year. Assets will not include deferred tax assets and intangible\nassets identified as "goodwill".\n  (III) Tangible real and personal property, such as buildings, land,\nmachinery, and equipment shall be valued at cost. Leased real property\nthat is not properly reflected on that balance sheet will be valued at\nthe annual lease payment multiplied by eight. Intangible property, such\nas loans and investments, shall be valued at book value exclusive of\nreserves.\n  (IV) Average assets are computed using the assets measured on the\nfirst day of the taxable year, and on the last day of each subsequent\nquarter of the taxable year or month or day during the taxable year.\n  (C) A qualifying loan is a loan that meets the conditions specified in\nsubclause (i) of this clause and subclause (ii) of this clause.\n  (i) The loan is originated by the qualified community bank or small\nthrift institution or purchased by the qualified community bank or small\nthrift institution immediately after its origination in connection with\na commitment to purchase made by the bank or thrift institution prior to\nthe loan's origination.\n  (ii) The loan is a small business loan or a residential mortgage loan,\nthe principal amount of which loan is five million dollars or less, and\neither the borrower is located in this state as determined under section\ntwo hundred ten-A of this article and the loan is not secured by real\nproperty, or the loan is secured by real property located in New York.\n  (iii) A loan that meets the definition of a qualifying loan in a prior\ntaxable year (including years prior to the effective date of this\nparagraph) remains a qualifying loan in taxable years during and after\nwhich such loan is acquired by another corporation in the taxpayer's\ncombined reporting group under section two hundred ten-C of this\narticle.\n  (t) A small thrift institution or a qualified community bank, as\ndefined in paragraph (s) of this subdivision, that maintained a captive\nREIT on April first, two thousand fourteen shall utilize a REIT\nsubtraction equal to one hundred sixty percent of the dividends paid\ndeductions allowed to that captive REIT for the taxable year for federal\nincome tax purposes and shall not be allowed to utilize the subtraction\nmodification for qualified residential loan portfolios under paragraph\n(r) of this subdivision or the subtraction modification for community\nbanks and small thrifts under paragraph (s) of this subdivision in any\ntax year in which such thrift institution or community bank maintains\nthat captive REIT.\n  10. The term "calendar year" means a period of twelve calendar months\n(or any shorter period beginning on the date the taxpayer becomes\nsubject to the tax imposed by this article) ending on the thirty-first\nday of December, provided the taxpayer keeps its books on the basis of\nsuch period or on the basis of any period ending on any day other than\nthe last day of a calendar month, or provided the taxpayer does not keep\nbooks, and includes, in case the taxpayer changes the period on the\nbasis of which it keeps its books from a fiscal year to a calendar year,\nthe period from the close of its last old fiscal year up to and\nincluding the following December thirty-first. The term "fiscal year"\nmeans a period of twelve calendar months (or any shorter period\nbeginning on the date the taxpayer becomes subject to the tax imposed by\nthis article) ending on the last day of any month other than December,\nprovided the taxpayer keeps its books on the basis of such period, and\nincludes, in case the taxpayer changes the period on the basis of which\nit keeps it books from a calendar year to a fiscal year or from one\nfiscal year to another fiscal year, the period from the close of its\nlast old calendar or fiscal year up to the date designated as the close\nof its new fiscal year.\n  11. The term "tangible personal property" means corporeal personal\nproperty, such as machinery, tools, implements, goods, wares and\nmerchandise, and does not mean money, deposits in banks, shares of\nstock, bonds, notes, credits or evidences of an interest in property and\nevidences of debt.\n  12. The term elected or appointed officer shall include the chairman,\npresident, vice-president, secretary, assistant secretary, treasurer,\nassistant treasurer, comptroller, and also any other officer,\nirrespective of his title, who is charged with and performs any of the\nregular functions of any such officer, unless the total compensation of\nsuch officer is derived exclusively from the receipt of commissions. A\ndirector shall be considered an elected or appointed officer only if he\nperforms duties ordinarily performed by an officer.\n