N.Y. GCM Law § 108 — New York Code / Act GCM / Section 108
Deductions not subject to allocation
Status: in_force

§ 108. Deductions not subject to allocation.  (a) In computing\nunincorporated business taxable income, there shall be allowed (without\nallocation under section one hundred seven) deductions for reasonable\ncompensation not in excess of five thousand dollars for personal\nservices of the proprietor and of each partner actively engaged in the\nunincorporated business, but the aggregate of such deductions shall not\nexceed twenty per centum of the unincorporated business taxable income\ncomputed without the benefit of any deductions under this section or the\nunincorporated business exemptions under section one hundred nine.\n  (b) At the election of the taxpayer there shall also be allowed\n(without allocation under section one hundred seven) either or both of\nthe items set forth in paragraphs one and two of this subdivision,\nexcept that only one of such items shall be allowed with respect to any\none item of property.\n  (1) Depreciation with respect to any property such as described in\nparagraph three of this subdivision, not exceeding twice the\ndepreciation allowed with respect to the same property for federal\nincome tax purposes.  Such deduction shall be allowed only upon\ncondition that no deduction shall be allowed pursuant to section one\nhundred six for depreciation of the same property, and the total of all\ndeductions allowed pursuant to this paragraph in any taxable year or\nyears with respect to any property shall not exceed its cost or other\nbasis.\n  (2) Expenditures paid or incurred during the taxable year for the\nconstruction, reconstruction, erection or acquisition of any property\nsuch as described in paragraph three of this subdivision which is used\nor to be used for purposes of research or development in the\nexperimental or laboratory sense. Such purposes shall not be deemed to\ninclude the ordinary testing or inspection of materials or products for\nquality control, efficiency surveys, management studies, consumer\nsurveys, advertising, promotions or research in connection with\nliterary, historical or similar projects. Such deduction shall be\nallowed only on condition that, for the taxable year and all succeeding\ntaxable years, no deduction shall be allowed pursuant to section one\nhundred six on account of such expenditures or on account of\ndepreciation of the same property, except to the extent that its basis\nmay be attributable to factors other than such expenditures, or in case\na deduction is allowable pursuant to this paragraph for only a part of\nsuch expenditures, on condition that any deduction allowable for federal\nincome tax purposes on account of such expenditures or on account of\ndepreciation of the same property shall be proportionately reduced in\ndetermining the deductions allowable pursuant to section one hundred six\nfor the taxable year and all succeeding taxable years. With respect to\nproperty which is used or to be used for research and development only\nin part, or during only part of its useful life, the deduction allowable\npursuant to this paragraph shall be limited to a proportionate part of\nthe expenditures relating thereto. If a deduction shall have been\nallowed pursuant to this paragraph for all or part of such expenditures\nwith respect to any property, and such property is used for purposes\nother than research and development to a greater extent than originally\nreported, the taxpayer shall report such use in the taxpayer's return\nfor the first taxable year during which it occurs, and the director of\nfinance may recompute the tax for the year or years for which such\ndeduction was allowed, and may assess any additional tax resulting from\nsuch recomputation within the time fixed by subdivision (c) of section\none hundred thirty-one.\n  (3) Such deductions shall be allowed only with respect to tangible\nproperty which is depreciable pursuant to section one hundred\nsixty-seven of the internal revenue code, having a situs in the city and\nused in the taxpayer's trade or business, (A) the construction,\nreconstruction or erection of which is completed after December\nthirty-first, nineteen hundred sixty-five, and then only with respect to\nthat portion of the basis thereof or the expenditures relating thereto\nwhich is properly attributable to such construction, reconstruction or\nerection after December thirty-first, nineteen hundred sixty-five, or\n(B) acquired after December thirty-first, nineteen hundred sixty-five by\npurchase as defined in section one hundred seventy-nine (d) of the\ninternal revenue code, if the original use of such property commenced\nwith the taxpayer, commenced in the city and commenced after such date.\n  (4) If the deductions allowable for any taxable year pursuant to this\nsubdivision exceed the taxpayer's unincorporated business taxable\nincome, determined without the allowance of such deductions, the excess\nmay be carried over to the following taxable year or years and may be\ndeducted (without allocation under section one hundred seven) in\ncomputing unincorporated business taxable income for such year or years.\n  (5) In any taxable year when property is sold or otherwise disposed\nof, with respect to which a deduction has been allowed pursuant to\nparagraph one or two of this subdivision, the basis of such property\nshall be adjusted to reflect the deductions so allowed, and if the basis\nas so adjusted is lower than the adjusted basis of the same property for\nfederal income tax purposes, there shall be added to federal gross\nincome the amount of the difference between such adjusted bases.\n