NY Tax L § 208 (2021)
2021 New York Laws TAX - Tax Article 9-A - Franchise Tax on Business Corporations 208 - Definitions.

§ 208. Definitions. As used in this article:   1.  The  term  "corporation"  includes  (a)  an association within the meaning of paragraph three of subsection (a)  of  section  seventy-seven hundred  one of the internal revenue code (including a limited liability company), (b) a joint-stock  company  or  association,  (c)  a  publicly traded partnership treated as a corporation for purposes of the internal revenue  code pursuant to section seventy-seven hundred four thereof and (d) any business conducted by a trustee or trustees wherein interest  or ownership  is  evidenced  by  certificate  or  other written instrument. "DISC"  and  "former  DISC"  mean  any  corporation  which   meets   the requirements of subsection (a) of section nine hundred ninety-two of the internal revenue code.   1-A.  The  term  "New  York  S corporation" means, with respect to any taxable year, a corporation subject to tax under this article for  which an  election  is  in  effect  pursuant  to subsection (a) of section six hundred sixty of this chapter for such year,  any  such  year  shall  be denominated  a "New York S year", and such election shall be denominated a "New York S election". The term "New York C corporation"  means,  with respect  to  any  taxable  year, a corporation subject to tax under this article which is not a New York S corporation, and any such  year  shall be  denominated  a  "New York C year". The term "termination year" means any taxable year of a corporation during which the New York  S  election terminates  on  a day other than the first day of such year. The portion of the  taxable  year  ending  before  the  first  day  for  which  such termination  is  effective  shall be denominated the "S short year", and the  portion  of  such  year  beginning  on  such  first  day  shall  be denominated  the  "C short year". The term "New York S termination year" means any termination year which is not also an S termination  year  for federal purposes.   1-B.  The  term  "QSSS"  means  a  corporation  which  is  a qualified subchapter S subsidiary as defined  in  subparagraph  (B)  of  paragraph three  of  subsection  (b)  of section thirteen hundred sixty-one of the internal revenue code. The term "exempt QSSS" means a QSSS  exempt  from tax  under this article as provided in paragraph (k) of subdivision nine of this section, or a QSSS described in subclause (i) of clause  (B)  of subparagraph  two  of paragraph (k) of subdivision nine of this section, wherein the parent corporation of the QSSS is subject to tax under  this article,  and the assets, liabilities, income and deductions of the QSSS are treated as the assets, liabilities, income  and  deductions  of  the parent  corporation.  Where  a  QSSS  is  an  exempt  QSSS, then for all purposes under this article:  (a) the assets, liabilities, income,  deductions,  property,  payroll, receipts, capital, credits, and all other tax attributes and elements of economic  activity of the QSSS shall be deemed to be those of the parent corporation,  (b) the  stocks,  bonds  and  other  securities  issued  by,  and  any indebtedness  from, the QSSS shall not be investment or business capital of the parent corporation,  (c)  transactions  between  the  parent  corporation  and  the   QSSS, including the payment of interest and dividends, shall not be taken into account, and  (d)  general  executive  officers  of  the  QSSS shall be deemed to be general executive officers of the parent corporation.   2. The term "taxpayer" means any corporation subject to tax under this article.   3. The term "subsidiary" means  a  corporation  of  which  over  fifty percent  of  the number of shares of stock entitling the holders thereof  to vote for the election of  directors  or  trustees  is  owned  by  the taxpayer.   4. The term "stock" means an interest in a corporation that is treated as equity for federal income tax purposes.   5.  (a) The term "investment capital" means investments in stocks that (i) satisfy the definition of a capital asset under section 1221 of  the internal  revenue code at all times the taxpayer owned such stock during the taxable year, (ii) are held by the taxpayer for investment for  more than one year, (iii) the dispositions of which are, or would be, treated by  the  taxpayer  as generating long-term capital gains or losses under the internal revenue code, (iv) for stocks acquired on or after  January first,  two  thousand fifteen, at any time after the close of the day in which they are acquired, have never been held for sale to  customers  in the  regular  course of business, and (v) before the close of the day on which the stock was acquired, are clearly identified in  the  taxpayer's records  as  stock  held  for  investment in the same manner as required under section 1236(a)(1) of the internal revenue code for the stock of a dealer in securities to be eligible for capital gain treatment  (whether or  not the taxpayer is a dealer of securities subject to section 1236), provided, however, that for stock acquired prior to October  first,  two thousand fifteen that was not subject to section 1236(a) of the internal revenue  code,  such identification in the taxpayer's records must occur before October first, two thousand fifteen. Stock in a corporation  that is  conducting  a  unitary  business  with  the  taxpayer,  stock  in  a corporation that is included in a  combined  report  with  the  taxpayer pursuant  to  the  commonly owned group election in subdivision three of section two hundred ten-C of this  article,  and  stock  issued  by  the taxpayer  shall  not constitute investment capital. For purposes of this subdivision, if the taxpayer owns or controls, directly  or  indirectly, less  than  twenty  percent  of  the  voting  power  of  the  stock of a corporation, that corporation  will  be  presumed  to  be  conducting  a business that is not unitary with the business of the taxpayer.  (b)  There  shall  be deducted from investment capital any liabilities which are directly or indirectly attributable to investment capital.  If the  amount  of  those  liabilities  exceeds  the  amount  of investment capital, the amount of investment capital will be zero.  (c) Investment capital shall not  include  any  such  investments  the income  from  which  is  excluded from entire net income pursuant to the provisions of paragraph (c-1) of subdivision nine of this  section,  and that  investment capital shall be computed without regard to liabilities directly or indirectly attributable to such investments, but only if air carriers organized in the United States and  operating  in  the  foreign country  or  countries  in  which  the  taxpayer  has  its major base of operations and in which it is organized, resident or  headquartered  (if not in the same country as its major base of operations) are not subject to  any  tax  based  on  or  measured by capital imposed by such foreign country or countries or any political subdivision thereof, or if  taxed, are  provided an exemption, equivalent to that provided for herein, from any tax based on or measured by capital imposed by such foreign  country or  countries and from any such tax imposed by any political subdivision thereof.  (d) If a taxpayer acquires stock that is a capital asset under section 1221 of the internal revenue code during the taxable year and owns  that stock  on  the last day of the taxable year, it will be presumed, solely for purposes of determining whether that stock should be  classified  as investment  capital  after  it  is acquired, that the taxpayer held that stock for more than one year. However, if the taxpayer does not in  fact own that stock at the time it actually files its original report for the  taxable year in which it acquired the stock, then the presumption in the preceding  sentence shall not apply and the actual period of time during which the taxpayer owned the stock shall be used  to  determine  whether the  stock  should  be  classified  as  investment  capital  after it is acquired. If the  taxpayer  relies  on  the  presumption  in  the  first sentence  of this paragraph but does not own the stock for more than one year, the taxpayer must increase  its  total  business  capital  in  the immediately succeeding taxable year by the amount included in investment capital  for  that  stock,  net  of any liabilities attributable to that stock computed as provided in paragraph (b) of this subdivision and must increase its business income in the immediately succeeding taxable  year by the amount of income and net gains (but not less than zero) from that stock  included  in  investment  income,  less  any  interest deductions directly or indirectly  attributable  to  that  stock,  as  provided  in subdivision six of this section.  (e)  When  income  or  gain  from  a debt obligation or other security cannot be apportioned  to  the  state  using  the  apportionment  factor determined  under  section two hundred ten-A of this article as a result of United States constitutional principles, the debt obligation or other security will be included in investment capital.   6. (a) (i)  The  term  "investment  income"  means  income,  including capital  gains  in excess of capital losses, from investment capital, to the extent included  in  computing  entire  net  income,  less,  in  the discretion  of  the  commissioner,  any interest deductions allowable in computing  entire  net  income  which   are   directly   or   indirectly attributable  to  investment  capital  or  investment  income, provided, however, that in no case  shall  investment  income  exceed  entire  net income.  (ii)  If  the  amount  of  interest deductions subtracted under subparagraph (i) of this paragraph exceeds investment income, the excess of such amount over investment income must be added back to  entire  net income.  (iii)  If  the  taxpayer's investment income determined without regard to the interest deductions subtracted under subparagraph  (i)  of this  paragraph  comprises  more  than  eight  percent of the taxpayer's entire net income, investment income determined without regard  to  such interest deductions cannot exceed eight percent of the taxpayer's entire net income.  (b)  In lieu of subtracting from investment income the amount of those interest deductions, the taxpayer  may  make  a  revocable  election  to reduce  its  total  investment  income,  determined  after  applying the limitation in subparagraph (iii) of paragraph (a) of  this  subdivision, by forty percent. If the taxpayer makes this election, the taxpayer must also  make  the  elections  provided  for  in  paragraphs (b) and (c) of subdivision six-a of this section. If the taxpayer subsequently  revokes this  election,  the  taxpayer must revoke the elections provided for in paragraphs (b) and (c) of subdivision six-a of this section. A  taxpayer that  does  not  make this election because it has no investment capital will not be precluded from making those other elections.  (c)  Investment  income  shall  not  include  any  amount  treated  as dividends  pursuant  to  section  seventy-eight  of the internal revenue code.   6-a. (a) The term "other exempt income" means the sum  of  exempt  CFC income and exempt unitary corporation dividends.  (b)  "Exempt  CFC  income" means (i) except to the extent described in subparagraph (ii) of this paragraph, the income required to be  included in  the  taxpayer's  federal  gross income pursuant to subsection (a) of section 951 of the internal revenue code, received  from  a  corporation that  is  conducting  a  unitary  business  with the taxpayer but is not included in a combined  report  with  the  taxpayer,  (ii)  such  income  required  to be included in the taxpayer's federal gross income pursuant to subsection (a) of such section 951 of the internal  revenue  code  by reason of subsection (a) of section 965 of the internal revenue code, as adjusted  by subsection (b) of section 965 of the internal revenue code, and without regard to subsection (c) of such section,  received  from  a corporation that is not included in a combined report with the taxpayer, and  (iii)  ninety-five percent of the income required to be included in the taxpayer's federal  gross  income  pursuant  to  subsection  (a)  of section  951A  of  the  internal  revenue  code,  without  regard to the deduction under section 250 of the internal revenue code, received  from a  corporation  that  is  not  included  in  a  combined report with the taxpayer, less, (iv) in the discretion of the commissioner, any interest deductions directly or indirectly attributable to that income.  In  lieu of  subtracting  from its exempt CFC income the amount of those interest deductions, the taxpayer may make a revocable  election  to  reduce  its total  exempt  CFC  income  by forty percent. If the taxpayer makes this election, the taxpayer must also make  the  elections  provided  for  in paragraph  (b)  of  subdivision six of this section and paragraph (c) of this subdivision. If the taxpayer subsequently  revokes  this  election, the  taxpayer must revoke the elections provided for in paragraph (b) of subdivision six of this section and paragraph (c) of this subdivision. A taxpayer which does not make this election because it has no exempt  CFC income  will  not  be  precluded  from making those other elections. The income described in subparagraphs (ii) and (iii) of this paragraph shall not constitute investment income. The income described  in  subparagraph (iii)  of this paragraph shall not constitute exempt unitary corporation dividends.  (c) "Exempt unitary corporation dividends" means those dividends  from a  corporation  that  is conducting a unitary business with the taxpayer but is not included in a combined report with the taxpayer, less, in the discretion of the commissioner,  any  interest  deductions  directly  or indirectly  attributable  to  such  income.  Other  than dividend income received from corporations  that  are  taxable  under  a  franchise  tax imposed by article nine or article thirty-three of this chapter or would be  taxable  under  a  franchise  tax imposed by article nine or article thirty-three of this chapter if subject to tax, in lieu  of  subtracting from  this  dividend  income those interest deductions, the taxpayer may make a revocable election to reduce the total amount  of  this  dividend income  by  forty  percent.  If  the  taxpayer  makes this election, the taxpayer must also make the elections provided for in paragraph  (b)  of subdivision  six  of this section and paragraph (b) of this subdivision. If the taxpayer subsequently revokes this election,  the  taxpayer  must also  revoke  the elections provided for in paragraph (b) of subdivision six of this section and paragraph (b) of this  subdivision.  A  taxpayer which does not make this election because it has not received any exempt unitary  corporation dividends or is precluded from making this election for dividends received from corporations taxable under a  franchise  tax imposed by article nine or article thirty-three of this chapter or would be  taxable  under  a  franchise  tax imposed by article nine or article thirty-three of this chapter if subject to tax  will  not  be  precluded from making those other elections.  (d)  If  the  taxpayer  attributes interest deductions to other exempt income and the amount subtracted exceeds other exempt income, the excess of the interest deductions over other exempt income must be  added  back to entire net income. In no case shall other exempt income exceed entire net income.  (e)  Other  exempt  income  shall  not  include  any amount treated as dividends pursuant to section  seventy-eight  of  the  internal  revenue code.   7.  (a)  The  term  "business  capital"  means  all assets, other than investment capital and stock issued by the  taxpayer,  less  liabilities not  deducted  from  investment  capital. Business capital shall include only those assets the income, loss or  expense  of  which  are  properly reflected   (or   would  have  been  properly  reflected  if  not  fully depreciated or expensed or depreciated or expensed to a nominal  amount) in the computation of entire net income for the taxable year.  (b)  Provided, however, "business capital" shall not include assets to the extent employed for  the  purpose  of  generating  income  which  is excluded  from entire net income pursuant to the provisions of paragraph (c-1) of subdivision nine of this section and shall be computed  without regard  to  liabilities  directly  or  indirectly  attributable  to such assets, but only if air carriers organized  in  the  United  States  and operating  in the foreign country or countries in which the taxpayer has its major base of operations and in which it is organized,  resident  or headquartered  (if  not  in  the  same  country  as  its  major  base of operations) are not subject to any tax based on or measured  by  capital imposed   by   such  foreign  country  or  countries  or  any  political subdivision thereof, or if taxed, are provided an exemption,  equivalent to  that  provided  for  herein,  from  any  tax based on or measured by capital imposed by such foreign country or countries and from  any  such tax imposed by any political subdivision thereof.   8. The term "business income" means entire net income minus investment income  and other exempt income. In no event shall the sum of investment income and other exempt income exceed entire net income. If the taxpayer makes the election provided for in subparagraph one of paragraph (a)  of subdivision  five of section two hundred ten-A of this article, then all income from qualified financial instruments  shall  constitute  business income.   8-A.  Provided, however, that with respect to a DISC or a former DISC, the following provisions shall apply:  (a) investments in the stocks, bonds or other securities of a DISC  or any  indebtedness from a DISC shall not be treated as investment capital under subdivision five of this section,  (b) any amounts deemed distributed from a DISC or a former DISC  which are  taxable  as  dividends  pursuant  to subsection (b) of section nine hundred ninety-five of the internal revenue  code  of  nineteen  hundred fifty-four  shall be treated as business income, except any such amounts from a former DISC attributable to amounts includible  in  a  taxpayer's entire  net  income  for  a prior taxable year under subparagraph (B) of paragraph (i) of subdivision nine of this section shall be excluded from entire net income,  (c) any gain  recognized  for  federal  income  tax  purposes  on  the disposition  of  stock  in  a  DISC,  and  any  gain  recognized  on the disposition of stock in a former DISC, includible in gross income  as  a dividend  pursuant to subsection (c) of section nine hundred ninety-five of the internal revenue code of nineteen hundred  fifty-four,  shall  be treated as business income, and  (d)  except  as  provided in paragraph (i) of subdivision nine of this section, any actual distribution from a DISC or a former DISC  shall  be treated  as  business  income  except  an  actual distribution which for federal income tax purposes is treated as made out  of  "other  earnings and  profits"  under  section  nine  hundred  ninety-six of the internal revenue code of nineteen hundred fifty-four, in which case  such  actual distribution shall be treated as investment income under this article.    9.  The  term  "entire  net  income"  means  total net income from all sources, which shall be  presumably  the  same  as  the  entire  taxable income, which, except as hereinafter provided in this subdivision,  (i)  the  taxpayer is required to report to the United States treasury department, or  (ii) the taxpayer would have been required to  report  to  the  United States  treasury  department  if  it  had  not  made  an  election under subchapter s of chapter one of the internal revenue code, or  (iii) the taxpayer, in the case of a corporation which is exempt  from federal  income  tax  (other  than the tax on unrelated business taxable income imposed under section 511 of the internal revenue code) but which is subject to tax under this article, would have been required to report to the United States treasury department but for such exemption, or  (iv) in the case of an alien corporation that under any  provision  of the  internal revenue code is not treated as a "domestic corporation" as defined in section seven thousand seven hundred  one  of  such  code  is effectively connected with the conduct of a trade or business within the United  States  as  determined under section 882 of the Internal Revenue Code.  (a) Entire net income shall not include:  (3) bona fide gifts,  (4) income and deductions with respect to amounts received from school districts and from corporations and associations, organized and operated exclusively for religious, charitable or educational purposes,  no  part of  the  net  earnings  of  which  inures  to the benefit of any private shareholder or individual, for the operation of school buses,  (5) (i) any refund or credit of a  tax  imposed  under  this  article, article  twenty-three, or former article thirty-two of this chapter, for which tax no exclusion or  deduction  was  allowed  in  determining  the taxpayer's  entire  net income under this article, article twenty-three, or former article thirty-two of this chapter for any prior year, or (ii) any refund or credit  of  a  tax  imposed  under  sections  one  hundred eighty-three, one hundred eighty-three-a, one hundred eighty-four or one hundred eighty-four-a of this chapter;  (6)  any amount treated as dividends pursuant to section seventy-eight of the internal revenue code to the extent that such dividends  are  not deducted under section two hundred fifty of such code;  (7)  that  portion  of  wages  and  salaries  paid or incurred for the taxable year for which a  deduction  is  not  allowed  pursuant  to  the provisions of section two hundred eighty-C of the internal revenue code.  (9)  for taxable years beginning after December thirty-first, nineteen hundred eighty-one, except with respect to property which is a qualified mass commuting vehicle described in subparagraph (D) of paragraph  eight of  subsection  (f)  of  section one hundred sixty-eight of the internal revenue  code  (relating  to  qualified  mass  commuting  vehicles)  and property  of  a  taxpayer principally engaged in the conduct of aviation (other than air freight forwarders acting as principal and like indirect air carriers) which is placed in service before taxable years  beginning in  nineteen  hundred  eighty-nine,  any amount which is included in the taxpayer's federal taxable income solely as a result of an election made pursuant to the provisions of such paragraph eight as it was  in  effect for  agreements  entered  into  prior to January first, nineteen hundred eighty-four;  (10) for taxable years beginning after December thirty-first, nineteen hundred eighty-one, except with respect to property which is a qualified mass commuting vehicle described in subparagraph (D) of paragraph  eight of  subsection  (f)  of  section one hundred sixty-eight of the internal revenue  code  (relating  to  qualified  mass  commuting  vehicles)  and  property  of  a  taxpayer principally engaged in the conduct of aviation (other than air freight forwarders acting as principal and like indirect air carriers) which is placed in service before taxable years  beginning in  nineteen  hundred  eighty-nine,  any amount which the taxpayer could have excluded from federal taxable income had it not made  the  election provided  for in such paragraph eight as it was in effect for agreements entered into prior to January first, nineteen hundred eighty-four;  (11)  the  amount  deductible  pursuant  to  paragraph  (j)  of   this subdivision; and  (12)  upon  the disposition of property to which paragraph (j) of this subdivision applies, the amount, if any, by which the aggregate  of  the amounts   described  in  subparagraph  ten  of  paragraph  (b)  of  this subdivision attributable to such property exceeds the aggregate  of  the amounts  described  in paragraph (j) of this subdivision attributable to such property; and  (14)  The  amount  deductible  pursuant  to  paragraph  (l)  of   this subdivision.  (16) In the case of a taxpayer subject to the modification provided by subparagraph  sixteen  of  paragraph (b) of this subdivision, the amount required to be recaptured pursuant to subsection (d) of section  179  of the  internal  revenue  code  with  respect  to property upon which such modification was based.  (17) for taxable years  beginning  after  December  thirty-first,  two thousand  two, the amount deductible pursuant to paragraph (n-1) of this subdivision.  (18) the amount of income or gain included in federal  taxable  income of  a taxpayer that is a partner in a qualified entity or is a qualified entity that is  located  both  within  and  without  a  New  York  state innovation  hot  spot,  to  the  extent  that  the  income  or  gain  is attributable to the operations of a qualified entity at or  as  part  of the   New  York  state  innovation  hot  spot  as  provided  in  section thirty-eight of this chapter.  (19) the amount computed pursuant to paragraph (r), (s) or (t) of this subdivision, but only the amount determined  pursuant  to  one  of  such paragraphs.  (20)  Any  amount  excepted, for purposes of subsection (a) of section one hundred eighteen  of  the  internal  revenue  code,  from  the  term "contribution  to  the  capital  of  the  taxpayer"  by paragraph two of subsection (b) of section one hundred eighteen of the  internal  revenue code.  (21)  The amount of any gain added back to determine entire net income in a previous taxable year  pursuant  to  subparagraph  twenty-seven  of paragraph  (b)  of  subdivision nine of this section that is included in federal gross income for the taxable year.  (22) Grants received pursuant to the COVID-19 pandemic small  business recovery  grant  program,  established  in section 16-ff of the New York state urban development corporation act, to  the  extent  includable  in federal taxable income.  (b)  Entire  net  income  shall  be  determined without the exclusion, deduction or credit of:  (1) in the case of an alien corporation that under  any  provision  of the  internal revenue code is not treated as a "domestic corporation" as defined in section seven thousand seven hundred one of  such  code,  (i) any  part of any income from dividends or interest on any kind of stock, securities or indebtedness, but  only  if  such  income  is  treated  as effectively  connected  with  the  conduct of a trade or business in the United States pursuant to section 864 of the internal revenue code, (ii) any  income  exempt  from  federal  taxable  income  under  any   treaty  obligation  of  the  United  States,  but  only  if such income would be treated as effectively connected in absence of such  exemption  provided that  such  treaty  obligation  does  not  preclude the taxation of such income  by  a  state,  or  (iii)  any  income  which would be treated as effectively connected if such income were not excluded from gross income pursuant to subsection (a) of section 103 of the internal revenue code;  (2) any part of any income from dividends or interest on any  kind  of stock, securities or indebtedness,  (3)  taxes  on or measured by profits or income paid or accrued to the United States or any of its possessions, territories  or  commonwealths, including  taxes  in  lieu  of  any  of  the  foregoing  taxes otherwise generally imposed by any possession, territory or  commonwealth  of  the United States,  (3-a)  taxes  on  or  measured  by profits or income, or which include profits or income as a measure, paid or accrued to any  other  state  of the  United  States,  or  any  political  subdivision thereof, or to the District of Columbia, including taxes expressly in lieu of  any  of  the foregoing  taxes  otherwise  generally imposed by any other state of the United States, or any political subdivision thereof, or the District  of Columbia;  (4)  taxes  imposed  under  this  article and article thirty-two as in effect on December thirty-first, two thousand fourteen and sections  one hundred   eighty-three,   one   hundred   eighty-three-a,   one  hundred eighty-four and one hundred eighty-four-a of this chapter,  (4-a)(A) in those instances where a credit for the special  additional mortgage  recording  tax  credit  is  allowed  under subdivision nine of section two hundred ten-B of this article,  the  amount  allowed  as  an exclusion or deduction for the special additional mortgage recording tax imposed  by subdivision one-a of section two hundred fifty-three of this chapter in determining the entire taxable income which the  taxpayer  is required  to  report  to  the United States treasury department, and (B) unless the credit allowed pursuant to subdivision nine  of  section  two hundred  ten-B  of  this  article is reflected in the computation of the gain or loss so as to result in an increase in such gain or decrease  of such  loss,  for  federal  income  tax  purposes, from the sale or other disposition of the property with respect to which the special additional mortgage recording tax imposed pursuant to subdivision one-a of  section two  hundred  fifty-three  of  this  chapter was paid, the amount of the special additional mortgage recording tax imposed by  subdivision  one-a of  section  two  hundred fifty-three of this chapter which was paid and which is reflected in the computation of the basis of the property so as to result in a decrease in such  gain  or  increase  in  such  loss  for federal  income  tax  purposes from the sale or other disposition of the property with respect to which such tax was paid.  (6) any amount allowed as a  deduction  for  the  taxable  year  under section  172  of  the  internal  revenue  code,  including carryovers of deductions from prior taxable years.  (8) for taxable years beginning after December thirty-first,  nineteen hundred eighty-one, except with respect to property which is a qualified mass  commuting vehicle described in subparagraph (D) of paragraph eight of subsection (f) of section one hundred  sixty-eight  of  the  internal revenue  code  (relating  to  qualified  mass  commuting  vehicles)  and property of a taxpayer principally engaged in the  conduct  of  aviation (other than air freight forwarders acting as principal and like indirect air  carriers) which is placed in service before taxable years beginning in nineteen hundred eighty-nine, any amount which the  taxpayer  claimed as  a  deduction  in  computing  its  federal taxable income solely as a result of an election made pursuant to the provisions of such  paragraph  eight  as  it was in effect for agreements entered into prior to January first, nineteen hundred eighty-four;  (9)  for taxable years beginning after December thirty-first, nineteen hundred eighty-one, except with respect to property which is a qualified mass commuting vehicle described in subparagraph (D) of paragraph  eight of  subsection  (f)  of  section one hundred sixty-eight of the internal revenue  code  (relating  to  qualified  mass  commuting  vehicles)  and property  of  a  taxpayer principally engaged in the conduct of aviation (other than air freight forwarders acting as principal and like indirect air carriers) which is placed in service before taxable years  beginning in  nineteen  hundred  eighty-nine,  any amount which the taxpayer would have been required to include in the computation of its federal  taxable income had it not made the election permitted pursuant to such paragraph eight  as  it was in effect for agreements entered into prior to January first, nineteen hundred eighty-four;  (10) in the case of  property  placed  in  service  in  taxable  years beginning   before  nineteen  hundred  ninety-four,  for  taxable  years beginning after  December  thirty-first,  nineteen  hundred  eighty-one, except with respect to property subject to the provisions of section two hundred  eighty-F  of the internal revenue code, property subject to the provisions of section one hundred sixty-eight of  the  internal  revenue code which is placed in service in this state in taxable years beginning after  December  thirty-first, nineteen hundred eighty-four and property of a taxpayer principally engaged in the conduct of aviation (other than air freight  forwarders  acting  as  principal  and  like  indirect  air carriers)  which  is placed in service before taxable years beginning in nineteen hundred  eighty-nine,  the  amount  allowable  as  a  deduction determined under section one hundred sixty-eight of the internal revenue code;  (11)  upon  the disposition of property to which paragraph (j) of this subdivision applies, the amount, if any, by which the aggregate  of  the amounts  described  in  such paragraph (j) attributable to such property exceeds the aggregate of the amounts described in  subparagraph  ten  of this paragraph attributable to such property.  (15)  Real  property taxes paid on qualified agricultural property and deducted in determining federal taxable income, to  the  extent  of  the amount of the agricultural property tax credit allowed under subdivision eleven of section two hundred ten-B of this article.  (16)  In  the  case  of  a taxpayer which is not an eligible farmer as defined in paragraph (b) of subdivision eleven of  section  two  hundred ten-B  of  this article, the amount of any deduction claimed pursuant to section 179 of the internal revenue code with respect to a sport utility vehicle which is not a passenger automobile as defined in paragraph 5 of subsection (d) of section 280F of the internal revenue code.  (17) for taxable years  beginning  after  December  thirty-first,  two thousand  two,  in the case of qualified property described in paragraph two of subsection k of section 168 of the internal revenue  code,  other than  qualified  resurgence  zone property described in paragraph (q) of this subdivision,  and  other  than  qualified  New  York  Liberty  Zone property  described in paragraph two of subsection b of section 1400L of the internal revenue code (without regard to clause (i) of  subparagraph (C)  of  such  paragraph),  which was placed in service on or after June first, two thousand three, the amount allowable  as  a  deduction  under section 167 of the internal revenue code.  (18) Premiums paid for environmental remediation insurance, as defined in  section  twenty-three  of  this chapter, and deducted in determining federal taxable income, to the extent of the amount of the environmental  remediation insurance credit allowed under such section twenty-three and subdivision nineteen of section two hundred ten-B of this article.  (19)  The  amount  of  any  deduction  allowed pursuant to section one hundred ninety-nine of the internal revenue code.  (20) The amount of any  federal  deduction  for  taxes  imposed  under article twenty-three of this chapter.  (20-a)  The  amount  of  any  federal  deduction for the excise tax on telecommunication services to the extent such  taxes  are  used  as  the basis  of  the  calculation  of  the  tax-free  NY  area  excise  tax on telecommunication services credit allowed under  subdivision  forty-four of section two hundred ten-B of this article.  (21)  The  amount  of any federal deduction for real property taxes to the extent such taxes are used as the basis of the  calculation  of  the real  property  tax  credit  for manufacturers allowed under subdivision forty-three of section two hundred ten-B of this article.  (22) the amount of any deduction for charitable contributions  allowed under  section  one  hundred seventy of the internal revenue code to the extent such contributions are used as the basis of  the  calculation  of the  farm  donations to food pantries credit under subdivision fifty-two of section two hundred ten-B of this article.  (23)  The  amount  of  any  federal  deduction  allowed  pursuant   to subsection (c) of section 965 of the internal revenue code.  (24)  The  amount of any federal deduction allowed pursuant to section 250(a)(1)(A) of the internal revenue code.  (25) The amount of any federal deduction allowed pursuant  to  section 250(a)(1)(B)(i) of the internal revenue code.  (26)  For  taxable  years  beginning  in two thousand nineteen and two thousand twenty, the amount of the  increase  in  the  federal  interest deduction  allowed  pursuant to section 163(j)(10)(A)(i) of the internal revenue code.  (27) The amount of any gain excluded from federal gross income for the taxable year by subparagraph (A) of paragraph (1) of subsection  (a)  of section 1400Z-2 of the internal revenue code.  (c-1)(1)  Notwithstanding  any other provision of this article, in the case of a taxpayer which is a foreign air carrier holding a foreign  air carrier  permit issued by the United States department of transportation pursuant to section four hundred two of  the  federal  aviation  act  of nineteen  hundred  fifty-eight, as amended, and which is qualified under subparagraph two of this paragraph, entire net income shall not include, and shall be computed without the  deduction  of,  amounts  directly  or indirectly   attributable   to,   (i)   any   income  derived  from  the international operation of aircraft as described in and subject  to  the provisions of section eight hundred eighty-three of the internal revenue code,  (ii)  income  without the United States which is derived from the operation of aircraft, and (iii) income without the United States  which is  of  a  type  described  in  subdivision (a) of section eight hundred eighty-one of the internal revenue code except that it is  derived  from sources  without  the  United  States.  Entire  net income shall include income described in clauses (i), (ii) and (iii) of this subparagraph  in the case of taxpayers not described in the previous sentence.  (2)  A  taxpayer  is qualified under this subparagraph if air carriers organized in the United States and operating in the foreign  country  or countries  in which the taxpayer has its major base of operations and in which it is organized, resident or headquartered (if  not  in  the  same country  as  its major base of operations) are not subject to any income tax or other tax based on or measured by income or receipts  imposed  by such  foreign country or countries or any political subdivision thereof,  or if so subject to such tax, are provided an exemption  from  such  tax equivalent to that provided for herein.  (c-2)  Adjustments by qualified public utilities. (1) In the case of a taxpayer which is a qualified public utility, entire net income shall be computed with the adjustments set forth in this paragraph.  (2) Definitions. (A) Qualified public  utility.  The  term  "qualified public  utility"  means  a taxpayer which: (i) on December thirty-first, nineteen hundred ninety-nine, was subject to the ratemaking  supervision of  the state department of public service, and (ii) for the year ending on December thirty-first, nineteen hundred ninety-nine, was  subject  to tax under former section one hundred eighty-six of this chapter.  (B) Transition property. The term "transition property" means property placed  in  service  by the taxpayer before January first, two thousand, for which a depreciation deduction is allowed under section one  hundred sixty-seven of the internal revenue code.  (3)  Federal  depreciation  disallowed.  With  respect  to  transition property, the deduction for federal income tax purposes for depreciation shall not be allowed.  (4) New York depreciation. With  respect  to  transition  property,  a deduction  shall  be  allowed  for the depreciation expense shown on the books and records of the taxpayer for the taxable year and determined in accordance with generally accepted accounting principles.  (5) Regulatory assets.  A  deduction  shall  be  allowed  for  amounts recognized  as  expense on the books and records of the taxpayer for the taxable year, which amounts  were  recognized  as  expense  for  federal income  tax  purposes  in  a  taxable  year ending on or before December thirty-first, nineteen hundred  ninety-nine,  where:  (A)  such  amounts represent  expenditures  which,  when  made,  were charged to a deferred debit account or similar asset account on the books and records  of  the taxpayer,  and  where  (B)  the  recognition of expense on the books and records of the taxpayer is matched by revenue stemming from a  procedure or  adjustment allowing the recovery of such expenditures, and where (C) such revenue is recognized  for  federal  income  tax  purposes  in  the taxable year.  (6)  Basis for gain or loss. (A) Recognition transactions. (i) General rule - book basis. Except as provided in subclause (ii) of this  clause, where  transition  property  is  sold  or  otherwise  disposed of in the taxable year in a transaction of the type requiring recognition of  gain or  loss  for federal income tax purposes, the basis for determining the amount of such gain or loss under this article shall be the cost of  the property less the accumulated depreciation on the property determined on the  books  and  records  of  the  taxpayer in accordance with generally accepted accounting principles.  (ii) Qualified gain - New York basis.  Where  a  sale  or  disposition described in subclause (i) of this clause results in recognition of gain for  federal  income tax purposes, and where either (I) such recognition occurs in a taxable year ending after nineteen hundred  ninety-nine  and before  two  thousand ten, or (II) such recognition is with respect to a nuclear electric generating facility,  the  basis  for  determining  the amount of such gain under this article shall be the cost of the property less  the  aggregate  of  the  New  York  depreciation deductions on the property determined under subparagraph four of this paragraph.  (iii) No conversion of gain to loss.  In  the  event  that  the  basis determined  under subclause (ii) of this clause results in determination of a loss on the sale or disposition of the property, no  gain  or  loss shall  be  recognized  under  this  article with respect to such sale or disposition.  (B)  Nonrecognition  transactions.  (i)  Carryover  basis.  (I)  where transition  property  is  disposed  of  ("original  disposition")  in  a transaction of a type requiring deferral of recognition of gain or  loss for  federal  income  tax purposes, and where (II) there is a subsequent recognition  of  gain or loss for federal income tax purposes ("clause B gain or loss"), the amount of which is determined by reference, in whole or in part, to  the  basis  of  such  transition  property  ("underlying transition  property"),  then  (III) the amount of such clause B gain or loss under this article shall be adjusted as provided in subclause  (ii) or (iii) of this clause.  (ii)  General  rule  -  book  basis  adjustment. Except as provided in subclause (iii) of this clause, the amount of clause  B  gain  shall  be reduced,  or  the  amount  of  clause B loss increased, by the amount by which the book basis of the underlying transition property on  the  date of  original  disposition  (determined using the provisions of subclause (i) of clause (A) of this subparagraph) exceeds the federal  income  tax basis of such property on such date.  (iii)  Qualified gain - New York basis adjustment. Where clause B gain either (I) occurs in  a  taxable  year  ending  after  nineteen  hundred ninety-nine  and  before  two thousand ten, or (II) is with respect to a nuclear electric generating facility, the amount of such gain under this article shall be reduced, but not below zero, by the amount by which the New York basis of the underlying transition  property  on  the  date  of original  disposition (determined using the provisions of subclause (ii) of clause (A) of this subparagraph) exceeds the federal income tax basis of such property on such date.  (iv) Application to replacement  property  and  transferee  taxpayers. This  clause  shall apply whether the clause B gain or loss: (I) is with respect to either transition property or depreciable property the  basis of  which  is determined by reference to transition property, or (II) is recognized by either a qualified public utility or by a  taxpayer  which is  a  transferee of transition property (whether or not such transferee is a qualified public utility, notwithstanding subparagraph one of  this paragraph).  (c-3)  Depreciation  adjustments  by  qualified  power  producers  and pipeline companies. (1) In the case of a qualified taxpayer, entire  net income  shall be computed with the depreciation adjustments set forth in this paragraph.  (2) Definitions. (A) Qualified taxpayer. The term "qualified taxpayer" means a qualified power producer or a qualified pipeline.  (B) Qualified power producer.  The  term  "qualified  power  producer" means  a  taxpayer which: (i) on December thirty-first, nineteen hundred ninety-nine, was not subject to the ratemaking supervision of the  state department  of  public service, and (ii) for the year ending on December thirty-first, nineteen hundred ninety-nine, was  subject  to  tax  under former  section one hundred eighty-six of this chapter on account of its being principally engaged in the business of supplying electricity.  (C) Qualified pipeline. The term "qualified pipeline" means a taxpayer which: (i) on December thirty-first, nineteen hundred  ninety-nine,  was subject  to  the  ratemaking  supervision  of  either the federal energy regulatory commission or the state department  of  public  service,  and (ii)  for  the  year  ending  on December thirty-first, nineteen hundred ninety-nine, was subject to tax under sections one hundred  eighty-three and  one  hundred  eighty-four  of  this chapter on account of its being principally engaged in the business of pipeline transmission.  (D) Transition property. The term "transition property" means property placed in service by a qualified  taxpayer  before  January  first,  two  thousand,  for  which  a depreciation deduction is allowed under section one hundred sixty-seven of the internal revenue code.  (3)  Federal  depreciation  disallowed.  With  respect  to  transition property, the deduction for federal income tax purposes for depreciation shall not be allowed.  (4) New York depreciation. With  respect  to  transition  property,  a deduction  shall  be  allowed  for  the depreciation expense computed as provided in this subparagraph. (A) All transition property shown on  the books  and  records of the taxpayer on January first, two thousand shall be treated as a single asset placed in service on  such  date.  The  New York  basis for purposes of computing the depreciation deduction on such single asset shall be the net book value  of  such  transition  property determined  on  the  first day of the federal taxable year ending in two thousand (or on the date any such property  is  placed  in  service,  if later) adjusted as provided in clause (B) of this subparagraph.  (B)  If  transition property is sold or otherwise disposed of, the New York basis of the single asset shall be reduced on the date of such sale or disposition by the amount of the adjusted federal tax basis  of  such property on such date.  (C)  The  New York depreciation deduction allowed for any taxable year with  respect  to  such  single  asset  shall  be  computed  using   the straight-line method, a twenty-year life, and a salvage value of zero.  (D) For purposes of this subparagraph, the term "net book value" means cost  reduced by accumulated depreciation shown on the books and records of the taxpayer and  determined,  in  the  case  of  a  qualified  power producer,  in  accordance with generally accepted accounting principles; and in the  case  of  a  qualified  pipeline,  in  accordance  with  the taxpayer's  regulatory  reports filed with the federal energy regulatory commission or state department of public service.  (d) The commissioner may, whenever  necessary  in  order  properly  to reflect  the  entire  net  income of any taxpayer, determine the year or period in which any item of  income  or  deduction  shall  be  included, without regard to the method of accounting employed by the taxpayer.  (e)  The  entire net income of any bridge commission created by act of congress to construct a bridge across an  international  boundary  means its  gross  income  less  the  expense  of maintaining and operating its properties, the annual interest upon its bonds  and  other  obligations, and the annual charge for the retirement of such bonds or obligations at maturity.  (h) If the period covered by a report under this article is other than the  period  covered  by  the  report  to  the  United  States  treasury department,  (1) except as provided in subparagraph two hereof, entire  net  income shall  be  determined by multiplying the taxable income reported to such department (as adjusted pursuant to the provisions of this  article)  by the  number  of  calendar  months  or major parts thereof covered by the report under this article and dividing by the number of calendar  months or  major  parts thereof covered by the report to such department. If it shall appear that such method of determining entire net income does  not properly  reflect the taxpayer's income during the period covered by the report under this article, the commissioner shall be authorized  in  its discretion  to  determine  such entire net income solely on the basis of the taxpayer's income during the period covered by its report under this article.  (2) In the case of a New York S termination year, an equal portion  of entire  net  income  shall  be  assigned  to  each day of such year. The portion of such entire net income thereby assigned to the S  short  year and the C short year shall be included in the respective reports for the  S  short  year  and  the C short year under this article. However, where paragraph three of subsection (s) of section six hundred twelve of  this chapter applies, the portion of such entire net income assigned to the S short  year  and  the  C short year shall be determined under normal tax accounting rules.  (i) With respect to a DISC which during any taxable year or  reporting year  (1)  received  more  than five percent of its gross sales from the sale of  inventory  or  other  property  which  it  purchased  from  its stockholders,  (2)  received more than five percent of its gross rentals from the rental of property  which  it  purchased  or  rented  from  its stockholders  or  (3)  received  more  than  five  percent  of its total receipts other  than  sales  and  rentals  from  its  stockholders,  the following provisions shall apply.  (A)  For any taxable year in which sub-paragraph (B) of this paragraph is in effect and not rendered invalid, a DISC  meeting  the  above  test shall be exempt from all taxes imposed by this article.  (B)  Supplemental to the provisions of subdivision five of section two hundred eleven of this article, any taxpayer required to compute  a  tax under  this  article, which during the taxable year being reported was a stockholder in any DISC meeting the test prescribed in  this  paragraph, shall  for any taxable year ending after December thirty-first, nineteen hundred seventy-one adjust each item of its receipts,  expenses,  assets and  liabilities,  as  otherwise  computed under this article, by adding thereto its attributable share of each such DISC's  receipts,  expenses, assets  and  liabilities  as  reportable by each such DISC to the United States Treasury Department for its annual reporting period ending during the current taxable year of such taxpayer; provided, however,  (1)  that all  transactions  between  the  taxpayer  and  each  such DISC shall be eliminated from the taxpayer's adjusted receipts, expenses,  assets  and liabilities;  (2)  that  the  taxpayer's  entire net income as otherwise computed under this section, shall be reduced by subtracting the  amount of  the  deemed  distribution  of current income, if any, from each such DISC already included in the entire  net  income  of  such  taxpayer  by virtue  of  having  been  included in its entire taxable income for that taxable year as reported to the United States Treasury  Department;  and (3)  that  in  the  event this paragraph should be rendered invalid, all DISC's and their stockholders taxable hereunder shall be  taxed  instead under the remaining portions of this article.  (j)  in  the  case  of  property  placed  in  service in taxable years beginning  before  nineteen  hundred  ninety-four,  for  taxable   years beginning  after  December  thirty-first,  nineteen  hundred eighty-one, except with respect to property subject to the provisions of section two hundred eighty-F of the internal revenue code and  property  subject  to the  provisions  of  section  one  hundred  sixty-eight  of the internal revenue code which is placed in service in this state in  taxable  years beginning after December thirty-first, nineteen hundred eighty-four, and provided  a  deduction  has  not  been  excluded  from entire net income pursuant to subparagraph eight of paragraph (b) of this  subdivision,  a taxpayer  shall  be allowed with respect to property which is subject to the provisions of  section  one  hundred  sixty-eight  of  the  internal revenue  code  the  depreciation  deduction  allowable under section one hundred sixty-seven of the internal revenue code as such  section  would have  applied  to  property  placed in service on December thirty-first, nineteen hundred eighty. This paragraph shall not apply to property of a taxpayer principally engaged in the conduct of aviation (other than  air freight  forwarders  acting as principal and like indirect air carriers) which is placed in service before taxable years  beginning  in  nineteen hundred eighty-nine.  (k)  QSSS.  (1)  New  York  S corporation. In the case of a New York S corporation which is the parent of a qualified subchapter  S  subsidiary (QSSS) with respect to a taxable year:  (A) where the QSSS is not an excluded corporation,  (i)  in  determining the entire net income of such parent corporation, all assets, liabilities, income and deductions  of  the  QSSS  shall  be treated  as  assets,  liabilities,  income  and deductions of the parent corporation, and  (ii) the QSSS shall be exempt from all taxes imposed by this  article, and  (B)  where  the QSSS is an excluded corporation, the entire net income of the parent corporation shall be determined as  if  the  federal  QSSS election had not been made.  (2)  New  York  C corporation. In the case of a New York C corporation which is the parent of a QSSS with respect to a taxable year:  (A) where the QSSS is a taxpayer,  (i) in determining the entire net income of such  parent  corporation, all  assets,  liabilities,  income  and  deductions of the QSSS shall be treated as assets, liabilities, income  and  deductions  of  the  parent corporation, and  (ii)  the QSSS shall be exempt from all taxes imposed by this article, and  (B) where the QSSS is not a taxpayer,  (i) if the QSSS is not an excluded corporation, the parent corporation may make a QSSS inclusion election to include all  assets,  liabilities, income  and  deductions  of  the QSSS as assets, liabilities, income and deductions of the parent corporation, and  (ii) in the absence of such election, or where the QSSS is an excluded corporation, the entire net income of the parent  corporation  shall  be determined as if the federal QSSS election had not been made.  (3)  Non-New  York  S  corporation  not  excluded. In the case of an S corporation which is not a taxpayer and not an excluded corporation, and which is the parent of a QSSS which is a taxpayer, the  shareholders  of the parent corporation shall be entitled to make the New York S election under subsection (a) of section six hundred sixty of this chapter.  (A)  For  any  taxable  year for which such election is in effect, the parent corporation shall be subject to tax under this article as  a  New York S corporation, and the provisions of clause (A) of subparagraph one of this paragraph shall apply.  (B) For any taxable year for which such election is not in effect, the QSSS shall be a New York C corporation, and the entire net income of the QSSS  shall  be  determined as if the federal QSSS election had not been made. For purposes of such determination, the taxable year of the parent corporation shall constitute the taxable year of  the  QSSS,  excluding, however,  any  portion  of  such  year  during  which  the QSSS is not a taxpayer.  (4) S corporation excluded. In the case of an S corporation  which  is an  excluded  corporation  and  which is the parent of a QSSS which is a taxpayer, the QSSS shall be a New York C corporation and the  provisions of clause (B) of subparagraph three of this paragraph shall apply.  (5)  Excluded  corporation.  The  term  "excluded corporation" means a corporation subject to  tax  under  sections  one  hundred  eighty-three through  one  hundred  eighty-six, inclusive, or article thirty-three of this chapter, or a foreign corporation not taxable by this state  which, if  it  were taxable, would be subject to tax under any of such sections or article.  (6) Taxpayer. For purposes of  this  paragraph,  the  term  "taxpayer" means  a  parent  corporation or QSSS subject to tax under this article, determined without regard to the provisions of this paragraph.  (7)  QSSS  inclusion  election.  The  election  under subclause (i) of clause (B) of subparagraph two of this paragraph shall be effective  for the  taxable year for which made and for all succeeding taxable years of the corporation until  such  election  is  terminated.  An  election  or termination  shall  be  made  on  such  form  and  in such manner as the commissioner may prescribe by regulation or instruction.  (l) Emerging technology investment deferral. In the case of  any  sale of  a  qualified  emerging  technologies  investment  held for more than thirty-six months and with respect to  which  the  taxpayer  elects  the application  of  this paragraph, gain from such sale shall be recognized only to the extent that the amount realized on  such  sale  exceeds  the cost  of any qualified emerging technologies investment purchased by the taxpayer during the three hundred sixty-five-day period beginning on the date of such sale, reduced by any portion of such cost previously  taken into  account  under  this paragraph. For purposes of this paragraph the following shall apply:  (1) A qualified investment is stock of a corporation or  an  interest, other  than as a creditor, in a partnership or limited liability company that was acquired by the taxpayer as provided in Internal Revenue Code § 1202(c)(1)(B), except that the reference to the  term  "stock"  in  such section  shall be read as "investment," or by the taxpayer from a person who had acquired such stock or interest in such a manner.  (2)  A  qualified  emerging  technology  investment  is  a   qualified investment,  that  was  held  by  the  taxpayer  for at least thirty-six months, in a company defined in paragraph  (c)  of  subdivision  one  of section  thirty-one  hundred  two-e  of the public authorities law or an investment in a partnership or limited liability company that  is  taxed as  a  partnership  to  the  extent  that  such  partnership  or limited liability company invests in qualified emerging technology companies.  (3) For purposes of determining whether  the  nonrecognition  of  gain under  this  subsection  applies  to  a  qualified emerging technologies investment  that  is  sold,  the  taxpayer's  holding  period  for  such investment  and  the  qualified emerging technologies investment that is purchased shall be determined without regard to Internal Revenue Code  § 1223.  (m)  Amounts deferred. The amount deferred under paragraph (l) of this subdivision shall be added to entire net income when the reinvestment in the New York qualified emerging technology  company  which  qualified  a taxpayer for such deferral is sold.  (n-1)  For  taxable  years  beginning after December thirty-first, two thousand two, in the case of qualified property described  in  paragraph two  of  subsection k of section 168 of the internal revenue code, other than qualified resurgence zone property described in  paragraph  (q)  of this  subdivision,  and  other  than  qualified  New  York  Liberty Zone property described in paragraph two of subsection b of section 1400L  of the  internal revenue code (without regard to clause (i) of subparagraph (C) of such paragraph), which was placed in service  on  or  after  June first,  two  thousand three, a taxpayer shall be allowed with respect to such property the depreciation deduction allowable under section 167  of the  internal  revenue  code  as such section would have applied to such property had it been acquired by the taxpayer on  September  tenth,  two thousand one.  (o)  Related  members  expense  add back. (1) Definitions. (A) Related member.  "Related  member"  means  a  related  person  as   defined   in subparagraph  (c)  of  paragraph three of subsection (b) of section four  hundred sixty-five of the internal  revenue  code,  except  that  "fifty percent" shall be substituted for "ten percent".  (B)  Effective  rate  of tax. "Effective rate of tax" means, as to any state or U.S. possession, the maximum statutory rate of tax  imposed  by the  state or possession on or measured by a related member's net income multiplied by the apportionment percentage, if any,  applicable  to  the related member under the laws of said jurisdiction. For purposes of this definition, the effective rate of tax as to any state or U.S. possession is  zero  where  the  related  member's net income tax liability in said jurisdiction is reported on a combined or consolidated return  including both the taxpayer and the related member where the reported transactions between  the  taxpayer  and the related member are eliminated or offset. Also, for purposes of this definition, when computing the effective rate of tax for a jurisdiction in which a  related  member's  net  income  is eliminated or offset by a credit or similar adjustment that is dependent upon  the  related  member  either  maintaining  or  managing intangible property or collecting interest income in that jurisdiction, the maximum statutory rate of tax imposed by said jurisdiction shall be decreased to reflect the statutory rate of tax that applies to the related member  as effectively reduced by such credit or similar adjustment.  (C) Royalty payments. Royalty payments are payments directly connected to  the  acquisition,  use,  maintenance or management, ownership, sale, exchange, or any other disposition of licenses, trademarks,  copyrights, trade  names,  trade  dress,  service  marks, mask works, trade secrets, patents and any other similar types of intangible assets  as  determined by   the   commissioner,  and  include  amounts  allowable  as  interest deductions under section one hundred sixty-three of the internal revenue code to the extent such amounts are directly or indirectly for,  related to   or   in  connection  with  the  acquisition,  use,  maintenance  or management, ownership, sale, exchange or disposition of such  intangible assets.  (D)  Valid  Business  Purpose. A valid business purpose is one or more business purposes, other than the avoidance or  reduction  of  taxation, which alone or in combination constitute the primary motivation for some business  activity or transaction, which activity or transaction changes in a meaningful way, apart from tax effects, the  economic  position  of the taxpayer. The economic position of the taxpayer includes an increase in  the  market share of the taxpayer, or the entry by the taxpayer into new business markets.  (2) Royalty expense add backs. (A) Except where a taxpayer is included in a combined report with a  related  member  pursuant  to  section  two hundred  ten-C  of this article, for the purpose of computing entire net income or other applicable taxable  basis,  a  taxpayer  must  add  back royalty  payments  directly  or indirectly paid, accrued, or incurred in connection with one or more direct or indirect transactions with one  or more related members during the taxable year to the extent deductible in calculating federal taxable income.  (B)  Exceptions.  (i)  The adjustment required in this paragraph shall not apply to the portion  of  the  royalty  payment  that  the  taxpayer establishes,  by  clear  and  convincing evidence of the type and in the form  specified  by  the  commissioner,  meets  all  of  the   following requirements: (I) the related member was subject to tax in this state or another  state or possession of the United States or a foreign nation or some combination thereof on a tax base that included the royalty payment paid, accrued or incurred by  the  taxpayer;  (II)  the  related  member during  the  same  taxable  year directly or indirectly paid, accrued or incurred such portion to a person that is  not  a  related  member;  and (III)  the  transaction  giving  rise to the royalty payment between the  taxpayer and the related member was  undertaken  for  a  valid  business purpose.  (ii)  The adjustment required in this paragraph shall not apply if the taxpayer establishes, by clear and convincing evidence of the  type  and in  the form specified by the commissioner, that: (I) the related member was subject to tax on or measured by its net income  in  this  state  or another  state  or  possession  of the United States or some combination thereof; (II) the tax base for said tax  included  the  royalty  payment paid,  accrued  or  incurred  by  the  taxpayer; and (III) the aggregate effective  rate  of  tax  applied  to  the  related  member   in   those jurisdictions  is  no  less than eighty percent of the statutory rate of tax that applied to the taxpayer under section two hundred ten  of  this article for the taxable year.  (iii) The adjustment required in this paragraph shall not apply if the taxpayer  establishes,  by clear and convincing evidence of the type and in the form specified by the commissioner, that: (I) the royalty payment was paid, accrued or incurred to a related member  organized  under  the laws  of  a  country  other  than  the  United  States; (II) the related member's income from the transaction  was  subject  to  a  comprehensive income  tax treaty between such country and the United States; (III) the related member was subject to tax in a foreign nation on a tax base that included the royalty payment paid, accrued or incurred by the  taxpayer; (IV)  the related member's income from the transaction was taxed in such country at an effective rate of tax at least equal to  that  imposed  by this  state;  and  (V) the royalty payment was paid, accrued or incurred pursuant to a transaction that  was  undertaken  for  a  valid  business purpose and using terms that reflect an arm's length relationship.  (iv)  The adjustment required in this paragraph shall not apply if the taxpayer and the commissioner agree in writing to the application or use of alternative adjustments or computations. The commissioner may, in his or her discretion, agree  to  the  application  or  use  of  alternative adjustments or computations when he or she concludes that in the absence of  such  agreement  the  income  of  the taxpayer would not be properly reflected.  (p) For taxable  years  beginning  after  December  thirty-first,  two thousand  two, upon the disposition of property to which paragraph (n-1) of this subdivision applies, the amount of any gain or  loss  includible in  entire  net  income  shall be adjusted to reflect the inclusions and exclusions from entire net income pursuant to subparagraph seventeen  of paragraph  (a)  and  subparagraph  seventeen  of  paragraph  (b) of this subdivision attributable to such property.  (q) For purposes of paragraphs (n-1)  and  (p)  of  this  subdivision, qualified   resurgence  zone  property  shall  mean  qualified  property described in paragraph two  of  subsection  k  of  section  168  of  the internal  revenue  code  substantially all of the use of which is in the resurgence zone, as defined below, and is in the  active  conduct  of  a trade  or business by the taxpayer in such zone, and the original use of which in the resurgence zone commences with the taxpayer after  December thirty-first,  two thousand two. The resurgence zone shall mean the area of New York county bounded on the south  by  a  line  running  from  the intersection  of  the  Hudson River with the Holland Tunnel, and running thence east to Canal Street, then running along the centerline of  Canal Street  to  the  intersection  of  the  Bowery and Canal Street, running thence in a southeasterly direction diagonally across  Manhattan  Bridge Plaza,  to  the  Manhattan Bridge and thence along the centerline of the Manhattan Bridge to the point where  the  centerline  of  the  Manhattan Bridge  would  intersect  with  the easterly bank of the East River, and bounded on the north by a line running  from  the  intersection  of  the  Hudson River with the Holland Tunnel and running thence north along West Avenue  to  the  intersection of Clarkson Street then running east along the centerline of Clarkson Street  to  the  intersection  of  Washington Avenue,  then running south along the centerline of Washington Avenue to the intersection of West Houston Street, then east along the  centerline of  West  Houston  Street, then at the intersection of the Avenue of the Americas continuing east along the centerline of East Houston Street  to the easterly bank of the East River.  (r)   Subtraction   modification   for   qualified   residential  loan portfolios.  (1)(A) A taxpayer that is either a  thrift  institution  as defined in subparagraph three of this paragraph or a qualified community bank as defined in subparagraph two of paragraph (s) of this subdivision and  maintains  a  qualified  residential  loan  portfolio as defined in subparagraph two of this paragraph shall be allowed as  a  deduction  in computing  entire net income the amount, if any, by which (i) thirty-two percent of its entire net  income  determined  without  regard  to  this paragraph  exceeds (ii) the amounts deducted by the taxpayer pursuant to sections 166 and 585 of the  Internal  Revenue  Code  less  any  amounts included in federal taxable income as a result of a recovery of a loan.  (B)(i)  If  the  taxpayer  is  in  a combined report under section two hundred ten-C of this article, this deduction  will  be  computed  on  a combined  basis. In that instance, the entire net income of the combined reporting group for purposes of this paragraph shall be multiplied by  a fraction,  the numerator of which is the average total assets of all the thrift institutions  and  qualified  community  banks  included  in  the combined report and the denominator of which is the average total assets of all the corporations included in the combined report.  (ii)  Measurement of assets. For purposes of this paragraph: (I) Total assets are those assets that are properly reflected on a balance  sheet, computed  in  the same manner as is required by the banking regulator of the taxpayers included in the combined return. In addition, total assets includes leased real property  that  is  not  properly  reflected  on  a balance sheet.  (II)  Assets  will only be included if the income or expenses of which are properly reflected (or would have been  properly  reflected  if  not fully  depreciated  or expensed, or depreciated or expensed to a nominal amount) in the computation of the combined group's entire net income for the taxable year. Assets  will  not  include  deferred  tax  assets  and intangible assets identified as "goodwill".  (III)  Tangible  real  and personal property, such as buildings, land, machinery, and equipment shall be valued at cost. Leased  real  property that  is not properly reflected on a balance sheet will be valued at the annual lease payment multiplied by eight. Intangible property,  such  as loans  and  investments,  shall  be  valued  at  book value exclusive of reserves.  (IV)  Intercorporate  stockholdings  and  bills,  notes  and  accounts receivable,   and   other   intercorporate   indebtedness   between  the corporations included in the combined report shall be eliminated.  (V) Average assets are computed using the assets measured on the first day of the taxable year, and on the last day of each subsequent  quarter of the taxable year or month or day during the taxable year.  (2)  Qualified  residential loan portfolio. (A) A taxpayer maintains a qualified residential loan portfolio if at least sixty  percent  of  the amount  of  the  total  assets  at  the close of the taxable year of the thrift institution or qualified community bank consists  of  the  assets described   in  items  (i)  through  (xii)  of  this  clause,  with  the application of the rule in item (xiii). If the taxpayer is a member of a combined group, the  determination  of  whether  there  is  a  qualified  residential loan portfolio will be made by aggregating the assets of the thrift  institutions  and  qualified community banks that are members of the combined group.   Assets:  (i)  cash,  which  includes  cash  and cash equivalents including cash items in  the  process  of  collection,  deposit  with  other  financial institutions,  including  corporate credit unions, balances with federal reserve banks and federal home loan banks, federal funds sold, and  cash and  cash  equivalents  on  hand.  Cash  shall  not include any balances serving as collateral for securities lending transactions;  (ii) obligations of the United States  or  of  a  state  or  political subdivision  thereof, and stock or obligations of a corporation which is an instrumentality or a government sponsored enterprise  of  the  United States or of a state or political subdivision thereof;  (iii) loans secured by a deposit or share of a member;  (iv)  loans  secured by an interest in real property which is (or from the proceeds of the loan, will become) residential real property or real property  used  primarily  for  church  purposes,  loans  made  for  the improvement of residential real property or real property used primarily for   church   purposes,  provided  that  for  purposes  of  this  item, residential  real  property  shall  include   single   or   multi-family dwellings,  facilities  in  residential developments dedicated to public use or property used on a nonprofit  basis  for  residents,  and  mobile homes not used on a transient basis;  (v)  property  acquired  through  the  liquidation  of defaulted loans described in item (iv) of this clause;  (vi) any regular or residual interest in a  REMIC,  as  such  term  is defined  in  section  860D of the internal revenue code, but only in the proportion which the assets of such REMIC consist of property  described in any of the preceding items of this clause, except that if ninety-five percent  or  more  of  the  assets of such REMIC are assets described in items (i) through (v) of this clause, the entire interest in  the  REMIC shall qualify;  (vii)  any  mortgage-backed  security  which represents ownership of a fractional undivided interest in a trust, the assets  of  which  consist primarily  of  mortgage  loans,  provided  that  the real property which serves as security for the loans is (or from the proceeds of  the  loan, will  become) the type of property described in item (iv) of this clause and any collateralized  mortgage  obligation,  the  security  for  which consists  primarily of mortgage loans that maintain as security the type of property described in item (iv) of this clause;  (viii) certificates of deposit in, or obligations  of,  a  corporation organized   under   a  state  law  which  specifically  authorizes  such corporation  to  insure  the  deposits  or  share  accounts  of   member associations;  (ix)  loans  secured by an interest in educational, health, or welfare institutions  or  facilities,  including  structures  designed  or  used primarily  for residential purposes for students, residents, and persons under care, employees, or members of the staff of such  institutions  or facilities;  (x)  loans  made  for the payment of expenses of college or university education or vocational training;  (xi) property used by  the  taxpayer  in  support  of  business  which consists  principally  of  acquiring  the  savings  of  the  public  and investing in loans; and  (xii) loans for which the taxpayer  is  the  creditor  and  which  are wholly secured by loans described in item (iv) of this clause.  (xiii)  The  value of accrued interest receivable and any loss-sharing commitment or other loan guaranty  by  a  governmental  agency  will  be considered  part of the basis in the loans to which the accrued interest or loss protection applies.  (B)  At  the  election  of  the  taxpayer, the percentage specified in clause (A) of this subparagraph shall be applied on  the  basis  of  the average assets outstanding during the taxable year, in lieu of the close of  the taxable year. The taxpayer can elect to compute an average using the assets measured on the first day of the taxable year and on the last day of each subsequent quarter, or month or day during the taxable year. This election may be made annually.  (C) For purposes of item (iv) of clause (A) of this subparagraph, if a multifamily structure securing a loan is used in part for nonresidential use purposes, the entire loan is deemed a residential real property loan if the planned residential use exceeds eighty percent of the  property's planned  use  (measured,  at  the  taxpayer's  election, by using square footage or gross rental revenue, and determined as of the time the  loan is made).  (D)  For  purposes  of  item  (iv) of clause (A) of this subparagraph, loans made to finance the acquisition or development of  land  shall  be deemed  to  be loans secured by an interest in residential real property if there is  a  reasonable  assurance  that  the  property  will  become residential  real  property within a period of three years from the date of acquisition of such land; but this sentence shall not apply  for  any taxable  year  unless,  within such three year period, such land becomes residential real property.  For  purposes  of  determining  whether  any interest  in  a  REMIC  qualifies  under item (vi) of clause (A) of this subparagraph, any regular interest in another REMIC held by  such  REMIC shall  be  treated  as  a  loan  described  in  a  preceding  item under principles similar to the principle of such item (vi),  except  that  is such REMICs are part of a tiered structure, they shall be treated as one REMIC for purposes of such item (vi).  (3)  For  purposes  of  this  paragraph,  a  "thrift institution" is a savings  bank,  a  savings  and  loan  association,  or  other   savings institution chartered and supervised as such under federal or state law.  (s)  Subtraction  modification  for community banks and small thrifts. (1) A taxpayer  that  is  a  qualified  community  bank  as  defined  in subparagraph  two  of  this  paragraph  or a small thrift institution as defined in subparagraph two-a of  this  paragraph  shall  be  allowed  a deduction  in  computing  entire net income equal to the amount computed under subparagraph three of this paragraph.  (2) To be a qualified community bank,  a  taxpayer  must  satisfy  the following conditions.  (A)  It  is  a bank or trust company organized under or subject to the provisions of article three of the banking law or a comparable provision of the laws of another state, or a national banking association.  (B) The average value during the taxable year of  the  assets  of  the taxpayer,  or,  if  the  taxpayer  is included in a combined report, the assets of the combined reporting group of the taxpayer under section two hundred ten-C of this article, must not exceed eight billion dollars.  (2-a) To be a small thrift institution, a taxpayer  must  satisfy  the following conditions.  (A)  It  is  a  savings bank, a savings and loan association, or other savings institution chartered and supervised as such  under  federal  or state law.  (B)  The  average  value  during the taxable year of the assets of the taxpayer, or, if the taxpayer is included  in  a  combined  report,  the  assets of the combined reporting group of the taxpayer under section two hundred ten-C of this article, must not exceed eight billion dollars.  (3)(A) The subtraction modification shall be computed as follows:  (i)  Multiply the taxpayer's net interest income from loans during the taxable year by a fraction, the numerator of which is the gross interest income during the taxable year from qualifying loans and the denominator of which is the gross interest income during the taxable year  from  all loans.  (ii)  Multiply  the  amount determined in clause (i) by fifty percent. This  product  is  the  amount  of  the  deduction  allowed  under  this paragraph.  (B)(i) Net interest income from loans shall mean gross interest income from  loans  less  gross  interest  expense  from  loans. Gross interest expense from loans is determined by multiplying gross  interest  expense by  a  fraction,  the  numerator  of which is the average total value of loans owned by the thrift  institution  or  community  bank  during  the taxable year and the denominator of which is the average total assets of the thrift institution or community bank during the taxable year.  (ii) Measurement of assets. (I) Total assets are those assets that are properly reflected on a balance sheet, computed in the same manner as is required  by  the  banking  regulator  of  the taxpayers included in the combined return. In addition, total assets includes leased real property that is not properly reflected on a balance sheet.  (II) Assets will only be included if the income or expenses  of  which are  properly  reflected  (or  would have been properly reflected if not fully depreciated or expensed, or depreciated or expensed to  a  nominal amount)  in  the computation of the taxpayer's entire net income for the taxable year. Assets will not include deferred tax assets and intangible assets identified as "goodwill".  (III) Tangible real and personal property, such  as  buildings,  land, machinery,  and  equipment shall be valued at cost. Leased real property that is not properly reflected on that balance sheet will be  valued  at the  annual lease payment multiplied by eight. Intangible property, such as loans and investments, shall be valued at  book  value  exclusive  of reserves.  (IV)  Average  assets  are  computed  using the assets measured on the first day of the taxable year, and on the last day  of  each  subsequent quarter of the taxable year or month or day during the taxable year.  (C) A qualifying loan is a loan that meets the conditions specified in subclause (i) of this clause and subclause (ii) of this clause.  (i)  The  loan  is originated by the qualified community bank or small thrift institution or purchased by the qualified community bank or small thrift institution immediately after its origination in connection  with a commitment to purchase made by the bank or thrift institution prior to the loan's origination.  (ii) The loan is a small business loan or a residential mortgage loan, the  principal amount of which loan is five million dollars or less, and either the borrower is located in this state as determined under section two hundred ten-A of this article and the loan is not  secured  by  real property, or the loan is secured by real property located in New York.  (iii) A loan that meets the definition of a qualifying loan in a prior taxable  year  (including  years  prior  to  the  effective date of this paragraph) remains a qualifying loan in taxable years during  and  after which  such  loan  is  acquired by another corporation in the taxpayer's combined reporting  group  under  section  two  hundred  ten-C  of  this article.  (t)  A  small  thrift  institution  or  a qualified community bank, as defined in paragraph (s) of this subdivision, that maintained a  captive  REIT  on  April  first,  two  thousand  fourteen  shall  utilize  a REIT subtraction equal to one hundred sixty percent  of  the  dividends  paid deductions allowed to that captive REIT for the taxable year for federal income  tax purposes and shall not be allowed to utilize the subtraction modification for qualified residential loan portfolios  under  paragraph (r)  of  this  subdivision or the subtraction modification for community banks and small thrifts under paragraph (s) of this subdivision  in  any tax  year  in  which such thrift institution or community bank maintains that captive REIT.   10. The term "calendar year" means a period of twelve calendar  months (or  any  shorter  period  beginning  on  the  date the taxpayer becomes subject to the tax imposed by this article) ending on  the  thirty-first day  of  December, provided the taxpayer keeps its books on the basis of such period or on the basis of any period ending on any day  other  than the last day of a calendar month, or provided the taxpayer does not keep books,  and  includes,  in  case  the taxpayer changes the period on the basis of which it keeps its books from a fiscal year to a calendar year, the period from the close  of  its  last  old  fiscal  year  up  to  and including  the  following  December thirty-first. The term "fiscal year" means a  period  of  twelve  calendar  months  (or  any  shorter  period beginning on the date the taxpayer becomes subject to the tax imposed by this  article)  ending on the last day of any month other than December, provided the taxpayer keeps its books on the basis of such  period,  and includes,  in case the taxpayer changes the period on the basis of which it keeps it books from a calendar year to a  fiscal  year  or  from  one fiscal  year  to  another  fiscal year, the period from the close of its last old calendar or fiscal year up to the date designated as the  close of its new fiscal year.   11.  The  term  "tangible  personal property" means corporeal personal property,  such  as  machinery,  tools,  implements,  goods,  wares  and merchandise,  and  does  not  mean  money,  deposits in banks, shares of stock, bonds, notes, credits or evidences of an interest in property and evidences of debt.   12. The term elected or appointed officer shall include the  chairman, president,  vice-president,  secretary,  assistant secretary, treasurer, assistant  treasurer,  comptroller,  and   also   any   other   officer, irrespective  of  his title, who is charged with and performs any of the regular functions of any such officer, unless the total compensation  of such  officer  is derived exclusively from the receipt of commissions. A director shall be considered an elected or appointed officer only if  he performs duties ordinarily performed by an officer.