NY Tax L § 612 (2021)
2021 New York Laws TAX - Tax Article 22 - Personal Income Tax Part 2 - Residents 612 - New York Adjusted Gross Income of a Resident Individual.

§  612.  New  York adjusted gross income of a resident individual. (a) General. The New York adjusted gross income  of  a  resident  individual means  his  federal  adjusted gross income as defined in the laws of the United States for the taxable year, with the modifications specified  in this section.  (b)  Modifications  increasing  federal  adjusted  gross income. There shall be added to federal adjusted gross income:  (1) Interest income on obligations of any state other than this state, or of a political subdivision of any such other state unless created  by compact  or  agreement to which this state is a party, to the extent not properly includible in federal adjusted gross income;  (2) Interest or dividend income on obligations or  securities  of  any authority,  commission,  or  instrumentality of the United States, which the laws of the United States exempt from federal  income  tax  but  not from state income taxes;  (3)  Income  taxes. (A) General. Income taxes imposed by this state or any other taxing jurisdiction, to the extent deductible  in  determining federal  adjusted  gross  income and not credited against federal income tax.  (B) Shareholders of S corporations. In the case of a shareholder of an S corporation, with respect to taxes imposed  upon  or  payable  by  the corporation,  the  term  "income  taxes"  in  subparagraph  (A)  of this paragraph shall also include the taxes imposed under article  nine-A  of this  chapter,  regardless  of  the  measure  of such tax, but shall not otherwise include taxes imposed by this or any other state of the United States, or any political subdivision of this or any other state, or  the District of Columbia.  (4)  Interest  on  indebtedness  incurred  or continued to purchase or carry obligations or securities the interest on which is exempt from tax under this article, to the  extent  deductible  in  determining  federal adjusted gross income.  (5)  Expenses  paid  or  incurred  during the taxable year for (i) the production or collection of income which is exempt from tax  under  this article, or (ii) the management, conservation or maintenance of property held for the production of such income, and the amortizable bond premium for  the  taxable  year on any bond the interest on which is exempt from tax under this article, to the extent that such  expenses  and  premiums are deductible in determining federal adjusted gross income.  (6) In the case of a taxpayer who has exercised the election permitted by subsection (g) or (h) of this section, the amount or amounts required by said subsections to be added to federal adjusted gross income.  (7)  In  the  case of a taxpayer who is a shareholder of a corporation organized under article fifteen or authorized to  do  business  in  this state  under  article fifteen-a of the business corporation law, for the taxpayer's taxable years beginning before nineteen hundred eighty-eight, the amount which is deductible by such corporation under paragraph  one, two  or  three  of  subsection  (a)  of section four hundred four of the internal revenue code for its  taxable  year  ending  in  or  with  such taxpayer's  taxable  year  for  contributions  paid  on  behalf  of such taxpayer minus the lesser of fifteen thousand dollars or fifteen percent of the earned income derived by  such  taxpayer  from  such  corporation during  such taxpayer's taxable year. In the case of a taxpayer on whose behalf contributions are paid under more than one  plan  to  which  this paragraph  applies or under a plan, contributions to which on his behalf are subject to the limitations provided in section four hundred four (e) of the internal revenue code, this paragraph shall apply with respect to the aggregate of the contributions paid on his  behalf  under  all  such plans.  (8)  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 subsection  (m)  of this  section,  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.  (10) The amount required to be added to federal adjusted gross  income pursuant to subsection (i) of this section.  (15)  In  those  instances  where  a credit for the special additional mortgage recording tax is allowed under paragraph one of subsection  (f) or  paragraph  one  of subsection (i) of section six hundred six of this article, the amount allowed as an exclusion or deduction for the special additional mortgage recording taxes  imposed  by  subdivision  one-a  of section  two  hundred fifty-three of this chapter in determining federal adjusted gross income.  (16) Unless the credit allowed pursuant to subsection (f)  of  section six  hundred  six 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  in 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.  (17) The amount required to be added to federal adjusted gross  income pursuant to subsection (r) of this section.  (18) In the case of a shareholder of an S corporation  (A)  where  the election provided for in subsection (a) of section six hundred sixty is in effect with respect to such corporation,  an  amount equal  to  his  pro rata share of the corporation's reductions for taxes described in paragraphs two and  three  of  subsection  (f)  of  section thirteen hundred sixty-six of the internal revenue code, and  (B)  in the case of a New York S termination year, subparagraph (A) of this paragraph shall  apply  to  the  amount  of  reductions  for  taxes determined under subsection (s) of this section.  (19) In the case of a shareholder of an S corporation  (A)  where  the election provided for in subsection (a) of section six hundred sixty has not been made with respect to  such  corporation,  any item  of  loss or deduction of the corporation included in federal gross income pursuant to section thirteen hundred sixty-six  of  the  internal revenue code, and  (B)  in the case of a New York S termination year, subparagraph (A) of this  paragraph  shall  apply  to  the  amounts  of  loss  or  deduction determined under subsection (s) of this section.  (20) S corporation distributions to the extent not included in federal gross  income for the taxable year because of the application of section thirteen hundred sixty-eight, subsection (e) of section thirteen hundred seventy-one or subsection (c) of section thirteen  hundred  seventy-nine of  the  internal  revenue  code  which  represent income not previously subject to tax under this article because the election provided  for  in  subsection  (a) of section six hundred sixty had not been made. Any such distribution treated  in  the  manner  described  in  paragraph  two  of subsection  (b)  of section thirteen hundred sixty-eight of the internal revenue  code  for  federal  income  tax  purposes  shall  be treated as ordinary income for purposes of this article.  (21) In relation to the disposition of  stock  or  indebtedness  of  a corporation  which  elected  under  subchapter  s  of chapter one of the internal  revenue  code  for  any  taxable  year  of  such   corporation beginning,  in the case of a corporation taxable under article nine-A of this chapter, after December thirty-first, nineteen hundred eighty,  the amount required to be added to federal adjusted gross income pursuant to subsection (n) of this section.  (22) The amounts required to be added to federal adjusted gross income pursuant to subsection (q) of this section.  (23) 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), any amount which  the  taxpayer  claimed  as  a  deduction in computing its federal adjusted gross 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.  (24) 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), any amount which  the  taxpayer  would  have  been  required  to  include  in   the computation  of  its  federal  adjusted gross 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.  (25) 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, the amount allowable as a deduction determined  under  section  one  hundred sixty-eight of the internal revenue code.   * (26)  The amount of member or employee contributions to a retirement system or pension fund picked up or paid by  the  employer  pursuant  to subdivision  f  of  section  five  hundred seventeen or subdivision d of section six hundred thirteen of the retirement and social  security  law or  section  13-225.1,  13-327.1,  13-125.1, 13-125.2 or 13-521.1 of the administrative code of the city of New York or subdivision  nineteen  of section twenty-five hundred seventy-five of the education law.   * NB Effective until ch 525/2011 § 3 takes effect   * (26)  The amount of member or employee contributions to a retirement system or pension fund picked up or paid by  the  employer  pursuant  to subdivision  f  of  section  five  hundred  seventeen,  subdivision d of section six hundred thirteen or section twelve  hundred  four-a  of  the retirement  and  social  security  law  or  section  13-225.1, 13-327.1, 13-125.1, 13-125.2 or 13-521.1 of the administrative code of the city of  New  York  or  subdivision  nineteen  of  section  twenty-five   hundred seventy-five of the education law.   * NB See ch 525/2011 § 7 for effectiveness   * (26)  The amount of member or employee contributions to a retirement system or pension fund picked up or paid by  the  employer  pursuant  to subdivision  f  of  section  five  hundred seventeen or subdivision d of section six hundred thirteen of the retirement and social  security  law or  section 13-225.1, 13-327.1 or 13-125.1 of the administrative code of the city of New York.   * NB Effective upon the expiration of ch 525/2011 § 3  (26-a) The amount of member or employee contributions to a  retirement system  or pension fund picked up or paid by the employer for members of the Manhattan and Bronx surface transportation  authority  pension  plan and   treated  as  employer  contributions  in  determining  income  tax treatment under section 414(h) of the Internal Revenue Code.  (27) Upon the disposition of property to which paragraph twenty-six of subsection (c) of this section applies, the amount, if any, by which the aggregate of the modifications described in  such  paragraph  twenty-six attributable to such property exceeds the aggregate of the modifications described  in  paragraph  twenty-five of this subsection attributable to such property.  (29) When gain from the sale  or  other  disposition  of  property  is included  in  federal gross income, the amount of reduction in the basis of such property attributable  to  credit  for  solar  and  wind  energy systems  pursuant  to  paragraph  nine  of subsection (g) of section six hundred six; but for taxable years  beginning  before  nineteen  hundred eighty-seven,  if  such  gain affects the determination of a net capital gain for federal income tax purposes, forty percent of such amount.  (31) The amount deducted or deferred from an employee's salary under a flexible benefits program established pursuant to  section  twenty-three of  the  general municipal law or section one thousand two hundred ten-a of the public authorities law.  (32) The amount by which an employee's salary is reduced  pursuant  to the provisions of subdivision b of section 12-126.1 and subdivision b of section 12-126.2 of the administrative code of the city of New York.  (33)  Real  property taxes paid on qualified agricultural property and deducted in determining federal adjusted gross income, to the extent  of the  amount  of  the  agricultural  property  tax  credit  allowed under subsection (n) or (i) of section six hundred six of this article.  (34) (A) Excess distributions received during the taxable  year  by  a distributee  of  a family tuition account established under the New York state college choice tuition savings program provided for under  article fourteen-A of the education law, to the extent such excess distributions are  deemed  attributable  to  deductible  contributions under paragraph thirty-two of subsection (c) of this section.  (B) (i) The term "excess distributions" means distributions which  are not  (I)  qualified  withdrawals  within the meaning of subdivision nine of section six hundred ninety-five-b of the education law;  (II) withdrawals made as a result of the death or  disability  of  the designated  beneficiary within the meaning of subdivision ten of section six hundred ninety-five-b of such law; or  (III) transfers described in paragraph b of subdivision six of section six hundred ninety-five-e of such law.  (ii) Excess distributions shall be deemed attributable  to  deductible contributions  to the extent the amount of any such excess distribution, when added to  all  previous  excess  distributions  from  the  account, exceeds the aggregate of all nondeductible contributions to the account.  (35) The amounts required to be added to federal adjusted gross income pursuant to subsection (v) of this section.  (36)  In  the  case  of  a  taxpayer  who is not an eligible farmer as defined in subsection (n) of section six hundred six  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.  (37) 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 subsection (ff) of section six hundred six of this article.  (38)  The  amount  of  any  deduction  allowed pursuant to section one hundred ninety-nine of the internal revenue code.  (39) The amount of any  federal  deduction  for  taxes  imposed  under article twenty-three of this chapter.  (39-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  tax-free  NY  area  excise  tax  on telecommunication services  credit  allowed  under  subsection  (yy)  of section six hundred six of this article.   * (40)  in  the case of a beneficiary of a trust that, in any tax year after its creation including its first tax year, was not subject to  tax pursuant  to  subparagraph  (D)  of paragraph three of subsection (b) of section six hundred five of this article (except for an incomplete  gift non-grantor   trust,   as   defined   by  paragraph  forty-one  of  this subsection), the amount described in the first sentence of  section  six hundred sixty-seven of the internal revenue code for the tax year to the extent  not  already  included in federal gross income for the tax year, except that, in computing the amount to be added under  this  paragraph, such  beneficiary  shall  disregard  (i)  subsection  (c) of section six hundred sixty-five of the internal revenue code; (ii) the income  earned by  such  trust  in  any  tax year in which the trust was subject to tax under this article; and (iii) the income  earned  by  such  trust  in  a taxable  year  prior  to when the beneficiary first became a resident of the state or in any taxable year  starting  before  January  first,  two thousand  fourteen.  Except as otherwise provided in this paragraph, all of the provisions of the internal revenue  code  that  are  relevant  to computing  the  amount described in the first sentence of subsection (a) of section six hundred sixty-seven of the internal  revenue  code  shall apply to the provisions of this paragraph with the same force and effect as  if  the  language of those internal revenue code provisions had been incorporated in full into this paragraph, except to the extent that  any such  provision  is  either  inconsistent  with  or not relevant to this paragraph.   * NB There are 2 par (40)'s   * (40) 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 subsection (xx) of section six hundred six of this article.   * NB There are 2 par (40)'s  (41) In the  case  of  a  taxpayer  who  transferred  property  to  an incomplete  gift  non-grantor  trust,  the income of the trust, less any deductions of the trust, to the extent such  income  and  deductions  of such  trust  would  be  taken  into  account in computing the taxpayer's federal taxable income if such trust in its entirety were treated  as  a grantor  trust for federal tax purposes. For purposes of this paragraph,  an "incomplete gift non-grantor trust" means a resident trust that meets the following conditions: (i) the trust does not qualify  as  a  grantor trust   under  section  six  hundred  seventy-one  through  six  hundred seventy-nine  of  the  internal  revenue  code,  and  (2)  the grantor's transfer of assets to the trust is treated as an incomplete  gift  under section twenty-five hundred eleven of the internal revenue code, and the regulations thereunder.  (42) 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) Modifications reducing federal adjusted gross income. There  shall be subtracted from federal adjusted gross income:  (1)  Interest  income  on  obligations  of  the  United States and its possessions to the extent includible in gross income for federal  income tax  purposes; such interest income shall include the amount received as dividends from a regulated investment company,  as  defined  in  section eight  hundred  fifty-one  of  the internal revenue code, which has been designated as the amount of such interest income in a written notice  to shareholders  not  later  than  sixty  days  following  the close of its taxable year; provided that, at the close of each quarter of the taxable year of such regulated investment company, at least fifty percent of the value of its total assets, as defined in subsection (c) of section eight hundred fifty-one of the internal revenue code, consists of  obligations of  the  United  States  and  its  possessions.  The aggregate amount so designated by the regulated investment  company  for  its  taxable  year shall  not  exceed  the  amount  determined  by  multiplying  the  total distributions  paid  by  such  regulated  investment  company   to   its shareholders  with  respect to that taxable year (attributable to income earned in that year), including any such distributions  paid  after  the close  of  the  taxable  year,  as  described  in  section eight hundred fifty-five of the internal revenue code, by the ratio that the  interest income received in that taxable year on obligations of the United States and  its  possessions,  after  reduction for the deductions and expenses directly or indirectly attributable thereto,  bears  to  the  investment company  taxable  income  of  such regulated investment company for such taxable year, determined without regard to subparagraph (D) of paragraph two of subsection (b) of section eight hundred fifty-two of the internal revenue code;  (2) Interest or dividend income on obligations or  securities  of  any authority,  commission  or  instrumentality  of the United States to the extent includible in gross income for federal income  tax  purposes  but exempt from state income taxes under the laws of the United States;  (3)  (i)  Pensions  to  officers  and  employees  of  this  state, its subdivisions and agencies, to the extent includible in gross income  for federal income tax purposes;  (ii)  Pensions  to  officers  and  employees  of  the United States of America, any territory or possession or political  subdivision  of  such territory  or  possession,  the  District  of Columbia, or any agency or instrumentality of any one of the foregoing, to the extent includible in gross income for federal income tax purposes;  (3-a) Pensions  and  annuities  received  by  an  individual  who  has attained  the  age  of  fifty-nine  and one-half, not otherwise excluded pursuant to paragraph three of this subsection, to the extent includible in gross income for federal income tax purposes, but not  in  excess  of twenty  thousand  dollars,  which  are periodic payments attributable to personal services performed by such individual prior to  his  retirement from  employment, which arise (i) from an employer-employee relationship or (ii) from contributions to a retirement plan which are deductible for  federal income tax purposes. However, the term "pensions and  annuities" shall  also  include  distributions  received  by  an individual who has attained  the  age  of  fifty-nine  and  one-half  from  an   individual retirement  account  or  an individual retirement annuity, as defined in section  four  hundred  eight  of  the  internal   revenue   code,   and distributions  received  by  an  individual  who has attained the age of fifty-nine and one-half from self-employed individual and owner-employee retirement plans which qualify under section four  hundred  one  of  the internal  revenue  code,  whether  or  not  the payments are periodic in nature. Nevertheless,  the  term  "pensions  and  annuities"  shall  not include  any  lump  sum  distribution, as defined in subparagraph (D) of paragraph four of subsection (e) of section  four  hundred  two  of  the internal  revenue code and taxed under section six hundred three of this article. Where a husband and wife file a joint state personal income tax return, the  modification  provided  for  in  this  paragraph  shall  be computed  as  if  they  were  filing  separate state personal income tax returns. Where a payment would otherwise come within the meaning of  the term  "pensions  and  annuities"  as set forth in this paragraph, except that such individual is deceased, such payment shall,  nevertheless,  be treated  as  a pension or annuity for purposes of this paragraph if such payment is received by such individual's beneficiary.  (3-b) (i) Disability income included in federal gross income,  to  the extent that such disability income would have been excluded from federal gross income pursuant to the provisions of subsection (d) of section one hundred five of the internal revenue code of nineteen hundred fifty-four had  such  provisions  continued  in effect for taxable years commencing after December thirty-first, nineteen hundred eighty-three as they  were in   effect   immediately  prior  to  the  repeal  of  such  subsection. Notwithstanding the foregoing, the sum  of  disability  income  excluded pursuant  to  this  paragraph,  and  pension and annuity income excluded pursuant to paragraph three-a  of  this  subsection,  shall  not  exceed twenty thousand dollars.  (ii)  Notwithstanding subsection (f) of this section, if a husband and wife determine their federal income  tax  on  a  joint  return  but  are required  to  determine  their  New  York  income  taxes separately, the amounts of exclusion allowed under subparagraph (i)  of  this  paragraph shall  be determined in the same joint manner as such amounts would have been determined under the provisions of paragraph five of subsection (d) of section one hundred  five  of  the  internal  revenue  code  as  such provisions  were  in  effect  immediately  prior  to  the repeal of such subsection, but shall be attributed for New York income tax purposes  to the  spouse  who  would  have been required to report any such amount as income  if  the  spouses  had  determined  their  federal  income  taxes separately.  (iii)  Where  a husband and wife file a joint state income tax return, the twenty thousand dollar limitation provided in  subparagraph  (i)  of this  paragraph  shall  be applied as if they were filing separate state income tax returns.  (3-c) Social security benefits  to  the  extent  includible  in  gross income for federal income tax purposes pursuant to section eighty-six of the internal revenue code.  (4)  The  portion  of  any gain, from the sale or other disposition of property having a higher adjusted basis for New York income tax purposes than for federal income tax purposes on the last day of the last taxable year for which article sixteen imposes  tax,  as  such  article  was  in effect on such date, that does not exceed such difference in basis.  (5) The amount necessary to prevent the taxation under this article of any  annuity  or  other  amount  of  income  or  gain which was properly  included in income or gain and was taxable  under  article  sixteen  (as such  article  was  in  effect  on  December thirtieth, nineteen hundred sixty) to the taxpayer, or to a decedent by reason of  whose  death  the taxpayer acquired the right to receive the income or gain, or to a trust or estate from which the taxpayer received the income or gain;  (6)  Interest  or  dividend income on obligations or securities to the extent exempt from income tax under the laws of this  state  authorizing the  issuance  of such obligations or securities but includible in gross income for federal income tax purposes; and  (7) The amount of any refund or credit for overpayment of income taxes imposed by this state, or any other taxing jurisdiction, and  any  taxes imposed  by article twenty-three of this chapter, to the extent properly included in gross income for federal income tax purposes.  (8) Compensation received for active service in the  armed  forces  of the United States on or after October first, nineteen hundred sixty-one, and  prior  to  September  first,  nineteen hundred sixty-two; provided, however, that the amount of such compensation to be deducted  shall  not exceed  one  hundred  dollars  for  each  month  of  the  taxable  year, subsequent to September, nineteen hundred sixty-one, during any part  of which  month  the taxpayer was engaged in such service. For the purposes of this paragraph, the words "active service in the armed forces of  the United  States"  shall mean active duty (other than for training) in the army, navy (including the marine corps), air force or coast guard of the United States as defined in title ten of the United States code.  (8-a) Compensation and bonuses received  for  active  service  in  the armed  forces of the United States while a prisoner of war or missing in action during the hostilities in Vietnam, to the  extent  includable  in gross income for federal income tax purposes.  (8-b) Income received by an individual who is a member of the New York state  organized  militia, as such term is defined in subdivision one of section two of the military law, as compensation for  performing  active service within the state pursuant to either (i) state active duty orders issued in accordance with subdivision one of section six of the military law  or  (ii)  active  service  of the United States pursuant to federal active  duty  orders,  for  service  other  than  training,  issued   in accordance with title 10 of the United States code.  (8-c)  Compensation  received for active service in the armed services of the United States in an area  designated  by  the  president  of  the United  States  by executive order as a "combat zone" at any time during the period designated by the president by executive order as the  period of  combatant  activities in such zone to the extent includable in gross income for federal income tax purposes.  (9) Interest on indebtedness incurred  or  continued  to  purchase  or carry  obligations or securities the interest on which is subject to tax under this article but exempt from federal income  tax,  to  the  extent that  such  interest  on  indebtedness  is not deductible in determining federal adjusted gross income and is attributable to a trade or business carried on by the taxpayer.  (10) Ordinary and necessary  expenses  paid  or  incurred  during  the taxable  year  for  (i)  the production or collection of income which is subject to tax under this article but exempt from federal income tax, or (ii) the management, conservation or maintenance of  property  held  for the  production of such income, and the amortizable bond premium for the taxable year on any bond the interest on which is subject to  tax  under this article but exempt from federal income tax, to the extent that such expenses and premiums are not deductible in determining federal adjusted gross  income  and are attributable to a trade or business carried on by the taxpayer.  (11) In the  case  of  a  taxpayer  who  has  exercised  the  election permitted  by  subsection  (g)  or  (h)  of  this section, the amount or amounts required by said  subsections  to  be  subtracted  from  federal adjusted gross income.  (12)  The amount necessary to prevent the taxation of amounts properly included in New York adjusted gross income in  prior  taxable  years  in accordance with paragraph seven of subsection (b).  (13)  The amount required to be subtracted from federal adjusted gross income pursuant to subsection (i) of this section.  (14) The amount that may be subtracted  from  federal  adjusted  gross income pursuant to subsection (j) of this section.  (15)  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.  (16)  for  taxable  years  beginning  after December thirty-first, two thousand two, the amount deductible pursuant to subsection (k)  of  this section.  (20)  The  amounts which may be subtracted from federal adjusted gross income pursuant to subsection (o) of this section.  (21) In relation to the disposition of  stock  or  indebtedness  of  a corporation  which  elected  under  subchapter  s  of chapter one of the internal  revenue  code  for  any  taxable  year  of  such   corporation beginning,  in the case of a corporation taxable under article nine-A of this chapter, after December thirty-first, nineteen hundred eighty,  the amounts  required  to  be  subtracted from federal adjusted gross income pursuant to subsection (n) of this section.  (22) In the case of a shareholder of an S corporation  (A)  where  the election provided for in subsection (a) of section six hundred sixty has not  been  made  with respect to such corporation, any item of income of the corporation included in federal gross  income  pursuant  to  section thirteen hundred sixty-six of the internal revenue code, and  (B)  in the case of a New York S termination year, subparagraph (A) of this paragraph shall apply to the amounts  of  income  determined  under subsection (s) of this section.  (23)  The  amounts which may be subtracted from federal adjusted gross income pursuant to subsection (p) of this section.  (24) 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), any amount which is included in the taxpayer's federal adjusted gross 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.  (25) 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), any amount which  the  taxpayer  could  have  excluded  from federal adjusted gross 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.  (26)  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, an amount with respect to property which is subject to  the  provisions  of section  one  hundred  sixty-eight of the internal revenue code equal to the amount allowable as the depreciation  deduction  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.  (28) Upon the disposition of property to which paragraph twenty-six of this  subsection  applies, the amount, if any, by which the aggregate of the modifications described in paragraph twenty-five of  subsection  (b) of  this  section attributable to such property exceeds the aggregate of the modifications described in paragraph twenty-six of  this  subsection attributable to such property.  (29)  Deduction  for  two-earner  married couples. (A) For the taxable year beginning in nineteen  hundred  eighty-seven,  in  the  case  of  a husband  and  wife  who each have qualified earned income and who file a joint return under subsection (b) of section six hundred  fifty-one  for the taxable year, an amount equal to ten percent of the lesser of:  (i) thirty thousand dollars or  (ii)  the  qualified  earned  income  of  the  spouse  with  the lower qualified earned income for such taxable year.  (B) For purposes of this  paragraph,  eligibility  for  the  deduction provided  for  herein  and  the  term  qualified  earned income shall be determined in the manner such  eligibility  and  such  qualified  earned income  would have been determined pursuant to the provisions of section two hundred twenty-one of the internal revenue code of nineteen  hundred fifty-four  had  such  provisions  continued in effect for taxable years commencing after December thirty-first, nineteen hundred  eighty-six  as they  were  in  effect  immediately prior to the repeal of such section. Provided, however, the determination of  such  qualified  earned  income shall be made with regard only to the items therein included in New York adjusted  gross  income,  with  such  adjusted  gross  income determined without regard to this paragraph, and only with regard to the deductions and exclusions which are of the type properly allowable to or chargeable against such qualified earned income in such taxable year.  (30) The amount received by any person as an  accelerated  payment  or payments  of part or all of the death benefit or special surrender value under a life insurance policy as  a  result  of  any  of  the  diagnoses specified  in subparagraph (A) or (B) of paragraph one of subsection (a) of section one thousand one hundred thirteen of the insurance  law,  and the  amount  received by any person as a viatical settlement pursuant to the provisions of article seventy-eight of the  insurance  law,  to  the extent includible in gross income for federal income tax purposes.  (32) Contributions made during the taxable year by an account owner to one or more family tuition accounts established under the New York state college  choice  tuition  savings  program  provided  for  under article fourteen-A of the  education  law,  to  the  extent  not  deductible  or eligible  for credit for federal income tax purposes, provided, however, the exclusion provided for in  this  paragraph  shall  not  exceed  five thousand dollars for an individual or head of household, and for married couples  who  file  joint  tax  returns,  shall  not exceed ten thousand dollars; provided, further, that such exclusion shall be available  only to the account owner and not to any other person.  (33) Distributions from a family tuition account established under the New York state college choice tuition savings program provided for under  article  fourteen-A  of  the  education law, to the extent includible in gross income for federal income tax purposes.   * (34)  The  portion  of  the  fees  paid during the taxable year by a taxpayer who is a resident of a continuing  care  retirement  community, issued  a  certificate of authority pursuant to article forty-six of the public health law, attributable to the cost of providing long term  care benefits pursuant to a continuing care contract. The portion of the fees so  attributable  shall  be  determined  in  accordance with regulations promulgated by the superintendent of financial services.  The  deduction may  not  exceed the limitation that would be applicable to the taxpayer for the taxable year, with respect to eligible long term care  premiums, determined  under paragraph (10) of subsection (d) of section 213 of the internal revenue code.   * NB There are 2 ù(34)'s   * (34) The amounts which may be subtracted from federal adjusted gross income pursuant to subsection (u) of this section.   * NB There are 2 ù(34)'s  (35) Distributions, to the  extent  includible  in  gross  income  for federal  income tax purposes, made to the taxpayer because of his or her status as a victim of Nazi persecution, as defined in P.L.  103-286,  or as a spouse or a descendant in need of such victim.  (36)  Items  of  income,  to the extent includible in gross income for federal income tax purposes, attributable to, derived from or in any way related to assets stolen from, hidden from or otherwise lost to a victim of Nazi persecution, as defined in P.L. 103-286, immediately  prior  to, during  and  immediately  after World War II, including, but not limited to, interest on the proceeds  receivable  as  insurance  under  policies issued  to  a victim of Nazi persecution, as defined in P.L. 103-286, by European insurance companies immediately prior to and during  World  War II.  Provided,  however,  this  subtraction from federal adjusted income does not apply to assets acquired with such assets or with the  proceeds from  the  sale  of such assets. Provided, further, this paragraph shall only apply to a taxpayer who was the  first  recipient  of  such  assets after their recovery and who is a victim of Nazi persecution, as defined in P.L. 103-286, or a spouse or a descendant of such victim.  (37) In the case of a taxpayer subject to the modification provided by paragraph  thirty-six  of  subsection  (b)  of  this section, 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.  (38) An amount of up to ten thousand  dollars  if  a  taxpayer,  while living,  donates one or more of his or her human organs to another human being for human organ transplantation. For purposes of  this  paragraph, "human organ" means all or part of a liver, pancreas, kidney, intestine, lung,  or  bone  marrow.  A  subtract  modification  allowed  under this paragraph shall be claimed in the taxable year in which the human  organ transplantation occurs.  (A)  A  taxpayer  shall  claim the subtract modification allowed under this paragraph only once and such subtract modification shall be claimed for only the following unreimbursed expenses which are incurred  by  the taxpayer and related to the taxpayer's organ donation:  (i) travel expenses;  (ii) lodging expenses; and  (iii) lost wages.  (B)  The  subtract modification allowed under this paragraph shall not be claimed by a part-year resident or a non-resident of this state.   * (39) Any income or gain, to the extent it  is  included  in  federal adjusted  gross  income of an individual who is the sole proprietor of a  qualified entity or a member of a limited liability company,  a  partner in a partnership or a shareholder in a New York subchapter S corporation that  is  a  qualified  entity,  attributable  to  the  operations  of a qualified  entity  at  its  location  in  or as part of a New York state innovation hot  spot,  as  provided  in  section  thirty-eight  of  this chapter.   * NB There are 2 par (39)'s   * (39)  In  the  case  of  a  taxpayer who is a small business who has business income and/or farm income as defined in the laws of the  United States,  an  amount  equal  to three percent of the net items of income, gain, loss and deduction attributable to such business or farm  entering into  federal adjusted gross income, but not less than zero, for taxable years beginning after two thousand thirteen, an amount  equal  to  three and  three-quarters  percent  of the net items of income, gain, loss and deduction attributable to such business or farm  entering  into  federal adjusted  gross  income,  but  not  less  than  zero,  for taxable years beginning after two thousand fourteen,  and  an  amount  equal  to  five percent   of   the  net  items  of  income,  gain,  loss  and  deduction attributable to such business or farm  entering  into  federal  adjusted gross  income, but not less than zero, for taxable years beginning after two thousand fifteen. For the purposes of this paragraph, the term small business shall mean a sole proprietor or a farm business who employs one or more persons during the taxable year and who has net business  income or net farm income of less than two hundred fifty thousand dollars.   * NB There are 2 par (39)'s  (40)  Any wages received by an individual as an employee of a business located within a tax-free NY area during the first five  years  of  such business's  ten  year  taxable  period  specified  in subdivision (a) of section thirty-nine of this chapter, to the extent included  in  federal adjusted  gross  income  and  allowed  under section thirty-nine of this chapter. During the second  five  years  of  such  business's  ten  year taxable  period, the first two hundred thousand dollars of such wages in the case of a taxpayer filing as a  single  individual,  the  first  two hundred  fifty  thousand dollars of such wages in the case of a taxpayer filing as a head of household, and three  hundred  thousand  dollars  of such  wages  in  the  case  of  a taxpayer filing a joint return, to the extent included in federal  adjusted  gross  income  and  allowed  under section thirty-nine of this chapter.  (41)  The  amount  of  any  award  paid  to a volunteer firefighter or volunteer ambulance worker from a length of service defined contribution plan or defined benefit plan  as  provided  for  in  articles  eleven-A, eleven-AA,  eleven-AAA  and eleven-AAAA of the general municipal law, to the extent that such award is includable in  gross  income  for  federal income   tax  purposes;  provided,  however,  that  such  award  is  not distributed in the form of  a  lump  sum  distribution,  as  defined  in subparagraph  (D)  of  paragraph  four of subsection (e) of section four hundred two of the internal revenue code and  taxed  under  section  six hundred three of this article; and provided, further, that such award is not distributed to a taxpayer who has not attained the age of fifty-nine and one-half years.   * (42) Distributions from an eligible retirement plan, as such term is defined  in  subparagraph  (B)  of  paragraph  (8)  of subsection (c) of section four hundred two of the Internal Revenue Code, made on or  after April  first,  two  thousand  seventeen  and  before  April  second, two thousand twenty-two. In order for such distributions to be  eligible  to be  subtracted  from federal adjusted gross income under this paragraph, the following conditions must be satisfied: (A) the  taxpayer's  primary residence  was  located  in  the  area affected by the disaster declared  pursuant to executive order  one  hundred  sixty-five  of  two  thousand seventeen, declaring a state of emergency, dated May third, two thousand seventeen;  (B)  such primary residence must have incurred damage due to coastal  flooding,  widespread  erosion  and water damage caused by such disaster; (C) such damage must qualify for the casualty deduction  under section  one hundred sixty-five of the internal revenue code (determined without regard to whether the loss exceeds ten percent of adjusted gross income); and (D) the taxpayer during  the  taxable  year  must  use  the entire amount of the distributions to pay for repairs needed as a result of  such damage. Provided, however, that the amount of the distributions that otherwise may be subtracted under this paragraph must be reduced by any deduction claimed by  the  taxpayer  for  such  damage  pursuant  to section  one  hundred sixty-five of the internal revenue code. Provided, further, that the taxpayer shall not claim  a  subtraction  modification under paragraph three-a of this subsection for such distribution.   * NB There are 3 par (42)'s   * (42)   Insurance   payments   received   by  an  eligible  volunteer firefighter for the cancer disability benefits in  section  two  hundred five-cc  of  the general municipal law to the extent includable in gross income for federal income tax purposes.   * NB There are 3 par (42)'s   * (42) (A) The amount of any student loan that is discharged,  whether in whole or in part, if such discharge was:  (i)  pursuant  to  subsection  (a) or (d) of section 437 of the Higher Education Act of 1965 or the parallel benefit provided pursuant to  part D of title IV of such act;  (ii)  pursuant  to section 464(c)(1)(F) of the Higher Education Act of 1965; or  (iii) otherwise discharged on  account  of  the  death  or  total  and permanent  disability of the person on whose behalf the indebtedness was incurred.  (B) For the purposes of this paragraph, "student loan" means:  (i) a student loan as defined in section  108(f)(2)  of  the  Internal Revenue Code of 1986; or  (ii)  a  private  education  loan, as defined in section 140(7) of the Consumer Credit Protection Act.   * NB There are 3 par (42)'s   * (43) Pass-through entity tax deduction addback. (A) In the case of a taxpayer who claims a credit  under  subsection  (kkk)  of  section  six hundred  six  of  this  article,  an  amount equal to the amount of such credit; and (B) in the case of a taxpayer  who  claims  a  credit  under subsection  (b) of section six hundred twenty of this article, an amount equal to the amount of such credit as calculated without regard  to  the limitation  under  subsection  (c) of section six hundred twenty of this article.   * NB There are 2 par (43)'s   * (43) The amount of any gain added back  to  federal  adjusted  gross income  in  a  previous  taxable year pursuant to paragraph forty-two of subdivision (b) of this section that is included in federal gross income for the taxable year.   * NB There are 2 par (43)'s  (44) Any death benefit, to the extent includible in  federal  adjusted gross  income,  paid  to  the  taxpayer  in  a  lump sum pursuant to the COVID-19 family death benefit program established  by  the  metropolitan transportation authority in two thousand twenty; provided, however, this subtraction shall not exceed five hundred thousand dollars and shall not apply  to  any  benefit payable under such program other than a lump sum death benefit.    * (45) (A) The amount of  an  item  that  was  included  in  New  York adjusted  gross  income  for  a prior taxable year (or years) because it appeared that the taxpayer had an unrestricted right to  such  item  but was  repaid  by  the  taxpayer  during  the  taxable year because it was established  after  the close of such prior taxable year (or years) that the taxpayer did not have an unrestricted right to such  item  or  to  a portion of such item.  (B)  No  subtraction  shall  be  allowed  under  this paragraph if the repayment amount is included in the deduction allowed under section  six hundred  fifteen  or  any  other  provision  of  this article, or if the repayment amount is the basis for  a  credit  claimed  by  the  taxpayer pursuant to section six hundred sixty-two of this article.   * NB There are 2 par (45)'s   * (45)  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 adjusted gross income.   * NB There are 2 par (45)'s  (d)  Modification  for  New  York fiduciary adjustment. There shall be added to or subtracted from federal adjusted gross income (as  the  case may  be)  the taxpayer's share, as beneficiary of an estate or trust, of the New York fiduciary adjustment determined under section  six  hundred nineteen.  (e)  Modifications of partners and shareholders of S corporations. (1) Partners and shareholders of S corporations which are  not  New  York  C corporations.  The  amounts  of  modifications required to be made under this section by a partner or by a shareholder of an S corporation (other than an S corporation which is a New York C corporation),  which  relate to partnership or S corporation items of income, gain, loss or deduction shall be determined under section six hundred seventeen and, in the case of a partner of a partnership doing an insurance business as a member of the  New  York  insurance exchange described in section six thousand two hundred one of the insurance law, under section six hundred  seventeen-a of this article.  (2)  Shareholders of S corporations which are New York C corporations. In the case of a shareholder of an S corporation which is a New  York  C corporation,  the  modifications  under this section which relate to the corporation's items of income,  loss  and  deduction  shall  not  apply, except  for  the  modifications  provided  under  paragraph  nineteen of subsection (b) and  paragraph  twenty-two  of  subsection  (c)  of  this section.  (3)  New  York  S  termination  year.  In  the  case  of  a New York S termination year, the amounts of the modifications required  under  this section  which  relate  to  the  S  corporation's items of income, loss, deduction and reductions for taxes (as described in paragraphs  two  and three  of  subsection  (f)  of section thirteen hundred sixty-six of the internal revenue code) shall be adjusted in the same manner that  the  S corporation's  items  are  adjusted  under subsection (s) of section six hundred twelve.  (f) Husband and wife. If husband  and  wife  determine  their  federal income  tax  on  a  joint return but are required to determine their New York income taxes  separately,  they  shall  determine  their  New  York adjusted  gross  incomes  separately  as if their federal adjusted gross incomes had been determined separately.  (g) Optional modifications. Subject  to  the  conditions  provided  in paragraphs  three  and  four  of this subsection, at the election of the taxpayer there shall also be  subtracted  from  federal  adjusted  gross income  either  or both of the items set forth in paragraphs one and two  of this subsection,  except  that  only  one  of  such  items  shall  be subtracted  with  respect to any one item of property, and except that a subtraction of the item set forth in such paragraph two may not be taken with  respect  to  taxable  years  commencing on or after January first, nineteen hundred eighty-seven.  (1) Depreciation with respect to any property  such  as  described  in paragraphs  three  or  four  of  this  subsection,  and  subject  to the conditions  provided  therein,  not  exceeding  twice  the  depreciation allowed  with  respect  to  the  same  property  for  federal income tax purposes. Such modification shall be allowed only  upon  condition  that any  depreciation  or  amortization  allowed  with  respect  to the same property in determining federal adjusted gross income shall be added  to federal  adjusted  gross  income pursuant to paragraph six of subsection (b) of this section. The total of all  deductions  allowed  pursuant  to this paragraph in any taxable year or years with respect to any property described  in  paragraph  three shall not exceed its cost or other basis and, with respect to property described in paragraph four, which is used in a business carried on both within and without  the  state  shall  not exceed  its cost or other basis multiplied by a percentage of the excess of the taxpayer's business income over its business deductions allocated to this state for the first year such  depreciation  is  deducted.  Such percentage  shall  be  determined  by apportionment and allocation under regulations of the tax commission.  (2) Expenditures paid or incurred during  the  taxable  year  for  the construction,  reconstruction,  erection  or acquisition of any property such as described in paragraphs three or four of  this  subsection,  and subject  to the conditions provided therein, which is used or to be used for  purposes  of  research  and  development  in  the  experimental  or laboratory  sense.  Such  purposes  shall  not  be deemed to include the ordinary testing or inspection of  materials  or  products  for  quality control,  efficiency  surveys,  management  studies,  consumer  surveys, advertising,  promotions  or  research  in  connection  with   literary, historical  or similar projects. Such modification shall be allowed only on condition that, with respect to property described in paragraph four, which is used in a business carried on both within and without the state the  deduction  shall  not  exceed  the  expenditures  multiplied  by  a percentage  of  the  excess  of  the taxpayer's business income over its business deductions allocated to this state  for  the  first  year  such expenditures  are  deducted.  Such  percentage  shall  be  determined by apportionment and allocation under regulations of  the  tax  commission, and  for  the  taxable  year  and  all  succeeding  taxable  years,  any deductions allowed for federal income tax purposes on  account  of  such expenditures  or  on account of depreciation of the same property except to the extent that its basis may be attributable to factors  other  than such  expenditures,  shall  be  added  to  federal adjusted gross income pursuant to paragraph six of subsection (b) of this section, or in  case a  modification  is allowable pursuant to this paragraph for only a part of such expenditures, on condition that a proportionate part of any such deductions allowed for federal income tax purposes be added  to  federal adjusted  gross  income. With respect to property which is used or to be used for research and development only in part, or during only  part  of its  useful  life, the modification allowable pursuant to this paragraph shall be limited to a proportionate part of  the  expenditures  relating thereto.  If  a  modification  shall  have been allowed pursuant to this paragraph for all or part of  such  expenditures  with  respect  to  any property, and such property is used for purposes other than research and development  to  a greater extent than originally reported, the taxpayer shall report such use in his return for the first  taxable  year  during  which  it  occurs,  and the tax commission may recompute the tax for the year or years for which such deduction was allowed, and may  assess  any additional  tax  resulting from such recomputation within the time fixed by subsection (c) of section six hundred eighty-three of this article.  (3)  For  purposes  of  this  paragraph,  such  modifications shall be allowed only with respect to  tangible  property  which  is  depreciable pursuant  to  section  one  hundred  sixty-seven of the internal revenue code, having a situs in this state and used in the taxpayer's  trade  or business,  (A)  constructed,  reconstructed  or  erected  after December thirty-first, nineteen hundred sixty-three, pursuant to a contract which was, on or before December thirty-first, nineteen  hundred  sixty-seven, and  at all times thereafter, binding on the taxpayer, or, property, the physical construction, reconstruction or erection of which began  on  or before  December  thirty-first,  nineteen  hundred  sixty-seven or which began after such date pursuant to an order placed on or before  December thirty-first,  nineteen  hundred sixty-seven, and then only with respect to that portion of  the  basis  thereof  or  the  expenditures  relating thereto   which   is   properly   attributable   to  such  construction, reconstruction or erection after December thirty-first, nineteen hundred sixty-three, or  (B)  acquired  after  December  thirty-first,  nineteen hundred  sixty-three,  pursuant  to  a  contract which was, on or before December thirty-first, nineteen hundred sixty-seven, and  at  all  times thereafter, binding on the taxpayer or pursuant to an order placed on or before  December thirty-first, nineteen hundred sixty-seven, by purchase as defined in section one  hundred  seventy-nine  (d)  of  the  internal revenue  code,  if  the original use of such property commenced with the taxpayer,  commenced  in  this  state  and  commenced   after   December thirty-first,   nineteen   hundred   sixty-three,   or   (C)   acquired, constructed,  reconstructed,   or   erected   subsequent   to   December thirty-first,   nineteen   hundred  sixty-seven,  if  such  acquisition, construction, reconstruction or erection is pursuant to a  plan  of  the taxpayer  which was in existence December thirty-first, nineteen hundred sixty-seven  and  not  thereafter  substantially  modified,   and   such acquisition,  construction,  reconstruction  or  erection  would qualify under the rules in paragraphs four, five or six  of  subsection  (h)  of section forty-eight of the internal revenue code provided all references in  such  paragraphs  four,  five  and  six  to  the dates October nine, nineteen hundred sixty-six, and October ten, nineteen hundred sixty-six, shall be read as December thirty-first, nineteen hundred sixty-seven.  A taxpayer  shall  be allowed a deduction under clauses (A), (B) or (C) of this paragraph only if the tangible property shall be delivered  or  the construction, reconstruction or erection shall be completed on or before December  thirty-first,  nineteen hundred sixty-nine, except in the case of tangible property which is acquired,  constructed,  reconstructed  or erected  pursuant  to  a  contract  which  was,  on  or  before December thirty-first, nineteen hundred sixty-seven, and at all times thereafter, binding on the taxpayer. However, for any taxable year beginning  on  or after  January first, nineteen hundred sixty-eight, a taxpayer shall not be allowed a modification under paragraph one of  this  subsection  with respect  to  tangible  personal  property  leased to any other person or corporation. For purposes of the preceding  sentence,  any  contract  or agreement  to  lease or rent or for a license to use such property shall be considered a lease. With respect to property which  a  taxpayer  uses for  purposes  other  than leasing for part of a taxable year and leases for a part of a taxable year, a modification under paragraph  one  shall be  allowed  in proportion to the part of the year such property is used by the taxpayer.  (4) For purposes  of  this  paragraph,  such  modifications  shall  be allowed  only  with  respect  to  tangible property which is depreciable pursuant to section one hundred  sixty-seven  of  the  internal  revenue code,  having  a situs in this state and used in the taxpayer's trade or business.  The  modifications  provided  for  in  paragraph  one of this subsection shall be allowed only with respect to tangible property which is  (A)   constructed,   reconstructed   or   erected   after   December thirty-first, nineteen hundred sixty-seven, pursuant to a contract which was,  on  or before December thirty-first, nineteen hundred sixty-eight, and at all times thereafter, binding on the taxpayer or,  property,  the physical  construction,  reconstruction or erection of which began on or before December thirty-first,  nineteen  hundred  sixty-eight  or  which began  after such date pursuant to an order placed on or before December thirty-first, nineteen hundred sixty-eight, and then only  with  respect to  that  portion  of  the  basis  thereof  or the expenditures relating thereto  which  is   properly   attributable   to   such   construction, reconstruction or erection after December thirty-first, nineteen hundred sixty-three,  or  (B)  acquired  after  December  thirty-first, nineteen hundred sixty-seven, pursuant to a contract  which  was,  on  or  before December  thirty-first,  nineteen  hundred sixty-eight, and at all times thereafter, binding on the taxpayer or pursuant to an order placed on or before December thirty-first, nineteen hundred sixty-eight, by  purchase as  defined  in  section  one  hundred  seventy-nine (d) of the internal revenue code, if the original use of such property  commenced  with  the taxpayer,   commenced   in  this  state  and  commenced  after  December thirty-first,   nineteen   hundred   sixty-seven,   or   (C)   acquired, constructed,   reconstructed,   or   erected   subsequent   to  December thirty-first,  nineteen  hundred  sixty-eight,  if   such   acquisition, construction,  reconstruction  or  erection is pursuant to a plan of the taxpayer which was in existence December thirty-first, nineteen  hundred sixty-eight,   and  not  thereafter  substantially  modified,  and  such acquisition, construction,  reconstruction  or  erection  would  qualify under  the  rules  in  paragraphs four, five or six of subsection (h) of section forty-eight of the internal revenue code provided all references in such paragraphs four,  five  and  six  to  the  dates  October  nine, nineteen hundred sixty-six, and October ten, nineteen hundred sixty-six, shall  be read as December thirty-first, nineteen hundred sixty-eight. A taxpayer shall be allowed a deduction under clauses (A), (B) or  (C)  of the  preceding  sentence of this paragraph only if the tangible property shall be delivered or the construction, reconstruction or erection shall be completed  on  or  before  December  thirty-first,  nineteen  hundred seventy,  except  in  the  case  of tangible property which is acquired, constructed, reconstructed or erected pursuant to a contract which  was, on or before December thirty-first, nineteen hundred sixty-eight, and at all  times thereafter binding on the taxpayer. The modification provided for in paragraph two of this  subsection  shall  be  allowed  only  with respect  to  tangible  property, (A) the construction, reconstruction or erection of which is completed  after  December  thirty-first,  nineteen hundred  sixty-seven,  and then only with respect to that portion of the basis thereof or the expenditures relating  thereto  which  is  properly attributable  to  such  construction,  reconstruction  or erection after December thirty-first, nineteen hundred  sixty-three,  or  (B)  acquired after  December  thirty-first, nineteen hundred sixty-seven, by purchase as defined in section one  hundred  seventy-nine  (d)  of  the  internal revenue  code,  if  the original use of such property commenced with the taxpayer,  commenced  in  this  state  and  commenced   after   December thirty-first,   nineteen   hundred  sixty-three.  Provided,  however,  a modification under paragraph one of this  subsection  shall  be  allowed  with  respect  to property described in this paragraph only on condition that such property shall be principally used  by  the  taxpayer  in  the production  of goods by manufacturing; processing; assembling; refining; mining;  extracting;  farming;  agriculture; horticulture; floriculture; viticulture; or  commercial  fishing.  For  purposes  of  the  preceding sentence,  manufacturing shall mean the process of working raw materials into wares suitable for use or which gives new shapes, new qualities  or new   combinations  to  matter  which  already  has  gone  through  some artificial process by the use of machinery, tools, appliances and  other similar  equipment.  Property  used  in  the  production  of goods shall include  machinery,  equipment  or  other  tangible  property  which  is principally used in the repair and service of other machinery, equipment or  other  tangible property used principally in the production of goods and shall include all facilities used in  the  manufacturing  operation, including  storage  of  material  to be used in manufacturing and of the products that are manufactured. At the option of the taxpayer,  air  and water pollution control facilities which qualify for elective deductions under  subsection  (h) of section six hundred twelve may be treated, for purposes of this paragraph, as tangible property principally used in the production of goods by manufacturing; processing; assembling;  refining; mining;  extracting;  farming;  agriculture; horticulture; floriculture; viticulture; or commercial fishing, in which event,  a  deduction  shall not  be allowed under such subsection (h). However, for any taxable year beginning on or after January first,  nineteen  hundred  sixty-eight,  a taxpayer shall not be allowed a modification under paragraph one of this subsection  with  respect  to  tangible  personal property leased to any other person or corporation. For purposes of the preceding sentence, any contract or agreement to lease or rent or for  a  license  to  use  such property  shall  be considered a lease. With respect to property which a taxpayer uses for purposes other than leasing for part of a taxable year and leases for a part of a taxable year, a modification under  paragraph one shall be allowed in proportion to the part of the year such property is used by the taxpayer.  (5)  If  the  modifications allowable for any taxable year pursuant to this subsection exceed the taxpayer's New York  adjusted  gross  income, determined  without  the allowance of such modifications, the excess may be carried over to the following  taxable  year  or  years  and  may  be subtracted  from  federal  adjusted  gross income for such year or years provided, however, that in no event shall such  excess,  insofar  as  it reflects subtractions taken with respect to items set forth in paragraph two  of  this subsection, be carried over to taxable years commencing on or after January first, nineteen hundred ninety-four.  (6) In any taxable year when property is sold  or  otherwise  disposed of,  with  respect  to which a modification has been allowed pursuant to paragraph one or two of this subsection,  the  basis  of  such  property shall  be  adjusted  to reflect the modifications so allowed, and if the basis as so adjusted is lower  than  the  adjusted  basis  of  the  same property  for  federal  income  tax  purposes,  there  shall be added to federal adjusted gross income the amount of the difference between  such adjusted bases.  (h)  Optional  modification for waste treatment facility expenditures. For taxable years commencing prior to January  first,  nineteen  hundred eighty-seven,  at  the  election  of  the  taxpayer, there shall also be subtracted from federal  adjusted  gross  income  expenditures  paid  or incurred  during  the taxable year for the construction, reconstruction, erection or improvement of industrial waste treatment facilities and air pollution control facilities.  (1) (A) The term "industrial waste treatment  facilities"  shall  mean facilities  for  the  treatment,  neutralization,  or  stabilization  of industrial waste and other wastes (as the terms "industrial  waste"  and "other  wastes"  are  defined  in  section  17-0105 of the environmental conservation  law)  from a point immediately preceding the point of such treatment, neutralization or stabilization to  the  point  of  disposal, including the necessary pumping and transmitting facilities.  (B)  The term "air pollution control facilities" shall mean facilities which remove, reduce, or render less noxious  air  contaminants  emitted from  an  air  contamination  source (as the terms "air contaminant" and "air contamination  source"  are  defined  in  section  19-0107  of  the environmental  conservation  law) from a point immediately preceding the point of such removal, reduction or rendering to the point of  discharge of  air,  meeting emission standards as established by the department of environmental conservation but excluding such facilities  installed  for the  primary  purpose  of  salvaging  materials  which are usable in the manufacturing process or are marketable and excluding  those  facilities which rely for their efficacy on dilution, dispersion or assimilation of air  contaminants  in  the  ambient  air after emission. Such term shall further include flue gas desulfurization equipment and attendant  sludge disposal  facilities, fluidized bed boilers, precombustion coal cleaning facilities or other facilities that conform with  this  subdivision  and which  comply  with  the provisions of the state acid deposition control act set forth in title nine of article  nineteen  of  the  environmental conservation law.  (2) Such modifications shall be allowed only  (A)  with  respect to tangible property which is depreciable, pursuant to section one hundred sixty-seven of the internal revenue code,  having a  situs in this state and used in the taxpayer's trade or business, the construction, reconstruction, erection or improvement of which,  in  the case  of industrial waste treatment facilities, is initiated on or after January first, nineteen hundred sixty-five, or which, in the case of air pollution control facilities, is initiated on or  after  January  first, nineteen hundred sixty-six, and  (B) on condition that such facilities have been certified by the state commissioner   of   environmental   conservation   or   his   designated representative,  pursuant  to  section  19-0309  of  the   environmental conservation  law,  as  complying  with the applicable provisions of the environmental  conservation  law,  the  public  health  law,  the  state sanitary   code   and  codes,  rules,  regulations,  permits  or  orders promulgated pursuant thereto, and  (C) on condition that for the taxable year and all succeeding  taxable years,  any  deductions allowed for federal income tax purposes for such expenditures or for depreciation or amortization of the  same  property, except to the extent that its basis may be attributable to factors other than  such  expenditures,  be  added  to  federal  adjusted gross income pursuant to paragraph five of subsection (b) of this section, or in case a modification is allowable pursuant to this paragraph for only  a  part of  such  expenditures,  on condition that a proportionate amount of any such deductions allowed for federal income  tax  purposes  be  added  to federal adjusted gross income, and  (D)  where  the election provided for in subsection (g) of section six hundred twelve has not been exercised in respect to the same property.  (3) (A) If expenditures in respect to an  industrial  waste  treatment facility  or  an  air  pollution control facility have been allowed as a modification as provided herein and if within ten years from the end  of the taxable year in which such modification was allowed such property or any  part thereof is used for the primary purpose of salvaging materials  which are usable in the manufacturing process  or  are  marketable,  the taxpayer  shall  report  such  change of use in its return for the first taxable year  during  which  it  occurs,  and  the  tax  commission  may recompute  the tax for the year or years for which such modification was allowed,  and  may  assess  any  additional  tax  resulting  from   such recomputation within the time fixed by paragraph eight of subsection (c) of section six hundred eighty-three.  (B)  If  a modification is allowed as herein provided for expenditures paid or incurred during any taxable year on the  basis  of  a  temporary certificate   of   compliance   issued  pursuant  to  the  environmental conservation law, and if  the  taxpayer  fails  to  obtain  a  permanent certificate of compliance upon completion of the facilities with respect to  which  such  temporary  certificate  was  issued, the taxpayer shall report such failure in its report for the taxable year during which such facilities are completed, and the tax commission may recompute  the  tax for  the  year or years for which such modification was allowed, and may assess any additional tax resulting from such recomputation  within  the time  fixed  by paragraph eight of subsection (c) of section six hundred eighty-three.  (C) If a modification is allowed as herein provided  for  expenditures paid  or incurred during any taxable year in respect to an air pollution control facility on the basis of  a  certificate  of  compliance  issued pursuant  to  the  environmental conservation law and the certificate is revoked  pursuant  to  subdivision  three  of  section  19-0309  of  the environmental conservation law, the tax commission may recompute the tax for  the  year  or  years  for  which  the facility is not or was not in compliance  with  the  applicable  provisions   of   the   environmental conservation  law, the state sanitary code or codes, rules, regulations, permits or orders issued pursuant thereto, and for which a  modification was  allowed,  and  may  assess  any  additional tax resulting from such recomputation within the time fixed by paragraph eight of subsection (c) of section six hundred eighty-three.  (4) In any taxable year when property is sold  or  otherwise  disposed of,  with  respect  to which a modification has been allowed pursuant to this paragraph, such modification shall be disregarded in computing gain or loss, and the gain or loss on the sale or other disposition  of  such property  shall  be  the  gain  or loss entering into the computation of federal adjusted gross income for such taxable year.  (i) In the case  of  mines,  oil  and  gas  wells  and  other  natural deposits, any allowance for percentage depletion pursuant to section six hundred  thirteen  or  section  six  hundred  thirteen A of the internal revenue code shall be added to federal adjusted gross  income.  However, with  respect  to  the  property  as  to  which such addition to federal adjusted gross income is required, an allowance for depletion  shall  be subtracted  from  federal adjusted gross income in the amount that would be deductible under section six hundred  eleven  of  such  code  if  the deduction for an allowance for depletion were computed without reference to  such section six hundred thirteen or section six hundred thirteen A. With  respect  to  the  computation  of  depletion  pursuant   to   this subsection,  the  basis for such computation for taxable years beginning in  nineteen  hundred  seventy-two  shall  be  the  federal  basis.  For subsequent  taxable  years,  the  basis  for  such  computation shall be reduced only by the deduction for the allowance for depletion deductible pursuant to this subsection. The portion of any gain from  the  sale  or other  disposition  of  such property having a higher adjusted basis for New York income tax purposes than for federal income tax purposes,  that does  not  exceed  such  difference  in  basis, shall be subtracted from federal adjusted gross income.  (j)  Modification  for  nonpublic  school  tuition.  (1)  General.  An individual shall be entitled to subtract from his federal adjusted gross income  an amount shown in the table set forth in this paragraph for his New York adjusted gross income for the taxable  year,  computed  without the  benefit  of  this  modification,  multiplied  by  the number of his dependents, not exceeding three,  attending  a  nonpublic  school  on  a full-time  basis for at least four months during the regular school year for the education of  such  dependent  in  grades  one  through  twelve, provided  such  individual  is  allowed  an  exemption under section six hundred  sixteen  for  such  dependent.  Provided,  further,  that   the modification  under  this paragraph may be taken only if such individual has paid at least fifty dollars for each such dependent  in  tuition  to such  nonpublic school for such education of such dependent. No taxpayer shall be entitled to the modification provided for in this paragraph  if he  claims  a tuition reimbursement payment pursuant to article twelve-A of the education law.   If New York                                         The amount adjusted gross                                   allowable for each   income is:                                       dependent is: Less than $9,000                                      $1,000  9,000--10,999                                          850 11,000--12,999                                          700 13,000--14,999                                          550 15,000--16,999                                          400 17,000--18,999                                          250 19,000--20,999                                          150 21,000--22,999                                          125 23,000--24,999                                          100 25,000 and over                                        --0--  (2) Husband and wife. In determining the applicable New York  adjusted gross  income  of a husband and wife for purposes of the table set forth in paragraph one of this subsection, the New York adjusted gross  income of  a husband and wife shall be the aggregate of their New York adjusted gross incomes for the taxable year, determined without  the  benefit  of the  modification  provided  for  in  this subsection, and the number of dependents with respect to which this modification may be claimed  shall be no more than three in the aggregate.  (3) Definitions. (A) "Tuition", as used in this subsection, shall mean the amount actually paid during the taxable year by the taxpayer for the enrollment  of a dependent during the regular school year at a nonpublic school.  (B) "Nonpublic school", as used in this  subsection,  shall  mean  any non-profit  elementary  or  secondary  school  in the state of New York, other than a public  school,  which  (i)  is  providing  instruction  in accordance with article seventeen and section thirty-two hundred four of the  education  law, (ii) has not been found to be in violation of Title VI of the Civil Rights Act of nineteen hundred sixty-four, 78 Stat. 252, 42 U.S.C. § 2000 (d) and (iii) which is  entitled  to  a  tax  exemption under  sections five hundred one (a) and five hundred one (c) (3) of the Federal  Internal  Revenue  Code  of  nineteen  hundred  fifty-four,  as amended.  The  commissioner  of education shall furnish to the state tax commission by February first of each year, a certified list of nonpublic schools which comply with  clause  (i)  of  this  subparagraph  for  the preceding  calendar  year  and  shall provide such other assistance with respect to whether nonpublic schools come within clause (i) as the state tax commission may require.  (C) "Regular school year", as used in this subsection, shall mean  the months of the taxable year exclusive of July and August.  (4)  Additional  information.  Any claim for a modification under this subsection  shall  be  accompanied  by  such  information  as  the   tax commission may require.  (k)  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 subsection  (m)  of this  section,  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.  (l)  For  taxable  years  beginning  after  December thirty-first, two thousand two, upon the disposition of property to which  subsection  (k) of  this  section  applies, the amount of any gain or loss includible in federal adjusted income shall be adjusted to reflect the inclusions  and exclusions  from  federal adjusted income pursuant to paragraph eight of subsection (b) and paragraph sixteen of subsection (c) of  this  section attributable to such property.  (m) For purposes of subsections (k) and (l) of this section, 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.  (n) Where gain or loss is recognized for federal income  tax  purposes upon  the disposition of stock or indebtedness of a corporation electing under subchapter s of chapter one of the internal revenue code  (1) There shall be added to federal adjusted gross income  the  amount of increase in basis with respect to such stock or indebtedness pursuant to  subsection  (a)  of  section  thirteen  hundred  seventy-six  of the internal revenue code as such section was in effect  for  taxable  years beginning  before  January  first,  nineteen  hundred  eighty-three  and subparagraphs (A) and (B) of paragraph one of subsection (a) of  section thirteen  hundred sixty-seven of such code, for each taxable year of the  corporation beginning, in  the  case  of  a  corporation  taxable  under article  nine-A  of  this chapter, after December thirty-first, nineteen hundred eighty, and in the case of a corporation taxable  under  article thirty-two  of  this  chapter,  after  December  thirty-first,  nineteen hundred ninety-six, for which the election provided  for  in  subsection (a) of section six hundred sixty of this article was not in effect, and  (2) There shall be subtracted from federal adjusted gross income  (A)  the  amount  of  reduction in basis with respect to such stock or indebtedness pursuant to subsection  (b)  of  section  thirteen  hundred seventy-six  of  the internal revenue code as such section was in effect for taxable years  beginning  before  January  first,  nineteen  hundred eighty-three   and  subparagraphs  (B)  and  (C)  of  paragraph  two  of subsection (a) of section thirteen hundred sixty-seven of such code, for each taxable year of  the  corporation  beginning,  in  the  case  of  a corporation taxable under article nine-A of this chapter, after December thirty-first,  nineteen hundred eighty, and in the case of a corporation taxable  under  article  thirty-two  of  this  chapter,  after  December thirty-first,  nineteen  hundred  ninety-six,  for  which  the  election provided for in subsection (a) of section  six  hundred  sixty  of  this article was not in effect and  (B)  the  amount  of  any  modifications  to federal gross income with respect to such stock pursuant to paragraph twenty of subsection (b)  of this section.  (o)  Modifications  for  new business investment gains and certain new business investments.   1. For purposes of this subsection, the  following  definitions  shall apply:  (A)  "New  business investment gain" means gain from the sale of a new business  investment  issued  to  the  taxpayer  before  January  first, nineteen hundred eighty-eight, if:  (i)  such  new  business  investment  is,  in  the hands of the person selling the same (whether or not  the  taxpayer),  a  capital  asset  as defined in section 1221 of the internal revenue code of nineteen hundred fifty-four, as amended, and  (ii)  such  new  business  investment  was held by such person for the period specified in paragraph two of this subsection.  (B) "New business" means a corporation  or  partnership  organized  or formed under the laws of any state which:  (i)  adopts a plan on or after July first, nineteen hundred eighty-one and before January first, nineteen hundred eighty-eight,  to  conduct  a new  business within the meaning and intent of this section and to issue new business investments, as defined in this subsection, and  (ii) is, at the date of adoption of such  plan,  subject  to  taxation (whether  or  not  any  amount  is  owing)  under  section  one  hundred eighty-three, one hundred  eighty-four  or  one  hundred  eighty-six  of article nine of this chapter, or under article nine-a of this chapter or article  twenty-three of this chapter, or would have been subject to tax under article twenty-three (as such article was  in  effect  on  January first,  nineteen  hundred  eighty) if such article were still in effect, and the first taxable period for which such new business became  subject to  such  taxation  commenced  on  or after July first, nineteen hundred eighty-one and before January first, nineteen hundred eighty-eight,  and such first taxable period includes the date of adoption of such plan; if not so subject to taxation, the new business must be subject to taxation under  such sections or articles for the first time within one year from the date of adoption of such plan, and  (iii) is conducted (or will be conducted, as evidenced by  such  plan) whereby  at least ninety percent of the assets (valued at original cost)  are located and employed  in  this  state  and  eighty  percent  of  the employees  (as ascertained within the meaning and intent of subparagraph three of paragraph (a) of subdivision three of section two  hundred  ten of  this  chapter  and,  in  addition,  in  the  case  of a partnership, excluding partners) are principally employed in this state  during  each taxable  period,  or  part  thereof,  as required by clause (iv) of this subparagraph, and  (iv) within ninety days after the adoption of  such  plan,  or,  if  a return  is  required,  as  part of such return, under such article nine, article nine-A or article twenty-three (as such article was in effect on or before December thirtieth, nineteen hundred eighty-two), whichever is sooner, shall file  a  new  business  certificate  with  the  state  tax commission  attesting  to whether it meets, if subject to taxation under such articles, or intends to  meet,  if  not  so  subject,  all  of  the conditions  stated  in  clauses (i), (ii) and (iii) of this subparagraph within the time set forth therein. Thereafter,  during  the  first  four taxable  years  of  such  new  business, along with, and as part of, any return required under such articles, such new business  shall  make  and file  a  new  business certificate for the period covered by such return attesting to whether  it  has  met  the  conditions  specified  in  this subparagraph  during  the  taxable  period covered by such return. If no return is required under such articles, such certificate shall be  filed annually  on  or before the fifteenth day of March which shall cover the twelve consecutive calendar month period  ending  on  the  last  day  of December  immediately  preceding  such  March  fifteenth.  If  such  new business fails to meet such conditions specified in  this  subparagraph, it  shall,  in  addition,  give  notice  of  this  fact, within the time prescribed by the state tax commission,  to  the  holders  of  its  "new business investments." The state tax commission shall prescribe the form and  content  of  such  new business certification and may require a new business to file such certificate for periods  (even  if  no  return  is filed or required, but for this section) covering up to eight years from the  date  of  adoption of such plan, as in its discretion, it deems the same necessary for the enforcement of this subparagraph, and  (v) Special rules:  (1) For any taxable period, in order to constitute a new  business,  a business  enterprise  must  have  derived more than sixty percent of its aggregate gross receipts  from  sources  other  than  royalties,  rents, dividends,  interest,  annuities  and  sales  or  exchanges  of stock or securities.  (2) A new business does not include (i)  any  new  business  of  which twenty-five  percent  or  more  of  the  number  of shares of stock that entitle the holders thereof to vote for the  election  of  directors  or trustees  is owned, directly or indirectly, by a taxpayer subject to tax under section one hundred eighty-three,  one  hundred  eighty-four,  one hundred  eighty-five  or  one hundred eighty-six of article nine of this chapter, or under article nine-A, thirty-two  or  thirty-three  of  this chapter  or (ii) any new business substantially similar in operation and in ownership, directly or indirectly, to a business entity (or entities) taxable, or previously taxable,  under  such  sections,  such  articles, article  twenty-three  or  which  would  have  been subject to tax under article twenty-three (as such article was in effect  on  January  first, nineteen  hundred eighty) or the income (or losses) of which is (or was) includable under article twenty-two whereby the intent  and  purpose  of this subsection would be evaded.  (C)  "New  business  investment"  means  and  includes  the  following investments issued before January first, nineteen  hundred  eighty-eight by  a  new  business  pursuant  to  a  plan  described  in clause (i) of  subparagraph (B) of this paragraph for money or  other  property  (other than  stock  or  securities)  on  or  before the expiration of the third taxable  year  of  such  new  business  (excluding  any   short   period immediately preceding such taxable year because the new business was not in  existence  for  an entire taxable year) or forty-two months from the adoption of such  plan,  whichever  is  sooner:  (i)  original  issuance capital  stock  as  part  of  a  new issue, (ii) other original issuance securities of a new issue of a like nature as stocks which are  designed as  a  means  of  investment  and  issued  for  the purpose of financing corporate enterprises and providing for a distribution of rights in such enterprises, (iii) debt obligations such as bonds and debentures  for  a term  of  at  least  one  year,  whether  secured or unsecured, and (iv) certificates and other instruments representing  proprietary  interests, whether  limited or otherwise, in and assumption of general liabilities, whether limited or otherwise, of a partnership enterprise.   2. A taxpayer may subtract from his federal adjusted  gross  income  a portion  of  an  amount  constituting a new business investment gain, as follows:       If new business                    The modification is equal to the      investment held for:               following proportion of the gain                                         includable in federal adjusted                                         gross income:       At least four years, but      less than five years               twenty-five percent      At least five years, but      less than six years                fifty percent      At least six years                 one hundred percent    3. Where, within six months of  the  realization  of  a  new  business investment gain allowable as the basis of a modification under paragraph two  of  this  subsection,  such  modification is equal to less than one hundred percent of  the  portion  of  the  gain  includable  in  federal adjusted  gross  income  and  the  taxpayer  purchases  a  new  business investment which is then held for a period of at least six  months,  the taxpayer may subtract from his federal adjusted gross income ten percent (but not an amount that will reduce the portion of such gain included in his  New  York  income  below zero) of the amount of such gain where the purchase price of the new business investment is  equal  to  or  greater than  the  proceeds  of  the  sale  giving  rise to such gain. Where the purchase price of the new business investment is  less  than  an  amount equal  to  the  proceeds  of such sale, the modification allowable under this paragraph shall be equal to ten percent of an amount equal  to  the product  of  (A) the amount of the gain and (B) a fraction the numerator of which is the purchase price of the new investment and the denominator of which  is  an  amount  equal  to  the  proceeds  of  such  sale.  The modification  allowable  under  this  paragraph  may be utilized, at the option of the taxpayer, with respect to the taxable year  in  which  the new business investment gain is realized or the year containing the last day of the six-month retention period described in this paragraph.   4.  The  state tax commission may prescribe such rules and regulations as may be necessary to carry out the purposes of this subdivision.  (p) New business investment  deferral.  For  taxable  years  beginning before  January  first,  nineteen hundred eighty-eight, at the option of the taxpayer, there may be subtracted from federal adjusted gross income a reinvested amount of long-term capital gain realized in a taxable year from the sale of a capital asset, as such term  is  defined  in  section  1221  of  the  internal  revenue  code,  which  is  not  a  new business investment. A reinvested amount of long-term capital gain shall mean  an amount which bears the same ratio to the long-term capital gain realized from  the  sale  of  a  capital  asset  which was includable in New York adjusted gross income as that portion of  the  sale  proceeds  which  is reinvested,  within  one  year  from  date  of  sale,  in a New York new business bears to the total sale proceeds.  For  the  purposes  of  this subsection,  a  New York new business is a business enterprise which (1) has been a taxpayer under this article for no more  than  three  taxable years  (including  short  taxable  years), (2) over fifty percent of the number of shares of stock that entitle the holders thereof to  vote  for the  election  of  directors  or  trustees  is  not  owned,  directly or indirectly, by a taxpayer subject  to  tax  under  section  one  hundred eighty-three,  one  hundred  eighty-four, one hundred eighty-five or one hundred eighty-six of article nine of this  chapter,  or  under  article nine-A,   thirty-two  or  thirty-three  of  this  chapter,  (3)  is  not substantially similar in operation or ownership, directly or indirectly, to a business entity (or entities) taxable, or previously taxable, under such sections, such articles, article twenty-three or which  would  have been  subject  to tax under article twenty-three (as such article was in effect on January first, nineteen hundred  eighty)  or  the  income  (or losses) of which is (or was) includable under article twenty-two whereby the  intent  and purpose of this subsection would be evaded, (4) locates and employs at least ninety percent of its  assets  in  the  state,  (5) employs  principally  in  the  state eighty percent of its employees (as ascertained within the meaning  and  intent  of  subparagraph  three  of paragraph  (a)  of  subdivision three of section two hundred ten of this chapter and, in addition,  in  the  case  of  a  partnership,  excluding partners),  (6) derives less than forty percent of its gross income from dividends,  interest,  royalties  (other  than  mineral,  oil,  or   gas royalties  or  copyright  royalties),  and  annuities and (7) reports at least twenty-five hundred dollars in gross income in any  taxable  year. The  reinvested  amount  must  qualify  as a capital asset as defined in section 1221 of the internal revenue code and must be  retained  by  the taxpayer  for  at  least twelve months. The modification allowable under this subsection shall be utilized with respect to the  taxable  year  in which  the  twelve  month  retention  period  ends.  The commissioner of taxation and finance may  require  annual  information  reports  on  the investments in new businesses made pursuant to this subsection, and such other  reports  as  he  may require to ensure against the evasion of the intent and purposes of this subsection.  (q) An amount deferred under subsection (p) hereof shall be  added  to federal  adjusted gross income when the reinvestment in the New York new business which qualified a taxpayer for such deferral is sold.  (r) 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) For the purpose  of  computing  New York  adjusted  gross  income, 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 subsection 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 subsection 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 six hundred one of this article for the taxable year.  (iii) The adjustment required in this subsection 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 tax rate 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 subsection 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.  (s)  New  York  S  termination year. (1) General. In the case of a New York S termination year, the amount of any item of S corporation income, loss and deduction included in the shareholder's federal adjusted  gross income  and any reductions for taxes (as described in paragraphs two and three of subsection (f) of section thirteen  hundred  sixty-six  of  the internal  revenue  code)  shall  be  adjusted  in  accordance  with  the treatment provided in paragraph two or three of this subsection.  (2) Pro rata allocation. Unless paragraph  three  of  this  subsection applies,  an  equal portion of each S corporation item shall be assigned to each day of the S corporation's taxable year for federal  income  tax purposes.  The portion of each such item thereby assigned to the S short year shall be treated as an item of a New York S  corporation,  and  the portion  of each such item thereby assigned to the C short year shall be treated as  an  item  of  an  S  corporation  which  is  a  New  York  C corporation.  (3)  Normal  tax  accounting.  The  portion of each S corporation item assigned to the S short year and the C short year  shall  be  determined using normal tax accounting rules if:  (A)  there is a sale or exchange of fifty percent or more of the stock in such corporation during the New York S termination year; or  (B) the corporation so elects, in  the  manner  the  commissioner  may provide.  No  election under this subparagraph shall be effective unless all persons who are shareholders during the S short year and all persons who are shareholders on the first day of the C  short  year  consent  to such election.  (u)  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 subsection, 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 subsection. For purposes of this subsection  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.  (v) Amounts deferred. The amount deferred under subsection (u) of this section  shall  be  added  to  federal  adjusted  gross  income when the reinvestment in the New York qualified emerging technology company which qualified a taxpayer for such deferral is sold.  (w) Alimony modifications. (1) In the case of  applicable  alimony  or separate maintenance payments, the following modifications shall apply:  (A)  There  shall be subtracted from federal adjusted gross income any applicable alimony or separate maintenance payments made by the taxpayer during the taxable year.  (B) There  shall  be  added  to  federal  adjusted  gross  income  any applicable  alimony  or  separate  maintenance  payments received by the taxpayer during the taxable year.  (2) (A) The term "alimony  or  separate  maintenance  payments"  means payments  as  defined  under section seventy-one of the internal revenue code in effect immediately prior to the enactment of Public Law 115-97.  (B) The term "applicable alimony  or  separate  maintenance  payments" means  payments  made  under  an  alimony  or  separation instrument (as defined in section seventy-one of the internal revenue  code  in  effect immediately  prior  to  the  enactment  of  Public  Law 115-97) that was executed after December thirty-first, two  thousand  eighteen,  and  any divorce  or  separation  instrument  executed on or before such date and modified after such date if the modification expressly provides that the amendments made by this section apply to such modification.  (x) Qualified moving expense reimbursement and moving expenses. (1) In the case of applicable qualified moving expense reimbursement and moving expenses, the following modifications shall apply:  (A) There shall be subtracted from federal adjusted gross  income  any applicable  qualified  moving  expense  reimbursement  received  by  the taxpayer during the taxable year.  (B) There shall be subtracted from federal adjusted gross  income  any applicable moving expenses paid by the taxpayer during the taxable year.  (2)  Applicable  qualified  moving  expense  reimbursement  and moving expenses are those deductions as allowed by paragraph  (g)  of  sections one  hundred thirty-two and section two hundred seventeen, respectfully, of the internal revenue code  immediately  prior  to  the  enactment  of Public Law 115-97.