2023 New York Laws › TAX - Tax › Article 22 - Personal Income Tax › Part 4 - Returns and Payment of Tax › 660 - Election by Shareholders of S Corporations.

§ 660. Election by shareholders of S corporations.  (a) Election. If a
corporation  is  an  eligible  S  corporation,  the  shareholders of the
corporation may elect in the manner set forth in subsection (b) of  this
section to take into account, to the extent provided for in this article
(or  in  article  thirteen of this chapter, in the case of a shareholder
which is a taxpayer under such article),  the  S  corporation  items  of
income, loss, deduction and reductions for taxes described in paragraphs
two and three of subsection (f) of section thirteen hundred sixty-six of
the  internal  revenue  code  which  are  taken into account for federal
income tax purposes  for  the  taxable  year.  No  election  under  this
subsection shall be effective unless all shareholders of the corporation
have so elected. An eligible S corporation is (i) an S corporation which
is  subject  to  tax  under article nine-A of this chapter, or (ii) an S
corporation which is the parent of a qualified subchapter  S  subsidiary
subject  to  tax  under  article  nine-A, where the shareholders of such
parent  corporation  are  entitled  to  make  the  election  under  this
subsection   by  reason  of  subparagraph  three  of  paragraph  (k)  of
subdivision nine of section two hundred eight of this chapter.
(b) Requirements of election. An election under subsection (a) of this
section shall be made on such  form  and  in  such  manner  as  the  tax
commission may prescribe by regulation or instruction.
(1) When made. An election under subsection (a) of this section may be
made at any time during the preceding taxable year of the corporation or
at  any time during the taxable year of the corporation and on or before
the fifteenth day of the third month of such taxable year.
(2) Certain elections made during first two and one-half months. If an
election made under subsection (a) of  this  section  is  made  for  any
taxable  year  of  the corporation during such year and on or before the
fifteenth day of the third month of such year, such  election  shall  be
treated as made for the following taxable year if
(A)  on  one or more days in such taxable year before the day on which
the election was made the corporation did not meet the  requirements  of
subsection  (b)  of  section  thirteen hundred sixty-one of the internal
revenue code or
(B) one or more of the shareholders who held stock in the  corporation
during  such  taxable  year  and  before  the  election was made did not
consent to the election.
(3) Elections made after first two and one-half months. If an election
under subsection (a) of this section is made for any taxable year of the
corporation and such election is made after the  fifteenth  day  of  the
third  month  of such taxable year and on or before the fifteenth day of
the third month of the following taxable year, such  election  shall  be
treated as made for the following taxable year.
(4)  Taxable years of two and one-half months or less. For purposes of
this subsection, an election for a taxable year made not later than  two
months and fifteen days after the first day of the taxable year shall be
treated as timely made during such year.
(5)  Authority  to  treat  late  elections, etc., as timely. If (A) an
election under subsection (a) of this section is made  for  any  taxable
year  (determined  without regard to paragraph three of this subsection)
after the date prescribed by this subsection for  making  such  election
for  such  taxable  year, or if no such election is made for any taxable
year, and
(B) the commissioner determines that there was  reasonable  cause  for
failure to timely make such election, then
(C)  the  commissioner  may  treat such an election as timely made for
such taxable year (and paragraph three  of  this  subsection  shall  not
apply).
(6)  Years  for  which  effective. An election under subsection (a) of
this section shall be effective for the taxable year of the  corporation
for  which  it  is  made  and  for  all  succeeding taxable years of the
corporation until such election is terminated under  subsection  (c)  of
this section.
(c)  Termination.  An  election  under  subsection (a) of this section
shall cease to be effective
(1) on the day an election  to  be  an  S  corporation  ceases  to  be
effective  for federal income tax purposes pursuant to subsection (d) of
section thirteen hundred sixty-two of the internal revenue code, or
(2) if shareholders holding more than one-half of the shares of  stock
of  the  corporation  on  the day on which the revocation is made revoke
such election  in  the  manner  the  tax  commission  may  prescribe  by
regulation,
(A)  on  the  first day of the taxable year of the corporation, if the
revocation is made during  such  taxable  year  and  on  or  before  the
fifteenth day of the third month thereof, or
(B) on the first day of the following taxable year of the corporation,
if  the  revocation  is  made  during  the  taxable  year  but after the
fifteenth day of the third month thereof, or
(C) on and after the date so specified, if the revocation specifies  a
date for revocation which is on or after the day on which the revocation
is made, or
(3)  if any person who was not a shareholder of the corporation on the
day on  which  the  election  is  made  becomes  a  shareholder  in  the
corporation and affirmatively refuses to consent to such election in the
manner  the  tax commission may prescribe by regulation, on the day such
person becomes a shareholder.
(d) New York S  termination  year.  In  the  case  of  a  New  York  S
termination  year,  the amount of any item of S corporation income, loss
and 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)  required  to  be  taken  account of under this
article shall be adjusted in the same manner that  the  S  corporation's
items  which  are  included  in the shareholder's federal adjusted gross
income are adjusted under subsection (s) of section six hundred twelve.
(e) Inadvertent invalid elections. If (1) an election under subsection
(a) of this section was not effective for the  taxable  year  for  which
made  (determined  without  regard to paragraph two of subsection (b) of
this section) by reason of a failure to obtain shareholder consents,
(2) the commissioner determines that the  circumstances  resulting  in
such ineffectiveness were inadvertent,
(3)  no  later than a reasonable period of time after discovery of the
circumstances resulting in such ineffectiveness,  steps  were  taken  to
acquire the required shareholder consents, and
(4)  the  corporation,  and  each  person who was a shareholder in the
corporation at any time during the period  specified  pursuant  to  this
subsection,  agrees  to  make  such  adjustments  (consistent  with  the
treatment of the corporation as a New York  S  corporation)  as  may  be
required by the commissioner with respect to such period,
(5)   then,   notwithstanding  the  circumstances  resulting  in  such
ineffectiveness, such corporation shall be  treated  as  a  New  York  S
corporation during the period specified by the commissioner.
(f)  Validated  federal elections. If (1) an election under subsection
(a) of this  section  was  made  for  a  taxable  year  or  years  of  a
corporation,  which  years occur with or within the period for which the
federal S election of such corporation has been  validated  pursuant  to

the  provisions  of subsection (f) of section thirteen hundred sixty-two
of the internal revenue code, and
(2)  the  corporation,  and  each  person who was a shareholder in the
corporation at any time during such taxable year or years agrees to make
such adjustments (consistent with the treatment of the corporation as  a
New  York  S  corporation)  as  may be required by the commissioner with
respect to such year or years,
(3) then such corporation shall be treated as a New York S corporation
during such year or years.
(g) Transitional rule. Any election made under  this  section  (as  in
effect  for  taxable  years  beginning  before  January  first, nineteen
hundred eighty-three)  shall  be  treated  as  an  election  made  under
subsection (a) of this section.
(h)  Cross  reference. For definitions relating to S corporations, see
subdivision one-A of section two hundred eight of this chapter.
(i) Mandated New York S corporation election.  (1) Notwithstanding the
provisions in subsection (a) of this section, in the case of an eligible
S corporation for which  the  election  under  subsection  (a)  of  this
section  is not in effect for the current taxable year, the shareholders
of an eligible S corporation are  deemed  to  have  made  that  election
effective  for the eligible S corporation's entire current taxable year,
if the eligible  S  corporation's  investment  income  for  the  current
taxable  year is more than fifty percent of its federal gross income for
such year. In determining whether an eligible S corporation is deemed to
have made  that  election,  the  income  of  a  qualified  subchapter  S
subsidiary  owned  directly  or indirectly by the eligible S corporation
shall be included with the income of the eligible S corporation.
(2) For  the  purposes  of  this  subsection,  the  term  "eligible  S
corporation"  has  the  same  definition  as  in  subsection (a) of this
section.
(3) For the purposes of this subsection, the term "investment  income"
means the sum of an eligible S corporation's gross income from interest,
dividends,  royalties,  annuities, rents and gains derived from dealings
in property, including the corporation's share  of  such  items  from  a
partnership,  estate  or  trust,  to  the  extent  such  items  would be
includable in federal gross income for the taxable year.
(4)  Estimated  tax  payments.  When  making  estimated  tax  payments
required  to  be  made  under  this chapter in the current tax year, the
eligible S corporation and its shareholders may rely on the  eligible  S
corporation's  filing  status  for  the  prior  year.  If the eligible S
corporation's  filing  status  changes  from  the  prior  tax  year  the
corporation  or  the  shareholders,  as  the case may be, which made the
payments shall be entitled to a refund of such estimated  tax  payments.
No  additions  to  tax  with  respect  to  any  required declarations or
payments of estimated tax imposed under this chapter shall be imposed on
the corporation or shareholders,  whichever  is  the  taxpayer  for  the
current  taxable  year, if the corporation or the shareholders file such
declarations and make such estimated tax payments by  January  fifteenth
of the following calendar year, regardless of whether the taxpayer's tax
year is a calendar or a fiscal year.