New York Codes, Rules and Regulations › Title 20 - DEPARTMENT OF TAXATION AND FINANCE › Chapter I - Franchise and Certain Business Taxes › Subchapter A - Business Corporation Franchise Tax › Part 3 - COMPUTATION OF TAX › Subpart 3-8 - COMPUTATION OF THE PRIOR NET OPERATING LOSS CONVERSION (PNOLC) SUBTRACTION › Section 3-8.3 - Examples

Current through Register Vol. 46, No. 28, July 10, 2024
The following examples illustrate the application of the
						rules and limitations as set forth in section 208(9)(f) and section 1453(k-1)
						and Subpart 3-8 of this Part, as such provisions were in effect on December 31,
						2014, as well as the application of the rules and limitations in section
						3-8.2  of this Subpart, in
						computing the eligible Federal and New York State (NYS) NOL carryover amounts
						and the amount of the UNOL for a corporation or combined group. Numbers in the
						examples have been rounded. To the extent the examples reference an "as if"
						Federal NOL, it either means that the corporation was included in a Federal
						consolidated return and, in order to compute its UNOL, computes its income and
						loss amounts "as if" it filed separately for Federal purposes or the
						composition of the Federal consolidated return and the New York combined group
						are different and in order to compute the UNOL of the combined group, the group
						computes its income and loss amounts "as if" the New York combined group was
						the Federal consolidated group.
Example 1:
ABC Company, a calendar-year taxpayer, began business in
						2009 and became taxable in NYS in 2011. ABC Company's base year is calendar
						year 2014. ABC Company had Federal/NYS income and losses, and applied its NOLs
						for tax years beginning before 1/1/2015, as follows:
ABC Company
2009
2010
2011
2012
2013
2014
Eligible NOL carryover amount 12/31/2014
"As if" Federal
Federal Taxable Income (FTI)
($1,500)
($800)
($500)
($400)
$300
$600
NOL Carried Forward from 2009 to 2013
$300
------------>
------------>
------------>
($300)
NOL Carried Forward from 2009 to 2014
$600
------------>
------------>
------------>
------------>
($600)
Balance
($600)
($800)
($500)
($400)
$0
$0
($900)
NY
Entire Net income (ENI)
($600)
($500)
$250
$400
Balance
($600)
($500)
$250
$400
($1,100)
Computation of ABC Company's eligible NOL carryover
						amounts and UNOL.
A Federal NOL sustained in a tax year that ABC Company
						was not subject to tax in New York State (i.e. the NOLs incurred in 2009 and
						2010) cannot be included in ABC Company's eligible Federal NOL carryover
						amount. Therefore, ABC Company's eligible Federal NOL carryover amount is
						($900). ABC Company's eligible NYS NOL carryover amount is ($1,100). ABC
						Company's UNOL is ($900), which is the lesser of its eligible Federal NOL
						carryover amount and its eligible NYS NOL carryover amount.
Example 2:
XYZ Company, a calendar-year NYS taxpayer, began business
						in 2009 and became taxable in NYS in 2009. XYZ Company's base year is calendar
						year 2014. XYZ Company had Federal/NYS income and losses, and applied its NOLs
						for tax years beginning before 1/1/2015, as follows:
XYZ Company
2009
2010
2011
2012
2013
2014
Eligible NOL carryover amount 12/31/2014
"As if" Federal
FTI
($1,000)
($1,200)
$600
($400)
$300
($700)
NOL Carried Forward from 2009 to 2011
$600
------------>
($600)
NOL Carried Forward from 2009 to 2013
$300
------------>
------------>
------------>
($300)
Balance
($100)
($1,200)
$0
($400)
$0
($700)
($2,300)
NY
ENI
$200
($1,000)
($300)
($100)
$400
($500)
Balance
$200
($1,000)
($300)
($100)
$400
($500)
($1,600)
Computation of XYZ Company's eligible NOL carryover
						amounts and UNOL.
XYZ Company's Federal and NYS NOLs available for
						carryover are only included in the eligible Federal and NYS NOL carryover
						amount, respectively, when there is both a Federal and New York State NOL
						sustained in the same taxable year and available for carryover as of the last
						day of the corporation's base year. Thus, only the Federal NOLs sustained in
						2010, 2012, and 2014 and available for carryover as of the last day of its base
						year are included in the eligible Federal NOL carryover amount. The Federal NOL
						sustained in 2009 is not included in the eligible Federal NOL carryover amount
						as there was no corresponding NYS NOL sustained in that year and available for
						carryover. The NYS NOL sustained in 2011 is not included in the eligible NYS
						NOL carryover amount as there was no corresponding Federal NOL sustained in
						that year and available for carryover. ABC Company's UNOL is ($1,600), which is
						the lesser of its eligible Federal NOL carryover amount and its eligible NYS
						NOL carryover amount.
Example 3:
Corporations L, M, N, and O are calendar-year taxpayers
						that began doing business in 2011 and properly filed as members of a combined
						group in NYS for 2011 through 2014. The combined group's base year is calendar
						year 2014. The combined group had Federal/NYS losses for tax years beginning
						before 1/1/2015, as follows:
Federal
2011 FTI
2012 FTI
2013 FTI
2014 FTI
Federal "as if" group's eligible NOL carryover
									 amount 12/31/2014
L
($400)
$100
($200)
($920)
M
$980
($3,000)
($500)
($2,300)
N
($600)
$1,900
($1,400)
$140
O
($900)
($1,100)
$700
($1,500)
Totals
($920)
($2,100)
($1,400)
($4,580)
($9,000)
NYS Combined Group
2011 ENI
2012 ENI
2013 ENI
2014 ENI
Combined group's eligible NYS NOL carryover
									 amount 12/31/2014
L
($500)
$500
($300)
($750)
M
$850
($2,000)
($600)
($2,000)
N
($600)
$2,000
($1,500)
$250
O
($1,000)
($1,000)
$500
($1,000)
Totals
($1,250)
($500)
($1,900)
($3,500)
($7,150)
Computation of base year combined group's eligible NOL
						carryover amounts and UNOL and Corporation L's, M's, N's and O's UNOL.
The base year combined group's Federal and NYS NOLs
						sustained in 2011 through 2014 and available for carryover as of the last day
						of its base year are included in its eligible Federal and NYS NOL carryover
						amount, respectively, since there were both Federal and NYS NOLs sustained in
						each of these taxable years and available for carryover as of the last day of
						its base year. The resulting base year combined group's eligible Federal NOL
						carryover amount is ($9,000) and its eligible NYS NOL carryover amount is
						($7,150). The base year combined group's UNOL is ($7,150), which is the lesser
						of its eligible Federal NOL carryover amount and its eligible NYS NOL carryover
						amount. Each member of the base year combined group must then compute its own
						UNOL, by multiplying the base year combined group's UNOL amount of ($7,150) by
						a percentage that represents each member's contribution of losses to the
						combined group's UNOL and as illustrated below:
NYS Combined Group
2011 ENI
2012 ENI
2013 ENI
2014 ENI
Losses by Member
Member's losses as a % of total losses of all
									 members with losses
Member's UNOL
L
($500)
$500
($300)
($750)
($1,550)
13.77%
($984)
M
$850
($2,000)
($600)
($2,000)
($4,600)
40.89%
($2,924)
N
($600)
$2,000
($1,500)
$250
($2,100)
18.67%
($1,335)
O
($1,000)
($1,000)
$500
($1,000)
($3,000)
26.67%
($1,907)
Totals
($1,250)
($500)
($1,900)
($3,500)
($11,250)
100.00%
($7,150)
Example 4:
Corporations E and F are calendar-year taxpayers that
						began doing business in 2011 and properly filed as members of a combined group
						in NYS for 2011 through 2014. The combined group's base year is calendar year
						2014. The combined group had Federal/NYS income and losses, and applied its
						NOLs for tax years beginning before 1/1/2015, as follows:
Combined Group:
2011
2012
2013
2014
Eligible NOL carryover amount 12/31/2014
"As if" Federal
FTI
Combined Group:
Corporation E
($10,000)
($7,000)
$2,000
$3,000
Corporation F
($6,000)
$650
$150
$1,000
Total for Federal "as if" group
($16,000)
($6,350)
$2,150
$4,000
NOL Carried Forward from 2011 to 2013
$2,150
-------------->
($2,150)
NOL Carried Forward from 2011 to 2014
$4,000
-------------->
-------------->
($4,000)
Balance
($9,850)
($6,350)
$0
$0
($16,200)
NY
ENI
Combined Group:
Corporation E
($11,000)
($7,700)
$2,500
$4,000
Corporation F
($4,000)
$100
($200)
$800
Total for combined group
($15,000)
($7,600)
$2,300
$4,800
NOL Carried Forward from 2011 to 2013
$2,150
-------------->
($2,150)
NOL Carried Forward from 2011 to 2014
$4,000
-------------->
-------------->
($4,000)
Balance
($8,850)
($7,600)
$150
$800
($16,450)
Computation of the base year combined group's eligible
						NOL carryover amounts and UNOL and Corporation E's and F's UNOL. The NYS NOLs
						carried forward from 2011 and deductible in 2013 and 2014 are limited to the
						amount of the "as if" Federal NOLs carried forward from 2011 to those years.
						Therefore, the Federal deduction limitation would limit the group's NYS NOL
						deduction in 2013 and 2014 to $2,150 and $4,000 respectively. The base year
						combined group's Federal and NYS NOLs sustained in 2011 and 2012 and available
						for carryover as of the last day of its base year are included in its eligible
						Federal and NYS NOL carryover amount, respectively, since there were both
						Federal and NY State NOLs sustained in each of these taxable years and
						available for carryover as of the last day of the combined group's base year.
						The base year combined group's UNOL is ($16,200), which is the lesser of its
						eligible Federal NOL carryover amount and its eligible NYS NOL carryover
						amount. Each member of the base year combined group must then compute its own
						UNOL, by multiplying the base year combined group's UNOL amount of ($16,200) by
						a percentage that represents each member's contribution of losses to the
						combined group's UNOL and as illustrated below. Since 2013 is a net income year
						for the combined group, Corporation F's loss of ($200) in 2013 is not included
						in the losses by member amounts below.
Member
2011 NYS NOL after carry forward (see
									 note)
2012 NYS NOL
2013 NYS NOL
2014 NYS NOL
Losses by Member
Member's losses as a % of total losses of all
									 members with losses
Member's UNOL
E
($6,490)
($7,600)
$0
$0
($14,090)
86%
($13,932)
F
($2,360)
$0
$0
$0
($2,360)
14%
($2,268)
Totals
($8,850)
($7,600)
$0
$0
($16,450)
100%
($16,200)
NOTE: Since some of the 2011 combined NOL was deductible
						in 2013 and 2014, the remaining available NOL from 2011 ($8,850) is allocated
						to Corporations E and F based on each corporation's original loss in 2011
						divided by the total combined loss for 2011 ($15,000) as follows:
Corporation E: 8,850 * (11,000/15,000) = 6,490
Corporation F: 8,850 * (4,000/15,000) = 2,360
Example 5:
During calendar tax year 2011, Corporation T filed
						separately in NYS and was not part of an affiliated group. In 2012, Corporation
						T began filing combined in NYS as a member of Group P, which consisted of
						Corporations Q and R, in addition to Corporation T. Group P had no Federal or
						NYS NOLs prior to 2012; Corporation T had no Federal or NYS NOLs prior to 2011.
						Group P's base year is calendar year 2014. Corporation T had an NOL for both
						Federal and NYS purposes in 2011, which is a Separate Return Limitation Year
						('SRLY"); the SRLY NOL was not subject to IRC section 382 limitations.
						Corporation T and Combined Group P had Federal/NYS income and losses, and
						applied the NOLs for tax years beginning before 1/1/2015, as follows:
Corporation T
2011
Federal
FTI
($250)
SRLY NOL Carried Forward from 2011 to 2012 (to
									 Group P)
$100
Balance
($150)
NY
ENI
($300)
NOL Carried Forward from 2011 to 2012 (to Group
									 P)
$100
Balance
($200)
Group P
T's SRLY NOL available after carryforward
									 2011
2012
2013
2014
Group P's Eligible NOL carryover amounts
									 12/31/2014
"As if" Federal
FTI
Group P:
Corporation Q
$50
($150)
$100
Corporation R
$50
$50
$150
Prior Combined Group Q and R gain/loss
$100
($100)
$250
Corporation T
$100
($200)
($250)
Total for Federal "as if" group
$200
($300)
$0
SRLY NOL Carried Forward from 2011 (from Corp
									 T) to 2012
($100)
Balance
($150)
$100
($300)
$0
($450)
ENI
Group P:
Corporation Q
($200)
($100)
$50
Corporation R
$50
$50
$50
Prior Combined Group Q and R gain/loss
($150)
($50)
$100
Corporation T
$300
($150)
($150)
Total for Combined Group P
$150
($200)
($50)
NOL Carried Forward from 2011 (from Corp T) to
									 2012
($100)
Balance
($150)
$50
($200)
$0
($350)
Computation of base year Group P's eligible NOL carryover
						amounts and UNOL and Corporation Q's, R's, and T's UNOL. The amount of
						Corporation T's SRLY NOL from 2011 that can be carried forward to Group P is
						($250), which is the lesser of the Federal or State NOL available and is the
						limitation for a loss sustained in an individual tax period being carried to a
						combined period. The deduction by Group P in 2012 is limited to $100, the
						amount of Corporation T's FTI for 2012. The NOLs remaining in 2011 and 2013 are
						included in Group P's eligible NYS carryover amount since there were both
						Federal and State NOL's sustained in each of those taxable years and available
						for carryover as of the last day of Group P's base year. Group P's NYS NOL
						sustained in 2014 ($50) is not included in the eligible carryover amount as
						there was no corresponding Federal NOL by Group P in that taxable year and
						available for carryover. Group P's UNOL is ($350) and includes the remaining
						loss available from the 2011 taxable period of ($150) along with ($200) from
						the 2013 tax period, being the lesser of the Federal or State NOL available.
						Each member of the base year combined Group P must then compute its own UNOL.
						Corporation T will have the ($150) remaining from the 2011 taxable year and its
						portion of the combined loss from the 2013 taxable year as determined by
						multiplying Group P's combined loss of ($200) by a percentage that represents
						each member's contribution of losses to the combined group's loss. Corporation
						Q will have its portion of the combined loss from the 2013 taxable year once
						again determined by multiplying Group P's combined loss of ($200) by a
						percentage that represents each member's contribution of losses to the combined
						group's loss and as illustrated below.
Member
2011 NYS NOL after carryforward
2012 NYS NOL
2013 NYS NOL
2014 NYS NOL
Losses by Member
Member's % of total combined losses of all
									 members
Member's Share of Combined 2013 Loss
Member's Total UNOL
Q
$0
($100)
$0
($100)
40%
($80)
($80)
R
$0
$50
$0
$0
0%
$0
$0
T
($150)
$0
($150)
$0
($150)
60%
($120)
($270)
Totals
($150)
$0
($200)
$0
($250)
100%
($200)
($350)
Corporation T's NYS loss of $150 in 2014 is not included
						in the losses by member amounts above. This is because the NYS NOL sustained in
						that year by the combined group that included Corporation T (i.e. Group P's
						2014 combined ENI of ($50)) was not included in the determination of Group P's
						UNOL (since, as explained above, there was no corresponding Federal NOL
						sustained by Group P in that taxable year and available for carryover).
Example 6:
Acme Company, a calendar-year taxpayer, began business in
						2009 and became taxable in NYS in 2009. Acme Company's base year is calendar
						year 2014. Acme Company had a change in ownership effective January 1, 2013,
						subjecting its Federal losses sustained in 2009 through 2012 to IRC section 382
						limitations. The ACME Company's annual section 382 limitation amount is $2,500.
						After the change in ownership Acme Company continued to file on a separate
						basis for NYS purposes. Acme Company had Federal/NYS losses for tax years
						beginning before 1/1/2015, as follows:
Federal NOLs subject to IRC section 382
Federal NOLs not subject to IRC section
									 382
Eligible NOL carryover amounts
									 12/31/2014
Acme Company
2009
2010
2011
2012
2013
2014
Arising from NOLs subject to IRC section
									 382
Arising from NOLs not subject to IRC section
									 382
(2009-2012)
(2013-2014)
"As if" Federal
FTI
($15,000)
($10,000)
($12,000)
($20,000)
($8,000)
($5,000)
Balance
($15,000)
($10,000)
($12,000)
($20,000)
($8,000)
($5,000)
($50,000)
($13,000)
NY
ENI
($20,000)
($12,000)
($10,000)
($18,000)
($5,000)
($4,000)
Balance
($20,000)
($12,000)
($10,000)
($18,000)
($5,000)
($4,000)
($60,000)
($9,000)
Computation of Acme Company's eligible NOL carryover
						amounts and UNOL. Since Acme Company has both Federal NOLs available for
						carryover that are subject to IRC section 382 limitations (from 2009 through
						2012) and Federal NOLs available for carryover that are not subject to IRC
						section 382 limitations (from 2013 and 2014), Acme Company must separately
						compute its eligible Federal NOL carryover amount for each, and also must
						separately compute its corresponding eligible NYS NOL carryover amount for
						each. Acme Company's Federal NOLs available for carryover from 2009 through
						2012 total ($57,000). However, due to the IRC section 382 limitation, the
						maximum amount of such NOLs available for carryover that can be included in its
						eligible Federal NOL carryover amount arising from Federal NOLs subject to IRC
						section 382 limitations is limited to ($50,000) which is the annual section 382
						limitation amount of ($2,500) multiplied by 20, less the amount of any such
						NOLs actually deducted (zero in this example as 2013 and 2014 are loss years).
						Acme Company's Federal NOLs available for carryover from 2013 and 2014,
						totaling ($13,000), are not subject to section 382 limitations and are included
						in its eligible Federal NOL carryover amount arising from Federal NOLs not
						subject to IRC section 382 limitations. Acme Company's UNOL is ($59,000), which
						is the sum of the following amounts:
(i) the lesser of the eligible Federal or NYS
					 NOL carryover amounts arising from Federal NOLs subject to IRC section 382
					 limitations; and
(ii) the lesser
					 of the eligible Federal or NYS NOL carryover amounts arising from Federal NOLs
					 not subject to IRC section 382 limitations.
Arising from NOLs subject to IRC section
									 382
2009-2012
Arising from NOLs not subject to IRC section
									 382
2013-2014
Eligible Federal NOL carryover amounts
									 (A)
($50,000)
($13,000)
Eligible NYS NOL carryover amounts (B)
($60,000)
($9,000)
Lesser of (A) and (B)
($50,000)
($9,000)
UNOL
($59,000)