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 1 - IMPOSITION OF TAX › Subpart 1-2 - CORPORATIONS SUBJECT TO TAX › Section 1-2.3 - Foreign corporations - partnership interests

Current through Register Vol. 46, No. 28, July 10, 2024
Tax Law, section 209(1)
(a) If a partnership is doing business,
					 employing capital, owning or leasing property, maintaining an office, or
					 deriving receipts from activity in New York State, as determined pursuant to
					 the rules under article 9-A, then all of its corporate general partners (other
					 than corporate partners that are or would be subject to franchise tax under
					 article 9 or 33) are subject to the tax imposed by article 9-A.
(b) A foreign corporation is doing business,
					 employing capital, owning or leasing property, maintaining an office, or
					 deriving receipts from activity in New York State if:
(1) it is a limited partner of a partnership,
					 other than a portfolio investment partnership, that is doing business,
					 employing capital, owning or leasing property, maintaining an office, or
					 deriving receipts from activity in New York State and
(2) it is engaged, directly or indirectly, in
					 the participation in or the domination or control of all or any portion of the
					 business activities or affairs of the partnership. Such foreign corporations
					 that are limited partners of such partnerships (other than corporate partners
					 that are or would be subject to franchise tax under article 9 or 33) are
					 subject to the tax imposed by article 9-A. A foreign corporation is engaged,
					 directly or indirectly, in the participation in or the domination or control of
					 all or any portion of the business activities or affairs of the partnership if
					 one or more of certain factual situations, including but not limited to the
					 following, exist during the taxable year or, except for subparagraph (i) of
					 this subdivision, any previous taxable year:
(i) The foreign corporation has a 1% or more
					 interest as a limited partner in a partnership and/or the basis of the foreign
					 corporation's interest in the limited partnership, determined pursuant to IRC
					 section 705, is more than $1 million. For purposes of determining whether the
					 level of interest in the partnership or level of basis of the interest in the
					 partnership is met, the percentage of interest in the partnership, and basis of
					 interest in the partnership of members of the foreign corporation's affiliated
					 group, of officers or directors of the foreign corporation, or of officers or
					 directors of members of the foreign corporation's affiliated group, are added
					 to the foreign corporation's interest in the partnership or the basis of its
					 interest in the partnership, respectively.
(ii) An officer, employee, or director of the
					 foreign corporation, or an officer, employee, or director of a member of an
					 affiliated group that includes such foreign corporation or a member of such an
					 affiliated group, is a general partner of the partnership.
(iii) The foreign corporation or a member of
					 an affiliated group that includes the foreign corporation is a 5% or more
					 stockholder in a general partner of the partnership.
(iv) One or more officers, employees,
					 directors or agents of the foreign corporation, or of a member of an affiliated
					 group that includes such foreign corporation, perform acts usually performed by
					 a general partner.
(v) The foreign
					 corporation becomes a limited partner after one or more officers, employees,
					 directors or agents of such corporation, or of a member of an affiliated group
					 that includes such foreign corporation, negotiates the terms of the partnership
					 agreement instead of merely accepting an existing agreement.
(vi) There is substantial communication
					 between one or more officers, employees, directors or agents of the foreign
					 corporation, or of a member of an affiliated group that includes such foreign
					 corporation, and the general partner regarding the business activities or
					 affairs of the partnership.
(vii)
					 The foreign corporation, a member of an affiliated group that includes such
					 foreign corporation, or an officer, employee, or director of the foreign
					 corporation or of a member of such an affiliated group, guarantees payment of
					 one or more loans to the partnership.
(viii) The foreign corporation, a member of
					 an affiliated group that includes such foreign corporation, or an officer,
					 employee, or director of the foreign corporation or of a member of such an
					 affiliated group, makes loans to the partnership.
(ix) The foreign corporation is a limited
					 partner that for purposes of IRC section 469 is materially participating in the
					 partnership as defined in 26
					 CFR 1.469-5 T(e). For purposes of this
					 subparagraph, references to taxpayer in such section 469 is deemed to mean any
					 person, as defined in IRC section 7701(a)(1).
(x) The foreign corporation entered into the
					 limited partnership arrangement not for a valid business or economic purpose,
					 but for the principal purpose of avoiding or evading the payment of
					 tax.