New York Codes, Rules and Regulations › Title 20 - DEPARTMENT OF TAXATION AND FINANCE › Chapter I - Franchise and Certain Business Taxes › Subchapter C - Franchise Taxes On Insurance Corporations › Part 32 - COMBINED RETURNS › Section 32.6 - Combined group composition

Current through Register Vol. 46, No. 28, July 10, 2024
The following steps should be used to determine whether a
					 combined return is required and, if so, which corporations are included in that
					 combined return:
(a) Step 1. Every
				  taxpayer must identify all of the corporations to which it is related,
				  regardless of the franchise tax imposed by the Tax Law the corporation is
				  subject to (or would be taxable under if subject to tax). Where one or more of
				  the related corporations are taxpayers, identify all of the corporations
				  related to these taxpayers. Do this until all related corporations have been
				  identified. If a taxpayer has no related corporations, it must file on a
				  separate basis. This constitutes the step 1 group of related
				  corporations.
(b) Step 2. Identify
				  all of the related corporations that have substantial intercorporate
				  transactions with a taxpayer identified in step 1. These related corporations
				  and the taxpayer with which they have substantial intercorporate transactions
				  constitute the step 2 tentative combined group.
(c) Step 3. Add to the step 2 tentative
				  combined group every related corporation that has substantial intercorporate
				  transactions with any corporation identified in step 2. This constitutes the
				  step 3 tentative combined group.
(d) Step 4. Add to the step 3 tentative
				  combined group every related corporation that has substantial intercorporate
				  transactions with any corporation identified in step 3. Repeat this process
				  until it adds no more corporations to the group. This constitutes the step 4
				  tentative combined group.
(e) Step
				  5. Identify each related corporation not in the step 4 tentative combined group
				  that has substantial intercorporate transactions with another related
				  corporation not in the step 4 tentative combined group. Compare all such groups
				  and combine into one group those with common members (unattached related
				  group). There may be more than one unattached related group.
(f) Step 6. If there are substantial
				  intercorporate transactions between any one corporation in an unattached
				  related group and the step 4 tentative combined group, then all corporations in
				  that unattached related group are included in the combined group. Do this for
				  each unattached related group. As unattached related groups are included in the
				  combined group, do this analysis between the expanded group and each unattached
				  related group. The resulting group is the step 6 tentative combined
				  group.
(g) Step 7. If there are
				  substantial intercorporate transactions between any one corporation in the step
				  6 tentative combined group and an unattached related group, then all
				  corporations in the unattached related group are included in the combined
				  group. Do this for each unattached related group. As unattached related groups
				  are included in the combined group, do this analysis between the expanded group
				  and each unattached related group. The resulting group is the step 7 tentative
				  combined group.
(h) Step 8. Add to
				  the step 7 tentative combined group each related corporation that has
				  substantial intercorporate transactions with the step 7 tentative combined
				  group.
(i) Step 9. Repeat the
				  process set forth in steps 4, 6, 7, and 8 until no more corporations can be
				  added to the tentative combined group.
(j) Step 10. Eliminate from the tentative
				  combined group those corporations that are formed under the laws of another
				  country (alien corporations), that are taxable under another franchise tax
				  imposed by the Tax Law (or would be taxable under another franchise tax if
				  subject to tax), or that are subject to the tax imposed by section 1502-a or
				  section 1502-b. Also eliminate any captive REIT or captive RIC as defined in
				  subdivisions 9 and 10 of section 2, respectively, that is required to be
				  included in a combined return under section 210-C. If two or more corporations
				  are eliminated, it is possible that they will constitute a combined group if
				  they have substantial intercorporate transactions.