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 9 - SPECIAL ENTITIES › Subpart 9-4 - REAL ESTATE INVESTMENT TRUSTS (REITS) AND REGULATED INVESTMENT COMPANIES (RICS) › Section 9-4.4 - Combination rules for REITs and RICs

Current through Register Vol. 46, No. 28, July 10, 2024
(a) Captive REITs and captive RICs will
					 always be included in a combined report under article 9-A, unless they are
					 required to be included in a combined report under article 33.
(1)
(i) For
					 purposes of determining under which article of the Tax Law a captive REIT or a
					 captive RIC is to be combined, the rules in section 1515 will be applied first.
					 If such captive REIT or such captive RIC is not required to be included in a
					 combined report under article 33, then it will be included in a combined report
					 pursuant to the rules included in section 210-C and further described in
					 Subpart 6-2 of this Subchapter.
(ii) A captive REIT or captive RIC is
					 required to be included in a combined return under article 33 in either of
					 these circumstances:
(a) When the corporation
					 that directly owns or controls more than 50% of the voting power of the capital
					 stock of the captive REIT or captive RIC is a life insurance corporation
					 subject to tax or required to be included in a combined return under article
					 33; or, if this condition in this clause is not satisfied, then
(b) When the closest controlling stockholder
					 of the captive REIT or captive RIC is a life insurance corporation subject to
					 tax or required to be included in a combined return under article 33.
(c) The term "closest controlling
					 stockholder" means the corporation that indirectly owns or controls over 50% of
					 the voting power of the capital stock of a captive REIT or captive RIC, is
					 subject to tax under section 1501 or article 9-A or is required to be included
					 in a combined return under article 33 or a combined report under article 9-A,
					 and is the fewest tiers of corporations away in the ownership structure from
					 the captive REIT or captive RIC.
(d) Examples.
Example 1: Insurance Company X, which is licensed as a
						life insurance company in New York State and subject to tax under section 1501,
						owns 100% of the voting power of the capital stock of Corporation Y, a general
						business corporation subject to tax under article 9-A. Corporation Y owns 75%
						of the voting stock of a captive REIT. Because over 50% of the voting power of
						the capital stock of the captive REIT is not directly owned or controlled by a
						life insurance corporation subject to tax or required to be included in a
						combined return under article 33 and the closest controlling stockholder of the
						captive REIT is a life insurance company, the captive REIT must be included in
						a combined return with Insurance Company X.
Example 2: Insurance Company X, which is licensed as a
						life insurance company in New York and subject to tax under section 1501, owns
						100% of the voting power of the capital stock of Corporation Y, a general
						business corporation subject to tax under article 9-A. Corporation Y owns 100%
						of the voting power of the capital stock of Corporation Z, also a general
						business corporation subject to tax under article 9-A. Corporations Y and Z are
						engaged in a unitary business. Corporation Z owns 100% of the voting power of
						the capital stock in a captive RIC. Corporation Y is the closest controlling
						stockholder in the captive RIC. Because over 50% of the voting power of the
						capital stock of the captive RIC is not directly owned or controlled by
						Insurance Company X, and the closest controlling stockholder in the captive RIC
						is not a life insurance corporation subject to tax under article 33, the
						captive RIC is required to be included in a combined report under article 9-A
						with Corporations Y and Z.
Example 3: Same facts as in Example 2 except that
						Corporations Y and Z are not engaged in a unitary business. In this case, the
						captive RIC is required to be included in a combined report with Corporation
						Z.