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 3-8.9 - Examples

Current through Register Vol. 46, No. 28, July 10, 2024
Example 1:
2014 Calendar Year (Base Year)
Corporations L, M, N and O are properly included in a
						combined report. The combined group's base year BAP is 12.50% and the group's
						base year tax rate is 7.1%.
2015 Calendar Year (First 2015 Taxable Year)
Corporation O files on a separate basis. It is not a
						small business taxpayer. To compute its PNOLC subtraction pool, Corporation O
						first multiplies its UNOL by its base year combined group's base year BAP and
						base year tax rate ($7,325 x 12.50% x 7.1%). The result of $65 is divided by
						the 6.5% conversion percentage to arrive at a PNOLC subtraction pool of $1,000.
						Since Corporation O properly elected to use the 50% allotment method, its PNOLC
						subtraction pool is multiplied by 50% to determine its tax period PNOLC
						subtraction allotment of $500 for the first 2015 taxable year. In the first
						2015 taxable year, the PNOLC subtraction available for use is $500, which is
						equal to its tax period PNOLC subtraction allotment for that year.
Corporation
UNOL
Base Year BAP
Base Year Tax Rate
Conversion Percentage
PNOLC Subtraction Pool
PNOLC Subtraction Allotment Method
Tax Period PNOLC Subtraction Allotment
2015 Calendar Year PNOLC Subtraction Available
									 for Use
O
$7,325
12.50%
7.10%
6.50%
$1,000
50%
$500
$500
Corporations L, M, and N are properly included in a
						combined report. The combined group is not a small business taxpayer and it
						does not elect to use the 50% allotment method. Each member of the combined
						group computes its own PNOLC subtraction pool by multiplying its own UNOL by
						the base year combined group's base year BAP and base year tax rate. The result
						is then divided by the 6.5% conversion percentage to compute the member's PNOLC
						subtraction pool. Since the combined group is utilizing the 10% allotment
						method, each member's PNOLC subtraction pool is multiplied by 10% to arrive at
						the member's PNOLC subtraction allotment for the first 2015 taxable year. The
						combined group's tax period PNOLC subtraction allotment for the first 2015
						taxable year of $3,505 is the sum of L, M, and N's tax period PNOLC subtraction
						allotments for that year. The combined group's PNOLC subtraction available for
						use in the first 2015 taxable year is $3,505, which is equal to the combined
						group's tax period PNOLC subtraction allotment for that year.
2015 Group Member
Member's UNOL
Base Year BAP
Base Year Tax Rate
Conversion Percentage
Member's PNOLC Subtraction Pool
PNOLC Subtraction Allotment Method
Tax Period PNOLC Subtraction Allotment
2015 Calendar Year PNOLC Subtraction Available
									 for Use
L
$70,000
12.50%
7.10%
6.50%
$9,558
10%
$956
$956
M
$186,700
12.50%
7.10%
6.50%
$25,492
10%
$2,549
$2,549
N
$0
12.50%
7.10%
6.50%
$0
$0
$0
Totals
$256,700
$35,050
$3,505
$3,505
Example 2:
2014 Calendar Year (Base Year)
Corporations E, F, and G are properly included in a
						combined report. The combined group's base year BAP is 9.5% and the group's
						base year tax rate is 7.1%. Corporation H is a small business taxpayer and
						files on a separate basis, with a base year BAP of 4.8250% and a base year tax
						rate of 6.5%. Corporation I was not subject to tax in New York State in the
						base year. Corporation J files on a separate basis, with a base year BAP of
						9.75% and a base year tax rate of 7.1%.
2015 Calendar Year (First 2015 Taxable Year)
Corporations E, F, G, H, and I are properly included in a
						combined report. Even though Corporation H qualified as a small business
						taxpayer in 2014, the combined group does not qualify as one in 2015. The
						designated agent of the combined group does not elect to use the 50% allotment
						method. Each member computes its own PNOLC subtraction pool by multiplying its
						own UNOL by the base year BAP and base year tax rate. Corporations E, F, and G
						have the same base year BAP and base year tax rate as they were included in the
						same base year combined group. Corporation H must use its separately filed base
						year BAP and base year tax rate. As Corporation I was not subject to tax in the
						base year, it has a 0% base year BAP and 0% base year tax rate. The result is
						then divided by the 6.5% conversion percentage to compute the member's PNOLC
						subtraction pool. Since the combined group is utilizing the 10% allotment
						method, each member's PNOLC subtraction pool is multiplied by 10% to arrive at
						the member's PNOLC subtraction allotment for the first 2015 taxable year. The
						combined group's PNOLC subtraction allotment for the first 2015 taxable year is
						$2,900, which is the sum of E, F, G, H, and I's tax period PNOLC subtraction
						allotments for that year. The combined group's PNOLC subtraction available for
						use in the first 2015 taxable year is $2,900, which is equal to the tax period
						PNOLC subtraction allotment for that year. The combined group is able to
						utilize the entire PNOLC subtraction available for use so there is no
						carryforward of PNOLC subtraction from the first 2015 taxable year.
2015 Group Member
Member's UNOL
Base Year BAP
Base Year Tax Rate
Conversion Percentage
Member's PNOLC Subtraction Pool
PNOLC Subtraction Allotment Method
PNOLC Subtraction Allotment
2015 Calendar Year PNOLC Subtraction Available
									 for Use
E
$115,600
9.50%
7.10%
6.50%
$11,996
10%
$1,200
$1,200
F
$28,900
9.50%
7.10%
6.50%
$2,999
10%
$300
$300
G
$57,800
9.50%
7.10%
6.50%
$5,998
10%
$600
$600
H
$165,800
4.83%
6.50%
6.50%
$8,000
10%
$800
$800
I
$0
$0
$0
$0
$0
$0
$0
$0
Total
$368,100
$28,993
$2,900
$2,900
Corporation J files on a separate basis and properly
						elects to use the 50% allotment method. To compute its PNOLC subtraction pool,
						Corporation J first multiplies its UNOL by its base year BAP and base year tax
						rate ($16,000 x 9.750% x 7.1%). The result of $111 is divided by the 6.5%
						conversion percentage to arrive at a PNOLC subtraction pool of $1,704. Since
						Corporation J properly elected to use the 50% allotment method, its PNOLC
						subtraction pool is multiplied by 50% to determine its tax period PNOLC
						subtraction allotment of $852 for the first 2015 taxable year. In the first
						2015 taxable year, the PNOLC subtraction available for use is $852, which is
						equal to its tax period PNOLC subtraction allotment for that year. Corporation
						J is able to use the entire PNOLC subtraction available for use so there is no
						carryforward of PNOLC subtraction from the first 2015 taxable year.
Corporation
UNOL
Base Year BAP
Base Year Tax Rate
Conversion Percentage
PNOLC Subtraction
Pool
PNOLC Subtraction Allotment Method
Tax Period PNOLC Subtraction Allotment
2015 CalendarYear PNOLC Subtraction
J
$16,000
9.75%
7.10%
6.50%
$1,704
50%
$852
$852
2016 Calendar Year (Second Year Following the Base
						Year)
Corporations E, F, G, H, I, and J are properly included
						in a combined report. The group has $3,752 of PNOLC subtraction available for
						use, which is the sum of each member's PNOLC subtraction available for use for
						the tax period.
2016 Group Member
Member's PNOLC Subtraction Pool
PNOLC Subtraction Allotment Method
Tax Period PNOLC Subtraction Allotment
Unused PNOLC Subtraction Carryforward from 2015
									 Calendar Year
2016 Calendar Year PNOLC Subtraction Available
									 for Use
E
$11,996
10%
$1,200
$0
$1,200
F
$2,999
10%
$300
$0
$300
G
$5,998
10%
$600
$0
$600
H
$8,000
10%
$800
$0
$800
I
$0
$0
$0
$0
$0
J
$1,704
50%
$852
$0
$852
Total
$30,697
$3,752
$0
$3,752
Even though combined group E, F, G, H, I elected in 2015
						to use the 10% allotment method, Corporation J is required to continue to use
						the 50% allotment method elected on its original, timely filed return for the
						first 2015 taxable year when it joined the combined group in 2016. However, if
						Corporation J properly revokes such election in accordance with the rules in
						this Subpart, it would then use the 10% allotment method in the 2016 taxable
						year.