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 9-3 - NEW YORK S CORPORATIONS › Section 9-3.3 - Examples

Current through Register Vol. 46, No. 28, July 10, 2024
Example 1: Corporation A is a New York S corporation that
						has the following types of receipts:
* dividends from stock of unitary corporations (that
						would have been characterized as other exempt income for a New York C
						corporation);
* dividends from stock of non-unitary corporations (that
						would have been characterized as investment income for a New York C
						corporation);
* net gains from sales of stock of non-unitary
						corporations (that would have been characterized as investment income for a New
						York C corporation);
* interest from loans secured by real property;
* interest from corporate bonds; and
* net gains from sales of corporate bonds.
Corporation A marks to market stock of non-unitary
						corporations only. No other assets are marked to market.
All of these receipts are considered business receipts
						for Corporation A. The amount of such receipts included in Corporation A's New
						York receipts or everywhere receipts is determined in accordance with section
						9-3.1  of this Subchapter.
Corporation A did not make the fixed percentage election.
						Therefore, dividends and net gains from stock are not included in its New York
						receipts or everywhere receipts pursuant to section 210-A.5(a)(2)(G) and the
						amount of interest from loans secured by real property, interest from corporate
						bonds, and net gains from the sale of corporate bonds included in New York
						receipts or everywhere receipts is determined in accordance with section
						210-A.5(a)(2) and this Subchapter.
To determine the amounts derived from New York sources
						for purposes of article 22, nonresident shareholder X of Corporation A must
						multiply its pro-rata share of Corporation A's items of income, gain, loss, and
						deduction that are included in shareholder X's New York adjusted gross income,
						including all income, gain, and loss from Corporation A's stocks, loans, and
						corporate bonds by Corporation A's apportionment factor.
Example 2: Same facts as Example 1 except that
						Corporation A makes the fixed percentage election. Since one stock has been
						marked to market, all stock are qualified financial instruments. The result is
						that 8% of the dividends and net gains (not less than zero) from stocks are
						included in Corporation A's New York receipts and 100% of dividends and net
						gains (not less than zero) from stock are included in everywhere receipts. The
						loans and corporate bonds are not qualified financial instruments as none of
						these assets have been marked to market. The amount of interest from the loans
						secured by real property, interest from corporate bonds, and net gains from the
						sales of corporate bonds included in New York receipts or everywhere receipts
						is determined in accordance with section 210-A and this Subchapter To determine
						the amounts derived from New York sources for purposes of article 22,
						nonresident shareholder X of Corporation A must multiply its pro-rata share of
						Corporation A's items of income, gain, loss, and deduction that are included in
						shareholder X's New York adjusted gross income, including all income, gain, and
						loss from Corporation A's stock, loans, and corporate bonds by Corporation A's
						apportionment factor.