New York Codes, Rules and Regulations › Title 20 - DEPARTMENT OF TAXATION AND FINANCE › Chapter II - Income Taxes and Estate Taxes › Subchapter D - City Of Yonkers Earnings Tax On Nonresidents › Part 261 - Accounting Periods And Methods › Accounting Methods › Section 261.13 - Change from accrual to installment method of accounting

Current through Register Vol. 46, No. 28, July 10, 2024
Tax Law, § 5(d)(3) of § 1340(c); Codes and Ordinances of
						the City of Yonkers, § 92-102(d)(3)
(a)
General.
If a nonresident taxpayer has changed his method of
						accounting from an accrual to an installment method for Federal income tax
						purposes, any installment payments actually received in the year of change or
						in subsequent taxable years (such year or years being referred to as
						"adjustment years"), on account of sales or other dispositions of property made
						in any taxable year prior to the year of the change, are required to be
						included in Federal net earnings from self-employment, and consequently are
						included in City of Yonkers net earnings from self-employment. Therefore,
						profits attributable to installment sales which were taxed in the year of sale
						because the taxpayer was then on the accrual method of accounting would also be
						taxed in the adjustment years (
i.e.,
during the years the
						installments are actually received after the change to the installment method
						of accounting). To avoid such duplication of City of Yonkers earnings tax, any
						additional tax for the adjustment years attributable to the receipt of
						installment payments properly accrued in a prior year must be reduced by an
						amount equal to the portion of the City of Yonkers earnings tax for any year or
						years preceding the year of change attributable to the prior accrual of income
						from installment sales included in City of Yonkers net earnings in the
						adjustment years.
(b)
Reduction in City of Yonkers earnings tax for adjustment year.
To give effect to the foregoing, the City of Yonkers
						earnings tax for an adjustment year must be reduced by the lower of the
						following amounts:
(1) that proportion
					 of the City of Yonkers earnings tax for the prior year (in which the
					 installment sales were reported on the accrual basis) which the amount of
					 installment sales gross profits reportable in the prior year of the sale and in
					 the adjustment year bears to the City of Yonkers net earnings for such prior
					 year of sale; or
(2) the excess, if
					 any, of the amount of City of Yonkers earnings tax for the adjustment year on
					 the entire City of Yonkers earnings, over the amount of the City of Yonkers
					 earnings tax for such year, computed without regard to the amount of the
					 installment sales gross profits reported in both the prior year of accrual and
					 in the adjustment year.
Where previously reported installments received in an
						adjustment year include installments on sales made in more than one prior year,
						the reduction allowable with respect to the installments for each prior year
						must be computed separately. In such a case, the excess City of Yonkers
						earnings tax, calculated under paragraph (2) of this subdivision, computed with
						respect to the installments from all prior years, must be prorated over the
						several prior years in proportion to the amount of the duplicated installment
						sales profits attributable to each such prior year.