§ 3-02 Accounting Periods and Methods.

   (a)   Accounting periods. 

      (1)   General. (Administrative Code, § 11-638(b); § 11-639(a))

         (i)   Generally, for Federal income tax purposes, a taxpayer's taxable year is the same as its accounting period. In most cases, the taxable year for which the banking corporation tax is to be computed and for which a tax return is to be filed shall be the same as the taxpayer's taxable year for Federal income tax purposes or that portion of the Federal taxable year for which the taxpayer is subject to the banking corporation tax. (See: 19 RCNY § 3-01(b) "taxable year"). The taxable year under the banking corporation tax law will, generally, be the accounting period covered by the taxpayer's Federal income tax return whether such period be a calendar year, a properly established fiscal year, an accounting period consisting of 52 or 53 weeks or an accounting period of less than 12 months as permitted or required under the Internal Revenue Code. If a taxpayer does not have a taxable year for Federal income tax purposes, the tax must be computed and a return must be filed for a calendar year, unless the Commissioner of Finance authorizes the use of some different accounting period.

         (ii)   The banking corporation tax is imposed for each fiscal or calendar year of the taxpayer, or any part thereof, during which the taxpayer is doing business in a corporate or organized capacity in New York City. Therefore, for purposes of the banking corporation tax, the taxpayer's first taxable year begins on the date it commences doing business in a corporate or organized capacity in New York City and ends on the last day of its fiscal or calendar year or the last day it is subject to the banking corporation tax, whichever comes first.

      (2)   Calendar year taxpayers.

         (i)   A taxpayer which reports on the basis of a calendar year for Federal income tax purposes must report on the same basis for purposes of the banking corporation tax. A calendar year is a period of 12 calendar months ending on December 31, or a period of less than 12 calendar months beginning on the date a taxpayer becomes subject to tax and ending on December 31. A calendar year also includes, in the case of a taxpayer which changes the period on the basis of which it keeps its books from a fiscal year to a calendar year, the period from the close of its last fiscal year to and including the following December 31.

         (ii)   A taxpayer shall use a calendar year as its accounting period and report on a calendar year basis in the following situations:

            (A)   the taxpayer keeps its books on the basis of a calendar year;

            (B)   the taxpayer keeps its books on the basis of any period ending on any day other than the last day of a calendar month except in the case of a taxpayer which keeps its books on the basis of a 52-53 week accounting period;

            (C)   the taxpayer does not keep books; or

            (D)   the taxpayer is not required to file a Federal income tax return, unless the use of a fiscal year or a 52-53 week period basis of reporting has been authorized by the Commissioner of Finance.

      (3)   Fiscal year taxpayers.

         (i)   A taxpayer which reports on the basis of a fiscal year for Federal income tax purposes must report on the same basis for purposes of the banking corporation tax. A fiscal year is a period not longer than 12 calendar months, or any shorter period beginning on the date the taxpayer becomes subject to tax and ending on the last day of any month other than December. A fiscal year also includes, in the case of a taxpayer which changes the period on the basis of which it keep its books from a calendar year to a fiscal year or from one fiscal year to another fiscal year, the period from the close of its last calendar or fiscal year up to the date designated as the close of its new fiscal year. A fiscal year also includes a 52-53 week accounting period if such period has been elected by the taxpayer.

         (ii)   A taxpayer reporting on a fiscal year basis must keep its books on such basis.

      (4)   52-53 week fiscal year taxpayers.

         (i)   A taxpayer which reports on the basis of a 52-53 week accounting period for Federal income tax purposes must report on the same basis for purposes of the banking corporation tax. A 52-53 week period must end on the same day of the week each year and end always on whatever date that day of the week last occurs in a calendar month, or on whatever date that day of the week falls which is nearest the last day of a calendar month.

         (ii)   If a 52-53 week accounting period is used and the period starts within seven days from the first day of any calendar month, the taxable year will be deemed to have begun on the first day of such calendar month. If a 52-53 week accounting period ends within seven days from the last day of any calendar month, the taxable year will be deemed to have ended on the last day of such month.

         (iii)   If a taxpayer uses a 52-53 week accounting period for Federal income tax purposes and becomes subject to the banking corporation tax, the taxpayer may be required to file returns for two taxable years during an accounting period for which one Federal return is required. For example, a banking corporation commences doing business in New York City on Monday, October 29, 1984. The corporation uses a 52-53 week accounting period ending on the Saturday nearest the last day of October for Federal income tax purposes. The 52-53 week accounting period for which the corporation computes its tax for Federal income tax purposes begins October 28, 1984 and ends Saturday, November 2, 1985. For purposes of the banking corporation tax, the period from October 29, 1984 to October 31, 1984, inclusive, is deemed to be the first period for which a return is due and a tax payable. The next taxable period is deemed to be from November 1, 1984 to October 31, 1985 and is based on the accounting period ending November 2, 1985.

      (5)   Change of accounting period.

         (i)   If a taxpayer's accounting period for Federal income tax purposes is changed, the taxable year and accounting period for which the taxpayer's return is filed under the banking corporation tax must be changed at the same time to coincide with the new Federal income tax accounting period and taxable year. (See: 19 RCNY § 3-05(a)(2) – Short period returns.)

         (ii)   Where a taxable year or accounting period of less than 12 months results from a change of accounting period, the taxpayer must file a return and pay the tax due for the period beginning from the close of the last taxable year or accounting period for which a return was required to be filed to the date designated as the close of its new accounting period or taxable year. Where a change in a taxable year from or to a 52-53 week accounting period, or from one 52-53 week period to a different 52-53 week period, results in a period of either 359 days or more or six days or less the 359 day or more period must be computed as if it were a full taxable year, and the period of six days or less must be added to and deemed part of the following taxable year. In the case of a period consisting of more than six days and less than 359 days, a return must be filed for such period.

         (iii)   A taxpayer whose accounting period is changed for Federal income tax purposes is not required to apply for or obtain permission to make a similar change with respect to returns required under the banking corporation tax. In such a case, however, the taxpayer must submit with the first return filed for the new accounting period under the banking corporation tax a copy of the consent of the Commissioner of Internal Revenue to the change for Federal income tax purposes. A taxpayer which changes its accounting period for Federal income tax purposes without the prior approval of the Commissioner of Internal Revenue must submit with the first return filed for the new accounting period under the banking corporation tax law, a statement indicating the authority for the change of the Federal accounting period.

         (iv)   In the case of a taxpayer which has an established accounting period for Federal income tax purposes, no change of accounting period for purposes of the banking corporation tax (other than one required by reason of a change of the Federal accounting period as set forth in subparagraph (i) of this paragraph) will be permitted.

   (b)   Accounting methods.

      (1)   General. (Administrative Code, § 11-641(m); § 11-641.1; § 11-643.5(b))

         (i)   The accounting method or basis on which entire net income, alternative entire net income or taxable assets is to be computed must be the same as the taxpayer's method of accounting for Federal income tax purposes. However, when the Commissioner of Finance deems it necessary in order to properly reflect the entire net income or alternative entire net income of the taxpayer, he may determine the taxable year or period in which any item of income or deduction must be included, without regard to the method of accounting used by the taxpayer. (See: 19 RCNY § 3-03(b)(6) – Taxable year in which income or deduction is included in entire net income and 19 RCNY § 3-03(d)(3) – Taxable year in which income or deduction is included in alternative entire net income.) When the Commissioner of Finance deems it necessary in order to properly reflect the taxable assets of the taxpayer, he may determine the taxable year or period in which any adjustment to the value of an asset may be claimed, without regard to the method of accounting used by the taxpayer.

         (ii)   In the absence of an accounting method for Federal income tax purposes, entire net income, alternative entire net income or taxable assets must be computed in accordance with the method regularly employed in keeping the books of the taxpayer, provided such method properly reflects entire net income, alternative entire net income or taxable assets. If the books of a taxpayer do not properly reflect entire net income, alternative entire net income or taxable assets or if no books are kept, the computation of entire net income, alternative entire net income or taxable assets must be made in such manner as the Commissioner of Finance deems necessary to properly reflect entire net income, alternative entire net income or taxable assets.

      (2)   Change of accounting method.

         (i)   If a taxpayer's method of accounting for Federal income tax purposes is changed, the accounting method employed in determining entire net income, alternative entire net income or taxable assets for purposes of the banking corporation tax must be changed at the same time to the method approved for Federal income tax purposes. When a change of accounting method is made, any adjustments which are determined to be necessary solely by reason of the change in order to prevent amounts from being duplicated or omitted must be taken into account to the extent they are required to be taken into account in determining the taxpayer's Federal taxable income.

         (ii)   A taxpayer whose method of accounting is changed must submit with its first return in which the new accounting method is used a copy of the consent of the Commissioner of Internal Revenue, together with complete details of any adjustments with respect to items of income or deduction or adjustments to the value of assets.

   (c)   Cessation periods. (Administrative Code, § 11-639(a))

      (1)   The banking corporation tax is imposed for each taxable year during which a taxpayer does business in a corporate or organized capacity in New York City. Accordingly, for purposes of the banking corporation tax, every taxpayer is subject to tax up to the date on which it ceases to do business in a corporate or organized capacity in New York City.

      (2)   A taxpayer may cease to be subject to the banking corporation tax because of a change in classification. (See: 19 RCNY § 3-01(c)(5) – Change in classification.) In some cases, a corporation may then become subject to tax under some other subchapter of Chapter 6 of Title 11 or some other chapter of Title 11 of the Administrative Code.

      (3)   For rules concerning the time for filing cessation returns, see 19 RCNY § 3-05(d)(3).

§ 3-03 Computation of Tax.

   (a)   Introduction.

      (1)   General. (Administrative Code, § 11-643.5(a) and (b))

         (i)   Every corporation subject to the banking corporation tax must compute its basic tax (See: 19 RCNY § 3-03(b) – Basic tax – measured by entire net income) and its alternative minimum tax. (See: subdivisions (d), (e), (f) and (g) of this 19 RCNY § 3-03.) Every taxpayer must pay the basic tax unless the alternative minimum tax is greater, in which case the taxpayer must pay the alternative minimum tax.

         (ii)   The basic tax is measured by the taxpayer's entire net income, or portion thereof allocated to New York City, and is imposed at the rate of nine percent.

         (iii)   The alternative minimum tax is the largest of three bases.

            (A)   The bases are: (a) (1) except for a corporation organized under the laws of a country other than the United States, and except as provided in subparagraph (iii)(B) of this paragraph, 0.1 of the mill upon each dollar of taxable assets, or portion thereof allocated to New York City (See: 19 RCNY § 3-03(e) – Alternative minimum tax measured by taxable assets); or (2) for a corporation organized under the laws of a country other than the United States, 2.6 mills upon each dollar of the taxpayer's issued capital stock, or portion thereof allocated to New York City, on the last day of its taxable year (See: 19 RCNY § 3-03(f) – Alternative minimum tax measured by issued capital stock); (b) three percent of alternative entire net income, or portion thereof allocated to New York City (See: 19 RCNY § 3-03(d) – Alternative minimum tax measured by alternative entire net income); and (c) $125 (See: 19 RCNY § 3-03(g) – Alternative minimum tax measured by the fixed minimum amount.)

            (B)   A taxpayer which has an outstanding net worth certificate issued to the Federal Deposit Insurance Corporation or to the Federal Savings and Loan Insurance Corporation and which meets certain other requirements is not subject to the alternative minimum tax measured by taxable assets for that portion of the taxable year in which such certificate is outstanding and such requirements are met. (See: 19 RCNY § 3-03(e)(1) – Computation of the alternative minimum tax measured by taxable assets.)

      (2)   Computing tax on combined returns. (Administrative Code, § 11-646(f)) Where corporations report on a combined basis, the tax is measured by the combined entire net income (See: 19 RCNY § 3-03(b)(6)), or by the combined alternative entire net income (See: 19 RCNY § 3-03(d)(2)), or by the combined taxable assets (See: 19 RCNY § 3-03(e)(6) of all of the corporations included in the combined return. Each taxpayer included in the combined return (other than the taxpayer paying the combined tax) is required to pay an alternative minimum tax of $125. The corporation paying the combined tax will pay the alternative minimum tax of $125 (See: 19 RCNY § 3-03(g)(2)) when it is the greatest alternative minimum base and the alternative minimum tax is greater than the basic tax. As to when combined returns will be required or permitted, see 19 RCNY § 3-05(b) – Combined returns.

      (3)   Correcting distortion of income or assets. (Administrative Code, § 11-646(g))

         (i)   In case it shall appear to the Commissioner of Finance that any agreement, understanding or arrangement exists between the taxpayer and any other corporation or any person or firm, whereby the activity, business, income or assets of the taxpayer within New York City is improperly or inaccurately reflected, the Commissioner of Finance may, in his discretion, make such adjustments as he deems necessary in order to accurately reflect the tax liability of the taxpayer. In exercising his discretion, the Commissioner of Finance is empowered to adjust:

            (A)   items of income or deduction in computing entire net income or alternative entire net income;

            (B)   assets;

            (C)   wages, salaries and other personal service compensation, receipts or deposits in computing any allocation percentage, provided only that entire net income or alternative entire net income be adjusted accordingly and that any asset directly traceable to the elimination of any receipt be eliminated from taxable assets so as to accurately determine the tax. If, however, in the determination of the Commissioner of Finance, such adjustments do not or cannot effectively provide for the accurate determination of the tax, the Commissioner of Finance shall be authorized to require the filing of a combined return by the taxpayer and any such other corporations. Thus, the Commissioner of Finance is not required to exercise his authority under this paragraph and in lieu thereof or in addition thereto a combined return may be required or permitted pursuant to the provisions of 19 RCNY § 3-05(b).

         (ii)   The Commissioner of Finance may include in the entire net income or alternative entire net income of the taxpayer the fair profits which, but for an agreement, arrangement or understanding as described in subparagraph (i) of this paragraph, the taxpayer might have derived from any transaction:

            (A)   where any taxpayer conducts its activity or business under any agreement, arrangement or understanding in such manner as either directly or indirectly to benefit its members or stockholders, or any of them, or any person or persons directly or indirectly interested in such activity or business, by entering into any transaction at more or less than a fair price which, but for such agreement, arrangement or understanding, might have been paid or received therefor; or

            (B)   where any taxpayer enters into any transaction with another corporation on such terms as to create an improper loss or net income.

         (iii)   In determining whether an agreement, understanding or arrangement between the taxpayer and any other corporation or any person or firm results in an improper or inaccurate reflection of the activity, business, income or assets of the taxpayer within New York City, consideration is given to such factors as:

            (A)   whether the taxpayer controls or is controlled by such other corporation, person or firm, or whether the taxpayer and such other corporation, person or firm are controlled by the same interest;

            (B)   whether the agreement, understanding or arrangement in question would have been entered into, or whether the terms and conditions would have been the same, had the element of control been absent and had the parties been dealing at arm's length; and

            (C)   whether the agreement, understanding or arrangement in question has a reasonable business purpose, or whether it appears to be arbitrary or to have been motivated principally by a tax avoidance purpose.

         (iv)   In applying the provisions of subparagraph (i) of this paragraph, the Commissioner of Finance will consider, and may utilize in making adjustments or determining a fair price or fair profit, the principles and rules contained in §§ 1.482-1 and 1.482-2 of the Federal income tax regulations (26 C.F.R. § 1.482-1; 26 C.F.R. § 1.482-2) to the extent that they are relevant and can be made applicable to the provisions of this paragraph.

      (4)   Use of dollar amounts in computing tax.

         (i)   Any amount required to be included in a return may be entered at the nearest whole dollar amount. This does not apply to the items which must be taken into account in making the computations necessary to determine such amount. For example, each taxable dividend received must be taken into account at its exact amount, including cents, in computing the amount of dividend income to be included in the banking corporation tax return. However, the total amount of dividend income to be included in the return may be entered at the nearest whole dollar amount. A taxpayer may elect not to use whole dollar amounts by reporting all amounts in full, including cents, if a similar election is made for Federal income tax purposes. Such election must be made at the time of filing the return and is irrevocable with respect to the taxable year covered by the return. A new election may be made on any return for any subsequent taxable year.

         (ii)   For the purpose of reporting amounts at the nearest whole dollar, a fractional part of the dollar shall be disregarded unless it amounts to one-half dollar or more, in which case the amount (determined without regard to the fractional part of a dollar) shall be increased by one dollar.

            Example: 

 

Exact amount	To be reported as
$500,000.49	$500,000.00
$500,000.50	$500,001.00
$500,000.51	$500,001.00

 

   (b)   Basic tax – measured by entire net income.

      (1)   General. (Administrative Code, § 11-643.5(a))

         (i)   The basic tax is measured by entire net income, or the portion thereof allocated to New York City, and is the measure of the tax unless the computation of the alternative minimum tax produces a greater amount of tax. The basic tax is computed by multiplying entire net income, or the portion thereof allocated to New York City, by the tax rate of nine percent.

         (ii)   The portion of entire net income allocated to New York City is determined pursuant to 19 RCNY § 3-04(b) – Allocation of entire net income.

      (2)   Definition of entire net income. (Administrative Code, § 11-641(a))

         (i)   The term "entire net income" means total net income from all sources, which is the same as the taxable income which the taxpayer is required to report to the United States Treasury Department for purposes of the Federal income tax imposed by chapter one of the Internal Revenue Code with the adjustments required by paragraphs (3), (4) and (5) of this subdivision.

         (ii)   "Federal taxable income" means taxable income as defined in § 63 of the Internal Revenue Code, and is the starting point in computing entire net income.

         (iii)   Each corporation included in a Federal consolidated group must compute its Federal taxable income for purposes of the banking corporation tax law as if such corporation had computed its Federal taxable income on a separate basis for Federal income tax purposes. Provided, however, in the case of a target corporation, as defined in § 338(d)(2) of the Internal Revenue Code, that is a member of a selling consolidated group, as defined in § 338(h)(10)(B) of the Internal Revenue Code, with respect to which an election under § 338(h)(10) has been made, such election shall be recognized for purposes of Subchapter 3 of Chapter 6 of Title 11 of the Administrative Code. For purposes of determining entire net income, the Federal taxable income of such target corporation shall include any gain or loss on the deemed asset sale by such target corporation recognized by virtue of such election. For purposes of determining entire net income, the Federal taxable income of a member of the selling consolidated group, as so defined, that is subject to tax under such subchapter shall not include any gain or loss on the sale or exchange of stock of such target corporation not recognized by virtue of such election.

         (iv)   For purposes of determining entire net income of an affiliated target corporation, as defined in Treasury Regulation § 1.338(h)(10)-1(b)(3) that is a member of a selling affiliated group that does not file a Federal consolidated return, and for which an election under § 338(h)(10) of the Internal Revenue Code has been made, the Federal taxable income of such affiliated target corporation shall include any gain or loss on the deemed asset sale by such affiliated target corporation recognized by virtue of such election. For purposes of determining entire net income of the selling affiliate of such affiliated target corporation, Federal taxable income shall not include any gain or loss on the sale or exchange of stock of such affiliated target corporation not recognized by virtue of such election.

         (v)   The income actually reported or the income actually determined for Federal income tax purposes is not necessarily the same as the taxable income which should have been reported for Federal income tax purposes under the provisions of the Internal Revenue Code. Generally the determination of the Commissioner of Internal Revenue as to Federal taxable income is followed, but it is not binding on the Commissioner of Finance.

         (vi)   For purposes of Subchapter 3 of Chapter 6 of Title 11 of the Administrative Code, any election pursuant to § 338(h)(10) of the Internal Revenue Code made with respect to a target corporation that is an S corporation for Federal tax purposes will be deemed to be an invalid election and will not be recognized for purposes of such subchapter. If pursuant to this subparagraph, a § 338(h)(10) election of an S corporation is not recognized, the corresponding election pursuant to § 338(g) will be deemed invalid and will not be recognized for purposes of Subchapter 3 of Chapter 6 of Title 11 of the Administrative Code. See Treas. Reg. § 1.338(h)(10)-1(c)(4). The basis of the assets of the target corporation will be determined without regard to any adjustments made pursuant to § 338(b).

      (3)   Adjustments – items to be added to federal taxable income. (Administrative Code, § 11-641)

         (i)   In computing entire net income, Federal taxable income must be adjusted by adding to it:

            (A)   in the case of a corporation organized under the laws of a country other than the United States,

               (a)   any part of any income from dividends (including any part of any dividend for which a deduction has been allowed for Federal income tax purposes) or interest on any kind of stock, securities or indebtedness which has been excluded from Federal taxable income (such as interest income on certain obligations of the United States and its instrumentalities), but only if such income is treated as effectively connected with the conduct of a trade or business in the United States pursuant to § 864 of the Internal Revenue Code,

               (b)   any income exempt from Federal taxable income under any treaty obligation of the United States, but only if such income would be treated as effectively connected in the absence of such exemption, provided that such treaty obligation does not preclude the taxation of such income by a state, or

               (c)   any income which would be treated as effectively connected if such income were not excluded from gross income pursuant to § 103(a) of the Internal Revenue Code, or

            (B)   (a)   in the case of any other corporation, any part of any income from dividends (including any part of any dividend for which a deduction has been allowed for Federal income tax purposes) or interest on any kind of stock, securities or indebtedness which has been excluded from Federal taxable income (such as interest income on state and municipal bonds and certain obligations of the United States and its instrumentalities);

               (b)   taxes on or measured by income or profits paid or accrued within the taxable year to the United States, or any of its possessions or to any foreign country for which a deduction has been allowed for Federal income tax purposes; any net operating loss deduction for the taxable year allowable for Federal income tax purposes;

               (c)   any net operating loss deduction for the taxable year allowable for Federal income tax purposes;

               (d)   any tax imposed under article 32 of the Tax Law and any tax imposed under the banking corporation tax law which were deducted in computing Federal taxable income;

               (e)   any amount which the taxpayer claimed as a deduction in computing its Federal taxable income solely as a result of an election made pursuant to § 168(f)(8) of the Internal Revenue Code as it was in effect for safe harbor lease agreements entered into prior to January 1, 1984, except with respect to property which is a qualified mass commuting vehicle described in such section;

               (f)   any amount which the taxpayer would have been required to include in the computation of its Federal taxable income had it not made the election permitted pursuant to § 168(f)(8) of the Internal Revenue Code as it was in effect for safe harbor lease agreements entered into prior to January 1, 1984, except with respect to property which is a qualified mass commuting vehicle described in such section;

               (g)   the amount allowable as the accelerated cost recovery system deduction pursuant to § 168 of the Internal Revenue Code, except with respect to

                  (1)   recovery property subject to the provisions of § 280F of the Internal Revenue Code (regarding luxury automobiles and certain property used for personal purposes) and

                  (2)   recovery property placed in service in New York State in taxable years beginning after December 31, 1984;

               (h)   upon the disposition of recovery property to which 19 RCNY § 3-03(b)(4)(ii)(G) applies, the amount, if any, by which the aggregate of the deductions for depreciation attributable to such property deducted in computing entire net income pursuant to such subparagraph (ii)(G) exceeds the aggregate accelerated cost recovery system deduction attributable to such property, described in subparagraph (g) of this paragraph

               (i)   any capital loss carry forward allowed as a deduction in computing Federal taxable income under § 1212 of the Internal Revenue Code which was deductible as a loss under Part 1 or Part 2 of Subchapter 3 of Chapter 6 of Title 11 of the Administrative Code; and

               (j)   any other amount allowed as a deduction for Federal income tax purposes which was allowable as a deduction in computing net income under Part 1 or Part 2 of Subchapter 3 of Chapter 6 of Title 11 of the Administrative Code.

      (4)   Adjustments – items to be deducted from federal taxable income. (Administrative Code, § 11-641)

         (i)   In computing entire net income, Federal taxable income must be adjusted by subtracting from it:

            (A)   any refund or credit of a tax imposed under Article 32 of the Tax Law or any refund or credit of the tax imposed under the banking corporation tax law for which tax no exclusion or deduction was allowed in determining the taxpayer's entire net income under the banking corporation tax law for any prior year;

            (B)   any amount treated as a dividend pursuant to § 78 of the Internal Revenue Code;

            (C)   any amount of income or gain includible in determining Federal taxable income for the taxable year, determined pursuant to the installment method under § 453 of the Internal Revenue Code, resulting from the sale of real or personal property to the extent that the income or gain was included in the computation of net income under Part 1 or Part 2 of Subchapter 3 of Chapter 6 of Title 11 of the Administrative Code; and

            (D)   any other amount of income or gain which was properly included in the computation of net income under Part 1 or Part 2 of Subchapter 3 of Chapter 6 of Title 11 of the Administrative Code.

         (ii)   In computing entire net income, a deduction shall be allowed, to the extent not deductible in determining Federal taxable income, for the following:

            (A)   interest on indebtedness incurred or continued to purchase or carry obligations or securities the income of which is subject to tax under the banking corporation tax law but exempt for Federal income tax purposes;

            (B)   ordinary and necessary expenses paid or incurred during the taxable year attributable to income which is subject to tax under the banking corporation tax law but exempt for Federal income tax purposes;

            (C)   the amortized portion of a bond premium for the taxable year on any bond the interest on which is subject to tax under the banking corporation tax law but exempt for Federal income tax purposes;

            (D)   that portion of wages and salaries paid or incurred for the taxable year for which a deduction is not allowed pursuant to the provisions of § 280C of the Internal Revenue Code;

            (E)   any amount which is included in the taxpayer's Federal taxable income solely as a result of an election made pursuant to § 168(f)(8) of the Internal Revenue Code as it was in effect for safe harbor lease agreements entered into prior to January 1, 1984, except with respect to property which is a qualified mass commuting vehicle described in such section;

            (F)   any amount which the taxpayer could have excluded from Federal taxable income had it not made the election provided for in § 168(f)(8) of the Internal Revenue Code as it was in effect for safe harbor lease agreements entered into prior to January 1, 1984, except with respect to property which is a qualified mass commuting vehicle described in such section;

            (G)   with respect to recovery property for which the accelerated cost recovery system deduction is allowed pursuant to § 168 of the Internal Revenue Code, the amount allowable as the depreciation deduction pursuant to § 167 of the Internal Revenue Code as such section would have applied to property placed in service on December 31, 1980, except recovery property

               (a)   subject to § 280F of the Internal Revenue Code (regarding luxury automobiles and certain property used for personal purposes),

               (b)   placed in service in New York State in taxable years beginning after December 31, 1984, or

               (c)   to which the adjustment required by 19 RCNY § 3-03(b)(3)(v) applies;

            (H)   upon the disposition of recovery property to which subparagraph (ii)(G) of this paragraph applies, the amount, if any, by which the aggregate accelerated cost recovery system deduction attributable to such property, described in 19 RCNY § 3-03(b)(3)(vii) exceeds the aggregate of the deductions for depreciation attributable to such property deducted in computing entire net income pursuant to subparagraph (ii)(G) of this paragraph;

            (I)   any amount of money or other property received from the Federal Deposit Insurance Corporation pursuant to § 13(c) of the Federal Deposit Insurance Act, as amended, (12 U.S.C. § 1823(c)) regardless of whether any note or other instrument is issued in exchange therefore;

            (J)   any amount of money or other property received from the Federal Savings and Loan Insurance Corporation pursuant to § 406(f)(1), (2), (3) or (4) of the Federal National Housing Act, as amended, (12 U.S.C. § 1729(f)(1), (2), (3) or (4)) regardless of whether any note or other instrument is issued in exchange therefor;

            (K)   (a)   17 percent of interest income from subsidiary capital, and

               (b)   60 percent of dividend income, gains and losses from subsidiary capital to the extent not already deducted pursuant to subparagraph (i)(B) of this paragraph;

            (L)   22 1/2 percent of interest income on obligations of New York State, or of any political subdivision thereof, or of the United States, other than obligations held for resale in connection with regular trading activities. The term "obligation" refers to obligations incurred in the exercise of the borrowing power of New York State or any of its political subdivisions or of the United States. This term does not refer to a guarantee of the debt of a third party. The following are examples of instruments that are not obligations incurred in the exercise of the borrowing power of New York State or any of its political subdivisions or of the United States:

               (a)   guaranteed student loans,

               (b)   industrial development bonds issued pursuant to article 18-A of the New York State General Municipal Law,

               (c)   Federal National Mortgage Association mortgage-backed securities, and

               (d)   Government National Mortgage Association mortgage-backed securities,

The Commissioner of Finance will publish on a regular basis a list of obligations which meet the requirements of this paragraph.

         (iii)   In the case of the sale or exchange of depreciable property which was subject to Part 1 or Part 2 of Subchapter 3 of Chapter 6 of Title 11 of the Administrative Code and has a higher adjusted basis for New York City tax purposes than for Federal income tax purposes, a deduction is allowed in computing entire net income for the portion of the gain or loss which equals the difference in the basis, except as provided in subparagraphs (ii)(A), (ii)(B) or (ii)(C) of this paragraph:

            (A)   for property of a taxpayer, other than a savings bank or a savings and loan association, acquired prior to January 1, 1966 and disposed of thereafter, no gain will be deemed to have been derived if either the cost or fair market price or value on January 1, 1966, exceeds the value realized, nor a loss sustained if either the cost or fair market price or value on January 1, 1966 is less than the value realized;

            (B)   for the purpose of ascertaining a gain or loss from the sale, exchange or other disposition of:

               (a)   property of a taxpayer, other than a savings bank or a savings and loan association, acquired prior to January 1, 1966 and disposed of thereafter, the basis for computing a gain when both the cost and the fair market price or value on January 1, 1966 are less than the value realized, is the cost or fair market price or value on that date, whichever is higher, and the basis for computing a loss when both the cost and the fair market price or value on January 1, 1966 exceeds the value realized, is the cost or fair market price or value on that date, whichever is lower;

               (b)   property of a savings and loan association acquired prior to January 1, 1966 and disposed of thereafter, the basis of such property shall be the fair market price or value on January 1, 1966.

         (iv)   The term "cost," for purposes of subparagraph (iii) of this paragraph, means the purchase price less the depreciation properly chargeable against the property since the date of acquisition, plus the cost of any permanent improvements made to the property subsequent to acquisition, less the depreciation thereon from the date such permanent improvements were completed. In the case of bonds, the purchase price shall be reduced by the total amount of amortizable bond premium allowable under § 11-621(a)(9) or § 11-629(i) of the Administrative Code. In the case of property acquired by exchange, the fair market value of the property at the date acquired shall be considered as being the purchase price of such property, except in those cases where these regulations provide that the property received in exchange shall be considered as substituted for and have the same value as the property exchanged. In the case of property which is included in an inventory, the "cost" of such property shall be the last inventory value thereof made in accordance with the method of accounting on which the taxpayer's books are kept.

         (v)   The term "fair market price or value on January 1, 1966" means the exchange value of the property on that date. Where there has been a change in the market value of the property since acquisition, but the actual market value of the property on January 1, 1966 is not proved conclusively, the difference between its selling price and its cost, as herein defined, disregarding the cost of permanent improvements made since December 31, 1966, and the depreciation thereon, will be deemed to have arisen ratably over the period during which the property was held and the January 1, 1966 value will be determined accordingly. In the case of securities dealt in on a recognized exchange, the fair market value on January 1, 1966 will ordinarily be determined by the average of the bid and asked prices after closing on December 31, 1965. In all other cases, other evidence of value is necessary, and bona fide sales nearest January 1, 1966, of securities publicly or privately dealt in, will be considered.

      (5)   Other items affecting entire net income. (Administrative Code, § 11-641)

         (i)   Entire net income may be affected by the following:

            (A)   In the case of property placed in service prior to January 1, 1973 for which the taxpayer properly adopted a method of computing depreciation under §§ 11-621 or 11-629 of the Administrative Code which was different than the method adopted for Federal income tax purposes, entire net income shall be computed by adding to Federal taxable income the deduction for depreciation on such property used in the computation of Federal taxable income and by subtracting from Federal taxable income a deduction for depreciation on such property computed as if such deduction were determined by the method of depreciation adopted under §§ 11-621 or 11-629 of the Administrative Code.

            (B)   A deduction is allowed for depreciation, at the election of the taxpayer, for certain tangible property located in New York City. (See: 19 RCNY § 3-04(h)(5) – Optional depreciation.)

            (C)   Provided an election has not been made pursuant to 19 RCNY § 3-04(b)(3), a deduction is allowed for the adjusted eligible net income, as described in 19 RCNY § 3-03(c), of the IBF of the taxpayer. In the event adjusted eligible net income is a loss, the amount of such loss is added to entire net income.

            (D)   Entire net income is to be computed without regard to the reduction in the basis of property that is required by § 362 of the Internal Revenue Code because of any amount of money or other property received from the Federal Deposit Insurance Corporation pursuant to § 13(c) of the Federal Deposit Insurance Act, as amended, (12 U.S.C. § 1823(c)) or from the Federal Savings and Loan Insurance Corporation pursuant to § 406(f)(1), (2), (3) or (4) of the Federal National Housing Act, as amended, (12 U.S.C. § 1729(f)(1), (2), (3) or (4)).

         (ii)   A taxpayer sustaining a net capital loss for Federal income tax purposes is permitted to carry back or carry forward such loss to the same extent and to the same years as is allowed under § 1212 of the Internal Revenue Code. A corporation which files as part of a consolidated group for Federal income tax purposes but files on a separate basis for purposes of the banking corporation tax law must compute its net capital loss as if it were filing on a separate basis for Federal income tax purposes.

      (6)   Computation of entire net income on a combined return. (Administrative Code, § 11-646(f))

         (i)   Each corporation included in the combined return is to compute its entire net income as if it had filed its Federal income tax return on a separate basis. Then, to compute combined entire net income, all intercorporate dividends and intercorporate transactions between the corporations included in the combined return must be eliminated. In applying the foregoing, intercorporate profits are deferred, capital losses are to be offset against capital gains and contributions are to be deducted as if the corporations in the group had filed a consolidated Federal income tax return.

         (ii)   If any corporation included in the combined return makes the IBF election pursuant to 19 RCNY § 3-04(b)(3), all corporations included in the combined return will be deemed to have made the election.

         (iii)   In no event will an item of income or expense of a corporation organized under the laws of a country other than the United States be included in a combined return unless it is includible in entire net income or alternative entire net income.

         (iv)   As to when combined returns will be permitted or required, see 19 RCNY § 3-05(b) – Combined returns.

      (7)   Taxable year in which income or deduction is included in entire net income. (Administrative Code, § 11-641(m)) In general, the method of accounting used in computing taxable income for Federal income tax purposes is the method used in computing entire net income. However, when the Commissioner of Finance deems it necessary in order to properly reflect the entire net income of the taxpayer, it may determine the taxable year or period in which any item of income or deduction shall be included without regard to the method of accounting used by the taxpayer for Federal income tax purposes.

      (8)   Adjusting entire net income to period covered by return. (Tax Law, § 11-641(i))

         (i)   If the entire net income required to be reported under the banking corporation tax law is for a period different than the period covered by the taxpayer's Federal income tax return, the taxpayer's entire net income must be prorated to correspond with the period covered by the return under the banking corporation tax law. The prorated entire net income is computed as follows:

            (A)   adjust Federal taxable income in the manner set forth in paragraphs (3), (4) and (5) of this subdivision;

            (B)   divide entire net income by the number of calendar months, or major parts thereof, covered by the return for Federal income tax purposes; and

            (C)   multiply the result by the number of calendar months, or major parts thereof, covered by the return under the banking corporation tax law.

Example: A banking corporation organized in France has been doing business since 1973 in the United States and began to do business in New York City on May 10, 1985, and reports on a calendar year basis. Its entire net income for calendar year 1985 is $12,000. For purposes of computing the tax measured by entire net income for taxable year 1985, entire net income must be divided by 12 and the result multiplied by 8 (the number of months from May to December), resulting in a prorated entire net income of $8,000.

         (ii)   The method of computing entire net income for a short period, as set forth in this paragraph, applies to taxpayers reporting on either a calendar year or fiscal year basis for Federal income tax purposes.

         (iii)   If, in the opinion of the Commissioner of Finance the method described in this paragraph does not properly reflect the taxpayer's entire net income for purposes of the banking corporation tax law during the period covered by its return, the Commissioner of Finance may determine entire net income solely on the basis of the taxpayer's income during such period.

      (9)   Correcting distortion of entire net income. (Administrative Code, § 11-646(g)) For rules relating to the power of the Commissioner of Finance to correct distortion of entire net income, see 19 RCNY § 3-03(a)(3).

   (c)   International banking facility (IBF). (1) General. (Administrative Code, § 11-641(f))

         (i)   Provided an election has not been made pursuant to 19 RCNY § 3-04(b)(3), a taxpayer which establishes an IBF, as defined in 19 RCNY § 3-01(b) "International banking facility", is allowed as a deduction in computing its entire net income the adjusted eligible net income, as determined in this subdivision, of such IBF. However, in the event the adjusted eligible net income of the IBF is a loss, the amount of such loss must be added to Federal taxable income in computing the taxpayer's entire net income.

         (ii)   The adjusted eligible net income of an IBF is computed by subtracting from eligible gross income the following:

            (A)   expenses or other deductions directly or indirectly attributable to eligible gross income;

            (B)   the ineligible funding amount; and

            (C)   the floor amount.

         (iii)   An IBF is required to:

            (A)   make loans to and receive deposits from foreign persons as defined in 19 RCNY § 3-03(c)(2); and

            (B)   maintain books and records that accurately reflect gross income, gains, losses, deductions, assets, liabilities and other activities of the IBF for the taxable year and make available to the Commissioner of Finance upon his request any information necessary to substantiate the deduction determined in this subdivision (c). Such information may include, but shall not be limited to: (a) a list of all loans made, arranged for, placed or serviced during the taxable year indicating the borrower, loan number, date proceeds disbursed, maturity date, amount borrowed and terms; (b) a list of all deposits made or placed during the taxable year indicating where such deposits were made or placed, date of deposit, amount and terms; and (c) a list of all depositors for the taxable year.

      (2)   Meaning of certain terms. (Administrative Code, § 11-641(f)) As used in this subdivision, the following terms have these meanings:

         Agency. The term "agency" means a branch.

         Deposit. The term "deposit" means an IBF time deposit as defined in § 204.8(a)(2) of the Federal Reserve System regulations (12 C.F.R. § 204.8(a)(2)).

         Domestic. The term "domestic" when applied to a corporation or partnership means a corporation or partnership created or organized in the United States or under the laws of the United States or of any state.

         Domestic branch. The term "domestic branch" means any branch located in the United States.

         Foreign. The term "foreign" when applied to a corporation or partnership means a corporation or partnership which is not domestic.

         Foreign branch. The term "foreign branch" means any branch located outside the United States.

         Foreign person. The term "foreign person" means:

            (A)   a nonresident individual;

            (B)   a foreign corporation, a foreign partnership or a foreign trust, other than a domestic branch thereof;

            (C)   a foreign branch of a domestic corporation;

            (D)   a foreign branch of the taxpayer;

            (E)   a foreign government or an international organization or an agency of either; or

            (F)   another international banking facility located within or without New York State.

         Foreign trust. The term "foreign trust" means a trust, the income of which, from sources without the United States which is not effectively connected with the conduct of a trade or business within the United States, is not includible in gross income for Federal income tax purposes.

         Ineligible gross income. The term "ineligible gross income" means gross income (including gross income from interoffice transactions) of the IBF that is other than eligible gross income.

         International organization. The term "international organization" means an organization as defined in § 7701(a)(18) of the Internal Revenue Code, an organization as described in § 204.125 of the Federal Reserve System regulations (12 C.F.R. § 204.125) and the World Bank.

         Loan. The term "loan" means any loan, whether the transaction is represented by a promissory note, security, acknowledgement of advance, due bill, repurchase agreement or any other form of credit transaction, if the related asset is recorded in the financial accounts of the IBF.

         Nonresident individual. The term "nonresident individual" means an individual who resides principally outside the United States at the time of the transaction.

         Resident individual. The term "resident individual" means an individual who resides principally within the United States at the time of the transaction.

         United States. The term "United States" means the 50 states and the District of Columbia.

      (3)   Adjusted eligible net income. (Administrative Code, § 11-641(f) and (m))

         (i)   The adjusted eligible net income of the IBF is allowed as a deduction in computing the taxpayer's entire net income, to the extent not deductible in determining Federal taxable income. This deduction is taken before the taxpayer allocates its entire net income within and without New York City. The adjusted eligible net income of the IBF is determined by subtracting from the eligible net income of the IBF the ineligible funding amount (See: 19 RCNY § 3-03(c)(10) – Ineligible funding amount) and the floor amount (See: 19 RCNY § 3-03(c)(11) – Floor amount). The eligible net income of the IBF is the amount remaining after subtracting from the eligible gross income of the IBF (See: 19 RCNY § 3-03(c)(4) – Eligible gross income) the expenses applicable to such gross income (See: 19 RCNY § 3-03(c)(5) – Direct expenses of the IBF, 19 RCNY § 3-03(c)(6) – Interest expense of the IBF, 19 RCNY § 3-03(c)(7) – Bad debt deduction of the IBF, and 19 RCNY § 3-03(c)(8) – Indirect expenses of the IBF, including head office expenses). When the IBF has eligible gross income and ineligible gross income for the taxable year, eligible net income of the IBF is computed by reducing eligible gross income by those expenses which are apportioned to eligible gross income pursuant to 19 RCNY § 3-03(c)(9).

         (ii)   The eligible gross income of the IBF is the amount of gross income (including gross income from interoffice transactions) derived from the activities described in 19 RCNY § 3-03(c)(4) that would be includible in the computation of the IBF's entire net income for the taxable year, as if the IBF were a separate corporation.

         (iii)   Expenses applicable to the eligible gross income of the IBF are those expenses or other deductions (including expenses or other deductions from interoffice transactions) described in paragraphs (5), (6), (7) and (8) of this subdivision that are directly or indirectly attributable to the eligible gross income of the IBF.

         (iv)   The Commissioner of Finance may, whenever necessary in order to properly reflect the adjusted eligible net income or the entire net income of the taxpayer, determine the taxable year in which any item of income or deduction shall be included without regard to the method of accounting used by the taxpayer.

      (4)   Eligible gross income. (Administrative Code, § 11-641(F)(2))

         (i)   Eligible gross income includes gross income derived from making, arranging for, placing or servicing loans to foreign persons, except that such gross income derived from those foreign persons described in subparagraph (ii) of this paragraph is eligible gross income only when substantially all the proceeds of the loan are for use outside the United States. Eligible gross income includes fees, such as arrangement, commitment and letter of credit fees received from foreign persons regardless of when or whether the loans are made, and management fees from servicing loans to foreign persons. Eligible gross income includes interest income received from a loan made to or a deposit placed with a foreign person which was purchased without recourse as against any prior owner and meets the restrictions set forth in 12 C.F.R. § 204-122. Eligible gross income does not include income received from the purchasing or selling of assets from or to third parties, such as loans (including loan participations), securities, certificates of deposit and bankers' acceptances. For an asset to be treated as recorded in the financial accounts of the IBF, such asset must be recorded in the financial accounts of the IBF:

            (A)   in accordance with the usual recording practices of the taxpayer; or

            (B)   in the case of assets transferred to the IBF when the IBF is created, within the transfer time allowed for Federal Reserve purposes.

         (ii)   Gross income derived from making, arranging for, placing or servicing a loan to a foreign person which is:

            (A)   a nonresident individual;

            (B)   a foreign branch of a domestic corporation (other than a foreign branch of a domestic bank);

            (C)   a foreign corporation which is 80 percent or more owned or controlled, either directly or indirectly, by one or more domestic corporations (except corporations which are banks), domestic partnerships or resident individuals; or

            (D)   a foreign partnership which is 80 percent or more owned or controlled, either directly or indirectly, by one or more domestic corporations (except corporations which are banks), domestic partnerships or resident individuals; is eligible gross income only when substantially all the proceeds of the loan are for use outside the United States. For purposes of this subdivision (c), the phrase "substantially all the proceeds of the loan are for use outside of the United States" means that at least 95 percent of the proceeds of the loan must be used outside the United States to finance the operations of the borrower or its affiliates located outside the United States. An affiliate is a corporation or partnership which is 80 percent or more owned or controlled, either directly or indirectly, by the borrower. The use-of-proceeds requirement for New York City tax purposes is deemed to be satisfied based on the stated purpose of the loan and a written statement of the foreign person to whom a loan is made stating that such foreign person, or another foreign person that is affiliated with such foreign person, will use the proceeds of the loan outside the United States. The written statement may be in the form of a representation or covenant in any agreement relating to the loan or a separate certificate or other written statement of the foreign person, such as the model statement set forth by the Federal Reserve Board. If the taxpayer is unable to obtain such a written statement, the Commissioner of Finance will consider other evidence that the proceeds of the loan are for use outside the United States. For purposes of this subparagraph (ii), the term "owned or controlled, either directly or indirectly" means, in the case of a corporation, the power to direct or cause the direction of the management and policies of a corporation, whether through the ownership of at least 80 percent of the voting stock of such corporation or through the ownership of at least 80 percent of the voting stock of any other corporation which possesses such power, or, in the case of a partnership, the power to direct or cause the direction of the management and policies of the partnership, or ownership of at least 80 percent of the profits interest or at least 80 percent of the capital interest of such partnership.

         (iii)   Eligible gross income includes gross income derived from making or placing deposits, if the related asset is recorded in the financial accounts of the IBF, with foreign persons which are:

            (A)   banks;

            (B)   foreign branches of a bank, including foreign branches of the taxpayer;

            (C)   foreign banks which are subsidiaries of a bank, including foreign banks which are subsidiaries of the taxpayer; or

            (D)   other IBFs. The term "deposit" as used in this subparagraph (iii) means the amount of money received or held by such foreign person for which it has given or is obligated to give credit, either conditionally or unconditionally, to a deposit liability account, including interest credited to such account, or which is evidenced by such foreign person's certificate of deposit.

         (iv)   Eligible gross income includes gross income derived from foreign exchange trading or hedging transactions that are solely entered into for or directly traceable to any of the transactions described in subparagraphs (i), (ii) or (iii) of this paragraph. Gross income from foreign exchange trading or hedging transactions related to a deposit (as defined in 19 RCNY § 3-03(c)(2)) from a foreign person, is eligible gross income when such deposit can be traced directly to a transaction described in subparagraphs (i), (ii) or (iii) of this paragraph. A foreign exchange trading or hedging transaction is not solely entered into for or directly traceable to any of the transactions described in subparagraphs (i), (ii) or (iii) of this paragraph unless the foreign exchange trading or hedging transaction is recorded in the financial accounts of the IBF. The term "foreign exchange trading or hedging transaction" as used in this subparagraph means:

            (A)   the purchase, sale or exchange of foreign currency; or

            (B)   the acquisition, disposition or performance of any contract to purchase, sell or exchange foreign currency at a future date under terms fixed in the contract if the contract hedges a foreign currency denominated loan or deposit. A forward contract hedges such foreign currency denominated loan or deposit if the effect of a change in the value of the foreign currency on the United States dollar value of the forward contract, either alone or in combination with other such contracts, offsets the effect of the change on the United States dollar value of such foreign currency denominated loan or deposit. A hedging relationship may be established by reference to particular facts and circumstances (for example, the amount of the forward contract, particular currency, initial date and maturity) indicating a hedging purpose, or by designating a contract as being intended for the purpose of hedging a loan or deposit.

      (5)   Direct expenses of the IBF. (Administrative Code, § 11-641(f)(3))

         (i)   Expenses or other deductions which can be specifically identified with the gross income, gains, losses, deductions, assets, liabilities or other activities of the IBF are direct expenses, regardless of where such expenses or other deductions are recorded. Direct expenses may include such items as interest, bad debts, rents, depreciation, taxes, insurance, supplies, compensation of officers, salaries, wages, travel expenses, pension plans, charitable contributions, training, servicing, etc.

         (ii)   Employee expenses incurred at places other than the IBF are allocated to the IBF when the employee is regularly connected with the IBF regardless of where the services of such employee were actually performed.

         (iii)   If the IBF incurs an expense which can be specifically identified with one or more places of business of the taxpayer, such expense must be directly allocated to such place or places of business.

         (iv)   Head office expenses that can be specifically identified with the gross income, gains, losses, deductions, assets, liabilities or other activities of the IBF are directly allocated to the IBF.

         (v)   If a portion of an expense can be specifically identified with the IBF, that portion of the expense must be directly allocated to the IBF. The portion of such expense that cannot be directly allocated to one or more places of business of the taxpayer must be indirectly allocated to the IBF pursuant to 19 RCNY § 3-03(c)(8).

      (6)   Interest expense of the IBF. (Administrative Code, § 11-641(f)(3))

         (i)   Interest expense of the IBF includes interest paid or accrued on funds borrowed by the IBF and/or interest paid or accrued on deposits recorded on the books as IBF liabilities. A taxpayer that determines its interest expense deduction for Federal income tax purposes pursuant to § 1.882-5 of the Federal income tax regulations (26 C.F.R. § 1.882-5) must compute the interest expense of the IBF for New York City tax purposes as described in subparagraph (iii) of this paragraph. Every other taxpayer must compute the interest expense of the IBF for New York City tax purposes as described in subparagraph (ii) of this paragraph.

         (ii)   The interest expense of the IBF is the sum of the amount of interest expense determined in subparagraph (ii)(A) of this paragraph and the total deemed interest expense determined in subparagraph (ii)(B) of this paragraph.

            (A)   Interest expense on the borrowings and deposits from other than a branch, agency or other office of the bank which established the IBF is the interest expense deduction on such borrowings and deposits that was allowed for Federal income tax purposes.

            (B)   Each deposit placed with the IBF by a branch, agency or other office of the bank which established the IBF (for purposes of this subparagraph called the "lending office") and each borrowing from such lending office shall be deemed to bear interest computed by using the following applicable rates: (a) a rate of interest representing the interest cost of the lending office on arm's length borrowings made to obtain funds which were loaned to, deposited in or placed with the IBF; or (b) the average rate of interest incurred by the lending office which is equal to the ratio of the total amount of interest expense from arm's length transactions recorded in the financial accounts of the lending office for the taxable year to the average amount of liabilities from borrowings and deposits owed from such arm's length transactions recorded in the financial accounts of the lending office for the taxable year averaged on a quarterly or more frequent basis; or (c) any other rate which the taxpayer establishes to the Commissioner of Finance as a more appropriate rate.

         (iii)   (A)   A taxpayer that determines its interest expense deduction for Federal income tax purposes pursuant to § 1.882-5 of the Federal income tax regulations (26 C.F.R. § 1.882-5) must compute its interest expense of the IBF for New York City tax purposes in the same manner, using the same liabilities-to-assets ratio, the same method (branch book/dollar pool or separate currency pools), the same interest rate or rates and the same method of valuation it actually used in the computation of its Federal interest expense deduction for the taxable year. In determining the IBF's interest expense for New York City tax purposes, the three-step process described in § 1.882-5 of the Federal income tax regulations (26 C.F.R. § 1.882-5) is applied using the following rules:

               (a)   The term "interoffice" means the activities between the IBF and the separate branches, agencies, or offices of the taxpayer.

               (b)   The classification of items as assets or liabilities must be on a consistent basis from year to year and determined according to U.S. tax principles.

               (c)   The average total value of IBF assets must be stated in U.S. dollars and valued by the same method (book or fair market) used for Federal income tax purposes. The actual value used in the Federal computation must be used in the asset determination for New York City tax purposes.

               (d)   The average total value of assets and the average total amount of liabilities is determined by using the same interval (daily, weekly, etc.) actually used for Federal income tax purposes.

               (e)   A particular asset value or liability amount that is denominated in one currency is translated into another currency at the exchange rate for the date the value or amount is determined for purposes of this subparagraph. An interest expense amount shown on the books is translated at the exchange rate from a qualified source for the date the amount is paid or accrued. Qualified sources of exchange rates must be determined under the rules of § 1.964-1(d)(5) of the Federal income tax regulations (26 C.F.R. § 1.964-1(d)(5)).

            (B)   The asset determination in Step 1 of the Federal three-step process is the average total value of all of the IBF assets (including interoffice) shown on the books that generate, have generated, or could reasonably have been or be expected to generate income, gain or loss which is or would be included in the computation of entire net income for the taxable year, or portion thereof.

            (C)   The liability determination in Step 2 of the Federal three-step process is the amount of IBF-connected liabilities for the taxable year, or portion thereof, determined by multiplying the average total value of assets determined in subparagraph (iii)(B) of this paragraph, by the same percentage actually used for Federal income tax purposes for the taxable year.

            (D)   If the taxpayer used, for Federal income tax purposes, the separate currency pools method in Step 3 of the Federal three-step process, the IBF interest expense for New York City tax purposes is the sum of the separate interest expenses for each currency in which the IBF has borrowed. If the IBF borrowed in a currency for which it did not compute an interest expense for Federal income tax purposes, it must compute its IBF interest expense for that currency as if it actually had an interest expense for such currency for Federal income tax purposes. The interest expense for each currency is determined as follows: (a) the amount of IBF-connected liabilities determined in subparagraph (iii)(C) of this paragraph multiplied by; (b) the ratio, stated in the same currency used for Federal income tax purposes, of (1) the average total amount of IBF liabilities denominated in the particular currency shown on the books (including interoffice) for the taxable year, or portion thereof, to (2) the average total amount of all IBF liabilities shown on the books (including interoffice) for the taxable year, or portion thereof, multiplied by; (c) the average worldwide interest rate actually used for Federal income tax purposes in computing that particular currency.

            (E)   If the taxpayer used, for Federal income tax purposes, the branch book/dollar pool method in Step 3 of the Federal three-step process and Section 1.882-5(b)(3)(i)(A) of the Federal income tax regulations (26 C.F.R. § 1.882-5(b)(3)(i)(A)) applied, the IBF interest expense for New York City tax purposes is determined by multiplying the IBF-connected liabilities, determined in subparagraph (iii)(C) of this paragraph, by the same average U.S.-connected interest rate actually used for Federal income tax purposes.

            (F)   If the taxpayer used, for Federal income tax purposes, the branch book/dollar pool method in Step 3 of the Federal three-step process and § 1.882-5(b)(3)(i)(B) of the Federal income tax regulations (26 C.F.R. § 1.882-5(b)(3)(i)(B)) applied and the IBF-connected liabilities exceed the average total amount of IBF liabilities shown on the books (excluding interoffice), the IBF interest expense for New York City tax purposes is determined by adding: (a) the amount of IBF interest expense (stated in U.S. dollars) shown on the books (excluding interoffice) for the taxable year, or portion thereof; and (b) the amount determined by multiplying the excess of IBF-connected liabilities, determined in subparagraph (iii)(C) of this paragraph, over the average total amount of IBF liabilities (stated in U.S. dollars) shown on the books (excluding interoffice) for the taxable year, or portion thereof, by the average interest rate on U.S. dollar liabilities actually used for Federal income tax purposes.

            (G)   If the taxpayer used, for Federal income tax purposes, the branch book/dollar pool method in Step 3 of the Federal three-step process and § 1.882-5(b)(3)(i)(B) of the Federal income tax regulations (26 C.F.R. § 1.882-5(b)(3)(i)(B)) applied and the IBF-connected liabilities do not exceed the average total amount of IBF liabilities shown on the books (excluding interoffice), the IBF interest expense for New York City tax purposes is determined by subtracting: (a) the amount determined by multiplying the difference between the average total amount of IBF liabilities (stated in U.S. dollars) shown on the books (excluding interoffice) for the taxable year, or portion thereof, and the IBF-connected liabilities, determined in subparagraph (iii)(C) of this paragraph, by the average interest rate on U.S. dollar liabilities actually used for Federal income tax purposes, from; (b) the amount of IBF interest expense (stated in U.S. dollars) shown on the books (excluding interoffice) for the taxable year, or portion thereof. If the amount determined in this paragraph results in a negative amount, the taxpayer must determine the interest expense of the IBF for New York City tax purposes by multiplying the IBF-connected liabilities, determined in subparagraph (iii)(C) of this paragraph, by the average IBF-connected interest rate. The average IBF-connected interest rate is the ratio, stated in U.S. dollars, of the total amount of IBF interest expense shown on the books (excluding interoffice) for the taxable year, or portion thereof, to the average total amount of IBF liabilities shown on the books (excluding interoffice) for the taxable year, or portion thereof.

      (7)   Bad debt deduction of the IBF. (Administrative Code, § 11-641(f)(3))

         (i)   In computing applicable direct expenses pursuant to paragraph(c)(5) of this section, the IBF of a taxpayer must compute its bad debt deduction by using the same method (direct charge-off or reserve) the bank used for Federal income tax purposes. A taxpayer which uses the direct charge-off method to compute its bad debt deduction for Federal income tax purposes, in accordance with subsection (a) of § 166 of the Internal Revenue Code, has as its IBF bad debt deduction the aggregate of those specific bad debts of the IBF from loans which produce or would have produced eligible gross income (hereinafter "IBF loans") which were included in the bad debt deduction for Federal income tax purposes. A taxpayer which maintains a reserve balance for losses on loans, in accordance with §§ 585 or 593 of the Internal Revenue Code, for Federal income tax purposes must maintain in IBF reserve balance for losses on loans and has as its IBF bad debt deduction the addition to its IBF reserve balance for losses on loans.

         (ii)   The addition to the IBF reserve balance for losses on loans is computed as follows:

            (A)   (a)   A taxpayer which computes its addition to its reserve balance for losses on loans for Federal income tax purposes pursuant to § 585(b)(2) (the percentage method) determines a fraction the numerator of which is the amount of IBF eligible loans and the denominator of which is the amount of eligible loans both within and without the IBF.

               (b)   A taxpayer which computes its addition to its reserve balance for losses on loans for Federal income tax purposes pursuant to § 585(b)(3) (the experience method) determines a fraction the numerator of which is the amount of IBF outstanding loans and the denominator of which is the amount of outstanding loans both within and without the IBF.

               (c)   A taxpayer which does not compute its addition to its reserve balance for losses on loans for Federal income tax purposes pursuant to § 585(b)(2) or (3) determines a fraction the numerator of which is the IBF amount which was included in the computation for Federal income tax purposes and the denominator of which is the amount used for Federal income tax purposes. The components of the fraction must reflect the method the taxpayer used for computing its addition to its reserve balance for losses on loans for Federal income tax purposes.

            (B)   Multiply the fraction determined in subparagraph (ii)(A) of this paragraph by the Federal reserve balance for losses on loans after the taxable year's reserve addition. The result is the IBF reserve balance for losses on loans.

            (C)   Subtract the IBF reserve balance for losses on loans before the taxable year's reserve addition from the IBF reserve balance for losses on loans computed in subparagraph (ii)(B) of this paragraph. The result is the addition to the IBF reserve balance for losses on loans. If the addition to the IBF reserve balance for losses on loans is a negative amount, the IBF bad debt deduction is a negative amount.

         (iii)   For purposes of this paragraph the following rules apply:

            (A)   The terms "loan," "eligible loan," "qualifying real property loan" and "nonqualifying loan" have the same meanings as defined in §§ 585 and 593, as the case may be, of the Internal Revenue Code and regulations promulgated thereunder. Therefore, interoffice loans do not qualify as eligible loans in computing the IBF bad debt deduction. Accordingly, the amount of the IBF bad debt deduction plus the amount of such deduction allocated without the IBF must equal the actual bad debt deduction taken for Federal income tax purposes.

            (B)   When outstanding loans or eligible loans that are outstanding are transferred to the IBF the taxpayer must on the same date transfer to the IBF the portion of its reserve balance for losses on loans maintained for Federal income tax purposes which is attributable to such transferred loans. Such portion is computed by multiplying the Federal reserve balance for losses on loans on the date of transfer by a fraction: (a) the numerator of which is such loans that were transferred as of the date of transfer which were included in the computation of the Federal reserve balance for losses on loans for the previous taxable year; and (b) the denominator of which is the total of such loans as of the date of transfer which were included in the computation of the Federal reserve balance for losses on loans for the previous taxable year. When the outstanding loans or eligible loans that are outstanding are transferred from existing places of business, the reserve balance for such existing places of business must be reduced accordingly.

      (8)   Indirect expenses of the IBF, including head office expenses. (Administrative Code, § 11-641(f)(3))

         (i)   Expenses of the taxpayer, including head office expenses, which cannot be specifically identified with the gross income, gains, losses, deductions, assets, liabilities or other activities of the IBF or a place of business of the taxpayer, are indirect expenses and must be allocated on an indirect basis. Indirect expenses, including head office expenses, may include such items as interest, bad debts, compensation of officers, salaries, wages, travel expenses, pension plans, rents, taxes, depreciation, insurance, advertising, accounting, legal, charitable contributions, financing, operation supervision, technical, research, training, physical facilities, servicing, etc. For computation of the interest expense of the IBF and bad debt deduction of the IBF, see paragraphs (6) and (7) of this subdivision, respectively.

         (ii)   Expenses that cannot be specifically identified with the IBF or any particular place of business of the taxpayer but are indirectly related to the gross income, gains, losses, deductions, assets, liabilities or other activities of the IBF, must be allocated by the method that properly reflects the allocation of such expenses to the IBF. Generally, the amount of indirect expenses allocable to the IBF is determined by multiplying such expenses by a fraction computed by either the gross asset method as described in subparagraph (ii)(A) of this paragraph, or the gross income method as described in subparagraph (ii)(B) of this paragraph.

            (A)   Gross asset method. In the gross asset method, the numerator of the fraction is the average of all gross assets (except interoffice gross assets and goodwill) of the IBF of the taxpayer and the denominator is the average of all gross assets (except interoffice gross assets and goodwill) of the taxpayer. Where the numerator determined in the preceding sentence is zero, the numerator and denominator must be computed by including gross assets from interoffice transactions. In the case of a taxpayer which is a foreign corporation, "all gross assets" means such taxpayer's assets located in the United States and its other assets used in connection with its trade or business in the United States. The average of all gross assets must be computed on a quarterly basis or, at the option of the taxpayer, on a more frequent basis such as monthly, weekly or daily. Loans and deposits are to be included on an average daily balance basis. When the taxpayer's usual accounting practice does not permit a quarterly or more frequent computation of the average of all gross assets, a semi-annual or annual computation will be allowed when it appears to the Commissioner of Finance that no distortion of the average of all gross assets will result. Different periods of averaging may be used for different classes of assets. If, because of variations in the amount or value of any class of assets, it appears to the Commissioner of Finance that averaging on an annual, semi-annual or quarterly basis does not properly reflect the average of all gross assets, the Commissioner of Finance may require averaging on a more frequent basis. The method used to determine the average of all gross assets must be consistent and may not be changed on any subsequent return without the prior written consent of the Commissioner of Finance. Gross assets are valued as described in 19 RCNY § 3-03(e)(2)(iii).

            (B)   Gross income method. In the gross income method, the numerator of the fraction is the gross income (excluding gross income from interoffice transactions) of the IBF of the taxpayer includible in the computation of entire net income for the taxable year and the denominator is the gross income (excluding gross income from interoffice transactions) of the taxpayer includible in the computation of entire net income for the taxable year. Where the numerator determined in the preceding sentence is zero, the numerator and denominator must be computed by including gross income from interoffice trans- actions.

            (C)   Other method. Any other method that the taxpayer establishes to the Commissioner of Finance as a more appropriate method.

         (iii)   Expenses that can be identified with the IBF and one or more places of business of the taxpayer, but not all places of business of the taxpayer, must be allocated by the method that properly reflects the allocation of such expenses to the IBF. The amount of such expenses allocable to the IBF is determined by multiplying such expenses by a fraction computed as described in subparagraph (ii) of this paragraph. However, in computing such fraction, the denominator is limited to the IBF and those places of business identified with such expenses.

         (iv)   A taxpayer must use the same method in allocating all indirect expenses. The method a taxpayer uses in computing the allocation of indirect expenses as described in subparagraph (ii) of this paragraph may not be changed in subsequent years without the written consent of the Commissioner of Finance. If the Commissioner of Finance determines that the method used in allocating expenses, including head office expenses, does not properly reflect the expenses of the IBF, the Commissioner of Finance may require the taxpayer to allocate expenses by a different method.

      (9)   Apportionment of expenses of the IBF. (Administrative Code, § 11-641(f)) When the IBF has eligible gross income and ineligible gross income, the expenses that are applicable to eligible gross income shall be the sum of the following amounts:

         (i)   the amount of direct expenses of the IBF (as determined in 19 RCNY § 3-03(c)(5), (c)(6)(ii)(A), and (c)(7)) for the taxable year that are specifically identified with eligible gross income, and

         (ii)   an amount computed by multiplying the sum of direct expenses of the IBF (as determined in 19 RCNY § 3-03(c)(5) and c)(6)(ii)(A)) for the taxable year that are not specifically identified with either the eligible gross income or the ineligible gross income of the IBF and all indirect expenses of the IBF (as determined in 19 RCNY § 3-03(c)(6) and (c)(8)) for the taxable year by a fraction, the numerator of which is the eligible gross income of the IBF for the taxable year and the denominator of which is the gross income of the IBF for the taxable year.

      (10)   Ineligible funding amount. (Administrative Code, § 11-641(f)(5))

         (i)   The ineligible funding amount of the IBF is determined by multiplying eligible net income (See: 19 RCNY § 3-03(c)(3)(i)), by the following fraction:

            (A)   The numerator of the fraction is the average aggregate amount of all liabilities and other sources of funds of the IBF for the taxable year which were not owed to or received from foreign persons (the term "foreign person" is defined in 19 RCNY § 3-03(c)(2)(viii)).

            (B)   The denominator of the fraction is the average aggregate amount of all liabilities and other sources of funds of the IBF for the taxable year.

         (ii)   "All liabilities and other sources of funds of the IBF" include deposits, advances from the head office or other places of business of the taxpayer, accounts payable, notes and bonds payable, accrued expenses, deferred income, contingent liabilities, taxes payable, appropriated retained earnings (such as reserve for deferred taxes, dividends payable, etc.), unappropriated retained earnings, etc. Certain liabilities that are determined not be sources of funds may be excluded with the permission of the Commissioner of Finance. The average aggregate amount of all liabilities and other sources of funds of the IBF for the taxable year must be computed on a quarterly basis or, at the option of the taxpayer, on a more frequent basis such as monthly, weekly or daily. When the taxpayer's usual accounting practice does not permit a quarterly or more frequent computation of the average aggregate amount of all liabilities and other sources of funds, a semi-annual or annual computation may be allowed when it appears that no distortion of the average aggregate amount of all liabilities and other sources of funds will result. Different periods of averaging may be used for different classes of liabilities. If, because of variations in the amount or value of any class of liabilities or other sources of funds, it appears to the Commissioner of Finance that averaging on an annual, semi-annual or quarterly basis does not properly reflect the average aggregate amount of all liabilities and other sources of funds, the Commissioner of Finance may require averaging on a more frequent basis. The method of determining the average aggregate amount of all liabilities and other sources of funds must be consistent and may not be changed on any subsequent return without the written consent of the Commissioner of Finance.

         (iii)   The principles of separate accounting must be applied in determining the amount of liabilities and other sources of funds, including retained earnings, which were not owed to or received from foreign persons. Unless the taxpayer can substantiate that liabilities and other sources of funds, including retained earnings, were owed to or received from foreign persons, they are deemed to be owed to or received from other than foreign persons and included in the numerator described in subparagraph (i)(A) of this paragraph.

      (11)   Floor amount. (Administrative Code, § 11-641(f)(b))

         (i)   The floor amount is computed by multiplying the amount remaining, after reducing eligible net income (See: 19 RCNY § 3-03(c)(3)(i)) by the ineligible funding amount (See: 19 RCNY § 3-03(c)(10)(i)) by a fraction not greater than one. The fraction is determined as follows:

            (A)   The numerator is the amount determined in subparagraph (i)(A)(a) of this paragraph multiplied by the applicable percentage stated in subparagraph (i)(A)(b) of this paragraph minus the amount determined in subparagraph (i)(A)(c) of this paragraph.

               (a)   Determine the average aggregate amount of loans and deposits as described in subparagraph (ii) of this paragraph which were properly recorded in the financial accounts of the taxpayer's branches, agencies and offices within New York State for taxable years beginning in 1975, 1976 and 1977. Loans and deposits related to net income reassigned to New York State by the New York State Tax Commission are not includible for purposes of this subparagraph (i)(A)(a). The average aggregate amount of such loans and deposits may be determined by reference to the monthly or quarterly reports of the taxpayer to the Federal Reserve Bank of New York, as appropriately modified.

               (b)   The average aggregate amount determined in subparagraph (i)(A)(a) of this paragraph is multiplied by the following percentages:

                  (1)   100 percent for the first taxable year the taxpayer established the IBF and for the next succeeding four taxable years;

                  (2)   80 percent for the sixth taxable year;

                  (3)   60 percent for the seventh taxable year;

                  (4)   40 percent for the eighth taxable year;

                  (5)   20 percent for the ninth taxable year; and

                  (6)   zero percent for the tenth taxable year and thereafter.

               (c)   The product obtained in subparagraph (i)(A)(b) of this paragraph is reduced by the average aggregate amount of loans and deposits as described in subparagraph (ii) of this paragraph which were properly recorded in the financial accounts of the taxpayer's branches, agencies and offices within New York State (other than the IBF) for the current taxable year. If the amount determined in this subparagraph (i)(A)(c) is greater than the amount determined in subparagraph (i)(A)(b) of this paragraph, the numerator is zero.

            (B)   The denominator is the average aggregate amount of loans and deposits as described in subparagraph (ii) of this paragraph which were properly recorded in the financial accounts of the IBF for the taxable year.

         (ii)   For purposes of this paragraph, the average aggregate amount of the loans described in subparagraph (i)(A) of this paragraph and the average aggregate amount of deposits described in subparagraph (i)(B) of this paragraph must be computed on a quarterly basis, or at the option of the taxpayer, on a more frequent basis such as monthly, weekly or daily. When the taxpayer's usual accounting practice does not permit a quarterly or more frequent computation of the average aggregate of such loans and such deposits, a semi-annual or annual computation may be allowed when it appears that no distortion of the average aggregate of such loans and such deposits will result. If, because of variations in the amount or value of such loans and such deposits, it appears to the Commissioner of Finance that averaging on an annual, semi-annual or quarterly basis does not properly reflect the average aggregate of such loans and such deposits, the Commissioner of Finance may require averaging on a more frequent basis. Any method of determining the average aggregate of such loans and such deposits may not be changed on any subsequent return without the written consent of the Commissioner of Finance.

            (A)   Loans mean loans to foreign persons. The term "foreign person" is defined in 19 RCNY § 3-03(c)(2)(vii).

            (B)   Deposits mean deposits with foreign persons which are: (a) banks; (b) foreign branches of a bank, including foreign branches of the taxpayer; or (c) foreign banks which are subsidiaries of a bank, including foreign banks which are subsidiaries of the taxpayer.

         (iii)   For purposes of this paragraph, loans and deposits that were recorded in the financial accounts for a taxable year include those loans which were issued during such taxable year and those deposits which were made or placed during such taxable year and any other loan or deposit in the financial accounts for such taxable year. If the IBF purchases or acquires loans or deposits which were recorded in the financial accounts within New York State of a related corporation for taxable years 1975, 1976 and 1977, such loans and deposits are deemed to be recorded in the financial accounts of the taxpayer's branches, agencies and offices within New York State for taxable years beginning in 1975, 1976 and 1977 and must be included in the numerator when computing the floor amount. A corporation is related to another corporation when such corporation owns or controls, either directly or indirectly, more than 50 percent of the capital stock of the other corporation, or more than 50 percent of the capital stock of such corporation is owned or controlled, either directly or indirectly, by the other corporation, or more than 50 percent of the capital stock of both corporations is owned or controlled, either directly or indirectly, by the same interests. A taxpayer, which, pursuant to § 11-646(f) of the Administrative Code, made a consolidated return with corporations affiliated with it for any of the taxable years 1975, 1976 and 1977, or makes a combined return for the taxable year, shall compute the floor amount as if it had filed separate returns for the taxable years 1975, 1976 and 1977 and as if it were filing a separate return for the taxable year.

   (d)   Alternative minimum tax measured by alternative entire net income.

      (1)   Computation of the alternative minimum tax measured by alternative entire net income. (Administrative Code, §§ 11-641.1, 11-643.5(b)(3))

         (i)   The alternative minimum tax measured by alternative entire net income is the measure of the tax if it is the largest of the alternative minimum bases and the alternative minimum tax is greater than the basic tax. The alternative minimum tax measured by alternative entire net income is computed by multiplying alternative entire net income, or portion thereof allocated to New York City, by the tax rate of three percent.

         (ii)   The term "alternative entire net income" means entire net income as determined pursuant to 19 RCNY § 3-03(b)(2), except that the deductions described in subparagraphs (K) and (L) of 19 RCNY § 3-03(b)(4) are not allowed.

         (iii)   Any election made pursuant to 19 RCNY § 3-04(b)(3) with respect to the IBF modification provided for in 19 RCNY § 3-03(c) is deemed to have been made for purposes of computing alternative entire net income.

      (2)   Computation of the alternative minimum tax measured by alternative entire net income on a combined return. (Administrative Code, § 11-646(f))

         (i)   Each corporation included in the combined return is to compute its alternative entire net income as if it had filed its Federal income tax return on a separate basis. Then, to compute combined alternative entire net income, all intercorporate dividends and intercorporate transactions between the corporations included in the combined return must be eliminated. Intercorporate profits are deferred, capital losses are to be offset against capital gains and contributions are to be deducted as if the corporations in the group had filed a consolidated Federal income tax return.

         (ii)   If any corporation included in the combined return is deemed to have made the IBF election pursuant to 19 RCNY § 3-03(d)(1)(iii), all corporations included in the combined return will be deemed to have made the election.

         (iii)   In no event will an item of income or expense of a corporation organized under the laws of a country other than the United States be included in a combined return unless it is includible in alternative entire net income.

         (iv)   As to when combined returns will be permitted or required, see 19 RCNY § 3-05(b) – Combined Returns.

      (3)   Taxable year in which income or deduction is included in alternative entire net income. (Administrative Code, § 11-641(m)) In general, the method of accounting used in computing taxable income for Federal income tax purposes is the method used in computing alternative entire net income. However, when the Commissioner of Finance deems it necessary in order to properly reflect the alternative entire net income of the taxpayer, it may determine the taxable year or period in which any item of income or deduction shall be included without regard to the method of accounting used by the taxpayer for Federal income tax purposes.

      (4)   Adjusting alternative entire net income to period covered by return. (Administrative Code, §§ 11-641(1), 11-641.1)

         (i)   If the alternative entire net income required to be reported under the banking corporation tax law is for a period different than the period covered by the taxpayer's Federal income tax return, the taxpayer's alternative entire net income must be prorated to correspond with the period covered by the return under the banking corporation tax law. The prorated alternative entire net income is computed as follows:

            (A)   divide alternative entire net income, as determined in 19 RCNY § 3-03(d)(1)(ii), by the number of calendar months, or major parts thereof, covered by the return for Federal income tax purposes; and

            (B)   multiply the result by the number of calendar months, or major parts thereof, covered by the return under the banking corporation tax law.

         (ii)   The method of computing alternative entire net income for a short period, as set forth in this paragraph, applies to taxpayer's reporting on either a calendar year or fiscal year basis for Federal income tax purposes.

         (iii)   If, in the opinion of the Commissioner of Finance, the method described in this paragraph does not properly reflect the taxpayer's alternative entire net income for purposes of the banking corporation tax during the period covered by its return, the Commissioner of Finance may determine entire net income solely on the basis of the taxpayer's income during such period.

      (5)   Correcting distortion of alternative entire net income. (Administrative Code, § 11-646(g)) For rules relating to the power of the Commissioner of Finance to correct distortion of alternative entire net income, see 19 RCNY § 3-03(a)(3).

   (e)   Alternative minimum tax measured by taxable assets.

      (1)   Computation of the alternative minimum tax measured by taxable assets. (Administrative Code, § 11-643.5(b)(1))

         (i)   Except for a corporation organized under the laws of a country other than the United States, the alternative minimum tax measured by taxable assets is the measure of the tax if it is larger than the alternative minimum tax measured by alternative entire net income or the alternative minimum tax measured by the fixed minimum amount and the alternative minimum tax is greater than the basic tax. The alternative minimum tax measured by taxable assets is computed at the rate of 0.1 of a mill upon each dollar of taxable assets, or portion thereof allocated to New York City, except in the case of a taxpayer described in subparagraph (ii) of this paragraph.

         (ii)   A taxpayer is not subject to the alternative minimum tax measured by taxable assets for that portion of the taxable year

            (A)   in which it was a qualified institution as defined in § 406(f)(5)(B) of the Federal National Housing Act, as amended, (12 U.S.C. § 1729(f)(5)(B)), or as defined in § 13(i)(2) of the Federal Deposit Insurance Act, as amended, (12 U.S.C. § 1823(i)(2)), and

            (B)   in which it had an outstanding net worth certificate issued to the Federal Savings and Loan Insurance Corporation in accordance with § 406(f)(5) of the Federal National Housing Act, as amended (12 U.S.C. § 1729(f)(5)), or issued to the Federal Deposit Insurance Corporation in accordance with § 13(i) of the Federal Deposit Insurance Act, as amended, (12 U.S.C. § 1823(i)), provided it would have been exempt from any tax determined on the basis of the deposits held by it or the interest paid on such deposits pursuant to § 406(f)(5)(I) of the Federal National Housing Act, as amended, (12 U.S.C. § 1729(f)(5)(I)) or § 13(i)(9) of the Federal Deposit Insurance Act, as amended, (12 U.S.C. § 1823(i)(9)).

      (2)   Definition of taxable assets. (Administrative Code, § 11-643.5(b)(1))

         (i)   The term "taxable assets" means the average total value of those assets which are properly reflected on a balance sheet the income or expenses of which are properly reflected (or would have been properly reflected if not fully depreciated or expensed or depreciated or expensed to a nominal amount) in the computation of the taxpayer's alternative entire net income for the taxable year and in the computation of the eligible net income of the taxpayer's IBF for the taxable year.

         (ii)   Taxable assets do not include any amount of money or other property received from or attributable to amounts received from the Federal Deposit Insurance Corporation pursuant to § 13(c) of the Federal Deposit Insurance Act, as amended, (12 U.S.C. § 1823(c)) or the Federal Savings and Loan Insurance Corporation pursuant to §§ 406(f)(1), (2), (3) or (4) of the Federal National Housing Act, as amended, (12 U.S.C. § 1729(f)(1), (2), (3) or (4)).

         (iii)   Tangible real and personal property, such as buildings, land, machinery and equipment, is to be valued at cost. Intangible property, such as loans, investments, coin and currency, is to be valued at book value. In determining the average total value of assets, the taxpayer must use the values described in this subparagraph. The average value of assets is computed on a quarterly basis, or at the option of the taxpayer on a more frequent basis, such as monthly, weekly or daily. Different periods of averaging may be used for different classes of assets. If, because of variations in the amount or value of any class of assets, it appears to the Commissioner of Finance that averaging on a quarterly basis does not properly reflect average total value of assets, the Commissioner of Finance may require averaging on a more frequent basis. Any method of determining average total value of assets which is adopted by the taxpayer on any return and accepted by the Commissioner of Finance may not be changed on any subsequent return without the prior written consent of the Commissioner of Finance.

         (iv)   The term "balance sheet" for purposes of subparagraph (i) shall mean the balance sheet of the taxpayer prepared from the books and records of the taxpayer in accordance with generally accepted accounting principles and used for purposes of preparing the taxpayer's financial statement. The "book value" of intangible property for purposes of subparagraph (iii) shall mean the amount of the intangible property shown on the books and records of the taxpayer in accordance with generally accepted accounting principles and included in the balance sheet described in the preceding sentence. In the case of loans, the book value shall be loans net of the reserve for losses on loans.

      (3)   [Reserved.]

      (4)   [Reserved.]

      (5)   [Reserved.]

      (6)   Computation of the alternative minimum tax measured by taxable assets on a combined return. (Administrative Code, § 11-646(f))

         (i)   The alternative minimum tax measured by taxable assets is computed at the rate of 0.1 of a mill upon each dollar of taxable assets, or portion thereof allocated to New York City, of all the corporations included in the combined return. In computing combined taxable assets, intercorporate stockholdings and intercorporate bills, notes and accounts receivable and payable and other intercorporate indebtedness between the corporations included in the combined return must be eliminated.

         (ii)   Combined taxable assets do not include the taxable assets of a taxpayer described in 19 RCNY § 3-03(e)(1)(ii).

         (iii)   As to when combined returns will be permitted or required, see 19 RCNY § 3-05(b) – Combined Returns.

      (7)   Adjusting taxable assets to period covered by return.

         (i)   If the period covered by the taxpayer's return under the banking corporation tax law is other than 12 calendar months, the taxpayer's taxable assets must be prorated to correspond with the period covered by the return. The prorated taxable assets are determined as follows:

            (A)   compute taxable assets in the manner set forth in 19 RCNY § 3-03(e)(2);

            (B)   divide taxable assets by 12; and

            (C)   multiply the result by the number of calendar months, or major parts thereof, covered by the return.

         (ii)   The method of computing taxable assets for a short period, as set forth in this paragraph, applies to taxpayer's reporting on either a calendar year or fiscal year basis for Federal income tax purposes.

         (iii)   If, in the opinion of the Commissioner of Finance, the method described in this paragraph does not properly reflect the taxpayer's taxable assets for purposes of the banking corporation tax during the period covered by its return, the Commissioner of Finance may determine taxable assets solely on the basis of the taxpayer's assets during such period.

      (8)   Correcting distortion of taxable assets. (Administrative Code, § 11-646(g)) For rules relating to the power of the Commissioner of Finance to correct distortion of taxable assets, see 19 RCNY § 3-03(a)(3).

   (f)   Alternative minimum tax measured by issued capital stock.

      (1)   Computation of the alternative minimum tax measured by issued capital stock. (Administrative Code, § 11-643.5(b)(2))

         (i)   For corporations organized under the laws of a country other than the United States, the alternative minimum tax measured by issued capital stock is the measure of the tax if it is larger than the alternative minimum tax measured by alternative entire net income or the alternative minimum tax measured by the fixed minimum amount and the alternative minimum tax is greater than the basic tax. The alternative minimum tax measured by issued capital stock is computed at the rate of 2.6 mills upon each dollar of the taxpayer's issued capital stock, or the portion thereof allocated to New York City, at its face value on the last day of its taxable year or, in the case of shares without par value, at its actual or market value on the last day of its taxable year. If its actual or market value is less than five dollars per share, a five dollar per share value must be used.

         (ii)   The term "face value" means par value, which is the value written or printed on the face of the instrument.

         (iii)   The market value of stocks regularly traded on an exchange or in an over-the-counter market is the mean between the highest and lowest selling prices on the last day of the taxpayer's taxable year, or if such prices are not available, the highest and lowest selling prices on the nearest date within its taxable year. If the actual sales prices within the taxable year are not available, the market value is the mean between the bona fide bid and asked prices on the last day of its taxable year, or if such prices are not available, the bona fide bid and asked prices on the nearest date within the taxable year. If the actual sales prices or bona fide bid and asked prices within the taxable year are not available or for any other reason such prices are not truly indicative of value, the market value is ascertained on the basis of the taxpayer's net worth, earning power, book value, dividends paid and all other relevant factors. If a taxpayer consistently computes the actual or market value of its stocks on some other basis, such as the last selling price on the last day of its taxable year, such method of valuation may be accepted by the Commissioner of Finance. In all cases, a complete explanation of the method of valuation used must be included with the taxpayer's return.

         (iv)   A taxpayer which derives income from business carried on both within and without New York City must allocate its issued capital stock in the proportion that gross income derived from business carried on within New York City, during the period covered by the return, bears to its total gross income derived from all business both within and without the city during the period covered by the return. The term "gross income" means gross income from whatever source derived, including, but not limited to, the items enumerated in paragraphs (1) through (15) of subdivision (a) of § 61 of the Internal Revenue Code. In determining the gross income derived from business carried on within New York City (which shall include the eligible gross income of an IBF), the rules described in 19 RCNY § 3-04(f) for determining when receipts are within the City must be used.

      (2)   Computation of the alternative minimum tax measured by issued capital stock on a combined return. The alternative minimum tax measured by issued capital stock is computed at the rate of 2.6 mills upon each dollar of issued capital stock, or portion thereof allocated to New York City, of all the corporations included in the combined return. In computing combined issued capital stock, intercorporate eliminations are not allowed.

   (g)   Alternative minimum tax measured by the fixed minimum amount.

      (1)   The alternative minimum tax measured by the fixed minimum amount. (Administrative Code, § 11-643.5(b)(4)) The alternative minimum tax measured by the fixed dollar amount of $125 is the measure of the tax if it is the largest of the alternative minimum bases and the alternative minimum tax is greater than the basic tax. In no event may the fixed minimum tax be less than $125 for any taxable year.

      (2)   The alternative minimum tax measured by the fixed minimum amount on a combined return. (Administrative Code, § 11-646(f))

         (i)   Where the tax as computed on a combined return is measured by combined entire net income (See: 19 RCNY § 3-03(b)(6)), or is measured by combined alternative entire net income (See: 19 RCNY § 3-03(d)(2)), or is measured by combined taxable assets (See: 19 RCNY § 3-03(e)(6)), or is measured by combined issued capital stock (See: 19 RCNY § 3-03(f)(2)), each corporation included in the combined return except:

            (A)   the taxpayer paying the combined tax; and

            (B)   any corporation described in subparagraph (ii) of this paragraph; is required to pay the fixed minimum tax of $125. The taxpayer paying the combined tax will pay the alternative minimum tax measured by $125 when $125 is the largest of the alternative minimum bases and the alternative minimum tax is greater than the basic tax.

         (ii)   A corporation which is not a taxpayer (See: 19 RCNY § 3-01(c)) is not required to pay the fixed minimum tax of $125 when included in a combined return.

         (iii)   As to when combined returns will be permitted or required, see 19 RCNY § 3-05(b) – Combined Returns.

§ 3-04 Allocation.

   (a)   General. (1) General rules for allocation. (Administrative Code, § 11-642)

         (i)   (A)   The banking corporation tax law provides for distinct allocations of entire net income, alternative entire net income and taxable assets. Entire net income is defined in 19 RCNY § 3-03(b)(2). Alternative entire net income is defined in 19 RCNY § 3-03(d)(1)(ii). Taxable assets are defined in 19 RCNY § 3-03(e)(2). A corporation subject to the banking corporation tax which has entire net income derived from business carried on both within and without New York City shall determine the portion of its entire net income which is derived from business carried on within New York City pursuant to 19 RCNY § 3-04(b). A corporation subject to the banking corporation tax which has alternative entire net income derived from business carried on both within and without New York City shall determine the portion of its alternative entire net income which is derived from business carried on within New York City pursuant to 19 RCNY § 3-04(c). A corporation subject to the banking corporation tax which has taxable assets derived from business carried on both within and without New York City shall determine the portion of its taxable assets derived from business carried on within New York City pursuant to 19 RCNY § 3-04(d). Except as provided in subparagraph (B) of this paragraph, a corporation subject to the banking corporation tax which does not have entire net income, alternative entire net income or taxable assets derived from business carried on without New York City must allocate such entire net income, alternative entire net income or taxable assets 100 percent to New York City.

            (B)   A taxpayer which has established an IBF as defined in 19 RCNY § 3-01(b)(16) may, in lieu of modifying its entire net income by deducting therefrom the adjusted eligible net income of the IBF (in the case of a loss, such loss must be added to entire net income) elect on an annual basis, pursuant to 19 RCNY § 3-04(b)(3)(iii), to reflect the results of its IBF operations in its entire net income allocation percentage and its alternative entire net income allocation percentage. When the taxpayer makes such election, such taxpayer is entitled to allocate its entire net income and alternative entire net income within and without New York City pursuant to 19 RCNY § 3-04(b) and (c), respectively.

         (ii)   When a corporation subject to the banking corporation tax carries on business within and without New York City for only part of the taxable year, it allocates entire net income, alternative entire net income or taxable assets within and without New York City for only that part of the taxable year during which it carries on such business within and without New York City. For allocation of entire net income for a short period, see 19 RCNY § 3-04(h)(1). For allocation of alternative entire net income for a short period, see 19 RCNY § 3-04(h)(2). For allocation of taxable assets for a short period, see 19 RCNY § 3-04(h)(3).

         (iii)   For purposes of this Part, the phrase "business carried on" means "doing business" as defined in 19 RCNY § 3-01(b)(7), provided the income or expenses from such business are required to be included in the computation of the taxpayer's alternative entire net income.

      (2)   Allocation on combined returns. (Administrative Code, § 11-646(f)) In the case of combined returns, allocation of entire net income, alternative entire net income and taxable assets is made on the basis of combined accounts from which all intercorporate transactions between corporations included in the combined return are eliminated. All corporations included in a combined return must make the same IBF election pursuant to 19 RCNY § 3-04(b)(3).

   (b)   Allocation of entire net income.

      (1)   General rules for allocation of entire net income. (Administrative Code, § 11-642)

         (i)   When a taxpayer's entire net income, as defined in 19 RCNY § 3-03(b)(2), is derived from business carried on both within and without New York City, the portion thereof which is derived from business carried on within New York City is determined by multiplying entire net income by the entire net income allocation percentage. When a taxpayer is entitled to allocate entire net income pursuant to 19 RCNY § 3-04(a)(1)(i)(B), the portion of its entire net income which is attributable to New York City is determined by multiplying entire net income by the entire net income allocation percentage. The entire net income allocation percentage is determined by a formula consisting of a payroll factor, a receipts factor, a deposits factor, an additional factor equal to the receipts factor and an additional factor equal to the deposits factor.

         (ii)   If allocation by the entire net income allocation percentage does not properly reflect the activity, business or income of the taxpayer in New York City, the Commissioner of Finance, in his discretion, may permit or require the allocation of entire net income by a different method. A taxpayer may not use a method other than the entire net income allocation percentage for allocating its entire net income within and without New York City without the written consent of the Commissioner of Finance. (See: 19 RCNY § 3-04(h)(4) – Power of the Commissioner of Finance to adjust or change the method of allocation.)

      (2)   Computation of entire net income allocation percentage. (Administrative Code, § 11-642)

         (i)   The taxpayer's entire net income allocation percentage is computed by

            (A)   adding the taxpayer's payroll factor, receipts factor, deposits factor, an additional factor equal to the receipts factor and an additional factor equal to the deposits factor, and

            (B)   dividing the total by five. If the payroll factor is missing, the receipts factor, deposits factor, an additional factor equal to the receipts factor and an additional factor equal to the deposits factor are added together and the sum is divided by four. If the receipts factor is missing, the remaining three factors are added together and the sum is divided by three. If the deposits factor is missing, the remaining three factors are added together and the sum is divided by three. If all but one factor are missing, that factor is the entire net income allocation percentage. A factor is missing if both its numerator and denominator are zero but it is not missing merely because its numerator is zero.

         (ii)   The taxpayer's payroll factor, receipts factor and deposits factor are expressed as percentages and are determined as follows.

            (A)   The payroll factor is computed by dividing 80 percent of the wages, salaries and other personal service compensation of the taxpayer's employees, except general executive officers, within New York City by the total wages, salaries and other personal service compensation of the taxpayer's employees, except general executive officers, within and without New York City. (See: 19 RCNY § 3-04(e).)

            (B)   The receipts factor is computed by dividing the amount of receipts of the taxpayer from loans, financing leases and all other business receipts earned within New York City by the total amount of receipts of the taxpayer from loans, financing leases and all other business receipts earned within and without New York City. (See: 19 RCNY § 3-04(f).)

            (C)   The deposits factor is computed by dividing the average value of deposits maintained at branches of the taxpayer within New York City by the average value of deposits maintained at branches of the taxpayer within and without New York City. (See: 19 RCNY § 3-04(g).)

         (iii)   The receipts factor includes only receipts which are included in the computation of alternative entire net income (as defined in 19 RCNY § 3-03(d)(1)(ii)) for the taxable year. The payroll factor includes only the wages, salaries and other personal service compensation of the taxpayer's employees, except general executive officers, the expenses of which are included in the computation of alternative entire net income for the taxable year. The deposits factor includes only deposits the expenses of which are included in the computation of alternative entire net income for the taxable year. Where the taxpayer includes in its Federal income tax return interbranch transactions between the taxpayer's places of business, such interbranch receipts, payroll and deposits are not included in either the numerators or denominators of the factors in computing the entire net income allocation percentage. For taxpayers that have an IBF, see 19 RCNY § 3-04(b)(3) for special allocation rules.

         (iv)   If it appears that the entire net income allocation percentage computed on the basis of all or any of the payroll, receipts or deposits factors does not properly reflect the activity, business or income of the taxpayer in New York City, the Commissioner of Finance may adjust the entire net income allocation percentage as set forth in 19 RCNY § 3-04(h)(4).

         (v)   For computation of the entire net income allocation percentage when a taxpayer is subject to tax for a period less than its taxable period for Federal income tax purposes, see 19 RCNY § 3-04(h)(1) – Allocation of entire net income for a short period.

      (2-a)   Income allocation percentage where an allocation factor is missing for taxable years beginning in 2009 and thereafter but before 2018.

         (i)   In the event that any of the percentages to be determined under paragraphs (1), (2) or (3) of subdivision (a) of § 11-642 of the Administrative Code cannot be determined because the taxpayer has either no payroll, or no receipts, or no deposits within or without the City, then the computation to be made under paragraph (1-a) of subdivision (b) of § 11-642 of the Administrative Code (applicable to taxable years beginning in 2009 and thereafter but before 2018) shall be made by taking the sum of the products that are determined under such paragraph (1-a) for the factors that are present, and dividing that sum by the sum of the weight factors that apply to each of the present factors in the calculation made under such paragraph (1-a). This amount is then rounded to four decimal places. (An allocation factor is not missing merely because its numerator is zero, but it is missing if both its numerator and its denominator are zero.)

         (ii)   Weight factor defined. For purposes of this paragraph, "weight factor" is the percentage used in the allocation computation in paragraph (1-a) of subdivision (b) of § 11-642 of the Administrative Code, by which the percentage derived from subdivision (a) of § 11-642 of the Administrative Code is multiplied in such allocation computation. For example, in clause (i) of subparagraph (A) of paragraph (1-a) of subdivision (b) of § 11-642 of the Administrative Code, the weight factor is 18%; in clause (i) of subparagraph (I) of paragraph (1-a) of subdivision (b) of § 11-642 of the Administrative Code, the weight factor is 2%.

         (iii)   Example: For the tax year 2009, a taxpayer has no employees either within or without the City. The receipts factor percentage determined under paragraph (2) of subdivision (a) of § 11-642 of the Administrative Code is 10%, and the deposit factor percentage determined under paragraph (3) of subdivision (a) of § 11-642 of the Administrative Code is 25%. As the payroll factor is missing, the allocation percentage may be computed by taking the sum of

   (A)   the product of 46% and 10%, and

   (B)   the product of 36% and 25%,
      which is .046 + .09 = .136,
      then dividing that sum by the sum of the weight factors for receipts and deposits, which are .46 and .36, respectively:

 

.136 .46 +.36

=

.136 .82

= .16585, rounded to four decimal places = .1659

 

      (3)   IBF entire net income allocation rules. (Administrative Code, § 11-642)

         (i)   A taxpayer which has established an IBF, as defined in 19 RCNY § 3-01(b)(16), is entitled, pursuant to 19 RCNY § 3-03(c), to modify its entire net income by deducting therefrom the adjusted eligible net income of the IBF. (In the case of a loss, such loss must be added to entire net income.) Where the taxpayer makes that modification and the taxpayer is entitled to allocate its entire net income by the entire net income allocation percentage pursuant to 19 RCNY § 3-04(a)(1)(i)(A), such taxpayer must

            (A)   exclude from both the numerator and denominator of the payroll and deposits factors the wages, salaries and other personal service compensation and deposits the expenses of which are attributable as provided in 19 RCNY § 3-03(c) to the production of eligible gross income and

            (B)   exclude from both the numerator and denominator of the receipts factor those receipts which are attributable as provided in 19 RCNY § 3-03(c) to the production of eligible gross income. Such method of treating the results of the IBF operations is referred to in this paragraph as the "IBF modification."

         (ii)   When the taxpayer elects, pursuant to subparagraph (iii) of this paragraph, to reflect the results of its IBF operations in its entire net income allocation percentage in lieu of the IBF modification, such allocation percentage is adjusted by

            (A)   including in the denominator of the payroll factor, wages, salaries and other personal service compensation of the taxpayer's employees, except general executive officers, but excluding from the numerator of the payroll factor, wages, salaries and other personal service compensation of the taxpayer's employees, the expenses of which are attributable, as provided in 19 RCNY § 3-03(c), to the production of eligible gross income,

            (B)   including in the denominator but excluding from the numerator of the receipts factors those receipts which are attributable, as provided in 19 RCNY § 3-03(c), to the production of eligible gross income and

            (C)   including in the denominator but excluding from the numerator of the deposits factor, deposits the expenses of which are attributable, as provided in 19 RCNY § 3-03(c), to the production of eligible gross income. Such election is referred to in this section as the "IBF formula allocation method."

         (iii)   The election to use the IBF formula allocation method for a taxable year is made with the filing of the return for such taxable year. Such election may be made or changed with the filing of an amended return for such taxable year. When a combined return is filed, the IBF election is made by the parent corporation included in such combined return and is binding on all corporations included in such combined return. Where the parent corporation is not included in the combined return, the IBF election shall be made for the corporations included in the combined return by their common parent and such election is binding on all corporations included in such return.

         (iv)   As used in this paragraph, the term "eligible gross income" has the same meaning as is given to that term in 19 RCNY § 3-03(c)(4), except that for purposes of subparagraph (ii) of this paragraph, the term "foreign person," as defined in 19 RCNY § 3-03(c)(2)(vii), shall not include a foreign branch of the taxpayer, and no consideration shall be given to any transaction between the taxpayer's foreign branches and its IBF.

      (4)   Allocation of entire net income on combined returns. (Administrative Code, § 11-646(f)) In the case of combined returns, the factors comprising the entire net income allocation percentage are computed as though the corporations included in the return were one corporation. Intercorporate dividends and all other intercorporate transactions, including intercorporate receipts between the corporations included in the combined return, are eliminated. If one corporation included in the combined return makes the IBF election pursuant to 19 RCNY § 3-04(b)(3), all corporations included in the combined return must make the same election. As to when combined returns will be required or permitted, see 19 RCNY § 3-05(b).

   (c)   Allocation of alternative entire net income.

      (1)   General rules for allocation of alternative entire net income. (Administrative Code, § 11-642)

         (i)   When a taxpayer's alternative entire net income, as defined in 19 RCNY § 3-03(d)(1)(ii), is derived from business carried on both within and without New York City, the portion thereof which is derived from business carried on within New York City is determined by multiplying alternative entire net income by the alternative entire net income allocation percentage. When a taxpayer is entitled to allocate alternative entire net income pursuant to 19 RCNY § 3-04(a)(1)(i)(B), the portion of its alternative entire net income which is attributable to New York City is determined by multiplying alternative entire net income by the alternative entire net income allocation percentage. The alternative entire net income allocation percentage is determined by a formula consisting of a payroll factor, a receipts factor and a deposits factor.

         (ii)   If allocation by the alternative entire net income allocation percentage does not properly reflect the activity, business or income of the taxpayer in New York City, the Commissioner of Finance, in his discretion, may permit or require the allocation of alternative entire net income by a different method. A taxpayer may not use a method other than the alternative entire net income allocation percentage for allocating its alternative entire net income within and without New York City without the written consent of the Commissioner of Finance. (See: 19 RCNY § 3-04(h)(4) – Power of the Commissioner of Finance to adjust or change the method of allocation.)

      (2)   Computation of alternative entire net income allocation percentage. (Administrative Code, § 11-642)

         (i)   The alternative entire net income allocation percentage is computed by

            (A)   adding the taxpayer's payroll factor, receipts factor and deposits factor, and

            (B)   dividing the total by three. If one of the factors is missing, the two remaining factors are added together and the sum is divided by two. If two of the factors are missing, the remaining factor is the alternative entire net income allocation percentage. A factor is missing if both its numerator and denominator are zero, but is not missing merely because its numerator is zero.

         (ii)   The taxpayer's payroll factor, receipts factor and deposits factor are expressed as percentages and are determined as follows.

            (A)   The payroll factor is computed by dividing 100 percent of the wages, salaries and other personal service compensation of the taxpayer's employees, except general executive officers, within New York City by the total wages, salaries and other personal service compensation of the taxpayer's employees, except general executive officers, within and without New York City. (See: 19 RCNY § 3-04(e).)

            (B)   The receipts factor is computed by dividing the amount of receipts of the taxpayer from loans, financing leases and all other business receipts earned within New York City by the total amount of receipts of the taxpayers from loans, financing leases and all other business receipts earned within and without New York City. (See: 19 RCNY § 3-04(f).)

            (C)   The deposits factor is computed by dividing the average value of deposits maintained at branches of the taxpayer within New York City by the average value of deposits maintained at branches of the taxpayer within and without New York City. (See: 19 RCNY § 3-04(g).)

         (iii)   The receipts factor includes only receipts which are included in the computation of alternative entire net income for the taxable year. The payroll factor includes only the wages, salaries and other personal service compensation of the taxpayer's employees, except general executive officers, the expenses of which are included in the computation of alternative entire net income for the taxable year. The deposits factor includes only deposits the expenses of which are included in the computation of alternative entire net income for the taxable year. Where the taxpayer includes in its Federal income tax return interbranch transactions between the taxpayer's places of business, such interbranch receipts, payroll and deposits are not included in either the numerators or denominators of the factors in computing the alternative entire net income allocation percentage. For taxpayers that have an IBF, see 19 RCNY § 3-04(c)(3) for special allocation rules.

         (iv)   If it appears that the alternative entire net income allocation percentage computed on the basis of all or any of the payroll, receipts or deposits factor does not properly reflect the activity, business or income of the taxpayer in New York City, the Commissioner of Finance may adjust the alternative entire net income allocation percentage as set forth in 19 RCNY § 3-04(h)(4).

         (v)   For computation of the alternative entire net income allocation percentage when a taxpayer is subject to tax for a period less than its taxable period for Federal income tax purposes, see 19 RCNY § 3-04(h)(2) – Allocation of alternative entire net income for a short period.

      (3)   IBF alternative entire net income allocation rules. (Administrative Code, § 11-642) A taxpayer which has established an IBF, as described in 19 RCNY § 3-03(c), and which has elected to use the IBF formula allocation method pursuant to 19 RCNY § 3-04(b)(3) must make the same election for purposes of allocating alternative entire net income by the alternative entire net income allocation percentage. If, pursuant to 19 RCNY § 3-04(b)(3), a taxpayer utilizes the IBF modification, the taxpayer must utilize the IBF modification for purposes of computing alternative entire net income and the alternative entire net income allocation percentage.

      (4)   Allocation of Alternative Entire Net Income on Combined Returns. (Administrative Code, § 11-646(f)) In the case of combined returns, the factors comprising the alternative entire net income allocation percentage are computed as though the corporations included in the return were one corporation. Intercorporate dividends and all other intercorporate transactions including intercorporate receipts between the corporations included in the combined return are eliminated. If one corporation included in the combined return makes the IBF election pursuant to 19 RCNY § 3-04(b)(3), all corporations included in the combined return must make the same election. As to when combined returns will be required or permitted, see 19 RCNY § 3-05(b).

   (d)   Allocation of taxable assets.

      (1)   General rules for allocation of taxable assets. (Administrative Code, § 11-642)

         (i)   When a taxpayer's taxable assets, as defined in 19 RCNY § 3-03(e)(2), are derived from business carried on both within and without New York City, the portion thereof which is derived from business carried on within New York City is determined by multiplying taxable assets by the asset allocation percentage. The asset allocation percentage is determined by a formula consisting of a payroll factor, a receipts factor, a deposits factor, an additional factor equal to the receipts factor, and an additional factor equal to the deposits factor.

         (ii)   If allocation by the asset allocation percentage does not properly reflect the activity, business or assets of the taxpayer in New York City, the Commissioner of Finance, in his discretion, may permit or require the allocation of taxable assets within and without New York City by a different method. A taxpayer may not use a method other than the asset allocation percentage for allocating its taxable assets within and without New York City without the written consent of the Commissioner of Finance. (See: 19 RCNY § 3-04(h)(4) – Power of the Commissioner of Finance to Adjust or Change the Method of Allocation.)

      (2)   Computation of asset allocation percentage. (Administrative Code, § 11-642)

         (i)   The taxpayer's asset allocation percentage is computed by

            (A)   adding the taxpayer's payroll factor, receipts factor, deposits factor, an additional factor equal to the receipts factor and an additional factor equal to the deposits factor, and

            (B)   dividing the total by five. If the payroll factor is missing, the receipts factor and deposits factor, an additional factor equal to the receipts factor and an additional factor equal to the deposits factor are added together and the sum is divided by four. If the receipts factor is missing, the remaining three factors are added together and the sum is divided by three. If the deposits factor is missing, the remaining three factors are added together and the sum is divided by three. If all but one factor are missing, the remaining factor is the asset allocation percentage. A percentage is missing if both its numerator and denominator are zero but it is not missing merely because its numerator is zero.

         (ii)   The taxpayer's payroll factor, receipts factor and deposits factor are expressed as percentages and are determined as follows.

            (A)   The payroll factor is computed by dividing 80 percent of the wages, salaries and other personal service compensation of the taxpayer's employees, except general executive officers, within New York City by the total wages, salaries and other personal service compensation of the taxpayer's employees, except general executive officers, within and without New York City. (See: 19 RCNY § 3-04(e).)

            (B)   The receipts factor is computed by dividing the amount of receipts of the taxpayer from loans, financing leases and all other business receipts earned within New York City by the total amount of receipts of the taxpayer from loans, financing leases and all other business receipts earned within and without New York City. (See: 19 RCNY § 3-04(f).)

            (C)   The deposits factor is computed by dividing the average value of deposits maintained at branches of the taxpayer within New York City by the average value of deposits maintained at branches of the taxpayer within and without New York City. (See: 19 RCNY § 3-04(g).)

         (iii)   (A)   Both the numerator and denominator of the receipts factor consist of (a) receipts that are included in the computation of alternative entire net income (as defined in 19 RCNY § 3-03(d)(1)(ii)) for the taxable year and (b) receipts that are attributable to the production of eligible gross income of the IBF for the taxable year, regardless of whether the IBF election is made pursuant to 19 RCNY § 3-04(b)(3).

            (B)   Both the numerator and denominator of the payroll factor consist of (a) wages, salaries and other personal service compensation of the taxpayer's employees, except general executive officers, the expenses of which are included in the computation of alternative entire net income for the taxable year, and (b) wages, salaries and other personal service compensation of the taxpayer's employees, except general executive officers, the expenses of which are attributable to the production of eligible gross income of the IBF for the taxable year, regardless of whether the IBF election is made pursuant to 19 RCNY § 3-04(b)(3).

            (C)   Both the numerator and the denominator of the deposits factor consist of (a) deposits the expenses of which are included in the computation of alternative entire net income for the taxable year, and (b) deposits the expenses of which are attributable to the production of eligible gross income of the IBF for the taxable year, regardless of whether the IBF election is made pursuant to 19 RCNY § 3-04(b)(3).

            (D)   As used in this subdivision, the term "eligible gross income" has the same meaning as is given to that term in 19 RCNY § 3-03(c)(4), except that for the purposes of this subdivision, the term "foreign person," as defined in 19 RCNY § 3-03(c)(2)(vii), shall not include a foreign branch of the taxpayer, and no consideration shall be given to any transactions between the taxpayer's foreign branches and its IBF.

            (E)   Where the taxpayer includes in its Federal income tax return interbranch transactions between the taxpayer's places of business, such interbranch receipts, payroll and deposits are not included in either the numerators or denominators of the factors in computing the asset allocation percentage.

         (iv)   If it appears that the asset allocation percentage computed on the basis of all or any of the payroll, receipts or deposits factors does not properly reflect the activity, business or assets of the taxpayer in New York City, the Commissioner of Finance may adjust the asset allocation percentage as set forth in 19 RCNY § 3-04(h)(4).

         (v)   For computation of the asset allocation percentage when a taxpayer is subject to tax for a period less than its taxable period for Federal income tax purposes, see 19 RCNY § 3-04(h)(3) – Allocation of taxable assets for a short period.

      (3)   Allocation of taxable assets on combined returns. (Administrative Code, § 11-646(f)) In the case of combined returns, the factors of the asset allocation percentage are computed as though the corporations included in the return were one corporation. Intercorporate dividends and all other intercorporate transactions including intercorporate receipts between the corporations included in the combined return are eliminated. As to when combined returns will be required or permitted, see 19 RCNY § 3-05(b).

   (e)   Payroll factor.

      (1)   General. (Administrative Code, § 11-642)

         (i)   The percentage of the taxpayer's payroll allocated to New York City is determined by dividing 80 percent (100 percent when computing the alternative entire net income allocation percentage) of the wages, salaries and other personal service compensation of the taxpayer's employees, except general executive officers, within New York City during the period the taxpayer is entitled to allocate by the total amount of wages, salaries and other personal service compensation of the taxpayer's employees, except general executive officers, both within and without New York City during the period the taxpayer is entitled to allocate.

         (ii)   The term "employees within New York City" includes all employees regularly connected with or working out of an office of the taxpayer within New York City, irrespective of where the services of such employees were performed. However, if the taxpayer establishes to the satisfaction of the Commissioner of Finance or the Commissioner of Finance establishes on his own motion that

            (A)   a substantial part of the taxpayer's payroll was paid to employees attached to an office in New York City who performed a substantial part of their services outside New York City or a substantial part of the taxpayer's payroll was paid to employees attached to an office outside New York City who performed a substantial part of their services within New York City, and

            (B)   establishes that the computation of the payroll factor according to the general rule stated in this subparagraph would not properly reflect the amount of the taxpayer's business carried on within New York City by its employees, then the Commissioner of Finance may permit or require the payroll factor to be computed on the basis of the amount of compensation paid for services performed within New York City. The compensation paid for services performed within New York City will be deemed to be:

               (a)   in the case of an employee whose compensation depended directly on the volume of business secured by him, the amount received by him for the business attributable to his efforts within New York City;

               (b)   in the case of an employee whose compensation depended on other results achieved, the proportion of the total compensation which the value of his services within New York City bears to the value of all his services; and

               (c)   in the case of an employee compensated on a time basis, the proportion of the total amount received by him which the working time within New York City bears to the total working time.

         (iii)   Wages, salaries and other personal service compensation include all amounts paid for services to the taxpayer and deducted by the taxpayer in computing its alternative entire net income, but do not include amounts paid by the taxpayer which do not have the element of compensation for personal services actually rendered or to be rendered.

         (iv)   Wages, salaries and other personal service compensation are computed on a cash or accrual basis, in accordance with the method of accounting used by the taxpayer for the taxable year in computing alternative entire net income.

      (2)   Definition of employee.

         (i)   Employees whose wages, salaries and other personal service compensation are included in the computation of the payroll factor include every individual, except general executive officers, where the relationship existing between the taxpayer and the individual is that of employer and employee.

         (ii)   Generally, the relationship of employer and employee exists when the taxpayer has the right to control and direct the individual not only as to the result to be accomplished by him but also as to the means by which such result is to be accomplished. If the relationship of employer and employee exists, the designation or description of the relationship, and the measure, method or designation of the compensation is immaterial.

         (iii)   Compensation paid to directors for acting as such is not included in computing the payroll factor.

      (3)   General executive officers.

         (i)   A general executive officer must be an officer of the corporation charged with and performing general executive duties of the corporation and elected by the shareholders, elected or appointed by the board of directors, or if initially appointed by another officer such appointment must be ratified by the board of directors. If the place of incorporation is other than New York State, the officer of the corporation must be elected or appointed in accordance with the laws of the place of incorporation.

         (ii)   A general executive officer is an appointed or elected officer of the corporation having company-wide authority with respect to his assigned functions or duties or is responsible for an entire division of the company. Any person who has merely been designated as an officer but who is not an appointed or elected officer, as described in subparagraph (i) of this paragraph, is not a general executive officer.

         (iii)   Personal service compensation paid to a general executive officer of the taxpayer for acting as such is not included in the computation of the payroll factor.

   (f)   Receipts factor.

      (1)   General. (Administrative Code, § 11-642)

         (i)   The percentage of the taxpayer's receipts allocated to New York City is determined by dividing 100 percent of the taxpayer's receipts from loans (including the taxpayer's portion of a participation in a loan) and financing leases and all other business receipts earned within New York City during the period the taxpayer is entitled to allocate by the total amount of the taxpayer's receipts from loans (including the taxpayer's portion of a participation in a loan) and financing leases and all other business receipts within and without New York City during the period the taxpayer is entitled to allocate.

         (ii)   Receipts are computed on a cash or accrual basis in accordance with the method of accounting used by the taxpayer for the taxable year in computing its alternative entire net income.

      (2)   Income from loans and financing leases. (Administrative Code, § 11-642)

         (i)   Gross income from a loan or financing lease is allocated to New York City if such income is attributable to a loan or financing lease which is located in New York City. A loan or financing lease is located where the greater portion of income producing activity relating to the loan or financing lease occurred, provided however:

            (A)   In the case of a taxpayer described in subparagraphs (i), (ii), (iii), (iv), (v), (vi), or (ix) of 19 RCNY § 3-01(b)(5), a loan or financing lease that is attributed by such taxpayer to a branch without New York City is presumed to be properly attributed provided that such presumption may be rebutted if the Commissioner of Finance demonstrates that the greater portion of income producing activity relating to the loan or financing lease did not occur at such branch. Where such presumption has been rebutted by the Commissioner of Finance, the loan or financing lease shall be presumed to be within New York City if the taxpayer had a branch within New York City at the time the loan or financing lease was made. However, the taxpayer may rebut such presumption by demonstrating that the greater portion of income producing activity relating to the loan or financing lease did not occur within New York City. For purposes of this section, a loan or financing lease is made when such loan or financing lease is approved.

            (B)   In the case of a taxpayer described in subparagraphs (i), (ii), (iii), (iv), (v), (vi), or (ix) of 19 RCNY § 3-01(b)(5) which records a loan or financing lease on the books of a place without New York City which is not a branch, it shall be presumed that the greater portion of income producing activity related to such loan or financing lease occurred within New York City if the taxpayer had a branch within New York City at the time the loan or financing lease was made. The taxpayer may rebut such presumption by demonstrating that the greater portion of income producing activity related to the loan or financing lease did not occur within New York City. A loan or financing lease is made when such loan or financing lease is approved.

            (C)   In the case of a taxpayer which is a bank holding company or a taxpayer described in subparagraphs (vii) or (x) of 19 RCNY § 3-01(b)(5), a loan or financing lease attributed by such taxpayer to a bona fide office without New York City is presumed to be properly attributed provided that such presumption may be rebutted if the Commissioner of Finance demonstrates that the greater portion of income producing activity relating to the loan or financing lease did not occur without New York City.

         (ii)   A)   The term "loan" means any loan, whether the transaction is represented by a promissory note, security, acknowledgement of advance, due bill or any other form of credit transaction, if the related asset is properly recorded in the financial accounts of the taxpayer. Loans include the taxpayer's portion of a participation in a loan.

            (B)   The term "financing lease" means a lease where the taxpayer is not treated as the owner of the property for purposes of computing alternative entire net income.

            (C)   The phrase "gross income from a loan or financing lease" includes interest and fees, such as arrangement, commitment and management fees but does not include the repayments of principal.

         (iii)   To determine where the greater portion of income producing activity relating to a loan or financing lease occurred, consideration is given to such activities as the solicitation, investigation, negotiation, final approval and administration of the loan or financing lease. Each loan or financing lease has its own characteristics. In some cases, one or more of the activities to be considered may not be present. The significance to be accorded to each activity depends upon the facts in each case.

         (iv)   The terms "solicitation,""investigation," "negotiation,""final approval" and "administration" are defined as follows:

            Administration. Administration is the process of managing the account. This process includes bookkeeping, collecting the payments, corresponding with the customer, reporting to management regarding the status of the agreement and proceeding against the borrower if the borrower is in default. Such activity is located at the office which oversees this activity.

            Final approval. Final approval is the act of employees or the board of directors of the taxpayer which legally binds the taxpayer to perform under an agreement. Such activity is located at the office which the taxpayer's employees are regularly connected with, regardless of where the services of such employees were actually performed. If the board of directors makes such final approval, such activity occurred where the actual seat of management and control of the taxpayer is located.

            Investigation. Investigation is the procedure whereby employees of the taxpayer determine the credit-worthiness of the customer as well as the degree of risk involved in making a particular agreement. Such activity is located at the office which the taxpayer's employees are regularly connected with, regardless of where the services of such employees were actually performed.

            Negotiation. Negotiation is the procedure whereby employees of the taxpayer and its customer determine the terms of the agreement (e.g., the amount, duration, interest rate, frequency of repayment, currency denomination and security required). Such activity is located at the office which the taxpayer's employees are regularly connected with, regardless of where the services of such employees were actually performed.

            Solicitation. Solicitation is either active or passive. (a) Active solicitation occurs when an employee of the taxpayer initiates the contact with the customer. Such activity is located at the office which the taxpayer's employee is regularly connected with, regardless of where the services of such employee were actually performed. (b) Passive solicitation occurs when the customer initiates the contact with the taxpayer. If the customer's initial contact was not at an office of the taxpayer, the office, if any, where the passive solicitation occurred is determined by the facts in each case.

      (3)   Receipts from leases and rents. (Administrative Code, § 11-642)

         (i)   Receipts from real property and tangible personal property leased or rented from the taxpayer are allocated to New York City if such property is located in New York City. Receipts from rentals include all amounts received by the taxpayer for the use of or occupation of property, whether or not such property is owned by the taxpayer. Gross receipts received from real property and tangible personal property which is subleased must be included in the receipts factor.

         (ii)   For the treatment of income from financing lease, see 19 RCNY § 3-04(f)(2).

      (4)   Income from bank, credit, travel, entertainment and other card operations. (Administrative Code, § 11-642)

         (i)   Interest, fees in the nature of interest and penalties in the nature of interest from a bank, credit, travel, entertainment and other card receivables are allocated to New York City if the card holder's domicile is in New York City. In the case of an individual, domicile, in general, is the place where such individual intends his permanent home to be. Such permanent home is the place to which a person intends to return whenever he may be absent. In all other cases, domicile is the place where the actual seat of management or control is located. It shall be presumed that the domicile of the cardholder is its billing address.

         (ii)   Service charges and fees from bank, credit, travel, entertainment and other cards are allocated to New York City if the card is serviced within New York City. A card is serviced at the place where the records pertaining to such account are kept and managed.

         (iii)   Receipts from merchant discounts are allocated to New York City if the merchant is located within New York City. In the case of a merchant with locations both within and without New York City, only receipts from merchant discounts attributable to sales made from locations within New York City are allocated to New York City. It shall be presumed that the location of the merchant is the address of the merchant shown on the invoice submitted by the merchant to the taxpayer.

      (5)   Income from trading activities and investment activities. (Administrative Code, § 11-642)

         (i)   Income from trading activities and investment activities shall be allocated to New York City, if the greater portion of income producing activity relating to such trading and investment activities occurred within New York City. When determining the income from trading and investment activities, the taxpayer must net the gains with the losses from such activities that are included in the computation of Federal taxable income. A net loss is deemed to be zero.

         (ii)   Trading activities include, but are not limited to, foreign exchange transactions, the purchase and sale of options and financial futures, and in appropriate cases, interbank fund transfers.

         (iii)   Except as provided in subparagraph (iv) of this paragraph, to determine where the greater portion of income producing activity relating to trading activities or investment activities occurred, consideration is given to such factors as:

            (A)   where the particular policies of the taxpayer regarding the trading or investment activities are established and guidelines set up;

            (B)   where the day to day decisions regarding each transaction relating to the trading or investment activities are made; and

            (C)   where the equipment and other support activities relating to such trading or investment activities are located. The significance to be accorded to each factor depends upon the facts in each case. Consideration shall also be given to where the general policies of the taxpayer regarding the trading or investment activities are established and the guidelines set up. However, this shall not be accorded as much significance as any of the factors enumerated in subparagraphs (iii)(A), (iii)(B), or (iii)(C) of this paragraph.

         (iv)   Securities owned by a bank but held by a public official or pledged to secure public funds or trust funds deposited in such bank shall be allocated to New York City if such secured deposit is maintained in New York City. (See: 19 RCNY § 3-04(g)(3) for definition of maintained.)

      (6)   Fees or charges from letters of credit, traveler's checks and money orders. (Administrative Code, § 11-642) Fees or charges from the issuance of letters of credit, traveler's checks and money orders are allocated to New York City if such letters of credit, traveler's checks or money orders are issued within New York City.

      (7)   Receipts for services performed. (Administrative Code, § 11-642)

         (i)   Receipts for services performed by the taxpayer's employees regularly connected with or working out of a New York City office of the taxpayer are allocated to New York City if such services are performed within New York City.

         (ii)   When allocating receipts for services performed, it is immaterial where such receipts are payable or where they are actually received.

         (iii)   Where services are performed both within and without New York City, the portion of the receipt attributable to services performed within New York City is determined on the basis of the relative value of, or amount of time spent in performance of, such services within New York City, or by some other reasonable method. Full details must be submitted with the taxpayer's return.

      (8)   Receipts of royalties. (Administrative Code, § 11-642) Receipts of royalties from the use of patents, copyrights and trademarks are allocated to New York City if the taxpayer's actual seat of management or control is located in New York City. Royalties include all amounts received by the taxpayer for the use of patents, copyrights or trademarks, whether or not such patents, copyrights or trademarks were issued to the tax- payer.

      (9)   Other business receipts. (Administrative Code, § 11-642)

         (i)   Income from securities used to maintain reserves against deposits to meet Federal and state reserve requirements shall be allocated to New York City based upon the ratio that total deposits in New York City bears to total deposits everywhere. (See: 19 RCNY § 3-04(g)(2) for definition of deposit.)

         (ii)   All other business receipts earned by the taxpayer in New York City are allocated to New York City.

         (iii)   A receipt from the sale of a capital asset is not a business receipt and is not included in the receipts factor. For example, the receipt from the sale of a capital asset as scrap or at a gain is not included in the receipts factor.

      (10)   Receipts factor on combined returns. The receipts factor on a combined return is computed as though the corporations included in the return were one corporation. All intercorporate receipts between the corporations included in the combined return are eliminated in computing the combined receipts factor. As to when combined returns will be required or permitted, see 19 RCNY § 3-05(b).

   (g)   Deposits factor. 

      (1)   General. (Administrative Code, § 11-642) The percentage of the taxpayer's deposits allocated to New York City is determined by dividing the average value of deposits maintained at branches of the taxpayer within New York City during the period the taxpayer is entitled to allocate by the average value of all deposits maintained at branches of the taxpayer both within and without New York City during the period the taxpayer is entitled to allocate.

      (2)   Definition of deposit. (Administrative Code, § 11-642) For purposes of this subdivision the term "deposit" means:

         (i)   the unpaid balance of money or its equivalent received or held by a bank in the usual course of business and for which it has given or is obligated to give credit, either conditionally or unconditionally, to a commercial, checking, savings, time, or thrift account, or which is evidenced by its certificate of deposit, thrift certificate, investment certificate, certificate of indebtedness, or other similar name, or a check or draft drawn against a deposit account and certified by the bank, or a letter of credit or a traveler's check on which the bank is primarily liable; provided, that, without limiting the generality of the term "money or its equivalent," any such account or instrument must be regarded as evidencing the receipt of the equivalent of money when credited or issued in exchange for checks or drafts or for a promissory note upon which the person obtaining any such credit or instrument is primarily or secondarily liable, or for a charge against a deposit account, or in settlement of checks, drafts, or other instruments forwarded to such bank for collection;

         (ii)   trust funds received or held by such bank, whether held in the trust department or held or deposited in any other department of such bank;

         (iii)   money received or held by a bank, or the credit given for money or its equivalent received or held by a bank, in the usual course of business for a special or specific purpose, regardless of the legal relationship thereby established, including without being limited to, escrow funds, funds held as security for an obligation due to the bank or others (including funds held as dealers' reserves) or for securities loaned by the bank, funds deposited by a debtor to meet maturing obligations, funds deposited as advance payment on subscriptions to United States Government securities, funds held for distribution or purchase of securities, funds held to meet its acceptances or letters of credit, and withheld taxes; provided, that there shall not be included funds which are received by the bank for immediate application to the reduction of an indebtedness to the receiving bank, or under condition that the receipt thereof immediately reduces or extinguishes such an indebtedness;

         (iv)   outstanding drafts (including advice or authorization to charge bank's balance in another bank), cashier's checks, money orders, or other officer's checks issued in the usual course of business for any purpose, but not including those issued in payment for services, dividends, or purchase or other costs or expenses of the bank itself.

      (3)   Definition of maintained. (Administrative Code, § 11-642)

         (i)   For purposes of this subdivision, a deposit is "maintained" at the branch of the taxpayer at which the deposit is properly booked.

            (A)   A deposit, the value of which at all times during the taxable year was less than $100,000, that is booked by a taxpayer at a branch without New York City is presumed to be properly booked, provided that such presumption may be rebutted if the Commissioner of Finance demonstrates that the greater portion of contact relating to the deposit did not occur at such branch. Where such presumption has been rebutted by the Commissioner of Finance, the deposit shall be presumed to be maintained within New York City if the taxpayer had a branch within New York City at the time the deposit was booked. However, the taxpayer may rebut such presumption by demonstrating that the greater portion of contact relating to the deposit did occur at a branch outside New York City.

            (B)   A deposit, the value of which at any time during the taxable year was $100,000 or more, is considered to be properly booked at the branch with which it has a greater portion of contact.

         (ii)   In determining whether a deposit has a greater portion of contact with a particular branch, consideration is given to such activities as:

            (A)   Whether the deposit account was opened at or transferred to that branch by or at the direction of the depositor or by a broker of deposits, regardless of where subsequent deposits or withdrawals may be made;

            (B)   whether employees regularly connected with that branch are primarily responsible for servicing the depositor's general banking and other financial needs;

            (C)   whether the deposit was solicited by an employee regularly connected with that branch, regardless of where such deposit was actually solicited;

            (D)   whether the terms governing the deposit were negotiated by employees regularly connected with that branch regardless of where the negotiations were actually conducted; and

            (E)   whether essential records relating to the deposit are kept at that branch and whether the deposit is serviced at that branch.

         (iii)   In some cases, one or more of the activities considered in subparagraph (ii) of this paragraph may not be present. The significance to be accorded to each activity depends upon the facts in each case.

         (iv)   A deposit that is maintained at a bona fide office of the taxpayer which is not a branch is excluded from both the numerator and denominator of the deposits factor.

      (4)   Average value of deposits. (Administrative Code, § 11-642) The value of deposits maintained at branches of the taxpayer is the total of the amounts credited to depositors, including the amount of any interest so credited. The average value of deposits is to be computed on a daily basis. However, if the taxpayer's usual accounting practices do not permit the computation of average value on a daily basis, a computation on a weekly basis will be permitted. The Commissioner of Finance will not permit the computation of average value of deposits on a basis less frequent than weekly, unless the taxpayer demonstrates that requiring it to use a weekly computation would produce an undue hardship. Any method of determining average value of deposits which is adopted by the taxpayer on any return may not be changed on any subsequent return without the prior written consent of the Commissioner of Finance.

   (h)   Other rules. 

      (1)   Allocation of entire net income for a short period. (Administrative Code, §§ 11-641(k) and 11-642)

         (i)   A taxpayer which is entitled to allocate entire net income within and without New York City for only part of a taxable year allocates its entire net income for only that part of the taxable year during which it is entitled to allocate. (See: 19 RCNY § 3-04(b)(1) – General Rules for Allocation of Entire Net Income.) A taxpayer subject to tax for a period less than its taxable period for Federal income tax purposes computes its prorated entire net income pursuant to 19 RCNY § 3-03(b)(8) and computes its entire net income allocation percentage only for that part of the taxable year during which it is entitled to allocate.

         (ii)   (A)   The entire net income allocation percentage is applied to entire net income which has been prorated for the period for which the taxpayer is entitled to allocate. In the case of a taxpayer subject to tax for a period less than its taxable period for Federal income tax purposes, the entire net income allocation percentage is applied to entire net income which (a) has been prorated pursuant to 19 RCNY § 3-03(b)(8), for the period during which the taxpayer is subject to tax; and (b) has been prorated for the period during which the taxpayer is entitled to allocate.

            (B)   Entire net income (or prorated entire net income) is prorated for the period the taxpayer is entitled to allocate and is computed as follows: (a) divide entire net income (or prorated entire net income) by the number of calendar months or major parts thereof covered by the taxpayer's New York City return; and (b) multiply the amount determined in subparagraph (ii)(A) of this paragraph by the number of calendar months or major parts thereof for which the taxpayer is entitled to allocate.

            (C)   After entire net income (or prorated entire net income) has been prorated for the period for which the taxpayer is entitled to allocate, the remaining portion of entire net income (or prorated entire net income) will be allocated at either 100 percent or zero percent depending on whether the taxpayer's business was conducted solely within or solely without New York City.

         (iii)   If, in the opinion of the Commissioner of Finance, the method described in this section for prorating entire net income (or prorated entire net income) for the period during which the taxpayer is entitled to allocate does not properly reflect the taxpayer's entire net income (or prorated entire net income) for the period during which it is entitled to allocate and for the remaining period, the Commissioner of Finance may determine entire net income solely on the basis of the entire net income properly recorded on the taxpayer's books and records during such periods.

         (iv)   The short period entire net income allocation percentage is determined in the same manner as the entire net income allocation percentage described in 19 RCNY § 3-04(b)(2), except that

            (A)   the payroll factor is computed only for the period for which the taxpayer is entitled to allocate;

            (B)   the receipts factor is computed only for the period for which the taxpayer is entitled to allocate; and

            (C)   the deposits factor is computed only for the period for which the taxpayer is entitled to allocate. A taxpayer must submit complete details with its return showing how it computed each factor of the short period entire net income allocation percentage.

         (v)   The following are examples illustrating the computation of the entire net income allocation percentage for a short period and the application of this percentage to entire net income:

Example 1: A taxpayer which was subject to tax for all of 1985 reports on a calendar year basis and had entire net income of $72,000 for such taxable year 1985. On June 13, 1985 the taxpayer began doing business both within and without New York City which entitled it to allocate for the period June 13, 1985 through December 31, 1985. For the short period June 13, 1985 through December 31, 1985 (7 months), the taxpayer had the following:

 

	New York City	Total
Payroll	$60,800*	$80,000
Receipts	$777,600*	$960,000
Deposits	$1,080,000*	$1,350,000

 

* 80% of the New York City amount

The taxpayer's short period entire net income allocation percentage is computed as follows:

 

Payroll factor [($60,800/$80,000) × 100]	76%
Receipts factor [($777,600/$960,000) × 100]	81%
Deposits factor [($1,080,000/$1,350,000) × 100]	80%
Receipts factor [($777,600/$960,000) × 100]	81%
Deposits factor [($1,080,000/$1,350,000) × 100]	80%
Total	398%

 

The short period entire net income allocation percentage is 79.6% (398%/5).

The taxpayers entire net income allocated to New York City is $63,432 computed as follows:

$72,000/12 (months) = $6,000
$6,000 × 7 (months) = $42,000
$42,000 × 79.6% = $33,432
$72,000 - $42,000 = $30,000

 

Entire net income allocated at 100%	$30,000
Entire net income allocated at 79.6%	$33,432
Total allocated entire net income	$63,432

 

Example 2: A banking corporation incorporated outside the United States has been doing business in the State of California since 1979. It began doing business and became subject to tax in New York State on April 2, 1985. The taxpayer reports on a calendar year basis and had entire net income of $60,000 for the 12 month calendar year 1985.For the short taxable period April 2, 1985 through December 31, 1985 (9 months), the taxpayer had the following:

 

	New York City	Total
Payroll	$70,000*	$100,000
Receipts	$560,000*	$800,000
Deposits	$672,000*	$1,120,000

 

* 80% of the New York City amount

The taxpayer's short period entire net income allocation percentage is computed as follows:

 

Payroll factor [($70,000/$100,000) x 100]	70%
Receipts factor [($560,000/$800,000) x 100]	70%
Deposits factor [($672,000/$1,120,00) x 100]	60%
Receipts factor [($560,000/$800,000) x 100]	70%
Deposits factor [($672,000/$1,120,000) x 100]	60%
Total	330%

 

The short period entire net income allocation percentage 66% (330%/5)

The taxpayer's prorated entire net income computed pursuant to 19 RCNY § 3-03(b)(7) is $45,000 computed as follows:

   $60,000/12 (months) = $5,000
   $5,000 × 9 (months) = $45,000

Such prorated entire net income allocated to New York City is $29,700 ($45,000 × 66%).

      (2)   Allocation of alternative entire net income for a short period. (Administrative Code, §§ 11-641(k) and 11-642)

         (i)   A taxpayer which is entitled to allocate alternative entire net income within and without New York City for only part of a taxable year allocates its alternative entire net income for only that part of the taxable year during which it is entitled to allocate. (See: 19 RCNY § 3-04(c)(1) – General rules for allocation of alternative entire net income.) A taxpayer subject to tax for a period less than its taxable period for Federal income tax purposes computes its prorated alternative entire net income pursuant to 19 RCNY § 3-03(d)(4) and computes its alternative entire net income allocation percentage only for that part of the taxable year during which it is entitled to allocate.

         (ii)   The alternative entire net income allocation percentage is applied to alternative entire net income which has been prorated for the period for which the taxpayer is entitled to allocate. In the case of a taxpayer subject to tax for a period less than its taxable period for Federal income tax purposes, the alternative entire net income allocation percentage is applied to alternative entire net income which

            (A)   has been prorated pursuant to 19 RCNY § 3-03(d)(4), for the period during which the taxpayer is subject to tax; and

            (B)   has been prorated for the period during which the taxpayer is entitled to allocate. Alternative entire net income (or prorated alternative entire net income) is prorated for the period the taxpayer is entitled to allocate and is computed as follows:

            (C)   divide alternative entire net income (or prorated alternative entire net income) by the number of calendar months or major parts thereof covered by the taxpayer's New York City return; and

            (D)   multiply the amount determined in subparagraph (ii)(c) of this paragraph by the number of calendar months or major parts thereof for which the taxpayer is entitled to allocate. After alternative entire net income (or prorated alternative entire net income) has been prorated for the period for which the taxpayer is entitled to allocate, the remaining portion of alternative entire net income (or prorated alternative entire net income) will be allocated at either 100 percent or zero percent depending on whether the taxpayer's business was conducted solely within or solely without New York City.

         (iii)   If, in the opinion of the Commissioner of Finance, the method described in this paragraph for prorating alternative entire net income (or prorated alternative entire net income) for the period during which the taxpayer is entitled to allocate does not properly reflect the taxpayer's alternative entire net income (or prorated alternative entire net income) for the period during which it is entitled to allocate and the remaining period, the Commissioner of Finance may determine alternative entire net income solely on the basis of the alternative entire net income properly recorded on the taxpayer's books and records during such periods.

         (iv)   The short period alternative entire net income allocation percentage is determined in the same manner as the alternative entire net income allocation percentage described in 19 RCNY § 3-04(c)(2) except that:

            (A)   the payroll factor is computed only for the period for which the taxpayer is entitled to allocate;

            (B)   the receipts factor is computed only for the period for which the taxpayer is entitled to allocate; and

            (C)   the deposits factors is computed only for the period for which the taxpayer is entitled to allocate. A taxpayer must submit complete details with its return showing how it computed each factor of the short period alternative entire net income allocation percentage.

         (v)   The following is an example illustrating the computation of the alternative entire net income allocation percentage for a short period and the application of this percentage to alternative entire net income:

Example: A banking corporation incorporated outside the United States had been doing business in the State of Florida since 1978. It began doing business and became subject to tax in New York City on May 3, 1985. On November 30, 1985 the taxpayer ceased doing business in Florida but continued its operations in New York City. For Federal income tax purposes, the taxpayer reports on a calendar year basis and had alternative entire net income of $120,000 for the 12 month calendar year 1985. For the period the taxpayer is entitled to allocate, that is, May 3, 1985 through November 30, 1985 (7 months), the taxpayer had the following:

 

	New York City	Total
Payroll	$80,000*	$100,000
Receipts	$875,000*	$1,250,000
Deposits	$990,000*	$1,650,000

 

* 100% of the New York City amount

The taxpayer's short period alternative entire net income allocation percentage is computed as follows:

 

Payroll factor [($80,000/$100,000) × 100]	80%
Receipts factor [($875,000/$1,250,000) × 100]	70%
Deposits factor [($990,000/$1,650,000) × 100]	60%
Total	210%

 

The short period alternative entire net income allocation percentage is 70% (210%/3).

The taxpayers alternative entire net income allocated to New York City is $59,000 computed as follows:

$120,000/12 (months) = $10,000
$10,000 × 7 (months) = $70,000
$70,000 × 70% = $49,000
$10,000 × 1 (month) = $10,000
$120,000 - $70,000 - $10,000 = $40,000

 

Alternative entire net income for period 1/1/85 - 4/30/85 is $40,000 allocated at 0%	0
Alternative entire net income for period 5/1/85 - 11/30/85 is $70,000 allocated at 70%	$49,000
Alternative entire net income for period 12/1/85 - 12/31/85 is $10,000 allocated at 100%	$10,000
Total allocated alternative entire net income	$59,000

 

      (3)   Allocation of taxable assets for a short period. (Administrative Code, § 11-642)

         (i)   A taxpayer which is entitled to allocate taxable assets within and without New York City for only part of a taxable year allocates its taxable assets for only that part of the taxable year during which it is entitled to allocate. (See: 19 RCNY § 3-04(d)(1) – General rules for allocation of taxable assets.) A taxpayer subject to tax for a period other than 12 calendar months computes its prorated taxable assets pursuant to 19 RCNY § 3-03(e)(7) and computes its asset allocation percentage only for that part of the taxable year during which it is entitled to allocate.

         (ii)   The asset allocation percentage is applied to taxable assets which have been prorated for the period for which the taxpayer is entitled to allocate. In the case of a taxpayer subject to tax for a period other than 12 calendar months, the asset allocation percentage is applied to taxable assets which:

            (A)   have been prorated, pursuant to 19 RCNY § 3-03(e)(7), for the period during which the taxpayer is subject to tax; and

            (B)   have been prorated for the period during which the taxpayer is entitled to allocate. Taxable assets (or prorated taxable assets) are prorated for the period the taxpayer is entitled to allocate and are computed as follows:

            (C)   divide taxable assets (or prorated taxable assets) by the number of calendar months or major parts thereof covered by the taxpayer's New York City return; and

            (D)   multiply the amount determined in subparagraph (ii)(c) of this paragraph by the number of calendar months or major parts thereof for which the taxpayer is entitled to allocate. After taxable assets (or prorated taxable assets) have been prorated for the period for which the taxpayer is entitled to allocate, the remaining portion of taxable assets (or prorated taxable assets) will be allocated at either 100 percent or zero percent depending on whether the taxpayer's business was conducted solely within or solely without New York City.

         (iii)   If, in the opinion of the Commissioner of Finance, the method described in this paragraph for prorating taxable assets (or prorated taxable assets) for the period during which the taxpayer is entitled to allocate does not properly reflect the taxable assets (or prorated taxable assets) for the period during which it is entitled to allocate and for the remaining period, the Commissioner of Finance may determine taxable assets solely on the basis of the taxable assets properly recorded on the taxpayer's books and records during such periods.

         (iv)   The short period assets allocation percentage is determined in the same manner as the asset allocation percentage described in 19 RCNY § 3-04(d)(2), except that:

            (A)   the payroll factor is computed only for the period for which the taxpayer is entitled to allocate;

            (B)   the receipts factor is computed only for the period for which the taxpayer is entitled to allocate; and

            (C)   the deposits factor is computed only for the period for which the taxpayer is entitled to allocate. A taxpayer must submit complete details with its return showing how it computed each factor of the short period asset allocation percentage.

         (v)   The following is an example illustrating the computation of the asset allocation percentage for a short period and the application of this percentage to taxable assets:

Example: A taxpayer, which was subject to tax for all of 1985, reports on a calendar year basis and had taxable assets of $1,800,000 for such taxable year 1985. On February 11, 1985 the taxpayer began doing business both within and without New York City which entitled it to allocate for the period February 11, 1985 through December 31, 1985. For the short period February 11, 1985 through December 31, 1985 (11 months), the taxpayer had the following:

 

	New York City	Total
Payroll	$73,000*	$100,000
Receipts	$720,000*	$900,000
Deposits	$855,000*	$1,125,000

 

* 80% of the New York City amount

The taxpayer's short period asset allocation percentage is computed as follows:

 

Payroll factor [($73,000/$100,000) × 100]	73%
Receipts factor [($720,000/$900,000) × 100]	80%
Deposits factor [($855,000/$1,125,000) × 100]	76%
Receipts factor [($720,000/$900,000) × 100]	80%
Deposits factor [$855,000/$1,125,000) × 100]	76%
Total	385%

 

The short period asset allocation percentage is 77% (385%/5).

The amount of the taxpayer's taxable assets allocated to New York City is $1,420,500 computed as follows:

$1,800,000/12 (months) = $150,000
$150,000 × 11 (months) = $1,650,000
$1,650,000 × 77% = $1,270,500
$1,800,000 - $1,650,000 = $150,000

 

Taxable assets allocated at 100%	$150,000
Taxable assets allocated at 77%	$1,270,500
Total allocated taxable assets	$1,420,500

 

      (4)   Power of the Commissioner of Finance to adjust or change the method of allocation. (Administrative Code, § 11-642)

         (i)   When it appears that the entire net income allocation percentage, the alternative entire net income allocation percentage or the asset allocation percentage described in this section does not properly reflect the activity, business, income or assets of the taxpayer in New York City, the Commissioner of Finance, in his discretion, may adjust the entire net income allocation percentage, the alternative entire net income allocation percentage or the asset allocation percentage by:

            (A)   excluding one or more factors; or

            (B)   including one or more factors.

         (ii)   The Commissioner of Finance is authorized, in his discretion, to permit or require the allocation of entire net income, alternative entire net income or taxable assets by a different method of allocation when it appears to the Commissioner of Finance that such method of allocation will effect a fair and proper allocation of the taxpayer's income or assets reasonably attributable to New York City.

         (iii)   A taxpayer may not adjust the entire net income allocation percentage, the alternative entire net income allocation percentage or the asset allocation percentage described in this section or use a different method of allocating its entire net income, alternative entire net income or taxable assets within and without New York City without the written consent of the Commissioner of Finance. A request to adjust the entire net income allocation percentage, the alternative entire net income allocation percentage or the asset allocation percentage or to use a different method of allocation must be made through the Department of Finance, Audit Division, Banking Corporation Tax Unit. The request must set forth complete information on which the request is made, together with a computation of the amount of tax which would be due under the proposed method. A taxpayer making a request for an adjustment of any of its allocation percentages, or to use a different method of allocation must compute and pay its tax in accordance with the entire net income allocation percentage, the alternative entire net income allocation percentage and the asset allocation percentage described in this section and it must file its return in accordance with the instructions shown on the return.

         (iv)   If a taxpayer has been permitted or required to adjust the entire net income allocation percentage, alternative entire net income allocation percentage or asset allocation percentage described in this section or to use a different method of allocating its entire net income, alternative entire net income or taxable assets within and without New York City, the taxpayer must continue to use such permitted or required method in subsequent taxable years. If the facts materially change, the taxpayer must notify the Commissioner of Finance of such change. If such permitted or required method no longer properly reflects the activity, business, income or assets of the taxpayer, the taxpayer must request permission or the Commissioner of Finance may require the taxpayer to change such permitted or required method.

         (v)   See 19 RCNY § 3-03(a)(3) concerning other powers of the Commissioner of Finance to adjust entire net income, alternative entire net income and taxable assets.

      (5)   Optional depreciation. (Administrative Code, §§ 11-641(j) and 11-641.1)

         (i)   For taxable years beginning on or after January 1, 1966, a taxpayer is provided an option to elect to deduct from allocated entire net income an amount not to exceed twice the amount of Federal depreciation on certain newly acquired depreciable property. Such deduction is allowed only upon the condition that entire net income be computed without any deduction for depreciation or amortization of qualified property. The total depreciation deduction allowed under Parts 1, 2 and 4 of Subchapter 3 of Chapter 6 of Title 11 of the Administrative Code in any taxable year or years on each item of qualified property may not exceed the cost or other basis of the property described in subparagraph (ii)(E) of this paragraph.

         (ii)   For purposes of this paragraph the term, "qualified property" means tangible property which:

            (A)   is depreciable pursuant to § 167 of the Internal Revenue Code;

            (B)   has a situs in New York City;

            (C)   is used in the taxpayer's trade or business;

            (D)   the original use of which commenced with the taxpayer, commenced in New York City and commenced after December 31, 1965; and

            (E)   is acquired by purchase as defined in § 179(d) of the Internal Revenue Code, or constructed, reconstructed or erected after December 31, 1965, pursuant to a contract which was, on or before December 31, 1967, and at all times thereafter, binding on the taxpayer, or property, the physical construction, reconstruction or erection of which began on or before December 31, 1967, which was completed on or before December 31, 1969. For any taxable year beginning on or after January 1, 1968, a taxpayer is not allowed a deduction under subparagraph (i) of this paragraph with respect to tangible personal property leased by it to any other person or corporation. For purposes of the preceding sentence, any contract or agreement to lease or rent or for a license to use such property is considered a lease.

         (iii)   If the deduction allowable for any taxable year exceeds the taxpayer's entire net income allocated to New York City, the excess may be carried over to the following taxable year or years. The taxpayer's entire net income allocated to New York City must be reduced to zero before any allowance of a carry-over of any unused deduction under this section. If a carry-over under this provision is claimed, complete details of the computation must be submitted with the return.

         (iv)   In any taxable year when property on which depreciation under this paragraph has been allowed, is sold or otherwise disposed of, entire net income before allocation must be adjusted by adding the Federal loss or subtracting the Federal gain resulting from such sale or disposition. The New York City gain resulting from such sale or disposition must be added to entire net income allocated to New York City. If a New York City loss results from such sale or disposition, it is subtracted from entire net income allocated to New York City. To determine the basis of the property, in computing the gain or loss for purposes of the banking corporation tax, the sum of the amounts allowed as depreciation under this paragraph for all taxable years from the year of acquisition to and including the year of the sale or other disposition is subtracted from the original Federal cost or other basis. No loss shall be recognized with respect to a sale or other disposition to a person whose acquisition thereof is not a purchase as defined in § 179(d) of the Internal Revenue Code. A sale or other disposition of qualified property includes any transfer or exchange without regard to whether a gain or loss from the transaction is recognized for Federal income tax purposes. A disposition of qualified property includes:

            (A)   a sale of the property;

            (B)   a liquidation other than as part of a statutory merger or consolidation;

            (C)   a legal dissolution of the taxpayer;

            (D)   a trade-in of the property;

            (E)   a gift of the property;

            (F)   transfer upon foreclosure of a security interest in the property;

            (G)   retirement of the property before expiration of its useful life;

            (H)   condemnation of the property;

            (I)   loss of the property due to fire, theft, storm or other casualty; and

            (J)   transfer of the property to a corporation not taxable under the banking corporation tax law.

         (v)   If the election provided in subparagraph (i) of this paragraph is made when computing entire net income, alternative entire net income must also be computed without any deduction for depreciation or amortization of qualified property. The deduction from allocated alternative entire net income for the taxable year is the same as the deduction from allocated entire net income for the taxable year.

(Amended City Record 1/16/2020, eff. 2/15/2020)

§ 3-05 Returns.

   (a)   General.

      (1)   Corporations required to file returns. (Administrative Code, § 11-646(a))

         (i)   Returns are required to be filed annually by:

            (A)   every banking corporation subject to tax (See: 19 RCNY § 3-01(c) – Corporations subject to tax);

            (B)   every bank holding company required or permitted to make a combined return under 19 RCNY § 3-05(b); and

            (C)   every taxpayer which continues in business in New York City after it is dissolved.

         (ii)   Every banking corporation claiming not to be subject to tax but having one or more officers, agents or representatives within New York City must submit a complete description of its activities in New York City in an information report (form NYC-245) which it must file annually. If the Commissioner of Finance determines the banking corporation is subject to tax, he will notify such corporation to file a tax return. The filing of the information report does not start the period of limitation within which the Commissioner of Finance may assess the tax.

      (2)   Short period returns. (Administrative Code, § 11-646(a)) A short period return is required in the case of:

         (i)   a newly organized taxpayer whose first accounting period is less than 12 months;

         (ii)   a foreign corporation that becomes subject to the banking corporation tax in New York City subsequent to the commencement of its Federal accounting period;

         (iii)   a taxpayer that dissolves, merges, consolidates or ceases to be subject to tax pursuant to the banking corporation tax prior to the close of its accounting period for Federal income tax purposes;

         (iv)   a taxpayer that changes its accounting period for Federal income tax purposes;

         (v)   a taxpayer that becomes part of or ceases to be part of a Federal consolidated group during the year;

         (vi)   a taxpayer which changes from one Federal consolidated group to another Federal consolidated group during the year; and

         (vii)   a taxpayer that is an old target (within the meaning of Treas. Reg. § 1.338-2(c)(17)) for which an election is made pursuant to § 338 of the Internal Revenue Code and not deemed invalid pursuant to 19 RCNY § 3-03(b)(2)(vi), if the acquisition date, as defined in § 338(h)(2) of the Internal Revenue Code, is other than the last day of the taxpayer's taxable year determined without regard to such election. A short period report required by this subdivision shall cover the period provided in subdivision (a) of 19 RCNY § 3-02 and shall be filed as provided in subdivision (d) of this section.

      (3)   Returns where Federal or New York State income is changed. (Administrative Code, § 11-646(e))

         (i)   If the amount of the taxable income for any year of any taxpayer as reported for Federal income tax or New York State franchise tax purposes is changed or corrected by a final determination of the Commissioner of Internal Revenue or other officer of the United States or the New York State Tax Commission or other competent authority, or if a taxpayer, pursuant to subsection (d) of § 6213 or the Internal Revenue Code, executes a notice of waiver of the restrictions, provided in subsection (a) of such section, or, pursuant to subsection (f) of § 1081 of the New York State Tax Law, executes a notice of waiver of the restrictions provided in subsection (c) of such section, the taxpayer is required to report to the Commissioner of Finance such changed or corrected taxable income or such execution of such notice of waiver and the changes or corrections of its Federal or New York State taxable income on which it is based within 90 days after the final determination or the execution of the notice of waiver. The taxpayer must concede the accuracy of such determination or state wherein it is erroneous.

         (ii)   Any deficiency notice issued (including a notice issued pursuant to a waiver filed by a taxpayer) pursuant to the provisions of the Internal Revenue Code or the New York State Tax Law is a final determination unless a timely petition to redetermine the deficiency is filed in the Tax Court of the United States or with the New York State Tax Commission. If a petition is filed, the judgment of the court of last resort is the final determination. The allowance by the Commissioner of Internal Revenue or the New York State Tax Commission of a refund of any part of the tax shown on the taxpayer's return or of any deficiency thereafter assessed, whether the refund is made on the Commissioner's or State Tax Commission's own motion or pursuant to the judgment of a court, is also final determination.

      (4)   Amended Federal or New York State return. (Administrative Code, § 11-646(e))

         (i)   Any taxpayer which files an amended return with the Internal Revenue Service or the New York State Tax Commission must file an amended return within 90 days thereafter with the Commissioner of Finance.

   (b)   Combined returns.

      (1)   General. (Administrative Code, § 11-646(f))

         (i)   Each banking corporation (as defined in 19 RCNY § 3-01(b)(5)) or bank holding company (as defined in 19 RCNY § 3-01(b)(4)) is a separate taxable entity and must file its own return. However, where the requirements described in 19 RCNY § 3-05(b)(2) and (b)(3) are met, a group of banking corporations and bank holding companies may be required or permitted to file a combined return.

         (ii)   Each of the corporations to be included in the combined return must be a banking corporation or a bank holding company.

         (iii)   A corporation organized under the laws of the United States, New York State, or any other state may not be included in a combined return with an alien corporation (a corporation organized under the laws of a country other than the United States.) That is, an alien corporation can only be included in a combined return with other alien corporations.

         (iv)   Each corporation included in a combined return must use the same accounting period.

         (v)   For purposes of this subdivision, the provisions of 19 RCNY § 3-01(b)(5)(x)(A)((c)) and (b)(5)(x)(A)((d)) relating to "ownership" and "control" apply.

      (2)   Corporations required to file a combined return. (Administrative Code, § 11-646(f))

         (i)   (A)   A banking corporation or bank holding company which is doing business in New York City in a corporate or organized capacity is required to file a return on a combined basis covering itself and the following corporations:

               (a)   any banking corporation or bank holding company which owns or controls, directly or indirectly, 80 percent or more of its voting stock, and

               (b)   any banking corporation or bank holding company in which it owns or controls, directly or indirectly, 80 percent or more of the voting stock.

            (B)   For provisions regarding a banking corporation or a bank holding company which is not a taxpayer, see 19 RCNY § 3-05(b)(6)(i).

         (ii)   It will be presumed that the tax liability of any banking corporation or bank holding company described in subparagraph (i)(A) of this paragraph will be properly reflected when such corporation reports on a combined basis. Such a corporation may nevertheless be excluded from the combined return if the taxpayer or the Commissioner of Finance shows that the inclusion of such a corporation in the combined return fails to properly reflect the tax liability of such corporation under the banking corporation tax law. Tax liability may be deemed to be improperly reflected because of intercorporate transactions or some agreement, understanding, arrangement or transaction referred to in 19 RCNY § 3-03(a)(3).

         (iii)   (A)   A banking corporation or bank holding company described in subparagraph (i)(A) of this paragraph of this section that meet the applicable requirements may be excluded from a combined return in accordance with paragraph (b)(5) of this section.

            (B)   A group of corporations meeting the requirements of subparagraph (i)(A) of this section may make a written request, in accordance with 19 RCNY § 3-05(b)(5), for preliminary review as to which corporations are to be included in a combined return.

         (iv)   A group of corporations filing a combined return pursuant to subparagraph (i)(A) of this paragraph must submit all of the information described in 19 RCNY § 3-05(b)(5)(iii) with its combined return unless such information has already been submitted pursuant to subparagraph (iii) of this paragraph.

      (3)   Corporations permitted or required to file a combined return. (Administrative Code, § 11-646(f))

         (i)   A)   In the discretion of the Commissioner of Finance, any banking corporation or bank holding company which is doing business in New York City in a corporate or organized capacity and

               (a)   any banking corporation or bank holding company which owns or controls, directly or indirectly, 65 percent or more of its voting stock, and

               (b)   any banking corporation or bank holding company in which it owns or controls, directly or indirectly, 65 percent or more of the voting stock, may be permitted or required to make a return on a combined basis. The Commissioner of Finance will permit or require such corporations to file on a combined basis if he determines that a combined return is necessary in order to properly reflect the tax liability of such a banking corporation or bank holding company. The corporations described in subparagraphs (i)(A)((a)) and (i)(A)((b)) of this paragraph include corporations which are not doing business in New York City in a corporate or organized capacity.

            (B)   The Commissioner of Finance may, in his discretion, permit or require the filing of a combined return by banking corporations or bank holding companies 65 percent or more of the voting stock of each of which is owned or controlled, directly or indirectly, by the same interest, if at least one of such corporations is a taxpayer and if the Commissioner of Finance determines that such filing is necessary in order to properly reflect the tax liability of any one or more of such corporations.

         (ii)   (A)   For those corporations described in subparagraph (i) of this paragraph, in making his determination whether a combined return is necessary in order to properly reflect the tax liability of any one or more of such corporations, the Commissioner of Finance will first determine whether the group of corporations under consideration is engaged in a unitary business. In deciding whether a corporation is part of a unitary business, the Commissioner of Finance will consider whether the activities in which the corporation engages are related to the activities of the other corporations in the group, or whether the corporation is engaged in the same or related lines of business as the other corporations in the group. It will be presumed that a group of corporations meeting the stock ownership requirements of subparagraph (i) of this paragraph (including those also meeting the requirements of 19 RCNY § 3-05(b)(2)(i)(A) and (b)(6)(i)) is engaged in a unitary business. The burden of establishing that a corporation in such group is not part of a unitary business shall be upon the person so asserting, whether such person be the Commissioner of Finance or any member of such group.

            (B)   When a taxpayer engaged in a unitary business reports on a separate basis, the tax liability of such taxpayer and any other banking corporation or bank holding company in such unitary business may be deemed to be improperly reflected because of:

               (a)   intercorporate transactions (See: subparagraph (ii)(c) of this paragraph), or

               (b)   some agreement, understanding, arrangement or transaction existing between the taxpayer and any other combinable corporation, whereby the activity, business, income or assets of the taxpayer within New York City is improperly or inaccurately reflected.

            (C)   (a)   If there are substantial intercorporate transactions among the banking corporations or bank holding companies engaged in a unitary business, it will be presumed that the tax liability of the taxpayer will be improperly reflected when the taxpayer reports on a separate basis. In determining whether there are substantial intercorporate transactions, the Commissioner of Finance will consider transactions directly connected with the business conducted by such corporations, such as:

                  (1)   performing services for other corporations in the group;

                  (2)   providing funds to other corporations in the group; or

                  (3)   performing related customer services using common facilities and employees. Service functions will not be considered when they are incidental to the business of the corporation providing such services. Service functions include, but are not limited to, accounting, legal and personnel services. The substantial intercorporate transaction test may be met where as little as 50 percent of a corporation's receipts or expenses are from one or more qualified activities described in subparagraph (ii)(c). It is not necessary that there be substantial intercorporate transactions between any one member with every other member of the group. It is, however, essential that each corporation have substantial intercorporate transactions with one other combinable corporation or with a combined or combinable group of corporations. For example, corporations X, Y and Z are banking corporations and Z derives 30 percent of its receipts from the performance of services for corporation X and 40 percent from the performance of services for corporation Y. If corporations X and Y constitute a combined or combinable group, there are substantial intercorporate transactions between corporation Z and such a combined group because 70 percent of corporation Z's receipts are from such combined group. If corporations X and Y do not constitute a combined or combinable group, there are not substantial intercorporate transactions between corporation Z and corporations X and Y.

               (b)   If a corporation described in subdivision (a) of this section fails to meet the presumption of improper reflection of tax liability because it does not have substantial intercorporate transactions with any other combinable corporation or with a combined or combinable group of such corporations and if the filing of a return on a separate basis nevertheless results in an improper reflection of the taxpayer's tax liability in New York City, the Commissioner of Finance will permit or require the filing of a combined return. If a corporation described in subdivision (a) of this section meets the presumption of improper reflection of tax liability because it has substantial intercorporate transactions with any other combinable corporation or with a combined or combinable group of such corporations and if the filing of a return on a separate basis does not result in an improper reflection of the taxpayer's tax liability in New York City, the Commissioner of Finance will not permit or require the filing of a combined return.

            (D)   When a taxpayer reports on a separate basis, the tax liability of such taxpayer and any other banking corporation or bank holding company may be deemed to be improperly reflected because of some agreement, understanding, arrangement or transaction existing between the taxpayer and any other combinable corporation, whereby the activity, business, income or assets of the taxpayer within New York City is improperly or inaccurately reflected.

         (iii)   Except for corporations described in 19 RCNY § 3-05(b)(2)(i)(A) any banking corporation or bank holding company described in subparagraph (i) of this paragraph and those described in 19 RCNY § 3-05(b)(6)(i) that meets the applicable requirements may file a combined return with one or more corporations or bank holding companies or be added to or excluded from a combined return in accordance with 19 RCNY § 3-05(b)(5).

      (4)   Examples. Example 1: Assume the same facts as in Example 1 of 19 RCNY § 3-01(b)(5)(x)(A)(d) and that all of the corporations except corporation E are organized under the laws of New York State. Assume that corporation E is organized under the laws of Canada. Bank A, bank B, corporation D, E, F and G are banking corporations. The Federal bank holding company and bank A are required (unless the requirements of 19 RCNY § 3-05(b)(2)(ii) are met) to file a combined return pursuant to the provisions of 19 RCNY § 3-05(b)(2). Bank B and corporation F are required (unless the requirements of 19 RCNY § 3-05(b)(2)(ii) are met) to file a combined return pursuant to the provisions of 19 RCNY § 3-05(b). Corporations D and G may be permitted or required to be included in a combined return with the Federal bank holding company and bank A pursuant to the provisions of 19 RCNY § 3-05(b)(3).

         Example 2: A, a Federal bank holding company, owns 100 percent of the voting stock of bank B and corporation C. Corporation C owns 100 percent of the voting stock of corporations D and E. All of the corporations are taxpayers. A performs services for and provides funds to bank B and corporations C, D and E. Corporations C and D are in the finance leasing business and corporation E conducts a consumer finance business. A, bank B and corporations C, D and E are required to file a combined return pursuant to 19 RCNY § 3-05(b).

      (5)   Procedure for adding to, excluding from or filing a combined return.

         (i)   (A)   A banking corporation or bank holding company described in 19 RCNY § 3-05(b)(2)(i) that meets the requirements for exclusion set forth in 19 RCNY § 3-05(b)(2)(ii) does not need to request prior permission to be excluded from a combined return. To be excluded from a combined return, such entity must file a completed separate return. The first year such entity is excluded from the combined return, such entity must include the information required by subparagraph (iii) of this paragraph (5) either on the return or attached thereto.

            (B)   A banking corporation or bank holding company described in 19 RCNY § 3-05(b)(3)(i) or 19 RCNY § 3-05(b)(6)(i), that meets the applicable requirements set forth in 19 RCNY § 3-05(b)(3) does not need to request prior permission to file on a combined basis with one or more banking corporations or bank holding companies or to be added to or excluded from a combined return. To file on a combined basis, such entity must be included in a completed combined return. The first year such entity files on a combined basis, and each year thereafter in which the composition of the group changes, the information required by subparagraph (iii) of this paragraph (5) must be submitted, either on the return or attached thereto.

         (ii)   [Reserved.]

         (iii)   The first year the group files on a combined basis and each year thereafter in which the composition of the group changes, the Commissioner requires the following information either on the combined return or attached thereto:

            (A)   the corporate organization chart setting forth the name of each banking corporation and bank holding company meeting the stock ownership requirements of 19 RCNY § 3-05(b)(3)(i) and the percentage of voting stock of each such corporation owned or controlled, directly or indirectly, by any other such corporation and the name of each corporation or, other person in the case of a corporation described in 19 RCNY § 3-05(b)(3)(i)(B), which owns or controls, directly or indirectly, the voting stock of each such corporation and the percentage of such stock so owned;

            (B)   for all of the bank holding companies, banking corporations and other corporations meeting the stock ownership requirements of 19 RCNY § 3-05(b)(3)(i):

               (a)   the exact name,

               (b)   address (including ZIP code),

               (c)   employer identification number,

               (d)   date of incorporation,

               (e)   state or country of incorporation,

               (f)   the date began business in New York City, if applicable, and

               (g)   in the case of a corporation described in 19 RCNY § 3-01(b)(5)(x), a description of the activities in which the corporation is principally engaged (as defined in such 19 RCNY § 3-01(b)(5)(x)) and the section of the law or regulations which establish that such activities are permissible activities within the contemplation of 19 RCNY § 3-01(b)(5)(x)(A)(a);

            (C)   a statement providing details as to why the inclusion of those corporations included in a combined return and the exclusion of those corporations excluded from a combined return properly reflect the tax liability of the group of corporations and of each corporation to be included in the group and of each corporation to be excluded from the group; and

            (D)   for the taxable year covered by the combined return, using spread sheets if necessary, information that will clearly identify on a corporation-by-corporation basis, the nature and amount of each category of intercorporate transaction between each one of the corporations described in subparagraph (iii)(B) of this paragraph with each of the other corporations which reflects:

               (a)   the source and amount of gross receipts of each corporation described in subparagraph (iii)(B) of this paragraph and the portion derived from transactions with each of the other corporations,

               (b)   the source and amount of total services and other transactions of each corporation described in subparagraph (iii)(B) of this paragraph, and the portion related to transactions with each of the other corporations, and

               (c)   any other data that shows the degree of involvement of the corporations with each other.

            (E)   If the New York State Department of Taxation and Finance disallows the filing of a combined report or the inclusion of a corporation in, or the exclusion of a corporation from, a combined report for purposes of Article 9-A of the New York State Tax Law, the taxpayer must report such fact to the Commissioner of Finance within 30 days following such disallowance.

         (iv)   The filing of a combined return, the inclusion of a corporation in or the exclusion of a corporation from a combined return is subject to revision or disallowance on audit. In such event, the Commissioner of Finance may compute and assess the tax of each corporation not permitted to be included in a combined report on a separate basis and the Commissioner of Finance may recompute and assess the tax on the combined return by including therein any improperly excluded corporation.

         (v)   A corporation that properly reports on a combined basis must continue to file its returns on a combined basis until the facts affecting its combined reporting status materially change. A corporation properly excluded from a combined return must continue to file its return on a separate basis until the facts materially change. For example, if a corporation which was 65 percent or more but less than 80 percent owned or controlled becomes 80 percent or more owned or controlled, or if a corporation which was 80 percent or more owned or controlled, becomes less than 80 percent owned or controlled, a material change has taken place.

         (vi)   Once a group of corporations properly files a combined return, it must notify the Commissioner of Finance of the subsequent acquisition of any corporation for which information is requested pursuant to subparagraph (iii)(B) of this paragraph. Such notification must be given on the combined return for the taxable year in which such acquisition was made. The notification must contain all the information described in subparagraph (iii) of this paragraph.

      (6)   Corporations not included in a combined return. (Administrative Code, § 11-646(f))

         (i)   A banking corporation or bank holding company which is not a taxpayer cannot be included in a combined return under 19 RCNY § 3-05(b)(2) unless it is part of a unitary business with the other corporations in the group (See: 19 RCNY § 3-05(b)(3)(ii)(A)) and the Commissioner of Finance determines that the inclusion of such corporation is necessary in order to properly reflect the tax liability of one or more banking corporations or bank holding companies included in the group because of:

            (A)   intercorporate transactions (See: 19 RCNY § 3-05(b)(3)(ii)(C)); or

            (B)   some agreement, understanding, arrangement or transaction existing between the taxpayer and any other combinable corporation, whereby the activity, business, income or assets of the taxpayer within New York City is improperly or inaccurately reflected (See: 19 RCNY § 3-05(b)(3)(ii)(D))

         (ii)   A corporation which has properly elected to be taxable under Subchapter 2 of Chapter 6 of Title 11 of the Administrative Code for a taxable year in accordance with the provisions of 19 RCNY § 3-01(b)(5)(x)(B) cannot be included in a combined return for that taxable year.

      (7)   Combined returns: cross-references. The following is a list of cross-references to other sections of these regulations which pertain to combined returns:

         (i)   Computing tax on combined returns, see 19 RCNY § 3-03(a)(2).

         (ii)   Definition of entire net income, see 19 RCNY § 3-03(b)(2)(iii).

         (iii)   Computing entire net income on a combined return, see 19 RCNY § 3-03(b)(6).

         (iv)   Computing the alternative minimum tax measured by alternative entire net income on a combined return, see 19 RCNY § 3-03(d)(2) of these regulations.

         (v)   Computing the alternative minimum tax measured by taxable assets on a combined return, see 19 RCNY § 3-03(e)(6).

         (vi)   The alternative minimum tax measured by the fixed minimum amount on a combined return, see 19 RCNY § 3-03(g)(2).

         (vii)   Allocation of entire net income on combined returns, see 19 RCNY § 3-04(b)(4).

         (viii)   Allocation of alternative entire net income on combined returns, see 19 RCNY § 3-04(c)(4).

         (ix)   Allocation of taxable assets on combined returns, see 19 RCNY § 3-04(d)(3).

         (x)   Receipts factor on combined returns, see 19 RCNY § 3-04(f)(10).

         (xi)   Form of combined returns, see 19 RCNY § 3-05(c)(2).

         (xii)   Combined corporations ceasing to be subject to the banking corporation tax, see 19 RCNY § 3-05(d)(3).

         (xiii)   Extension of time for filing combined returns, see 19 RCNY § 3-05(d)(4).

         (xiv)   Payment of tax on combined return, see 19 RCNY § 3-06(a).

   (c)   Form of returns.

      (1)   Form of returns. (General) (Administrative Code, § 11-646(a), (b), (d) and (e))

         (i)   Returns are required to be filed on forms prescribed by the Commissioner of Finance. All taxpayers are required to file form NYC-1. A taxpayer must submit with such return a copy of its actual Federal form 1120 or 1120F and all attachments. In addition, it must submit the following information:

            (A)   payor and amount of each dividend;

            (B)   payor and amount of each item of gross interest income described in 19 RCNY § 3-03(b)(4)(ii)(L);

            (C)   description and amount of each item of other income;

            (D)   the amount and type of taxes paid to each jurisdiction;

            (E)   a schedule showing all computations pertaining to an IBF.

         (ii)   When a consolidated return is filed for Federal income tax purposes, the taxpayer must also submit with its form NYC-1 a copy of the consolidating spread sheets and supporting schedules required for Federal income tax purposes.

         (iii)   A change in Federal or New York State taxable income must be reported and must be accompanied by a copy of the amended Federal or New York State return or the Federal revenue agent's report or New York State audit report and copies of all other related information.

         (iv)   Any banking corporation which is not a taxpayer but which has one or more officers, agents or representatives within New York City is required to file an information report on form NYC-245.

         (v)   Every taxpayer must submit such other returns and other information which the Commissioner of Finance may require in the administration of the banking corporation tax law.

         (vi)   Every return must have annexed to it a certification that the statements in the return are true. The certification must be made by the president, vice-president, treasurer, assistant treasurer, chief accounting officer or any other officer of the taxpayer authorized to act in that capacity. The fact that an individual's name is signed on the certification of the return shall be prima facie evidence that such individual is authorized to sign and to certify the return on behalf of the corporation.

         (vii)   Annual return forms are supplied by the Commissioner of Finance. Copies of the prescribed forms will, upon request, be furnished by the Commissioner of Finance. Failure to receive a blank form does not excuse failure to file the return.

      (2)   Form of combined return. (Administrative Code, § 11-646(a))

         (i)   In all cases where a combined return is permitted or required (See: 19 RCNY § 3-05(b) – Combined returns), a combined banking corporation tax return must be submitted on form NYC-3A-F. In addition, a separate banking corporation tax return must be filed for each corporation in the combined group on form NYC-1.

         (ii)   All corporations in the combined group must use the same accounting period.

      (3)   Forms to be used.

         (i)   Return forms may be obtained from the Department of Finance, Taxpayer Services Division, 151 West Broadway, New York, New York 10013.

         (ii)   The following is a list of forms to be used:

Form No.	Description
NYC-6B	Application for 6 Month Extension for Filing Tax Return
NYC-6.1B	Application for Additional Extension
NYC-8	Claim for Credit or Refund of Corporation Tax Paid
NYC-1	Tax Return for Banking Corporations
NYC-1A-F	Combined Tax Return for Banking Corporations
NYC-245	Activities Report of Corporations
NYC-324	Schedule of Optional Depreciation on Qualified New York Property
NYC-399	Schedule for New York City Depreciation Deduction
NYC-400B	Declaration of Estimated Tax
NYC-3360B	Banking Corporation Tax Report of Change in Tax made by U.S. Internal Revenue Service and/or NY State Department of Taxation and Finance

 

   (d)   Time and place for filing returns. 

      (1)   Time for filing returns. (Adminstrative Code, § 11-646(a)) Returns must be filed at the times set forth in this subparagraph.

         (i)   Except as provided in paragraph (8) of this subdivision, every calendar year taxpayer must file its return on or before the 15th day of March following the close of its calendar year.

         (ii)   Except as provided in paragraph (8) of this subdivision, every fiscal year taxpayer must file its return on or before the 15th day of the third month following the close of its fiscal year.

Example 1: A corporation selects the fiscal year basis of reporting and uses September 30 as the last day of its fiscal year. Its return must be filed on or before December 15.

         (iii)   Except as provided in paragraph (8) of this subdivision, every taxpayer using a 52-53 week accounting period must file its annual return on or before the 15th day of the third month following the date on which its fiscal year is deemed to have ended. A 52-53 week accounting period which ends within seven days from the last day of any calendar month will be deemed to have ended on the last day of such month (See: 19 RCNY § 3-02(a)(4) – 52-53 week fiscal year taxpayers).

Example 2: A corporation selects a 52-53 week accounting period ending on the Monday nearest the last day of November. In 1985, the Monday nearest the last day of November is Monday, December 2. The accounting period is deemed to have ended on the last day of November and its return must be filed on or before February 15, 1986.

      (2)   Time for filing changes in Federal or New York State taxable income. (Administrative Code, § 11-646(e)) Any change in Federal or New York State taxable income must be reported within 90 days after the date of final determination by the Commissioner of Internal Revenue or other officer of the United States or the New York State Tax Commission or other competent authority. For a description of change in Federal or New York State taxable income and final determination, see 19 RCNY § 3-05(a)(3).

      (3)   Time for filing returns of corporations ceasing to be subject to tax. (Administrative Code, § 11-646(a))

         (i)   (A)   A taxpayer that ceases to do business in New York City in a corporate or organized capacity and thereby ceases to be subject to the banking corporation tax (See: 19 RCNY § 3-02(c) – Cessation Periods), is required to file a return on or before the 15th day following the date of such cessation or at such other time as the Commissioner of Finance may require, covering the period from the close of its last calendar or fiscal year up to and including the date of such cessation.

            (B)   A taxpayer that ceases to be subject to the banking corporation tax because of a change in the nature of its activities or because of a change in the ownership or control of its voting stock (See: 19 RCNY § 3-02(c) – Cessation Periods), is required to file a return on or before the 15th day following the date of such change or at such other time as the commissioner of Finance may require, covering the period from the close of its last calendar or fiscal year up to and including the date of such change. This subparagraph shall not apply to a taxpayer for which an election is made pursuant to § 338 of the Internal Revenue Code, regardless of whether such election is deemed invalid pursuant to 19 RCNY § 3-03(b)(2)(vi), notwithstanding any deemed cessation of existence of such taxpayer pursuant to Treas. Reg. § 1.338(h)(10)-1(d)(4).

         (ii)   Notwithstanding subparagraph (i) of this paragraph (3), a corporation need not file a separate report within 15 days of the date it ceases to be subject to the banking corporation tax (See: 19 RCNY § 3-02(c) – Cessation Periods) if:

            (a)   it is a member of a group taxed on the basis of a combined report for the period including the date of such cessation; and

            (b)   it is properly included in such combined report.

      (4)   Extension of time for filing returns. (Administrative Code, § 11-646(c).)

         (i)   An automatic six month extension for filing an annual return will be granted if the application for automatic extension (form NYC-6B) is filed and a properly estimated tax is paid on or before the due date of the return for the taxable period for which the extension is requested. (See: 19 RCNY § 3-06(a)(3) – Properly estimated tax.) Failure to meet the requirements of this subparagraph (i) will make the application invalid and any return filed after the due date will be treated as a late filed return.

         (ii)   An automatic six month extension for filing a combined return will be granted to a group of corporations authorized to file a combined return if the application for automatic extension (form NYC-6B) is filed and a properly estimated tax is paid on or before the due date of the return for the taxable period for which the extension is requested. (See: 19 RCNY § 3-06(a)(3) – Properly estimated tax.) Failure to meet the requirements of this subparagraph (ii) will make the application invalid and any return filed after the due date will be treated as a late filed return. To obtain an automatic extension, an application must be filed by the corporation paying the tax for the combined group. The applicant must submit the following information:

            (A)   its complete name;

            (B)   its employer identification number;

            (C)   a list showing the name, employer identification number and taxable period of each of the other corporations properly included as part of the combined group; and

            (D)   a list showing the estimated tax for each corporation included in the combined group. The corporation paying the tax for the combined group must pay with the application the properly estimated combined tax plus $125, as provided in 19 RCNY § 3-03(g)(2), for each of the taxpayers included in the combined group.

         (iii)   On or before the expiration of the automatic six month extension, the Commissioner of Finance may grant additional three month extensions of time for filing returns when good cause exists. Up to two additional three month extensions of time for filing returns for any taxable year may be granted when good cause exists. An application for each additional three month extension must be made in writing before the expiration of the previous extension. Additional extensions of time for filing by a combined group must be requested in one application by the corporation paying the tax for the combined group. The applicant must submit the following information:

            (A)   its complete name;

            (B)   its employer identification number;

            (C)   the reason for requesting the additional extension; and

            (D)   in the case of an application by a combined group, a list showing the name, employer identification number and taxable period of the other corporations properly included as part of the combined group.

         (iv)   Any extension of time for filing a return granted under this Subpart will not extend the time for payment of any tax due. (However, see 19 RCNY § 3-06(a)(2) for extension of time for payment of tax.)

         (v)   Notwithstanding paragraph (3) of this subdivision, a corporation that ceases to be subject to the banking corporation tax shall receive an automatic six-month extension of time for filing an annual tax report (form NYC-1) only on the condition that form NYC-6FB (Application for Automatic Extension to File Final Return) is filed and a properly estimated tax is paid on or before the due date of the return for the taxable period for which the extension is requested.

      (5)   Place for filing returns. Returns must be mailed to the Department of Finance at the address designated on the return form.

      (6)   Last day on a Saturday, Sunday or legal holiday. (Administrative Code, § 11-682(3)) When the last day prescribed in these regulations for filing a return (including the last day covered by an extension of time) falls on Saturday, Sunday or a legal holiday in New York State, the filing of such return will be considered timely if it is filed on the next succeeding date which is not a Saturday, Sunday or legal holiday.

      (7)   Mailing of returns. (Administrative Code, § 11-682(1)) The provisions of the Regulations of the Commissioner of Finance Relating to the Mailing Rules for New York City Income and Excise Taxes apply with respect to banking corporation tax returns and payments. Generally, those regulations provide that if a tax return or payment properly addressed with sufficient postage prepaid is delivered to the Department of Finance by U.S. mail after the due date, the date of the U.S. Postal Service postmark stamped on the envelope will be deemed the date of delivery, provided the postmark date falls on or before the due date. Non-U.S. Postal Service postmarks will also be recognized, provided delivery to the Department of Finance occurs within five days of the postmark date. If the five-day limit is exceeded, the taxpayer must establish that the item was actually deposited in the mail by the due date, that the delay in receipt was due to a delay in the transmission of mail, and the cause of the delay.

      (8)   Electronic filing. Pursuant to 19 RCNY § 17-03, the Commissioner may authorize the electronic filing of returns and reports required by this section.

      (9)   Short period reports.

         (i)   Taxpayers joining a Federal consolidated group.

            (A)   Short period precedes joining the group. Except as otherwise provided in subparagraph (iii) or (iv) of this paragraph, where a taxpayer, not previously part of a Federal consolidated group, becomes part of a Federal consolidated group on a day other than the first day of its Federal taxable year, determined without reference to its membership in the group, and the taxpayer is required to file a Federal short period return for the period from the first day of its taxable year through the end of the day on which it becomes such a member pursuant to Treas. Reg. § 1.1502-76(b), the taxpayer must file a report under this section covering the same period. The short period report required by this subparagraph shall be due on the due date for the Federal short period return as provided by paragraph (1) or (2) of subdivision (c) of Treas. Reg. § 1.1502-76, whichever is applicable. This provision does not apply in the case of an amended Federal short period return required under Treas. Reg. § 1.1502-76(c)(2). An amended return for any such short period must be filed within 90 days after the taxpayer files an amended return with the United States Treasury Department. See paragraph (4) of subdivision (a) of this section.

            (B)   Short period follows joining group. Except as otherwise provided in subparagraph (iii) or (iv) of this paragraph, where a taxpayer joins a Federal consolidated group, including a situation where a taxpayer leaves one group to join another, the taxpayer must file a short period report under this paragraph covering the period from the day it becomes a member of the group through the end of its new taxable year for purposes of Subchapter 3 of Chapter 6 of Title 11 of the Administrative Code of the City of New York, which shall be the same as the end of the taxable year of the new consolidated group. Such report shall be filed on or before the 15th day of the third month following the end of its new taxable year.

         (ii)   Taxpayers leaving a Federal consolidated group.

            (A)   Short period precedes leaving group. Except as otherwise provided in subparagraph (iii) or (iv) of this paragraph, where a taxpayer ceases to be part of a Federal consolidated group, including a situation where a taxpayer leaves one Federal consolidated group to join another, the taxpayer must file a report under this paragraph covering the period from the beginning of its taxable year up to the date it leaves the group. Such report shall be filed on or before the 15th day of the third month following the close of its taxable year determined as if it had not ceased to be a member.

            (B)   Short period follows leaving group. Except as otherwise provided in subparagraph (iii) or (iv) of this paragraph, where a taxpayer ceases to be part of a Federal consolidated group, other than a situation where a taxpayer leaves one Federal consolidated group to join another, the taxpayer must file a short period report under this paragraph covering the period from the day it ceases to be a member of the group through the end of its taxable year determined as if it had not left the group. Such report shall be filed on or before the 15th day of the third month following the close of its taxable year determined as if it had not ceased to be a member.

         (iii)   Short period returns relating to IRC § 338 elections.

            (A)   Subject to the provisions of clause (B), if a taxpayer is an old target (within the meaning of Treas. Reg. § 1.338-2(c)(17)) any short period report required by 19 RCNY § 3-05(a)(2) shall cover the same period as is covered by the Federal report and shall be due on the due date for the Federal short period return set forth in Treas. Reg. § 1.338-10(a)(6), including any deemed extensions granted pursuant to Treas. Reg. § 1.338-10(a)(6)(ii)(B).

            (B)   This subparagraph shall not apply to an amended return described in Treas. Reg. § 1.338-10(a)(6)(ii)(D). An amended return for any such short period must be filed within 90 days after the taxpayer files an amended return with the United States Treasury Department. See paragraph (4) of subdivision (a) of this section.

            (C)   Subparagraph (i) of paragraph (3) of this subdivision shall not apply to a taxpayer for which an election is made pursuant to § 338 of the Internal Revenue Code, regardless of whether such election is deemed invalid pursuant to 19 RCNY § 3-03(b)(2)(vi), notwithstanding any deemed cessation of existence of such taxpayer pursuant to Treas. Reg. § 1.338(h)(10)-1(d)(4).

         (iv)   If a corporation required to file a short period report as provided in this subdivision becomes subject to tax under Subchapter 3 of Chapter 6 of Title 11 of the Administrative Code on a date other than the first day of such short period, the short period report shall begin on the date the corporation becomes subject to tax under such Subchapter. Except as provided in subparagraph (iii) of this subdivision, if a corporation required to file a short period report as provided in this subdivision ceases to be subject to tax under Subchapter 3 of Chapter 6 of Title 11 of the Administrative Code on the last day of such short period, the provisions of paragraph (3) of this subdivision shall apply in determining the due date for such short period report.

   (e)   Secrecy provisions. 

      (1)   Secrecy of returns. (Administrative Code, § 11-682(1))

         (i)   Except in accordance with a proper judicial order or as otherwise provided by law, it is unlawful for any of the following to divulge or make known in any manner the amount of income or any particulars set forth or disclosed in any return required under the banking corporation tax law:

            (A)   the Commissioner of Finance;

            (B)   the Department of Finance of the City of New York;

            (C)   any officer or employee of the Department of Finance;

            (D)   any person who, pursuant to the banking corporation tax law,is permitted to inspect any return, or to whom any information contained in any return is furnished;

            (E)   any person engaged or retained by the Department of Finance on an independent contract basis; or

            (F)   any person who in any manner may acquire knowledge of the contents of a return filed pursuant to the banking corporation tax law.

         (ii)   The words "except in accordance with a proper judicial order or as otherwise provided by law" mean that a disclosure is permitted only in appropriate proceedings where the integrity of the return itself is attacked or defended as the main issue, and not merely as a collateral issue or where disclosure is explicitly permitted by statute.

         (iii)   The officers charged with the custody of returns are not required to produce any of them or evidence of anything contained in them in any action or proceeding in any court, except on behalf of the City of New York in an action or proceeding involving the collection of a tax due under Chapter 6 of Title 11 of the Administrative Code to which the City of New York is a party or a claimant, or on behalf of any party in an action or proceeding under the provisions of such Chapter 6 when the returns or facts shown thereby are directly involved in such action or proceeding, in any of which events the court may require the production of, and may admit in evidence, so much of said returns or of the facts shown thereby as are pertinent to the action or proceeding and no more.

      (2)   Secrecy exceptions. (Administrative Code, § 11-688(1), (3) and (4))

         (i)   In spite of the provisions relating to secrecy, the Commissioner of Finance may publish a copy or a summary of any determination or decision rendered after the formal hearing provided for in § 11-680 of the Administrative Code.

         (ii)   The provisions relating to secrecy do not prohibit:

            (A)   the delivery to a taxpayer or its duly authorized representative of a certified copy of any return filed by it;

            (B)   the publication of statistics so classified as to prevent the identification of particular returns;

            (C)   the inspection by the Corporation Counsel or other legal representative of the City of New York of the return of any taxpayer which brings an action or proceeding to set aside or review the tax based thereon or concerning which an action or proceeding has been recommended by the Commissioner of Finance or has been instituted by the Corporation Counsel;

            (D)   the inspection of the returns of any taxpayer by the duly designated officers or employees of the City of New York for purposes of audit under Chapter 6 of Title 11 of the Administrative Code; or

            (E)   the publication of the percentage of net income of any corporation which may be required to be allocated within New York City for purposes of the tax imposed by Subchapter 2 of Chapter 6 of Title 11 of the Administrative Code.

         (iii)   In spite of the provisions relating to secrecy –

            (A)   The Commissioner of Finance may permit the Secretary of the Treasury of the United States or his delegates, or the proper officer of New York State or any other state charged with tax administration, or the authorized representative or either such officer, to inspect returns filed under the banking corporation tax law or may furnish to them an abstract of a return or supply information concerning an item contained in a return, or disclosed by an investigation of tax liability under the banking corporation tax law. Such permission or information may be provided only if the laws of the United States or of such state grant substantially similar privileges to the Commissioner of Finance and such information is to be used for tax purposes only.

            (B)   The Commissioner of Finance may furnish to the Secretary of the Treasury of the United States or to the New York State Tax Commission or their delegates such returns filed under the banking corporation tax law and other tax information, as he may consider proper, for use in court actions or proceedings under the Internal Revenue Code or the New York State Tax Law, whether civil or criminal, where a written request for them has been made to the Commissioner of Finance by the Secretary of the Treasury or the New York State Tax Commission or their delegates, provided the laws of the United States or the laws of the State of New York grant substantially similar powers to the Secretary of the Treasury or the New York State Tax Commission or their delegates. Where the Commissioner of Finance has so authorized the use of returns or other tax information in such actions or proceedings, officers and employees of the Department of Finance may testify in such actions or proceedings in respect to the returns or other tax information.

         (iv)   In spite of the provisions relating to secrecy, the Commissioner of Finance, in his discretion, may permit or require any or all persons liable for any tax imposed under the banking corporation tax law to make payments on account of estimated tax and payment of any tax, penalty or interest imposed by the banking corporation tax law to banks, banking houses or trust companies designated by the Commissioner of Finance and to file declarations of estimated tax, applications for automatic extensions of time to file returns and returns with such banks, banking houses or trust companies as agents of the Commissioner of Finance, in lieu of making any such payment directly to the Commissioner of Finance. However, the Commissioner of Finance may designate only such banks, banking houses or trust companies as are depositories or financial agents of the City.

      (3)   Penalty for violation of secrecy provisions. (Administrative Code, §§ 11-688(2), 11-4017) Any person who violates the secrecy provisions is guilty of a misdemeanor. If the offender is an officer or employee of New York City or New York State and he willfully violates the secrecy provisions, he must be dismissed from office and may not hold any public office in the City or State for a period of five years after such dismissal.

§ 3-06 Payment of Tax and Declaration and Payment of Estimated Tax.

   (a)   Payment of tax.

      (1)   Time for payment of tax. (Administrative Code, § 11-647) The tax imposed by the banking corporation tax law is payable to the Commissioner of Finance in full at the time the return is required to be filed. The time when the payment is required to be made is determined without regard to any extension of time for filing such return.

      (2)   Extension of time for payment of tax. (Administrative Code, § 11-647(c)) The Commissioner of Finance may grant a reasonable extension of time for payment of the tax upon receipt of a written request from the taxpayer giving complete information as to the reasons for its inability to make payment of the tax on or before the prescribed due date. Interest must be paid on any balance due from the original due date of the return, without regard to any extension, to the date of payment.

      (3)   Properly estimated tax. (Administrative Code, § 11-647(b)) A taxpayer applying for an automatic six month extension for filing its tax return must pay on or before the date its return is required to be filed, without regard to any extension of time, its properly estimated tax. The estimated tax paid, or balance thereof, will be deemed properly estimated if the tax paid is either:

         (i)   not less than 90 percent of the tax as finally determined; or

         (ii)   not less than the tax shown on the taxpayer's return for the preceding taxable year, if such preceding year was a taxable year of 12 months.

      (4)   Cessation Tax. (Administrative Code, § 11-647(a)) Any taxpayer which ceases to be subject to the banking corporation tax must pay the tax, or balance thereof, at the time the return is required to be filed as described in 19 RCNY § 3-05(d)(3).

   (b)   Declaration of estimated tax.

      (1)   Requirement of declaration. (Administrative Code, § 11-644) Every taxpayer subject to the banking corporation tax must make a declaration of its estimated tax for the current taxable year if such estimated tax can reasonably be expected to exceed $1,000 for the taxable year. The declaration must cover a calendar year accounting period if the taxpayer files its return on the basis of a calendar year, or a full fiscal year if the taxpayer files its return on the basis of a fiscal year, unless a declaration for a short period is required by 19 RCNY § 3-06(b)(6). No declaration may be made for a period of more than 12 months. For purposes of this section a taxable year of 52-53 weeks, in accordance with the provisions of 19 RCNY § 3-02(a)(4), will be deemed a period of 12 months.

      (2)   Definition of estimated tax. (Administrative Code, § 11-644(b)) The term "estimated tax" means the amount which a taxpayer estimates to be the tax imposed by the banking corporation tax law for the current taxable year, less the amount which it estimates to be the sum of any credits allowable against the tax.

      (3)   Time for filing declaration of estimated tax. (Administrative Code, § 11-644(c) and (f)) A declaration of estimated tax must be filed when the requirements of 19 RCNY § 3-06(b)(1) are first met:

         (i)   on or before the first day of the sixth month of the current taxable year, then the declaration must be filed on or before the 15th day of the sixth month;

         (ii)   after the first day of the sixth month of the current taxable year and before the second day of the tenth month, then the declaration must be filed on or before the 15th day of the tenth month;

         (iii)   after the first day of the tenth month of the current taxable year, then the declaration must be filed on or before the 15th day of the first month of the succeeding taxable year.

      (4)   Amendments of declaration. (Administrative Code, § 11-644(d)) In making a declaration of estimated tax, the taxpayer is required to take into account the then existing facts and circumstances as well as those reasonably to be anticipated which relate to the prospective banking corporation tax. Amended or revised declarations may be made in any case in which the taxpayer finds that its estimated tax differs from the estimated tax reflected in its most recent declaration of estimated tax. However, an amended declaration may only be made on an installment date (See: 19 RCNY § 3-06(c)(4) – Other Installments of Estimated Tax) and no further amendments may be made until a succeeding installment date. The amended declaration shall be made on form NYC-400F and marked "AMENDED". No refund will be issued as a result of the filing of an amended declaration. Consideration will be given to a refund only in connection with a completed return filed by a taxpayer for the taxable year covered by its declaration or amended declaration.

      (5)   Return as declaration or amendment. (Administrative Code, § 11-644(e) and (f))

         (i)   If the taxpayer files its return for the calendar year on or before February 15 of the succeeding calendar year (or if the taxpayer is on a fiscal year basis, on or before the 15th day of the second month succeeding the taxable year) and pays therewith the balance, if any, of the full amount of the tax shown to be due on the return:

            (A)   such return will be considered to be its declaration if no declaration was required to be filed during the taxable year for which the tax was imposed, but a declaration was required to be filed on or before the 15th day of the first month of the succeeding taxable year pursuant to 19 RCNY § 3-06(b)(3); or

            (B)   such return will be considered as the amendment permitted by 19 RCNY § 3-06(b)(4) to be filed on or before the 15th day of the first month of the succeeding taxable year if the tax shown on the return is greater than the estimate shown on a declaration previously made.

Example 1: A taxpayer which reports on the basis of a calendar year first meets the requirements for making a declaration of estimated tax on October 5, 1981. The taxpayer may satisfy the requirement for making a declaration of estimated tax by preparing and filing its return for taxable year 1981 on or before February 15, 1982, and paying at the time of filing the balance, if any, of the full amount of tax shown to be payable. The return will be treated as the declaration required to be filed on or before January 15, 1982.

Example 2: The taxpayer makes and files on or before October 15, 1981 a timely declaration of estimated tax for such year and on or before February 15, 1982 files its 1981 tax return and pays the balance, if any, of the full amount of tax shown to be payable. If the taxpayer's return shows the tax to be greater than the estimated tax shown on the declaration, the return will be treated as the amended declaration permitted to be filed on or before January 15, 1982.

         (ii)   The filing of a declaration or amended declaration or the payment of the last installment of estimated tax on January 15, or the filing of a return by February 15 of the succeeding calendar year (or if on a fiscal year basis, on the 15th day of the first month of the succeeding taxable year or the 15th day of the second month of the succeeding fiscal year) will not relieve the taxpayer of the additional charge for underpayment of installments if it failed to pay its estimated tax due earlier in its taxable year.

      (6)   Short periods. (Administrative Code, § 11-644(g)) If a taxpayer is required to make a declaration of estimated tax pursuant to 19 RCNY § 3-06(b)(1) and a short taxable year is involved, a declaration for the fractional part of the year is required. No declaration is required if the short taxable year is a period of five months or less.

      (7)   Time for filing declaration of estimated tax for short taxable year. (Administrative Code, § 11-644(g)) In the case of a short taxable year of more than five months, the declaration of estimated tax must be filed when the requirements for filing a declaration (See: 19 RCNY § 3-06(b)(1)) are first met:

         (i)   on or before the first day of the sixth month of the current taxable year, then the declaration must be filed on or before the 15th day of the sixth month;

         (ii)   after the first day of the sixth month of the current taxable year but before the second day of the tenth month, then the declaration must be filed on or before the 15th day of the tenth month or the 15th day of the first month of the succeeding taxable year, whichever comes first;

         (iii)   after the first day of the tenth month of the current taxable year, the declaration must be filed on or before the 15th day of the first month of the succeeding taxable year.

      (8)   Extension of time for filing declaration of estimated tax. (Administrative Code, § 11-644(h)) The Commissioner of Finance may grant a reasonable extension of time, not to exceed three months, for the filing of any declaration of estimated tax upon receipt of a written request from the taxpayer giving complete information as to the reasons for its inability to file the declaration on or before the prescribed due date.

   (c)   Payments of estimated tax. 

      (1)   General. The amount of estimated tax due as shown on a declaration of estimated tax may be paid in installments or, at the election of the taxpayer, may be paid in full at the time of filing the declaration. If the estimated tax is paid in installments, the first payment must accompany the declaration.

      (2)   Definition of preceding year's tax. (Administrative Code, § 11-645(f)) The term "preceding year's tax" as used in this subdivision (c) means the tax imposed by the banking corporation tax law for the preceding taxable year. It also means, for purposes of computing the first installment of estimated tax when an application has been filed for extension of the time for filing the return required to be filed for the preceding taxable year, the amount properly estimated (See: 19 RCNY § 3-06(a)(3) – Properly Estimated Tax) as the tax imposed upon the taxpayer for such preceding taxable year.

      (3)   First installment of estimated tax for certain taxpayers. (Administrative Code, § 11-645(a)) Every taxpayer subject to the tax imposed by the banking corporation tax law must pay with its return required for the preceding taxable year, or with an application for extension of the time for filing such return, an amount equal to 25 percent of the preceding year's tax, if such tax exceeded $1,000.

      (4)   Other installments of estimated tax. (Administrative Code, § 11-645(b) and (j))

         (i)   In the case of a declaration of estimated tax for a 12 month taxable year, the other dates for filing the declaration and for installment payments are as follows:

 

Dates for filing the declaration	Dates for installment payments
(A) On or before the 15th day of the sixth month	(1) The estimated tax must be paid in three equal installments (after deducting the amount, if any, paid with the return for the preceding taxable year or with the application for extension of time to file such return). One payment must be made at the time of filing the declaration, one on or before the 15th day of the tenth month and one on or before the 15th day of the first month of the succeeding taxable year.
(B) On or before the 15th day of the tenth month	(2) The estimated tax must be paid in two equal installments (after deducting the amount, if any, paid with the return for the preceding taxable year or with the application for extension of time to file such return). One payment must be made at the time of filing the declaration and one on or before the 15th day of the first month of the succeeding taxable year.
(C) On or before the 15th day of the first month if the succeeding taxable year	(3) The estimated tax must be paid in full at the time of filing the declaration (after deducting the amount, if any, paid with the return for the preceding taxable year or with the application for extension of time to file such return).

 

         (ii)   If a declaration is filed after the time prescribed in 19 RCNY § 3-06(b)(3), or after the expiration of any extension of time, then the provisions of Subparagraphs (A), (B) and (C) of subparagraph (i) of this paragraph do not apply, and the taxpayer must pay at the time of filing the declaration all installments of estimated tax which would have been payable at or before such time if the declaration had been filed at the time prescribed in 19 RCNY § 3-06(b)(3). The remaining installments must be paid at the time and in the amounts in which they would have been payable if the declaration had been flied at the time prescribed in 19 RCNY § 3-06(b)(3).

Example: X Corporation was required to file a declaration of estimated tax on or before June 15, 1981, but it filed its declaration for calendar year 1981 on November 18, 1981. At the time of filing its declaration, X Corporation had failed to pay two installments of its estimated tax for the taxable year 1981. Upon filing the declaration on November 18, 1981, it must pay the two installments of estimated tax which it had previously failed to pay.

      (5)   Amendments of declaration. (Administrative Code, § 11-645(c) and (j)) If an amendment of a declaration is filed, the remaining installments, if any, must be ratably increased or decreased to reflect any increase or decrease (as the case may be) in the estimated tax by reason of such amendment. If an amendment is made after the 15th day of the tenth month of the current taxable year, any increase in the estimated tax must be paid at the time of making such amendment.

Example: On June 15, 1981, a taxpayer files a declaration of estimated tax for $12,000 and pays the first installment of $4,000. On October 15, 1981, it files an amended declaration showing an estimated tax of $14,000. The balance of $10,000 must be paid in two remaining installments, $5,000 on October 15, 1981, and $5,000 on January 15, 1982.

      (6)   Application of installments based on preceding year's tax. (Administrative Code, § 11-645(d)) Any amount paid pursuant to 19 RCNY § 3-06(c)(3) must first be applied as payment of the first installment against the estimated tax for the current taxable year shown on the declaration required to be filed pursuant to 19 RCNY § 3-06(b)(1). If the amount paid pursuant to 19 RCNY § 3-06(c)(3) exceeds the declaration of estimated tax, such amount will be considered as a payment on account of the tax shown on the return required to be filed by the taxpayer for the current taxable year. If no declaration of estimated tax is required to be filed by the taxpayer pursuant to 19 RCNY § 3-06(b)(1), any amount paid pursuant to 19 RCNY § 3-06(c)(3) will be considered as a payment on account of the tax shown on the return required to be filed by the taxpayer for the current year.

Example: On March 15, 1983, a calendar year taxpayer files its tax return for the calendar year 1982 showing a tax due of $12,000 and a first installment of estimated tax for calendar year 1983 of $3,000. On June 15, 1983, the taxpayer files a declaration of estimated tax for calendar year 1983 in the amount of $18,000. After deducting the first installment of $3,000, the balance of $15,000 must be paid in three equal installments. The June 15, 1983 installment is $5,000 ($15,000/3).

      (7)   Interest on certain installments based on the proceeding year's tax.(Administrative Code, § 11-645(e)) If the amount paid pursuant to 19 RCNY § 3-06(c)(3) exceeds the tax shown on the return required to be filed by the taxpayer for the taxable year for which the amount was paid, interest will be allowed and paid on the amount by which the amount paid pursuant to 19 RCNY § 3-06(c)(3) exceeds the tax. Interest will be paid at the rate or rates set by the Commissioner of Finance in the Regulations of the Commissioner of Finance Relating to Interest Rates on New York City Income and Excise Taxes, or if no rate is set, at the rate of six percent per year from the date of payment of the amount to the 15th day of the third month of the succeeding taxable year. However, no interest will be allowed or paid if such interest is less than one dollar.

Example: X Corporation, a calendar year taxpayer, files its tax return for the calendar year 1981 on March 15, 1982 and shows a tax due of $4,000. The taxpayer pays $1,000, representing 25 percent of the preceding year's tax, as its first installment for the current taxable year's estimated tax. On March 15, 1983, X Corporation files its return for the calendar year 1982 and shows a tax due of $600. Interest will be paid on the difference of $400 from March 15, 1982 to March 15, 1983.

      (8)   Short taxable years. (Administrative Code, § 11-645(g)) In the case of a short taxable year of a taxpayer for which a declaration of estimated tax is required to be made and filed, the estimated tax should be paid in equal installments (after deducting the amount, if any, paid with the return for the preceding taxable year), one at the time of filing the declaration, one on the 15th day of the tenth month of the taxable year (unless the short taxable year closed prior to such tenth month, in which case the installment will be eliminated) and one on the 15th day of the first month of the succeeding taxable year.

Example: In the case of a short taxable year of 11 months, from January 1, 1981 to November 31, 1981, the declaration is required to be made and filed on or before June 15, 1981. The estimated tax is payable in three equal installments, one on the date of filing the declaration and one each on October 15 and December 15, 1981. If the declaration is required to be filed after June 15, 1981 but on or before October 15, 1981, the estimated tax is payable in two equal installments, one on the date of filing the declaration and one on December 15, 1981.

      (9)   Extension of time. (Administrative Code, § 11-645(i)) The Commissioner of Finance may grant a reasonable extension of time, not to exceed six months, for payment of any installment of estimated tax upon receipt of a written request from the taxpayer giving complete information as to the reasons for its inability to pay the installment on or before the prescribed due date. As a condition for granting an extension of time, the Commissioner of Finance may require the taxpayer to furnish a bond or other security in an amount not to exceed twice the amount of the installment. Interest must be paid from the original due date of the installment, without regard to any extension, to the date of payment.

      (10)   Payments of installments in advance. (Administrative Code, § 11-645(j)) At the election of the taxpayer, any installment of the estimated tax may be paid prior to the date prescribed for its payment. No interest will be allowed or paid on such prepayment.

   (d)   Electronic filing and payment. Pursuant to 19 RCNY § 17-03, the Commissioner may authorize the electronic filing of any request for extension and payment of any tax required to be paid by this section.