§ 11-05 Change of Classification.

   (a)   A corporation subject to tax under Subchapter 2 of Chapter 6 of Title 11, may, by reason of a change in the nature of its activities, cease to be subject to such tax and become taxable under some other chapter or subchapter of Title 11. Conversely, a corporation subject to tax under some other chapter or subchapter of Title 11, may, for the same reason, cease to be taxable thereunder and become subject to tax under Subchapter 2 of Chapter 6. The date on which any such change of classification becomes effective will be determined by the facts of each case.

   (b)   A corporation which becomes subject to tax under Subchapter 2 of Chapter 6 of Title 11, during one of its fiscal or calendar years by reason of a change in classification is treated in the same manner as a corporation which began to do business during such year (see: 19 RCNY § 11-13, infra). Similarly, a corporation which ceases to be subject to the tax imposed by Subchapter 2 of Chapter 6 of Title 11, during one of its fiscal or calendar years by reason of a change in classification is treated in the same manner as a corporation which ceases to do business in New York during such year (see: 19 RCNY § 11-14, infra).

§ 11-06 Corporations as Limited Partners.

   (a)   Subject to the provisions of paragraph (b) and (c) of this section, a corporation shall be deemed to be doing business in the City if it owns a limited partnership interest in a partnership that is doing business, employing capital, owning or leasing property, or maintaining an office in the City.

   (b)   A corporation whose only contact with the City is the ownership of a limited partnership interest in a limited partnership that is doing business, employing capital, owning or leasing property, or maintaining an office in the City will not be deemed to be doing business in the City if the partnership is a publicly-traded partnership as defined in § 7704 of the Internal Revenue Code unless:

      (1)   the corporation is actively engaged in the conduct of the partnership's business;

      (2)   the corporation effectively controls the partnership; or

      (3)   any general partner is effectively controlled by the corporation.

   (c)   A corporation whose only contact with the City is the ownership of a limited partnership interest in a portfolio investment partnership will not be deemed to be doing business in the City unless:

      (1)   the corporation is actively engaged in the conduct of the partnership's business; or

      (2)   the corporation effectively controls the partnership; or

      (3)   any general partner is effectively controlled by the corporation; or

      (4)   the corporation entered into the limited partnership arrangement not for a valid business or economic purpose, but for the principal purpose of avoiding or evading the payment of tax.

   (d)   For purposes of paragraph (c) of this subdivision, the term "portfolio investment partnership" means a limited partnership that meets the gross income requirement of § 851(b)(2) of the Internal Revenue Code. The term "portfolio investment partnership" shall not include a dealer in stocks or securities (within the meaning of § 1236 of the Internal Revenue Code).

Subchapter B: Nature of Tax

§ 11-11 General.

Subchapter 2 of Chapter 6 of Title 11 of the Administrative Code imposes a tax on every domestic and foreign corporation doing business, employing capital, owning or leasing property, or maintaining an office in New York City.

§ 11-12 Definitions.

Calendar and fiscal years. (§ 11-602(9), Administrative Code.) The term "calendar year" means a period of 12 calendar months ending on December 31 (for a period of less than 12 calendar months beginning on the date a taxpayer becomes subject to tax and ending on December 31), in cases where the taxpayer

      (1)   keeps its books on the basis of such period, or

      (2)   keeps its books on the basis of any period ending on any day other than the last day of a calendar month, or

      (3)   does not keep books, and also includes, in the case of a taxpayer which changes the period on the basis of which it keeps books from a fiscal year to a calendar year, the period from the close of its last old fiscal year to and including the following December 31. The term "fiscal year" means a period of 12 calendar months ending on the last day of any month other than December (or a period of less than 12 calendar months beginning on the date a taxpayer becomes subject to tax and ending on the last day of any month other than December), in cases where the taxpayer keeps its books on the basis of such period, and also includes, in the case of a taxpayer which changes the period on the basis of which it keeps 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 old calendar or fiscal year to and including the date designated as the close of its new fiscal year. In general, the calendar or fiscal year on the basis of which the taxpayer is required to report for Federal income tax purposes is the calendar or fiscal year on the basis of which it is required to report for purposes of the tax imposed by Subchapter 2 of Chapter 6 of Title 11. Reports based on a 52-53 week accounting year will be accepted where such method of reporting is permissible and used for Federal tax purposes. If such method is used, a fiscal year which begins within seven days from the beginning of any calendar month shall be deemed for purposes of Subchapter 2 of Chapter 6 of Title 11 to have begun on the first day of such calendar month, and any fiscal year which ends within seven days from the end of any calendar month shall be deemed to have ended on the last day of such calendar month.