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Subchapter B: Nature of Tax
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.
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.
(§ 11-603, Administrative Code.)
(a) The tax is imposed on every domestic and foreign corporation, with specified exceptions, for the privilege of doing business, or employing capital, or of owning or leasing property in New York City in a corporate or organized capacity, or of maintaining an office in the city. For exceptions, see 19 RCNY § 11-04, supra.
(b) The tax is imposed for each fiscal or calendar year of the taxpayer, or any part thereof, during which the taxpayer does business, employs capital, owns or leases property, or maintains an office in New York City.
(c) The tax for each such year or part thereof is measured by the taxpayer's entire net income or capital, or by one of the other bases prescribed by paragraph (a) of subdivision 1 of § 11-604 of the Administrative Code, for such year or part thereof.
(d) Any corporation beginning to do business, employ capital, own or lease property, or maintain an office in New York City immediately becomes subject to tax. Its first privilege and base period is its first calendar or fiscal year (that is, the period beginning on the date it commenced to do business, employ capital, own or lease property, or maintain an office in New York City and ending on the last day of its accounting year). Its first report is due on the 15th day of March following the close of its calendar year or, in the case of a corporation keeping its books on the basis of a fiscal year, within two and one-half months after the close of such first fiscal year. For report by a taxpayer which ceases to be subject to tax, see 19 RCNY § 11-88, infra.
Example 1: A corporation, reporting on the basis of a calendar year, begins to do business in New York City on March 1, 1966 and continues to do business here throughout the balance of the year. The corporation is subject to the tax imposed for such privilege and is required to file a report on or before March 15, 1967. The tax on such report for the period March 1 to December 31, 1966 is measured as set forth in 19 RCNY § 11-31, infra.
Example 2: A corporation, reporting on the basis of a fiscal year ending November 30, begins to do business in New York City on March 1, 1966 and continues to do business here throughout the balance of its fiscal year. The corporation is subject to the tax imposed for such privilege and is required to file a report on or before February 15, 1967. The tax on such report for the period March 1 to November 30, 1966 is measured as set forth in 19 RCNY § 11-31, infra.
(§ 11-603(1), Administrative Code.)
(a) The tax is for all or any part of each calendar or fiscal year during which the taxpayer does business, employs capital, owns or leases property, or maintains an office in New York City. Accordingly, every taxpayer is required to pay a tax measured by its entire net income (or other applicable basis) up to the date on which it ceases to do business, employ capital, own or lease property, or maintain an office in New York City.
(b) A taxpayer may cease to be subject to tax under Subchapter 2 of Chapter 6 of Title 11, because of a change in the nature of its activities and, in such event, is required to pay a tax measured by its entire net income (or other applicable basis) up to the date of such cessation. As to such changes, see 19 RCNY § 11-05, supra.
(c) A corporation which is a member of a group taxed on the basis of a combined report, and which ceases to be subject to tax under Subchapter 2 of Chapter 6 of Title 11 may, in the discretion of the Commissioner of Finance be permitted to be included in the next combined report of the group, instead of paying a separate tax covering the period up to the date of such cessation.
Subchapter C: Computation of Tax
(a) Under Subchapter 2 of Chapter 6 of Title 11 of the Administrative Code, every corporation is treated as a holding corporation to the extent that it holds investments in subsidiaries, as an investment trust to the extent that it holds other securities, and as a business corporation to the extent that it is engaged in ordinary business. In the case of every such corporation, Subchapter 2 of Chapter 6 of Title 11 of the Administrative Code defines and treats differently
(1) its subsidiary capital (capital invested in subsidiaries) and the income therefrom;
(3) its business capital and business income (all capital other than subsidiary capital and investment capital, and all income other than investment income and income from subsidiary capital). However, for the sake of simplicity, the law gives some corporations which are predominantly business corporations an election to be taxed entirely as business corporations, and some corporations which predominantly hold investments in securities, an election to be taxed entirely as investment trusts.
(b) The taxpayer's "entire net income," or the portion thereof allocated to New York City, is the primary measure for the computation of the tax under Subchapter 2 of Chapter 6 of Title 11. In computing entire net income, all income from subsidiary capital (which does not include any recovery in respect of any war loss) and one-half of all dividends from nonsubsidiary corporations are excluded. The rate of the tax measured by entire net income is five and one-half percent for taxable years beginning before January 1, 1971, and six and seven-tenths percent for taxable years beginning on or after such date.
(c) Subchapter 2 of Chapter 6 of Title 11 also provides for three alternative bases for measuring the tax:
(1) the tax on capital, measured by the value of assets (exclusive of subsidiary capital); (2) the tax measured by entire net income plus compensation paid to officers and certain stockholders; and
(3) the fixed minimum tax of $25. In every case, the corporation is required to pay the tax measured by its entire net income, or one of the three alternative taxes, whichever is greatest. However, a real estate investment trust, as defined in subdivision 7 of § 11-603 of the Administrative Code, shall be subject only to the tax measured by its entire net income or the minimum tax of $25, whichever is greater. In addition, every corporation having any subsidiary capital is required to pay a tax measured thereby at the rate of one-half mill.
(a) Any amount required to be included in a report shall be entered at the nearest whole dollar amount. However, 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 sale must be taken into account at its exact amount, including cents, in computing the amount of gross sales to be included in the tax report. 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 tax purposes. Such election must be made at the time of filing the report and is irrevocable with respect to the taxable year covered by the report. A new election, however, may be made on any report for any subsequent taxable period.
(b) For the purpose of the computation to the nearest dollar, a fractional part of a 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 |
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