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(§ 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 |
(§ 11-604(1)(a), Administrative Code.)
(a) Every corporation subject to tax under Subchapter 2 of Chapter 6 of Title 11 is required to pay:
(1) a tax computed by one of the four alternative methods set forth below (whichever results in the highest tax), except that a real estate investment trust, as defined in subdivision 7 of § 11-603 of the Administrative Code, is required to pay only the tax determined under alternative (i) or alternative (iv), whichever is greater:
(i) 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, of its entire net income 19 RCNY § 11-27, infra, or the portion thereof allocated to New York City;
(ii) 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, of an amount equal to 30 percent of the balance remaining after adding to entire net income compensation paid to officers and certain stockholders and deducting therefrom $15,000 (or a proportionate part thereof in the case of a report for less than a year) and any net loss for the reported year, or the portion of such amount allocated to New York City;
(iii) one mill (or one-fourth of a mill in the case of a cooperative housing corporation or a housing company organized and operated pursuant to the provisions of Article 2 or 4 of the Private Housing Finance Law) of the total of its business capital and investment capital, or the portion thereof allocated to New York City;
(iv) $25; plus
(b) For purposes of this section, a cooperative housing corporation means a corporation:
(1) having one and only one class of stock outstanding,
(2) each of the stockholders of which is entitled, solely by reason of his ownership of stock in the corporation, to occupy for dwelling purposes a house, or an apartment in a building, owned or leased by such corporation,
(3) no stockholder of which is entitled (either conditionally or unconditionally) to receive any distribution not out of earnings and profits of the corporation except on a complete or partial liquidation of the corporation, and
(4) eighty percent or more of the gross income of which for the taxable year is derived from tenant-stockholders.
(§ 11-605(4), Administrative Code.)
Where corporations are taxed on a combined basis, the tax will be measured by the combined entire net income or combined capital of all the corporations included in the combined report. (See: 19 RCNY § 11-32, infra.) As to when combined reports will be permitted or required, see 19 RCNY § 11-91, infra. For cross reference to other sections relating to combined reports, see 19 RCNY § 11-93, infra.
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