This bill has been amended

Bill S6359C-2013

Enacts into law major components of legislation necessary to implement the state fiscal plan for the 2014-2015 state fiscal year

Enacts into law major components of legislation necessary to implement the state fiscal plan for the 2014-2015 state fiscal year; relates to the reformation of the taxation on business corporations; allows direct payment of STAR savings; extends fees for the establishment of oil and gas unit of production value; modifies signature requirements on e-filed returns; extends the non-custodial parent earned income tax credit for two years; closes the resident trust loophole; repeals the additional minimum personal income tax; establishes an enhanced real property tax circuit breaker; modifies delivery of the family tax relief credit; extends the empire state commercial production tax credit; authorizes additional credits for the low income housing credit; establishes a twenty percent real property tax credit for manufacturers and eliminates the net income tax on upstate manufacturers; repeals the franchise tax on agriculture cooperatives; provides a refundable credit for telecommunications excise taxes on START-UP NY; enhances the youth works tax credit; extends the alternative fuels tax exemption; simplifies the distribution of motor vehicle fee receipts; relates to comprehensive estate tax reform; extends Monticello raceway video lottery terminal rates for one year; extends certain tax rates and certain simulcasting provisions; extends VLG vendors capital awards program; aligns mobility and personal income tax filings for the self-employed; relates to commercial gaming; provides a two-year property tax freeze through a refundable personal income tax credit; extends certain New York city tax exemptions; relates to a musical theatrical production credit; increases the sales tax exemption threshold amount for vending machines; increases film production credit benefits for films produced in certain counties; relates to the length of service awards; creates a third region for the prepayment of motor fuel taxes; establishes the workers with disabilities tax credit program; provides tax incentives to employers for employing individuals with developmental disabilities; allows a STAR lookback period for widows and widowers; relates to health insurance for jockeys.

Details

Actions

  • Mar 14, 2014: PRINT NUMBER 6359C
  • Mar 14, 2014: AMEND AND RECOMMIT TO FINANCE
  • Feb 21, 2014: PRINT NUMBER 6359B
  • Feb 21, 2014: AMEND AND RECOMMIT TO FINANCE
  • Feb 12, 2014: PRINT NUMBER 6359A
  • Feb 12, 2014: AMEND (T) AND RECOMMIT TO FINANCE
  • Jan 21, 2014: REFERRED TO FINANCE

Text

STATE OF NEW YORK ________________________________________________________________________ 6359--C IN SENATE January 21, 2014 ___________ A BUDGET BILL, submitted by the Governor pursuant to article seven of the Constitution -- read twice and ordered printed, and when printed to be committed to the Committee on Finance -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the tax law, the general municipal law, the urban devel- opment corporation act, the business corporation law, and the general associations law, in relation to reforming taxation of business corpo- rations; to amend the administrative code of the city of New York, in relation to transitional provisions relating to the enactment and implementation of the federal Gramm-Leach-Bliley act; and to repeal various provisions of the tax law relating thereto (Part A); to amend the real property tax law, in relation to the STAR registration program (Part B); to amend chapter 540 of the laws of 1992, amending the real property tax law relating to oil and gas charges, in relation to the effective date of such chapter (Part C); intentionally omitted (Part D); to amend the tax law, in relation to modifying the signature requirement on e-filed returns prepared by tax professionals (Part E); intentionally omitted (Part F); to amend part I of chapter 58 of the laws of 2006, amending the tax law relating to providing an enhanced earned income tax credit, in relation to the effectiveness thereof (Part G); to amend the general obligations law and the tax law, in relation to authorizing electronic tax clearances for professional and business licenses (Part H); to amend the tax law and the administra- tive code of the city of New York, in relation to taxing residents who are grantors of exempt resident trusts that qualify as non-grantor incomplete gift trusts on the income from such trusts and taxing resi- dents who are beneficiaries of all other exempt resident trusts or nonresident trusts on the distributions of accumulated income that they receive from such trusts (Part I); to amend the tax law and the administrative code of the city of New York, in relation to eliminat- ing the personal income tax add-on minimum tax; and to repeal certain provisions of such laws relating thereto (Part J); intentionally omit- ted (Part K); intentionally omitted (Part L); to amend the tax law, in EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD12674-06-4 S. 6359--C 2 relation to the family tax relief credit (Part M); to amend the tax law, in relation to eliminating the personal income tax filing requirement for residents having no liability because income does not exceed the New York standard deduction if they do not file a federal income tax return (Part N); to amend the tax law, in relation to extending the empire state commercial production tax credit (Part O); to amend the public housing law, in relation to extending the credit against income tax for persons or entities investing in low-income housing (Part P); to amend the environmental conservation law, the tax law, the economic development law and the general municipal law, in relation to eligibility for participation in the brownfield cleanup program, and assignment of the brownfield redevelopment tax credits; to amend part H of chapter 1 of the laws of 2003, amending the tax law relating to brownfield redevelopment tax credits, remediated brown- field credit for real property taxes for qualified sites and environ- mental remediation insurance credits, in relation to tax credits for certain sites; to amend the environmental conservation law, in relation to hazardous waste generator fees and taxes; to amend the environmental conservation law, the public authorities law and the state finance law, in relation to the environmental restoration program; and to repeal certain provisions of the environmental conser- vation law and the tax law relating thereto (Subpart A); and to amend the navigation law, in relation to responsible parties for petroleum contaminated sites and incentives to parties who are willing to reme- diate petroleum contaminated sites (Subpart B) (Part Q); to amend the tax law, in relation to providing a tax credit for real property taxes to New York manufacturers; and providing for the repeal of certain provisions upon expiration thereof (Part R); intentionally omitted (Part S); to amend the tax law, in relation to providing a credit for excise tax on telecommunication services for businesses located in tax-free NY areas (Part T); to amend the tax law, in relation to reducing the number of hours of part-time work needed by employees for employer qualification for the New York youth works tax credit; and to amend the labor law, in relation to the New York youth works tax cred- it (Part U); to amend chapter 109 of the laws of 2006 amending the tax law and other laws relating to providing exemptions, reimbursements and credits from various taxes for certain alternative fuels, in relation to extending the alternative fuels tax exemptions for two years (Part V); to amend chapter 63 of the laws of 2000, amending the tax law and other laws relating to modifying the distribution of funds from the motor vehicle fuel excise tax and the vehicle and traffic law, in relation to simplifying the methodology for distribution of motor vehicle receipts (Part W); to amend the tax law, in relation to the estate tax; to repeal section 2 of chapter 1013 of the laws of 1962, amending the tax law relating to imposing a tax on the transfer of estates of decedents dying on or after April first, nineteen hundred sixty-three, relating to an appendix of applicable internal revenue code provisions, and to repeal article 26-B of the tax law, relating to the generation skipping transfer tax (Part X); inten- tionally omitted (Part Y); to amend the tax law, in relation to vendor fees paid to vendor tracks (Part Z); to amend the racing, pari-mutuel wagering and breeding law, in relation to licenses for simulcast facilities, sums relating to track simulcast, simulcast of out-of- state thoroughbred races, simulcasting of races run by out-of-state harness tracks and distributions of wagers; to amend chapter 281 of the laws of 1994 amending the racing, pari-mutuel wagering and breed- S. 6359--C 3 ing law and other laws relating to simulcasting and chapter 346 of the laws of 1990 amending the racing, pari-mutuel wagering and breeding law and other laws relating to simulcasting and the imposition of certain taxes, in relation to extending certain provisions thereof; and to amend the racing, pari-mutuel wagering and breeding law, in relation to extending certain provisions thereof (Part AA); to amend the tax law, in relation to capital awards to vendor tracks (Part BB); to amend the tax law, the banking law, the public authorities law, and the administrative code of the city of New York, in relation to the stock transfer tax, and to repeal certain provisions of the tax law, the state finance law and the administrative code of the city of New York relating thereto (Part CC); to amend the tax law, in relation to conforming the due dates for the metropolitan commuter transportation mobility tax for taxpayers with income from self-employment with the due dates for the personal income tax (Part DD); to amend the state finance law, the upstate New York gaming economic development act of 2013 and the tax law, in relation to moneys appropriated or trans- ferred from the commercial gaming revenue fund (Part EE); inten- tionally omitted (Part FF); to amend the tax law, in relation to the temporary exemption from sales and use taxes for premises used for commercial office space in lower Manhattan; and to amend part C of chapter 2 of the laws of 2005 amending the tax law relating to exemptions from sales and use taxes, in relation to the effectiveness thereof (Subpart A); to amend the real property tax law and the admin- istrative code of the city of New York, in relation to extending a real property tax abatement program for certain commercial properties in cities having a population of one million or more and in relation to extending a special reduction under the commercial rent tax in the city of New York (Subpart B); to amend the real property tax law and the administrative code of the city of New York, in relation to appli- cations for tax abatements for industrial and commercial construction work on properties in a city of one million or more persons (Subpart C); to amend the general city law and the administrative code of the city of New York, in relation to extending the relocation and employ- ment assistance program and the Lower Manhattan relocation and employ- ment assistance program (Subpart D); to amend the general city law and the administrative code of the city of New York, in relation to extending the special rebates and discounts provided pursuant to the energy cost savings program and the Lower Manhattan energy program (Subpart E); to amend the administrative code of the city of New York, in relation to the amount of special reduction allowed (Subpart F); and to amend the real property tax law, in relation to a real estate tax abatement program for certain commercial, industrial and manufac- turing properties in a city of one million or more persons (Subpart G) (Part GG); to amend the state finance law, in relation to establishing a spending cap and establishing a tax freedom fund (Part HH); to amend the tax law, in relation to simple personal income tax (Part II); to amend the tax law, in relation to the cost of living adjustment (Part JJ); to amend the general municipal law and the tax law, in relation to establishing an angel tax credit for investments made in small businesses (Part KK); to amend the tax law, in relation to exempting the proceeds from service award programs for volunteer firefighters and ambulance workers from personal income taxes (Part LL); to amend the tax law, in relation to establishing the public safety communi- cations surcharge on prepaid wireless telecommunications services (Part MM); to amend the tax law, in relation to the prepayment of S. 6359--C 4 sales tax on motor fuel and diesel motor fuel and in relation to increasing the amount of tax required to be prepaid on motor fuel (Part NN); to amend the tax law, in relation to the exemption of poli- tical subdivisions from the imposition of the metropolitan commuter transportation mobility tax (Part OO); to amend the tax law, in relation to increasing the maximum award available under the historic preservation tax credit; and providing for the repeal of such provisions upon expiration thereof (Part PP); to amend the civil prac- tice law and rules, in relation to the undertaking required during the pendency of a stay of enforcement of a judgment against a participat- ing or non-participating manufacturer under the master settlement agreement (Part QQ); to amend the tax law, in relation to eliminating sales tax on transportation services; and to repeal certain provisions of such law relating thereto (Part RR); to amend the tax law, in relation to the sale of food and beverages through vending machines (Part SS); to amend the tax law, in relation to establishing business franchise and personal income tax credits for certain musical and theatrical production expenses (Part TT); to amend the tax law, in relation to establishing a credit against income tax for the rehabili- tation of distressed commercial properties (Part UU); to amend chapter 912 of the laws of 1920 relating to the regulation of boxing, sparring and wrestling, in relation to establishing protocols for combative sports and authorizing mixed martial arts events in this state; to amend the tax law, in relation to the imposition of a tax on the gross receipts of any person holding any professional or amateur boxing, sparring or wrestling match or exhibition, or professional combative sports match or exhibition; and to amend the alcoholic beverage control law, in relation to allowing matches or exhibitions on the premises of certain licensees (Part VV); to amend the tax law, in relation to providing an asbestos remediation tax credit (Part WW); to amend the tax law, in relation to exempting from sales and compensat- ing use taxes the purchase of general aviation aircraft; and providing for the repeal of certain provisions upon expiration thereof (Part XX); to amend the tax law, in relation to biofuel production credit for production of cellulosic ethanol (Part YY); to amend the tax law, in relation to establishing a business franchise and personal income tax credit for natural resources improvement projects upon farmlands and forestlands (Part ZZ); to amend the tax law, in relation to contributions made to a farm reserve account (Part AAA); to amend the racing, pari-mutuel wagering and breeding law, in relation to the simulcasting of races; and repealing certain provisions of such law relating thereto (Part BBB); to amend the tax law, in relation to video lottery gaming (Part CCC); to amend the tax law, in relation to increasing the percentage New York shall receive from a marketing allowance on the total revenue from vendor tracks (Part DDD); to amend the tax law, in relation to allowing vendor tracks to receive revenues when located within certain development zone regions (Part EEE); to amend the tax law, in relation to the disposition of revenues from video lottery gaming (Part FFF); to amend the racing, pari-mutuel wagering and breeding law, in relation to simulcasting of out-of-state thoroughbred races (Part GGG); to amend the tax law, in relation to monetary reporting (Part HHH); to amend the tax law, in relation to providing that the low income housing credit shall be treated as an overpayment of taxes (Part III); to amend the tax law and the educa- tion law, in relation to enacting the "education investment incentives act" (Part JJJ); to amend the labor law and the tax law, in relation S. 6359--C 5 to the creation of the workers with disabilities tax credit program (Part KKK); to amend the tax law, in relation to authorizing advertis- ing during quick draw and authorizing the gaming commission to sell advertising space on lottery tickets (Part LLL); in relation to the definition of "equipment" when used in certain circumstances related to empire zones (Part MMM); to amend the environmental conservation law, in relation to pre-installation review and certification of green roof materials; and to amend the tax law, in relation to establishing a green roof installation credit (Part NNN); to amend the tax law and the state finance law, in relation to establishing the study and stay program (Part OOO); to amend the tax law, in relation to establishing a gift for eliminating the stigma relating to mental illness on personal income tax returns; to amend the state finance law, in relation to establishing a mental illness anti-stigma fund; and to amend the mental hygiene law, in relation to directing the office of mental health to provide grants to organizations dedicated to elimi- nating the stigma attached to mental illness and persons with mental health needs (Part PPP); to amend the state finance law, in relation to requiring the department of health to submit certain reports to the legislature; and to amend the tax law, in relation to gifts for prostate and testicular cancer research and education (Part QQQ); to amend the tax law, in relation to establishing tax credits for taxpay- ers which provide their employees with access to federal qualified transportation fringe benefits (Part RRR); to amend the tax law, in relation to the exemption of libraries from the imposition of the metropolitan commuter transportation mobility tax (Part SSS); to amend the tax law, in relation to providing a tax credit to farmers who sell or rent their agricultural land to a young farmer (Part TTT); to amend the tax law, in relation to providing a tax credit for allowable college expenses (Part UUU); to amend the tax law, in relation to sales and compensating use taxes (Part VVV); to amend the economic development law, the urban development corporation act, the state finance law and the tax law, in relation to establishing the New York state digital game development and incentive act (Part WWW); to amend the urban development corporation act, the tax law and the public service law, in relation to New York state incubators and hotspots (Part XXX); and to amend the public housing law and the tax law, in relation to providing certain tax credits for construction or rehabil- itation of middle-income housing (Part YYY) THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: 1 Section 1. This act enacts into law major components of legislation 2 which are necessary to implement the state fiscal plan for the 2014-2015 3 state fiscal year. Each component is wholly contained within a Part 4 identified as Parts A through YYY. The effective date for each partic- 5 ular provision contained within such Part is set forth in the last 6 section of such Part. Any provision in any section contained within a 7 Part, including the effective date of the Part, which makes a reference 8 to a section "of this act", when used in connection with that particular 9 component, shall be deemed to mean and refer to the corresponding 10 section of the Part in which it is found. Section three of this act sets 11 forth the general effective date of this act. S. 6359--C 6 1 PART A 2 Section 1. Article 32 of the tax law is REPEALED. 3 S 2. Section 180 of the tax law is REPEALED. 4 S 3. Section 181 of the tax law is REPEALED. 5 S 4. Section 208 of the tax law, as added by chapter 415 of the laws 6 of 1944, subdivision 1 as amended by chapter 576 of the laws of 1994, 7 subdivision 1-A as amended by chapter 166 of the laws of 1991, subdivi- 8 sion 1-B as added by section 45 of part A and paragraph (k) of subdivi- 9 sion 9 as added by section 46 of part A of chapter 389 of the laws of 10 1997, subdivision 3, the opening paragraph, subparagraphs 6 and 11 of 11 paragraph (b), and the opening paragraph of paragraph (g) of subdivision 12 9 as amended and subdivision 8-B and subparagraph 3-a of paragraph (b) 13 of subdivision 9 as added by chapter 817 of the laws of 1987, subdivi- 14 sion 4 as amended by section 1, subdivision 6 as amended by section 2 15 and subparagraph 2 of paragraph (a) of subdivision 9 as amended by 16 section 7 of part M of chapter 407 of the laws of 1999, subdivisions 5 17 and 7, paragraph (a) of subdivision 8-B, subparagraph 10 of paragraph 18 (b) and paragraph (j) of subdivision 9 as amended, paragraph (d) of 19 subdivision 8-B and paragraph (c-1) of subdivision 9 as added and para- 20 graphs (e) and (f) of subdivision 8-B as relettered by chapter 170 of 21 the laws of 1994, subdivisions 8 and 10 as amended by chapter 133 of the 22 laws of 1945, subdivision 8-A as added and subparagraph 1 of paragraph 23 (a) of subdivision 9 as amended by chapter 778 of the laws of 1972, 24 paragraph (b) of subdivision 8-A and paragraph (i) of subdivision 9 as 25 amended by chapter 779 of the laws of 1972, subdivision 9 as amended by 26 chapter 713 of the laws of 1961, paragraph (a) of subdivision 9 as 27 amended by chapter 203 of the laws of 1962, subparagraphs 5, 9 and 10 of 28 paragraph (a) and subparagraphs 8 and 9 of paragraph (b) of subdivision 29 9 as amended by chapter 61 of the laws of 1989 and paragraph (f) of 30 subdivision 9 as separately amended by sections 278 and 347 of chapter 31 61 of the laws of 1989, clause (i) of subparagraph 5 of paragraph (a) of 32 subdivision 9 as amended by section 2 and subparagraph 20 of paragraph 33 (b) of subdivision 9 as added by section 3 of part C of chapter 25 of 34 the laws of 2009, subparagraph 6 of paragraph (a) of subdivision 9 as 35 added by chapter 895 of the laws of 1975 and as renumbered by chapter 36 613 of the laws of 1976, subparagraph 7 of paragraph (a) of subdivision 37 9 as added by chapter 33 of the laws of 1978, subparagraph 8 of para- 38 graph (a) and subparagraph 7 of paragraph (b) of subdivision 9 as 39 amended by chapter 639 of the laws of 1986, subparagraph 11 of paragraph 40 (a) of subdivision 9 as added by chapter 15 of the laws of 1983, subpar- 41 agraph 12 of paragraph (a), subparagraph 4-a of paragraph (b) and 42 subparagraph 2 of paragraph (h) of subdivision 9 as amended and subpara- 43 graph 13 of paragraph (a) of subdivision 9 as added by chapter 760 of 44 the laws of 1992, subparagraph 14 of paragraph (a) of subdivision 9 as 45 added by section 101 and paragraphs (l) and (m) of subdivision 9 as 46 added by section 102 of part A of chapter 56 of the laws of 1998, 47 subparagraph 15 of paragraph (a) of subdivision 9 as amended by section 48 1 of part ZZ of chapter 63 of the laws of 2003, subparagraph 16 of para- 49 graph (a) of subdivision 9 as added by section 1 of part K3, subpara- 50 graph 16 of paragraph (b) of subdivision 9 as added by section 2 of part 51 K3, subparagraph 17 of paragraph (b) of subdivision 9 as added by 52 section 2 of part O3, and paragraphs (o), (p) and (q) of subdivision 9 53 as added by section 3 of part O3 of chapter 62 of the laws of 2003, 54 subparagraph 18 of paragraph (a) of subdivision 9 as added by section 3 55 of part C and paragraph (o) of subdivision 9 as amended by section 2 of S. 6359--C 7 1 part E of chapter 59 of the laws of 2013, subparagraph 3 of paragraph 2 (b) of subdivision 9 as amended by chapter 895 of the laws of 1975, 3 subparagraph 4 of paragraph (b) and subparagraph 4 of paragraph (f) of 4 subdivision 9 as amended by chapter 190 of the laws of 1990, subpara- 5 graph 15 of paragraph (b) of subdivision 9 as added by chapter 309 of 6 the laws of 1996, subparagraph 18 of paragraph (b) of subdivision 9 as 7 added by section 21 of part H of chapter 1 of the laws of 2003, subpara- 8 graph 19 of paragraph (b) of subdivision 9 as added by section 1 of part 9 HH1 of chapter 57 of the laws of 2008, subparagraph 20-a of paragraph 10 (b) of subdivision 9 as added by section 2-a of part T of this act, and 11 paragraphs (c-2) and (c-3) of subdivision 9 as added by section 10 of 12 part Y of chapter 63 of the laws of 2000, paragraph (g) of subdivision 9 13 as added by chapter 178 of the laws of 1965, subparagraph 1 and clauses 14 (B) and (C) of subparagraph 3 of paragraph (g) of subdivision 9 as 15 amended by chapter 613 of the laws of 1976, clause (A) of subparagraph 1 16 of paragraph (g) of subdivision 9 as separately amended by chapters 675 17 and 836 of the laws of 1977, clause (B) of subparagraph 1, clause (A) of 18 subparagraph 2 and clause (A) of subparagraph 3 of paragraph (g) of 19 subdivision 9 as amended by chapter 675 of the laws of 1977, item 1 of 20 clause (B) of subparagraph 1 of paragraph (g) of subdivision 9 as 21 amended by chapter 972 of the laws of 1984, clause (B) of subparagraph 2 22 of paragraph (g) of subdivision 9 as amended by chapter 365 of the laws 23 of 1979, clause (C) of subparagraph 2 of paragraph (g) of subdivision 9 24 as amended by chapter 1005 of the laws of 1970, paragraph (h) of subdi- 25 vision 9 as amended by chapter 606 of the laws of 1984, paragraph (n) of 26 subdivision 9 as added by section 1 of part O of chapter 85 of the laws 27 of 2002, subdivision 12 as added by chapter 828 of the laws of 1977, 28 subdivision 19 as added by chapter 681 of the laws of 1997, is amended 29 to read as follows: 30 S 208. Definitions. As used in this article: 31 1. The term "corporation" includes (a) an association within the mean- 32 ing of paragraph three of subsection (a) of section seventy-seven 33 hundred one of the internal revenue code (including a limited liability 34 company), (b) a joint-stock company or association, (c) a publicly trad- 35 ed partnership treated as a corporation for purposes of the internal 36 revenue code pursuant to section seventy-seven hundred four thereof and 37 (d) any business conducted by a trustee or trustees wherein interest or 38 ownership is evidenced by certificate or other written instrument. 39 "DISC" and "former DISC" mean any corporation which meets the require- 40 ments of subsection (a) of section nine hundred ninety-two of the inter- 41 nal revenue code[;]. 42 1-A. The term "New York S corporation" means, with respect to any 43 taxable year, a corporation subject to tax under this article for which 44 an election is in effect pursuant to subsection (a) of section six 45 hundred sixty of this chapter for such year, any such year shall be 46 denominated a "New York S year", and such election shall be denominated 47 a "New York S election". The term "New York C corporation" means, with 48 respect to any taxable year, a corporation subject to tax under this 49 article which is not a New York S corporation, and any such year shall 50 be denominated a "New York C year". The term "termination year" means 51 any taxable year of a corporation during which the New York S election 52 terminates on a day other than the first day of such year. The portion 53 of the taxable year ending before the first day for which such termi- 54 nation is effective shall be denominated the "S short year", and the 55 portion of such year beginning on such first day shall be denominated 56 the "C short year". The term "New York S termination year" means any S. 6359--C 8 1 termination year which is not also an S termination year for federal 2 purposes. 3 1-B. The term "QSSS" means a corporation which is a qualified subchap- 4 ter S subsidiary as defined in subparagraph (B) of paragraph three of 5 subsection (b) of section thirteen hundred sixty-one of the internal 6 revenue code. The term "exempt QSSS" means a QSSS exempt from tax under 7 this article as provided in paragraph (k) of subdivision nine of this 8 section, or a QSSS described in subclause (i) of clause (B) of subpara- 9 graph two of paragraph (k) of subdivision nine of this section, wherein 10 the parent corporation of the QSSS is subject to tax under this article, 11 and the assets, liabilities, income and deductions of the QSSS are 12 treated as the assets, liabilities, income and deductions of the parent 13 corporation. Where a QSSS is an exempt QSSS, then for all purposes under 14 this article: 15 (a) the assets, liabilities, income, deductions, property, payroll, 16 receipts, capital, credits, and all other tax attributes and elements of 17 economic activity of the QSSS shall be deemed to be those of the parent 18 corporation, 19 (b) the stocks, bonds and other securities issued by, and any indebt- 20 edness from, the QSSS shall not be [subsidiary,] investment or business 21 capital of the parent corporation, 22 (c) transactions between the parent corporation and the QSSS, includ- 23 ing the payment of interest and dividends, shall not be taken into 24 account, and 25 (d) general executive officers of the QSSS shall be deemed to be 26 general executive officers of the parent corporation. 27 2. The term "taxpayer" means any corporation subject to tax under this 28 article[;]. 29 3. The term "subsidiary" means a corporation of which over fifty 30 percent of the number of shares of stock entitling the holders thereof 31 to vote for the election of directors or trustees is owned by the 32 taxpayer[;]. 33 4. The term ["subsidiary capital" means investments in the stock of 34 subsidiaries and any indebtedness from subsidiaries, exclusive of 35 accounts receivable acquired in the ordinary course of trade or business 36 for services rendered or for sales of property held primarily for sale 37 to customers, whether or not evidenced by written instrument, on which 38 interest is not claimed and deducted by the subsidiary for purposes of 39 taxation under article nine-A, thirty-two or thirty-three of this chap- 40 ter, provided, however, that, in the discretion of the commissioner, 41 there shall be deducted from subsidiary capital any liabilities which 42 are directly or indirectly attributable to subsidiary capital] "STOCK" 43 MEANS A DIRECT INTEREST IN A CORPORATION THAT IS TREATED AS EQUITY FOR 44 FEDERAL INCOME TAX PURPOSES. 45 5. (A) The term "investment capital" means investments in stocks[, 46 bonds and other securities, corporate and governmental,] THAT ARE HELD 47 BY THE TAXPAYER FOR MORE THAN SIX CONSECUTIVE MONTHS BUT ARE not held 48 for sale to customers in the regular course of business, [exclusive of 49 subsidiary capital] OR, IF THE TAXPAYER MAKES THE ELECTION PROVIDED FOR 50 IN SUBPARAGRAPH ONE OF PARAGRAPH (A) OF SUBDIVISION THREE OF SECTION TWO 51 HUNDRED TEN-A OF THIS ARTICLE, ARE NOT QUALIFIED FINANCIAL INSTRUMENTS 52 AS DESCRIBED IN SUBDIVISION FIVE OF SECTION TWO HUNDRED TEN-A OF THIS 53 ARTICLE. STOCK IN A CORPORATION THAT IS CONDUCTING A UNITARY BUSINESS 54 WITH THE TAXPAYER, STOCK IN A CORPORATION THAT IS INCLUDED IN A COMBINED 55 REPORT WITH THE TAXPAYER PURSUANT TO THE COMMONLY OWNED GROUP ELECTION 56 IN SUBDIVISION FIVE OF SECTION TWO HUNDRED TEN-C OF THIS ARTICLE, and S. 6359--C 9 1 stock issued by the taxpayer[, provided, however, that, in the 2 discretion of the commissioner, there] SHALL NOT CONSTITUTE INVESTMENT 3 CAPITAL. FOR PURPOSES OF THIS SUBDIVISION, IF THE TAXPAYER OWNS OR 4 CONTROLS, DIRECTLY OR INDIRECTLY, LESS THAN TWENTY PERCENT OF THE STOCK 5 OF A CORPORATION THAT ENTITLES THE HOLDERS THEREOF TO VOTE FOR THE 6 ELECTION OF TRUSTEES OR DIRECTORS, THAT CORPORATION WILL BE PRESUMED TO 7 BE CONDUCTING A BUSINESS THAT IS NOT UNITARY WITH THE BUSINESS OF THE 8 TAXPAYER. 9 (B) THERE shall be deducted from investment capital any liabilities 10 which are directly or indirectly attributable to investment capital[; 11 and provided, further, that investment]. IF THE AMOUNT OF THOSE LIABIL- 12 ITIES EXCEEDS THE AMOUNT OF INVESTMENT CAPITAL, THE AMOUNT OF INVESTMENT 13 CAPITAL WILL BE ZERO. 14 (C) INVESTMENT capital shall not include any such investments the 15 income from which is excluded from entire net income pursuant to the 16 provisions of paragraph (c-1) of subdivision nine of this section, and 17 that investment capital shall be computed without regard to liabilities 18 directly or indirectly attributable to such investments, but only if air 19 carriers organized in the United States and operating in the foreign 20 country or countries in which the taxpayer has its major base of oper- 21 ations and in which it is organized, resident or headquartered (if not 22 in the same country as its major base of operations) are not subject to 23 any tax based on or measured by capital imposed by such foreign country 24 or countries or any political subdivision thereof, or if taxed, are 25 provided an exemption, equivalent to that provided for herein, from any 26 tax based on or measured by capital imposed by such foreign country or 27 countries and from any such tax imposed by any political subdivision 28 thereof[;]. 29 (D) IF A TAXPAYER ACQUIRES STOCK DURING THE SECOND HALF OF ITS TAXABLE 30 YEAR AND OWNS THAT STOCK ON THE LAST DAY OF THE TAXABLE YEAR, IT WILL BE 31 PRESUMED THAT THE TAXPAYER HELD THAT STOCK FOR MORE THAN SIX CONSECUTIVE 32 MONTHS DURING THE TAXABLE YEAR. HOWEVER, IF THE TAXPAYER DOES NOT IN 33 FACT HOLD THAT STOCK FOR MORE THAN SIX CONSECUTIVE MONTHS, THE TAXPAYER 34 MUST INCREASE ITS TOTAL BUSINESS CAPITAL IN THE IMMEDIATELY SUCCEEDING 35 TAXABLE YEAR BY THE AMOUNT INCLUDED IN INVESTMENT CAPITAL FOR THAT 36 STOCK, NET OF ANY LIABILITIES ATTRIBUTABLE TO THAT STOCK COMPUTED AS 37 PROVIDED IN PARAGRAPH (B) OF THIS SUBDIVISION. 38 (E) WHEN INCOME OR GAIN FROM A DEBT OBLIGATION OR OTHER SECURITY 39 CANNOT BE APPORTIONED TO THE STATE USING THE BUSINESS ALLOCATION 40 PERCENTAGE AS A RESULT OF UNITED STATES CONSTITUTIONAL PRINCIPLES, THE 41 DEBT OBLIGATION OR OTHER SECURITY WILL BE INCLUDED IN INVESTMENT CAPI- 42 TAL. 43 6. (A) The term "investment income" means income, including capital 44 gains in excess of capital losses, from investment capital, to the 45 extent included in computing entire net income, less, [(a)] in the 46 discretion of the commissioner, any INTEREST deductions allowable in 47 computing entire net income which are directly or indirectly attribut- 48 able to investment capital or investment income[, and (b) such portion 49 of any net operating loss deduction allowable in computing entire net 50 income, as the investment income, before such deduction, bears to entire 51 net income, before such deduction,] provided, however, that in no case 52 shall investment income exceed entire net income[;]. IF THE TAXPAYER 53 ATTRIBUTES INTEREST DEDUCTIONS TO INVESTMENT INCOME AND THE AMOUNT 54 SUBTRACTED EXCEEDS INVESTMENT INCOME, THE EXCESS OF THE INTEREST 55 DEDUCTIONS OVER INVESTMENT INCOME MUST BE ADDED BACK TO ENTIRE NET 56 INCOME. S. 6359--C 10 1 (B) IN LIEU OF SUBTRACTING FROM INVESTMENT INCOME THE AMOUNT OF THOSE 2 INTEREST DEDUCTIONS, THE TAXPAYER MAY ELECT TO REDUCE ITS TOTAL INVEST- 3 MENT INCOME BY FORTY PERCENT. IF THE TAXPAYER MAKES THIS ELECTION, THE 4 TAXPAYER MUST ALSO MAKE THE ELECTIONS PROVIDED FOR IN PARAGRAPHS (B) AND 5 (C) OF SUBDIVISION SIX-A OF THIS SECTION. A TAXPAYER WHICH DOES NOT MAKE 6 THIS ELECTION BECAUSE IT HAS NO INVESTMENT CAPITAL WILL NOT BE PRECLUDED 7 FROM MAKING THOSE OTHER ELECTIONS. 8 (C) INVESTMENT INCOME SHALL NOT INCLUDE ANY AMOUNT TREATED AS DIVI- 9 DENDS PURSUANT TO SECTION SEVENTY-EIGHT OF THE INTERNAL REVENUE CODE. 10 6-A. (A) THE TERM "OTHER EXEMPT INCOME" MEANS THE SUM OF EXEMPT 11 SUBPART F INCOME AND EXEMPT UNITARY CORPORATION DIVIDENDS. 12 (B) "EXEMPT SUBPART F INCOME" MEANS THE INCOME, AS DEFINED IN SECTION 13 952 OF THE INTERNAL REVENUE CODE, RECEIVED FROM A CORPORATION THAT IS 14 CONDUCTING A UNITARY BUSINESS WITH THE TAXPAYER BUT IS NOT INCLUDED IN A 15 COMBINED REPORT WITH THE TAXPAYER, LESS, IN THE DISCRETION OF THE 16 COMMISSIONER, ANY INTEREST DEDUCTIONS DIRECTLY OR INDIRECTLY ATTRIBUT- 17 ABLE TO THAT INCOME. IN LIEU OF SUBTRACTING FROM ITS EXEMPT SUBPART F 18 INCOME THE AMOUNT OF THOSE INTEREST DEDUCTIONS, THE TAXPAYER MAY ELECT 19 TO REDUCE ITS TOTAL EXEMPT SUBPART F INCOME BY FORTY PERCENT. IF THE 20 TAXPAYER MAKES THIS ELECTION, THE TAXPAYER MUST ALSO MAKE THE ELECTIONS 21 PROVIDED FOR IN PARAGRAPH (B) OF SUBDIVISION SIX OF THIS SECTION AND 22 PARAGRAPH (C) OF THIS SUBDIVISION. A TAXPAYER WHICH DOES NOT MAKE THIS 23 ELECTION BECAUSE IT HAS NO EXEMPT SUBPART F INCOME WILL NOT BE PRECLUDED 24 FROM MAKING THOSE OTHER ELECTIONS. 25 (C) "EXEMPT UNITARY CORPORATION DIVIDENDS" MEANS THOSE DIVIDENDS FROM 26 A CORPORATION THAT IS CONDUCTING A UNITARY BUSINESS WITH THE TAXPAYER 27 BUT IS NOT INCLUDED IN A COMBINED REPORT WITH THE TAXPAYER, LESS, IN THE 28 DISCRETION OF THE COMMISSIONER, ANY INTEREST DEDUCTIONS DIRECTLY OR 29 INDIRECTLY ATTRIBUTABLE TO SUCH INCOME. IN LIEU OF SUBTRACTING FROM 30 THIS DIVIDEND INCOME THOSE INTEREST DEDUCTIONS, THE TAXPAYER, OTHER THAN 31 TAXPAYERS THAT ARE OR WOULD BE TAXABLE IF DOING BUSINESS IN THIS STATE 32 UNDER ARTICLE NINE OR ARTICLE THIRTY-THREE OF THIS CHAPTER MAY ELECT TO 33 REDUCE THE TOTAL AMOUNT OF THIS DIVIDEND INCOME BY FORTY PERCENT. IF THE 34 TAXPAYER MAKES THIS ELECTION, THE TAXPAYER MUST ALSO MAKE THE ELECTIONS 35 PROVIDED FOR IN PARAGRAPH (B) OF SUBDIVISION SIX OF THIS SECTION AND 36 PARAGRAPH (B) OF THIS SUBDIVISION. A TAXPAYER WHICH DOES NOT MAKE THIS 37 ELECTION BECAUSE IT HAS NOT RECEIVED ANY EXEMPT UNITARY CORPORATION 38 DIVIDENDS WILL NOT BE PRECLUDED FROM MAKING THOSE OTHER ELECTIONS. 39 (D) IF THE TAXPAYER ATTRIBUTES INTEREST DEDUCTIONS TO OTHER EXEMPT 40 INCOME AND THE AMOUNT SUBTRACTED EXCEEDS OTHER EXEMPT INCOME, THE EXCESS 41 OF THE INTEREST DEDUCTIONS OVER OTHER EXEMPT INCOME MUST BE ADDED BACK 42 TO ENTIRE NET INCOME. IN NO CASE SHALL OTHER EXEMPT INCOME EXCEED ENTIRE 43 NET INCOME. 44 (E) OTHER EXEMPT INCOME SHALL NOT INCLUDE ANY AMOUNT TREATED AS DIVI- 45 DENDS PURSUANT TO SECTION SEVENTY-EIGHT OF THE INTERNAL REVENUE CODE. 46 7. (a) The term "business capital" means all assets, other than 47 [subsidiary capital,] investment capital and stock issued by the taxpay- 48 er, less liabilities not deducted from [subsidiary or] investment capi- 49 tal [except that cash on hand and on deposit shall be treated as invest- 50 ment capital or as business capital as the taxpayer may elect]. 51 BUSINESS CAPITAL SHALL INCLUDE ONLY THOSE ASSETS THE INCOME, LOSS OR 52 EXPENSE OF WHICH ARE PROPERLY REFLECTED (OR WOULD HAVE BEEN PROPERLY 53 REFLECTED IF NOT FULLY DEPRECIATED OR EXPENSED OR DEPRECIATED OR 54 EXPENSED TO A NOMINAL AMOUNT) IN THE COMPUTATION OF ENTIRE NET INCOME 55 FOR THE TAXABLE YEAR. S. 6359--C 11 1 (b) Provided, however, "business capital" shall not include assets to 2 the extent employed for the purpose of generating income which is 3 excluded from entire net income pursuant to the provisions of paragraph 4 (c-1) of subdivision nine of this section and shall be computed without 5 regard to liabilities directly or indirectly attributable to such 6 assets, but only if air carriers organized in the United States and 7 operating in the foreign country or countries in which the taxpayer has 8 its major base of operations and in which it is organized, resident or 9 headquartered (if not in the same country as its major base of oper- 10 ations) are not subject to any tax based on or measured by capital 11 imposed by such foreign country or countries or any political subdivi- 12 sion thereof, or if taxed, are provided an exemption, equivalent to that 13 provided for herein, from any tax based on or measured by capital 14 imposed by such foreign country or countries and from any such tax 15 imposed by any political subdivision thereof[;]. 16 8. The term "business income" means entire net income minus investment 17 income[;] AND OTHER EXEMPT INCOME. IN NO EVENT SHALL THE SUM OF INVEST- 18 MENT INCOME AND OTHER EXEMPT INCOME EXCEED ENTIRE NET INCOME. IF THE 19 TAXPAYER MAKES THE ELECTION PROVIDED FOR IN SUBPARAGRAPH ONE OF PARA- 20 GRAPH (A) OF SUBDIVISION FIVE OF SECTION TWO HUNDRED TEN-A OF THIS ARTI- 21 CLE, THEN ALL INCOME FROM QUALIFIED FINANCIAL INSTRUMENTS SHALL CONSTI- 22 TUTE BUSINESS INCOME. 23 8-A. Provided, however, that with respect to a DISC or a former DISC, 24 the following provisions shall apply: 25 (a) investments in the stocks, bonds or other securities of a DISC or 26 any indebtedness from a DISC shall not be treated as [either subsidiary 27 capital or] investment capital under [subdivisions four or] SUBDIVISION 28 five of this section, 29 (b) any amounts deemed distributed from a DISC or a former DISC which 30 are taxable as dividends pursuant to subsection (b) of section nine 31 hundred ninety-five of the internal revenue code of nineteen hundred 32 fifty-four shall be treated as business income, except any such amounts 33 from a former DISC attributable to amounts includible in a taxpayer's 34 entire net income for a prior taxable year under subparagraph (B) of 35 paragraph (i) of subdivision nine of this section shall be excluded from 36 entire net income, 37 (c) any gain recognized for federal income tax purposes on the dispo- 38 sition of stock in a DISC, and any gain recognized on the disposition of 39 stock in a former DISC, includible in gross income as a dividend pursu- 40 ant to subsection (c) of section nine hundred ninety-five of the inter- 41 nal revenue code of nineteen hundred fifty-four, shall be treated as 42 business income, and 43 (d) except as provided in paragraph (i) of subdivision nine of this 44 section, any actual distribution from a DISC or a former DISC shall be 45 treated as business income except an actual distribution which for 46 federal income tax purposes is treated as made out of "other earnings 47 and profits" under section nine hundred ninety-six of the internal 48 revenue code of nineteen hundred fifty-four, in which case such actual 49 distribution shall be treated as [either subsidiary income or] invest- 50 ment income under this article. 51 [8-B. (a) The term "minimum taxable income" shall mean the entire net 52 income of the taxpayer for the taxable year: 53 (1) increased by the amount of the federal items of tax preference set 54 forth in section fifty-seven of the internal revenue code (with the 55 modifications set forth in paragraph (b) of this subdivision), which 56 items of tax preference shall have the same meaning and be computed in S. 6359--C 12 1 the same manner as under section fifty-seven of the internal revenue 2 code, 3 (2) determined with the federal adjustments described in paragraph (c) 4 of this subdivision, which adjustments shall have the same meaning and 5 be computed in the same manner as under sections fifty-six and fifty- 6 eight of the internal revenue code, 7 (3) increased by the net operating loss deduction otherwise allowed 8 under paragraph (f) of subdivision nine of this section, and 9 (4) reduced, for taxable years beginning after nineteen hundred nine- 10 ty-three, by the alternative net operating loss deduction, as defined in 11 paragraph (d) of this subdivision. 12 (b) The federal items of tax preference referred to hereinabove shall 13 be modified by deducting "tax-exempt interest" and "accelerated depreci- 14 ation or amortization on certain property placed in service before Janu- 15 ary 1, 1987", as determined under paragraphs five and seven of 16 subsection (a) of section fifty-seven of the internal revenue code. 17 (c) The adjustments referred to hereinabove shall be: 18 (1) "Depreciation" as determined under paragraph one of subsection (a) 19 of section fifty-six of the internal revenue code. For purposes of this 20 subparagraph, the depreciation item of adjustment provided for here 21 shall not include any amount attributable to property for which the tax 22 benefits of the accelerated cost recovery system are not available under 23 this article by reason of subparagraph ten of paragraph (b) of subdivi- 24 sion nine of this section; 25 (2) "Mining exploration and development costs" as determined under 26 paragraph two of subsection (a) of section fifty-six of the internal 27 revenue code; 28 (3) "Treatment of certain long-term contracts" as determined under 29 paragraph three of subsection (a) of section fifty-six of the internal 30 revenue code; 31 (4) "Installment sales of certain property" as determined under para- 32 graph six of subsection (a) of section fifty-six of the internal revenue 33 code; 34 (5) "Circulation expenditures of personal holding companies" as deter- 35 mined under subparagraph (C) of paragraph two of subsection (b) of 36 section fifty-six of the internal revenue code; 37 (6) "Merchant marine capital construction funds" as determined under 38 paragraph two of subsection (c) of section fifty-six of the internal 39 revenue code; 40 (7) "Disallowance of passive activity loss" as determined under 41 subsection (b) of section fifty-eight of the internal revenue code; and 42 (8) "Adjusted basis", as it appears in paragraph seven of subsection 43 (a) of section fifty-six of the internal revenue code, but without 44 taking into account the references therein to paragraph five of 45 subsection (a) of section fifty-six of the internal revenue code. 46 (d) The term "alternative net operating loss deduction" means the net 47 operating loss deduction allowed for the taxable year under paragraph 48 (f) of subdivision nine of this section, except as provided herein. 49 (1)(A) The net operating loss for any year beginning after nineteen 50 hundred eighty-nine which is included in determining such deduction 51 shall be determined with the adjustments provided in subparagraph two of 52 paragraph (a) of this subdivision, and shall be reduced by the items of 53 tax preference determined under subparagraph one of paragraph (a) of 54 this subdivision, attributable to such year. An item of tax preference 55 shall be taken into account only to the extent such item increased the S. 6359--C 13 1 amount of the net operating loss for the taxable year under paragraph 2 (f) of subdivision nine of this section. 3 (B) In the case of loss years beginning before nineteen hundred nine- 4 ty, the amount of the net operating loss which may be carried over to 5 taxable years beginning after nineteen hundred eighty-nine shall be 6 equal to an amount which may be carried from the loss year to the first 7 taxable year of the taxpayer beginning after nineteen hundred eighty- 8 nine. 9 (2) In determining the amount of such deduction, loss carryforwards 10 and carrybacks shall, subject to the provisions of subparagraph five of 11 paragraph (f) of subdivision nine of this section, be computed in the 12 manner set forth in paragraph two of subsection (b) of section one 13 hundred seventy-two of the internal revenue code, except that, for the 14 reference therein to taxable income, there shall be substituted the 15 phrase "ninety percent of minimum taxable income determined without 16 regard to the alternative net operating loss deduction". 17 (3) The amount of such deduction shall not exceed ninety percent of 18 minimum taxable income determined without regard to such deduction, 19 provided, however, the term "ninety percent" shall be read as "forty- 20 five percent" with respect to taxable years beginning in nineteen 21 hundred ninety-four. 22 (e) The tax commission may, whenever necessary in order to properly 23 reflect the minimum taxable income of any taxpayer, determine the year 24 or period in which any item of income or deduction shall be included, 25 without regard to the method of accounting employed by the taxpayer. 26 (f) If the period covered by a report under this article is other than 27 the period covered by the report to the United States treasury depart- 28 ment, the minimum taxable income shall be appropriately modified pursu- 29 ant to regulations promulgated by the tax commission.] 30 9. The term "entire net income" means total net income from all sourc- 31 es, which shall be presumably the same as the entire taxable income 32 [(but not alternative minimum taxable income)], WHICH, EXCEPT AS HEREIN- 33 AFTER PROVIDED IN THIS SUBDIVISION, 34 (i) [which] the taxpayer is required to report to the United States 35 treasury department, or 36 (ii) [which] the taxpayer would have been required to report to the 37 United States treasury department if it had not made an election under 38 subchapter s of chapter one of the internal revenue code, or 39 (iii) [which] the taxpayer, in the case of a corporation which is 40 exempt from federal income tax (other than the tax on unrelated business 41 taxable income imposed under section 511 of the internal revenue code) 42 but which is subject to tax under this article, would have been required 43 to report to the United States treasury department but for such 44 exemption, [except as hereinafter provided, and subject to any modifica- 45 tion required by paragraphs (d) and (e) of subdivision three of section 46 two hundred ten of this article] OR 47 (IV) IN THE CASE OF A CORPORATION ORGANIZED UNDER THE LAWS OF A COUN- 48 TRY OTHER THAN THE UNITED STATES, IS EFFECTIVELY CONNECTED WITH THE 49 CONDUCT OF A TRADE OR BUSINESS WITHIN THE UNITED STATES AS DETERMINED 50 UNDER SECTION 882 OF THE INTERNAL REVENUE CODE, 51 (a) Entire net income shall not include: 52 [(1) income, gains and losses from subsidiary capital which do not 53 include the amount of a recovery in respect of any war loss except for 54 such amounts from a former DISC which are treated as business income 55 under subdivision eight-A of this section, S. 6359--C 14 1 (2) fifty percent of dividends (A) other than from subsidiaries, and 2 (B) other than amounts treated as business income under subdivision 3 eight-A of this section, on shares of stock which conform to the 4 requirements of subsection (c) of section two hundred forty-six of the 5 internal revenue code.] 6 (3) bona fide gifts, 7 (4) income and deductions with respect to amounts received from school 8 districts and from corporations and associations, organized and operated 9 exclusively for religious, charitable or educational purposes, no part 10 of the net earnings of which inures to the benefit of any private share- 11 holder or individual, for the operation of school buses, 12 (5) (i) any refund or credit of a tax imposed under this article, 13 article twenty-three, or FORMER article thirty-two of this chapter, for 14 which tax no exclusion or deduction was allowed in determining the 15 taxpayer's entire net income under this article, article twenty-three, 16 or FORMER article thirty-two of this chapter for any prior year, (ii) a 17 refund or credit of general corporation tax allowed by subdivision elev- 18 en of section 11-604 of the administrative code of the city of New York, 19 or (iii) any refund or credit of a tax imposed under sections one 20 hundred eighty-three, one hundred eighty-three-a, one hundred eighty- 21 four or one hundred eighty-four-a of this chapter, and 22 (6) any amount treated as dividends pursuant to section seventy-eight 23 of the internal revenue code [and not otherwise deductible under subpar- 24 agraphs one and two of this paragraph]; 25 (7) that portion of wages and salaries paid or incurred for the taxa- 26 ble year for which a deduction is not allowed pursuant to the provisions 27 of section two hundred eighty-C of the internal revenue code. 28 [(8) in the case of a taxpayer who is separately or as a partner of a 29 partnership doing an insurance business as a member of the New York 30 insurance exchange described in section six thousand two hundred one of 31 the insurance law, any item of income, gain, loss or deduction of such 32 business which is the taxpayer's distributive or pro rata share for 33 federal income tax purposes or which the taxpayer is required to take 34 into account separately for federal income tax purposes.] 35 (9) for taxable years beginning after December thirty-first, nineteen 36 hundred eighty-one, except with respect to property which is a qualified 37 mass commuting vehicle described in subparagraph (D) of paragraph eight 38 of subsection (f) of section one hundred sixty-eight of the internal 39 revenue code (relating to qualified mass commuting vehicles) and proper- 40 ty of a taxpayer principally engaged in the conduct of aviation (other 41 than air freight forwarders acting as principal and like indirect air 42 carriers) which is placed in service before taxable years beginning in 43 nineteen hundred eighty-nine, any amount which is included in the 44 taxpayer's federal taxable income solely as a result of an election made 45 pursuant to the provisions of such paragraph eight as it was in effect 46 for agreements entered into prior to January first, nineteen hundred 47 eighty-four; 48 (10) for taxable years beginning after December thirty-first, nineteen 49 hundred eighty-one, except with respect to property which is a qualified 50 mass commuting vehicle described in subparagraph (D) of paragraph eight 51 of subsection (f) of section one hundred sixty-eight of the internal 52 revenue code (relating to qualified mass commuting vehicles) and proper- 53 ty of a taxpayer principally engaged in the conduct of aviation (other 54 than air freight forwarders acting as principal and like indirect air 55 carriers) which is placed in service before taxable years beginning in 56 nineteen hundred eighty-nine, any amount which the taxpayer could have S. 6359--C 15 1 excluded from federal taxable income had it not made the election 2 provided for in such paragraph eight as it was in effect for agreements 3 entered into prior to January first, nineteen hundred eighty-four; 4 (11) the amount deductible pursuant to paragraph (j) of this subdivi- 5 sion; and 6 (12) upon the disposition of property to which paragraph (j) of this 7 subdivision applies, the amount, if any, by which the aggregate of the 8 amounts described in subparagraph ten of paragraph (b) of this subdivi- 9 sion attributable to such property exceeds the aggregate of the amounts 10 described in paragraph (j) of this subdivision attributable to such 11 property; and 12 [(13) if the added tax provided for in either (i) former subdivision 13 two of section one hundred eighty-two of this chapter (relating to real 14 estate corporations) or (ii) former subdivision one-a of section two 15 hundred nine of this chapter (relating to real estate corporations) has 16 been imposed upon the taxpayer, any income which has been used in 17 computing such tax.] 18 (14) The amount deductible pursuant to paragraph [(l)] (I) of this 19 subsection. 20 [(15) In the case of an attorney-in-fact, with respect to which a 21 mutual insurance company, which is an interinsurer or a reciprocal 22 insurer and is subject to tax under subdivision (a) of section fifteen 23 hundred ten of this chapter, has made the election provided for under 24 section eight hundred thirty-five of the Internal Revenue Code, an 25 amount equal to the excess, if any, of the amounts paid or incurred by 26 such interinsurer or reciprocal insurer in the taxable year to the 27 attorney-in-fact over the deduction allowed to such interinsurer or 28 reciprocal insurer with respect to amounts paid or incurred in the taxa- 29 ble year to the attorney-in-fact under subsection (b) of such section 30 eight hundred thirty-five of the Internal Revenue Code.] 31 (16) In the case of a taxpayer subject to the modification provided by 32 subparagraph sixteen of paragraph (b) of this subdivision, the amount 33 required to be recaptured pursuant to subsection (d) of section 179 of 34 the internal revenue code with respect to property upon which such 35 modification was based. 36 (17) FOR TAXABLE YEARS BEGINNING AFTER DECEMBER THIRTY-FIRST, TWO 37 THOUSAND TWO, THE AMOUNT DEDUCTIBLE PURSUANT TO PARAGRAPH (N-1) OF THIS 38 SUBDIVISION. 39 (18) the amount of income or gain included in federal taxable income 40 of a taxpayer that is a partner in a qualified entity or is a qualified 41 entity that is located both within and without a New York state inno- 42 vation hot spot, to the extent that the income or gain is attributable 43 to the operations of a qualified entity at or as part of the New York 44 state innovation hot spot as provided in section thirty-eight of this 45 chapter. 46 (19) THE AMOUNT COMPUTED PURSUANT TO PARAGRAPH (R) OR (S) OF THIS 47 SUBDIVISION, BUT NOT BOTH SUCH AMOUNTS. 48 (b) Entire net income shall be determined without the exclusion, 49 deduction or credit of: 50 (1) [the amount of any specific exemption or credit allowed in any law 51 of the United States imposing any tax on or measured by the income of 52 corporations,] IN THE CASE OF A CORPORATION ORGANIZED UNDER THE LAW OF A 53 COUNTRY OTHER THAN THE UNITED STATES, EXCEPT AS TREATED AS OTHER EXEMPT 54 INCOME UNDER SUBDIVISION SIX-A OF THIS SECTION, (I) ANY PART OF ANY 55 INCOME FROM DIVIDENDS OR INTEREST ON ANY KIND OF STOCK, SECURITIES OR 56 INDEBTEDNESS, BUT ONLY IF SUCH INCOME IS TREATED AS EFFECTIVELY S. 6359--C 16 1 CONNECTED WITH THE CONDUCT OF A TRADE OR BUSINESS IN THE UNITED STATES 2 PURSUANT TO SECTION 864 OF THE INTERNAL REVENUE CODE, (II) ANY INCOME 3 EXEMPT FROM FEDERAL TAXABLE INCOME UNDER ANY TREATY OBLIGATION OF THE 4 UNITED STATES, BUT ONLY IF SUCH INCOME WOULD BE TREATED AS EFFECTIVELY 5 CONNECTED IN ABSENCE OF SUCH EXEMPTION PROVIDED THAT SUCH TREATY OBLI- 6 GATION DOES NOT PRECLUDE THE TAXATION OF SUCH INCOME BY A STATE, OR 7 (III) ANY INCOME WHICH WOULD BE TREATED AS EFFECTIVELY CONNECTED IF SUCH 8 INCOME WERE NOT EXCLUDED FROM GROSS INCOME PURSUANT TO SUBSECTION (A) OF 9 SECTION 103 OF THE INTERNAL REVENUE CODE; 10 (2) any part of any income from dividends or interest on any kind of 11 stock, securities or indebtedness, [except as provided in clauses (1) 12 and (2) of paragraph (a) hereof] TREATED AS OTHER EXEMPT INCOME UNDER 13 SUBDIVISION SIX-A OF THIS SECTION, 14 (3) taxes on or measured by profits or income paid or accrued to the 15 United States, any of its possessions or to any foreign country, includ- 16 ing taxes in lieu of any of the foregoing taxes otherwise generally 17 imposed by any foreign country or by any possession of the United 18 States, 19 (3-a) taxes on or measured by profits or income, or which include 20 profits or income as a measure, paid or accrued to any other state of 21 the United States, or any political subdivision thereof, or to the 22 District of Columbia, including taxes expressly in lieu of any of the 23 foregoing taxes otherwise generally imposed by any other state of the 24 United States, or any political subdivision thereof, or the District of 25 Columbia; 26 (4) taxes imposed under this article and article thirty-two AS IN 27 EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN and sections one 28 hundred eighty-three, one hundred eighty-three-a, one hundred eighty- 29 four and one hundred eighty-four-a of this chapter, 30 (4-a)(A) [the entire amount allowable as an exclusion or deduction for 31 stock transfer taxes imposed by article twelve of this chapter in deter- 32 mining the entire taxable income which the taxpayer is required to 33 report to the United States treasury department but only to the extent 34 that such taxes are incurred and paid in market making transactions, 35 (B)] in those instances where a credit for the special additional mort- 36 gage recording tax credit is allowed under [paragraph (a) of] subdivi- 37 sion [seventeen] NINE of section two hundred [ten] TEN-B of this arti- 38 cle, the amount allowed as an exclusion or deduction for the special 39 additional mortgage recording tax imposed by subdivision one-a of 40 section two hundred fifty-three of this chapter in determining the 41 entire taxable income which the taxpayer is required to report to the 42 United States treasury department, and [(C)] (B) unless the credit 43 allowed pursuant to subdivision [seventeen] NINE of section two hundred 44 [ten] TEN-B of this article is reflected in the computation of the gain 45 or loss so as to result in an increase in such gain or decrease of such 46 loss, for federal income tax purposes, from the sale or other disposi- 47 tion of the property with respect to which the special additional mort- 48 gage recording tax imposed pursuant to subdivision one-a of section two 49 hundred fifty-three of this chapter was paid, the amount of the special 50 additional mortgage recording tax imposed by subdivision one-a of 51 section two hundred fifty-three of this chapter which was paid and which 52 is reflected in the computation of the basis of the property so as to 53 result in a decrease in such gain or increase in such loss for federal 54 income tax purposes from the sale or other disposition of the property 55 with respect to which such tax was paid. S. 6359--C 17 1 (6) [in the discretion of the tax commission, any amount of interest 2 directly or indirectly and any other amount directly or indirectly 3 attributable as a carrying charge or otherwise to subsidiary capital or 4 to income, gains or losses from subsidiary capital] ANY AMOUNT ALLOWED 5 AS A DEDUCTION FOR THE TAXABLE YEAR UNDER SECTION 172 OF THE INTERNAL 6 REVENUE CODE, INCLUDING CARRYOVERS OF DEDUCTIONS FROM PRIOR TAXABLE 7 YEARS. 8 [(7) in the case of a taxpayer who is separately or as a partner of a 9 partnership doing an insurance business as a member of the New York 10 insurance exchange described in section six thousand two hundred one of 11 the insurance law, such taxpayer's distributive or pro rata share of the 12 allocated entire net income of such business as determined under 13 sections fifteen hundred three and fifteen hundred four of this chapter, 14 provided however, in the event such allocated entire net income is a 15 loss, such taxpayer's distributive or pro rata share of such loss shall 16 not be subtracted from federal taxable income in computing entire net 17 income under this subdivision.] 18 (8) for taxable years beginning after December thirty-first, nineteen 19 hundred eighty-one, except with respect to property which is a qualified 20 mass commuting vehicle described in subparagraph (D) of paragraph eight 21 of subsection (f) of section one hundred sixty-eight of the internal 22 revenue code (relating to qualified mass commuting vehicles) and proper- 23 ty of a taxpayer principally engaged in the conduct of aviation (other 24 than air freight forwarders acting as principal and like indirect air 25 carriers) which is placed in service before taxable years beginning in 26 nineteen hundred eighty-nine, any amount which the taxpayer claimed as a 27 deduction in computing its federal taxable income solely as a result of 28 an election made pursuant to the provisions of such paragraph eight as 29 it was in effect for agreements entered into prior to January first, 30 nineteen hundred eighty-four; 31 (9) for taxable years beginning after December thirty-first, nineteen 32 hundred eighty-one, except with respect to property which is a qualified 33 mass commuting vehicle described in subparagraph (D) of paragraph eight 34 of subsection (f) of section one hundred sixty-eight of the internal 35 revenue code (relating to qualified mass commuting vehicles) and proper- 36 ty of a taxpayer principally engaged in the conduct of aviation (other 37 than air freight forwarders acting as principal and like indirect air 38 carriers) which is placed in service before taxable years beginning in 39 nineteen hundred eighty-nine, any amount which the taxpayer would have 40 been required to include in the computation of its federal taxable 41 income had it not made the election permitted pursuant to such paragraph 42 eight as it was in effect for agreements entered into prior to January 43 first, nineteen hundred eighty-four; 44 (10) in the case of property placed in service in taxable years begin- 45 ning before nineteen hundred ninety-four, for taxable years beginning 46 after December thirty-first, nineteen hundred eighty-one, except with 47 respect to property subject to the provisions of section two hundred 48 eighty-F of the internal revenue code, property subject to the 49 provisions of section one hundred sixty-eight of the internal revenue 50 code which is placed in service in this state in taxable years beginning 51 after December thirty-first, nineteen hundred eighty-four and property 52 of a taxpayer principally engaged in the conduct of aviation (other than 53 air freight forwarders acting as principal and like indirect air carri- 54 ers) which is placed in service before taxable years beginning in nine- 55 teen hundred [eight-nine] EIGHTY-NINE, the amount allowable as a S. 6359--C 18 1 deduction determined under section one hundred sixty-eight of the inter- 2 nal revenue code; 3 (11) upon the disposition of property to which paragraph (j) of this 4 subdivision applies, the amount, if any, by which the aggregate of the 5 amounts described in such paragraph (j) attributable to such property 6 exceeds the aggregate of the amounts described in subparagraph ten of 7 this paragraph attributable to such property. 8 (15) Real property taxes paid on qualified agricultural property and 9 deducted in determining federal taxable income, to the extent of the 10 amount of the agricultural property tax credit allowed under subdivision 11 [twenty-two] ELEVEN of section two hundred [ten] TEN-B of this article. 12 (16) In the case of a taxpayer which is not an eligible farmer as 13 defined in paragraph (b) of subdivision [twenty-two] ELEVEN of section 14 two hundred [ten] TEN-B of this article, the amount of any deduction 15 claimed pursuant to section 179 of the internal revenue code with 16 respect to a sport utility vehicle which is not a passenger automobile 17 as defined in paragraph 5 of subsection (d) of section 280F of the 18 internal revenue code. 19 (17) for taxable years beginning after December thirty-first, two 20 thousand two, in the case of qualified property described in paragraph 21 two of subsection k of section 168 of the internal revenue code, other 22 than qualified resurgence zone property described in paragraph (q) of 23 this subdivision, and other than qualified New York Liberty Zone proper- 24 ty described in paragraph two of subsection b of section 1400L of the 25 internal revenue code (without regard to clause (i) of subparagraph (C) 26 of such paragraph), which was placed in service on or after June first, 27 two thousand three, the amount allowable as a deduction under section 28 167 of the internal revenue code. 29 (18) Premiums paid for environmental remediation insurance, as defined 30 in section twenty-three of this chapter, and deducted in determining 31 federal taxable income, to the extent of the amount of the environmental 32 remediation insurance credit allowed under such section twenty-three and 33 subdivision [thirty-five] NINETEEN of section two hundred [ten] TEN-B of 34 this article. 35 (19) The amount of any deduction allowed pursuant to section one 36 hundred ninety-nine of the internal revenue code. 37 (20) The amount of any federal deduction for taxes imposed under arti- 38 cle twenty-three of this chapter. 39 (20-a) The amount of any federal deduction for the excise tax on tele- 40 communication services to the extent such taxes are used as the basis of 41 the calculation of the tax-free NY area excise tax on telecommunication 42 services credit allowed under subdivision [forty-eight] FORTY-THREE of 43 section two hundred [ten] TEN-B of this article. 44 [(c) Entire net income shall include income within and without the 45 United States;] (21) THE AMOUNT OF ANY FEDERAL DEDUCTION FOR REAL PROP- 46 ERTY TAXES TO THE EXTENT SUCH TAXES ARE USED AS THE BASIS OF THE CALCU- 47 LATION OF THE REAL PROPERTY TAX CREDIT FOR MANUFACTURERS ALLOWED UNDER 48 SUBDIVISION FORTY-FOUR OF SECTION TWO HUNDRED TEN-B OF THIS ARTICLE. 49 (c-1)(1) Notwithstanding any other provision of this article, in the 50 case of a taxpayer which is a foreign air carrier holding a foreign air 51 carrier permit issued by the United States department of transportation 52 pursuant to section four hundred two of the federal aviation act of 53 nineteen hundred fifty-eight, as amended, and which is qualified under 54 subparagraph two of this paragraph, entire net income shall not include, 55 and shall be computed without the deduction of, amounts directly or 56 indirectly attributable to, (i) any income derived from the interna- S. 6359--C 19 1 tional operation of aircraft as described in and subject to the 2 provisions of section eight hundred eighty-three of the internal revenue 3 code, (ii) income without the United States which is derived from the 4 operation of aircraft, and (iii) income without the United States which 5 is of a type described in subdivision (a) of section eight hundred 6 eighty-one of the internal revenue code except that it is derived from 7 sources without the United States. Entire net income shall include 8 income described in clauses (i), (ii) and (iii) of this subparagraph in 9 the case of taxpayers not described in the previous sentence. 10 (2) A taxpayer is qualified under this subparagraph if air carriers 11 organized in the United States and operating in the foreign country or 12 countries in which the taxpayer has its major base of operations and in 13 which it is organized, resident or headquartered (if not in the same 14 country as its major base of operations) are not subject to any income 15 tax or other tax based on or measured by income or receipts imposed by 16 such foreign country or countries or any political subdivision thereof, 17 or if so subject to such tax, are provided an exemption from such tax 18 equivalent to that provided for herein. 19 (c-2) Adjustments by qualified public utilities. (1) In the case of a 20 taxpayer which is a qualified public utility, entire net income shall be 21 computed with the adjustments set forth in this paragraph. 22 (2) Definitions. (A) Qualified public utility. The term "qualified 23 public utility" means a taxpayer which: (i) on December thirty-first, 24 nineteen hundred ninety-nine, was subject to the ratemaking supervision 25 of the state department of public service, and (ii) for the year ending 26 on December thirty-first, nineteen hundred ninety-nine, was subject to 27 tax under former section one hundred eighty-six of this chapter. 28 (B) Transition property. The term "transition property" means property 29 placed in service by the taxpayer before January first, two thousand, 30 for which a depreciation deduction is allowed under section one hundred 31 sixty-seven of the internal revenue code. 32 (3) Federal depreciation disallowed. With respect to transition prop- 33 erty, the deduction for federal income tax purposes for depreciation 34 shall not be allowed. 35 (4) New York depreciation. With respect to transition property, a 36 deduction shall be allowed for the depreciation expense shown on the 37 books and records of the taxpayer for the taxable year and determined in 38 accordance with generally accepted accounting principles. 39 (5) Regulatory assets. A deduction shall be allowed for amounts recog- 40 nized as expense on the books and records of the taxpayer for the taxa- 41 ble year, which amounts were recognized as expense for federal income 42 tax purposes in a taxable year ending on or before December thirty- 43 first, nineteen hundred ninety-nine, where: (A) such amounts represent 44 expenditures which, when made, were charged to a deferred debit account 45 or similar asset account on the books and records of the taxpayer, and 46 where (B) the recognition of expense on the books and records of the 47 taxpayer is matched by revenue stemming from a procedure or adjustment 48 allowing the recovery of such expenditures, and where (C) such revenue 49 is recognized for federal income tax purposes in the taxable year. 50 (6) Basis for gain or loss. (A) Recognition transactions. (i) General 51 rule - book basis. Except as provided in subclause (ii) of this clause, 52 where transition property is sold or otherwise disposed of in the taxa- 53 ble year in a transaction of the type requiring recognition of gain or 54 loss for federal income tax purposes, the basis for determining the 55 amount of such gain or loss under this article shall be the cost of the 56 property less the accumulated depreciation on the property determined on S. 6359--C 20 1 the books and records of the taxpayer in accordance with generally 2 accepted accounting principles. 3 (ii) Qualified gain - New York basis. Where a sale or disposition 4 described in subclause (i) of this clause results in recognition of gain 5 for federal income tax purposes, and where either (I) such recognition 6 occurs in a taxable year ending after nineteen hundred ninety-nine and 7 before two thousand ten, or (II) such recognition is with respect to a 8 nuclear electric generating facility, the basis for determining the 9 amount of such gain under this article shall be the cost of the property 10 less the aggregate of the New York depreciation deductions on the prop- 11 erty determined under subparagraph four of this paragraph. 12 (iii) No conversion of gain to loss. In the event that the basis 13 determined under subclause (ii) of this clause results in determination 14 of a loss on the sale or disposition of the property, no gain or loss 15 shall be recognized under this article with respect to such sale or 16 disposition. 17 (B) Nonrecognition transactions. (i) Carryover basis. (I) where tran- 18 sition property is disposed of ("original disposition") in a transaction 19 of a type requiring deferral of recognition of gain or loss for federal 20 income tax purposes, and where (II) there is a subsequent recognition of 21 gain or loss for federal income tax purposes ("clause B gain or loss"), 22 the amount of which is determined by reference, in whole or in part, to 23 the basis of such transition property ("underlying transition proper- 24 ty"), then (III) the amount of such clause B gain or loss under this 25 article shall be adjusted as provided in subclause (ii) or (iii) of this 26 clause. 27 (ii) General rule - book basis adjustment. Except as provided in 28 subclause (iii) of this clause, the amount of clause B gain shall be 29 reduced, or the amount of clause B loss increased, by the amount by 30 which the book basis of the underlying transition property on the date 31 of original disposition (determined using the provisions of subclause 32 (i) of clause (A) of this subparagraph) exceeds the federal income tax 33 basis of such property on such date. 34 (iii) Qualified gain - New York basis adjustment. Where clause B gain 35 either (I) occurs in a taxable year ending after nineteen hundred nine- 36 ty-nine and before two thousand ten, or (II) is with respect to a nucle- 37 ar electric generating facility, the amount of such gain under this 38 article shall be reduced, but not below zero, by the amount by which the 39 New York basis of the underlying transition property on the date of 40 original disposition (determined using the provisions of subclause (ii) 41 of clause (A) of this subparagraph) exceeds the federal income tax basis 42 of such property on such date. 43 (iv) Application to replacement property and transferee taxpayers. 44 This clause shall apply whether the clause B gain or loss: (I) is with 45 respect to either transition property or depreciable property the basis 46 of which is determined by reference to transition property, or (II) is 47 recognized by either a qualified public utility or by a taxpayer which 48 is a transferee of transition property (whether or not such transferee 49 is a qualified public utility, notwithstanding subparagraph one of this 50 paragraph). 51 (c-3) Depreciation adjustments by qualified power producers and pipe- 52 line companies. (1) In the case of a qualified taxpayer, entire net 53 income shall be computed with the depreciation adjustments set forth in 54 this paragraph. 55 (2) Definitions. (A) Qualified taxpayer. The term "qualified taxpayer" 56 means a qualified power producer or a qualified pipeline. S. 6359--C 21 1 (B) Qualified power producer. The term "qualified power producer" 2 means a taxpayer which: (i) on December thirty-first, nineteen hundred 3 ninety-nine, was not subject to the ratemaking supervision of the state 4 department of public service, and (ii) for the year ending on December 5 thirty-first, nineteen hundred ninety-nine, was subject to tax under 6 former section one hundred eighty-six of this chapter on account of its 7 being principally engaged in the business of supplying electricity. 8 (C) Qualified pipeline. The term "qualified pipeline" means a taxpayer 9 which: (i) on December thirty-first, nineteen hundred ninety-nine, was 10 subject to the ratemaking supervision of either the federal energy regu- 11 latory commission or the state department of public service, and (ii) 12 for the year ending on December thirty-first, nineteen hundred ninety- 13 nine, was subject to tax under sections one hundred eighty-three and one 14 hundred eighty-four of this chapter on account of its being principally 15 engaged in the business of pipeline transmission. 16 (D) Transition property. The term "transition property" means property 17 placed in service by a qualified taxpayer before January first, two 18 thousand, for which a depreciation deduction is allowed under section 19 one hundred sixty-seven of the internal revenue code. 20 (3) Federal depreciation disallowed. With respect to transition prop- 21 erty, the deduction for federal income tax purposes for depreciation 22 shall not be allowed. 23 (4) New York depreciation. With respect to transition property, a 24 deduction shall be allowed for the depreciation expense computed as 25 provided in this subparagraph. (A) All transition property shown on the 26 books and records of the taxpayer on January first, two thousand shall 27 be treated as a single asset placed in service on such date. The New 28 York basis for purposes of computing the depreciation deduction on such 29 single asset shall be the net book value of such transition property 30 determined on the first day of the federal taxable year ending in two 31 thousand (or on the date any such property is placed in service, if 32 later) adjusted as provided in clause (B) of this subparagraph. 33 (B) If transition property is sold or otherwise disposed of, the New 34 York basis of the single asset shall be reduced on the date of such sale 35 or disposition by the amount of the adjusted federal tax basis of such 36 property on such date. 37 (C) The New York depreciation deduction allowed for any taxable year 38 with respect to such single asset shall be computed using the straight- 39 line method, a twenty-year life, and a salvage value of zero. 40 (D) For purposes of this subparagraph, the term "net book value" means 41 cost reduced by accumulated depreciation shown on the books and records 42 of the taxpayer and determined, in the case of a qualified power produc- 43 er, in accordance with generally accepted accounting principles; and in 44 the case of a qualified pipeline, in accordance with the taxpayer's 45 regulatory reports filed with the federal energy regulatory commission 46 or state department of public service. 47 (d) The [tax commission] COMMISSIONER may, whenever necessary in order 48 properly to reflect the entire net income of any taxpayer, determine the 49 year or period in which any item of income or deduction shall be 50 included, without regard to the method of accounting employed by the 51 taxpayer[;]. 52 (e) The entire net income of any bridge commission created by act of 53 congress to construct a bridge across an international boundary means 54 its gross income less the expense of maintaining and operating its prop- 55 erties, the annual interest upon its bonds and other obligations, and S. 6359--C 22 1 the annual charge for the retirement of such bonds or obligations at 2 maturity[;]. 3 [(f) A net operating loss deduction shall be allowed which shall be 4 presumably the same as the net operating loss deduction allowed under 5 section one hundred seventy-two of the internal revenue code, or which 6 would have been allowed if the taxpayer had not made an election under 7 subchapter s of chapter one of the internal revenue code, except that in 8 every instance where such deduction is allowed under this article: 9 (1) any net operating loss included in determining such deduction 10 shall be adjusted to reflect the inclusions and exclusions from entire 11 net income required by paragraphs (a), (b) and (g) hereof, 12 (2) such deduction shall not include any net operating loss sustained 13 during any taxable year beginning prior to January first, nineteen 14 hundred sixty-one, or during any taxable year in which the taxpayer was 15 not subject to the tax imposed by this article, 16 (3) such deduction shall not exceed the deduction for the taxable year 17 allowed under section one hundred seventy-two of the internal revenue 18 code, or the deduction for the taxable year which would have been 19 allowed if the taxpayer had not made an election under subchapter s of 20 chapter one of the internal revenue code, 21 (4) in the case of a New York S corporation, such deduction shall not 22 include any net operating loss sustained during a New York C year or 23 during a New York S year beginning prior to nineteen hundred ninety, and 24 in the case of a New York C corporation, such deduction shall not 25 include any net operating loss sustained during a New York S year, 26 provided, however, a New York S year shall be treated as a taxable year 27 for purposes of determining the number of taxable years to which a net 28 operating loss may be carried back or carried forward, and 29 (5) the net operating loss deduction allowed under section one hundred 30 seventy-two of the internal revenue code shall for purposes of this 31 paragraph be determined as if the taxpayer had elected under such 32 section to relinquish the entire carryback period with respect to net 33 operating losses, except with respect to the first ten thousand dollars 34 of each of such losses, sustained during taxable years ending after June 35 thirtieth, nineteen hundred eighty-nine. 36 (g) For taxable years commencing prior to January first, nineteen 37 hundred eighty-seven, at the election of the taxpayer, a deduction shall 38 be allowed for expenditures paid or incurred during the taxable year for 39 the construction, reconstruction, erection or improvement of either 40 industrial waste treatment facilities or air pollution control facili- 41 ties, or, with respect to taxable years beginning on or after January 42 first, nineteen hundred seventy-seven and before January first, nineteen 43 hundred eighty-one, industrial waste treatment controlled process facil- 44 ities or air pollution controlled process facilities. 45 (1) (A) (1) The term "industrial waste treatment facilities" shall 46 mean facilities for the treatment, neutralization or stabilization of 47 industrial waste and other wastes (as the terms "industrial waste" and 48 "other wastes" are defined in section 17-0105 of the environmental 49 conservation law) from a point immediately preceding the point of such 50 treatment, neutralization or stabilization to the point of disposal, 51 including the necessary pumping and transmitting facilities. 52 (2) The term "industrial waste treatment controlled process facility" 53 shall mean such portion of the cost of an industrial production facility 54 designed for the purpose of obviating the need for industrial waste 55 treatment facilities as defined in item one of this clause as shall 56 exceed the cost of an industrial production facility of equal production S. 6359--C 23 1 capacity which if constructed would require industrial waste treatment 2 facilities to meet emission standards in compliance with the provisions 3 of the environmental conservation law and the codes, rules, regulations, 4 permits or orders issued pursuant thereto but only to the extent of the 5 cost of such industrial waste treatment facilities. 6 (B) (1) The term "air pollution control facilities" shall mean facili- 7 ties which remove, reduce, or render less noxious air contaminants emit- 8 ted from an air contamination source (as the terms "air contaminant" and 9 "air contamination source" are defined in section 19-0107 of the envi- 10 ronmental conservation law) from a point immediately preceding the point 11 of such removal, reduction or rendering to the point of discharge of 12 air, meeting emission standards as established by the department of 13 environmental conservation, but excluding such facilities installed for 14 the primary purpose of salvaging materials which are usable in the manu- 15 facturing process or are marketable and excluding those facilities which 16 rely for their efficacy on dilution, dispersion or assimilation of air 17 contaminants in the ambient air after emission. Such term shall further 18 include flue gas desulfurization equipment and attendant sludge disposal 19 facilities, fluidized bed boilers, precombustion coal cleaning facili- 20 ties or other facilities that conform with this subdivision and which 21 comply with the provisions of the state acid deposition control act set 22 forth in title nine of article nineteen of the environmental conserva- 23 tion law. 24 (2) The term "air pollution controlled process facility" shall mean 25 such portion of the cost of an industrial production facility designed 26 for the purpose of obviating the need for air pollution control facili- 27 ties as defined in item one of this clause as shall exceed the cost of 28 an industrial production facility of equal productive capacity which if 29 constructed would require air pollution control facilities to inert 30 emission standards as established pursuant to title three of article 31 nineteen of the environmental conservation law but only to the extent of 32 the cost of such air pollution control facilities. 33 (2) However, such deduction shall be allowed only 34 (A) with respect to tangible property which is depreciable, pursuant 35 to section one hundred sixty-seven of the internal revenue code, having 36 a situs in this state and used in the taxpayer's trade or business, the 37 construction, reconstruction, erection or improvement of which, in the 38 case of industrial waste treatment facilities, is initiated on or after 39 January first, nineteen hundred sixty-five or which, in the case of air 40 pollution control facilities, is initiated on or after January first, 41 nineteen hundred sixty-six, or which in the case of industrial waste 42 treatment controlled process facilities or air pollution controlled 43 process facilities is initiated on and after January first, nineteen 44 hundred seventy-seven, and 45 (B) on condition that such facilities have been certified by the state 46 commissioner of environmental conservation or his designated represen- 47 tative, pursuant to section 19-0309 of the environmental conservation 48 law, as complying with applicable provisions of the environmental 49 conservation law, the public health law, the state sanitary code and 50 codes, rules, regulations, permits or orders issued pursuant thereto, 51 and 52 (C) on condition that entire net income for the taxable year and all 53 succeeding taxable years be computed without any deductions for such 54 expenditures or for depreciation or amortization of the same property 55 other than the deductions allowed by this paragraph (g), except to the 56 extent that the basis of the property may be attributable to factors S. 6359--C 24 1 other than such expenditures, or in case a deduction is allowable pursu- 2 ant to this paragraph for only a part of such expenditures, on condition 3 that any deduction allowed for federal income tax purposes for such 4 expenditures or for depreciation or amortization of the same property be 5 proportionately reduced in computing entire net income for the taxable 6 year and all succeeding taxable years, and 7 (D) where the election provided for in paragraph (d) of subdivision 8 three of section two hundred ten of this chapter has not been exercised 9 in respect to the same property. 10 (3) (A) If expenditures in respect to an industrial waste treatment 11 facility, an air pollution control facility, an industrial waste treat- 12 ment controlled process facility or an air pollution controlled process 13 facility have been deducted as provided herein and if within ten years 14 from the end of the taxable year in which such deduction was allowed 15 such property or any part thereof is used for the primary purpose of 16 salvaging materials which are usable in the manufacturing process or are 17 marketable, the taxpayer shall report such change of use in its report 18 for the first taxable year during which it occurs, and the tax commis- 19 sion may recompute the tax for the year or years for which such 20 deduction was allowed and any carryback or carryover year, and may 21 assess any additional tax resulting from such recomputation within the 22 time fixed by paragraph nine of subsection (c) of section ten hundred 23 eighty-three of this chapter. 24 (B) If a deduction is allowed as herein provided for expenditures paid 25 or incurred during any taxable year on the basis of a temporary certif- 26 icate of compliance issued pursuant to the environmental conservation 27 law and if the taxpayer fails to obtain a permanent certificate of 28 compliance upon completion of the facilities with respect to which such 29 temporary certificate was issued, the taxpayer shall report such failure 30 in its report for the taxable year during which such facilities are 31 completed, and the tax commission may recompute the tax for the year or 32 years for which such deduction was allowed and any carryback or carry- 33 over year, and may assess any additional tax resulting from in such 34 recomputation within the time fixed by paragraph nine of subsection (c) 35 of section ten hundred eighty-three. 36 (C) If a deduction is allowed as herein provided for expenditures paid 37 or incurred during any taxable year in respect to an air pollution 38 control facility on the basis of a certificate of compliance issued 39 pursuant to the environmental conservation law and the certificate is 40 revoked pursuant to subdivision three of section 19-0309 of the environ- 41 mental conservation law, the tax commission may recompute the tax for 42 the year or years for which the facility is not or was not in compliance 43 with the applicable provisions of the environmental conservation law, 44 the state sanitary code or codes, rules, regulations, permits or orders 45 promulgated pursuant thereto, and for which a deduction was allowed, as 46 well as for any carryback or carryover year to which such deduction was 47 carried, and may assess any additional tax resulting from such recompu- 48 tation within the time fixed by paragraph nine of subsection (c) of 49 section ten hundred eighty-three. 50 (4) In any taxable year when property is sold or otherwise disposed 51 of, with respect to which a deduction has been allowed pursuant to this 52 paragraph, such deduction shall be disregarded in computing gain or 53 loss, and the gain or loss on the sale or other disposition of such 54 property shall be the gain or loss entering into the computation of 55 entire taxable income which the taxpayer is required to report to the 56 United States treasury department for such taxable year.] S. 6359--C 25 1 (h) If the period covered by a report under this article is other than 2 the period covered by the report to the United States treasury depart- 3 ment, 4 (1) except as provided in subparagraph two hereof, entire net income 5 shall be determined by multiplying the taxable income reported to such 6 department (as adjusted pursuant to the provisions of this article) by 7 the number of calendar months or major parts thereof covered by the 8 report under this article and dividing by the number of calendar months 9 or major parts thereof covered by the report to such department. If it 10 shall appear that such method of determining entire net income does not 11 properly reflect the taxpayer's income during the period covered by the 12 report under this article, the [tax commission] COMMISSIONER shall be 13 authorized in its discretion to determine such entire net income solely 14 on the basis of the taxpayer's income during the period covered by its 15 report under this article[;]. 16 (2) [in] IN the case of a New York S termination year, an equal 17 portion of entire net income shall be assigned to each day of such year. 18 The portion of such entire net income thereby assigned to the S short 19 year and the C short year shall be included in the respective reports 20 for the S short year and the C short year under this article. However, 21 where paragraph three of subsection (s) of section six hundred twelve of 22 this chapter applies, the portion of such entire net income assigned to 23 the S short year and the C short year shall be determined under normal 24 tax accounting rules. 25 (i) With respect to a DISC which during any taxable year or reporting 26 year (1) received more than five percent of its gross sales from the 27 sale of inventory or other property which it purchased from its stock- 28 holders, (2) received more than five percent of its gross rentals from 29 the rental of property which it purchased or rented from its stockhold- 30 ers or (3) received more than five percent of its total receipts other 31 than sales and rentals from its stockholders, the following provisions 32 shall apply. 33 (A) For any taxable year in which sub-paragraph (B) of this paragraph 34 is in effect and not rendered invalid, a DISC meeting the above test 35 shall be exempt from all taxes imposed by this article. 36 (B) Supplemental to the provisions of subdivision five of section two 37 hundred eleven of this article, any taxpayer required to compute a tax 38 under this article, which during the taxable year being reported was a 39 stockholder in any DISC meeting the test prescribed in this paragraph, 40 shall for any taxable year ending after December thirty-first, nineteen 41 hundred seventy-one adjust each item of its receipts, expenses, assets 42 and liabilities, as otherwise computed under this article, by adding 43 thereto its attributable share of each such DISC's receipts, expenses, 44 assets and liabilities as reportable by each such DISC to the United 45 States Treasury Department for its annual reporting period ending during 46 the current taxable year of such taxpayer; provided, however, (1) that 47 all transactions between the taxpayer and each such DISC shall be elimi- 48 nated from the taxpayer's adjusted receipts, expenses, assets and 49 liabilities; (2) that the taxpayer's entire net income as otherwise 50 computed under this section, shall be reduced by subtracting the amount 51 of the deemed distribution of current income, if any, from each such 52 DISC already included in the entire net income of such taxpayer by 53 virtue of having been included in its entire taxable income for that 54 taxable year as reported to the United States Treasury Department; and 55 (3) that in the event this paragraph should be rendered invalid, all S. 6359--C 26 1 DISC's and their stockholders taxable hereunder shall be taxed instead 2 under the remaining portions of this article. 3 (j) in the case of property placed in service in taxable years begin- 4 ning before nineteen hundred ninety-four, for taxable years beginning 5 after December thirty-first, nineteen hundred eighty-one, except with 6 respect to property subject to the provisions of section two hundred 7 eighty-F of the internal revenue code and property subject to the 8 provisions of section one hundred sixty-eight of the internal revenue 9 code which is placed in service in this state in taxable years beginning 10 after December thirty-first, nineteen hundred eighty-four, and provided 11 a deduction has not been excluded from entire net income pursuant to 12 subparagraph eight of paragraph (b) of this subdivision, a taxpayer 13 shall be allowed with respect to property which is subject to the 14 provisions of section one hundred sixty-eight of the internal revenue 15 code the depreciation deduction allowable under section one hundred 16 sixty-seven of the internal revenue code as such section would have 17 applied to property placed in service on December thirty-first, nineteen 18 hundred eighty. This paragraph shall not apply to property of a taxpayer 19 principally engaged in the conduct of aviation (other than air freight 20 forwarders acting as principal and like indirect air carriers) which is 21 placed in service before taxable years beginning in nineteen hundred 22 eighty-nine. 23 (k) QSSS. (1) New York S corporation. In the case of a New York S 24 corporation which is the parent of a qualified subchapter S subsidiary 25 (QSSS) with respect to a taxable year: 26 (A) where the QSSS is not an excluded corporation, 27 (i) in determining the entire net income of such parent corporation, 28 all assets, liabilities, income and deductions of the QSSS shall be 29 treated as assets, liabilities, income and deductions of the parent 30 corporation, and 31 (ii) the QSSS shall be exempt from all taxes imposed by this article, 32 and 33 (B) where the QSSS is an excluded corporation, the entire net income 34 of the parent corporation shall be determined as if the federal QSSS 35 election had not been made. 36 (2) New York C corporation. In the case of a New York C corporation 37 which is the parent of a QSSS with respect to a taxable year: 38 (A) where the QSSS is a taxpayer, 39 (i) in determining the entire net income of such parent corporation, 40 all assets, liabilities, income and deductions of the QSSS shall be 41 treated as assets, liabilities, income and deductions of the parent 42 corporation, and 43 (ii) the QSSS shall be exempt from all taxes imposed by this article, 44 and 45 (B) where the QSSS is not a taxpayer, 46 (i) if the QSSS is not an excluded corporation, the parent corporation 47 may make a QSSS inclusion election to include all assets, liabilities, 48 income and deductions of the QSSS as assets, liabilities, income and 49 deductions of the parent corporation, and 50 (ii) in the absence of such election, or where the QSSS is an excluded 51 corporation, the entire net income of the parent corporation shall be 52 determined as if the federal QSSS election had not been made. 53 (3) Non-New York S corporation not excluded. In the case of an S 54 corporation which is not a taxpayer and not an excluded corporation, and 55 which is the parent of a QSSS which is a taxpayer, the shareholders of S. 6359--C 27 1 the parent corporation shall be entitled to make the New York S election 2 under subsection (a) of section six hundred sixty of this chapter. 3 (A) For any taxable year for which such election is in effect, the 4 parent corporation shall be subject to tax under this article as a New 5 York S corporation, and the provisions of clause (A) of subparagraph one 6 of this paragraph shall apply. 7 (B) For any taxable year for which such election is not in effect, the 8 QSSS shall be a New York C corporation, and the entire net income of the 9 QSSS shall be determined as if the federal QSSS election had not been 10 made. For purposes of such determination, the taxable year of the parent 11 corporation shall constitute the taxable year of the QSSS, excluding, 12 however, any portion of such year during which the QSSS is not a taxpay- 13 er. 14 (4) S corporation excluded. In the case of an S corporation which is 15 an excluded corporation and which is the parent of a QSSS which is a 16 taxpayer, the QSSS shall be a New York C corporation and the provisions 17 of clause (B) of subparagraph three of this paragraph shall apply. 18 (5) Excluded corporation. The term "excluded corporation" means a 19 corporation subject to tax under sections one hundred eighty-three 20 through one hundred eighty-six, inclusive, or article [thirty-two or] 21 thirty-three of this chapter, or a foreign corporation not taxable by 22 this state which, if it were taxable, would be subject to tax under any 23 of such sections or [articles] ARTICLE. 24 (6) Taxpayer. For purposes of this paragraph, the term "taxpayer" 25 means a parent corporation or QSSS subject to tax under this article, 26 determined without regard to the provisions of this paragraph. 27 (7) QSSS inclusion election. The election under subclause (i) of 28 clause (B) of subparagraph two of this paragraph shall be effective for 29 the taxable year for which made and for all succeeding taxable years of 30 the corporation until such election is terminated. An election or termi- 31 nation shall be made on such form and in such manner as the commissioner 32 may prescribe by regulation or instruction. 33 (l) Emerging technology investment deferral. In the case of any sale 34 of a qualified emerging technologies investment held for more than thir- 35 ty-six months and with respect to which the taxpayer elects the applica- 36 tion of this paragraph, gain from such sale shall be recognized only to 37 the extent that the amount realized on such sale exceeds the cost of any 38 qualified emerging technologies investment purchased by the taxpayer 39 during the three hundred sixty-five-day period beginning on the date of 40 such sale, reduced by any portion of such cost previously taken into 41 account under this paragraph. For purposes of this paragraph the follow- 42 ing shall apply: 43 (1) A qualified investment is stock of a corporation or an interest, 44 other than as a creditor, in a partnership or limited liability company 45 that was acquired by the taxpayer as provided in Internal Revenue Code S 46 1202(c)(1)(B), except that the reference to the term "stock" in such 47 section shall be read as "investment," or by the taxpayer from a person 48 who had acquired such stock or interest in such a manner. 49 (2) A qualified emerging technology investment is a qualified invest- 50 ment, that was held by the taxpayer for at least thirty-six months, in a 51 company defined in paragraph (c) of subdivision one of section thirty- 52 one hundred two-e of the public authorities law or an investment in a 53 partnership or limited liability company that is taxed as a partnership 54 to the extent that such partnership or limited liability company invests 55 in qualified emerging technology companies. S. 6359--C 28 1 (3) For purposes of determining whether the nonrecognition of gain 2 under this subsection applies to a qualified emerging technologies 3 investment that is sold, the taxpayer's holding period for such invest- 4 ment and the qualified emerging technologies investment that is 5 purchased shall be determined without regard to Internal Revenue Code S 6 1223. 7 (m) Amounts deferred. The amount deferred under paragraph (l) of this 8 subdivision shall be added to entire net income when the reinvestment in 9 the New York qualified emerging technology company which qualified a 10 taxpayer for such deferral is sold. 11 [(n) Qualified gas transportation contracts. 12 (1) Any tax paid under this article allocable to receipts attributable 13 to a "qualified gas transportation contract" shall be deemed to have 14 been paid under article nine of this chapter for all purposes of law for 15 taxable years commencing on or after January first, two thousand, 16 computed as hereinafter provided, if all of the following conditions are 17 met: 18 (i) For periods ending prior to January first, two thousand, the 19 taxpayer paid the franchise tax due under section one hundred eighty- 20 four of this chapter. 21 (ii) For the taxable year, all of the receipts from the pipeline 22 transportation of natural gas attributable to the taxpayer and included 23 in the taxpayer's entire net income (without regard to this paragraph) 24 are solely from the transportation of natural gas for wholesale custom- 25 ers and commercial retail customers. 26 (iii) The taxpayer's franchise tax liability under this article for 27 the taxable year (computed without regard to this paragraph) is deter- 28 mined under paragraph (a) of subdivision one of section two hundred ten 29 of this article, and such tax liability (without regard to this para- 30 graph) is greater than the liability the taxpayer would have incurred 31 under sections one hundred eighty-three and one hundred eighty-four of 32 this chapter (as such sections existed on December thirty-first, nine- 33 teen hundred ninety-nine) based on the same taxable period. 34 (iv) The taxpayer is a party to a "qualified gas transportation 35 contract," as defined herein. 36 (2) The provisions of this paragraph shall apply only for the taxable 37 years during which such qualified gas transportation contract is in full 38 force and effect, and shall apply only to the receipts of the taxpayer 39 less any expenses of the taxpayer (but not less than zero), during the 40 taxable year, to the extent included in entire net income, which are 41 attributable to any such qualified gas transportation contracts. 42 Provided, further, in any event, the characterization hereunder shall 43 expire and be of no further force and effect for taxable years commenc- 44 ing on or after January first, two thousand fifteen. 45 (3) The term "qualified gas transportation contract" shall mean a 46 service agreement for the transportation of natural gas for an end-user 47 which is a qualified cogeneration facility with a rated capacity of one 48 thousand megawatts or more, which (i) was entered into before January 49 first, two thousand, and was in full force and effect and binding on the 50 parties thereto as of such date, (ii) as originally executed, was for a 51 term of at least twenty years, and (iii) the terms of which prohibit the 52 pass-through to such customer of the franchise tax imposed under this 53 article, while allowing the recovery of the gross earnings tax imposed 54 under section one hundred eighty-four of this chapter. A contract shall 55 not qualify as a qualified gas transportation contract if there is: (i) 56 any renewal or extension of an otherwise qualified gas transportation S. 6359--C 29 1 contract occurring on or after January first, two thousand, or (ii) any 2 material amendment to, or supplementation of, an otherwise qualified gas 3 transportation contract on or after such date. Such renewal, extension, 4 or material amendment or supplementation shall have the same force and 5 effect of terminating the characterization hereunder as if the qualify- 6 ing contract had expired by its own terms. 7 (o)] (N-1) For taxable years beginning after December thirty-first, 8 two thousand two, in the case of qualified property described in para- 9 graph two of subsection k of section 168 of the internal revenue code, 10 other than qualified resurgence zone property described in paragraph (q) 11 of this subdivision, and other than qualified New York Liberty Zone 12 property described in paragraph two of subsection b of section 1400L of 13 the internal revenue code (without regard to clause (i) of subparagraph 14 (C) of such paragraph), which was placed in service on or after June 15 first, two thousand three, a taxpayer shall be allowed with respect to 16 such property the depreciation deduction allowable under section 167 of 17 the internal revenue code as such section would have applied to such 18 property had it been acquired by the taxpayer on September tenth, two 19 thousand one. 20 (o) Related members expense add back. (1) Definitions. (A) Related 21 member. "Related member" means a related person as defined in subpara- 22 graph (c) of paragraph three of subsection (b) of section four hundred 23 sixty-five of the internal revenue code, except that "fifty percent" 24 shall be substituted for "ten percent". 25 (B) Effective rate of tax. "Effective rate of tax" means, as to any 26 state or U.S. possession, the maximum statutory rate of tax imposed by 27 the state or possession on or measured by a related member's net income 28 multiplied by the apportionment percentage, if any, applicable to the 29 related member under the laws of said jurisdiction. For purposes of this 30 definition, the effective rate of tax as to any state or U.S. possession 31 is zero where the related member's net income tax liability in said 32 jurisdiction is reported on a combined or consolidated return including 33 both the taxpayer and the related member where the reported transactions 34 between the taxpayer and the related member are eliminated or offset. 35 Also, for purposes of this definition, when computing the effective rate 36 of tax for a jurisdiction in which a related member's net income is 37 eliminated or offset by a credit or similar adjustment that is dependent 38 upon the related member either maintaining or managing intangible prop- 39 erty or collecting interest income in that jurisdiction, the maximum 40 statutory rate of tax imposed by said jurisdiction shall be decreased to 41 reflect the statutory rate of tax that applies to the related member as 42 effectively reduced by such credit or similar adjustment. 43 (C) Royalty payments. Royalty payments are payments directly connected 44 to the acquisition, use, maintenance or management, ownership, sale, 45 exchange, or any other disposition of licenses, trademarks, copyrights, 46 trade names, trade dress, service marks, mask works, trade secrets, 47 patents and any other similar types of intangible assets as determined 48 by the commissioner, and include amounts allowable as interest 49 deductions under section one hundred sixty-three of the internal revenue 50 code to the extent such amounts are directly or indirectly for, related 51 to or in connection with the acquisition, use, maintenance or manage- 52 ment, ownership, sale, exchange or disposition of such intangible 53 assets. 54 (D) Valid Business Purpose. A valid business purpose is one or more 55 business purposes, other than the avoidance or reduction of taxation, 56 which alone or in combination constitute the primary motivation for some S. 6359--C 30 1 business activity or transaction, which activity or transaction changes 2 in a meaningful way, apart from tax effects, the economic position of 3 the taxpayer. The economic position of the taxpayer includes an increase 4 in the market share of the taxpayer, or the entry by the taxpayer into 5 new business markets. 6 (2) Royalty expense add backs. (A) Except where a taxpayer is included 7 in a combined report with a related member pursuant to [subdivision four 8 of] section two hundred [eleven] TEN-C of this article, for the purpose 9 of computing entire net income or other applicable taxable basis, a 10 taxpayer must add back royalty payments directly or indirectly paid, 11 accrued, or incurred in connection with one or more direct or indirect 12 transactions with one or more related members during the taxable year to 13 the extent deductible in calculating federal taxable income. 14 (B) Exceptions. (i) The adjustment required in this paragraph shall 15 not apply to the portion of the royalty payment that the taxpayer estab- 16 lishes, by clear and convincing evidence of the type and in the form 17 specified by the commissioner, meets all of the following requirements: 18 (I) the related member was subject to tax in this state or another state 19 or possession of the United States or a foreign nation or some combina- 20 tion thereof on a tax base that included the royalty payment paid, 21 accrued or incurred by the taxpayer; (II) the related member during the 22 same taxable year directly or indirectly paid, accrued or incurred such 23 portion to a person that is not a related member; and (III) the trans- 24 action giving rise to the royalty payment between the taxpayer and the 25 related member was undertaken for a valid business purpose. 26 (ii) The adjustment required in this paragraph shall not apply if the 27 taxpayer establishes, by clear and convincing evidence of the type and 28 in the form specified by the commissioner, that: (I) the related member 29 was subject to tax on or measured by its net income in this state or 30 another state or possession of the United States or some combination 31 thereof; (II) the tax base for said tax included the royalty payment 32 paid, accrued or incurred by the taxpayer; and (III) the aggregate 33 effective rate of tax applied to the related member in those jurisdic- 34 tions is no less than eighty percent of the statutory rate of tax that 35 applied to the taxpayer under section two hundred ten of this article 36 for the taxable year. 37 (iii) The adjustment required in this paragraph shall not apply if the 38 taxpayer establishes, by clear and convincing evidence of the type and 39 in the form specified by the commissioner, that: (I) the royalty payment 40 was paid, accrued or incurred to a related member organized under the 41 laws of a country other than the United States; (II) the related 42 member's income from the transaction was subject to a comprehensive 43 income tax treaty between such country and the United States; (III) the 44 related member was subject to tax in a foreign nation on a tax base that 45 included the royalty payment paid, accrued or incurred by the taxpayer; 46 (IV) the related member's income from the transaction was taxed in such 47 country at an effective rate of tax at least equal to that imposed by 48 this state; and (V) the royalty payment was paid, accrued or incurred 49 pursuant to a transaction that was undertaken for a valid business 50 purpose and using terms that reflect an arm's length relationship. 51 (iv) The adjustment required in this paragraph shall not apply if the 52 taxpayer and the commissioner agree in writing to the application or use 53 of alternative adjustments or computations. The commissioner may, in his 54 or her discretion, agree to the application or use of alternative 55 adjustments or computations when he or she concludes that in the absence S. 6359--C 31 1 of such agreement the income of the taxpayer would not be properly 2 reflected. 3 (p) For taxable years beginning after December thirty-first, two thou- 4 sand two, upon the disposition of property to which paragraph [(o)] 5 (N-1) of this subdivision applies, the amount of any gain or loss inclu- 6 dible in entire net income shall be adjusted to reflect the inclusions 7 and exclusions from entire net income pursuant to subparagraph seventeen 8 of paragraph (a) and subparagraph seventeen of paragraph (b) of this 9 subdivision attributable to such property. 10 (q) For purposes of paragraphs [(o)] (N-1) and (p) of this subdivi- 11 sion, qualified resurgence zone property shall mean qualified property 12 described in paragraph two of subsection k of section 168 of the inter- 13 nal revenue code substantially all of the use of which is in the resur- 14 gence zone, as defined below, and is in the active conduct of a trade or 15 business by the taxpayer in such zone, and the original use of which in 16 the resurgence zone commences with the taxpayer after December thirty- 17 first, two thousand two. The resurgence zone shall mean the area of New 18 York county bounded on the south by a line running from the intersection 19 of the Hudson River with the Holland Tunnel, and running thence east to 20 Canal Street, then running along the centerline of Canal Street to the 21 intersection of the Bowery and Canal Street, running thence in a south- 22 easterly direction diagonally across Manhattan Bridge Plaza, to the 23 Manhattan Bridge and thence along the centerline of the Manhattan Bridge 24 to the point where the centerline of the Manhattan Bridge would inter- 25 sect with the easterly bank of the East River, and bounded on the north 26 by a line running from the intersection of the Hudson River with the 27 Holland Tunnel and running thence north along West Avenue to the inter- 28 section of Clarkson Street then running east along the centerline of 29 Clarkson Street to the intersection of Washington Avenue, then running 30 south along the centerline of Washington Avenue to the intersection of 31 West Houston Street, then east along the centerline of West Houston 32 Street, then at the intersection of the Avenue of the Americas continu- 33 ing east along the centerline of East Houston Street to the easterly 34 bank of the East River. 35 (R) SUBTRACTION MODIFICATION FOR QUALIFIED RESIDENTIAL LOAN PORTFO- 36 LIOS. (1)(A) A TAXPAYER THAT IS EITHER A THRIFT INSTITUTION AS DEFINED 37 IN SUBPARAGRAPH THREE OF THIS PARAGRAPH OR A QUALIFIED COMMUNITY BANK AS 38 DEFINED IN SUBPARAGRAPH TWO OF PARAGRAPH (S) OF THIS SUBDIVISION AND 39 MAINTAINS A QUALIFIED RESIDENTIAL LOAN PORTFOLIO AS DEFINED IN SUBPARA- 40 GRAPH TWO OF THIS PARAGRAPH SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING 41 ENTIRE NET INCOME THE AMOUNT, IF ANY, BY WHICH (I) THIRTY-TWO PERCENT OF 42 ITS ENTIRE NET INCOME DETERMINED WITHOUT REGARD TO THIS PARAGRAPH 43 EXCEEDS (II) THE AMOUNTS DEDUCTED BY THE TAXPAYER PURSUANT TO SECTIONS 44 166 AND 585 OF THE INTERNAL REVENUE CODE LESS ANY AMOUNTS INCLUDED IN 45 FEDERAL TAXABLE INCOME AS A RESULT OF A RECOVERY OF A LOAN. 46 (B)(I) IF THE TAXPAYER IS IN A COMBINED REPORT, THIS DEDUCTION WILL BE 47 COMPUTED ON A COMBINED BASIS. IN THAT INSTANCE, THE ENTIRE NET INCOME OF 48 THE COMBINED GROUP FOR PURPOSES OF THIS PARAGRAPH SHALL BE MULTIPLIED BY 49 A FRACTION, THE NUMERATOR OF WHICH IS THE AVERAGE TOTAL ASSETS OF ALL 50 THE THRIFT INSTITUTIONS OR QUALIFIED COMMUNITY BANKS INCLUDED IN THE 51 COMBINED REPORT AND THE DENOMINATOR OF WHICH IS THE AVERAGE TOTAL ASSETS 52 OF ALL THE CORPORATIONS INCLUDED IN THE COMBINED REPORT. 53 (II) MEASUREMENT OF ASSETS FOR PURPOSES OF THIS CLAUSE. (I) TOTAL 54 ASSETS ARE THOSE ASSETS THAT ARE PROPERLY REFLECTED ON A BALANCE SHEET, 55 COMPUTED IN THE SAME MANNER AS IS REQUIRED BY THE BANKING REGULATOR OF 56 THE TAXPAYERS INCLUDED IN THE COMBINED RETURN. S. 6359--C 32 1 (II) ASSETS WILL ONLY BE INCLUDED IF THE INCOME OR EXPENSES OF WHICH 2 ARE PROPERLY REFLECTED (OR WOULD HAVE BEEN PROPERLY REFLECTED IF NOT 3 FULLY DEPRECIATED OR EXPENSED, OR DEPRECIATED OR EXPENSED TO A NOMINAL 4 AMOUNT) IN THE COMPUTATION OF THE COMBINED GROUP'S ENTIRE NET INCOME FOR 5 THE TAXABLE YEAR. ASSETS WILL NOT INCLUDE DEFERRED TAX ASSETS AND INTAN- 6 GIBLE ASSETS IDENTIFIED AS "GOODWILL". 7 (III) TANGIBLE REAL AND PERSONAL PROPERTY, SUCH AS BUILDINGS, LAND, 8 MACHINERY, AND EQUIPMENT SHALL BE VALUED AT COST. LEASED ASSETS WILL BE 9 VALUED AT THE ANNUAL LEASE PAYMENT MULTIPLIED BY EIGHT. INTANGIBLE 10 PROPERTY, SUCH AS LOANS AND INVESTMENTS, SHALL BE VALUED AT BOOK VALUE 11 EXCLUSIVE OF ANY RESERVES. 12 (IV) INTERCORPORATE STOCKHOLDINGS AND BILLS, NOTES AND ACCOUNTS 13 RECEIVABLE, AND OTHER INTERCORPORATE INDEBTEDNESS BETWEEN THE CORPO- 14 RATIONS INCLUDED IN THE COMBINED REPORT SHALL BE ELIMINATED. 15 (V) AVERAGE ASSETS ARE COMPUTED USING THE ASSETS MEASURED ON THE FIRST 16 DAY OF THE TAXABLE YEAR, AND ON THE LAST DAY OF EACH SUBSEQUENT QUARTER 17 OF THE TAXABLE YEAR. 18 (2) QUALIFIED RESIDENTIAL LOAN PORTFOLIO. (A) A TAXPAYER MAINTAINS A 19 QUALIFIED RESIDENTIAL LOAN PORTFOLIO IF AT LEAST SIXTY PERCENT OF THE 20 AMOUNT OF THE TOTAL ASSETS AT THE CLOSE OF THE TAXABLE YEAR OF THE 21 THRIFT INSTITUTION OR QUALIFIED COMMUNITY BANK CONSISTS OF THE ASSETS 22 DESCRIBED IN ITEMS (I) THROUGH (XII) OF THIS CLAUSE, WITH THE APPLICA- 23 TION OF THE RULE IN ITEM (XIII). IF THE TAXPAYER IS A MEMBER OF A 24 COMBINED GROUP, THE DETERMINATION OF WHETHER THERE IS A QUALIFIED RESI- 25 DENTIAL LOAN PORTFOLIO WILL BE MADE BY AGGREGATING THE ASSETS OF THE 26 THRIFT INSTITUTIONS OR QUALIFIED COMMUNITY BANKS THAT ARE MEMBERS OF THE 27 COMBINED GROUP. 28 ASSETS: 29 (I) CASH; WHICH INCLUDES CASH AND CASH EQUIVALENTS INCLUDING CASH 30 ITEMS IN THE PROCESS OF COLLECTION, DEPOSIT WITH OTHER FINANCIAL INSTI- 31 TUTIONS, INCLUDING CORPORATE CREDIT UNIONS, BALANCES WITH FEDERAL 32 RESERVE BANKS AND FEDERAL HOME LOAN BANKS, FEDERAL FUNDS SOLD, AND CASH 33 AND CASH EQUIVALENTS ON HAND. CASH SHALL NOT INCLUDE ANY BALANCES SERV- 34 ING AS COLLATERAL FOR SECURITIES LENDING TRANSACTIONS; 35 (II) OBLIGATIONS OF THE UNITED STATES OR OF A STATE OR POLITICAL 36 SUBDIVISION THEREOF, AND STOCK OR OBLIGATIONS OF A CORPORATION WHICH IS 37 AN INSTRUMENTALITY OR A GOVERNMENT SPONSORED ENTERPRISE OF THE UNITED 38 STATES OR OF A STATE OR POLITICAL SUBDIVISION THEREOF; 39 (III) LOANS SECURED BY A DEPOSIT OR SHARE OF A MEMBER; 40 (IV) LOANS SECURED BY AN INTEREST IN REAL PROPERTY WHICH IS (OR FROM 41 THE PROCEEDS OF THE LOAN, WILL BECOME) RESIDENTIAL REAL PROPERTY OR REAL 42 PROPERTY USED PRIMARILY FOR CHURCH PURPOSES, LOANS MADE FOR THE IMPROVE- 43 MENT OF RESIDENTIAL REAL PROPERTY OR REAL PROPERTY USED PRIMARILY FOR 44 CHURCH PURPOSES, PROVIDED THAT FOR PURPOSES OF THIS ITEM, RESIDENTIAL 45 REAL PROPERTY SHALL INCLUDE SINGLE OR MULTI-FAMILY DWELLINGS, FACILITIES 46 IN RESIDENTIAL DEVELOPMENTS DEDICATED TO PUBLIC USE OR PROPERTY USED ON 47 A NONPROFIT BASIS FOR RESIDENTS, AND MOBILE HOMES NOT USED ON A TRAN- 48 SIENT BASIS; 49 (V) PROPERTY ACQUIRED THROUGH THE LIQUIDATION OF DEFAULTED LOANS 50 DESCRIBED IN ITEM (IV) OF THIS CLAUSE; 51 (VI) ANY REGULAR OR RESIDUAL INTEREST IN A REMIC, AS SUCH TERM IS 52 DEFINED IN SECTION 860D OF THE INTERNAL REVENUE CODE, BUT ONLY IN THE 53 PROPORTION WHICH THE ASSETS OF SUCH REMIC CONSIST OF PROPERTY DESCRIBED 54 IN ANY OF THE PRECEDING ITEMS OF THIS CLAUSE, EXCEPT THAT IF NINETY-FIVE 55 PERCENT OR MORE OF THE ASSETS OF SUCH REMIC ARE ASSETS DESCRIBED IN S. 6359--C 33 1 ITEMS (I) THROUGH (V) OF THIS CLAUSE, THE ENTIRE INTEREST IN THE REMIC 2 SHALL QUALIFY; 3 (VII) ANY MORTGAGE-BACKED SECURITY WHICH REPRESENTS OWNERSHIP OF A 4 FRACTIONAL UNDIVIDED INTEREST IN A TRUST, THE ASSETS OF WHICH CONSIST 5 PRIMARILY OF MORTGAGE LOANS, PROVIDED THAT THE REAL PROPERTY WHICH 6 SERVES AS SECURITY FOR THE LOANS IS (OR FROM THE PROCEEDS OF THE LOAN, 7 WILL BECOME) THE TYPE OF PROPERTY DESCRIBED IN ITEM (IV) OF THIS CLAUSE 8 AND ANY COLLATERALIZED MORTGAGE OBLIGATION, THE SECURITY FOR WHICH 9 CONSISTS PRIMARILY OF MORTGAGE LOANS THAT MAINTAIN AS SECURITY THE TYPE 10 OF PROPERTY DESCRIBED IN ITEM (IV) OF THIS CLAUSE; 11 (VIII) CERTIFICATES OF DEPOSIT IN, OR OBLIGATIONS OF, A CORPORATION 12 ORGANIZED UNDER A STATE LAW WHICH SPECIFICALLY AUTHORIZES SUCH CORPO- 13 RATION TO INSURE THE DEPOSITS OR SHARE ACCOUNTS OF MEMBER ASSOCIATIONS; 14 (IX) LOANS SECURED BY AN INTEREST IN EDUCATIONAL, HEALTH, OR WELFARE 15 INSTITUTIONS OR FACILITIES, INCLUDING STRUCTURES DESIGNED OR USED PRIMA- 16 RILY FOR RESIDENTIAL PURPOSES FOR STUDENTS, RESIDENTS, AND PERSONS UNDER 17 CARE, EMPLOYEES, OR MEMBERS OF THE STAFF OF SUCH INSTITUTIONS OR FACILI- 18 TIES; 19 (X) LOANS MADE FOR THE PAYMENT OF EXPENSES OF COLLEGE OR UNIVERSITY 20 EDUCATION OR VOCATIONAL TRAINING; 21 (XI) PROPERTY USED BY THE TAXPAYER IN SUPPORT OF BUSINESS WHICH 22 CONSISTS PRINCIPALLY OF ACQUIRING THE SAVINGS OF THE PUBLIC AND INVEST- 23 ING IN LOANS; AND 24 (XII) LOANS FOR WHICH THE TAXPAYER IS THE CREDITOR AND WHICH ARE WHOL- 25 LY SECURED BY LOANS DESCRIBED IN ITEM (IV) OF THIS CLAUSE. 26 (XIII) THE VALUE OF ACCRUED INTEREST RECEIVABLE AND ANY LOSS-SHARING 27 COMMITMENT OR OTHER LOAN GUARANTY BY A GOVERNMENTAL AGENCY WILL BE 28 CONSIDERED PART OF THE BASIS IN THE LOANS TO WHICH THE ACCRUED INTEREST 29 OR LOSS PROTECTION APPLIES. 30 (B) AT THE ELECTION OF THE TAXPAYER, THE PERCENTAGE SPECIFIED IN 31 CLAUSE (A) OF THIS SUBPARAGRAPH SHALL BE APPLIED ON THE BASIS OF THE 32 AVERAGE ASSETS OUTSTANDING DURING THE TAXABLE YEAR, IN LIEU OF THE CLOSE 33 OF THE TAXABLE YEAR. THE TAXPAYER CAN ELECT TO COMPUTE AN AVERAGE USING 34 THE ASSETS MEASURED ON THE FIRST DAY OF THE TAXABLE YEAR AND ON THE LAST 35 DAY OF EACH SUBSEQUENT QUARTER, OR MONTH OR DAY DURING THE TAXABLE YEAR. 36 THIS ELECTION MAY BE MADE ANNUALLY. 37 (C) FOR PURPOSES OF THIS COMPUTATION, THE DEFINITION OF ASSETS IN 38 CLAUSE (B) OF SUBPARAGRAPH ONE OF THIS PARAGRAPH APPLIES. 39 (D) FOR PURPOSES OF ITEM (IV) OF CLAUSE (A) OF THIS SUBPARAGRAPH, IF A 40 MULTIFAMILY STRUCTURE SECURING A LOAN IS USED IN PART FOR NONRESIDENTIAL 41 USE PURPOSES, THE ENTIRE LOAN IS DEEMED A RESIDENTIAL REAL PROPERTY LOAN 42 IF THE PLANNED RESIDENTIAL USE EXCEEDS EIGHTY PERCENT OF THE PROPERTY'S 43 PLANNED USE (MEASURED, AT THE TAXPAYER'S ELECTION, BY USING SQUARE 44 FOOTAGE OR GROSS RENTAL REVENUE, AND DETERMINED AS OF THE TIME THE LOAN 45 IS MADE). 46 (E) FOR PURPOSES OF ITEM (IV) OF CLAUSE (A) OF THIS SUBPARAGRAPH, 47 LOANS MADE TO FINANCE THE ACQUISITION OR DEVELOPMENT OF LAND SHALL BE 48 DEEMED TO BE LOANS SECURED BY AN INTEREST IN RESIDENTIAL REAL PROPERTY 49 IF THERE IS A REASONABLE ASSURANCE THAT THE PROPERTY WILL BECOME RESI- 50 DENTIAL REAL PROPERTY WITHIN A PERIOD OF THREE YEARS FROM THE DATE OF 51 ACQUISITION OF SUCH LAND; BUT THIS SENTENCE SHALL NOT APPLY FOR ANY 52 TAXABLE YEAR UNLESS, WITHIN SUCH THREE YEAR PERIOD, SUCH LAND BECOMES 53 RESIDENTIAL REAL PROPERTY. FOR PURPOSES OF DETERMINING WHETHER ANY 54 INTEREST IN A REMIC QUALIFIES UNDER ITEM (VI) OF CLAUSE (A) OF THIS 55 SUBPARAGRAPH, ANY REGULAR INTEREST IN ANOTHER REMIC HELD BY SUCH REMIC 56 SHALL BE TREATED AS A LOAN DESCRIBED IN A PRECEDING ITEM UNDER PRINCI- S. 6359--C 34 1 PLES SIMILAR TO THE PRINCIPLE OF SUCH ITEM (VI), EXCEPT THAT IS SUCH 2 REMICS ARE PART OF A TIERED STRUCTURE, THEY SHALL BE TREATED AS ONE 3 REMIC FOR PURPOSES OF SUCH ITEM (VI). 4 (3) FOR PURPOSES OF THIS PARAGRAPH, A "THRIFT INSTITUTION" IS A 5 SAVINGS BANK, A SAVINGS AND LOAN ASSOCIATION, OR OTHER SAVINGS INSTITU- 6 TION CHARTERED AND SUPERVISED AS SUCH UNDER FEDERAL OR STATE LAW. 7 (S) SUBTRACTION MODIFICATION FOR COMMUNITY BANKS AND SMALL THRIFTS. 8 (1) A TAXPAYER THAT IS A QUALIFIED COMMUNITY BANK AS DEFINED IN SUBPARA- 9 GRAPH TWO OF THIS PARAGRAPH OR A SMALL THRIFT INSTITUTION AS DEFINED IN 10 SUBPARAGRAPH TWO-A OF THIS PARAGRAPH SHALL BE ALLOWED A DEDUCTION IN 11 COMPUTING ENTIRE NET INCOME EQUAL TO THE AMOUNT COMPUTED UNDER SUBPARA- 12 GRAPH THREE OF THIS PARAGRAPH. 13 (2) TO BE A QUALIFIED COMMUNITY BANK, A TAXPAYER MUST SATISFY THE 14 FOLLOWING CONDITIONS. 15 (A) IT IS A BANK OR TRUST COMPANY ORGANIZED UNDER OR SUBJECT TO THE 16 PROVISIONS OF ARTICLE THREE OF THE BANKING LAW OR A COMPARABLE PROVISION 17 OF THE LAWS OF ANOTHER STATE, OR A NATIONAL BANKING ASSOCIATION. 18 (B) THE AVERAGE VALUE DURING THE TAXABLE YEAR OF THE ASSETS OF THE 19 TAXPAYER, OR THE ASSETS OF THE AFFILIATED GROUP OF THE TAXPAYER, MUST 20 NOT EXCEED EIGHT BILLION DOLLARS. FOR PURPOSES OF THIS CLAUSE, THE 21 AFFILIATED GROUP OF THE TAXPAYER INCLUDES ANY CORPORATION THAT MEETS THE 22 OWNERSHIP REQUIREMENTS TO BE INCLUDED IN A COMBINED REPORT SPECIFIED IN 23 PARAGRAPH (A) OF SUBDIVISION TWO OF SECTION TWO HUNDRED TEN-C OF THIS 24 ARTICLE. 25 (2-A) TO BE A SMALL THRIFT INSTITUTION, A TAXPAYER MUST SATISFY THE 26 FOLLOWING CONDITIONS. 27 (A) IT IS A SAVINGS BANK, A SAVINGS AND LOAN ASSOCIATION, OR OTHER 28 SAVINGS INSTITUTION CHARTERED AND SUPERVISED AS SUCH UNDER FEDERAL OR 29 STATE LAW. 30 (B) THE AVERAGE VALUE DURING THE TAXABLE YEAR OF THE ASSETS OF THE 31 TAXPAYER, OR THE ASSETS OF THE AFFILIATED GROUP OF THE TAXPAYER, MUST 32 NOT EXCEED EIGHT BILLION DOLLARS. FOR PURPOSES OF THIS CLAUSE, THE 33 AFFILIATED GROUP OF THE TAXPAYER INCLUDES ANY CORPORATION THAT MEETS THE 34 OWNERSHIP REQUIREMENTS TO BE INCLUDED IN A COMBINED REPORT SPECIFIED IN 35 PARAGRAPH (A) OF SUBDIVISION TWO OF SECTION TWO HUNDRED TEN-C OF THIS 36 ARTICLE. 37 (3)(A) THE SUBTRACTION MODIFICATION SHALL BE COMPUTED AS FOLLOWS: 38 (I) MULTIPLY THE TAXPAYER'S NET INTEREST INCOME FROM LOANS DURING THE 39 TAXABLE YEAR BY A FRACTION, THE NUMERATOR OF WHICH IS THE GROSS INTEREST 40 INCOME DURING THE TAXABLE YEAR FROM QUALIFYING LOANS AND THE DENOMINATOR 41 OF WHICH IS THE GROSS INTEREST INCOME DURING THE TAXABLE YEAR FROM ALL 42 LOANS. 43 (II) MULTIPLY THE AMOUNT DETERMINED IN CLAUSE (I) BY FIFTY PERCENT. 44 THIS PRODUCT IS THE AMOUNT OF THE DEDUCTION ALLOWED UNDER THIS PARA- 45 GRAPH. 46 (B)(I) NET INTEREST INCOME FROM LOANS SHALL MEAN GROSS INTEREST INCOME 47 FROM LOANS LESS GROSS INTEREST EXPENSE FROM LOANS. GROSS INTEREST 48 EXPENSE FROM LOANS IS DETERMINED BY MULTIPLYING GROSS INTEREST EXPENSE 49 BY A FRACTION, THE NUMERATOR OF WHICH IS THE AVERAGE TOTAL VALUE OF 50 LOANS OWNED BY THE THRIFT INSTITUTION OR COMMUNITY BANK DURING THE TAXA- 51 BLE YEAR AND THE DENOMINATOR OF WHICH IS THE AVERAGE TOTAL ASSETS OF THE 52 THRIFT INSTITUTION OR COMMUNITY BANK DURING THE TAXABLE YEAR. 53 (II) MEASUREMENT OF ASSETS FOR PURPOSES OF THIS CLAUSE. (I) TOTAL 54 ASSETS ARE THOSE ASSETS THAT ARE PROPERLY REFLECTED ON A BALANCE SHEET, 55 COMPUTED IN THE SAME MANNER AS IS REQUIRED BY THE BANKING REGULATOR OF 56 THE TAXPAYERS INCLUDED IN THE COMBINED RETURN. S. 6359--C 35 1 (II) ASSETS WILL ONLY BE INCLUDED IF THE INCOME OR EXPENSES OF WHICH 2 ARE PROPERLY REFLECTED (OR WOULD HAVE BEEN PROPERLY REFLECTED IF NOT 3 FULLY DEPRECIATED OR EXPENSED, OR DEPRECIATED OR EXPENSED TO A NOMINAL 4 AMOUNT) IN THE COMPUTATION OF THE TAXPAYER'S ENTIRE NET INCOME FOR THE 5 TAXABLE YEAR. ASSETS WILL NOT INCLUDE DEFERRED TAX ASSETS AND INTANGIBLE 6 ASSETS IDENTIFIED AS "GOODWILL". 7 (III) TANGIBLE REAL AND PERSONAL PROPERTY, SUCH AS BUILDINGS, LAND, 8 MACHINERY, AND EQUIPMENT SHALL BE VALUED AT COST. LEASED ASSETS WILL BE 9 VALUED AT THE ANNUAL LEASE PAYMENT MULTIPLIED BY EIGHT. INTANGIBLE PROP- 10 ERTY, SUCH AS LOANS AND INVESTMENTS, SHALL BE VALUED AT BOOK VALUE 11 EXCLUSIVE OF ANY RESERVES. 12 (IV) AVERAGE ASSETS ARE COMPUTED USING THE ASSETS MEASURED ON THE 13 FIRST DAY OF THE TAXABLE YEAR, AND ON THE LAST DAY OF EACH SUBSEQUENT 14 QUARTER OF THE TAXABLE YEAR OR MONTH OR DAY DURING THE TAXABLE YEAR. 15 (C) A QUALIFYING LOAN IS A LOAN THAT MEETS THE CONDITIONS SPECIFIED IN 16 SUBCLAUSE (I) OF THIS CLAUSE AND SUBCLAUSE (II) OF THIS CLAUSE. 17 (I) THE LOAN IS ORIGINATED BY THE QUALIFIED COMMUNITY BANK OR SMALL 18 THRIFT INSTITUTION OR PURCHASED BY THE QUALIFIED COMMUNITY BANK OR SMALL 19 THRIFT INSTITUTION IMMEDIATELY AFTER ITS ORIGINATION IN CONNECTION WITH 20 A COMMITMENT TO PURCHASE MADE BY THE BANK OR THRIFT INSTITUTION PRIOR TO 21 THE LOAN'S ORIGINATION. 22 (II) THE LOAN IS A SMALL BUSINESS LOAN OR A RESIDENTIAL MORTGAGE LOAN, 23 THE PRINCIPAL AMOUNT OF WHICH LOAN DOES NOT EXCEED THE MAXIMUM PRINCIPAL 24 AMOUNT ESTABLISHED BY THE UNITED STATES SMALL BUSINESS ADMINISTRATION 25 FOR THE 7(C) GUARANTY LOAN PROGRAM AT THE TIME THE LOAN IS ORIGINATED 26 BUT NOT LESS THAN FIVE MILLION DOLLARS AND EITHER THE BORROWER IS 27 LOCATED IN THIS STATE AS DETERMINED UNDER SECTION TWO HUNDRED TEN-A OF 28 THIS ARTICLE AND THE LOAN IS NOT SECURED BY REAL PROPERTY, OR THE LOAN 29 IS SECURED BY REAL PROPERTY LOCATED IN NEW YORK. 30 (III) A LOAN THAT HAS BEEN DETERMINED TO BE A QUALIFYING LOAN IN A 31 PRIOR TAXABLE YEAR REMAINS A QUALIFYING LOAN IN TAXABLE YEARS DURING AND 32 AFTER WHICH SUCH LOAN IS ACQUIRED BY ANOTHER CORPORATION IN THE TAXPAY- 33 ER'S COMBINED GROUP. 34 (T) NOTWITHSTANDING ANY OTHER TREATMENT PROVIDED IN THIS ARTICLE A 35 SMALL THRIFT INSTITUTION OR A QUALIFIED COMMUNITY BANK THAT MAINTAINS A 36 CAPTIVE REIT ON THE EFFECTIVE DATE OF THIS PARAGRAPH MAY CHOOSE TO 37 UTILIZE THE REIT SUBTRACTION AS DESCRIBED HEREIN OR EITHER THE 38 SUBTRACTION FOR QUALIFIED RESIDENTIAL LOAN PORTFOLIOS OR THE SUBTRACTION 39 FOR THE NET INTEREST INCOME FROM SMALL BUSINESS AND RESIDENTIAL MORTGAGE 40 LOANS. THE REIT SUBTRACTION WILL BE EQUAL TO SIXTY PERCENT OF THE DIVI- 41 DENDS PAID DEDUCTION ALLOWED TO THE CAPTIVE REIT FOR THE TAX YEAR FOR 42 FEDERAL INCOME TAX PURPOSES. NOTWITHSTANDING ANY TREATMENT TO THE 43 CONTRARY UNDER THIS ARTICLE, THE CAPTIVE REIT WILL BE ALLOWED THE SAME 44 DEDUCTION FOR DIVIDENDS PAID AS ALLOWED FOR FEDERAL INCOME TAX PURPOSES. 45 THE TAX BEFORE CREDITS FOR A SMALL THRIFT INSTITUTION OR A QUALIFIED 46 COMMUNITY BANK THAT UTILIZES THIS REIT SUBTRACTION MAY NOT BE LESS THAN 47 THE TAX BEFORE CREDITS FOR ITS TAX YEAR BEGINNING ON OR AFTER JANUARY 48 FIRST, TWO THOUSAND THIRTEEN. 49 10. The term "calendar year" means a period of twelve calendar months 50 (or any shorter period beginning on the date the taxpayer becomes 51 subject to the tax imposed by this article) ending on the thirty-first 52 day of December, provided the taxpayer keeps its books on the basis of 53 such period or on the basis of any period ending on any day other than 54 the last day of a calendar month, or provided the taxpayer does not keep 55 books, and includes, in case the taxpayer changes the period on the 56 basis of which it keeps its books from a fiscal year to a calendar year, S. 6359--C 36 1 the period from the close of its last old fiscal year up to and includ- 2 ing the following December thirty-first. The term "fiscal year" means a 3 period of twelve calendar months (or any shorter period beginning on the 4 date the taxpayer becomes subject to the tax imposed by this article) 5 ending on the last day of any month other than December, provided the 6 taxpayer keeps its books on the basis of such period, and includes, in 7 case the taxpayer changes the period on the basis of which it keeps it 8 books from a calendar year to a fiscal year or from one fiscal year to 9 another fiscal year, the period from the close of its last old calendar 10 or fiscal year up to the date designated as the close of its new fiscal 11 year. 12 11. The term "tangible personal property" means corporeal personal 13 property, such as machinery, tools, implements, goods, wares and 14 merchandise, and does not mean money, deposits in banks, shares of 15 stock, bonds, notes, credits or evidences of an interest in property and 16 evidences of debt. 17 12. The term elected or appointed officer shall include the chairman, 18 president, vice-president, secretary, assistant secretary, treasurer, 19 assistant treasurer, comptroller, and also any other officer, irrespec- 20 tive of his title, who is charged with and performs any of the regular 21 functions of any such officer, unless the total compensation of such 22 officer is derived exclusively from the receipt of commissions. A direc- 23 tor shall be considered an elected or appointed officer only if he 24 performs duties ordinarily performed by an officer. 25 [19. The term "fulfillment services" shall mean any of the following 26 services performed by an entity on its premises on behalf of a purchas- 27 er: 28 (a) the acceptance of orders electronically or by mail, telephone, 29 telefax or internet; 30 (b) responses to consumer correspondence or inquiries electronically 31 or by mail, telephone, telefax or internet; 32 (c) billing and collection activities; or 33 (d) the shipment of orders from an inventory of products offered for 34 sale by the purchaser.] 35 S 5. Subdivisions 1, 2, 2-a, 4, 5, 6, 7 and 8 of section 209 of the 36 tax law, subdivisions 1 and 6 as amended by chapter 817 of the laws of 37 1987, subdivision 2 as amended by chapter 75 of the laws of 1998, subdi- 38 vision 2-a as added by chapter 340 of the laws of 1998, subdivision 4 as 39 amended by section 27 of part S of this act, subdivisions 5 and 7 as 40 amended by section 2 of part FF-1 of chapter 57 of the laws of 2008, and 41 subdivision 8 as added by section 1 of part O of chapter 61 of the laws 42 of 2006, are amended to read as follows: 43 1. (A) For the privilege of exercising its corporate franchise, or of 44 doing business, or of employing capital, or of owning or leasing proper- 45 ty in this state in a corporate or organized capacity, or of maintaining 46 an office in this state, OR OF DERIVING RECEIPTS FROM ACTIVITY IN THIS 47 STATE, for all or any part of each of its fiscal or calendar years, 48 every domestic or foreign corporation, except corporations specified in 49 subdivision four of this section, shall annually pay a franchise tax, 50 upon the basis of its [entire net] BUSINESS income base, or upon such 51 other basis as may be applicable as hereinafter provided, for such 52 fiscal or calendar year or part thereof, on a report which shall be 53 filed, except as hereinafter provided, on or before the fifteenth day of 54 March next succeeding the close of each such year, or, in the case of a 55 corporation which reports on the basis of a fiscal year, within two and S. 6359--C 37 1 one-half months after the close of such fiscal year, and shall be paid 2 as hereinafter provided. 3 (B) A CORPORATION IS DERIVING RECEIPTS FROM ACTIVITY IN THIS STATE IF 4 IT HAS RECEIPTS WITHIN THIS STATE OF ONE MILLION DOLLARS OR MORE IN THE 5 TAXABLE YEAR. FOR PURPOSES OF THIS SECTION, THE TERM "RECEIPTS" MEANS 6 THE RECEIPTS THAT ARE SUBJECT TO THE APPORTIONMENT RULES SET FORTH IN 7 SECTION TWO HUNDRED TEN-A OF THIS ARTICLE, AND THE TERM "RECEIPTS WITHIN 8 THIS STATE" MEANS THE RECEIPTS INCLUDED IN THE NUMERATOR OF THE APPOR- 9 TIONMENT FACTOR DETERMINED UNDER SECTION TWO HUNDRED TEN-A OF THIS ARTI- 10 CLE. FOR PURPOSES OF THIS PARAGRAPH, RECEIPTS FROM PROCESSING CREDIT 11 CARD TRANSACTIONS FOR MERCHANTS INCLUDE MERCHANT DISCOUNT FEES RECEIVED 12 BY THE CORPORATION. 13 (C) A CORPORATION IS DOING BUSINESS IN THIS STATE IF (I) IT HAS ISSUED 14 CREDIT CARDS TO ONE THOUSAND OR MORE CUSTOMERS WHO HAVE A MAILING 15 ADDRESS WITHIN THIS STATE AS OF THE LAST DAY OF ITS TAXABLE YEAR, (II) 16 IT HAS MERCHANT CUSTOMER CONTRACTS WITH MERCHANTS AND THE TOTAL NUMBER 17 OF LOCATIONS COVERED BY THOSE CONTRACTS EQUALS ONE THOUSAND OR MORE 18 LOCATIONS IN THIS STATE TO WHOM THE CORPORATION REMITTED PAYMENTS FOR 19 CREDIT CARD TRANSACTIONS DURING THE TAXABLE YEAR, OR (III) THE SUM OF 20 THE NUMBER OF CUSTOMERS DESCRIBED IN SUBPARAGRAPH (I) OF THIS PARAGRAPH 21 PLUS THE NUMBER OF LOCATIONS COVERED BY ITS CONTRACTS DESCRIBED IN 22 SUBPARAGRAPH (II) OF THIS PARAGRAPH EQUALS ONE THOUSAND OR MORE. AS USED 23 IN THIS SUBDIVISION, THE TERM "CREDIT CARD" INCLUDES BANK, CREDIT, TRAV- 24 EL AND ENTERTAINMENT CARDS. 25 (D)(I) A CORPORATION WITH LESS THAN ONE MILLION DOLLARS BUT AT LEAST 26 TEN THOUSAND DOLLARS OF RECEIPTS WITHIN THIS STATE IN A TAXABLE YEAR 27 THAT IS PART OF A COMBINED REPORTING GROUP IS DERIVING RECEIPTS FROM 28 ACTIVITY IN THIS STATE IF THE RECEIPTS WITHIN THIS STATE OF THE MEMBERS 29 OF THE COMBINED REPORTING GROUP THAT HAVE AT LEAST TEN THOUSAND DOLLARS 30 OF RECEIPTS WITHIN THIS STATE IN THE AGGREGATE MEET THE THRESHOLD SET 31 FORTH IN PARAGRAPH (B) OF THIS SUBDIVISION. 32 (II) A CORPORATION THAT DOES NOT MEET ANY OF THE THRESHOLDS SET FORTH 33 IN PARAGRAPH (C) OF THIS SUBDIVISION BUT HAS AT LEAST TEN CUSTOMERS, OR 34 LOCATIONS, OR CUSTOMERS AND LOCATIONS, AS DESCRIBED IN PARAGRAPH (C) OF 35 THIS SUBDIVISION, AND IS PART OF A COMBINED REPORTING GROUP THAT IS 36 DOING BUSINESS IN THIS STATE IF THE NUMBER OF CUSTOMERS, LOCATIONS, OR 37 CUSTOMERS AND LOCATIONS, WITHIN THIS STATE OF THE MEMBERS OF THE 38 COMBINED REPORTING GROUP THAT HAVE AT LEAST TEN CUSTOMERS, LOCATIONS, OR 39 CUSTOMERS AND LOCATIONS, WITHIN THIS STATE IN THE AGGREGATE MEETS ANY OF 40 THE THRESHOLDS SET FORTH IN PARAGRAPH (C) OF THIS SUBDIVISION. 41 (E) AT THE END OF EACH YEAR, THE COMMISSIONER SHALL REVIEW THE CUMULA- 42 TIVE PERCENTAGE CHANGE IN THE CONSUMER PRICE INDEX. THE COMMISSIONER 43 SHALL ADJUST THE RECEIPT THRESHOLDS SET FORTH IN THIS SUBDIVISION IF THE 44 CONSUMER PRICE INDEX HAS CHANGED BY TEN PERCENT OR MORE SINCE JANUARY 45 FIRST, TWO THOUSAND FIFTEEN, OR SINCE THE DATE THAT THE THRESHOLDS WERE 46 LAST ADJUSTED UNDER THIS SUBDIVISION. THE THRESHOLDS SHALL BE ADJUSTED 47 TO REFLECT THAT CUMULATIVE PERCENTAGE CHANGE IN THE CONSUMER PRICE 48 INDEX. THE ADJUSTED THRESHOLDS SHALL BE ROUNDED TO THE NEAREST ONE THOU- 49 SAND DOLLARS. AS USED IN THIS PARAGRAPH, "CONSUMER PRICE INDEX" MEANS 50 THE CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS (CPI-U) AVAILABLE FORM 51 THE BUREAU OF LABOR STATISTICS OF THE UNITED STATES DEPARTMENT OF LABOR. 52 ANY ADJUSTMENT SHALL APPLY TO TAX PERIODS THAT BEGIN AFTER THE ADJUST- 53 MENT IS MADE. 54 (F) IF A PARTNERSHIP IS DOING BUSINESS, EMPLOYING CAPITAL, OWNING OR 55 LEASING PROPERTY IN THIS STATE, MAINTAINING AN OFFICE IN THE STATE, OR 56 DERIVING RECEIPTS FROM ACTIVITY IN THIS STATE, ANY CORPORATION THAT IS A S. 6359--C 38 1 PARTNER IN SUCH PARTNERSHIP SHALL BE SUBJECT TO TAX UNDER THIS ARTICLE 2 AS DESCRIBED IN THE REGULATIONS OF THE COMMISSIONER. 3 2. A foreign corporation shall not be deemed to be doing business, 4 employing capital, owning or leasing property, or maintaining an office 5 in this state, OR DERIVING RECEIPTS FROM ACTIVITY IN THIS STATE, for the 6 purposes of this article, by reason of (a) the maintenance of cash 7 balances with banks or trust companies in this state, or (b) the owner- 8 ship of shares of stock or securities kept in this state, if kept in a 9 safe deposit box, safe, vault or other receptacle rented for the 10 purpose, or if pledged as collateral security, or if deposited with one 11 or more banks or trust companies, or brokers who are members of a recog- 12 nized security exchange, in safekeeping or custody accounts, or (c) the 13 taking of any action by any such bank or trust company or broker, which 14 is incidental to the rendering of safekeeping or custodian service to 15 such corporation, or (d) the maintenance of an office in this state by 16 one or more officers or directors of the corporation who are not employ- 17 ees of the corporation if the corporation otherwise is not doing busi- 18 ness in this state, and does not employ capital or own or lease property 19 in this state, or (e) the keeping of books or records of a corporation 20 in this state if such books or records are not kept by employees of such 21 corporation and such corporation does not otherwise do business, employ 22 capital, own or lease property or maintain an office in this state, or 23 (f) [the use of fulfillment services of a person other than an affil- 24 iated person and the ownership of property stored on the premises of 25 such person in conjunction with such services, or (g)] any combination 26 of the foregoing activities. [For purposes of this subdivision, persons 27 are affiliated persons with respect to each other where one of such 28 persons has an ownership interest of more than five percent, whether 29 direct or indirect, in the other, or where an ownership interest of more 30 than five percent, whether direct or indirect, is held in each of such 31 persons by another person or by a group of other persons which are 32 affiliated persons with respect to each other. The term "person" in the 33 preceding sentence and in paragraph (f) of this subdivision shall have 34 the meaning ascribed thereto by subdivision (a) of section eleven 35 hundred one of this chapter.] 36 2-a. An alien corporation shall not be deemed to be doing business, 37 employing capital, owning or leasing property, or maintaining an office 38 in this state, for the purposes of this article, if its activities in 39 this state are limited solely to (a) investing or trading in stocks and 40 securities for its own account within the meaning of clause (ii) of 41 subparagraph (A) of paragraph (2) of subsection (b) of section eight 42 hundred sixty-four of the internal revenue code or (b) investing or 43 trading in commodities for its own account within the meaning of clause 44 (ii) of subparagraph (B) of paragraph (2) of subsection (b) of section 45 eight hundred sixty-four of the internal revenue code or (c) any combi- 46 nation of activities described in paragraphs (a) and (b) of this subdi- 47 vision. AN ALIEN CORPORATION THAT HAS NO EFFECTIVELY CONNECTED INCOME 48 FOR THE TAXABLE YEAR PURSUANT TO CLAUSE (IV) OF THE OPENING PARAGRAPH OF 49 SUBDIVISION NINE OF SECTION TWO HUNDRED EIGHT OF THIS ARTICLE SHALL NOT 50 BE SUBJECT TO TAX UNDER THIS ARTICLE FOR THAT TAXABLE YEAR. For purposes 51 of this subdivision, an alien corporation is a corporation organized 52 under the laws of a country, or any political subdivision thereof, other 53 than the United States. 54 4. Corporations liable to tax under sections one hundred eighty-three 55 to one hundred eighty-four-a, inclusive, corporations taxable under 56 [articles thirty-two and] ARTICLE thirty-three of this chapter, any S. 6359--C 39 1 trust company organized under a law of this state all of the stock of 2 which is owned by not less than twenty savings banks organized under a 3 law of this state, [bank holding companies filing a combined return in 4 accordance with subsection (f) of section fourteen hundred sixty-two of 5 this chapter,] a captive REIT or a captive RIC filing a combined return 6 under [either subsection (f) of section fourteen hundred sixty-two or] 7 subdivision (f) of section fifteen hundred fifteen of this chapter, and 8 housing companies organized and operating pursuant to the provisions of 9 article two or article five of the private housing finance law and hous- 10 ing development fund companies organized pursuant to the provisions of 11 article eleven of the private housing finance law shall not be subject 12 to tax under this article. 13 5. For any taxable year of a real estate investment trust as defined 14 in section eight hundred fifty-six of the internal revenue code in which 15 such trust is subject to federal income taxation under section eight 16 hundred fifty-seven of such code, such trust shall be subject to a tax 17 computed under either paragraph (a) [, (c)] or (d) of subdivision one of 18 section two hundred ten of this chapter, whichever is [greatest] 19 GREATER, and shall not be subject to any tax under article [thirty-two 20 or article] thirty-three of this chapter except for a captive REIT 21 required to file a combined return under [subdivision (f) of section 22 fourteen hundred sixty-two or] subdivision (f) of section fifteen 23 hundred fifteen of this chapter. In the case of such a real estate 24 investment trust, including a captive REIT as defined in section two of 25 this chapter, the term "entire net income" means "real estate investment 26 trust taxable income" as defined in paragraph two of subdivision (b) of 27 section eight hundred fifty-seven (as modified by section eight hundred 28 fifty-eight) of the internal revenue code plus the amount taxable under 29 paragraph three of subdivision (b) of section eight hundred fifty-seven 30 of such code, subject to the [modification] MODIFICATIONS required by 31 subdivision nine of section two hundred eight of this article [(other 32 than the modification required by subparagraph two of paragraph (a) 33 thereof) including the modifications required by paragraphs (d) and (e) 34 of subdivision three of section two hundred ten of this article]. 35 6. For any taxable year of a DISC, not exempt from tax under paragraph 36 (i) of subdivision nine of section two hundred eight of this article, 37 the taxes imposed by subdivision one of this section shall be computed 38 only under either paragraph (b) or (d) of subdivision one of section two 39 hundred ten of this chapter, whichever is greater[, and paragraph (e) of 40 such subdivision]. 41 7. For any taxable year, beginning on or after January first, nineteen 42 hundred eighty of a regulated investment company, as defined in section 43 eight hundred fifty-one of the internal revenue code, in which such 44 company is subject to federal income taxation under section eight 45 hundred fifty-two of such code, such company shall be subject to a tax 46 computed under either paragraph (a)[, (c)] or (d) of subdivision one of 47 section two hundred ten of this chapter, whichever is [greatest] 48 GREATER, and shall not be subject to any tax under article [thirty-two 49 or article] thirty-three of this chapter except for a captive RIC 50 required to file a combined return under [subdivision (f) of section 51 fourteen hundred sixty-two or] subdivision (f) of section fifteen 52 hundred fifteen of this chapter. In the case of such a regulated invest- 53 ment company, including a captive RIC as defined in section two of this 54 chapter, the term "entire net income" means "investment company taxable 55 income" as defined in paragraph two of subdivision (b) of section eight 56 hundred fifty-two, as modified by section eight hundred fifty-five, of S. 6359--C 40 1 the internal revenue code plus the amount taxable under paragraph three 2 of subdivision (b) of section eight hundred fifty-two of such code 3 subject to the [modification] MODIFICATIONS required by subdivision nine 4 of section two hundred eight of this chapter[, other than the modifica- 5 tion required by subparagraph two of paragraph (a) and by paragraph (f) 6 thereof, including the modification required by paragraphs (d) and (e) 7 of subdivision three of section two hundred ten of this chapter]. 8 8. For any taxable year beginning on or after January first, two thou- 9 sand six, a corporation that is no longer doing business, employing 10 capital, or owning or leasing property, OR DERIVING RECEIPTS FROM ACTIV- 11 ITY in this state in a corporate or organized capacity that has filed a 12 final tax return with the department for the last tax year it was doing 13 business and has no outstanding tax liability for such final tax return 14 or any tax return for prior tax years shall be exempt from all taxes 15 imposed by paragraph (d) of subdivision one of section two hundred ten 16 of this article for tax years following the last year such corporation 17 was doing business. 18 S 6. Section 209-A of the tax law is REPEALED. 19 S 7. The section heading and subdivision 1 of section 209-B of the tax 20 law, the section heading as amended by chapter 11 of the laws of 1983 21 and subdivision 1 as amended by section 4 of part A of chapter 59 of the 22 laws of 2013, are amended to read as follows: 23 [Temporary metropolitan] METROPOLITAN transportation business tax 24 surcharge. 1. (A) For the privilege of exercising its corporate fran- 25 chise, or of doing business, or of employing capital, or of owning or 26 leasing property in a corporate or organized capacity, or of maintaining 27 an office, OR OF DERIVING RECEIPTS FROM ACTIVITY in the metropolitan 28 commuter transportation district, for all or any part of its taxable 29 year, there is hereby imposed on every corporation, other than a New 30 York S corporation, subject to tax under section two hundred nine of 31 this article, or any receiver, referee, trustee, assignee or other fidu- 32 ciary, or any officer or agent appointed by any court, who conducts the 33 business of any such corporation, [for the taxable years commencing on 34 or after January first, nineteen hundred eighty-two but ending before 35 December thirty-first, two thousand eighteen,] a tax surcharge, in addi- 36 tion to the tax imposed under section two hundred nine of this article[, 37 to be computed at the rate of eighteen]. SUCH SURCHARGE SHALL BE THE 38 PRODUCT OF SEVENTEEN percent of the tax imposed under such section two 39 hundred nine for such taxable years or any part of such taxable years 40 [ending before December thirty-first, nineteen hundred eighty-three 41 after the deduction of any credits otherwise allowable under this arti- 42 cle, and at the rate of seventeen percent of the tax imposed under such 43 section for such taxable years or any part of such taxable years ending 44 on or after December thirty-first, nineteen hundred eighty-three after] 45 BEFORE the deduction of any credits otherwise allowable under this arti- 46 cle; provided, however, that such [rates] RATE of tax surcharge shall be 47 applied only to that portion of the tax imposed under section two 48 hundred nine of this article [after] BEFORE the deduction of any credits 49 otherwise allowable under this article which is attributable to the 50 taxpayer's business activity carried on within the metropolitan commuter 51 transportation district; and provided, further, [that the tax surcharge 52 imposed by this section shall not be imposed upon any taxpayer for more 53 than four hundred thirty-two months. Provided however, that for taxable 54 years commencing on or after July first, nineteen hundred ninety-eight, 55 such surcharge shall be calculated as if the tax imposed under section 56 two hundred ten of this article were imposed under the law in effect for S. 6359--C 41 1 taxable years commencing on or after July first, nineteen hundred nine- 2 ty-seven and before July first, nineteen hundred ninety-eight. Provided 3 however, that for taxable years commencing on or after January first, 4 two thousand seven, such surcharge shall be calculated using the highest 5 of the tax bases imposed pursuant to paragraphs (a), (b), (c) or (d) of 6 subdivision one of section two hundred ten of this article and the 7 amount imposed under paragraph (e) of subdivision one of such section 8 two hundred ten, for the taxable year; and, provided further that, if 9 such highest amount is the tax base imposed under paragraph (a), (b) or 10 (c) of such subdivision, then the surcharge shall be computed as if the 11 tax rates and limitations under such paragraph were the tax rates and 12 limitations under such paragraph in effect for taxable years commencing 13 on or after July first, nineteen hundred ninety-seven and before July 14 first, nineteen hundred ninety-eight] THE SURCHARGE COMPUTED ON A 15 COMBINED REPORT SHALL INCLUDE A SURCHARGE ON THE FIXED DOLLAR MINIMUM 16 TAX FOR EACH MEMBER OF THE COMBINED GROUP SUBJECT TO THE SURCHARGE UNDER 17 THIS SUBDIVISION. HOWEVER, IF THE TOTAL LIABILITY OF THE SURCHARGE 18 IMPOSED BY THIS PARAGRAPH FOR THE TAXABLE YEAR BEGINNING ON JANUARY 19 FIRST, TWO THOUSAND FIFTEEN SHOULD BE MORE THAN THREE AND SIX-TENTHS 20 PERCENT HIGHER THAN THE SUM OF THE TOTAL LIABILITY OF THE SURCHARGE 21 IMPOSED BY THIS PARAGRAPH AND THE TOTAL LIABILITY OF THE SURCHARGE 22 IMPOSED BY SECTION FOURTEEN HUNDRED FIFTY-FIVE-B OF THIS CHAPTER FOR THE 23 TAXABLE YEAR BEGINNING ON JANUARY FIRST, TWO THOUSAND FOURTEEN, THEN FOR 24 TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO THOUSAND SIXTEEN 25 THE SURCHARGE PERCENTAGE SHALL BE REDUCED BY A PERCENTAGE EQUAL TO THE 26 DIFFERENCE BETWEEN THE RATE OF GROWTH IN THE TOTAL LIABILITY FROM TAXA- 27 BLE YEAR TWO THOUSAND FOURTEEN TO TAXABLE YEAR TWO THOUSAND FIFTEEN AND 28 THREE AND SIX-TENTHS PERCENT. 29 (B) A CORPORATION IS DERIVING RECEIPTS FROM ACTIVITY IN THE METROPOL- 30 ITAN COMMUTER TRANSPORTATION DISTRICT IF IT HAS RECEIPTS WITHIN THE 31 METROPOLITAN COMMUTER TRANSPORTATION DISTRICT OF ONE MILLION DOLLARS OR 32 MORE IN A TAXABLE YEAR. FOR PURPOSES OF THIS SECTION, THE TERM 33 "RECEIPTS" MEANS THE RECEIPTS THAT ARE SUBJECT TO THE APPORTIONMENT 34 RULES SET FORTH IN SECTION TWO HUNDRED TEN-A OF THIS ARTICLE, AND THE 35 TERM "RECEIPTS WITHIN THE METROPOLITAN COMMUTER TRANSPORTATION DISTRICT" 36 MEANS THE RECEIPTS INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FACTOR 37 DETERMINED UNDER SUBDIVISION TWO OF THIS SECTION. FOR PURPOSES OF THIS 38 PARAGRAPH, RECEIPTS FROM PROCESSING CREDIT CARD TRANSACTIONS FOR 39 MERCHANTS INCLUDE MERCHANT DISCOUNT FEES RECEIVED BY THE CORPORATION. 40 (C) A CORPORATION IS DOING BUSINESS IN THE METROPOLITAN COMMUTER 41 TRANSPORTATION DISTRICT IF (I) IT HAS ISSUED CREDIT CARDS TO ONE THOU- 42 SAND OR MORE CUSTOMERS WHO HAVE A MAILING ADDRESS WITHIN THE METROPOL- 43 ITAN COMMUTER TRANSPORTATION DISTRICT AS OF THE LAST DAY OF ITS TAXABLE 44 YEAR, (II) IT HAS MERCHANT CUSTOMER CONTRACTS WITH MERCHANTS AND THE 45 TOTAL NUMBER OF LOCATIONS COVERED BY THOSE CONTRACTS EQUALS ONE THOUSAND 46 OR MORE LOCATIONS IN THE METROPOLITAN COMMUTER TRANSPORTATION DISTRICT 47 TO WHOM THE CORPORATION REMITTED PAYMENTS FOR CREDIT CARD TRANSACTIONS 48 DURING THE TAXABLE YEAR, OR (III) THE SUM OF THE NUMBER OF CUSTOMERS 49 DESCRIBED IN SUBPARAGRAPH (I) OF THIS PARAGRAPH PLUS THE NUMBER OF 50 LOCATIONS COVERED BY ITS CONTRACTS DESCRIBED IN SUBPARAGRAPH (II) OF 51 THIS PARAGRAPH EQUALS ONE THOUSAND OR MORE. AS USED IN THIS PARAGRAPH, 52 THE TERM "CREDIT CARD" INCLUDES BANK, CREDIT, TRAVEL AND ENTERTAINMENT 53 CARDS. 54 (D)(I) A CORPORATION WITH LESS THAN ONE MILLION DOLLARS BUT AT LEAST 55 TEN THOUSAND DOLLARS OF RECEIPTS WITHIN THE METROPOLITAN COMMUTER TRANS- 56 PORTATION DISTRICT IN A TAXABLE YEAR THAT IS PART OF A COMBINED REPORT- S. 6359--C 42 1 ING GROUP IS DERIVING RECEIPTS FROM ACTIVITY IN THE METROPOLITAN COMMU- 2 TER TRANSPORTATION DISTRICT IF THE RECEIPTS WITHIN THE METROPOLITAN 3 COMMUTER TRANSPORTATION DISTRICT OF THE MEMBERS OF THE UNITARY BUSINESS 4 GROUP THAT HAVE AT LEAST TEN THOUSAND DOLLARS OF RECEIPTS WITHIN THE 5 METROPOLITAN COMMUTER TRANSPORTATION DISTRICT IN THE AGGREGATE MEET THE 6 THRESHOLD SET FORTH IN PARAGRAPH (B) OF THIS SUBDIVISION. 7 (II) A CORPORATION THAT DOES NOT MEET ANY OF THE THRESHOLDS SET FORTH 8 IN PARAGRAPH (C) OF THIS SUBDIVISION BUT HAS AT LEAST TEN CUSTOMERS, OR 9 LOCATIONS, OR CUSTOMERS AND LOCATIONS, AS DESCRIBED IN PARAGRAPH (C), 10 AND IS PART OF A COMBINED REPORTING GROUP THAT IS DOING BUSINESS IN THE 11 METROPOLITAN COMMUTER TRANSPORTATION DISTRICT IF THE NUMBER OF CUSTOM- 12 ERS, LOCATIONS, OR CUSTOMERS AND LOCATIONS, WITHIN THE METROPOLITAN 13 COMMUTER TRANSPORTATION DISTRICT OF THE MEMBERS OF THE UNITARY BUSINESS 14 GROUP THAT HAVE AT LEAST TEN CUSTOMERS, LOCATIONS, OR CUSTOMERS AND 15 LOCATIONS, WITHIN THE METROPOLITAN COMMUTER TRANSPORTATION DISTRICT IN 16 THE AGGREGATE MEETS ANY OF THE THRESHOLDS SET FORTH IN PARAGRAPH (C) OF 17 THIS SUBDIVISION. 18 (E) AT THE END OF EACH YEAR, THE COMMISSIONER SHALL REVIEW THE CUMULA- 19 TIVE PERCENTAGE CHANGE IN THE CONSUMER PRICE INDEX. THE COMMISSIONER 20 SHALL ADJUST THE RECEIPT THRESHOLDS SET FORTH IN THIS SUBDIVISION IF THE 21 CONSUMER PRICE INDEX HAS CHANGED BY TEN PERCENT OR MORE SINCE JANUARY 22 FIRST, TWO THOUSAND FIFTEEN, OR SINCE THE DATE THAT THE THRESHOLDS WERE 23 LAST ADJUSTED UNDER THIS SUBDIVISION. THE THRESHOLDS SHALL BE ADJUSTED 24 TO REFLECT THAT CUMULATIVE PERCENTAGE CHANGE IN THE CONSUMER PRICE 25 INDEX. THE ADJUSTED THRESHOLDS SHALL BE ROUNDED TO THE NEAREST ONE THOU- 26 SAND DOLLARS. AS USED IN THIS PARAGRAPH, "CONSUMER PRICE INDEX" MEANS 27 THE CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS (CPI-U) AVAILABLE FROM 28 THE BUREAU OF LABOR STATISTICS OF THE UNITED STATES DEPARTMENT OF LABOR. 29 ANY ADJUSTMENT SHALL APPLY TO TAX PERIODS THAT BEGIN AFTER THE ADJUST- 30 MENT IS MADE. 31 S 8. Paragraph (a) and the opening paragraph of paragraph (b) of 32 subdivision 2 of section 209-B of the tax law, paragraph (a) as amended 33 by chapter 760 of the laws of 1992, and the opening paragraph of para- 34 graph (b) as amended by chapter 11 of the laws of 1983, are amended to 35 read as follows: 36 (a) ascertaining the percentage which the average value of the taxpay- 37 er's real and tangible personal property, whether owned or rented to it, 38 within the metropolitan commuter transportation district during the 39 period covered by its report bears to the average value of all the 40 taxpayer's real and tangible personal property, whether owned or rented 41 to it, within the state during such period; provided that the term 42 "value of the taxpayer's real and tangible personal property" shall 43 [have the same meaning as is ascribed to that term by subparagraph one 44 of paragraph (a) of subdivision three of section two hundred ten] MEAN 45 THE FAIR MARKET VALUE OF SUCH PROPERTIES FOR FEDERAL INCOME TAX PURPOSES 46 (EXCEPT THAT IN THE CASE OF RENTED PROPERTY SUCH VALUE SHALL MEAN THE 47 PRODUCT OF (I) EIGHT AND (II) THE GROSS RENTS PAYABLE FOR THE RENTAL OF 48 SUCH PROPERTY DURING THE TAXABLE YEAR); 49 ascertaining the percentage which the receipts of the taxpayer, AS 50 DETERMINED IN SECTION 210-A OF THIS ARTICLE computed on the cash or 51 accrual basis according to the method of accounting used in the computa- 52 tion of its entire net income, arising during such period from: 53 S 9. Intentionally omitted. 54 S 10. Subdivisions 2-a and 2-b of section 209-B of the tax law are 55 REPEALED. S. 6359--C 43 1 S 11. Subdivisions 3 and 5 of section 209-B of the tax law, subdivi- 2 sion 3 as amended by chapter 11 of the laws of 1983 and subdivision 5 as 3 amended by chapter 166 of the laws of 1991, are amended to read as 4 follows: 5 3. A corporation shall not be deemed to be doing business, employing 6 capital, owning or leasing property, or maintaining an office, OR DERIV- 7 ING RECEIPTS FROM ACTIVITY in the metropolitan commuter transportation 8 district, for the purposes of this section, by reason of (a) the mainte- 9 nance of cash balances with banks or trust companies in the metropolitan 10 commuter transportation district, or (b) the ownership of shares of 11 stock or securities kept in the metropolitan commuter transportation 12 district, if kept in a safe deposit box, safe, vault or other receptacle 13 rented for the purpose, or if pledged as collateral security, or if 14 deposited with one or more banks or trust companies, or brokers who are 15 members of a recognized security exchange, in safekeeping or custody 16 accounts, or (c) the taking of any action by any such bank or trust 17 company or broker, which is incidental to the rendering of safekeeping 18 or custodian service to such corporation, or (d) the maintenance of an 19 office in the metropolitan commuter transportation district by one or 20 more officers or directors of the corporation who are not employees of 21 the corporation if the corporation otherwise is not doing business in 22 the metropolitan commuter transportation district, and does not employ 23 capital or own or lease property in the metropolitan commuter transpor- 24 tation district, or (e) the keeping of books or records of a corporation 25 in the metropolitan commuter transportation district if such books or 26 records are not kept by employees of such corporation and such corpo- 27 ration does not otherwise do business, employ capital, own or lease 28 property or maintain an office in the metropolitan commuter transporta- 29 tion district, or (f) any combination of the foregoing activities. 30 5. The provisions concerning reports under [section] SECTIONS TWO 31 HUNDRED TEN-C AND two hundred eleven shall be applicable to this 32 section, except that for purposes of an automatic extension for six 33 months for filing a report covering the tax surcharge imposed by this 34 section, such automatic extension shall be allowed only if a taxpayer 35 files with the commissioner an application for extension in such form as 36 said commissioner may prescribe by regulation and pays on or before the 37 date of such filing in addition to any other amounts required under this 38 article, either ninety percent of the entire tax surcharge required to 39 be paid under this section for the applicable period, or not less than 40 the tax surcharge shown on the taxpayer's return for the preceding taxa- 41 ble year, if such preceding taxable year was a taxable year of twelve 42 months; provided, however, that in no event shall such amount be less 43 than the product of the following three amounts: (1) the tax surcharge 44 rate in effect for the taxable year pursuant to subdivision one of this 45 section, (2) the fixed dollar minimum applicable to such taxpayer as 46 determined under paragraph (d) of subdivision one of section two hundred 47 ten of this chapter for the taxable year, and (3) the percentage deter- 48 mined under subdivision two of this section for the preceding taxable 49 year, unless the taxpayer was not subject to the tax surcharge imposed 50 pursuant to this section with respect to such year, in which case such 51 percentage shall be deemed to be one hundred percent. The tax surcharge 52 imposed by this section shall be payable to the commissioner in full at 53 the time the report is required to be filed, and such tax surcharge or 54 the balance thereof, imposed on any taxpayer which ceases to exercise 55 its franchise or be subject to the tax surcharge imposed by this section 56 shall be payable to the commissioner at the time the report is required S. 6359--C 44 1 to be filed, provided such tax surcharge of a domestic corporation which 2 continues to possess its franchise shall be subject to adjustment as the 3 circumstances may require; all other tax surcharges of any such taxpay- 4 er, which pursuant to the foregoing provisions of this section would 5 otherwise be payable subsequent to the time such report is required to 6 be filed, shall nevertheless be payable at such time. All of the 7 provisions of this article presently applicable are applicable to the 8 tax surcharge imposed by this section. 9 S 12. Subdivision 1 of section 210 of the tax law, as added by chapter 10 817 of the laws of 1987, the opening paragraph as amended by section 1 11 of part D and paragraph (g) as amended by section 2 of part A of chapter 12 63 of the laws of 2000, paragraph (a) as amended by section 2 of part N 13 of chapter 60 of the laws of 2007, subparagraph 2 of paragraph (b) as 14 amended by section 1 of part GG-1 of chapter 57 of the laws of 2008, 15 subparagraph 3 of paragraph (b) as added by section 2 of part Z of chap- 16 ter 59 of the laws of 2013, subparagraph (ii) of paragraph (c) as 17 amended by section 2 of part C and subparagraph 5 of paragraph (d) as 18 added by section 3 of part C of chapter 56 of the laws of 2011, subpara- 19 graph (vi) of paragraph (a) as amended by section 1 of part C of chapter 20 56 of the laws of 2011, subparagraph (vii) of paragraph (a) as added by 21 section 1 of part Z of chapter 59 of the laws of 2013, subparagraph 22 (iii) of paragraph (c) as added by section 3 of part Z of chapter 59 of 23 the laws of 2013, and subparagraph 6 of paragraph (d) as added by 24 section 4 of part Z of chapter 59 of the laws of 2013, paragraph (b) as 25 amended by section 1 of part GG1, subparagraph 3 of paragraph (d) as 26 amended by section 3 of part AA1, subparagraph 4 of paragraph (d) as 27 added by section 2 of part AA1 and subparagraph 1 of paragraph (g) as 28 amended by section 4 of part AA1 of chapter 57 of the laws of 2008, 29 paragraph (c) as amended by section 10 of part A and subparagraph 1 of 30 paragraph (d) as amended by section 12 of part A of chapter 56 of the 31 laws of 1998, paragraph (d) as amended by chapter 760 of the laws of 32 1992, paragraph (e) as amended by section 1 of part P of chapter 407 of 33 the laws of 1999, and paragraph (f) as amended by section 2 of part E of 34 chapter 61 of the laws of 2005, is amended to read as follows: 35 1. The tax imposed by subdivision one of section two hundred nine of 36 this chapter shall be: (A) in the case of each taxpayer other than a New 37 York S corporation or a qualified homeowners association, the [sum of 38 (1) the] highest of the amounts prescribed in paragraphs (a), (b), [(c)] 39 and (d) of this subdivision [and (2) the amount prescribed in paragraph 40 (e) of this subdivision], (B) in the case of each New York S corpo- 41 ration, the amount prescribed in paragraph [(g)] (D) of this subdivi- 42 sion, and (C) in the case of a qualified homeowners association, the 43 [sum of (1) the] highest of the amounts prescribed in paragraphs (a)[,] 44 AND (b) [and (c)] of this subdivision [and (2) the amount prescribed in 45 paragraph (e) of this subdivision]. For purposes of this paragraph, the 46 term "qualified homeowners association" means a homeowners association, 47 as such term is defined in subsection (c) of section five hundred twen- 48 ty-eight of the internal revenue code without regard to subparagraph (E) 49 of paragraph one of such subsection (relating to elections to be taxed 50 pursuant to such section), which has no homeowners association taxable 51 income, as such term is defined in subsection (d) of such section. 52 Provided, however, that in the case of a small business taxpayer (other 53 than a New York S corporation) as defined in paragraph (f) of this 54 subdivision, FOR TAXABLE YEARS BEGINNING BEFORE JANUARY FIRST, TWO THOU- 55 SAND SIXTEEN, if the amount prescribed in such paragraph (b) is higher 56 than the amount prescribed in such paragraph (a) solely by reason of the S. 6359--C 45 1 application of the rate applicable to small business taxpayers, then 2 with respect to such taxpayer the tax referred to in the previous 3 sentence shall be [the sum of (1) the highest] HIGHER of the amounts 4 prescribed in paragraphs (a)[, (c)] and (d) of this subdivision [and (2) 5 the amount prescribed in paragraph (e) of this subdivision]. 6 (a) [Entire net] BUSINESS income base. [For taxable years beginning 7 before July first, nineteen hundred ninety-nine, the amount prescribed 8 by this paragraph shall be computed at the rate of nine percent of the 9 taxpayer's entire net income base. For taxable years beginning after 10 June thirtieth, nineteen hundred ninety-nine and before July first, two 11 thousand, the amount prescribed by this paragraph shall be computed at 12 the rate of eight and one-half percent of the taxpayer's entire net 13 income base. For taxable years beginning after June thirtieth, two thou- 14 sand and before July first, two thousand one, the amount prescribed by 15 this paragraph shall be computed at the rate of eight percent of the 16 taxpayer's entire net income base. For taxable years beginning after 17 June thirtieth, two thousand one and before January first, two thousand 18 seven, the amount prescribed by this paragraph shall be computed at the 19 rate of seven and one-half percent of the taxpayer's entire net income 20 base.] For taxable years beginning [on or after] BEFORE January first, 21 two thousand [seven] SIXTEEN, the amount prescribed by this paragraph 22 shall be computed at the rate of seven and one-tenth percent of the 23 taxpayer's [entire net] BUSINESS income base. FOR TAXABLE YEARS BEGIN- 24 NING ON OR AFTER JANUARY FIRST, TWO THOUSAND SIXTEEN, THE AMOUNT 25 PRESCRIBED BY THIS PARAGRAPH SHALL BE SIX AND ONE-HALF PERCENT OF THE 26 TAXPAYER'S BUSINESS INCOME BASE. The taxpayer's [entire net] BUSINESS 27 income base shall mean the portion of the taxpayer's [entire net] BUSI- 28 NESS income allocated within the state as hereinafter provided[, subject 29 to any modification required by paragraphs (d) and (e) of subdivision 30 three of this section]. However, in the case of a small business taxpay- 31 er, as defined in paragraph (f) of this subdivision, the amount 32 prescribed by this paragraph shall be computed pursuant to subparagraph 33 (iv) of this paragraph and in the case of a manufacturer, as defined in 34 subparagraph (vi) of this paragraph, the amount prescribed by this para- 35 graph shall be computed pursuant to subparagraph (vi) of this paragraph. 36 [(i) if the entire net income base is not more than two hundred thou- 37 sand dollars, (1) for taxable years beginning before July first, nine- 38 teen hundred ninety-nine, the amount shall be eight percent of the 39 entire net income base; (2) for taxable years beginning after June thir- 40 tieth, nineteen hundred ninety-nine and before July first, two thousand 41 three, the amount shall be seven and one-half percent of the entire net 42 income base; and (3) for taxable years beginning after June thirtieth, 43 two thousand three and before January first, two thousand five, the 44 amount shall be 6.85 percent of the entire net income base; 45 (ii) if the entire net income base is more than two hundred thousand 46 dollars but not over two hundred ninety thousand dollars, (1) for taxa- 47 ble years beginning before July first, nineteen hundred ninety-nine, the 48 amount shall be the sum of (a) sixteen thousand dollars, (b) nine 49 percent of the excess of the entire net income base over two hundred 50 thousand dollars and (c) five percent of the excess of the entire net 51 income base over two hundred fifty thousand dollars; (2) for taxable 52 years beginning after June thirtieth, nineteen hundred ninety-nine and 53 before July first, two thousand, the amount shall be the sum of (a) 54 fifteen thousand dollars, (b) eight and one-half percent of the excess 55 of the entire net income base over two hundred thousand dollars and (c) 56 five percent of the excess of the entire net income base over two S. 6359--C 46 1 hundred fifty thousand dollars; (3) for taxable years beginning after 2 June thirtieth, two thousand and before July first, two thousand one, 3 the amount shall be the sum of (a) fifteen thousand dollars, (b) eight 4 percent of the excess of the entire net income base over two hundred 5 thousand dollars and (c) two and one-half percent of the excess of the 6 entire net income base over two hundred fifty thousand dollars; (4) for 7 taxable years beginning after June thirtieth, two thousand one and 8 before July first, two thousand three, the amount shall be seven and 9 one-half percent of the entire net income base; and (5) for taxable 10 years beginning after June thirtieth, two thousand three and before 11 January first, two thousand five, the amount shall be the sum of (a) 12 thirteen thousand seven hundred dollars, (b) 7.5 percent of the excess 13 of the entire net income base over two hundred thousand dollars and (c) 14 3.25 percent of the excess of the entire net income base over two 15 hundred fifty thousand dollars; 16 (iii) for taxable years beginning on or after January first, two thou- 17 sand five and ending before January first, two thousand seven, if the 18 entire net income base is not more than two hundred ninety thousand 19 dollars the amount shall be six and one-half percent of the entire net 20 income base; if the entire net income base is more than two hundred 21 ninety thousand dollars but not over three hundred ninety thousand 22 dollars the amount shall be the sum of (1) eighteen thousand eight 23 hundred fifty dollars, (2) seven and one-half percent of the excess of 24 the entire net income base over two hundred ninety thousand dollars but 25 not over three hundred ninety thousand dollars and (3) seven and one- 26 quarter percent of the excess of the entire net income base over three 27 hundred fifty thousand dollars but not over three hundred ninety thou- 28 sand dollars;] 29 (iv) for taxable years beginning [on or after] BEFORE January first, 30 two thousand [seven] SIXTEEN, if the [entire net] BUSINESS income base 31 is not more than two hundred ninety thousand dollars the amount shall be 32 six and one-half percent of the [entire net] BUSINESS income base; if 33 the [entire net] BUSINESS income base is more than two hundred ninety 34 thousand dollars but not over three hundred ninety thousand dollars the 35 amount shall be the sum of (1) eighteen thousand eight hundred fifty 36 dollars, (2) seven and one-tenth percent of the excess of the [entire 37 net] BUSINESS income base over two hundred ninety thousand dollars but 38 not over three hundred ninety thousand dollars and (3) four and thirty- 39 five hundredths percent of the excess of the [entire net] BUSINESS 40 income base over three hundred fifty thousand dollars but not over three 41 hundred ninety thousand dollars; 42 (v) if the taxable period to which [subparagraphs (i), (ii), (iii), 43 and] SUBPARAGRAPH (iv) of this paragraph [apply] APPLIES is less than 44 twelve months, the amount prescribed by this paragraph shall be computed 45 as follows: 46 (A) Multiply the [entire net] BUSINESS income base for such taxpayer 47 by twelve; 48 (B) Divide the result obtained in (A) by the number of months in the 49 taxable year; 50 (C) Compute an amount pursuant to [subparagraphs (i) and (ii)] SUBPAR- 51 AGRAPH (IV) as if the result obtained in (B) were the taxpayer's [entire 52 net] BUSINESS income base; 53 (D) Multiply the result obtained in (C) by the number of months in the 54 taxpayer's taxable year; 55 (E) Divide the result obtained in (D) by twelve. S. 6359--C 47 1 (vi) for taxable years beginning on or after January thirty-first, two 2 thousand seven, the amount prescribed by this paragraph for a taxpayer 3 which is a qualified New York manufacturer, shall be computed at the 4 rate of six and one-half (6.5) percent of the taxpayer's [entire net] 5 BUSINESS income base. [For taxable years beginning on or after January 6 first, two thousand twelve and before January first, two thousand 7 fifteen, the amount prescribed by this paragraph for a taxpayer which is 8 an eligible qualified New York manufacturer shall be computed at the 9 rate of three and one-quarter (3.25) percent of the taxpayer's entire 10 net income base.] The term "manufacturer" shall mean a taxpayer which 11 during the taxable year is principally engaged in the production of 12 goods by manufacturing, processing, assembling, refining, mining, 13 extracting, farming, agriculture, horticulture, floriculture, viticul- 14 ture or commercial fishing. However, the generation and distribution of 15 electricity, the distribution of natural gas, and the production of 16 steam associated with the generation of electricity shall not be quali- 17 fying activities for a manufacturer under this subparagraph. Moreover, 18 the combined group shall be considered a "manufacturer" for purposes of 19 this subparagraph only if the combined group during the taxable year is 20 principally engaged in the activities set forth in this paragraph, or 21 any combination thereof. A taxpayer or a combined group shall be "prin- 22 cipally engaged" in activities described above if, during the taxable 23 year, more than fifty percent of the gross receipts of the taxpayer or 24 combined group, respectively, are derived from receipts from the sale of 25 goods produced by such activities. In computing a combined group's gross 26 receipts, intercorporate receipts shall be eliminated. A "qualified New 27 York manufacturer" is a manufacturer which has property in New York 28 which is described in [clause (A) of subparagraph (i) of paragraph (b) 29 of] subdivision [twelve of this section] ONE OF SECTION TWO HUNDRED 30 TEN-B OF THIS ARTICLE and either (I) the adjusted basis of such property 31 for federal income tax purposes at the close of the taxable year is at 32 least one million dollars or (II) all of its real and personal property 33 is located in New York. In addition, a "qualified New York manufacturer" 34 means a taxpayer which is defined as a qualified emerging technology 35 company under paragraph (c) of subdivision one of section thirty-one 36 hundred two-e of the public authorities law regardless of the ten 37 million dollar limitation expressed in subparagraph one of such para- 38 graph (c). [The commissioner shall establish guidelines and criteria 39 that specify requirements by which a manufacturer may be classified as 40 an eligible qualified New York manufacturer. Criteria may include but 41 not be limited to factors such as regional unemployment, the economic 42 impact that manufacturing has on the surrounding community, population 43 decline within the region and median income within the region in which 44 the manufacturer is located. In establishing these guidelines and crite- 45 ria, the commissioner shall endeavor that the total annual cost of the 46 lower rates shall not exceed twenty-five million dollars.] A TAXPAYER 47 OR, IN THE CASE OF A COMBINED REPORT, A COMBINED GROUP, THAT DOES NOT 48 SATISFY THE CRITERIA IN SUBDIVISION THIRTEEN OF THIS SECTION MAY BE A 49 QUALIFIED NEW YORK MANUFACTURER IF THE TAXPAYER OR THE COMBINED GROUP 50 EMPLOYS DURING THE TAXABLE YEAR AT LEAST TWO THOUSAND FIVE HUNDRED 51 EMPLOYEES IN MANUFACTURING IN NEW YORK AND THE TAXPAYER OR THE COMBINED 52 GROUP HAS PROPERTY IN THE STATE USED IN MANUFACTURING, THE ADJUSTED 53 BASIS OF WHICH FOR FEDERAL INCOME TAX PURPOSES AT THE CLOSE OF THE TAXA- 54 BLE YEAR IS AT LEAST ONE HUNDRED MILLION DOLLARS. 55 (vii) For a qualified New York manufacturer, as defined in subpara- 56 graph (vi) of this paragraph, the rate at which the tax is computed [in S. 6359--C 48 1 effect for taxable years beginning on or after January first, two thou- 2 sand thirteen and before January first, two thousand fourteen for quali- 3 fied New York manufacturers shall be reduced by nine and two-tenths 4 percent for taxable years commencing on or after January first, two 5 thousand fourteen and before January first, two thousand fifteen, twelve 6 and three-tenths percent for taxable years commencing on or after Janu- 7 ary first, two thousand fifteen and before January first, two thousand 8 sixteen, fifteen and four-tenths percent for taxable years commencing on 9 or after January first, two thousand sixteen and before January first, 10 two thousand eighteen, and twenty-five percent for taxable years begin- 11 ning on or after January first, two thousand eighteen] SHALL BE ZERO 12 PERCENT OF THE TAXPAYER'S BUSINESS INCOME BASE. 13 (VIII) (A) IN COMPUTING THE BUSINESS INCOME BASE, TAXPAYERS SHALL BE 14 ALLOWED BOTH A PRIOR NET OPERATING LOSS CONVERSION SUBTRACTION UNDER 15 THIS SUBPARAGRAPH AND A NET OPERATING LOSS DEDUCTION UNDER SUBPARAGRAPH 16 (IX) OF THIS PARAGRAPH. THE PRIOR NET OPERATING LOSS CONVERSION 17 SUBTRACTION COMPUTED UNDER THIS SUBPARAGRAPH SHALL BE APPLIED AGAINST 18 THE BUSINESS INCOME BASE BEFORE THE NET OPERATING LOSS DEDUCTION 19 COMPUTED UNDER SUBPARAGRAPH (IX) OF THIS PARAGRAPH. 20 (B) PRIOR NET OPERATING LOSS CONVERSION SUBTRACTION. 21 (1) DEFINITIONS. 22 (I) "BASE YEAR" MEANS THE LAST TAXABLE YEAR BEGINNING ON OR AFTER 23 JANUARY FIRST, TWO THOUSAND FOURTEEN AND BEFORE JANUARY FIRST, TWO THOU- 24 SAND FIFTEEN. 25 (II) "UNABSORBED NET OPERATING LOSS" MEANS THE UNABSORBED PORTION OF 26 NET OPERATING LOSS AS CALCULATED UNDER PARAGRAPH (F) OF SUBDIVISION NINE 27 OF SECTION TWO HUNDRED EIGHT OF THIS ARTICLE OR SUBSECTION (K-1) OF 28 SECTION FOURTEEN HUNDRED FIFTY-THREE OF THIS CHAPTER AS SUCH SECTIONS 29 WERE IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN, THAT WAS 30 NOT DEDUCTIBLE IN PREVIOUS TAXABLE YEARS AND WAS ELIGIBLE FOR CARRYOVER 31 ON THE LAST DAY OF THE BASE YEAR, INCLUDING ANY NET OPERATING LOSS 32 SUSTAINED BY THE TAXPAYER DURING THE BASE YEAR. 33 (III) "BASE YEAR BAP" MEANS THE TAXPAYER'S BUSINESS ALLOCATION 34 PERCENTAGE AS CALCULATED UNDER PARAGRAPH (A) OF SUBDIVISION THREE OF 35 THIS SECTION FOR THE BASE YEAR, OR THE TAXPAYER'S ALLOCATION PERCENTAGE 36 AS CALCULATED UNDER SECTION FOURTEEN HUNDRED FIFTY-FOUR OF THIS CHAPTER 37 FOR PURPOSES OF CALCULATING ENTIRE NET INCOME FOR THE BASE YEAR, AS SUCH 38 SECTIONS WERE IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN. 39 (IV) "BASE YEAR TAX RATE" MEANS THE TAXPAYER'S TAX RATE FOR THE BASE 40 YEAR AS CALCULATED UNDER THIS PARAGRAPH OR SUBSECTION (A) OF SECTION 41 FOURTEEN HUNDRED FIFTY-FIVE OF THIS CHAPTER, AS SUCH PROVISIONS WERE IN 42 EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN. 43 (2) THE PRIOR NET OPERATING LOSS CONVERSION SUBTRACTION SHALL BE 44 CALCULATED AS FOLLOWS: 45 (I) THE TAXPAYER SHALL FIRST CALCULATE THE TAX VALUE OF ITS UNABSORBED 46 NET OPERATING LOSS FOR THE BASE YEAR. THE VALUE IS EQUAL TO THE PRODUCT 47 OF (I) THE AMOUNT OF THE TAXPAYER'S UNABSORBED NET OPERATING LOSS, (II) 48 THE TAXPAYER'S BASE YEAR BAP, AND (III) THE TAXPAYER'S BASE YEAR TAX 49 RATE. 50 (II) THE PRODUCT DETERMINED UNDER ITEM (I) OF THIS SUBCLAUSE IS THEN 51 DIVIDED BY SIX AND ONE-HALF PERCENT, OR IN THE CASE OF A QUALIFIED NEW 52 YORK MANUFACTURER, FIVE AND SEVEN-TENTHS PERCENT. THIS RESULT SHALL 53 EQUAL THE TAXPAYER'S PRIOR NET OPERATING LOSS CONVERSION SUBTRACTION 54 POOL. 55 (III) THE TAXPAYER'S PRIOR NET OPERATING LOSS CONVERSION SUBTRACTION 56 FOR THE TAXABLE YEAR SHALL EQUAL ONE-HALF FOR NO MORE THAN TWO CONSEC- S. 6359--C 49 1 UTIVE TAX YEARS OR ONE-TENTH OF ITS NET OPERATING LOSS CONVERSION 2 SUBTRACTION POOL PLUS ANY AMOUNT OF UNUSED PRIOR NET OPERATING LOSS 3 CONVERSION SUBTRACTION FROM PRECEDING TAXABLE YEARS. PROVIDED, HOWEVER, 4 THE PRIOR NET OPERATING LOSS CONVERSION SUBTRACTION OF A SMALL BUSINESS 5 CORPORATION, AS DEFINED IN PARAGRAPH (F) OF THIS SUBDIVISION, AS OF THE 6 LAST DAY OF THE BASE YEAR, SHALL NOT BE SUBJECT TO THE ONE-TENTH LIMITA- 7 TION IN THE PREVIOUS SENTENCE. 8 (3) COMBINED GROUPS. (I) WHERE A TAXPAYER WAS PROPERLY INCLUDED OR 9 REQUIRED TO BE INCLUDED IN A COMBINED REPORT FOR THE BASE YEAR PURSUANT 10 TO SECTION TWO HUNDRED ELEVEN OF THIS ARTICLE OR A COMBINED RETURN UNDER 11 SECTION FOURTEEN HUNDRED SIXTY-TWO OF THIS CHAPTER, AS SUCH SECTIONS 12 WERE IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN, AND THE 13 MEMBERS OF THE COMBINED GROUP FOR THE BASE YEAR ARE THE SAME AS THE 14 MEMBERS OF THE COMBINED GROUP FOR THE TAXABLE YEAR IMMEDIATELY SUCCEED- 15 ING THE BASE YEAR, THE COMBINED GROUP SHALL CALCULATE ITS PRIOR NET 16 OPERATING LOSS CONVERSION SUBTRACTION POOL USING THE COMBINED GROUP'S 17 TOTAL UNABSORBED NET OPERATING LOSS, BASE YEAR BAP, AND BASE YEAR TAX 18 RATE. 19 (II) IF A COMBINED GROUP INCLUDES ADDITIONAL MEMBERS IN THE TAXABLE 20 YEAR IMMEDIATELY SUCCEEDING THE BASE YEAR THAT WERE NOT INCLUDED IN THE 21 COMBINED GROUP DURING THE BASE YEAR, EACH BASE YEAR COMBINED GROUP AND 22 EACH TAXPAYER THAT FILED SEPARATELY IN THE BASE YEAR BUT IS INCLUDED IN 23 THE COMBINED GROUP IN THE TAXABLE YEAR SUCCEEDING THE BASE YEAR SHALL 24 CALCULATE ITS PRIOR NET OPERATING LOSS CONVERSION SUBTRACTION POOL, AND 25 THE SUM OF THE POOLS SHALL BE THE COMBINED PRIOR NET OPERATING LOSS 26 CONVERSION SUBTRACTION POOL OF THE COMBINED GROUP. 27 (III) IF A TAXPAYER WAS PROPERLY INCLUDED IN A COMBINED REPORT FOR THE 28 BASE YEAR AND FILES A SEPARATE REPORT IN A SUBSEQUENT TAXABLE YEAR, THEN 29 THE AMOUNT OF REMAINING PRIOR NET OPERATING LOSS CONVERSION SUBTRACTION 30 ALLOWED TO THE TAXPAYER FILING SUCH SEPARATE REPORT SHALL BE PROPOR- 31 TIONATE TO THE AMOUNT THAT SUCH TAXPAYER CONTRIBUTED TO THE PRIOR NET 32 OPERATING LOSS CONVERSION SUBTRACTION POOL ON A COMBINED BASIS, AND THE 33 REMAINING PRIOR NET OPERATING LOSS CONVERSION SUBTRACTION ALLOWED TO THE 34 REMAINING MEMBERS OF THE COMBINED GROUP SHALL BE REDUCED ACCORDINGLY. 35 (4) THE PRIOR NET OPERATING LOSS CONVERSION SUBTRACTION MAY BE USED TO 36 REDUCE THE TAXPAYER'S TAX ON ALLOCATED BUSINESS INCOME TO THE HIGHER OF 37 THE TAX ON THE CAPITAL BASE UNDER PARAGRAPH (B) OF THIS SUBDIVISION OR 38 THE FIXED DOLLAR MINIMUM UNDER PARAGRAPH (D) OF THIS SUBDIVISION. ANY 39 AMOUNT OF UNUSED SUBTRACTION SHALL BE CARRIED FORWARD TO SUBSEQUENT TAX 40 YEAR OR YEARS UNTIL TAX YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO 41 THOUSAND THIRTY-SIX, AND SHALL NOT BE SUBJECT TO THE ONE-TENTH LIMITA- 42 TION IN THE SUBSEQUENT TAX YEAR OR YEARS. 43 (IX) NET OPERATING LOSS DEDUCTION. IN COMPUTING THE BUSINESS INCOME 44 BASE, A NET OPERATING LOSS DEDUCTION SHALL BE ALLOWED. A NET OPERATING 45 LOSS DEDUCTION IS THE AMOUNT OF NET OPERATING LOSS OR LOSSES FROM ONE OR 46 MORE TAXABLE YEARS THAT ARE CARRIED FORWARD TO A PARTICULAR INCOME YEAR. 47 A NET OPERATING LOSS IS THE AMOUNT OF A BUSINESS LOSS INCURRED IN A 48 PARTICULAR TAX YEAR MULTIPLIED BY THE APPORTIONMENT FACTOR FOR THAT YEAR 49 AS DETERMINED UNDER SECTION TWO HUNDRED TEN-A OF THIS ARTICLE. THE MAXI- 50 MUM NET OPERATING DEDUCTION THAT IS ALLOWED IN A TAXABLE YEAR IS THE 51 AMOUNT THAT REDUCES THE TAXPAYER'S TAX ON ALLOCATED BUSINESS INCOME TO 52 THE HIGHER OF THE TAX ON THE CAPITAL BASE OR THE FIXED DOLLAR MINIMUM. 53 SUCH DEDUCTION AND LOSS ARE DETERMINED IN ACCORDANCE WITH THE FOLLOWING: 54 (1) SUCH NET OPERATING LOSS DEDUCTION IS NOT LIMITED TO THE AMOUNT 55 ALLOWED UNDER SECTION ONE HUNDRED SEVENTY-TWO OF THE INTERNAL REVENUE 56 CODE OR THE AMOUNT THAT WOULD HAVE BEEN ALLOWED IF THE TAXPAYER HAD NOT S. 6359--C 50 1 MADE AN ELECTION UNDER SUBCHAPTER S OF CHAPTER ONE OF THE INTERNAL 2 REVENUE CODE. 3 (2) SUCH NET OPERATING LOSS DEDUCTION SHALL NOT INCLUDE ANY NET OPER- 4 ATING LOSS INCURRED DURING ANY TAXABLE YEAR BEGINNING PRIOR TO JANUARY 5 FIRST, TWO THOUSAND FIFTEEN, OR DURING ANY TAXABLE YEAR IN WHICH THE 6 TAXPAYER WAS NOT SUBJECT TO THE TAX IMPOSED BY THIS ARTICLE. 7 (3) A TAXPAYER THAT FILES AS PART OF A FEDERAL CONSOLIDATED RETURN BUT 8 ON A SEPARATE BASIS FOR PURPOSES OF THIS ARTICLE MUST COMPUTE ITS 9 DEDUCTION AND LOSS AS IF IT WERE FILING ON A SEPARATE BASIS FOR FEDERAL 10 INCOME TAX PURPOSES. 11 (4) A NET OPERATING LOSS MUST BE CARRIED FORWARD TO EACH OF THE TWENTY 12 TAXABLE YEARS FOLLOWING THE TAXABLE YEAR OF THE LOSS. NO CARRYBACK OF 13 THE NET OPERATING LOSS IS ALLOWED. A TAXPAYER MUST APPLY BOTH OF THESE 14 LIMITATIONS IN COMPUTING SUCH NET OPERATING LOSS DEDUCTION. 15 (5) SUCH NET OPERATING LOSS DEDUCTION SHALL NOT INCLUDE ANY NET OPER- 16 ATING LOSS INCURRED DURING A NEW YORK S YEAR; PROVIDED, HOWEVER, A NEW 17 YORK S YEAR MUST BE TREATED AS A TAXABLE YEAR FOR PURPOSES OF DETERMIN- 18 ING THE NUMBER OF TAXABLE YEARS TO WHICH A NET OPERATING LOSS MAY BE 19 CARRIED FORWARD. 20 (6) WHERE THERE ARE TWO OR MORE ALLOCATED NET OPERATING LOSSES, OR 21 PORTIONS THEREOF, CARRIED FORWARD TO BE DEDUCTED IN ONE PARTICULAR TAX 22 YEAR FROM ALLOCATED BUSINESS INCOME, THE EARLIEST ALLOCATED LOSS 23 INCURRED MUST BE APPLIED FIRST. 24 (b) Capital base. (1) The [amount prescribed by this paragraph for 25 taxable years beginning before January first, two thousand eight shall 26 be computed at .178 percent for each dollar of the taxpayer's total 27 business and investment capital, or the portion thereof allocated within 28 the state as hereinafter provided. For taxable years beginning on or 29 after January first, two thousand eight, the] amount prescribed by this 30 paragraph shall be computed at .15 percent for each dollar of the 31 taxpayer's total business [and investment] capital, or the portion ther- 32 eof allocated within the state as hereinafter provided. However, in the 33 case of a cooperative housing corporation as defined in the internal 34 revenue code, the applicable rate shall be .04 percent. In no event 35 shall the amount prescribed by this paragraph exceed three hundred fifty 36 thousand dollars for qualified New York manufacturers and for all other 37 taxpayers [ten] FIVE million dollars [for taxable years beginning on or 38 after January first, two thousand eight but before January first, two 39 thousand eleven and one million dollars for taxable years beginning on 40 or after January first, two thousand eleven]. 41 (2) For purposes of subparagraph one of this paragraph, the term 42 "manufacturer" shall mean a taxpayer which during the taxable year is 43 principally engaged in the production of goods by manufacturing, proc- 44 essing, assembling, refining, mining, extracting, farming, agriculture, 45 horticulture, floriculture, viticulture or commercial fishing. Moreover, 46 for purposes of computing the capital base in a combined report, the 47 combined group shall be considered a "manufacturer" for purposes of this 48 subparagraph only if the combined group during the taxable year is prin- 49 cipally engaged in the activities set forth in this subparagraph, or any 50 combination thereof. A taxpayer or a combined group shall be "principal- 51 ly engaged" in activities described above if, during the taxable year, 52 more than fifty percent of the gross receipts of the taxpayer or 53 combined group, respectively, are derived from receipts from the sale of 54 goods produced by such activities. In computing a combined group's gross 55 receipts, intercorporate receipts shall be eliminated. A "qualified New 56 York manufacturer" is a manufacturer that has property in New York that S. 6359--C 51 1 is described in [clause (A) of subparagraph (i) of paragraph (b) of] 2 subdivision [twelve of this section] ONE OF SECTION TWO HUNDRED TEN-B OF 3 THIS ARTICLE and either (i) the adjusted basis of that property for 4 federal income tax purposes at the close of the taxable year is at least 5 one million dollars or (ii) all of its real and personal property is 6 located in New York. In addition, a "qualified New York manufacturer" 7 means a taxpayer that is defined as a qualified emerging technology 8 company under paragraph (c) of subdivision one of section thirty-one 9 hundred two-e of the public authorities law regardless of the ten 10 million dollar limitation expressed in subparagraph one of such para- 11 graph. 12 (3) For a qualified New York manufacturer, as defined in subparagraph 13 two of this paragraph, the rate at which the tax is computed in effect 14 for taxable years beginning on or after January first, two thousand 15 thirteen and before January first, two thousand fourteen shall be 16 reduced by nine and two-tenths percent for taxable years commencing on 17 or after January first, two thousand fourteen and before January first, 18 two thousand fifteen, twelve and three-tenths percent for taxable years 19 commencing on or after January first, two thousand fifteen and before 20 January first, two thousand sixteen, fifteen and four-tenths percent for 21 taxable years commencing on or after January first, two thousand sixteen 22 and before January first, two thousand eighteen, and twenty-five percent 23 for taxable years beginning on or after January first, two thousand 24 eighteen. 25 (c) [Minimum taxable income bases. (i) For taxable years beginning 26 after nineteen hundred eighty-six and before nineteen hundred eighty- 27 nine, the amount prescribed by this paragraph shall be computed at the 28 rate of three and one-half percent of the taxpayer's pre-nineteen 29 hundred ninety minimum taxable income base. For taxable years beginning 30 in nineteen hundred eighty-nine, the amount prescribed by this paragraph 31 shall be computed at the rate of five percent of the taxpayer's pre- 32 nineteen hundred ninety minimum taxable income base. A "taxpayer's pre- 33 nineteen hundred ninety minimum taxable income base" shall mean the 34 portion of the taxpayer's entire net income allocated within the state 35 as hereinafter provided, subject to any modification required by para- 36 graphs (d) and (e) of subdivision three of this section; 37 (ii) (A) For taxable years beginning on or after January first, two 38 thousand seven, the amount prescribed by this paragraph shall be 39 computed at the rate of one and one-half percent of the taxpayer's mini- 40 mum taxable income base. The "taxpayer's minimum taxable income base" 41 shall mean the portion of the taxpayer's minimum taxable income allo- 42 cated within the state as hereinafter provided, subject to any modifica- 43 tions required by paragraphs (d) and (e) of subdivision three of this 44 section. 45 (B) For taxable years beginning on or after January first, two thou- 46 sand twelve and before January first, two thousand fifteen, the amount 47 prescribed by this paragraph for an eligible qualified New York manufac- 48 turer shall be computed at the rate of seventy-five hundredths (.75) 49 percent of the taxpayer's minimum taxable income base. For purposes of 50 this clause, the term "eligible qualified New York manufacturer" shall 51 have the same meaning as in subparagraph (vi) of paragraph (a) of this 52 subdivision. 53 (iii) For a qualified New York manufacturer, as defined in subpara- 54 graph (vi) of paragraph (a) of this subdivision, the rate at which the 55 tax is computed in effect for taxable years beginning on or after Janu- 56 ary first, two thousand thirteen and before January first, two thousand S. 6359--C 52 1 fourteen for qualified New York manufacturers shall be reduced by nine 2 and two-tenths percent for taxable years commencing on or after January 3 first, two thousand fourteen and before January first, two thousand 4 fifteen, twelve and three-tenths percent for taxable years commencing on 5 or after January first, two thousand fifteen and before January first, 6 two thousand sixteen, fifteen and four-tenths percent for taxable years 7 commencing on or after January first, two thousand sixteen and before 8 January first, two thousand eighteen, and twenty-five percent for taxa- 9 ble years beginning on or after January first, two thousand eighteen.] 10 (d) Fixed dollar minimum. (1) The [amount prescribed by this paragraph 11 shall be for a taxpayer which during the taxable year has: 12 (A) a gross payroll of six million two hundred fifty thousand dollars 13 or more, one thousand five hundred dollars; 14 (B) a gross payroll of less than six million two hundred fifty thou- 15 sand dollars but more than one million dollars, four hundred twenty-five 16 dollars; 17 (C) a gross payroll of no more than one million dollars but more than 18 five hundred thousand dollars, three hundred twenty-five dollars; 19 (D) a gross payroll of no more than five hundred thousand dollars but 20 more than two hundred fifty thousand dollars, two hundred twenty-five 21 dollars; 22 (E) a gross payroll of two hundred fifty thousand dollars or less 23 (except as prescribed in clause (F) of this subparagraph), one hundred 24 dollars; 25 (F) a gross payroll of one thousand dollars or less, with total 26 receipts within and without this state of one thousand dollars or less, 27 and the average value of the assets of which are one thousand dollars or 28 less, eight hundred dollars. 29 (2) For purposes of this paragraph: 30 (A) gross payroll shall be the same as the total wages, salaries and 31 other personal service compensation of all the taxpayer's employees, 32 within and without this state, as defined in subparagraph three of para- 33 graph (a) of subdivision three of this section, except that general 34 executive officers shall not be excluded. 35 (B) total receipts shall be the same as receipts within and without 36 this state as defined in subparagraph two of paragraph (a) of subdivi- 37 sion three of this section. 38 (C) average value of the assets shall be the same as prescribed by 39 subdivision two of this section without reduction for liabilities. 40 (3) If the taxable year is less than twelve months, the amount 41 prescribed by this paragraph shall be reduced by twenty-five percent if 42 the period for which the taxpayer is subject to tax is more than six 43 months but not more than nine months and by fifty percent if the period 44 for which the taxpayer is subject to tax is not more than six months. 45 Provided, however, that in determining the amount of gross payroll and 46 total receipts for purposes of subparagraph one of this paragraph, where 47 the taxable year is less than twelve months, the amount of each shall be 48 determined by dividing the amount of each with respect to the taxable 49 year by the number of months in such taxable year and multiplying the 50 result by twelve. If the taxable year is less than twelve months, the 51 amount of New York receipts for purposes of subparagraph four of this 52 paragraph is determined by dividing the amount of the receipts for the 53 taxable year by the number of months in the taxable year and multiplying 54 the result by twelve. 55 (4) Notwithstanding subparagraphs one and two of this paragraph, for 56 taxable years beginning on or after January first, two thousand eight, S. 6359--C 53 1 the] amount prescribed by this paragraph for New York S corporations 2 will be determined in accordance with the following table: 3 If New York receipts are: The fixed dollar minimum tax is: 4 not more than $100,000 $ 25 5 more than $100,000 but not over $250,000 $ 50 6 more than $250,000 but not over $500,000 $ 175 7 more than $500,000 but not over $1,000,000 $ 300 8 more than $1,000,000 but not over $5,000,000 $1,000 9 more than $5,000,000 but not over $25,000,000 $3,000 10 Over $25,000,000 $4,500 11 [Otherwise the amount prescribed by this paragraph will be determined in 12 accordance with the following table:] 13 PROVIDED FURTHER, THE AMOUNT PRESCRIBED BY THIS PARAGRAPH FOR A QUALI- 14 FIED NEW YORK MANUFACTURER, AS DEFINED IN SUBPARAGRAPH (VI) OF PARAGRAPH 15 (A) OF THIS SUBDIVISION, WILL BE DETERMINED IN ACCORDANCE WITH THE 16 FOLLOWING TABLES: 17 FOR TAX YEARS BEGINNING ON OR AFTER JANUARY 1, 2014 AND BEFORE JANUARY 18 1, 2015: 19 IF NEW YORK RECEIPTS ARE: THE FIXED DOLLAR MINIMUM TAX IS: 20 NOT MORE THAN $100,000 $ 23 21 MORE THAN $100,000 BUT NOT OVER $250,000 $ 68 22 MORE THAN $250,000 BUT NOT OVER $500,000 $ 159 23 MORE THAN $500,000 BUT NOT OVER $1,000,000 $ 454 24 MORE THAN $1,000,000 BUT NOT OVER $5,000,000 $1,362 25 MORE THAN $5,000,000 BUT NOT OVER $25,000,000 $3,178 26 OVER $25,000,000 $4,500 27 FOR TAX YEARS BEGINNING ON OR AFTER JANUARY 1, 2015 AND BEFORE JANUARY 28 1, 2016: 29 IF NEW YORK RECEIPTS ARE: THE FIXED DOLLAR MINIMUM TAX IS: 30 NOT MORE THAN $100,000 $ 22 31 MORE THAN $100,000 BUT NOT OVER $250,000 $ 66 32 MORE THAN $250,000 BUT NOT OVER $500,000 $ 153 33 MORE THAN $500,000 BUT NOT OVER $1,000,000 $ 439 34 MORE THAN $1,000,000 BUT NOT OVER $5,000,000 $1,316 35 MORE THAN $5,000,000 BUT NOT OVER $25,000,000 $3,070 36 OVER $25,000,000 $4,385 37 FOR TAX YEARS BEGINNING ON OR AFTER JANUARY 1, 2016 AND BEFORE JANUARY 38 1, 2018: 39 IF NEW YORK RECEIPTS ARE: THE FIXED DOLLAR MINIMUM TAX IS: 40 NOT MORE THAN $100,000 $ 21 41 MORE THAN $100,000 BUT NOT OVER $250,000 $ 63 42 MORE THAN $250,000 BUT NOT OVER $500,000 $ 148 43 MORE THAN $500,000 BUT NOT OVER $1,000,000 $ 423 44 MORE THAN $1,000,000 BUT NOT OVER $5,000,000 $1,269 45 MORE THAN $5,000,000 BUT NOT OVER $25,000,000 $2,961 46 OVER $25,000,000 $4,230 47 FOR TAX YEARS BEGINNING ON OR AFTER JANUARY 1, 2018: S. 6359--C 54 1 IF NEW YORK RECEIPTS ARE: THE FIXED DOLLAR MINIMUM TAX IS: 2 NOT MORE THAN $100,000 $ 19 3 MORE THAN $100,000 BUT NOT OVER $250,000 $ 56 4 MORE THAN $250,000 BUT NOT OVER $500,000 $ 131 5 MORE THAN $500,000 BUT NOT OVER $1,000,000 $ 375 6 MORE THAN $1,000,000 BUT NOT OVER $5,000,000 $1,125 7 MORE THAN $5,000,000 BUT NOT OVER $25,000,000 $2,625 8 OVER $25,000,000 $3,750 9 OTHERWISE THE AMOUNT PRESCRIBED BY THIS PARAGRAPH WILL BE DETERMINED IN 10 ACCORDANCE WITH THE FOLLOWING TABLE: 11 If New York receipts are: The fixed dollar minimum tax is: 12 not more than $100,000 $ 25 13 more than $100,000 but not over $250,000 $ 75 14 more than $250,000 but not over $500,000 $ 175 15 more than $500,000 but not over $1,000,000 $ 500 16 more than $1,000,000 but not over $5,000,000 $1,500 17 more than $5,000,000 but not over $25,000,000 $3,500 18 Over $25,000,000 $5,000 19 For purposes of this paragraph, New York receipts are the receipts 20 [computed in accordance with subparagraph two of paragraph (a) of subdi- 21 vision three of this] INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT 22 FACTOR DETERMINED UNDER section TWO HUNDRED TEN-A for the taxable year. 23 (2) IF THE TAXABLE YEAR IS LESS THAN TWELVE MONTHS, THE AMOUNT OF NEW 24 YORK RECEIPTS IS DETERMINED BY DIVIDING THE AMOUNT OF THE RECEIPTS FOR 25 THE TAXABLE YEAR BY THE NUMBER OF MONTHS IN THE TAXABLE YEAR AND MULTI- 26 PLYING THE RESULT BY TWELVE. IN THE CASE OF A TERMINATION YEAR OF A NEW 27 YORK S CORPORATION, THE SUM OF THE TAX COMPUTED UNDER THIS PARAGRAPH FOR 28 THE S SHORT YEAR AND FOR THE C SHORT YEAR SHALL NOT BE LESS THAN THE 29 AMOUNT COMPUTED UNDER THIS PARAGRAPH AS IF THE CORPORATION WERE A NEW 30 YORK C CORPORATION FOR THE ENTIRE TAXABLE YEAR. 31 [(5) For taxable years beginning on or after January first, two thou- 32 sand twelve and before January first, two thousand fifteen, the amounts 33 prescribed in subparagraphs one and four of this paragraph as the fixed 34 dollar minimum tax for an eligible qualified New York manufacturer shall 35 be one-half of the amounts stated in those subparagraphs. For purposes 36 of this subparagraph, the term "eligible qualified New York manufactur- 37 er" shall have the same meaning as in subparagraph (vi) of paragraph (a) 38 of this subdivision. 39 (6) For a qualified New York manufacturer, as defined in subparagraph 40 (vi) of paragraph (a) of this subdivision, the amounts prescribed in 41 subparagraphs one and four of this paragraph in effect for taxable years 42 beginning on or after January first, two thousand thirteen and before 43 January first, two thousand fourteen for qualified New York manufactur- 44 ers shall be reduced by nine and two-tenths percent for taxable years 45 commencing on or after January first, two thousand fourteen and before 46 January first, two thousand fifteen, twelve and three-tenths percent for 47 taxable years commencing on or after January first, two thousand fifteen 48 and before January first, two thousand sixteen, fifteen and four-tenths 49 percent for taxable years commencing on or after January first, two 50 thousand sixteen and before January first, two thousand eighteen, and 51 twenty-five percent for taxable years beginning on or after January 52 first, two thousand eighteen.] S. 6359--C 55 1 (e) [Subsidiary capital base. (1) The amount prescribed by this para- 2 graph shall be computed at the rate of nine-tenths of a mill for each 3 dollar of the portion of the taxpayer's subsidiary capital allocated 4 within the state as hereinafter provided. 5 (2) For purposes of this paragraph, the amount of such subsidiary 6 capital, prior to allocation, shall be reduced by the applicable 7 percentage of the taxpayer's (i) investments in the stock of, and any 8 indebtedness from, subsidiaries subject to tax under section one hundred 9 eighty-six of this chapter (but only to the extent such indebtedness is 10 included in subsidiary capital), and (ii) investments in the stock of, 11 and any indebtedness from, subsidiaries subject to tax under article 12 thirty-two or thirty-three of this chapter (but only to the extent such 13 indebtedness is included in subsidiary capital). For purposes of clause 14 (i) of this subparagraph, the applicable percentage shall be thirty 15 percent for taxable years beginning in two thousand, and one hundred 16 percent for taxable years beginning after two thousand. For purposes of 17 clause (ii) of this subparagraph, the applicable percentage shall be one 18 hundred percent for taxable years beginning after nineteen hundred nine- 19 ty-nine.] 20 (f) For purposes of this section, the term "small business taxpayer" 21 shall mean a taxpayer (i) which has an entire net income of not more 22 than three hundred ninety thousand dollars for the taxable year; (ii) 23 [which constitutes a small business as defined in section 1244(c)(3) of 24 internal revenue code (without regard to the second sentence of subpara- 25 graph (A) thereof) as of the last day of the taxable year] THE AGGREGATE 26 AMOUNT OF MONEY AND OTHER PROPERTY RECEIVED BY THE CORPORATION FOR 27 STOCK, AS A CONTRIBUTION TO CAPITAL, AND AS PAID-IN SURPLUS, DOES NOT 28 EXCEED ONE MILLION DOLLARS; [and] (iii) which is not part of an affil- 29 iated group, as defined in section 1504 of the internal revenue code, 30 unless such group, if it had filed a report under this article on a 31 combined basis, would have itself qualified as a "small business taxpay- 32 er" pursuant to this subdivision; AND (IV) WHICH HAS AN AVERAGE NUMBER 33 OF INDIVIDUALS, EXCLUDING GENERAL EXECUTIVE OFFICERS, EMPLOYED FULL-TIME 34 IN THE STATE DURING THE TAXABLE YEAR OF ONE HUNDRED OR FEWER. If the 35 taxable period to which subparagraph (i) of this paragraph applies is 36 less than twelve months, entire net income under such subparagraph shall 37 be placed on an annual basis by multiplying the entire net income by 38 twelve and dividing the result by the number of months in the period. 39 FOR PURPOSES OF SUBPARAGRAPH (II) OF THIS PARAGRAPH, THE AMOUNT TAKEN 40 INTO ACCOUNT WITH RESPECT TO ANY PROPERTY OTHER THAN MONEY SHALL BE THE 41 AMOUNT EQUAL TO THE ADJUSTED BASIS TO THE CORPORATION OF SUCH PROPERTY 42 FOR DETERMINING GAIN, REDUCED BY ANY LIABILITY TO WHICH THE PROPERTY WAS 43 SUBJECT OR WHICH WAS ASSUMED BY THE CORPORATION. THE DETERMINATION UNDER 44 THE PRECEDING SENTENCE SHALL BE MADE AS OF THE TIME THE PROPERTY WAS 45 RECEIVED BY THE CORPORATION. FOR PURPOSES OF SUBPARAGRAPH (III) OF THIS 46 SECTION, "AVERAGE NUMBER OF INDIVIDUALS, EXCLUDING GENERAL EXECUTIVE 47 OFFICERS, EMPLOYED FULL-TIME" SHALL BE COMPUTED BY ASCERTAINING THE 48 NUMBER OF SUCH INDIVIDUALS EMPLOYED BY THE TAXPAYER ON THE THIRTY-FIRST 49 DAY OF MARCH, THE THIRTIETH DAY OF JUNE, THE THIRTIETH DAY OF SEPTEMBER 50 AND THE THIRTY-FIRST DAY OF DECEMBER DURING EACH TAXABLE YEAR OR OTHER 51 APPLICABLE PERIOD, BY ADDING TOGETHER THE NUMBER OF SUCH INDIVIDUALS 52 ASCERTAINED ON EACH OF SUCH DATES AND DIVIDING THE SUM SO OBTAINED BY 53 THE NUMBER OF SUCH DATES OCCURRING WITHIN SUCH TAXABLE YEAR OR OTHER 54 APPLICABLE PERIOD. AN INDIVIDUAL EMPLOYED FULL-TIME MEANS AN EMPLOYEE IN 55 A JOB CONSISTING OF AT LEAST THIRTY-FIVE HOURS PER WEEK, OR TWO OR MORE 56 EMPLOYEES WHO ARE IN JOBS THAT TOGETHER CONSTITUTE THE EQUIVALENT OF A S. 6359--C 56 1 JOB AT LEAST THIRTY-FIVE HOURS PER WEEK (FULL-TIME EQUIVALENT). 2 FULL-TIME EQUIVALENT EMPLOYEES IN THE STATE INCLUDES ALL EMPLOYEES REGU- 3 LARLY CONNECTED WITH OR WORKING OUT OF AN OFFICE OR PLACE OF BUSINESS OF 4 THE TAXPAYER WITHIN THE STATE. 5 (g) New York S corporations. (1) General. The amount prescribed by 6 this paragraph shall be, in the case of each New York S corporation, 7 [(i) the higher of the amounts prescribed in paragraphs (a) and (d) of 8 this subdivision (other than the amount prescribed in the final clause 9 of subparagraph one of that paragraph (d)) (ii) reduced by the article 10 twenty-two tax equivalent; provided, however, that the amount thus 11 determined shall not be less than the lowest of the amounts prescribed 12 in subparagraph one of that paragraph (d) (applying the provisions of 13 subparagraph three of that paragraph as necessary). Provided, however, 14 notwithstanding any provision of this paragraph, in taxable years begin- 15 ning in two thousand three and before two thousand eight, the amount 16 prescribed by this paragraph shall be the amount prescribed in subpara- 17 graph one of that paragraph (d) (applying the provisions of subparagraph 18 three of that paragraph as necessary) and applying the calculation of 19 that amount in the case of a termination year as set forth in subpara- 20 graph four of this paragraph as necessary. In taxable years beginning in 21 two thousand eight and thereafter, the amount prescribed by this para- 22 graph is] the amount prescribed in subparagraph four of that paragraph 23 (d) [(applying the provisions of subparagraph three of that paragraph as 24 necessary)] and applying the calculation of that amount in the case of a 25 termination year as set forth in subparagraph four of this paragraph as 26 necessary. 27 (2) [Article twenty-two tax equivalent. For taxable years beginning 28 before July first, nineteen hundred ninety-nine, the article twenty-two 29 tax equivalent is the amount computed under paragraph (a) of this subdi- 30 vision by substituting for the rate therein the rate of 7.875 percent. 31 For taxable years beginning after June thirtieth, nineteen hundred nine- 32 ty-nine and before July first, two thousand, the article twenty-two tax 33 equivalent is the amount computed under paragraph (a) of this subdivi- 34 sion by substituting for the rate therein the rate of 7.525 percent. For 35 taxable years beginning after June thirtieth, two thousand and before 36 July first, two thousand one, the article twenty-two tax equivalent is 37 the amount computed under paragraph (a) of this subdivision by substi- 38 tuting for the rate therein the rate of 7.175 percent. For taxable years 39 beginning after June thirtieth, two thousand one and before July first, 40 two thousand three, the article twenty-two tax equivalent is the amount 41 computed under paragraph (a) of this subdivision by substituting for the 42 rate therein the rate of 6.85 percent. For taxable years beginning after 43 June thirtieth, two thousand three, the article twenty-two tax equiv- 44 alent is the amount computed under paragraph (a) of this subdivision by 45 substituting for the rate therein the rate of 7.1425 percent. 46 (3) Small business taxpayers. Notwithstanding the provisions of 47 subparagraphs one and two of this paragraph, in the case of a New York S 48 corporation which is a small business taxpayer, as defined in paragraph 49 (f) of this subdivision, the following provisions shall apply: 50 (A) For taxable years beginning before July first, nineteen hundred 51 ninety-nine, the article twenty-two tax equivalent is the amount 52 computed under paragraph (a) of this subdivision by substituting for the 53 rate therein the rate of 7.875 percent. 54 (B) For taxable years beginning after June thirtieth, nineteen hundred 55 ninety-nine and before July first, two thousand three, the amount 56 computed under paragraph (a) of this subdivision, as referred to in S. 6359--C 57 1 subparagraph one of this paragraph, shall be computed by substituting 2 for the rate therein the rate of 7.5 percent, and the article twenty-two 3 tax equivalent under paragraph (a) of this subdivision shall be computed 4 as follows: 5 (i) if the entire net income base is not more than two hundred thou- 6 sand dollars, the article twenty-two tax equivalent is the amount 7 computed under paragraph (a) of this subdivision by substituting for the 8 rate therein the rate of 7.45 percent; 9 (ii) if the entire net income base is more than two hundred thousand 10 dollars but not over two hundred ninety thousand dollars, the article 11 twenty-two tax equivalent shall be computed as the sum of (I) fourteen 12 thousand nine hundred dollars, (II) six and eighty-five hundredths 13 percent of the first fifty thousand dollars in excess of the entire net 14 income base over two hundred thousand dollars, and (III) three and 15 eighty-five hundredths percent of the excess, if any, of the entire net 16 income base over two hundred fifty thousand dollars. 17 (C) For taxable years beginning after June thirtieth, two thousand 18 three, the amount computed under paragraph (a) of this subdivision, as 19 referred to in subparagraph one of this paragraph, shall be computed by 20 substituting for the rate therein the rate of 7.5 percent, and the arti- 21 cle twenty-two tax equivalent under paragraph (a) of this subdivision 22 shall be computed as follows: 23 (i) if the entire net income base is not more than two hundred thou- 24 sand dollars, the article twenty-two tax equivalent is the amount 25 computed under paragraph (a) of this subdivision by substituting for the 26 rate therein the rate of 7.4725 percent; 27 (ii) if the entire net income base is more than two hundred thousand 28 dollars but not over two hundred ninety thousand dollars, the article 29 twenty-two tax equivalent shall be computed as the sum of (I) fourteen 30 thousand nine hundred forty-five dollars, (II) 7.1425 percent of the 31 first fifty thousand dollars in excess of the entire net income base 32 over two hundred thousand dollars, and (III) 5.4925 percent of the 33 excess, if any, of the entire net income base over two hundred fifty 34 thousand dollars. 35 (4)] Termination year. In the case of a termination year, [the tax for 36 the S short year shall be computed under this paragraph without regard 37 to the fixed dollar minimum tax prescribed in paragraph (d) of this 38 subdivision, and the tax for the C short year shall be computed under 39 the opening paragraph of this subdivision without regard to the fixed 40 dollar minimum tax prescribed under such paragraph (d), but in no event 41 shall] the sum of the tax for the S short year and the tax for the C 42 short year SHALL NOT be less than the fixed dollar minimum tax under 43 paragraph (d) of this subdivision computed as if the corporation were a 44 New York C corporation for the entire taxable year. 45 S 13. Subdivision 1-c of section 210 of the tax law, as amended by 46 chapter 1043 of the laws of 1981, the opening paragraph and paragraph 47 (a) as amended by chapter 817 of the laws of 1987, and paragraph (b) as 48 amended by section 12 of part Y of chapter 63 of the laws of 2000, is 49 amended to read as follows: 50 1-c. The computations specified in paragraph (b) of subdivision one of 51 this section shall not apply to the first two taxable years of a taxpay- 52 er which, for one or both such years, is a small business [concern. A 53 small business concern: 54 (a) is a taxpayer which is a small business corporation as defined in 55 paragraph three of subsection (c) of section twelve hundred forty-four S. 6359--C 58 1 of the internal revenue code (without regard to the second sentence of 2 subparagraph (A) thereof) as of the last day of the taxable year, 3 (b) is not a corporation over fifty percent of the number of shares of 4 stock of which entitling the holders thereof to vote for the election of 5 directors or trustees is owned by a taxpayer which (1) is subject to tax 6 under this article; section one hundred eighty-three, one hundred eight- 7 y-four or one hundred eighty-five of article nine; article thirty-two or 8 thirty-three of this chapter, and (2) does not qualify as a small busi- 9 ness corporation as defined in paragraph three of subsection (c) of 10 section twelve hundred forty-four of the internal revenue code (without 11 regard to the second sentence of subparagraph (A) thereof) as of the 12 last day of its taxable year ending within or with the taxable year of 13 the taxpayer, 14 (c) is not a corporation which is substantially similar in operation 15 and in ownership to a business entity (or entities) taxable, or previ- 16 ously taxable, under this article; section one hundred eighty-three, one 17 hundred eighty-four, one hundred eighty-five or one hundred eighty-six 18 of article nine; article thirty-two or thirty-three of this chapter; 19 article twenty-three of this chapter or which would have been subject to 20 tax under such article twenty-three (as such article was in effect on 21 January first, nineteen hundred eighty) or the income (or losses) of 22 which is (or was) includable under article twenty-two of this chapter, 23 and 24 (d) at least ninety percent of the assets of such corporation (valued 25 at original cost) were located and employed in this state during the 26 taxable year and eighty percent of the employees of such corporation (as 27 ascertained within the meaning and intent of subparagraph three of para- 28 graph (a) of subdivision three of this section) were principally 29 employed in this state during the taxable year] TAXPAYER AS DEFINED IN 30 PARAGRAPH (F) OF SUBDIVISION ONE OF THIS SECTION. 31 S 14. Subdivision 2 of section 210 of the tax law, as amended by chap- 32 ter 760 of the laws of 1992, is amended to read as follows: 33 2. The amount of [subsidiary capital,] investment capital and business 34 capital shall each be determined by taking the average value of the 35 assets included therein (less liabilities deductible therefrom pursuant 36 to the provisions of subdivisions [four,] five and seven of section two 37 hundred eight), and, if the period covered by the report is other than a 38 period of twelve calendar months, by multiplying such value by the 39 number of calendar months or major parts thereof included in such peri- 40 od, and dividing the product thus obtained by twelve. For purposes of 41 this subdivision, real property and marketable securities shall be 42 valued at fair market value and the value of personal property other 43 than marketable securities shall be the value thereof shown on the books 44 and records of the taxpayer in accordance with generally accepted 45 accounting principles. 46 S 15. Subdivisions 3, 3-a, 4, 5, 6, 7, 8, 9, 10, 11, 12, 12-A, 12-B, 47 12-C, 12-D, 12-E, 12-F, 12-G, 13, 14, 15, 16, 17, 18, 19, 20, 21, 21-a, 48 22, 23, 23-a, 24, 25, 25-a, 26, 26-a, 27, 28, 30, 31, 32, 33, 34, 35, 49 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, and subdivision 48 as 50 added by section 3 of part T of this act of section 210 of the tax law 51 are REPEALED. 52 S 15-a. Section 210 of the tax law is amended by adding a new subdivi- 53 sion 3 to read as follows: 54 3. A CORPORATION THAT IS A PARTNER IN A PARTNERSHIP SHALL COMPUTE TAX 55 UNDER THIS ARTICLE USING THE AGGREGATE METHOD AS DEFINED IN THE REGU- 56 LATIONS OF THE COMMISSIONER, UNLESS ANOTHER METHOD FOR COMPUTING SUCH S. 6359--C 59 1 TAX IS REQUIRED OR ALLOWED BY SUCH REGULATIONS. UNDER THE AGGREGATE 2 METHOD, A CORPORATION THAT IS A PARTNER IN A PARTNERSHIP IS VIEWED AS 3 HAVING AN UNDIVIDED INTEREST IN THE PARTNERSHIP'S ASSETS, LIABILITIES, 4 AND ITEMS OF RECEIPTS, INCOME, GAIN, LOSS AND DEDUCTION. UNDER THE 5 AGGREGATE METHOD, THE CORPORATION THAT IS A PARTNER IN A PARTNERSHIP IS 6 TREATED AS PARTICIPATING IN THE PARTNERSHIP'S TRANSACTIONS AND ACTIV- 7 ITIES. 8 S 16. The tax law is amended by adding a new section 210-A to read as 9 follows: 10 S 210-A. APPORTIONMENT. 1. GENERAL. BUSINESS INCOME AND CAPITAL SHALL 11 BE APPORTIONED TO THE STATE BY THE APPORTIONMENT FACTOR DETERMINED 12 PURSUANT TO THIS SECTION. THE APPORTIONMENT FACTOR IS A FRACTION, DETER- 13 MINED BY INCLUDING ONLY THOSE RECEIPTS, NET INCOME, NET GAINS, AND OTHER 14 ITEMS DESCRIBED IN THIS SECTION THAT ARE INCLUDED IN THE COMPUTATION OF 15 THE TAXPAYER'S BUSINESS INCOME FOR THE TAXABLE YEAR. THE NUMERATOR OF 16 THE APPORTIONMENT FRACTION SHALL BE EQUAL TO THE SUM OF ALL THE AMOUNTS 17 REQUIRED TO BE INCLUDED IN THE NUMERATOR PURSUANT TO THE PROVISIONS OF 18 THIS SECTION AND THE DENOMINATOR OF THE APPORTIONMENT FRACTION SHALL BE 19 EQUAL TO THE SUM OF ALL THE AMOUNTS REQUIRED TO BE INCLUDED IN THE 20 DENOMINATOR PURSUANT TO THE PROVISIONS OF THIS SECTION. 21 2. SALES OF TANGIBLE PERSONAL PROPERTY AND ELECTRICITY. (A) RECEIPTS 22 FROM SALES OF TANGIBLE PERSONAL PROPERTY WHERE SHIPMENTS ARE MADE TO 23 POINTS WITHIN THE STATE OR THE DESTINATION OF THE PROPERTY IS A POINT IN 24 THE STATE SHALL BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRAC- 25 TION. RECEIPTS FROM SALES OF TANGIBLE PERSONAL PROPERTY WHERE SHIPMENTS 26 ARE MADE TO POINTS WITHIN AND WITHOUT THE STATE OR THE DESTINATION IS 27 WITHIN AND WITHOUT THE STATE SHALL BE INCLUDED IN THE DENOMINATOR OF THE 28 APPORTIONMENT FRACTION. 29 (B) RECEIPTS FROM SALES OF ELECTRICITY DELIVERED TO POINTS WITHIN THE 30 STATE SHALL BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION. 31 RECEIPTS FROM SALES OF ELECTRICITY DELIVERED TO POINTS WITHIN AND WITH- 32 OUT THE STATE SHALL BE INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT 33 FRACTION. 34 (C) RECEIPTS FROM SALES OF TANGIBLE PERSONAL PROPERTY AND ELECTRICITY 35 THAT ARE TRADED AS COMMODITIES AS DESCRIBED IN SECTION 475 OF THE INTER- 36 NAL REVENUE CODE ARE INCLUDED IN THE APPORTIONMENT FRACTION IN ACCORD- 37 ANCE WITH CLAUSE (I) OF SUBPARAGRAPH TWO OF PARAGRAPH (A) OF SUBDIVISION 38 FIVE OF THIS SECTION. 39 3. RENTALS AND ROYALTIES. (A) RECEIPTS FROM RENTALS OF REAL AND TANGI- 40 BLE PERSONAL PROPERTY LOCATED WITHIN THE STATE ARE INCLUDED IN THE 41 NUMERATOR OF THE APPORTIONMENT FRACTION. RECEIPTS FROM RENTALS OF REAL 42 AND TANGIBLE PERSONAL PROPERTY LOCATED WITHIN AND WITHOUT THE STATE 43 SHALL BE INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION. 44 (B) RECEIPTS OF ROYALTIES FROM THE USE OF PATENTS, COPYRIGHTS, TRADE- 45 MARKS, AND SIMILAR INTANGIBLE PERSONAL PROPERTY WITHIN THE STATE ARE 46 INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION. RECEIPTS OF 47 ROYALTIES FROM THE USE OF PATENTS, COPYRIGHTS, TRADEMARKS AND SIMILAR 48 INTANGIBLES WITHIN AND WITHOUT THE STATE ARE INCLUDED IN THE DENOMINATOR 49 OF THE APPORTIONMENT FRACTION. A PATENT, COPYRIGHT, TRADEMARK OR SIMILAR 50 INTANGIBLE PROPERTY IS USED IN THE STATE TO THE EXTENT THAT THE ACTIV- 51 ITIES THEREUNDER ARE CARRIED ON IN THE STATE. 52 (C) RECEIPTS FROM THE SALES OF RIGHTS FOR CLOSED-CIRCUIT AND CABLE 53 TELEVISION TRANSMISSIONS OF AN EVENT (OTHER THAN EVENTS OCCURRING ON A 54 REGULARLY SCHEDULED BASIS) TAKING PLACE WITHIN THE STATE AS A RESULT OF 55 THE RENDITION OF SERVICES BY EMPLOYEES OF THE CORPORATION, AS ATHLETES, 56 ENTERTAINERS OR PERFORMING ARTISTS ARE INCLUDED IN THE NUMERATOR OF THE S. 6359--C 60 1 APPORTIONMENT FRACTION TO THE EXTENT THAT SUCH RECEIPTS ARE ATTRIBUTABLE 2 TO SUCH TRANSMISSIONS RECEIVED OR EXHIBITED WITHIN THE STATE. RECEIPTS 3 FROM ALL SALES OF RIGHTS FOR CLOSED-CIRCUIT AND CABLE TELEVISION TRANS- 4 MISSIONS OF AN EVENT ARE INCLUDED IN THE DENOMINATOR OF THE APPORTION- 5 MENT FRACTION. 6 4. DIGITAL PRODUCTS. (A) FOR PURPOSES OF DETERMINING THE APPORTIONMENT 7 FRACTION UNDER THIS SECTION, THE TERM "DIGITAL PRODUCT" MEANS ANY PROP- 8 ERTY OR SERVICE, OR COMBINATION THEREOF, OF WHATEVER NATURE DELIVERED TO 9 THE PURCHASER THROUGH THE USE OF WIRE, CABLE, FIBER-OPTIC, LASER, MICRO- 10 WAVE, RADIO WAVE, SATELLITE OR SIMILAR SUCCESSOR MEDIA, OR ANY COMBINA- 11 TION THEREOF. DIGITAL PRODUCT INCLUDES, BUT IS NOT LIMITED TO, AN AUDIO 12 WORK, AUDIOVISUAL WORK, VISUAL WORK, BOOK OR LITERARY WORK, GRAPHIC 13 WORK, GAME, INFORMATION OR ENTERTAINMENT SERVICE, STORAGE OF DIGITAL 14 PRODUCTS AND COMPUTER SOFTWARE BY WHATEVER MEANS DELIVERED. THE TERM 15 "DELIVERED TO" INCLUDES FURNISHED OR PROVIDED TO OR ACCESSED BY. A 16 DIGITAL PRODUCT DOES NOT INCLUDE LEGAL, MEDICAL, ACCOUNTING, ARCHITEC- 17 TURAL, RESEARCH, ANALYTICAL, ENGINEERING OR CONSULTING SERVICES PROVIDED 18 BY THE TAXPAYER. 19 (B) RECEIPTS FROM THE SALE OF, LICENCE TO USE, OR GRANTING OF REMOTE 20 ACCESS TO DIGITAL PRODUCTS WITHIN THE STATE, DETERMINED ACCORDING TO THE 21 HIERARCHY OF METHODS SET FORTH IN SUBPARAGRAPHS ONE THROUGH FOUR OF 22 PARAGRAPH (C) OF THIS SUBDIVISION, SHALL BE INCLUDED IN THE NUMERATOR OF 23 THE APPORTIONMENT FRACTION. RECEIPTS FROM THE SALE OF, LICENSE TO USE, 24 OR GRANTING OF REMOTE ACCESS TO DIGITAL PRODUCTS WITHIN AND WITHOUT THE 25 STATE SHALL BE INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRAC- 26 TION. THE TAXPAYER MUST EXERCISE DUE DILIGENCE UNDER EACH METHOD 27 DESCRIBED IN PARAGRAPH (C) OF THIS SUBDIVISION BEFORE REJECTING IT AND 28 PROCEEDING TO THE NEXT METHOD IN THE HIERARCHY. IF THE RECEIPT FOR A 29 DIGITAL PRODUCT IS COMPRISED OF A COMBINATION OF PROPERTY AND SERVICES, 30 IT CANNOT BE DIVIDED INTO SEPARATE COMPONENTS AND IS CONSIDERED TO BE 31 ONE RECEIPT REGARDLESS OF WHETHER IT IS SEPARATELY STATED FOR BILLING 32 PURPOSES. THE ENTIRE RECEIPT MUST BE ALLOCATED BY THIS HIERARCHY. 33 (C) HIERARCHY OF SOURCING METHODS. (1) DELIVERY DESTINATION OF THE 34 DIGITAL PRODUCT. A DIGITAL PRODUCT IS DEEMED DELIVERED WITHIN THE STATE 35 IF THE LOCATION FROM WHICH THE PURCHASER OR ITS AUTHORIZED USER ACCESSES 36 OR USES THE DIGITAL PRODUCT IS IN THE STATE. DESTINATION MAY BE DEMON- 37 STRATED BY INTERNET PROTOCOL ADDRESS OR OTHER SIMILAR OR SUCCESSOR INDI- 38 CATOR, THE GEOGRAPHIC LOCATION OF THE EQUIPMENT TO WHICH THE DIGITAL 39 PRODUCT IS DELIVERED OR FROM WHICH THE DIGITAL PRODUCT IS ACCESSED, OR 40 THE DELIVERY DESTINATION INDICATED ON A BILL OF LADING OR PURCHASE 41 INVOICE. A DIGITAL PRODUCT ACCESSED OR USED BY THE PURCHASER OR ITS 42 AUTHORIZED USER DURING THE TAXPAYER'S TAXABLE YEAR IN MULTIPLE LOCATIONS 43 IS DELIVERED WITHIN THE STATE TO THE EXTENT THAT THE DIGITAL PRODUCT IS 44 ACCESSED OR USED IN THE STATE; 45 (2) BILLING ADDRESS OF THE PURCHASER; 46 (3) ZIP CODE OR OTHER GEOGRAPHIC INDICATOR OF THE PURCHASER'S 47 LOCATION; OR 48 (4) THE APPORTIONMENT FRACTION DETERMINED PURSUANT TO THIS SUBDIVISION 49 FOR THE PRECEDING TAXABLE YEAR, OR, IF THE TAXPAYER WAS NOT SUBJECT TO 50 TAX IN THE PRECEDING TAXABLE YEAR, THEN THE APPORTIONMENT FRACTION IN 51 THE CURRENT TAXABLE YEAR FOR THOSE DIGITAL PRODUCTS THAT CAN BE SOURCED 52 USING THE HIERARCHY OF SOURCING METHODS IN SUBPARAGRAPHS ONE THROUGH 53 THREE OF THIS SUBDIVISION. 54 5. FINANCIAL TRANSACTIONS. (A) FINANCIAL INSTRUMENTS. A FINANCIAL 55 INSTRUMENT IS A "QUALIFIED FINANCIAL INSTRUMENT" IF IT IS MARKED TO 56 MARKET UNDER SECTION 475 OR SECTION 1256 OF THE INTERNAL REVENUE CODE, S. 6359--C 61 1 PROVIDED THAT LOANS SECURED BY REAL PROPERTY SHALL NOT BE QUALIFIED 2 FINANCIAL INSTRUMENTS. A FINANCIAL INSTRUMENT IS A "NONQUALIFIED FINAN- 3 CIAL INSTRUMENT" IF IT IS NOT A QUALIFIED FINANCIAL INSTRUMENT. 4 (1) FIXED PERCENTAGE METHOD FOR QUALIFIED FINANCIAL INSTRUMENTS. IN 5 DETERMINING THE INCLUSION OF RECEIPTS AND NET GAINS FROM QUALIFIED 6 FINANCIAL INSTRUMENTS IN THE APPORTIONMENT FRACTION, TAXPAYERS MAY ELECT 7 TO USE THE FIXED PERCENTAGE METHOD DESCRIBED IN THIS SUBPARAGRAPH FOR 8 QUALIFIED FINANCIAL INSTRUMENTS. THE ELECTION IS IRREVOCABLE, APPLIES TO 9 ALL QUALIFIED FINANCIAL INSTRUMENTS, AND MUST BE MADE ON AN ANNUAL BASIS 10 ON THE TAXPAYER'S ORIGINAL, TIMELY FILED RETURN. IF THE TAXPAYER ELECTS 11 THE FIXED PERCENTAGE METHOD, THEN ALL INCOME, GAIN OR LOSS, FROM QUALI- 12 FIED FINANCIAL INSTRUMENTS CONSTITUTES BUSINESS INCOME, GAIN OR LOSS. IF 13 THE TAXPAYER DOES NOT ELECT TO USE THE FIXED PERCENTAGE METHOD, THEN 14 RECEIPTS AND NET GAINS ARE INCLUDED IN THE APPORTIONMENT FRACTION IN 15 ACCORDANCE WITH THE CUSTOMER SOURCING METHOD DESCRIBED IN SUBPARAGRAPH 16 TWO OF THIS PARAGRAPH. UNDER THE FIXED PERCENTAGE METHOD, EIGHT PERCENT 17 OF ALL NET INCOME (NOT LESS THAN ZERO) FROM QUALIFIED FINANCIAL INSTRU- 18 MENTS IS INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION. ALL 19 NET INCOME (NOT LESS THAN ZERO) FROM QUALIFIED FINANCIAL INSTRUMENTS IS 20 INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION. 21 (2) CUSTOMER SOURCING METHOD. RECEIPTS AND NET GAINS FROM QUALIFIED 22 FINANCIAL INSTRUMENTS, IN CASES WHERE THE TAXPAYER DID NOT ELECT TO USE 23 THE FIXED PERCENTAGE METHOD DESCRIBED IN SUBPARAGRAPH ONE OF THIS PARA- 24 GRAPH, AND FROM NONQUALIFIED FINANCIAL INSTRUMENTS ARE INCLUDED IN THE 25 APPORTIONMENT FRACTION IN ACCORDANCE WITH THIS SUBPARAGRAPH. FOR 26 PURPOSES OF THIS PARAGRAPH, AN INDIVIDUAL IS DEEMED TO BE LOCATED IN THE 27 STATE IF HIS OR HER BILLING ADDRESS IS IN THE STATE. A BUSINESS ENTITY 28 IS DEEMED TO BE LOCATED IN THE STATE IF ITS COMMERCIAL DOMICILE IS 29 LOCATED IN THE STATE. 30 (A) LOANS. (I) RECEIPTS CONSTITUTING INTEREST FROM LOANS SECURED BY 31 REAL PROPERTY LOCATED WITHIN THE STATE SHALL BE INCLUDED IN THE NUMERA- 32 TOR OF THE APPORTIONMENT FRACTION. RECEIPTS CONSTITUTING INTEREST FROM 33 LOANS SECURED BY REAL PROPERTY LOCATED WITHIN AND WITHOUT THE STATE 34 SHALL BE INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION. 35 (II) RECEIPTS CONSTITUTING INTEREST FROM LOANS NOT SECURED BY REAL 36 PROPERTY SHALL BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRAC- 37 TION IF THE BORROWER IS LOCATED IN THE STATE. RECEIPTS CONSTITUTING 38 INTEREST FROM LOANS NOT SECURED BY REAL PROPERTY, WHETHER THE BORROWER 39 IS LOCATED WITHIN OR WITHOUT THE STATE, SHALL BE INCLUDED IN THE DENOMI- 40 NATOR OF THE APPORTIONMENT FRACTION. 41 (III) NET GAINS (NOT LESS THAN ZERO) FROM SALES OF LOANS SECURED BY 42 REAL PROPERTY ARE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRAC- 43 TION AS PROVIDED IN THIS SUBCLAUSE. THE AMOUNT OF NET GAINS FROM THE 44 SALE OF LOANS SECURED BY REAL PROPERTY INCLUDED IN THE NUMERATOR OF THE 45 APPORTIONMENT FRACTION IS DETERMINED BY MULTIPLYING THE NET GAINS BY A 46 FRACTION THE NUMERATOR OF WHICH IS THE AMOUNT OF GROSS PROCEEDS FROM 47 SALES OF LOANS SECURED BY REAL PROPERTY LOCATED WITHIN THE STATE AND THE 48 DENOMINATOR OF WHICH IS THE GROSS PROCEEDS FROM SALES OF LOANS SECURED 49 BY REAL PROPERTY WITHIN AND WITHOUT THE STATE. GROSS PROCEEDS SHALL BE 50 DETERMINED AFTER THE DEDUCTION OF ANY COST INCURRED TO ACQUIRE THE LOANS 51 BUT SHALL NOT BE LESS THAN ZERO. NET GAINS (NOT LESS THAN ZERO) FROM 52 SALES OF LOANS SECURED BY REAL PROPERTY WITHIN AND WITHOUT THE STATE ARE 53 INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION. 54 (IV) NET GAINS (NOT LESS THAN ZERO) FROM SALES OF LOANS NOT SECURED BY 55 REAL PROPERTY ARE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRAC- 56 TION AS PROVIDED IN THIS SUBCLAUSE. THE AMOUNT OF NET GAINS FROM THE S. 6359--C 62 1 SALE OF LOANS NOT SECURED BY REAL PROPERTY INCLUDED IN THE NUMERATOR OF 2 THE APPORTIONMENT FRACTION IS DETERMINED BY MULTIPLYING THE NET GAINS BY 3 A FRACTION, THE NUMERATOR OF WHICH IS THE AMOUNT OF GROSS PROCEEDS FROM 4 SALES OF LOANS NOT SECURED BY REAL PROPERTY TO PURCHASERS LOCATED WITHIN 5 THE STATE AND THE DENOMINATOR OF WHICH IS THE AMOUNT OF GROSS RECEIPTS 6 FROM SALES OF LOANS NOT SECURED BY REAL PROPERTY TO PURCHASERS LOCATED 7 WITHIN AND WITHOUT THE STATE. GROSS PROCEEDS SHALL BE DETERMINED AFTER 8 THE DEDUCTION OF ANY COST INCURRED TO ACQUIRE THE LOANS BUT SHALL NOT BE 9 LESS THAN ZERO. NET GAINS (NOT LESS THAN ZERO) FROM SALES OF LOANS NOT 10 SECURED BY REAL PROPERTY ARE INCLUDED IN THE DENOMINATOR OF THE APPOR- 11 TIONMENT FRACTION. 12 (B) FEDERAL, STATE, AND MUNICIPAL DEBT. RECEIPTS CONSTITUTING INTEREST 13 AND NET GAINS FROM SALES OF DEBT INSTRUMENTS ISSUED BY THE UNITED 14 STATES, ANY STATE, OR POLITICAL SUBDIVISION OF A STATE SHALL NOT BE 15 INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION. RECEIPTS 16 CONSTITUTING INTEREST AND NET GAINS (NOT LESS THAN ZERO) FROM SALES OF 17 DEBT INSTRUMENTS ISSUED BY THE UNITED STATES AND THE STATE OF NEW YORK 18 OR ITS POLITICAL SUBDIVISIONS SHALL BE INCLUDED IN THE DENOMINATOR OF 19 THE APPORTIONMENT FRACTION. FIFTY PERCENT OF THE RECEIPTS CONSTITUTING 20 INTEREST AND NET GAINS (NOT LESS THAN ZERO) FROM SALES OF DEBT INSTRU- 21 MENTS ISSUED BY OTHER STATES OR THEIR POLITICAL SUBDIVISIONS SHALL BE 22 INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION. 23 (C) ASSET BACKED SECURITIES AND OTHER GOVERNMENT AGENCY DEBT. EIGHT 24 PERCENT OF THE INTEREST INCOME FROM ASSET BACKED SECURITIES OR OTHER 25 SECURITIES ISSUED BY GOVERNMENT AGENCIES, INCLUDING BUT NOT LIMITED TO 26 SECURITIES ISSUED BY THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION 27 (GNMA), THE FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA), THE FEDERAL 28 HOME LOAN MORTGAGE CORPORATION (FHLMC), OR THE SMALL BUSINESS ADMINIS- 29 TRATION SHALL BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRAC- 30 TION. EIGHT PERCENT OF THE NET GAINS (NOT LESS THAN ZERO) FROM (I) SALES 31 OF ASSET BACKED SECURITIES OR OTHER SECURITIES ISSUED BY GOVERNMENT 32 AGENCIES ISSUED BY GNMA, FNMA, OR FHLMC, THE SMALL BUSINESS ADMINIS- 33 TRATION OR OTHER GOVERNMENT AGENCY, OR (II) SALES OF OTHER ASSET BACKED 34 SECURITIES THAT ARE SOLD THROUGH A REGISTERED SECURITIES BROKER OR DEAL- 35 ER OR THROUGH A LICENSED EXCHANGE, SHALL BE INCLUDED IN THE NUMERATOR OF 36 THE APPORTIONMENT FRACTION. THE AMOUNT OF NET GAINS (NOT LESS THAN ZERO) 37 FROM SALES OF OTHER ASSET BACKED SECURITIES REFERENCED IN CLAUSE (II) 38 INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION IS DETERMINED BY 39 MULTIPLYING SUCH NET GAINS BY A FRACTION, THE NUMERATOR OF WHICH IS THE 40 AMOUNT OF GROSS PROCEEDS FROM SUCH SALES TO PURCHASERS LOCATED IN THE 41 STATE AND THE DENOMINATOR OF WHICH IS THE AMOUNT OF GROSS PROCEEDS FROM 42 SUCH SALES TO PURCHASERS LOCATED WITHIN AND WITHOUT THE STATE. RECEIPTS 43 CONSTITUTING INTEREST FROM ASSET BACKED SECURITIES AND NET GAINS (NOT 44 LESS THAN ZERO) FROM SALES OF ASSET BACKED SECURITIES ARE INCLUDED IN 45 THE DENOMINATOR OF THE APPORTIONMENT FRACTION. GROSS PROCEEDS SHALL BE 46 DETERMINED AFTER THE DEDUCTION OF ANY COST TO ACQUIRE THE SECURITIES BUT 47 SHALL NOT BE LESS THAN ZERO. 48 (D) CORPORATE BONDS. RECEIPTS CONSTITUTING INTEREST FROM CORPORATE 49 BONDS ARE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION IF THE 50 COMMERCIAL DOMICILE OF THE ISSUING CORPORATION IS IN THE STATE. EIGHT 51 PERCENT OF THE NET GAINS (NOT LESS THAN ZERO) FROM SALES OF CORPORATE 52 BONDS SOLD THROUGH A REGISTERED SECURITIES BROKER OR DEALER OR THROUGH A 53 LICENSED EXCHANGE IS INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT 54 FRACTION. THE AMOUNT OF NET GAINS (NOT LESS THAN ZERO) FROM OTHER SALES 55 OF CORPORATE BONDS INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRAC- 56 TION IS DETERMINED BY MULTIPLYING SUCH NET GAINS BY A FRACTION, THE S. 6359--C 63 1 NUMERATOR OF WHICH IS THE AMOUNT OF GROSS PROCEEDS FROM SUCH SALES TO 2 PURCHASERS LOCATED IN THE STATE AND THE DENOMINATOR OF WHICH IS THE 3 AMOUNT OF GROSS PROCEEDS FROM SALES TO PURCHASERS LOCATED WITHIN AND 4 WITHOUT THE STATE. RECEIPTS CONSTITUTING INTEREST FROM CORPORATE BONDS, 5 WHETHER THE ISSUING CORPORATION'S COMMERCIAL DOMICILE IS WITHIN OR WITH- 6 OUT THE STATE, AND NET GAINS (NOT LESS THAN ZERO) FROM SALES OF CORPO- 7 RATE BONDS TO PURCHASERS WITHIN AND WITHOUT THE STATE ARE INCLUDED IN 8 THE DENOMINATOR OF THE APPORTIONMENT FRACTION. GROSS PROCEEDS SHALL BE 9 DETERMINED AFTER THE DEDUCTION OF ANY COST TO ACQUIRE THE BONDS BUT 10 SHALL NOT BE LESS THAN ZERO. 11 (E) REVERSE REPURCHASE AGREEMENTS AND SECURITIES BORROWING AGREEMENTS. 12 EIGHT PERCENT OF NET INTEREST INCOME (NOT LESS THAN ZERO) FROM REVERSE 13 REPURCHASE AGREEMENTS AND SECURITIES BORROWING AGREEMENTS SHALL BE 14 INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION. NET INTEREST 15 INCOME (NOT LESS THAN ZERO) FROM REVERSE REPURCHASE AGREEMENTS AND SECU- 16 RITIES BORROWING AGREEMENTS IS INCLUDED IN THE DENOMINATOR OF THE APPOR- 17 TIONMENT FRACTION. NET INTEREST INCOME FROM REVERSE REPURCHASE AGREE- 18 MENTS AND SECURITIES BORROWING AGREEMENTS IS DETERMINED FOR PURPOSES OF 19 THIS SUBDIVISION AFTER THE DEDUCTION OF THE INTEREST EXPENSE FROM THE 20 TAXPAYER'S REPURCHASE AGREEMENTS AND SECURITIES LENDING AGREEMENTS BUT 21 CANNOT BE LESS THAN ZERO. FOR THIS CALCULATION, THE AMOUNT OF SUCH 22 INTEREST EXPENSE IS THE INTEREST EXPENSE ASSOCIATED WITH THE SUM OF THE 23 VALUE OF THE TAXPAYER'S REPURCHASE AGREEMENTS WHERE IT IS THE 24 SELLER/BORROWER PLUS THE VALUE OF THE TAXPAYER'S SECURITIES LENDING 25 AGREEMENTS WHERE IT IS THE SECURITIES LENDER, PROVIDED SUCH SUM IS 26 LIMITED TO THE SUM OF THE VALUE OF THE TAXPAYER'S REVERSE REPURCHASE 27 AGREEMENTS WHERE IT IS THE SELLER/BORROWER AND THE VALUE OF THE TAXPAY- 28 ER'S SECURITIES BORROWING AGREEMENTS. 29 (F) FEDERAL FUNDS. EIGHT PERCENT OF THE NET INTEREST (NOT LESS THAN 30 ZERO) FROM FEDERAL FUNDS IS INCLUDED IN THE NUMERATOR OF THE APPORTION- 31 MENT FRACTION. THE NET INTEREST (NOT LESS THAN ZERO) FROM FEDERAL FUNDS 32 IS INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION. NET INTER- 33 EST FROM FEDERAL FUNDS IS DETERMINED AFTER DEDUCTION OF INTEREST EXPENSE 34 FROM FEDERAL FUNDS. 35 (G) DIVIDENDS AND NET GAINS FROM SALES OF STOCK OR PARTNERSHIP INTER- 36 ESTS. DIVIDENDS FROM STOCK, NET GAINS (NOT LESS THAN ZERO) FROM SALES OF 37 STOCK AND NET GAINS (NOT LESS THAN ZERO) FROM THE SALE OF PARTNERSHIP 38 INTERESTS ARE NOT INCLUDED IN EITHER THE NUMERATOR OR DENOMINATOR OF THE 39 APPORTIONMENT FRACTION UNLESS THE COMMISSIONER DETERMINES PURSUANT TO 40 SUBDIVISION ELEVEN OF THIS SECTION THAT INCLUSION OF SUCH DIVIDENDS AND 41 NET GAINS (NOT LESS THAN ZERO) IS NECESSARY TO PROPERLY REFLECT THE 42 BUSINESS INCOME OR CAPITAL OF THE TAXPAYER. 43 (H) OTHER FINANCIAL INSTRUMENTS. (I) RECEIPTS CONSTITUTING INTEREST 44 FROM OTHER FINANCIAL INSTRUMENTS SHALL BE INCLUDED IN THE NUMERATOR OF 45 THE APPORTIONMENT FRACTION IF THE PAYOR IS LOCATED IN THE STATE. 46 RECEIPTS CONSTITUTING INTEREST FROM OTHER FINANCIAL INSTRUMENTS, WHETHER 47 THE PAYOR IS WITHIN OR WITHOUT THE STATE, ARE INCLUDED IN THE DENOMINA- 48 TOR OF THE APPORTIONMENT FRACTION. 49 (II) NET GAINS (NOT LESS THAN ZERO) FROM SALES OF OTHER FINANCIAL 50 INSTRUMENTS AND OTHER INCOME (NOT LESS THAN ZERO) FROM OTHER FINANCIAL 51 INSTRUMENTS WHERE THE PURCHASER OR PAYOR IS LOCATED IN THE STATE ARE 52 INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION, PROVIDED THAT, 53 IF THE PURCHASER OR PAYOR IS A REGISTERED SECURITIES BROKER OR DEALER OR 54 THE TRANSACTION IS MADE THROUGH A LICENSED EXCHANGE, THEN EIGHT PERCENT 55 OF THE NET GAINS (NOT LESS THAN ZERO) OR OTHER INCOME (NOT LESS THAN 56 ZERO) IS INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION. NET S. 6359--C 64 1 GAINS (NOT LESS THAN ZERO) FROM SALES OF OTHER FINANCIAL INSTRUMENTS AND 2 OTHER INCOME (NOT LESS THAN ZERO) FROM OTHER FINANCIAL INSTRUMENTS ARE 3 INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION. 4 (I) PHYSICAL COMMODITIES. NET INCOME (NOT LESS THAN ZERO) FROM SALES 5 OF PHYSICAL COMMODITIES ARE INCLUDED IN THE NUMERATOR OF THE APPORTION- 6 MENT FRACTION AS PROVIDED IN THIS SUBPARAGRAPH. THE AMOUNT OF NET INCOME 7 FROM SALES OF PHYSICAL COMMODITIES INCLUDED IN THE NUMERATOR OF THE 8 APPORTIONMENT FRACTION IS DETERMINED BY MULTIPLYING THE NET INCOME FROM 9 SALES OF PHYSICAL COMMODITIES BY A FRACTION, THE NUMERATOR OF WHICH IS 10 THE AMOUNT OF RECEIPTS FROM SALES OF PHYSICAL COMMODITIES ACTUALLY 11 DELIVERED TO POINTS WITHIN THE STATE OR, IF THERE IS NO ACTUAL DELIVERY 12 OF THE PHYSICAL COMMODITY, SOLD TO CUSTOMERS LOCATED IN THE STATE, AND 13 THE DENOMINATOR OF WHICH IS THE AMOUNT OF RECEIPTS FROM SALES OF PHYS- 14 ICAL COMMODITIES ACTUALLY DELIVERED TO POINTS WITHIN AND WITHOUT THE 15 STATE OR SOLD TO CUSTOMERS LOCATED WITHIN AND WITHOUT THE STATE. NET 16 INCOME (NOT LESS THAT ZERO) FROM SALES OF PHYSICAL COMMODITIES IS 17 INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION. NET INCOME 18 (NOT LESS THAN ZERO) FROM SALES OF PHYSICAL COMMODITIES IS DETERMINED 19 AFTER THE DEDUCTION OF THE COST TO ACQUIRE OR PRODUCE THE PHYSICAL 20 COMMODITIES. 21 (B) OTHER RECEIPTS FROM BROKER OR DEALER ACTIVITIES. RECEIPTS OF A 22 REGISTERED SECURITIES BROKER OR DEALER FROM SECURITIES OR COMMODITIES 23 BROKER OR DEALER ACTIVITIES DESCRIBED IN THIS PARAGRAPH SHALL BE DEEMED 24 TO BE GENERATED WITHIN THE STATE AS DESCRIBED IN SUBPARAGRAPHS ONE 25 THROUGH EIGHT OF THIS PARAGRAPH. RECEIPTS FROM SUCH ACTIVITIES GENERATED 26 WITHIN THE STATE SHALL BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT 27 FRACTION. RECEIPTS FROM SUCH ACTIVITIES GENERATED WITHIN AND WITHOUT THE 28 STATE SHALL BE INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRAC- 29 TION. FOR THE PURPOSES OF THIS PARAGRAPH, THE TERM "SECURITIES" SHALL 30 HAVE THE SAME MEANING AS IN SECTION 475(C)(2) OF THE INTERNAL REVENUE 31 CODE AND THE TERM "COMMODITIES" SHALL HAVE THE SAME MEANING AS IN 32 SECTION 475(E)(2) OF THE INTERNAL REVENUE CODE. 33 (1) RECEIPTS CONSTITUTING BROKERAGE COMMISSIONS DERIVED FROM THE 34 EXECUTION OF SECURITIES OR COMMODITIES PURCHASE OR SALES ORDERS FOR THE 35 ACCOUNTS OF CUSTOMERS SHALL BE DEEMED TO BE GENERATED WITHIN THE STATE 36 IF THE MAILING ADDRESS IN THE RECORDS OF THE TAXPAYER OF THE CUSTOMER 37 WHO IS RESPONSIBLE FOR PAYING SUCH COMMISSIONS IS WITHIN THE STATE. 38 (2) RECEIPTS CONSTITUTING MARGIN INTEREST EARNED ON BEHALF OF BROKER- 39 AGE ACCOUNTS SHALL BE DEEMED TO BE GENERATED WITHIN THE STATE IF THE 40 MAILING ADDRESS IN THE RECORDS OF THE TAXPAYER OF THE CUSTOMER WHO IS 41 RESPONSIBLE FOR PAYING SUCH MARGIN INTEREST IS WITHIN THE STATE. 42 (3)(A) RECEIPTS CONSTITUTING FEES EARNED BY THE TAXPAYER FOR ADVISORY 43 SERVICES TO A CUSTOMER IN CONNECTION WITH THE UNDERWRITING OF SECURITIES 44 FOR SUCH CUSTOMER (SUCH CUSTOMER BEING THE ENTITY THAT IS CONTEMPLATING 45 ISSUING OR IS ISSUING SECURITIES) OR FEES EARNED BY THE TAXPAYER FOR 46 MANAGING AN UNDERWRITING SHALL BE DEEMED TO BE GENERATED WITHIN THE 47 STATE IF THE MAILING ADDRESS IN THE RECORDS OF THE TAXPAYER OF SUCH 48 CUSTOMER WHO IS RESPONSIBLE FOR PAYING SUCH FEES IS WITHIN THE STATE. 49 (B) RECEIPTS CONSTITUTING THE PRIMARY SPREAD OF SELLING CONCESSION 50 FROM UNDERWRITTEN SECURITIES SHALL BE DEEMED TO BE GENERATED WITHIN THE 51 STATE TO THE EXTENT THE CUSTOMER IS LOCATED IN THE STATE. 52 (C) THE TERM "PRIMARY SPREAD" MEANS THE DIFFERENCE BETWEEN THE PRICE 53 PAID BY THE TAXPAYER TO THE ISSUER OF THE SECURITIES BEING MARKETED AND 54 THE PRICE RECEIVED FROM THE SUBSEQUENT SALE OF THE UNDERWRITTEN SECURI- 55 TIES AT THE INITIAL PUBLIC OFFERING PRICE, LESS ANY SELLING CONCESSION 56 AND ANY FEES PAID TO THE TAXPAYER FOR ADVISORY SERVICES OR ANY MANAGER'S S. 6359--C 65 1 FEES, IF SUCH FEES ARE NOT PAID BY THE CUSTOMER TO THE TAXPAYER SEPA- 2 RATELY. THE TERM "PUBLIC OFFERING PRICE" MEANS THE PRICE AGREED UPON BY 3 THE TAXPAYER AND THE ISSUER AT WHICH THE SECURITIES ARE TO BE OFFERED TO 4 THE PUBLIC. THE TERM "SELLING CONCESSION" MEANS THE AMOUNT PAID TO THE 5 TAXPAYER FOR PARTICIPATING IN THE UNDERWRITING OF A SECURITY WHERE THE 6 TAXPAYER IS NOT THE LEAD UNDERWRITER. 7 (4) RECEIPTS CONSTITUTING ACCOUNT MAINTENANCE FEES SHALL BE DEEMED TO 8 BE GENERATED WITHIN THE STATE IF THE MAILING ADDRESS IN THE RECORD OF 9 THE TAXPAYER OF THE CUSTOMER WHO IS RESPONSIBLE FOR PAYING SUCH ACCOUNT 10 MAINTENANCE FEES IS WITHIN THE STATE. 11 (5) RECEIPTS CONSTITUTING FEES FOR MANAGEMENT OR ADVISORY SERVICES, 12 INCLUDING FEES FOR ADVISORY SERVICES IN RELATION TO MERGER OR ACQUISI- 13 TION ACTIVITIES, BUT EXCLUDING FEES PAID FOR SERVICES DESCRIBED IN PARA- 14 GRAPH (D) OF THIS SUBDIVISION, SHALL BE DEEMED TO BE GENERATED WITHIN 15 THE STATE IF THE MAILING ADDRESS IN THE RECORDS OF THE TAXPAYER OF THE 16 CUSTOMER WHO IS RESPONSIBLE FOR PAYING SUCH FEES IS WITHIN THE STATE. 17 (6) RECEIPTS CONSTITUTING INTEREST EARNED BY THE TAXPAYER ON LOANS AND 18 ADVANCES MADE BY THE TAXPAYER TO A CORPORATION AFFILIATED WITH THE 19 TAXPAYER BUT WITH WHICH THE TAXPAYER IS NOT PERMITTED OR REQUIRED TO 20 FILE A COMBINED REPORT PURSUANT TO SECTION TWO HUNDRED TEN-C OF THIS 21 ARTICLE SHALL BE DEEMED TO ARISE FROM SERVICES PERFORMED AT THE PRINCI- 22 PAL PLACE OF BUSINESS OF SUCH AFFILIATED CORPORATION. 23 (7) IF THE TAXPAYER RECEIVES ANY OF THE RECEIPTS ENUMERATED IN SUBPAR- 24 AGRAPHS ONE THROUGH FOUR OF THIS PARAGRAPH AS A RESULT OF A SECURITIES 25 CORRESPONDENT RELATIONSHIP SUCH TAXPAYER HAS WITH ANOTHER BROKER OR 26 DEALER WITH THE TAXPAYER ACTING IN THIS RELATIONSHIP AS THE CLEARING 27 FIRM, SUCH RECEIPTS SHALL BE DEEMED TO BE GENERATED WITHIN THE STATE TO 28 EXTENT SET FORTH IN EACH OF SUCH SUBPARAGRAPHS. THE AMOUNT OF SUCH 29 RECEIPTS SHALL EXCLUDE THE AMOUNT THE TAXPAYER IS REQUIRED TO PAY TO THE 30 CORRESPONDENT FIRM FOR SUCH CORRESPONDENT RELATIONSHIP. IF THE TAXPAYER 31 RECEIVES ANY OF THE RECEIPTS ENUMERATED IN SUBPARAGRAPHS ONE THROUGH 32 FOUR OF THIS PARAGRAPH AS AS RESULT OF A SECURITIES CORRESPONDENT 33 RELATIONSHIP SUCH TAXPAYER HAS WITH ANOTHER BROKER OR DEALER WITH THE 34 TAXPAYER ACTING IN THIS RELATIONSHIP AS THE INTRODUCING FIRM, SUCH 35 RECEIPTS SHALL BE DEEMED TO BE GENERATED WITHIN THE STATE TO THE EXTENT 36 SET FORTH IN EACH OF SUCH SUBPARAGRAPHS. 37 (8) IF, FOR PURPOSES OF SUBPARAGRAPHS ONE, TWO, CLAUSE (A) OF SUBPARA- 38 GRAPH THREE, FOUR, OR FIVE OF THIS PARAGRAPH THE TAXPAYER IS UNABLE FROM 39 ITS RECORDS TO DETERMINE THE MAILING ADDRESS OF THE CUSTOMER, EIGHT 40 PERCENT OF THE RECEIPTS IS INCLUDED IN THE NUMERATOR OF THE APPORTION- 41 MENT FRACTION. 42 (C) RECEIPTS FROM CREDIT CARD AND SIMILAR ACTIVITIES. RECEIPTS RELAT- 43 ING TO THE BANK, CREDIT, TRAVEL AND ENTERTAINMENT CARD ACTIVITIES 44 DESCRIBED IN THIS PARAGRAPH SHALL BE DEEMED TO BE GENERATED WITHIN THE 45 STATE AS DESCRIBED IN SUBPARAGRAPHS ONE THROUGH THREE OF THIS PARAGRAPH. 46 RECEIPTS FROM SUCH ACTIVITIES GENERATED WITHIN THE STATE SHALL BE 47 INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION. RECEIPTS FROM 48 SUCH ACTIVITIES GENERATED WITHIN AND WITHOUT THE STATE SHALL BE INCLUDED 49 IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION. 50 (1) RECEIPTS CONSTITUTING INTEREST, AND FEES AND PENALTIES IN THE 51 NATURE OF INTEREST, FROM BANK, CREDIT, TRAVEL AND ENTERTAINMENT CARD 52 RECEIVABLES SHALL BE DEEMED TO BE GENERATED WITHIN THE STATE IF THE 53 MAILING ADDRESS OF THE CARD HOLDER IN THE RECORDS OF THE TAXPAYER IS IN 54 THE STATE; S. 6359--C 66 1 (2) RECEIPTS FROM SERVICE CHARGES AND FEES FROM SUCH CARDS SHALL BE 2 DEEMED TO BE GENERATED WITHIN THE STATE IF THE MAILING ADDRESS OF THE 3 CARD HOLDER IN THE RECORDS OF THE TAXPAYER IS IN THE STATE; AND 4 (3) RECEIPTS FROM MERCHANT DISCOUNTS SHALL BE DEEMED TO BE GENERATED 5 WITHIN THE STATE IF THE MERCHANT IS LOCATED WITHIN THE STATE. IN THE 6 CASE OF A MERCHANT WITH LOCATIONS BOTH WITHIN AND WITHOUT NEW YORK 7 STATE, ONLY RECEIPTS FROM MERCHANT DISCOUNTS ATTRIBUTABLE TO SALES MADE 8 FROM LOCATIONS WITHIN NEW YORK STATE ARE ALLOCATED TO NEW YORK STATE. IT 9 SHALL BE PRESUMED THAT THE LOCATION OF THE MERCHANT IS THE ADDRESS OF 10 THE MERCHANT SHOWN ON THE INVOICE SUBMITTED BY THE MERCHANT TO THE 11 TAXPAYER. 12 (D) RECEIPTS FROM CERTAIN SERVICES TO INVESTMENT COMPANIES. RECEIPTS 13 RECEIVED FROM AN INVESTMENT COMPANY ARISING FROM THE SALE OF MANAGEMENT, 14 ADMINISTRATION OR DISTRIBUTION SERVICES TO SUCH INVESTMENT COMPANY ARE 15 INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION. THE PORTION 16 OF SUCH RECEIPTS INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION 17 (SUCH PORTION REFERRED TO HEREIN AS THE NEW YORK PORTION) SHALL BE 18 DETERMINED AS PROVIDED IN THIS PARAGRAPH. 19 (1) THE NEW YORK PORTION SHALL BE THE PRODUCT OF THE TOTAL OF SUCH 20 RECEIPTS FROM THE SALE OF SUCH SERVICES AND A FRACTION. THE NUMERATOR OF 21 THAT FRACTION IS THE SUM OF THE MONTHLY PERCENTAGES (AS DEFINED HEREIN- 22 AFTER) DETERMINED FOR EACH MONTH OF THE INVESTMENT COMPANY'S TAXABLE 23 YEAR FOR FEDERAL INCOME TAX PURPOSES WHICH TAXABLE YEAR ENDS WITHIN THE 24 TAXABLE YEAR OF THE TAXPAYER (BUT EXCLUDING ANY MONTH DURING WHICH THE 25 INVESTMENT COMPANY HAD NO OUTSTANDING SHARES). THE MONTHLY PERCENTAGE 26 FOR EACH SUCH MONTH IS DETERMINED BY DIVIDING THE NUMBER OF SHARES IN 27 THE INVESTMENT COMPANY THAT ARE OWNED ON THE LAST DAY OF THE MONTH BY 28 SHAREHOLDERS THAT ARE DOMICILED IN THE STATE BY THE TOTAL NUMBER OF 29 SHARES IN THE INVESTMENT COMPANY OUTSTANDING ON THAT DATE. THE DENOMI- 30 NATOR OF THE FRACTION IS THE NUMBER OF SUCH MONTHLY PERCENTAGES. 31 (2)(A) FOR PURPOSES OF THIS PARAGRAPH, AN INDIVIDUAL, ESTATE OR TRUST 32 IS DEEMED TO BE LOCATED IN THE STATE IF HIS, HER OR ITS MAILING ADDRESS 33 ON THE RECORDS OF THE INVESTMENT COMPANY IS IN THE STATE. A BUSINESS 34 ENTITY IS DEEMED TO BE LOCATED IN THE STATE IF ITS COMMERCIAL DOMICILE 35 IS LOCATED IN THE STATE. 36 (B) FOR PURPOSES OF THIS PARAGRAPH, THE TERM "INVESTMENT COMPANY" 37 MEANS A REGULATED INVESTMENT COMPANY, AS DEFINED IN SECTION 851 OF THE 38 INTERNAL REVENUE CODE, AND A PARTNERSHIP TO WHICH SECTION 7704(A) OF THE 39 INTERNAL REVENUE CODE APPLIES (BY VIRTUE OF SECTION 7704(C)(3) OF SUCH 40 CODE) AND THAT MEETS THE REQUIREMENTS OF SECTION 851(B) OF SUCH CODE. 41 THE PRECEDING SENTENCE SHALL BE APPLIED TO THE TAXABLE YEAR FOR FEDERAL 42 INCOME TAX PURPOSES OF THE BUSINESS ENTITY THAT IS ASSERTED TO CONSTI- 43 TUTE AN INVESTMENT COMPANY THAT ENDS WITHIN THE TAXABLE YEAR OF THE 44 TAXPAYER. 45 (C) FOR PURPOSES OF THIS PARAGRAPH THE TERM "RECEIPTS FROM AN INVEST- 46 MENT COMPANY" INCLUDES AMOUNTS RECEIVED DIRECTLY FROM AN INVESTMENT 47 COMPANY AS WELL AS AMOUNTS RECEIVED FROM THE SHAREHOLDERS IN SUCH 48 INVESTMENT COMPANY, IN THEIR CAPACITY AS SUCH. 49 (D) FOR PURPOSES OF THIS PARAGRAPH, THE TERM "MANAGEMENT SERVICES" 50 MEANS THE RENDERING OF INVESTMENT ADVICE TO AN INVESTMENT COMPANY, 51 MAKING DETERMINATIONS AS TO WHEN SALES AND PURCHASES OF SECURITIES ARE 52 TO BE MADE ON BEHALF OF AN INVESTMENT COMPANY, OR THE SELLING OR 53 PURCHASING OF SECURITIES CONSTITUTING ASSETS OF AN INVESTMENT COMPANY, 54 AND RELATED ACTIVITIES, BUT ONLY WHERE SUCH ACTIVITY OR ACTIVITIES ARE 55 PERFORMED PURSUANT TO A CONTRACT WITH THE INVESTMENT COMPANY ENTERED S. 6359--C 67 1 INTO PURSUANT TO SECTION 15(A) OF THE FEDERAL INVESTMENT COMPANY ACT OF 2 NINETEEN HUNDRED FORTY, AS AMENDED. 3 (E) FOR PURPOSES OF THIS PARAGRAPH, THE TERM "DISTRIBUTION SERVICES" 4 MEANS THE SERVICES OF ADVERTISING, SERVICING INVESTOR ACCOUNTS (INCLUD- 5 ING REDEMPTIONS), MARKETING SHARES OR SELLING SHARES OF AN INVESTMENT 6 COMPANY, BUT, IN THE CASE OF ADVERTISING, SERVICING INVESTOR ACCOUNTS 7 (INCLUDING REDEMPTIONS) OR MARKETING SHARES, ONLY WHERE SUCH SERVICE IS 8 PERFORMED BY A PERSON WHO IS (OR WAS, IN THE CASE OF A CLOSED END COMPA- 9 NY) ALSO ENGAGED IN THE SERVICE OF SELLING SUCH SHARES. IN THE CASE OF 10 AN OPEN END COMPANY, SUCH SERVICE OF SELLING SHARES MUST BE PERFORMED 11 PURSUANT TO A CONTRACT ENTERED INTO PURSUANT TO SECTION 15(B) OF THE 12 FEDERAL INVESTMENT COMPANY ACT OF NINETEEN HUNDRED FORTY, AS AMENDED. 13 (F) FOR PURPOSES OF THIS PARAGRAPH, THE TERM "ADMINISTRATION SERVICES" 14 INCLUDES CLERICAL, ACCOUNTING, BOOKKEEPING, DATA PROCESSING, INTERNAL 15 AUDITING, LEGAL AND TAX SERVICES PERFORMED FOR AN INVESTMENT COMPANY BUT 16 ONLY IF THE PROVIDER OF SUCH SERVICE OR SERVICES DURING THE TAXABLE YEAR 17 IN WHICH SUCH SERVICE OR SERVICES ARE SOLD ALSO SELLS MANAGEMENT OR 18 DISTRIBUTION SERVICES, AS DEFINED HEREINABOVE, TO SUCH INVESTMENT COMPA- 19 NY. 20 (E) FOR PURPOSES OF THIS SUBDIVISION, A TAXPAYER SHALL USE THE FOLLOW- 21 ING HIERARCHY TO DETERMINE THE COMMERCIAL DOMICILE OF A BUSINESS ENTITY, 22 BASED ON THE INFORMATION KNOWN TO THE TAXPAYER OR INFORMATION THAT WOULD 23 BE KNOWN UPON REASONABLE INQUIRY: (I) THE LOCATION OF THE TREASURY FUNC- 24 TION OF THE BUSINESS ENTITY; (II) THE SEAT OF MANAGEMENT AND CONTROL OF 25 THE BUSINESS ENTITY; AND (III) THE BILLING ADDRESS OF THE BUSINESS ENTI- 26 TY IN THE TAXPAYER'S RECORDS. THE TAXPAYER MUST EXERCISE DUE DILIGENCE 27 BEFORE REJECTING A METHOD IN THIS HIERARCHY AND PROCEEDING TO THE NEXT 28 METHOD. 29 (F) FOR PURPOSES OF THIS SUBDIVISION, THE TERM "REGISTERED SECURITIES 30 BROKER OR DEALER" MEANS A BROKER OR DEALER REGISTERED AS SUCH BY THE 31 SECURITIES AND EXCHANGE COMMISSION OR A BROKER OR DEALER REGISTERED AS 32 SUCH BY THE COMMODITIES FUTURES TRADING COMMISSION, AND SHALL INCLUDE AN 33 OTC DERIVATIVES DEALER AS DEFINED UNDER REGULATIONS OF THE SECURITIES 34 AND EXCHANGE COMMISSION AT TITLE 17, PART 240, SECTION 3B-12 OF THE CODE 35 OF FEDERAL REGULATIONS (17 CFR 240.3B-12). 36 6. RECEIPTS FROM RAILROAD AND TRUCKING BUSINESS. RECEIPTS FROM THE 37 CONDUCT OF A RAILROAD BUSINESS (INCLUDING SURFACE RAILROAD, WHETHER OR 38 NOT OPERATED BY STEAM, SUBWAY RAILROAD, ELEVATED RAILROAD, PALACE CAR OR 39 SLEEPING CAR BUSINESS) OR A TRUCKING BUSINESS ARE INCLUDED IN THE NUMER- 40 ATOR OF THE APPORTIONMENT FRACTION AS FOLLOWS. THE AMOUNT OF RECEIPTS 41 FROM THE CONDUCT OF A RAILROAD BUSINESS OR A TRUCKING BUSINESS INCLUDED 42 IN THE NUMERATOR OF THE APPORTIONMENT FRACTION IS DETERMINED BY MULTI- 43 PLYING THE AMOUNT OF RECEIPTS FROM SUCH BUSINESS BY A FRACTION, THE 44 NUMERATOR OF WHICH IS THE MILES IN SUCH BUSINESS WITHIN THE STATE DURING 45 THE PERIOD COVERED BY THE TAXPAYER'S REPORT AND THE DENOMINATOR OF WHICH 46 IS THE MILES IN SUCH BUSINESS WITHIN AND WITHOUT THE STATE DURING SUCH 47 PERIOD. RECEIPTS FROM THE CONDUCT OF THE RAILROAD BUSINESS OR A TRUCK- 48 ING BUSINESS ARE INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRAC- 49 TION. 50 7. RECEIPTS FROM AVIATION SERVICES. (A) AIR FREIGHT FORWARDING. 51 RECEIPTS OF A TAXPAYER FROM THE ACTIVITY OF AIR FREIGHT FORWARDING 52 ACTING AS PRINCIPAL AND LIKE INDIRECT AIR CARRIER RECEIPTS ARISING FROM 53 SUCH ACTIVITY SHALL BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT 54 FRACTION AS FOLLOWS: ONE HUNDRED PERCENT OF SUCH RECEIPTS IF BOTH THE 55 PICKUP AND DELIVERY ASSOCIATED WITH SUCH RECEIPTS ARE MADE IN THE STATE 56 AND FIFTY PERCENT OF SUCH RECEIPTS IF EITHER THE PICKUP OR DELIVERY S. 6359--C 68 1 ASSOCIATED WITH SUCH RECEIPTS IS MADE IN THIS STATE. SUCH RECEIPTS, 2 WHETHER THE PICKUP OR DELIVERY ASSOCIATED WITH THE RECEIPTS IS WITHIN OR 3 WITHOUT THE STATE, SHALL BE INCLUDED IN THE DENOMINATOR OF THE APPOR- 4 TIONMENT FRACTION. 5 (B) OTHER AVIATION SERVICES. (1)(A) THE PORTION OF RECEIPTS OF A 6 TAXPAYER FROM AVIATION SERVICES (OTHER THAN SERVICES DESCRIBED IN PARA- 7 GRAPH (A) OF THIS SUBDIVISION) TO BE INCLUDED IN THE NUMERATOR OF THE 8 APPORTIONMENT FRACTION SHALL BE DETERMINED BY MULTIPLYING ITS RECEIPTS 9 FROM SUCH AVIATION SERVICES BY A PERCENTAGE WHICH IS EQUAL TO THE ARITH- 10 METIC AVERAGE OF THE FOLLOWING THREE PERCENTAGES: 11 (I) THE PERCENTAGE DETERMINED BY DIVIDING SIXTY PERCENT OF THE 12 AIRCRAFT ARRIVALS AND DEPARTURES WITHIN THIS STATE BY THE TAXPAYER 13 DURING THE PERIOD COVERED BY ITS REPORT BY THE TOTAL AIRCRAFT ARRIVALS 14 AND DEPARTURES WITHIN AND WITHOUT THIS STATE DURING SUCH PERIOD; 15 PROVIDED, HOWEVER, ARRIVALS AND DEPARTURES SOLELY FOR MAINTENANCE OR 16 REPAIR, REFUELING (WHERE NO DEBARKATION OR EMBARKATION OF TRAFFIC 17 OCCURS), ARRIVALS AND DEPARTURES OF FERRY AND PERSONNEL TRAINING FLIGHTS 18 OR ARRIVALS AND DEPARTURES IN THE EVENT OF EMERGENCY SITUATIONS SHALL 19 NOT BE INCLUDED IN COMPUTING SUCH ARRIVAL AND DEPARTURE PERCENTAGE; 20 PROVIDED, FURTHER, THE COMMISSIONER MAY ALSO EXEMPT FROM SUCH PERCENTAGE 21 AIRCRAFT ARRIVALS AND DEPARTURES OF ALL NON-REVENUE FLIGHTS INCLUDING 22 FLIGHTS INVOLVING THE TRANSPORTATION OF OFFICERS OR EMPLOYEES RECEIVING 23 AIR TRANSPORTATION TO PERFORM MAINTENANCE OR REPAIR SERVICES OR WHERE 24 SUCH OFFICERS OR EMPLOYEES ARE TRANSPORTED IN CONJUNCTION WITH AN EMER- 25 GENCY SITUATION OR THE INVESTIGATION OF AN AIR DISASTER (OTHER THAN ON A 26 SCHEDULED FLIGHT); PROVIDED, HOWEVER, THAT ARRIVALS AND DEPARTURES OF 27 FLIGHTS TRANSPORTING OFFICERS AND EMPLOYEES RECEIVING AIR TRANSPORTATION 28 FOR PURPOSES OTHER THAN SPECIFIED ABOVE (WITHOUT REGARD TO REMUNERATION) 29 SHALL BE INCLUDED IN COMPUTING SUCH ARRIVAL AND DEPARTURE PERCENTAGE; 30 (II) THE PERCENTAGE DETERMINED BY DIVIDING SIXTY PERCENT OF THE REVEN- 31 UE TONS HANDLED BY THE TAXPAYER AT AIRPORTS WITHIN THIS STATE DURING 32 SUCH PERIOD BY THE TOTAL REVENUE TONS HANDLED BY IT AT AIRPORTS WITHIN 33 AND WITHOUT THIS STATE DURING SUCH PERIOD; AND 34 (III) THE PERCENTAGE DETERMINED BY DIVIDING SIXTY PERCENT OF THE 35 TAXPAYER'S ORIGINATING REVENUE WITHIN THIS STATE FOR SUCH PERIOD BY ITS 36 TOTAL ORIGINATING REVENUE WITHIN AND WITHOUT THIS STATE FOR SUCH PERIOD. 37 (B) AS USED HEREIN THE TERM "AIRCRAFT ARRIVALS AND DEPARTURES" MEANS 38 THE NUMBER OF LANDINGS AND TAKEOFFS OF THE AIRCRAFT OF THE TAXPAYER AND 39 THE NUMBER OF AIR PICKUPS AND DELIVERIES BY THE AIRCRAFT OF SUCH TAXPAY- 40 ER; THE TERM "ORIGINATING REVENUE" MEANS REVENUE TO THE TAXPAYER FROM 41 THE TRANSPORTATION OR REVENUE PASSENGERS AND REVENUE PROPERTY FIRST 42 RECEIVED BY THE TAXPAYER EITHER AS ORIGINATING OR CONNECTING TRAFFIC AT 43 AIRPORTS; AND THE TERM "REVENUE TONS HANDLED" BY THE TAXPAYER AT 44 AIRPORTS MEANS THE WEIGHT IN TONS OF REVENUE PASSENGERS (AT TWO HUNDRED 45 POUNDS PER PASSENGER) AND REVENUE CARGO FIRST RECEIVED EITHER AS ORIGI- 46 NATING OR CONNECTING TRAFFIC OR FINALLY DISCHARGED BY THE TAXPAYER AT 47 AIRPORTS; 48 (2) ALL SUCH RECEIPTS OF A TAXPAYER FROM AVIATION SERVICES DESCRIBED 49 IN THIS PARAGRAPH ARE INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT 50 FRACTION. 51 8. RECEIPTS FROM SALES OF ADVERTISING. (A) THE AMOUNT OF RECEIPTS FROM 52 SALES OF ADVERTISING IN NEWSPAPERS OR PERIODICALS INCLUDED IN THE NUMER- 53 ATOR OF THE APPORTIONMENT FRACTION IS DETERMINED BY MULTIPLYING THE 54 TOTAL OF SUCH RECEIPTS BY A FRACTION, THE NUMERATOR OF WHICH IS THE 55 NUMBER OF NEWSPAPERS AND PERIODICALS DELIVERED TO POINTS WITHIN THE 56 STATE AND THE DENOMINATOR OF WHICH IS THE NUMBER OF NEWSPAPERS AND PERI- S. 6359--C 69 1 ODICALS DELIVERED TO POINTS WITHIN AND WITHOUT THE STATE. THE TOTAL OF 2 SUCH RECEIPTS FROM SALES OF ADVERTISING IN NEWSPAPERS OR PERIODICALS IS 3 INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION. 4 (B) THE AMOUNT OF RECEIPTS FROM SALES OF ADVERTISING ON TELEVISION OR 5 RADIO INCLUDED IN THE APPORTIONMENT FRACTION IS DETERMINED BY MULTIPLY- 6 ING THE TOTAL OF SUCH RECEIPTS BY A FRACTION, THE NUMERATOR OF WHICH IS 7 THE NUMBER OF VIEWERS OR LISTENERS WITHIN THE STATE AND THE DENOMINATOR 8 OF WHICH IS THE NUMBER OF VIEWERS OR LISTENERS WITHIN AND WITHOUT THE 9 STATE. THE TOTAL OF SUCH RECEIPTS FROM SALES OF ADVERTISING ON TELE- 10 VISION AND RADIO IS INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT 11 FRACTION. 12 (C) THE AMOUNT OF RECEIPTS FROM SALES OF ADVERTISING NOT DESCRIBED IN 13 PARAGRAPH (A) OR (B) OF THIS SUBDIVISION THAT IS FURNISHED, PROVIDED OR 14 DELIVERED TO, OR ACCESSED BY THE VIEWER OR LISTENER THROUGH THE USE OF 15 WIRE, CABLE, FIBER-OPTIC, LASER, MICROWAVE, RADIO WAVE, SATELLITE OR 16 SIMILAR SUCCESSOR MEDIA OR ANY COMBINATION THEREOF, INCLUDED IN THE 17 NUMERATOR OF THE APPORTIONMENT FRACTION IS DETERMINED BY MULTIPLYING THE 18 TOTAL OF SUCH RECEIPTS BY A FRACTION, THE NUMERATOR OF WHICH IS THE 19 NUMBER OF VIEWERS OR LISTENERS WITHIN THE STATE AND THE DENOMINATOR OF 20 WHICH IS THE NUMBER OF VIEWERS OR LISTENERS WITHIN AND WITHOUT THE 21 STATE. THE TOTAL OF SUCH RECEIPTS FROM SALES OF ADVERTISING DESCRIBED IN 22 THIS PARAGRAPH IS INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRAC- 23 TION. 24 9. RECEIPTS FROM TRANSPORTATION OR TRANSMISSION OF GAS THROUGH PIPES. 25 RECEIPTS FROM THE TRANSPORTATION OR TRANSMISSION OF GAS THROUGH PIPES 26 ARE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION AS FOLLOWS. 27 THE AMOUNT OF RECEIPTS FROM THE TRANSPORTATION OR TRANSMISSION OF GAS 28 THROUGH PIPES INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION IS 29 DETERMINED BY MULTIPLYING THE TOTAL AMOUNT OF SUCH RECEIPTS BY A FRAC- 30 TION, THE NUMERATOR OF WHICH IS THE TAXPAYER'S TRANSPORTATION UNITS 31 WITHIN THE STATE AND THE DENOMINATOR OF WHICH IS THE TAXPAYER'S TRANS- 32 PORTATION UNITS WITHIN AND WITHOUT THE STATE. A TRANSPORTATION UNIT IS 33 THE TRANSPORTATION OF ONE CUBIC FOOT OF GAS OVER A DISTANCE OF ONE MILE. 34 THE TOTAL AMOUNT OF RECEIPTS FROM THE TRANSPORTATION OR TRANSMISSION OF 35 GAS THROUGH PIPES IS INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT 36 FRACTION. 37 10. (A) RECEIPTS FROM OTHER SERVICES AND OTHER BUSINESS RECEIPTS. 38 RECEIPTS FROM SERVICES NOT ADDRESSED IN SUBDIVISIONS ONE THROUGH NINE OF 39 THIS SECTION AND OTHER BUSINESS RECEIPTS NOT ADDRESSED IN SUCH SUBDIVI- 40 SIONS SHALL BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION 41 IF THE LOCATION OF THE CUSTOMER IS WITHIN THE STATE. SUCH RECEIPTS FROM 42 CUSTOMERS WITHIN AND WITHOUT THE STATE ARE INCLUDED IN THE DENOMINATOR 43 OF THE APPORTIONMENT FRACTION. WHETHER THE RECEIPTS ARE INCLUDED IN THE 44 NUMERATOR OF THE APPORTIONMENT FRACTION IS DETERMINED ACCORDING TO THE 45 HIERARCHY OF METHOD SET FORTH IN PARAGRAPH (B) OF THIS SUBDIVISION. THE 46 TAXPAYER MUST EXERCISE DUE DILIGENCE UNDER EACH METHOD DESCRIBED IN 47 PARAGRAPH (B) BEFORE REJECTING IT AND PROCEEDING TO THE NEXT METHOD IN 48 THE HIERARCHY. 49 (B) HIERARCHY OF METHODS. (1) DELIVERY DESTINATION. RECEIPTS FOR 50 SERVICES PERFORMED FOR A CUSTOMER'S PARTICULAR LOCATION, SUCH AS WHERE A 51 DELIVERY IS MADE TO THAT LOCATION, AS MAY BE INDICATED ON A BILL OF 52 LADING OR PURCHASE INVOICE, ARE SOURCED TO THAT LOCATION. 53 (2) BILLING ADDRESS OF THE CUSTOMER. 54 (3) ZIP CODE OR OTHER GEOGRAPHIC INDICATOR OF THE CUSTOMER'S LOCATION. 55 (4) PERCENTAGE OF THE TAXPAYER'S RECEIPTS WITHIN THE STATE DETERMINED 56 PURSUANT TO THIS SUBDIVISION FOR THE PRECEDING TAXABLE YEAR OR, IF THE S. 6359--C 70 1 TAXPAYER WAS NOT SUBJECT TO TAX IN THE PRECEDING TAXABLE YEAR, THEN THE 2 PERCENTAGE OF THE TAXPAYER'S RECEIPTS WITHIN THE STATE IN THE CURRENT 3 TAXABLE YEAR DETERMINED PURSUANT TO THIS SUBDIVISION. 4 11. IF IT SHALL APPEAR TO THE COMMISSIONER THAT THE APPORTIONMENT 5 FRACTION DETERMINED PURSUANT TO THIS SECTION DOES NOT RESULT IN A PROPER 6 REFLECTION OF THE TAXPAYER'S BUSINESS INCOME OR CAPITAL WITHIN THE 7 STATE, THE COMMISSIONER IS AUTHORIZED IN HIS OR HER DISCRETION TO ADJUST 8 IT BY (A) EXCLUDING ONE OR MORE ITEMS IN SUCH DETERMINATION, (B) INCLUD- 9 ING ONE OR MORE OTHER ITEMS IN SUCH DETERMINATION, OR (C) ANY OTHER 10 SIMILAR OR DIFFERENT METHOD CALCULATED TO EFFECT A FAIR AND PROPER 11 APPORTIONMENT OF THE BUSINESS INCOME AND CAPITAL REASONABLY ATTRIBUTED 12 TO THE STATE. 13 S 17. The tax law is amended by adding a new section 210-B to read as 14 follows: 15 S 210-B. CREDITS. 1. INVESTMENT TAX CREDIT (ITC). (A) A TAXPAYER 16 SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS HEREINAFTER PROVIDED, 17 AGAINST THE TAX IMPOSED BY THIS ARTICLE. THE AMOUNT OF THE CREDIT SHALL 18 BE THE PERCENT PROVIDED FOR HEREINBELOW OF THE INVESTMENT CREDIT BASE. 19 THE INVESTMENT CREDIT BASE IS THE COST OR OTHER BASIS FOR FEDERAL INCOME 20 TAX PURPOSES OF TANGIBLE PERSONAL PROPERTY AND OTHER TANGIBLE PROPERTY, 21 INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS OF BUILDINGS, DESCRIBED IN 22 PARAGRAPH (B) OF THIS SUBDIVISION, LESS THE AMOUNT OF THE NONQUALIFIED 23 NONRECOURSE FINANCING WITH RESPECT TO SUCH PROPERTY TO THE EXTENT SUCH 24 FINANCING WOULD BE EXCLUDIBLE FROM THE CREDIT BASE PURSUANT TO SECTION 25 46(C)(8) OF THE INTERNAL REVENUE CODE (TREATING SUCH PROPERTY AS SECTION 26 THIRTY-EIGHT PROPERTY IRRESPECTIVE OF WHETHER OR NOT IT IN FACT CONSTI- 27 TUTES SECTION THIRTY-EIGHT PROPERTY). IF, AT THE CLOSE OF A TAXABLE YEAR 28 FOLLOWING THE TAXABLE YEAR IN WHICH SUCH PROPERTY WAS PLACED IN SERVICE, 29 THERE IS A NET DECREASE IN THE AMOUNT OF NONQUALIFIED NONRECOURSE 30 FINANCING WITH RESPECT TO SUCH PROPERTY, SUCH NET DECREASE SHALL BE 31 TREATED AS IF IT WERE THE COST OR OTHER BASIS OF PROPERTY DESCRIBED IN 32 PARAGRAPH (B) OF THIS SUBDIVISION ACQUIRED, CONSTRUCTED, RECONSTRUCTED 33 OR ERECTED DURING THE YEAR OF THE DECREASE IN THE AMOUNT OF NONQUALIFIED 34 NONRECOURSE FINANCING. IN THE CASE OF A COMBINED REPORT THE TERM INVEST- 35 MENT CREDIT BASE SHALL MEAN THE SUM OF THE INVESTMENT CREDIT BASE OF 36 EACH CORPORATION INCLUDED ON SUCH REPORT. THE PERCENTAGE TO BE USED TO 37 COMPUTE THE CREDIT ALLOWED PURSUANT TO THIS SUBDIVISION SHALL BE FIVE 38 PERCENT WITH RESPECT TO THE FIRST THREE HUNDRED FIFTY MILLION DOLLARS OF 39 THE INVESTMENT CREDIT BASE, AND FOUR PERCENT WITH RESPECT TO THE INVEST- 40 MENT CREDIT BASE IN EXCESS OF THREE HUNDRED FIFTY MILLION DOLLARS, 41 EXCEPT THAT IN THE CASE OF RESEARCH AND DEVELOPMENT PROPERTY AT THE 42 OPTION OF THE TAXPAYER THE APPLICABLE PERCENTAGE SHALL BE NINE. 43 (B) (I) A CREDIT SHALL BE ALLOWED UNDER THIS SUBDIVISION WITH RESPECT 44 TO TANGIBLE PERSONAL PROPERTY AND OTHER TANGIBLE PROPERTY, INCLUDING 45 BUILDINGS AND STRUCTURAL COMPONENTS OF BUILDINGS, WHICH ARE: DEPRECIABLE 46 PURSUANT TO SECTION ONE HUNDRED SIXTY-SEVEN OF THE INTERNAL REVENUE 47 CODE, HAVE A USEFUL LIFE OF FOUR YEARS OR MORE, ARE ACQUIRED BY PURCHASE 48 AS DEFINED IN SECTION ONE HUNDRED SEVENTY-NINE (D) OF THE INTERNAL 49 REVENUE CODE, HAVE A SITUS IN THIS STATE AND ARE (A) PRINCIPALLY USED BY 50 THE TAXPAYER IN THE PRODUCTION OF GOODS BY MANUFACTURING, PROCESSING, 51 ASSEMBLING, REFINING, MINING, EXTRACTING, FARMING, AGRICULTURE, HORTI- 52 CULTURE, FLORICULTURE, VITICULTURE OR COMMERCIAL FISHING, (B) INDUSTRIAL 53 WASTE TREATMENT FACILITIES OR AIR POLLUTION CONTROL FACILITIES, USED IN 54 THE TAXPAYER'S TRADE OR BUSINESS, (C) RESEARCH AND DEVELOPMENT PROPERTY, 55 OR (D) PRINCIPALLY USED AS A QUALIFIED FILM PRODUCTION FACILITY INCLUD- 56 ING QUALIFIED FILM PRODUCTION FACILITIES HAVING A SITUS IN AN EMPIRE S. 6359--C 71 1 ZONE DESIGNATED AS SUCH PURSUANT TO ARTICLE EIGHTEEN-B OF THE GENERAL 2 MUNICIPAL LAW, WHERE THE TAXPAYER IS PROVIDING THREE OR MORE SERVICES TO 3 ANY QUALIFIED FILM PRODUCTION COMPANY USING THE FACILITY, INCLUDING SUCH 4 SERVICES AS A STUDIO LIGHTING GRID, LIGHTING AND GRIP EQUIPMENT, MULTI- 5 LINE PHONE SERVICE, BROADBAND INFORMATION TECHNOLOGY ACCESS, INDUSTRIAL 6 SCALE ELECTRICAL CAPACITY, FOOD SERVICES, SECURITY SERVICES, AND HEAT- 7 ING, VENTILATION AND AIR CONDITIONING. FOR PURPOSES OF THIS SUBDIVI- 8 SION, THE TERM "GOODS" SHALL NOT INCLUDE ELECTRICITY. 9 (II) FOR PURPOSES OF THIS PARAGRAPH, THE FOLLOWING DEFINITIONS SHALL 10 APPLY-- 11 (A) MANUFACTURING SHALL MEAN THE PROCESS OF WORKING RAW MATERIALS INTO 12 WARES SUITABLE FOR USE OR WHICH GIVES NEW SHAPES, NEW QUALITY OR NEW 13 COMBINATIONS TO MATTER WHICH ALREADY HAS GONE THROUGH SOME ARTIFICIAL 14 PROCESS BY THE USE OF MACHINERY, TOOLS, APPLIANCES AND OTHER SIMILAR 15 EQUIPMENT. PROPERTY USED IN THE PRODUCTION OF GOODS SHALL INCLUDE 16 MACHINERY, EQUIPMENT OR OTHER TANGIBLE PROPERTY WHICH IS PRINCIPALLY 17 USED IN THE REPAIR AND SERVICE OF OTHER MACHINERY, EQUIPMENT OR OTHER 18 TANGIBLE PROPERTY USED PRINCIPALLY IN THE PRODUCTION OF GOODS AND SHALL 19 INCLUDE ALL FACILITIES USED IN THE PRODUCTION OPERATION, INCLUDING STOR- 20 AGE OF MATERIAL TO BE USED IN PRODUCTION AND OF THE PRODUCTS THAT ARE 21 PRODUCED. 22 (B) RESEARCH AND DEVELOPMENT PROPERTY SHALL MEAN PROPERTY WHICH IS 23 USED FOR PURPOSES OF RESEARCH AND DEVELOPMENT IN THE EXPERIMENTAL OR 24 LABORATORY SENSE. SUCH PURPOSES SHALL NOT BE DEEMED TO INCLUDE THE ORDI- 25 NARY TESTING OR INSPECTION OF MATERIALS OR PRODUCTS FOR QUALITY CONTROL, 26 EFFICIENCY SURVEYS, MANAGEMENT STUDIES, CONSUMER SURVEYS, ADVERTISING, 27 PROMOTIONS, OR RESEARCH IN CONNECTION WITH LITERARY, HISTORICAL OR SIMI- 28 LAR PROJECTS. 29 (C) INDUSTRIAL WASTE TREATMENT FACILITIES SHALL MEAN PROPERTY CONSTI- 30 TUTING FACILITIES FOR THE TREATMENT, NEUTRALIZATION OR STABILIZATION OF 31 INDUSTRIAL WASTE AND OTHER WASTES (AS THE TERMS "INDUSTRIAL WASTE" AND 32 "OTHER WASTES" ARE DEFINED IN SECTION 17-0105 OF THE ENVIRONMENTAL 33 CONSERVATION LAW) FROM A POINT IMMEDIATELY PRECEDING THE POINT OF SUCH 34 TREATMENT, NEUTRALIZATION OR STABILIZATION TO THE POINT OF DISPOSAL, 35 INCLUDING THE NECESSARY PUMPING AND TRANSMITTING FACILITIES, BUT EXCLUD- 36 ING SUCH FACILITIES INSTALLED FOR THE PRIMARY PURPOSE OF SALVAGING MATE- 37 RIALS WHICH ARE USABLE IN THE MANUFACTURING PROCESS OR ARE MARKETABLE. 38 (D) AIR POLLUTION CONTROL FACILITIES SHALL MEAN PROPERTY CONSTITUTING 39 FACILITIES WHICH REMOVE, REDUCE, OR RENDER LESS NOXIOUS AIR CONTAMINANTS 40 EMITTED FROM AN AIR CONTAMINATION SOURCE (AS THE TERMS "AIR CONTAMINANT" 41 AND "AIR CONTAMINATION SOURCE" ARE DEFINED IN SECTION 19-0107 OF THE 42 ENVIRONMENTAL CONSERVATION LAW) FROM A POINT IMMEDIATELY PRECEDING THE 43 POINT OF SUCH REMOVAL, REDUCTION OR RENDERING TO THE POINT OF DISCHARGE 44 OF AIR, MEETING EMISSION STANDARDS AS ESTABLISHED BY THE DEPARTMENT OF 45 ENVIRONMENTAL CONSERVATION, BUT EXCLUDING SUCH FACILITIES INSTALLED FOR 46 THE PRIMARY PURPOSE OF SALVAGING MATERIALS WHICH ARE USABLE IN THE MANU- 47 FACTURING PROCESS OR ARE MARKETABLE AND EXCLUDING THOSE FACILITIES WHICH 48 RELY FOR THEIR EFFICACY ON DILUTION, DISPERSION OR ASSIMILATION OF AIR 49 CONTAMINANTS IN THE AMBIENT AIR AFTER EMISSION. SUCH TERM SHALL FURTHER 50 INCLUDE FLUE GAS DESULFURIZATION EQUIPMENT AND ATTENDANT SLUDGE DISPOSAL 51 FACILITIES, FLUIDIZED BED BOILERS, PRECOMBUSTION COAL CLEANING FACILI- 52 TIES OR OTHER FACILITIES THAT CONFORM WITH THIS SUBDIVISION AND WHICH 53 COMPLY WITH THE PROVISIONS OF THE STATE ACID DEPOSITION CONTROL ACT SET 54 FORTH IN TITLE NINE OF ARTICLE NINETEEN OF THE ENVIRONMENTAL CONSERVA- 55 TION LAW. S. 6359--C 72 1 (E) THE TERMS "QUALIFIED FILM PRODUCTION FACILITY" AND "QUALIFIED FILM 2 PRODUCTION COMPANY" SHALL HAVE THE SAME MEANING AS IN SECTION 3 TWENTY-FOUR OF THIS CHAPTER. 4 (III) HOWEVER, SUCH CREDIT SHALL BE ALLOWED WITH RESPECT TO INDUSTRIAL 5 WASTE TREATMENT FACILITIES AND AIR POLLUTION CONTROL FACILITIES ONLY ON 6 CONDITION THAT SUCH FACILITIES HAVE BEEN CERTIFIED BY THE STATE COMMIS- 7 SIONER OF ENVIRONMENTAL CONSERVATION OR HIS DESIGNATED REPRESENTATIVE, 8 PURSUANT TO SUBDIVISION ONE OF SECTION 17-0707 OR SUBDIVISION ONE OF 9 SECTION 19-0309 OF THE ENVIRONMENTAL CONSERVATION LAW, AS COMPLYING WITH 10 APPLICABLE PROVISIONS OF THE ENVIRONMENTAL CONSERVATION LAW, THE PUBLIC 11 HEALTH LAW, THE STATE SANITARY CODE AND CODES, RULES, REGULATIONS, 12 PERMITS OR ORDERS ISSUED PURSUANT THERETO. 13 (C) 14 (D) A TAXPAYER SHALL NOT BE ALLOWED A CREDIT UNDER THIS SUBDIVISION 15 WITH RESPECT TO TANGIBLE PERSONAL PROPERTY AND OTHER TANGIBLE PROPERTY, 16 INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS OF BUILDINGS, WHICH IT 17 LEASES TO ANY OTHER PERSON OR CORPORATION. FOR PURPOSES OF THE PRECED- 18 ING SENTENCE, ANY CONTRACT OR AGREEMENT TO LEASE OR RENT OR FOR A 19 LICENSE TO USE SUCH PROPERTY SHALL BE CONSIDERED A LEASE. PROVIDED, 20 HOWEVER, IN DETERMINING WHETHER A TAXPAYER SHALL BE ALLOWED A CREDIT 21 UNDER THIS SUBDIVISION WITH RESPECT TO SUCH PROPERTY, ANY ELECTION MADE 22 WITH RESPECT TO SUCH PROPERTY PURSUANT TO THE PROVISIONS OF PARAGRAPH 23 EIGHT OF SUBSECTION (F) OF SECTION ONE HUNDRED SIXTY-EIGHT OF THE INTER- 24 NAL REVENUE CODE, AS SUCH PARAGRAPH WAS IN EFFECT FOR AGREEMENTS ENTERED 25 INTO PRIOR TO JANUARY FIRST, NINETEEN HUNDRED EIGHTY-FOUR, SHALL BE 26 DISREGARDED. FOR PURPOSES OF THIS PARAGRAPH, THE USE OF A QUALIFIED FILM 27 PRODUCTION FACILITY BY A QUALIFIED FILM PRODUCTION COMPANY SHALL NOT BE 28 CONSIDERED A LEASE OF SUCH FACILITY TO SUCH COMPANY. 29 (E) EXCEPT AS OTHERWISE PROVIDED IN THIS PARAGRAPH, THE CREDIT ALLOWED 30 UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE 31 FOR SUCH YEAR TO LESS THAN THE HIGHER OF THE AMOUNTS PRESCRIBED IN PARA- 32 GRAPHS (C) AND (D) OF SUBDIVISION ONE OF THIS SECTION. HOWEVER, IF THE 33 AMOUNT OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR 34 REDUCES THE TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT ALLOWED FOR A TAXA- 35 BLE YEAR COMMENCING PRIOR TO JANUARY FIRST, NINETEEN HUNDRED EIGHTY-SEV- 36 EN AND NOT DEDUCTIBLE IN SUCH TAXABLE YEAR MAY BE CARRIED OVER TO THE 37 FOLLOWING YEAR OR YEARS AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR 38 SUCH YEAR OR YEARS BUT IN NO EVENT SHALL SUCH CREDIT BE CARRIED OVER TO 39 TAXABLE YEARS COMMENCING ON OR AFTER JANUARY FIRST, TWO THOUSAND TWO, 40 AND ANY AMOUNT OF CREDIT ALLOWED FOR A TAXABLE YEAR COMMENCING ON OR 41 AFTER JANUARY FIRST, NINETEEN HUNDRED EIGHTY-SEVEN AND NOT DEDUCTIBLE IN 42 SUCH YEAR MAY BE CARRIED OVER TO THE FIFTEEN TAXABLE YEARS NEXT FOLLOW- 43 ING SUCH TAXABLE YEAR AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR 44 SUCH YEAR OR YEARS. IN LIEU OF SUCH CARRYOVER, ANY SUCH TAXPAYER WHICH 45 QUALIFIES AS A NEW BUSINESS UNDER PARAGRAPH (J) OF THIS SUBDIVISION MAY 46 ELECT TO TREAT THE AMOUNT OF SUCH CARRYOVER AS AN OVERPAYMENT OF TAX TO 47 BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION TEN 48 HUNDRED EIGHTY-SIX OF THIS CHAPTER, PROVIDED, HOWEVER, THE PROVISIONS OF 49 SUBSECTION (C) OF SECTION TEN HUNDRED EIGHTY-EIGHT OF THIS CHAPTER 50 NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON. 51 (F) AT THE OPTION OF THE TAXPAYER AN ELIGIBLE BUSINESS FACILITY FOR 52 WHICH A CREDIT IS ALLOWED UNDER SUBDIVISION ELEVEN OF THIS SECTION, OR, 53 FOR TAXABLE YEARS COMMENCING PRIOR TO JANUARY FIRST, NINETEEN HUNDRED 54 EIGHTY-SEVEN, AIR OR WATER POLLUTION CONTROL OR CONTROLLED PROCESS 55 FACILITIES WHICH QUALIFY FOR ELECTIVE DEDUCTIONS UNDER PARAGRAPH (G) OF 56 SUBDIVISION NINE OF SECTION TWO HUNDRED EIGHT, MAY BE TREATED AS PROPER- S. 6359--C 73 1 TY PRINCIPALLY USED BY THE TAXPAYER IN THE PRODUCTION OF GOODS BY MANU- 2 FACTURING, PROCESSING, ASSEMBLING, REFINING, MINING, EXTRACTING, FARM- 3 ING, AGRICULTURE, HORTICULTURE, FLORICULTURE, VITICULTURE OR COMMERCIAL 4 FISHING, PROVIDED THE PROPERTY OTHERWISE QUALIFIES UNDER PARAGRAPH (B) 5 OF THIS SUBDIVISION, IN WHICH EVENT, A DEDUCTION SHALL NOT BE ALLOWED 6 UNDER SUCH PARAGRAPH (G). 7 (G) (1) WITH RESPECT TO PROPERTY WHICH IS DEPRECIABLE PURSUANT TO 8 SECTION ONE HUNDRED SIXTY-SEVEN OF THE INTERNAL REVENUE CODE BUT IS NOT 9 SUBJECT TO THE PROVISIONS OF SECTION ONE HUNDRED SIXTY-EIGHT OF SUCH 10 CODE AND WHICH IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE PRIOR TO 11 THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT IS TO BE TAKEN, THE 12 AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF THE CREDIT PROVIDED FOR IN 13 THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH THE MONTHS OF QUALI- 14 FIED USE BEAR TO THE MONTHS OF USEFUL LIFE. IF PROPERTY ON WHICH CREDIT 15 HAS BEEN TAKEN IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE PRIOR TO 16 THE END OF ITS USEFUL LIFE, THE DIFFERENCE BETWEEN THE CREDIT TAKEN AND 17 THE CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE YEAR OF 18 DISPOSITION. PROVIDED, HOWEVER, IF SUCH PROPERTY IS DISPOSED OF OR CEAS- 19 ES TO BE IN QUALIFIED USE AFTER IT HAS BEEN IN QUALIFIED USE FOR MORE 20 THAN TWELVE CONSECUTIVE YEARS, IT SHALL NOT BE NECESSARY TO ADD BACK THE 21 CREDIT AS PROVIDED IN THIS SUBPARAGRAPH. THE AMOUNT OF CREDIT ALLOWED 22 FOR ACTUAL USE SHALL BE DETERMINED BY MULTIPLYING THE ORIGINAL CREDIT BY 23 THE RATIO WHICH THE MONTHS OF QUALIFIED USE BEAR TO THE MONTHS OF USEFUL 24 LIFE. FOR PURPOSES OF THIS SUBPARAGRAPH, USEFUL LIFE OF PROPERTY SHALL 25 BE THE SAME AS THE TAXPAYER USES FOR DEPRECIATION PURPOSES WHEN COMPUT- 26 ING HIS FEDERAL INCOME TAX LIABILITY. 27 (2) EXCEPT WITH RESPECT TO THAT PROPERTY TO WHICH SUBPARAGRAPH FOUR OF 28 THIS PARAGRAPH APPLIES, WITH RESPECT TO THREE-YEAR PROPERTY, AS DEFINED 29 IN SUBSECTION (E) OF SECTION ONE HUNDRED SIXTY-EIGHT OF THE INTERNAL 30 REVENUE CODE, WHICH IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE 31 PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT IS TO BE TAKEN, 32 THE AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF THE CREDIT PROVIDED 33 FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH THE MONTHS OF 34 QUALIFIED USE BEAR TO THIRTY-SIX. IF PROPERTY ON WHICH CREDIT HAS BEEN 35 TAKEN IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE PRIOR TO THE END 36 OF THIRTY-SIX MONTHS, THE DIFFERENCE BETWEEN THE CREDIT TAKEN AND THE 37 CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE YEAR OF DISPOSI- 38 TION. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL USE SHALL BE DETERMINED BY 39 MULTIPLYING THE ORIGINAL CREDIT BY THE RATIO WHICH THE MONTHS OF QUALI- 40 FIED USE BEAR TO THIRTY-SIX. 41 (3) EXCEPT WITH RESPECT TO THAT PROPERTY TO WHICH SUBPARAGRAPH FOUR OF 42 THIS PARAGRAPH APPLIES, WITH RESPECT TO PROPERTY SUBJECT TO THE 43 PROVISIONS OF SECTION ONE HUNDRED SIXTY-EIGHT OF THE INTERNAL REVENUE 44 CODE, OTHER THAN THREE-YEAR PROPERTY AS DEFINED IN SUBSECTION (E) OF 45 SUCH SECTION ONE HUNDRED SIXTY-EIGHT WHICH IS DISPOSED OF OR CEASES TO 46 BE IN QUALIFIED USE PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE 47 CREDIT IS TO BE TAKEN, THE AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF 48 THE CREDIT PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO 49 WHICH THE MONTHS OF QUALIFIED USE BEAR TO SIXTY. IF PROPERTY ON WHICH 50 CREDIT HAS BEEN TAKEN IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE 51 PRIOR TO THE END OF SIXTY MONTHS, THE DIFFERENCE BETWEEN THE CREDIT 52 TAKEN AND THE CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE 53 YEAR OF DISPOSITION. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL USE SHALL 54 BE DETERMINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE RATIO WHICH THE 55 MONTHS OF QUALIFIED USE BEAR TO SIXTY. S. 6359--C 74 1 (4) WITH RESPECT TO ANY PROPERTY TO WHICH SECTION ONE HUNDRED 2 SIXTY-EIGHT OF THE INTERNAL REVENUE CODE APPLIES, WHICH IS A BUILDING OR 3 A STRUCTURAL COMPONENT OF A BUILDING AND WHICH IS DISPOSED OF OR CEASES 4 TO BE IN QUALIFIED USE PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE 5 CREDIT IS TO BE TAKEN, THE AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF 6 THE CREDIT PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO 7 WHICH THE MONTHS OF QUALIFIED USE BEAR TO THE TOTAL NUMBER OF MONTHS 8 OVER WHICH THE TAXPAYER CHOOSES TO DEDUCT THE PROPERTY UNDER THE INTER- 9 NAL REVENUE CODE. IF PROPERTY ON WHICH CREDIT HAS BEEN TAKEN IS DISPOSED 10 OF OR CEASES TO BE IN QUALIFIED USE PRIOR TO THE END OF THE PERIOD OVER 11 WHICH THE TAXPAYER CHOOSES TO DEDUCT THE PROPERTY UNDER THE INTERNAL 12 REVENUE CODE, THE DIFFERENCE BETWEEN THE CREDIT TAKEN AND THE CREDIT 13 ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE YEAR OF DISPOSITION. 14 PROVIDED, HOWEVER, IF SUCH PROPERTY IS DISPOSED OF OR CEASES TO BE IN 15 QUALIFIED USE AFTER IT HAS BEEN IN QUALIFIED USE FOR MORE THAN TWELVE 16 CONSECUTIVE YEARS, IT SHALL NOT BE NECESSARY TO ADD BACK THE CREDIT AS 17 PROVIDED IN THIS SUBPARAGRAPH. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL 18 USE SHALL BE DETERMINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE RATIO 19 WHICH THE MONTHS OF QUALIFIED USE BEAR TO THE TOTAL NUMBER OF MONTHS 20 OVER WHICH THE TAXPAYER CHOOSES TO DEDUCT THE PROPERTY UNDER THE INTER- 21 NAL REVENUE CODE. 22 (5) FOR PURPOSES OF THIS PARAGRAPH, PROPERTY (I) WHICH IS DESCRIBED IN 23 SUBPARAGRAPH TWO, THREE OR FOUR OF THIS PARAGRAPH, AND (II) WHICH IS 24 SUBJECT TO SUBPARAGRAPH ELEVEN OF PARAGRAPH (A) OF SUBDIVISION NINE AND 25 SUBPARAGRAPH TEN OF PARAGRAPH (B) OF SUBDIVISION NINE OF SECTION TWO 26 HUNDRED EIGHT OF THIS CHAPTER, SHALL BE TREATED AS PROPERTY WHICH IS 27 DEPRECIABLE PURSUANT TO SECTION ONE HUNDRED SIXTY-SEVEN OF THE INTERNAL 28 REVENUE CODE BUT IS NOT SUBJECT TO SECTION ONE HUNDRED SIXTY-EIGHT OF 29 SUCH CODE. 30 (6) FOR PURPOSES OF THIS PARAGRAPH, WHERE A CREDIT IS ALLOWED WITH 31 RESPECT TO AN AIR POLLUTION CONTROL FACILITY ON THE BASIS OF A CERTIF- 32 ICATE OF COMPLIANCE ISSUED PURSUANT TO THE ENVIRONMENTAL CONSERVATION 33 LAW AND THE CERTIFICATE IS REVOKED PURSUANT TO SUBDIVISION THREE OF 34 SECTION 19-0309 OF THE ENVIRONMENTAL CONSERVATION LAW, SUCH REVOCATION 35 SHALL CONSTITUTE A DISPOSAL OR CESSATION OF QUALIFIED USE, UNLESS SUCH 36 FACILITY IS DESCRIBED IN CLAUSE (A) OR (C) OF SUBPARAGRAPH (II) OF PARA- 37 GRAPH (B) OF THIS SUBDIVISION. ALSO FOR PURPOSES OF THIS SUBPARAGRAPH, 38 THE USE OF AN AIR POLLUTION CONTROL FACILITY OR AN INDUSTRIAL WASTE 39 TREATMENT FACILITY FOR THE PRIMARY PURPOSE OF SALVAGING MATERIALS WHICH 40 ARE USABLE IN THE MANUFACTURING PROCESS OR ARE MARKETABLE SHALL CONSTI- 41 TUTE A CESSATION OF QUALIFIED USE, UNLESS SUCH FACILITY IS DESCRIBED IN 42 CLAUSE (A) OR (C) OF SUBPARAGRAPH (II) OF PARAGRAPH (B) OF THIS SUBDIVI- 43 SION. 44 (7) FOR TAXABLE YEARS COMMENCING ON OR AFTER JANUARY FIRST, NINETEEN 45 HUNDRED EIGHTY-SEVEN, THE AMOUNT REQUIRED TO BE ADDED BACK PURSUANT TO 46 THIS PARAGRAPH SHALL BE AUGMENTED BY AN AMOUNT EQUAL TO THE PRODUCT OF 47 SUCH AMOUNT AND THE UNDERPAYMENT RATE OF INTEREST (WITHOUT REGARD TO 48 COMPOUNDING), SET BY THE COMMISSIONER OF TAXATION AND FINANCE PURSUANT 49 TO SUBSECTION (E) OF SECTION ONE THOUSAND NINETY-SIX, IN EFFECT ON THE 50 LAST DAY OF THE TAXABLE YEAR. 51 (8) IF, AS OF THE CLOSE OF THE TAXABLE YEAR, THERE IS A NET INCREASE 52 WITH RESPECT TO THE TAXPAYER IN THE AMOUNT OF NONQUALIFIED NONRECOURSE 53 FINANCING (WITHIN THE MEANING OF SECTION 46(C) (8) OF THE INTERNAL 54 REVENUE CODE) WITH RESPECT TO ANY PROPERTY WITH RESPECT TO WHICH THE 55 CREDIT UNDER THIS SUBDIVISION WAS LIMITED BASED ON ATTRIBUTABLE NONQUAL- 56 IFIED NONRECOURSE FINANCING, THEN AN AMOUNT EQUAL TO THE DECREASE IN S. 6359--C 75 1 SUCH CREDIT WHICH WOULD HAVE RESULTED FROM REDUCING, BY THE AMOUNT OF 2 SUCH NET INCREASE, THE COST OR OTHER BASIS TAKEN INTO ACCOUNT WITH 3 RESPECT TO SUCH PROPERTY MUST BE ADDED BACK IN SUCH TAXABLE YEAR. THE 4 AMOUNT OF NONQUALIFIED NONRECOURSE FINANCING SHALL NOT BE TREATED AS 5 INCREASED BY REASON OF A TRANSFER OF (OR AGREEMENT TO TRANSFER) ANY 6 EVIDENCE OF AN INDEBTEDNESS IF SUCH TRANSFER OCCURS (OR SUCH AGREEMENT 7 IS ENTERED INTO) MORE THAN ONE YEAR AFTER THE DATE SUCH INDEBTEDNESS WAS 8 INCURRED. 9 (11) (A) WHERE PROPERTY WITH RESPECT TO WHICH CREDIT HAS BEEN ALLOWED 10 UNDER THIS SUBDIVISION IS DISPOSED OF BY TRANSFER TO THE TAXPAYER IN A 11 QUALIFIED TRANSACTION, AND SUCH DISPOSITION REQUIRES, PURSUANT TO THIS 12 PARAGRAPH (WITHOUT REGARD TO THIS SUBPARAGRAPH) THAT SUCH CREDIT BE 13 DECREASED (WHERE THE DISPOSITION OCCURS IN THE TAXABLE YEAR IN WHICH THE 14 PROPERTY IS PLACED IN SERVICE BY THE TRANSFEROR) OR THAT A PORTION OF 15 SUCH CREDIT BE ADDED BACK BY THE TRANSFEROR, THEN CLAUSE (B) OR CLAUSE 16 (C) OF THIS SUBPARAGRAPH SHALL APPLY. 17 (B) IF THE TAXPAYER AND THE TRANSFEROR JOINTLY ELECT, AT SUCH TIME AND 18 IN SUCH MANNER AS THE COMMISSIONER MAY PRESCRIBE, THE FOLLOWING SHALL 19 APPLY: 20 (I) SUCH PORTION SHALL NOT BE REQUIRED TO BE ADDED BACK BY THE 21 TRANSFEROR, 22 (II) THE AMOUNT OF UNUSED CREDIT SHALL NOT BE DEDUCTED FROM TAX OTHER- 23 WISE DUE BY THE TRANSFEROR ON ANY RETURN (INCLUDING AN AMENDED RETURN), 24 AND SHALL NOT BE SO DEDUCTED AS PART OF ANY AUDIT ADJUSTMENT OR ANY 25 OTHER DETERMINATION, AND 26 (III) THE AMOUNT OF UNUSED CREDIT SHALL BE TREATED AS AN AMOUNT OF 27 CREDIT OF THE TAXPAYER UNDER THIS SUBDIVISION CARRIED FORWARD BY THE 28 TAXPAYER TO ITS TAXABLE YEAR IN WHICH SUCH TRANSFER OCCURRED, AS IF THE 29 CREDIT ALLOWED TO THE TRANSFEROR WITH RESPECT TO SUCH PROPERTY HAD 30 ORIGINALLY BEEN ALLOWED TO THE TAXPAYER BOTH AS TO AMOUNT AND FIRST DATE 31 OF QUALIFIED USE, AND AS IF THE PERIOD OF QUALIFIED USE BY THE TRANSFE- 32 ROR PRIOR TO THE TRANSFER HAD BEEN A PERIOD OF SUCH USE BY THE TAXPAYER. 33 ANY AMOUNT OF CREDIT TREATED AS CARRIED FORWARD TO THE TAXABLE YEAR 34 PURSUANT TO THIS SUBPARAGRAPH SHALL BE APPLIED AS PROVIDED IN CLAUSE (H) 35 OF THIS SUBPARAGRAPH. 36 (C) IF THE TAXPAYER AND THE TRANSFEROR DO NOT MAKE THE ELECTION 37 DESCRIBED IN CLAUSE (B) OF THIS SUBPARAGRAPH, THEN THE AMOUNT OF CREDIT 38 REQUIRED PURSUANT TO THIS PARAGRAPH TO BE ADDED BACK BY THE TRANSFEROR 39 SHALL BE TREATED AS AN AMOUNT OF CREDIT OF THE TAXPAYER UNDER THIS 40 SUBDIVISION TO BE CARRIED FORWARD BY THE TAXPAYER TO ITS TAXABLE YEAR IN 41 WHICH SUCH TRANSFER OCCURRED, AS IF THE CREDIT ALLOWED TO THE TRANSFEROR 42 WITH RESPECT TO SUCH PROPERTY HAD ORIGINALLY BEEN ALLOWED TO THE TAXPAY- 43 ER BOTH AS TO AMOUNT AND FIRST DATE OF QUALIFIED USE, AND AS IF THE 44 PERIOD OF QUALIFIED USE BY THE TRANSFEROR PRIOR TO THE TRANSFER HAD BEEN 45 A PERIOD OF SUCH USE BY THE TAXPAYER. ANY AMOUNT OF CREDIT TREATED AS 46 CARRIED FORWARD TO THE TAXABLE YEAR PURSUANT TO THIS SUBPARAGRAPH SHALL 47 BE APPLIED AS PROVIDED IN CLAUSE (H) OF THIS SUBPARAGRAPH. 48 (D) THE TERM "QUALIFIED TRANSACTION" SHALL MEAN A TRANSACTION WHICH IS 49 A REORGANIZATION DESCRIBED IN SECTION 368(A)(1)(D) OF THE INTERNAL 50 REVENUE CODE, WHEREIN (I) SUBSTANTIALLY ALL OF THE ASSETS OF THE 51 TRANSFEROR NECESSARY TO CONTINUE THE OPERATION OF A DIVISION OR DIVI- 52 SIONS OF THE TRANSFEROR ARE TRANSFERRED TO THE TAXPAYER IN A TRANSACTION 53 TO WHICH SECTION 351 OF SUCH CODE APPLIES, AND (II) STOCK OR SECURITIES 54 OF THE TAXPAYER HELD BY THE TRANSFEROR ARE DISTRIBUTED PURSUANT TO 55 SECTION 355 OF SUCH CODE. S. 6359--C 76 1 (E) THE TERM "UNUSED CREDIT" SHALL MEAN THE AMOUNT OF CREDIT SHOWN AS 2 CARRIED FORWARD TO THE TRANSACTION YEAR ON THE TRANSFEROR'S TAX RETURN 3 FOR ITS TAXABLE YEAR IMMEDIATELY PRECEDING THE TRANSACTION YEAR WITH 4 RESPECT TO THE PROPERTY DESCRIBED IN CLAUSE (A) OF THIS SUBPARAGRAPH. 5 (F) THE TERM "TRANSACTION YEAR" MEANS THE TAXABLE YEAR IN WHICH THE 6 QUALIFIED TRANSACTION OCCURS. 7 (G) NOTWITHSTANDING ANY OTHER PROVISION OF LAW TO THE CONTRARY, IN THE 8 CASE OF ALLOWANCE OF CREDIT PURSUANT TO THIS SUBPARAGRAPH TO A TAXPAYER 9 THE COMMISSIONER SHALL HAVE THE AUTHORITY TO REVEAL TO THE TAXPAYER ANY 10 INFORMATION, WITH RESPECT TO THE CREDIT OF THE TRANSFEROR, WHICH IS THE 11 BASIS FOR THE DENIAL IN WHOLE OR IN PART OF THE CREDIT CLAIMED BY SUCH 12 TAXPAYER. 13 (H) WHERE A CREDIT IS ALLOWED TO A TAXPAYER PURSUANT TO THIS SUBPARA- 14 GRAPH, THE TAXPAYER MAY TREAT THE AMOUNT OF SUCH CREDIT AS AN OVERPAY- 15 MENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS 16 OF SECTION TEN HUNDRED EIGHTY-SIX OF THIS CHAPTER, PROVIDED, HOWEVER, 17 THE PROVISIONS OF SUBSECTION (C) OF SECTION TEN HUNDRED EIGHTY-EIGHT OF 18 THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON. SUCH 19 CREDIT SHALL BE ALLOWED AGAINST THE TAX IMPOSED BY THIS ARTICLE WITH 20 RESPECT TO THE SECOND SUCCEEDING TAXABLE YEAR NEXT FOLLOWING THE TRANS- 21 ACTION YEAR, PROVIDED THAT NOT MORE THAN ONE-FOURTH OF THE AMOUNT OF 22 SUCH CREDIT MAY BE APPLIED BY THE TAXPAYER, WHETHER TO REDUCE TAX OTHER- 23 WISE DUE OR TO BE TREATED AS AN OVERPAYMENT TO BE CREDITED OR REFUNDED, 24 WITH RESPECT TO SUCH SECOND SUCCEEDING TAXABLE YEAR AND EACH OF THE NEXT 25 THREE TAXABLE YEARS FOLLOWING SUCH SECOND SUCCEEDING TAXABLE YEAR. 26 (J) FOR PURPOSES OF PARAGRAPH (E) OF THIS SUBDIVISION, A NEW BUSINESS 27 SHALL INCLUDE ANY CORPORATION, EXCEPT A CORPORATION WHICH: 28 (1) OVER FIFTY PERCENT OF THE NUMBER OF SHARES OF STOCK ENTITLING THE 29 HOLDERS THEREOF TO VOTE FOR THE ELECTION OF DIRECTORS OR TRUSTEES IS 30 OWNED OR CONTROLLED, EITHER DIRECTLY OR INDIRECTLY, BY A TAXPAYER 31 SUBJECT TO TAX UNDER THIS ARTICLE; SECTION ONE HUNDRED EIGHTY-THREE, ONE 32 HUNDRED EIGHTY-FOUR OR ONE HUNDRED EIGHTY-FIVE OF ARTICLE NINE; OR ARTI- 33 CLE THIRTY-THREE OF THIS CHAPTER; OR 34 (2) IS SUBSTANTIALLY SIMILAR IN OPERATION AND IN OWNERSHIP TO A BUSI- 35 NESS ENTITY (OR ENTITIES) TAXABLE, OR PREVIOUSLY TAXABLE, UNDER THIS 36 ARTICLE; SECTION ONE HUNDRED EIGHTY-THREE, ONE HUNDRED EIGHTY-FOUR, 37 FORMER SECTION ONE HUNDRED EIGHTY-FIVE OR FORMER SECTION ONE HUNDRED 38 EIGHTY-SIX OF ARTICLE NINE; ARTICLE THIRTY-TWO OF THIS CHAPTER AS SUCH 39 ARTICLE WAS IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN; 40 ARTICLE THIRTY-THREE OF THIS CHAPTER; ARTICLE TWENTY-THREE OF THIS CHAP- 41 TER OR WHICH WOULD HAVE BEEN SUBJECT TO TAX UNDER SUCH ARTICLE 42 TWENTY-THREE (AS SUCH ARTICLE WAS IN EFFECT ON JANUARY FIRST, NINETEEN 43 HUNDRED EIGHTY) OR THE INCOME (OR LOSSES) OF WHICH IS (OR WAS) INCLUDA- 44 BLE UNDER ARTICLE TWENTY-TWO OF THIS CHAPTER WHEREBY THE INTENT AND 45 PURPOSE OF THIS PARAGRAPH AND PARAGRAPH (E) OF THIS SUBDIVISION WITH 46 RESPECT TO REFUNDING OF CREDIT TO NEW BUSINESS WOULD BE EVADED; OR 47 (3) HAS BEEN SUBJECT TO TAX UNDER THIS ARTICLE OR FORMER ARTICLE THIR- 48 TY-TWO OF THIS CHAPTER FOR MORE THAN FIVE TAXABLE YEARS (EXCLUDING SHORT 49 TAXABLE YEARS). 50 2. EMPLOYMENT INCENTIVE CREDIT (EIC). (A)(I) APPLICATION OF CREDIT. 51 WHERE A TAXPAYER IS ALLOWED A CREDIT UNDER SUBDIVISION ONE OF THIS 52 SECTION, OTHER THAN AT THE OPTIONAL RATE APPLICABLE TO RESEARCH AND 53 DEVELOPMENT PROPERTY, THE TAXPAYER SHALL BE ALLOWED A CREDIT FOR EACH OF 54 THE TWO YEARS NEXT SUCCEEDING THE TAXABLE YEAR FOR WHICH THE CREDIT 55 UNDER SUCH SUBDIVISION ONE IS ALLOWED WITH RESPECT TO SUCH PROPERTY, 56 WHETHER OR NOT DEDUCTIBLE IN SUCH TAXABLE YEAR OR IN SUBSEQUENT TAXABLE S. 6359--C 77 1 YEARS PURSUANT TO PARAGRAPH (D) OF SUCH SUBDIVISION ONE. PROVIDED, 2 HOWEVER, THAT THE CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXA- 3 BLE YEAR SHALL BE ALLOWED ONLY IF THE AVERAGE NUMBER OF EMPLOYEES DURING 4 SUCH TAXABLE YEAR IS AT LEAST ONE HUNDRED ONE PERCENT OF THE AVERAGE 5 NUMBER OF EMPLOYEES DURING THE EMPLOYMENT BASE YEAR. THE EMPLOYMENT BASE 6 YEAR SHALL BE THE TAXABLE YEAR IMMEDIATELY PRECEDING THE TAXABLE YEAR 7 FOR WHICH THE CREDIT UNDER SUCH SUBDIVISION ONE IS ALLOWED EXCEPT THAT 8 IF THE TAXPAYER WAS NOT SUBJECT TO TAX AND DID NOT HAVE A TAXABLE YEAR 9 IMMEDIATELY PRECEDING THE TAXABLE YEAR FOR WHICH THE CREDIT UNDER SUCH 10 SUBDIVISION ONE OF THIS SECTION IS ALLOWED, THE EMPLOYMENT BASE YEAR 11 SHALL BE THE TAXABLE YEAR IN WHICH THE CREDIT UNDER SUCH SUBDIVISION ONE 12 IS ALLOWED. 13 (II) AMOUNT OF CREDIT. THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS 14 SUBDIVISION SHALL BE AS SET FORTH IN THE FOLLOWING TABLE: 15 AVERAGE NUMBER OF EMPLOYEES DURING THE CREDIT ALLOWED UNDER THIS 16 TAXABLE YEAR EXPRESSED AS A PERCENTAGE SUBDIVISION EXPRESSED AS A 17 OF AVERAGE EMPLOYEES IN EMPLOYMENT PERCENTAGE OF THE APPLICABLE 18 BASE YEARS INVESTMENT CREDIT BASIS 19 LESS THAN 102% 1.5% 20 AT LEAST 102% AND LESS THAN 103% 2% 21 AT LEAST 103% 2.5% 22 (B) AVERAGE NUMBER OF EMPLOYEES. THE AVERAGE NUMBER OF EMPLOYEES IN A 23 TAXABLE YEAR SHALL BE COMPUTED BY ASCERTAINING THE NUMBER OF EMPLOYEES 24 WITHIN THE STATE, EXCEPT GENERAL EXECUTIVE OFFICERS, EMPLOYED BY THE 25 TAXPAYER ON THE THIRTY-FIRST DAY OF MARCH, THE THIRTIETH DAY OF JUNE, 26 THE THIRTIETH DAY OF SEPTEMBER AND THE THIRTY-FIRST DAY OF DECEMBER IN 27 THE TAXABLE YEAR, BY ADDING TOGETHER THE NUMBER OF EMPLOYEES ASCERTAINED 28 ON EACH OF SUCH DATES AND DIVIDING THE SUM SO OBTAINED BY THE NUMBER OF 29 SUCH ABOVE MENTIONED DATES OCCURRING WITHIN THE TAXABLE YEAR. HOWEVER, 30 WITH RESPECT TO THE EMPLOYMENT BASE YEAR, THERE SHALL BE EXCLUDED THERE- 31 FROM ANY EMPLOYEE WITH RESPECT TO WHOM A CREDIT PROVIDED FOR UNDER 32 SUBDIVISION SIX OF THIS SECTION IS CLAIMED, FOR THE TAXABLE YEAR, BASED 33 ON EMPLOYMENT WITHIN A ZONE EQUIVALENT AREA DESIGNATED AS SUCH PURSUANT 34 TO ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL LAW. 35 (C) CARRYOVER. IN NO EVENT SHALL THE CREDIT HEREIN PROVIDED FOR BE 36 ALLOWED IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN THE 37 FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION 38 ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT 39 OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES 40 THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON 41 THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN 42 SUCH TAXABLE YEAR MAY BE CARRIED OVER TO THE FIFTEEN TAXABLE YEARS IMME- 43 DIATELY FOLLOWING SUCH TAXABLE YEAR AND MAY BE DEDUCTED FROM THE TAXPAY- 44 ER'S TAX FOR SUCH YEAR OR YEARS. 45 3. EMPIRE ZONE INVESTMENT TAX CREDIT (EZ-ITC). (A) A TAXPAYER SHALL BE 46 ALLOWED A CREDIT, TO BE COMPUTED AS HEREIN PROVIDED, AGAINST THE TAX 47 IMPOSED BY THIS ARTICLE IF THE TAXPAYER HAS BEEN CERTIFIED PURSUANT TO 48 ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL LAW. THE AMOUNT OF THE CRED- 49 IT SHALL BE TEN PERCENT OF THE COST OR OTHER BASIS FOR FEDERAL INCOME 50 TAX PURPOSES OF TANGIBLE PERSONAL PROPERTY AND OTHER TANGIBLE PROPERTY, 51 INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS OF BUILDINGS, DESCRIBED IN 52 PARAGRAPH (B) OF THIS SUBDIVISION, WHICH IS LOCATED WITHIN AN EMPIRE 53 ZONE DESIGNATED AS SUCH PURSUANT TO ARTICLE EIGHTEEN-B OF SUCH LAW, BUT 54 ONLY IF THE ACQUISITION, CONSTRUCTION, RECONSTRUCTION OR ERECTION OF 55 SUCH PROPERTY OCCURRED OR WAS COMMENCED ON OR AFTER THE DATE OF SUCH 56 DESIGNATION AND PRIOR TO THE EXPIRATION THEREOF. PROVIDED, HOWEVER, THAT S. 6359--C 78 1 IN THE CASE OF AN ACQUISITION, CONSTRUCTION, RECONSTRUCTION OR ERECTION 2 WHICH WAS COMMENCED DURING SUCH PERIOD AND CONTINUED OR COMPLETED SUBSE- 3 QUENTLY, SUCH CREDIT SHALL BE TEN PERCENT OF THE PORTION OF THE COST OR 4 OTHER BASIS FOR FEDERAL INCOME TAX PURPOSES ATTRIBUTABLE TO SUCH PERIOD, 5 WHICH PORTION SHALL BE ASCERTAINED BY MULTIPLYING SUCH COST OR BASIS BY 6 A FRACTION THE NUMERATOR OF WHICH SHALL BE THE EXPENDITURES PAID OR 7 INCURRED DURING SUCH PERIOD FOR SUCH PURPOSES AND THE DENOMINATOR OF 8 WHICH SHALL BE THE TOTAL OF ALL EXPENDITURES PAID OR INCURRED FOR SUCH 9 ACQUISITION, CONSTRUCTION, RECONSTRUCTION OR ERECTION. 10 (B) QUALIFIED PROPERTY. A CREDIT SHALL BE ALLOWED UNDER THIS SUBDIVI- 11 SION WITH RESPECT TO TANGIBLE PERSONAL PROPERTY AND OTHER TANGIBLE PROP- 12 ERTY, INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS OF BUILDINGS, WHICH 13 (I) ARE DEPRECIABLE PURSUANT TO SECTION ONE HUNDRED SIXTY-SEVEN OF THE 14 INTERNAL REVENUE CODE, 15 (II) HAVE A USEFUL LIFE OF FOUR YEARS OR MORE, 16 (III) ARE ACQUIRED BY PURCHASE AS DEFINED IN SECTION ONE HUNDRED 17 SEVENTY-NINE (D) OF THE INTERNAL REVENUE CODE, 18 (IV) HAVE A SITUS IN AN EMPIRE ZONE DESIGNATED AS SUCH PURSUANT TO 19 ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL LAW, AND 20 (V) ARE (A) PRINCIPALLY USED BY THE TAXPAYER IN THE PRODUCTION OF 21 GOODS BY MANUFACTURING, PROCESSING, ASSEMBLING, REFINING, MINING, 22 EXTRACTING, FARMING, AGRICULTURE, HORTICULTURE, FLORICULTURE, VITICUL- 23 TURE OR COMMERCIAL FISHING, 24 (B) INDUSTRIAL WASTE TREATMENT FACILITIES OR AIR POLLUTION CONTROL 25 FACILITIES USED IN THE TAXPAYER'S TRADE OR BUSINESS, 26 (C) RESEARCH AND DEVELOPMENT PROPERTY, 27 (D) PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S TRADE OR 28 BUSINESS AS A BROKER OR DEALER IN CONNECTION WITH THE PURCHASE OR SALE 29 (WHICH SHALL INCLUDE BUT NOT BE LIMITED TO THE ISSUANCE, ENTERING INTO, 30 ASSUMPTION, OFFSET, ASSIGNMENT, TERMINATION, OR TRANSFER) OF STOCKS, 31 BONDS OR OTHER SECURITIES AS DEFINED IN SECTION FOUR HUNDRED 32 SEVENTY-FIVE (C)(2) OF THE INTERNAL REVENUE CODE, OR OF COMMODITIES AS 33 DEFINED IN SECTION FOUR HUNDRED SEVENTY-FIVE (E) OF THE INTERNAL REVENUE 34 CODE, 35 (E) PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S TRADE OR 36 BUSINESS OF PROVIDING INVESTMENT ADVISORY SERVICES FOR A REGULATED 37 INVESTMENT COMPANY AS DEFINED IN SECTION EIGHT HUNDRED FIFTY-ONE OF THE 38 INTERNAL REVENUE CODE, OR LENDING, LOAN ARRANGEMENT, OR LOAN ORIGINATION 39 SERVICES TO CUSTOMERS IN CONNECTION WITH THE PURCHASE OR SALE (WHICH 40 SHALL INCLUDE BUT NOT BE LIMITED TO THE ISSUANCE, ENTERING INTO, ASSUMP- 41 TION, OFFSET, ASSIGNMENT, TERMINATION OR TRANSFER) OF SECURITIES AS 42 DEFINED IN SECTION FOUR HUNDRED SEVENTY-FIVE (C)(2) OF THE INTERNAL 43 REVENUE CODE, 44 (E-1) PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S TRADE 45 OR BUSINESS OF PROVIDING INVESTMENT ADVISORY SERVICES OR THE SERVICE OF 46 MANAGING INVESTMENT PORTFOLIOS TO ACHIEVE SPECIFIC INVESTMENT OBJECTIVES 47 FOR ACCOUNTS OVER ONE MILLION DOLLARS OF ACCREDITED INVESTORS (AS THAT 48 TERM IS DEFINED IN RULE 501 OF REGULATION D OF THE SECURITIES ACT OF 49 1933), IF THE TAXPAYER SATISFIES THE FOLLOWING CRITERIA: 50 (I) THE TAXPAYER IS A REGULATED BROKER OR DEALER OR AN AFFILIATE OF A 51 REGULATED BROKER OR DEALER, 52 (II) THE TAXPAYER IS REGISTERED AS AN INVESTMENT ADVISER UNDER SECTION 53 TWO HUNDRED THREE OF THE INVESTMENT ADVISERS ACT OF 1940, AS AMENDED, 54 AND S. 6359--C 79 1 (III) AT LEAST ONE CLIENT OF THE TAXPAYER IS A REGULATED INVESTMENT 2 COMPANY AS DEFINED IN SECTION EIGHT HUNDRED FIFTY-ONE OF THE INTERNAL 3 REVENUE CODE THAT HAS ASSETS OF ONE HUNDRED MILLION DOLLARS, OR 4 (F) PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S BUSINESS 5 AS AN EXCHANGE REGISTERED AS A NATIONAL SECURITIES EXCHANGE WITHIN THE 6 MEANING OF SECTIONS 3(A)(1) AND 6(A) OF THE SECURITIES EXCHANGE ACT OF 7 1934 OR A BOARD OF TRADE AS DEFINED IN SUBDIVISION ONE OF PARAGRAPH (A) 8 OF SECTION FOURTEEN HUNDRED TEN OF THE NOT-FOR-PROFIT CORPORATION LAW OR 9 AS AN ENTITY THAT IS WHOLLY OWNED BY ONE OR MORE SUCH NATIONAL SECURI- 10 TIES EXCHANGES OR BOARDS OR TRADE AND THAT PROVIDES AUTOMATION OR TECH- 11 NICAL SERVICES THERETO. 12 (VI) FOR PURPOSES OF CLAUSES (D), (E), (E-1) AND (F) OF SUBPARAGRAPH 13 (V) OF THIS PARAGRAPH, PROPERTY PURCHASED BY A TAXPAYER AFFILIATED WITH 14 A REGULATED BROKER, DEALER, REGISTERED INVESTMENT ADVISER, NATIONAL 15 SECURITIES EXCHANGE OR BOARD OF TRADE IS ALLOWED A CREDIT UNDER THIS 16 SUBDIVISION IF THE PROPERTY IS USED BY ITS AFFILIATED REGULATED BROKER, 17 DEALER, REGISTERED INVESTMENT ADVISER OR NATIONAL SECURITIES EXCHANGE OR 18 BOARD OF TRADE IN ACCORDANCE WITH THIS SUBDIVISION. FOR PURPOSES OF 19 DETERMINING IF THE PROPERTY IS PRINCIPALLY USED IN QUALIFYING USES, THE 20 USES BY THE TAXPAYER DESCRIBED IN CLAUSES (D), (E) AND (E-1) OF SUBPARA- 21 GRAPH (V) OF THIS PARAGRAPH MAY BE AGGREGATED. IN ADDITION, THE USES BY 22 THE TAXPAYER, ITS AFFILIATED REGULATED BROKER, DEALER AND REGISTERED 23 INVESTMENT ADVISER UNDER ANY OF THOSE CLAUSES MAY BE AGGREGATED. 24 PROVIDED, HOWEVER, A TAXPAYER SHALL NOT BE ALLOWED THE CREDIT PROVIDED 25 BY CLAUSES (D), (E), (E-1) AND (F) OF SUBPARAGRAPH (V) OF THIS PARAGRAPH 26 UNLESS 27 (I) EIGHTY PERCENT OR MORE OF THE EMPLOYEES PERFORMING THE ADMINISTRA- 28 TIVE AND SUPPORT FUNCTIONS RESULTING FROM OR RELATED TO THE QUALIFYING 29 USES OF SUCH EQUIPMENT ARE LOCATED IN THIS STATE, OR 30 (II) THE AVERAGE NUMBER OF EMPLOYEES THAT PERFORM THE ADMINISTRATIVE 31 AND SUPPORT FUNCTIONS RESULTING FROM OR RELATED TO THE QUALIFYING USES 32 OF SUCH EQUIPMENT AND ARE LOCATED IN THIS STATE DURING THE TAXABLE YEAR 33 FOR WHICH THE CREDIT IS CLAIMED IS EQUAL TO OR GREATER THAN NINETY-FIVE 34 PERCENT OF THE AVERAGE NUMBER OF EMPLOYEES THAT PERFORM THESE FUNCTIONS 35 AND ARE LOCATED IN THIS STATE DURING THE THIRTY-SIX MONTHS IMMEDIATELY 36 PRECEDING THE YEAR FOR WHICH THE CREDIT IS CLAIMED, OR 37 (III) THE NUMBER OF EMPLOYEES LOCATED IN THIS STATE DURING THE TAXABLE 38 YEAR FOR WHICH THE CREDIT IS CLAIMED IS EQUAL TO OR GREATER THAN NINETY 39 PERCENT OF THE NUMBER OF EMPLOYEES LOCATED IN THIS STATE ON DECEMBER 40 THIRTY-FIRST, NINETEEN HUNDRED NINETY-EIGHT OR, IF THE TAXPAYER WAS NOT 41 A CALENDAR YEAR TAXPAYER IN NINETEEN HUNDRED NINETY-EIGHT, THE LAST DAY 42 OF ITS FIRST TAXABLE YEAR ENDING AFTER DECEMBER THIRTY-FIRST, NINETEEN 43 HUNDRED NINETY-EIGHT. IF THE TAXPAYER BECOMES SUBJECT TO TAX IN THIS 44 STATE AFTER THE TAXABLE YEAR BEGINNING IN NINETEEN HUNDRED NINETY-EIGHT, 45 THEN THE TAXPAYER IS NOT REQUIRED TO SATISFY THE EMPLOYMENT TEST 46 PROVIDED IN THE PRECEDING SENTENCE OF THIS SUBPARAGRAPH FOR ITS FIRST 47 TAXABLE YEAR. 48 (VII) FOR THE PURPOSES OF CLAUSE (III) OF SUBPARAGRAPH (VI) OF THIS 49 PARAGRAPH THE EMPLOYMENT TEST WILL BE BASED ON THE NUMBER OF EMPLOYEES 50 LOCATED IN THIS STATE ON THE LAST DAY OF THE FIRST TAXABLE YEAR THE 51 TAXPAYER IS SUBJECT TO TAX IN THIS STATE. IF THE USES OF THE PROPERTY 52 MUST BE AGGREGATED TO DETERMINE WHETHER THE PROPERTY IS PRINCIPALLY USED 53 IN QUALIFYING USES, THEN EITHER EACH AFFILIATE USING THE PROPERTY MUST 54 SATISFY THIS EMPLOYMENT TEST OR THIS EMPLOYMENT TEST MUST BE SATISFIED 55 THROUGH THE AGGREGATION OF THE EMPLOYEES OF THE TAXPAYER, ITS AFFILIATED S. 6359--C 80 1 REGULATED BROKER, DEALER, AND REGISTERED INVESTMENT ADVISER USING THE 2 PROPERTY. 3 (VIII) FOR THE PURPOSE OF THIS SUBDIVISION, THE TERM "GOODS" SHALL NOT 4 INCLUDE ELECTRICITY. 5 (IX) FOR PURPOSES OF THIS SUBDIVISION, "MANUFACTURING" SHALL MEAN THE 6 PROCESS OF WORKING RAW MATERIALS INTO WARES SUITABLE FOR USE OR WHICH 7 GIVES NEW SHAPES, NEW QUALITY OR NEW COMBINATIONS TO MATTER WHICH 8 ALREADY HAS GONE THROUGH SOME ARTIFICIAL PROCESS BY THE USE OF MACHIN- 9 ERY, TOOLS, APPLIANCES AND OTHER SIMILAR EQUIPMENT. PROPERTY USED IN THE 10 PRODUCTION OF GOODS SHALL INCLUDE MACHINERY, EQUIPMENT OR OTHER TANGIBLE 11 PROPERTY WHICH IS PRINCIPALLY USED IN THE REPAIR AND SERVICE OF OTHER 12 MACHINERY, EQUIPMENT OR OTHER TANGIBLE PROPERTY USED PRINCIPALLY IN THE 13 PRODUCTION OF GOODS AND SHALL INCLUDE ALL FACILITIES USED IN THE 14 PRODUCTION OPERATION, INCLUDING STORAGE OF MATERIAL TO BE USED IN 15 PRODUCTION AND OF THE PRODUCTS THAT ARE PRODUCED. FOR PURPOSES OF THIS 16 SUBDIVISION, THE TERMS "RESEARCH AND DEVELOPMENT PROPERTY", "INDUSTRIAL 17 WASTE TREATMENT FACILITIES", AND "AIR POLLUTION CONTROL FACILITIES" 18 SHALL HAVE THE MEANINGS ASCRIBED THERETO BY CLAUSES (B), (C) AND (D), 19 RESPECTIVELY, OF SUBPARAGRAPH (IV) OF PARAGRAPH (B) OF SUBDIVISION ONE 20 OF THIS SECTION, AND THE PROVISIONS OF SUBPARAGRAPH (V) OF SUCH PARA- 21 GRAPH (B) SHALL APPLY. 22 (C) NONQUALIFIED PROPERTY. A TAXPAYER SHALL NOT BE ALLOWED A CREDIT 23 UNDER THIS SUBDIVISION WITH RESPECT TO ANY TANGIBLE PERSONAL PROPERTY 24 AND OTHER TANGIBLE PROPERTY, INCLUDING BUILDINGS AND STRUCTURAL COMPO- 25 NENTS OF BUILDINGS, WHICH IT LEASES TO ANY OTHER PERSON OR CORPORATION 26 EXCEPT WHERE A TAXPAYER LEASES PROPERTY TO AN AFFILIATED REGULATED 27 BROKER, DEALER, REGISTERED INVESTMENT ADVISER, NATIONAL SECURITIES 28 EXCHANGE OR BOARD OF TRADE OR OTHER ENTITY DESCRIBED IN CLAUSE (F) OF 29 SUBPARAGRAPH (V) OF PARAGRAPH (B) OF THIS SUBDIVISION THAT USES SUCH 30 PROPERTY IN ACCORDANCE WITH CLAUSE (D), (E), (E-1) OR (F) OF SUBPARA- 31 GRAPH (V) OF PARAGRAPH (B) OF THIS SUBDIVISION. FOR PURPOSES OF THE 32 PRECEDING SENTENCE, ANY CONTRACT OR AGREEMENT TO LEASE OR RENT OR FOR A 33 LICENSE TO USE SUCH PROPERTY SHALL BE CONSIDERED A LEASE. PROVIDED, 34 HOWEVER, IN DETERMINING WHETHER A TAXPAYER SHALL BE ALLOWED A CREDIT 35 UNDER THIS SUBDIVISION WITH RESPECT TO SUCH PROPERTY, ANY ELECTION MADE 36 WITH RESPECT TO SUCH PROPERTY PURSUANT TO THE PROVISIONS OF PARAGRAPH 37 EIGHT OF SUBSECTION (F) OF SECTION ONE HUNDRED SIXTY-EIGHT OF THE INTER- 38 NAL REVENUE CODE, AS SUCH PARAGRAPH WAS IN EFFECT FOR AGREEMENTS ENTERED 39 INTO PRIOR TO JANUARY FIRST, NINETEEN HUNDRED EIGHTY-FOUR, SHALL BE 40 DISREGARDED. 41 (D) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA- 42 BLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE 43 FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION 44 ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. PROVIDED, HOWEVER, THAT 45 IF THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE 46 YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS 47 TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT 48 DEDUCTIBLE IN SUCH TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING 49 YEAR OR YEARS AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR 50 OR YEARS. IN LIEU OF SUCH CARRYOVER, ANY SUCH TAXPAYER WHICH QUALIFIES 51 AS A NEW BUSINESS UNDER PARAGRAPH (F) OF SUBDIVISION ONE OF THIS SECTION 52 MAY ELECT, ON ITS REPORT FOR ITS TAXABLE YEAR WITH RESPECT TO WHICH SUCH 53 CREDIT IS ALLOWED, TO TREAT FIFTY PERCENT OF THE AMOUNT OF SUCH CARRY- 54 OVER AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE 55 WITH THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. 56 IN ADDITION, ANY TAXPAYER WHICH IS APPROVED AS THE OWNER OF A QUALIFIED S. 6359--C 81 1 INVESTMENT PROJECT OR A SIGNIFICANT CAPITAL INVESTMENT PROJECT PURSUANT 2 TO SUBDIVISION (W) OF SECTION NINE HUNDRED FIFTY-NINE OF THE GENERAL 3 MUNICIPAL LAW, ON ITS REPORT FOR ITS TAXABLE YEAR WITH RESPECT TO WHICH 4 SUCH CREDIT IS ALLOWED, IN LIEU OF SUCH CARRYOVER, MAY ELECT TO TREAT 5 FIFTY PERCENT OF THE AMOUNT OF SUCH CARRYOVER WHICH IS ATTRIBUTABLE TO 6 THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR PROPERTY WHICH IS PART OF 7 SUCH PROJECT AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED IN 8 ACCORDANCE WITH THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF 9 THIS CHAPTER. PROVIDED, HOWEVER, SUCH OWNER SHALL BE ALLOWED SUCH REFUND 10 FOR A MAXIMUM OF TEN TAXABLE YEARS WITH RESPECT TO SUCH QUALIFIED 11 INVESTMENT PROJECT AND EACH SIGNIFICANT CAPITAL INVESTMENT PROJECT, 12 STARTING WITH THE FIRST TAXABLE YEAR IN WHICH PROPERTY COMPRISING SUCH 13 PROJECT IS PLACED IN SERVICE. PROVIDED, FURTHER, HOWEVER, THE PROVISIONS 14 OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER 15 NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON. 16 (D-1) ANY CARRYOVER OF A CREDIT FROM PRIOR TAXABLE YEARS WILL NOT BE 17 ALLOWED IF AN EMPIRE ZONE RETENTION CERTIFICATE IS NOT ISSUED PURSUANT 18 TO SUBDIVISION (W) OF SECTION NINE HUNDRED FIFTY-NINE OF THE GENERAL 19 MUNICIPAL LAW TO THE EMPIRE ZONE ENTERPRISE WHICH IS THE BASIS OF THE 20 CREDIT. 21 (E) AT THE OPTION OF THE TAXPAYER, THE TAXPAYER MAY CHOOSE TO CLAIM 22 THE CREDIT DESCRIBED IN PARAGRAPH (A) OF THIS SUBDIVISION FOR PROPERTY 23 WHICH ALSO QUALIFIES FOR THE CREDIT PROVIDED UNDER SUBDIVISION ONE OF 24 THIS SECTION. A TAXPAYER SHALL NOT BE ALLOWED A CREDIT UNDER THIS SUBDI- 25 VISION WITH RESPECT TO ANY PROPERTY DESCRIBED IN PARAGRAPH (A) OF THIS 26 SUBDIVISION IF A CREDIT IS TAKEN PURSUANT TO SUBDIVISION ONE OF THIS 27 SECTION. 28 (F) RECAPTURE. (I) WITH RESPECT TO PROPERTY WHICH IS DEPRECIABLE 29 PURSUANT TO SECTION ONE HUNDRED SIXTY-SEVEN OF THE INTERNAL REVENUE CODE 30 BUT IS NOT SUBJECT TO THE PROVISIONS OF SECTION ONE HUNDRED SIXTY-EIGHT 31 OF SUCH CODE AND WHICH IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE 32 PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT IS TO BE TAKEN, 33 THE AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF THE CREDIT PROVIDED 34 FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH THE MONTHS OF 35 QUALIFIED USE BEAR TO THE MONTHS OF USEFUL LIFE. IF PROPERTY ON WHICH 36 CREDIT HAS BEEN TAKEN IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE 37 PRIOR TO THE END OF ITS USEFUL LIFE, THE DIFFERENCE BETWEEN THE CREDIT 38 TAKEN AND THE CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE 39 YEAR OF DISPOSITION. PROVIDED, HOWEVER, IF SUCH PROPERTY IS DISPOSED OF 40 OR CEASES TO BE IN QUALIFIED USE AFTER IT HAS BEEN IN QUALIFIED USE FOR 41 MORE THAN TWELVE CONSECUTIVE YEARS, IT SHALL NOT BE NECESSARY TO ADD 42 BACK THE CREDIT AS PROVIDED IN THIS SUBPARAGRAPH. THE AMOUNT OF CREDIT 43 ALLOWED FOR ACTUAL USE SHALL BE DETERMINED BY MULTIPLYING THE ORIGINAL 44 CREDIT BY THE RATIO WHICH THE MONTHS OF QUALIFIED USE BEAR TO THE MONTHS 45 OF USEFUL LIFE. FOR PURPOSES OF THIS SUBPARAGRAPH, USEFUL LIFE OF PROP- 46 ERTY SHALL BE THE SAME AS THE TAXPAYER USES FOR DEPRECIATION PURPOSES 47 WHEN COMPUTING HIS FEDERAL INCOME TAX LIABILITY. 48 (II) EXCEPT WITH RESPECT TO THAT PROPERTY TO WHICH SUBPARAGRAPH (IV) 49 OF THIS PARAGRAPH APPLIES, WITH RESPECT TO THREE-YEAR PROPERTY, AS 50 DEFINED IN SUBSECTION (E) OF SECTION ONE HUNDRED SIXTY-EIGHT OF THE 51 INTERNAL REVENUE CODE, WHICH IS DISPOSED OF OR CEASES TO BE IN QUALIFIED 52 USE PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT IS TO BE 53 TAKEN, THE AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF THE CREDIT 54 PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH THE 55 MONTHS OF QUALIFIED USE BEAR TO THIRTY-SIX. IF PROPERTY ON WHICH CREDIT 56 HAS BEEN TAKEN IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE PRIOR TO S. 6359--C 82 1 THE END OF THIRTY-SIX MONTHS, THE DIFFERENCE BETWEEN THE CREDIT TAKEN 2 AND THE CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE YEAR OF 3 DISPOSITION. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL USE SHALL BE DETER- 4 MINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE RATIO WHICH THE MONTHS 5 OF QUALIFIED USE BEAR TO THIRTY-SIX. 6 (III) EXCEPT WITH RESPECT TO THAT PROPERTY TO WHICH SUBPARAGRAPH (IV) 7 OF THIS PARAGRAPH APPLIES, WITH RESPECT TO PROPERTY SUBJECT TO THE 8 PROVISIONS OF SECTION ONE HUNDRED SIXTY-EIGHT OF THE INTERNAL REVENUE 9 CODE OTHER THAN THREE-YEAR PROPERTY AS DEFINED IN SUBSECTION (E) OF SUCH 10 SECTION ONE HUNDRED SIXTY-EIGHT WHICH IS DISPOSED OF OR CEASES TO BE IN 11 QUALIFIED USE PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT 12 IS TO BE TAKEN, THE AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF THE 13 CREDIT PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH 14 THE MONTHS OF QUALIFIED USE BEAR TO SIXTY. IF PROPERTY ON WHICH CREDIT 15 HAS BEEN TAKEN IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE PRIOR TO 16 THE END OF SIXTY MONTHS, THE DIFFERENCE BETWEEN THE CREDIT TAKEN AND THE 17 CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE YEAR OF DISPOSI- 18 TION. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL USE SHALL BE DETERMINED BY 19 MULTIPLYING THE ORIGINAL CREDIT BY THE RATIO WHICH THE MONTHS OF QUALI- 20 FIED USE BEAR TO SIXTY. 21 (IV) WITH RESPECT TO ANY PROPERTY TO WHICH SECTION ONE HUNDRED SIXTY- 22 EIGHT OF THE INTERNAL REVENUE CODE APPLIES, WHICH IS A BUILDING OR A 23 STRUCTURAL COMPONENT OF A BUILDING AND WHICH IS DISPOSED OF OR CEASES TO 24 BE IN QUALIFIED USE PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE 25 CREDIT IS TO BE TAKEN, THE AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF 26 THE CREDIT PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO 27 WHICH THE MONTHS OF QUALIFIED USE BEAR TO THE TOTAL NUMBER OF MONTHS 28 OVER WHICH THE TAXPAYER CHOOSES TO DEDUCT THE PROPERTY UNDER THE INTER- 29 NAL REVENUE CODE. IF PROPERTY ON WHICH CREDIT HAS BEEN TAKEN IS DISPOSED 30 OF OR CEASES TO BE IN QUALIFIED USE PRIOR TO THE END OF THE PERIOD OVER 31 WHICH THE TAXPAYER CHOOSES TO DEDUCT THE PROPERTY UNDER THE INTERNAL 32 REVENUE CODE, THE DIFFERENCE BETWEEN THE CREDIT TAKEN AND THE CREDIT 33 ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE YEAR OF DISPOSITION. 34 PROVIDED, HOWEVER, IF SUCH PROPERTY IS DISPOSED OF OR CEASES TO BE IN 35 QUALIFIED USE AFTER IT HAS BEEN IN QUALIFIED USE FOR MORE THAN TWELVE 36 CONSECUTIVE YEARS, IT SHALL NOT BE NECESSARY TO ADD BACK THE CREDIT AS 37 PROVIDED IN THIS SUBPARAGRAPH. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL 38 USE SHALL BE DETERMINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE RATIO 39 WHICH THE MONTHS OF QUALIFIED USE BEAR TO THE TOTAL NUMBER OF MONTHS 40 OVER WHICH THE TAXPAYER CHOOSES TO DEDUCT THE PROPERTY UNDER THE INTER- 41 NAL REVENUE CODE. 42 (V) FOR PURPOSES OF THIS PARAGRAPH, DISPOSAL OR CESSATION OF QUALIFIED 43 USE SHALL NOT BE DEEMED TO HAVE OCCURRED SOLELY BY REASON OF THE TERMI- 44 NATION OR EXPIRATION OF AN EMPIRE ZONE'S DESIGNATION AS SUCH. 45 (VI)(A) FOR PURPOSES OF THIS PARAGRAPH, THE DECERTIFICATION OF A BUSI- 46 NESS ENTERPRISE WITH RESPECT TO AN EMPIRE ZONE SHALL CONSTITUTE A 47 DISPOSAL OR CESSATION OF QUALIFIED USE OF THE PROPERTY ON WHICH THE 48 CREDIT WAS TAKEN WHICH IS LOCATED IN THE ZONE TO WHICH THE DECERTIF- 49 ICATION APPLIES, ON THE EFFECTIVE DATE OF SUCH DECERTIFICATION. 50 (B) WHERE A BUSINESS ENTERPRISE HAS BEEN DECERTIFIED BASED ON A FIND- 51 ING PURSUANT TO CLAUSE ONE, TWO, OR FIVE OF SUBDIVISION (A) OF SECTION 52 NINE HUNDRED FIFTY-NINE OF THE GENERAL MUNICIPAL LAW, THE AMOUNT 53 REQUIRED TO BE ADDED BACK BY REASON OF THIS PARAGRAPH SHALL BE (I) THE 54 AMOUNT OF CREDIT, WITH RESPECT TO THE PROPERTY WHICH IS DISPOSED OF OR 55 CEASES TO BE IN QUALIFIED USE, WHICH WAS DEDUCTED FROM THE TAXPAYER'S 56 TAX OTHERWISE DUE UNDER THIS ARTICLE FOR ALL PRIOR TAXABLE YEARS, S. 6359--C 83 1 REDUCED (BUT NOT BELOW ZERO) BY (II) THE CREDIT ALLOWED FOR ACTUAL USE. 2 FOR PURPOSES OF THIS SUBPARAGRAPH, THE ATTRIBUTION TO SPECIFIC PROPERTY 3 OF CREDIT AMOUNTS DEDUCTED FROM TAX SHALL BE ESTABLISHED IN ACCORDANCE 4 WITH THE DATE OF PLACEMENT IN SERVICE OF SUCH PROPERTY IN THE EMPIRE 5 ZONE. 6 (C) IN NO EVENT SHALL THE AMOUNT OF THE CREDIT ALLOWED PURSUANT TO 7 THIS SUBDIVISION BE RENDERED, SOLELY BY REASON OF CLAUSE (A) OF THIS 8 SUBPARAGRAPH, LESS THAN THE AMOUNT OF THE CREDIT TO WHICH THE TAXPAYER 9 WOULD OTHERWISE BE ENTITLED UNDER SUBDIVISION ONE OF THIS SECTION. 10 (D) NOTWITHSTANDING ANY OTHER PROVISION OF THIS SUBDIVISION, IN THE 11 CASE OF A BUSINESS ENTERPRISE WHICH HAS BEEN DECERTIFIED, ANY AMOUNT OF 12 CREDIT ALLOWED WITH RESPECT TO THE PROPERTY OF SUCH BUSINESS ENTERPRISE 13 LOCATED IN THE ZONE TO WHICH THE DECERTIFICATION APPLIES WHICH IS 14 CARRIED OVER PURSUANT TO PARAGRAPH (D) OF THIS SUBDIVISION SHALL NOT BE 15 CARRIED OVER BEYOND THE SEVENTH TAXABLE YEAR NEXT FOLLOWING THE TAXABLE 16 YEAR WITH RESPECT TO WHICH THE CREDIT PROVIDED FOR IN THIS SUBDIVISION 17 WAS ALLOWED. 18 (VII) FOR PURPOSES OF THIS PARAGRAPH, WHERE A CREDIT IS ALLOWED WITH 19 RESPECT TO AN AIR POLLUTION CONTROL FACILITY ON THE BASIS OF A CERTIF- 20 ICATE OF COMPLIANCE ISSUED PURSUANT TO THE ENVIRONMENTAL CONSERVATION 21 LAW AND THE CERTIFICATE IS REVOKED PURSUANT TO SUBDIVISION THREE OF 22 SECTION 19-0309 OF THE ENVIRONMENTAL CONSERVATION LAW, SUCH REVOCATION 23 SHALL CONSTITUTE A DISPOSAL OR CESSATION OF QUALIFIED USE, EXCEPT WITH 24 RESPECT TO PROPERTY CONTAINED IN OR COMPRISING SUCH FACILITY WHICH IS 25 DESCRIBED IN CLAUSE (A), (B), OR (C) OF SUBPARAGRAPH (V) OF PARAGRAPH 26 (B) OF THIS SUBDIVISION OTHER THAN AS PART OF OR COMPRISING AN AIR 27 POLLUTION CONTROL FACILITY. ALSO FOR PURPOSES OF THIS PARAGRAPH, THE USE 28 OF AN AIR POLLUTION CONTROL FACILITY OR AN INDUSTRIAL WASTE TREATMENT 29 FACILITY FOR THE PRIMARY PURPOSE OF SALVAGING MATERIALS WHICH ARE USABLE 30 IN THE MANUFACTURING PROCESS OR ARE MARKETABLE SHALL CONSTITUTE A CESSA- 31 TION OF QUALIFIED USE, EXCEPT WITH RESPECT TO PROPERTY CONTAINED IN OR 32 COMPRISING SUCH FACILITY WHICH IS DESCRIBED IN CLAUSE (A) OR (C) OF 33 SUBPARAGRAPH (V) OF PARAGRAPH (B) OF THIS SUBDIVISION. 34 (VIII) EXCEPT AS PROVIDED IN THIS SUBPARAGRAPH, THIS PARAGRAPH SHALL 35 NOT APPLY TO A CREDIT ALLOWED BY THIS SUBDIVISION TO A TAXPAYER THAT IS 36 A PARTNER IN A PARTNERSHIP IN THE CASE OF MANUFACTURING PROPERTY; 37 PROVIDED, AT THE TIME SUCH PROPERTY WAS PLACED IN SERVICE BY SUCH PART- 38 NERSHIP IN AN EMPIRE ZONE THE BASIS FOR FEDERAL INCOME TAX PURPOSES FOR 39 SUCH PROPERTY (OR A PROJECT THAT INCLUDES SUCH PROPERTY) EQUALED OR 40 EXCEEDED THREE HUNDRED MILLION DOLLARS AND SUCH PARTNER OWNED ITS PART- 41 NERSHIP INTEREST FOR AT LEAST THREE YEARS FROM THE DATE SUCH PROPERTY 42 WAS PLACED IN SERVICE. IF SUCH PROPERTY CEASES TO BE IN QUALIFIED USE 43 AFTER IT IS PLACED IN SERVICE, THIS PARAGRAPH SHALL APPLY TO SUCH PART- 44 NER IN THE YEAR SUCH PROPERTY CEASES TO BE IN QUALIFYING USE. 45 (IX) IF A TAXPAYER, WHICH IS APPROVED BY THE COMMISSIONER OF ECONOMIC 46 DEVELOPMENT AS THE OWNER OF A QUALIFIED INVESTMENT PROJECT OR A SIGNIF- 47 ICANT CAPITAL INVESTMENT PROJECT PURSUANT TO SUBDIVISION (W) OF SECTION 48 NINE HUNDRED FIFTY-NINE OF THE GENERAL MUNICIPAL LAW, FAILS TO (A) 49 CREATE AT LEAST THE MINIMUM NUMBER OF JOBS AT SUCH PROJECT AS REQUIRED 50 BY THE PROVISIONS OF SUBDIVISION (S) OR (T) OF SECTION NINE HUNDRED 51 FIFTY-SEVEN AND SUBDIVISION (W) OF SECTION NINE HUNDRED FIFTY-NINE OF 52 THE GENERAL MUNICIPAL LAW OR (B) PLACE IN SERVICE PROPERTY COMPRISING 53 SUCH QUALIFIED INVESTMENT PROJECT OR SIGNIFICANT CAPITAL INVESTMENT 54 PROJECT WITH A BASIS FOR FEDERAL INCOME TAX PURPOSES EQUALING OR EXCEED- 55 ING THE APPLICABLE MINIMUM REQUIRED BASIS AS PROVIDED IN SUCH SUBDIVI- 56 SION (S) OR (T), WHICHEVER IS RELEVANT, BY THE LAST DAY OF THE FIFTH S. 6359--C 84 1 TAXABLE YEAR FOLLOWING THE TAXABLE YEAR IN WHICH A CREDIT IS FIRST 2 ALLOWED UNDER THIS SUBDIVISION FOR THE PROPERTY WHICH COMPRISES SUCH 3 QUALIFIED INVESTMENT PROJECT OR SUCH SIGNIFICANT CAPITAL INVESTMENT 4 PROJECT, THE TOTAL AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBDIVISION 5 FOR ALL TAXABLE YEARS WITH RESPECT TO THE PROPERTY WHICH COMPRISES SUCH 6 PROJECT WHICH HAS BEEN REFUNDED TO SUCH TAXPAYER SHALL BE ADDED BACK IN 7 SUCH TAXABLE YEAR. 8 (G) NOTWITHSTANDING THE EXPIRATION OF THE EMPIRE ZONES PROGRAM UNDER 9 ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL LAW, A TAXPAYER THAT IS 10 CERTIFIED AS A QUALIFIED INVESTMENT PROJECT PURSUANT TO SUCH ARTICLE 11 EIGHT-B ON THE DAY IMMEDIATELY PRECEDING THE DAY THE EMPIRE ZONES 12 PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED CERTIFIED UNDER SUCH ARTICLE 13 EIGHTEEN-B FOR PURPOSES OF THIS SUBDIVISION FOR THE REMAINDER OF THE 14 TAXABLE YEAR IN WHICH THE EXPIRATION OCCURRED AND FOR THE NEXT SUCCEED- 15 ING NINE TAXABLE YEARS. IN ADDITION, THE AREAS DESIGNATED AS EMPIRE 16 ZONES IN WHICH THE TAXPAYER IS CERTIFIED AS A QUALIFIED INVESTMENT 17 PROJECT ON THE DAY IMMEDIATELY PRECEDING THE DAY THE EMPIRE ZONES 18 PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED EMPIRE ZONES FOR PURPOSES OF 19 THIS SUBDIVISION FOR THE REMAINDER OF THE TAXABLE YEAR IN WHICH THE 20 EXPIRATION OCCURRED AND FOR THE NEXT SUCCEEDING NINE TAXABLE YEARS. 21 (H) NOTWITHSTANDING THE EXPIRATION OF THE EMPIRE ZONES PROGRAM UNDER 22 ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL LAW AND EXCEPT AS PROVIDED 23 IN PARAGRAPH (G) OF THIS SUBDIVISION, A TAXPAYER THAT IS CERTIFIED AS AN 24 EMPIRE ZONE BUSINESS PURSUANT TO SUCH ARTICLE EIGHTEEN-B ON THE DAY 25 IMMEDIATELY PRECEDING THE DAY THE EMPIRE ZONE PROGRAM EXPIRED SHALL 26 CONTINUE TO BE DEEMED CERTIFIED UNDER SUCH ARTICLE EIGHTEEN-B FOR 27 PURPOSES OF THIS SUBDIVISION UNTIL APRIL FIRST, TWO THOUSAND FOURTEEN. 28 IN ADDITION, THE AREAS DESIGNATED AS EMPIRE ZONES IN WHICH THE TAXPAYER 29 IS CERTIFIED AS AN EMPIRE ZONE BUSINESS ON THE DAY IMMEDIATELY PRECEDING 30 THE DAY THE EMPIRE ZONES PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED 31 EMPIRE ZONES FOR PURPOSES OF THIS SUBDIVISIONS UNTIL APRIL FIRST, TWO 32 THOUSAND FOURTEEN. 33 4. EMPIRE ZONE EMPLOYMENT INCENTIVE CREDIT (EZ-EIC). (A) APPLICATION 34 OF CREDIT. WHERE A TAXPAYER IS ALLOWED A CREDIT UNDER SUBDIVISION THREE 35 OF THIS SECTION, THE TAXPAYER SHALL BE ALLOWED A CREDIT FOR EACH OF THE 36 THREE YEARS NEXT SUCCEEDING THE TAXABLE YEAR FOR WHICH THE CREDIT UNDER 37 SUCH SUBDIVISION THREE IS ALLOWED, WITH RESPECT TO SUCH PROPERTY, WHETH- 38 ER OR NOT DEDUCTIBLE IN SUCH TAXABLE YEAR OR IN SUBSEQUENT TAXABLE YEARS 39 PURSUANT TO PARAGRAPH (D) OF SUCH SUBDIVISION THREE, OF THIRTY PERCENT 40 OF THE CREDIT ALLOWABLE UNDER SUCH SUBDIVISION THREE; PROVIDED, HOWEVER, 41 THAT THE CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR 42 SHALL ONLY BE ALLOWED IF THE AVERAGE NUMBER OF EMPLOYEES EMPLOYED BY THE 43 TAXPAYER IN THE EMPIRE ZONE, DESIGNATED PURSUANT TO ARTICLE EIGHTEEN-B 44 OF THE GENERAL MUNICIPAL LAW, IN WHICH SUCH PROPERTY IS LOCATED DURING 45 SUCH TAXABLE YEAR IS AT LEAST ONE HUNDRED ONE PERCENT OF THE AVERAGE 46 NUMBER OF EMPLOYEES EMPLOYED BY THE TAXPAYER IN SUCH EMPIRE ZONE, DURING 47 THE TAXABLE YEAR IMMEDIATELY PRECEDING THE TAXABLE YEAR FOR WHICH THE 48 CREDIT UNDER SUCH SUBDIVISION THREE IS ALLOWED AND PROVIDED, FURTHER, 49 THAT IF THE TAXPAYER WAS NOT SUBJECT TO TAX AND DID NOT HAVE A TAXABLE 50 YEAR IMMEDIATELY PRECEDING THE TAXABLE YEAR FOR WHICH THE CREDIT UNDER 51 SUBDIVISION THREE OF THIS SECTION IS ALLOWED, THE CREDIT ALLOWABLE UNDER 52 THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL BE ALLOWED IF THE AVERAGE 53 NUMBER OF EMPLOYEES EMPLOYED IN SUCH EMPIRE ZONE IN SUCH TAXABLE YEAR IS 54 AT LEAST ONE HUNDRED ONE PERCENT OF THE AVERAGE NUMBER OF SUCH EMPLOYEES 55 DURING THE TAXABLE YEAR IN WHICH THE CREDIT UNDER SUCH SUBDIVISION THREE 56 IS ALLOWED. S. 6359--C 85 1 (B) AVERAGE NUMBER OF EMPLOYEES. THE AVERAGE NUMBER OF EMPLOYEES 2 EMPLOYED IN AN EMPIRE ZONE IN A TAXABLE YEAR SHALL BE COMPUTED BY ASCER- 3 TAINING THE NUMBER OF SUCH EMPLOYEES WITHIN SUCH ZONE EXCEPT GENERAL 4 EXECUTIVE OFFICERS, EMPLOYED BY THE TAXPAYER ON THE THIRTY-FIRST DAY OF 5 MARCH, THE THIRTIETH DAY OF JUNE, THE THIRTIETH DAY OF SEPTEMBER AND THE 6 THIRTY-FIRST DAY OF DECEMBER IN THE TAXABLE YEAR, BY ADDING TOGETHER THE 7 NUMBER OF EMPLOYEES ASCERTAINED ON EACH OF SUCH DATES AND DIVIDING THE 8 SUM SO OBTAINED BY THE NUMBER OF SUCH ABOVE-MENTIONED DATES OCCURRING 9 WITHIN THE TAXABLE YEAR. 10 (C) CARRYOVER. IN NO EVENT SHALL THE CREDIT HEREIN PROVIDED FOR BE 11 ALLOWED IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN THE 12 FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION 13 ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. PROVIDED, HOWEVER, THAT 14 IF THE AMOUNT OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE 15 YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS 16 TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT 17 DEDUCTIBLE IN SUCH TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING 18 YEAR OR YEARS AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR 19 OR YEARS. IN LIEU OF SUCH CARRYOVER, ANY SUCH TAXPAYER, WHICH IS 20 APPROVED AS THE OWNER OF A QUALIFIED INVESTMENT PROJECT OR A SIGNIFICANT 21 CAPITAL INVESTMENT PROJECT PURSUANT TO SUBDIVISION (V) OF SECTION NINE 22 HUNDRED FIFTY-NINE OF THE GENERAL MUNICIPAL LAW, MAY ELECT, ON ITS 23 REPORT FOR ITS TAXABLE YEAR WITH RESPECT TO WHICH SUCH CREDIT IS 24 ALLOWED, TO TREAT FIFTY PERCENT OF THE AMOUNT OF SUCH CARRYOVER AS AN 25 OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE 26 PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, 27 HOWEVER, IN THE CASE OF SUCH OWNER OF A QUALIFIED INVESTMENT PROJECT OR 28 A SIGNIFICANT CAPITAL INVESTMENT PROJECT, ONLY FIFTY PERCENT OF THE 29 AMOUNT OF SUCH CARRYOVER WHICH IS ATTRIBUTABLE TO THE CREDIT ALLOWED 30 UNDER THIS SUBDIVISION WITH RESPECT TO PROPERTY WHICH IS PART OF SUCH 31 PROJECT SHALL BE ALLOWED TO BE CREDITED OR REFUNDED AND SUCH OWNER SHALL 32 BE ALLOWED SUCH CREDIT OR REFUND ONLY FOR THOSE TAXABLE YEARS IN WHICH 33 SUCH OWNER WOULD BE ALLOWED A CREDIT OR REFUND OF THE EMPIRE ZONE 34 INVESTMENT TAX CREDIT PURSUANT TO PARAGRAPH (D) OF SUBDIVISION THREE OF 35 THIS SECTION. PROVIDED, FURTHER, HOWEVER, THE PROVISIONS OF SUBSECTION 36 (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTAND- 37 ING, NO INTEREST SHALL BE PAID THEREON. 38 (C-1) ANY CARRYOVER OF A CREDIT FROM PRIOR TAXABLE YEARS WILL NOT BE 39 ALLOWED IF AN EMPIRE ZONE RETENTION CERTIFICATE IS NOT ISSUED PURSUANT 40 TO SUBDIVISION (W) OF SECTION NINE HUNDRED FIFTY-NINE OF THE GENERAL 41 MUNICIPAL LAW TO THE EMPIRE ZONE ENTERPRISE WHICH IS THE BASIS OF THE 42 CREDIT. 43 (D) NOTWITHSTANDING THE EXPIRATION OF THE EMPIRE ZONES PROGRAM UNDER 44 ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL LAW, A TAXPAYER THAT IS 45 CERTIFIED AS A QUALIFIED INVESTMENT PROJECT PURSUANT TO SUCH ARTICLE 46 EIGHTEEN-B ON THE DAY IMMEDIATELY PRECEDING THE DAY THE EMPIRE ZONES 47 PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED CERTIFIED UNDER SUCH ARTICLE 48 EIGHTEEN-B FOR PURPOSES OF THIS SUBDIVISION FOR THE REMAINDER OF THE 49 TAXABLE YEAR IN WHICH THE EXPIRATION OCCURRED AND FOR THE NEXT SUCCEED- 50 ING NINE TAXABLE YEARS. IN ADDITION, THE AREAS DESIGNATED AS EMPIRE 51 ZONES IN WHICH THE TAXPAYER IS CERTIFIED AS A QUALIFIED INVESTMENT 52 PROJECT ON THE DAY IMMEDIATELY PRECEDING THE DAY THE EMPIRE ZONES 53 PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED EMPIRE ZONES FOR PURPOSES OF 54 THIS SUBDIVISION FOR THE REMAINDER OF THE TAXABLE YEAR IN WHICH THE 55 EXPIRATION OCCURRED AND FOR THE NEXT SUCCEEDING NINE TAXABLE YEARS. S. 6359--C 86 1 (E) NOTWITHSTANDING THE EXPIRATION OF THE EMPIRE ZONES PROGRAM UNDER 2 ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL LAW AND EXCEPT AS PROVIDED 3 IN PARAGRAPH (D) OF THIS SUBDIVISION, A TAXPAYER THAT IS CERTIFIED AS AN 4 EMPIRE ZONE BUSINESS PURSUANT TO SUCH ARTICLE EIGHTEEN-B ON THE DAY 5 IMMEDIATELY PRECEDING THE DAY THE EMPIRE ZONES PROGRAM EXPIRED SHALL 6 CONTINUE TO BE DEEMED IN THE EMPIRE ZONE IN WHICH THE TAXPAYER WAS 7 CERTIFIED AS AN EMPIRE ZONE BUSINESS ON THE DAY IMMEDIATELY PRECEDING 8 THE DAY THE EMPIRE ZONES PROGRAM EXPIRED FOR EACH OF THE THREE YEARS 9 NEXT SUCCEEDING THE TAXABLE YEAR FOR WHICH THE CREDIT UNDER SUBDIVISION 10 THREE OF THIS SECTION IS ALLOWED. 11 5. QEZE CREDIT FOR REAL PROPERTY TAXES. (A) ALLOWANCE OF CREDIT. A 12 TAXPAYER WHICH IS A QUALIFIED EMPIRE ZONE ENTERPRISE SHALL BE ALLOWED A 13 CREDIT FOR ELIGIBLE REAL PROPERTY TAXES, TO BE COMPUTED AS PROVIDED IN 14 SECTION FIFTEEN OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTI- 15 CLE. 16 (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION 17 FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS 18 THAN THE FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF 19 SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF 20 THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR 21 REDUCES THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX 22 BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT 23 DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF 24 TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF 25 SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE 26 PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF 27 THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON. 28 6. QEZE TAX REDUCTION CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAYER 29 WHICH IS A QUALIFIED EMPIRE ZONE ENTERPRISE SHALL BE ALLOWED A QEZE TAX 30 REDUCTION CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION SIXTEEN OF THIS 31 CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE. 32 (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION 33 FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS 34 THAN THE FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF 35 SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. PROVIDED, 36 HOWEVER, THIS PARAGRAPH SHALL NOT APPLY TO A TAXPAYER WITH A ZONE ALLO- 37 CATION FACTOR OF ONE HUNDRED PERCENT. 38 7. QUALIFIED EMERGING TECHNOLOGY COMPANY EMPLOYMENT CREDIT. (A) APPLI- 39 CATION OF CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED 40 AS HEREINAFTER PROVIDED, AGAINST THE TAX IMPOSED BY THIS ARTICLE, 41 PROVIDED: 42 (I) THE TAXPAYER IS A QUALIFIED EMERGING TECHNOLOGY COMPANY PURSUANT 43 TO THE PROVISIONS OF SECTION THIRTY-ONE HUNDRED TWO-E OF THE PUBLIC 44 AUTHORITIES LAW; AND 45 (II) THE AVERAGE NUMBER OF INDIVIDUALS EMPLOYED FULL TIME BY THE 46 TAXPAYER IN NEW YORK STATE DURING THE TAXABLE YEAR IS AT LEAST ONE 47 HUNDRED ONE PERCENT OF THE TAXPAYER'S BASE YEAR EMPLOYMENT. FOR THE 48 PURPOSES OF THIS SUBDIVISION, "BASE YEAR EMPLOYMENT" MEANS THE AVERAGE 49 NUMBER OF INDIVIDUALS EMPLOYED FULL-TIME BY THE TAXPAYER IN THE STATE 50 DURING THE THREE TAXABLE YEARS IMMEDIATELY PRECEDING THE FIRST TAXABLE 51 YEAR IN WHICH THE CREDIT IS CLAIMED. WHERE THE TAXPAYER PROVIDED 52 FULL-TIME EMPLOYMENT WITHIN THE STATE DURING ONLY A PORTION OF SUCH 53 THREE-YEAR PERIOD, THEN THE FIRST EFFECTIVE DATE FOR THE COMPANY TO TAKE 54 ADVANTAGE OF THIS CREDIT SHALL BE THE NEXT YEAR FOLLOWING THE FIRST FULL 55 TAXABLE YEAR THAT THE COMPANY HAD FULL-TIME EMPLOYMENT IN NEW YORK 56 STATE. FOR THE PURPOSES OF THIS PARAGRAPH THE TERM "THREE YEARS" SHALL S. 6359--C 87 1 BE DEEMED TO REFER INSTEAD TO THE PRIOR YEAR'S FULL-TIME EMPLOYMENT 2 AFTER THE FIRST YEAR AND THE AVERAGE OF THE FIRST EIGHT QUARTERS OF 3 EMPLOYMENT AFTER THE FIRST TWO TAXABLE YEARS IN NEW YORK STATE. 4 (B) CREDIT LIMITATION. THE CREDIT SHALL BE ALLOWED ONLY IN THE FIRST 5 TAXABLE YEAR IN WHICH THE CREDIT IS CLAIMED AND IN EACH OF THE NEXT TWO 6 TAXABLE YEARS, PROVIDED THAT THE CONDITIONS OF PARAGRAPH (A) OF THIS 7 SUBDIVISION ARE SATISFIED IN EACH TAXABLE YEAR. 8 (C) AVERAGE NUMBER OF INDIVIDUALS EMPLOYED FULL-TIME. FOR THE PURPOSES 9 OF THIS SUBDIVISION, AVERAGE NUMBER OF INDIVIDUALS EMPLOYED FULL-TIME 10 SHALL BE COMPUTED BY ADDING THE NUMBER OF SUCH INDIVIDUALS EMPLOYED BY 11 THE TAXPAYER AT THE END OF EACH QUARTER DURING EACH TAXABLE YEAR OR 12 OTHER APPLICABLE PERIOD AND DIVIDING THE SUM SO OBTAINED BY THE NUMBER 13 OF SUCH QUARTERS OCCURRING WITHIN SUCH TAXABLE YEAR OR OTHER APPLICABLE 14 PERIOD; PROVIDED HOWEVER, EXCEPT THAT IN COMPUTING BASE YEAR EMPLOYMENT, 15 THERE SHALL BE EXCLUDED THEREFROM ANY EMPLOYEE WITH RESPECT TO WHOM A 16 CREDIT PROVIDED FOR UNDER SUBDIVISION SIX OF THIS SECTION IS CLAIMED FOR 17 THE TAXABLE YEAR. 18 (D) AMOUNT OF CREDIT. THE AMOUNT OF THE CREDIT SHALL EQUAL THE PRODUCT 19 OF ONE THOUSAND DOLLARS TIMES THE NUMBER OF INDIVIDUALS EMPLOYED 20 FULL-TIME BY THE TAXPAYER IN THE TAXABLE YEAR THAT ARE IN EXCESS OF ONE 21 HUNDRED PERCENT OF THE TAXPAYER'S BASE YEAR EMPLOYMENT. 22 (E) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA- 23 BLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE 24 FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION 25 ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT 26 OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES 27 THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON 28 THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCT- 29 IBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO 30 BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE 31 THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS 32 OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER 33 NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON. 34 8. QUALIFIED EMERGING TECHNOLOGY COMPANY CAPITAL TAX CREDIT. (A) 35 AMOUNT OF CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT AGAINST THE TAX 36 IMPOSED BY THIS ARTICLE. THE AMOUNT OF THE CREDIT SHALL BE EQUAL TO ONE 37 OF THE FOLLOWING PERCENTAGES, PER EACH QUALIFIED INVESTMENT IN A QUALI- 38 FIED EMERGING TECHNOLOGY COMPANY AS DEFINED IN SECTION THIRTY-ONE 39 HUNDRED TWO-E OF THE PUBLIC AUTHORITIES LAW, MADE DURING THE TAXABLE 40 YEAR, AND CERTIFIED BY THE COMMISSIONER, EITHER: 41 (1) TEN PERCENT OF QUALIFIED INVESTMENTS IN QUALIFIED EMERGING TECH- 42 NOLOGY COMPANIES, EXCEPT FOR INVESTMENTS MADE BY OR ON BEHALF OF AN 43 OWNER OF THE BUSINESS, INCLUDING, BUT NOT LIMITED TO, A STOCKHOLDER, 44 PARTNER OR SOLE PROPRIETOR, OR ANY RELATED PERSON, AS DEFINED IN SUBPAR- 45 AGRAPH (C) OF PARAGRAPH THREE OF SUBSECTION (B) OF SECTION FOUR HUNDRED 46 SIXTY-FIVE OF THE INTERNAL REVENUE CODE, AND PROVIDED, HOWEVER, THAT THE 47 TAXPAYER CERTIFIES TO THE COMMISSIONER THAT THE QUALIFIED INVESTMENT 48 WILL NOT BE SOLD, TRANSFERRED, TRADED, OR DISPOSED OF DURING THE FOUR 49 YEARS FOLLOWING THE YEAR IN WHICH THE CREDIT IS FIRST CLAIMED; OR 50 (2) TWENTY PERCENT OF QUALIFIED INVESTMENTS IN QUALIFIED EMERGING 51 TECHNOLOGY COMPANIES, EXCEPT FOR INVESTMENTS MADE BY OR ON BEHALF OF AN 52 OWNER OF THE BUSINESS, INCLUDING, BUT NOT LIMITED TO, A STOCKHOLDER, 53 PARTNER OR SOLE PROPRIETOR, OR ANY RELATED PERSON, AS DEFINED IN SUBPAR- 54 AGRAPH (C) OF PARAGRAPH THREE OF SUBSECTION (B) OF SECTION FOUR HUNDRED 55 SIXTY-FIVE OF THE INTERNAL REVENUE CODE, AND PROVIDED, HOWEVER, THAT THE 56 TAXPAYER CERTIFIES TO THE COMMISSIONER THAT THE QUALIFIED INVESTMENT S. 6359--C 88 1 WILL NOT BE SOLD, TRANSFERRED, TRADED, OR DISPOSED OF DURING THE NINE 2 YEARS FOLLOWING THE YEAR IN WHICH THE CREDIT IS FIRST CLAIMED. 3 (B) QUALIFIED INVESTMENT. "QUALIFIED INVESTMENT" MEANS THE CONTRIB- 4 UTION OF PROPERTY TO A CORPORATION IN EXCHANGE FOR ORIGINAL ISSUE CAPI- 5 TAL STOCK OR OTHER OWNERSHIP INTEREST, THE CONTRIBUTION OF PROPERTY TO A 6 PARTNERSHIP IN EXCHANGE FOR AN INTEREST IN THE PARTNERSHIP, AND SIMILAR 7 CONTRIBUTIONS IN THE CASE OF A BUSINESS ENTITY NOT IN CORPORATE OR PART- 8 NERSHIP FORM IN EXCHANGE FOR AN OWNERSHIP INTEREST IN SUCH ENTITY. THE 9 TOTAL AMOUNT OF CREDIT ALLOWABLE TO A TAXPAYER UNDER THIS PROVISION FOR 10 ALL YEARS, TAKEN IN THE AGGREGATE, SHALL NOT EXCEED ONE HUNDRED FIFTY 11 THOUSAND DOLLARS IN THE CASE OF INVESTMENTS MADE PURSUANT TO SUBPARA- 12 GRAPH ONE OF PARAGRAPH (A) OF THIS SUBDIVISION AND SHALL NOT EXCEED 13 THREE HUNDRED THOUSAND DOLLARS IN THE CASE OF INVESTMENTS MADE PURSUANT 14 TO SUBPARAGRAPH TWO OF PARAGRAPH (A) OF THIS SUBDIVISION. 15 (C) CARRYOVER. IN NO EVENT SHALL THE CREDIT AND CARRYOVER OF SUCH 16 CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR, IN THE 17 AGGREGATE, REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE FIXED 18 DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF 19 SECTION TWO HUNDRED TEN OF THIS CHAPTER. HOWEVER, IF THE AMOUNT OF CRED- 20 IT OR CARRYOVERS OF SUCH CREDIT, OR BOTH, ALLOWED UNDER THIS SUBDIVISION 21 FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER 22 OTHERWISE PAYS TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, OR IF ANY 23 PART OF THE CREDIT OR CARRYOVERS OF SUCH CREDIT MAY NOT BE DEDUCTED FROM 24 THE TAX OTHERWISE DUE BY REASON OF THE FINAL SENTENCE OF THIS PARAGRAPH, 25 ANY AMOUNT OF CREDIT OR CARRYOVERS OF SUCH CREDIT THUS NOT DEDUCTIBLE IN 26 SUCH TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND 27 MAY BE DEDUCTED FROM THE TAX FOR SUCH YEAR OR YEARS. IN ADDITION, THE 28 AMOUNT OF SUCH CREDIT, AND CARRYOVERS OF SUCH CREDIT TO THE TAXABLE 29 YEAR, DEDUCTED FROM THE TAX OTHERWISE DUE MAY NOT, IN THE AGGREGATE, 30 EXCEED FIFTY PERCENT OF THE TAX IMPOSED UNDER SECTION TWO HUNDRED NINE 31 OF THIS ARTICLE COMPUTED WITHOUT REGARD TO ANY CREDIT PROVIDED FOR BY 32 THIS SECTION. 33 (D) RECAPTURE. (1) WHERE A TAXPAYER SELLS, TRANSFERS OR OTHERWISE 34 DISPOSES OF CORPORATE STOCK, A PARTNERSHIP INTEREST OR OTHER OWNERSHIP 35 INTEREST ARISING FROM THE MAKING OF A QUALIFIED INVESTMENT WHICH WAS THE 36 BASIS, IN WHOLE OR IN PART, FOR THE ALLOWANCE OF THE CREDIT PROVIDED FOR 37 UNDER SUBPARAGRAPH ONE OF PARAGRAPH (A) OF THIS SUBDIVISION, OR WHERE AN 38 INVESTMENT WHICH WAS THE BASIS FOR SUCH ALLOWANCE IS, IN WHOLE OR IN 39 PART, RECOVERED BY SUCH TAXPAYER, AND SUCH DISPOSITION OR RECOVERY 40 OCCURS DURING THE TAXABLE YEAR OR WITHIN FORTY-EIGHT MONTHS FROM THE 41 CLOSE OF THE TAXABLE YEAR WITH RESPECT TO WHICH SUCH CREDIT IS ALLOWED, 42 THE TAXPAYER SHALL ADD BACK, WITH RESPECT TO THE TAXABLE YEAR IN WHICH 43 THE DISPOSITION OR RECOVERY DESCRIBED ABOVE OCCURRED, THE REQUIRED 44 PORTION OF THE CREDIT ORIGINALLY ALLOWED. 45 (2) WHERE A TAXPAYER SELLS, TRANSFERS OR OTHERWISE DISPOSES OF CORPO- 46 RATE STOCK, A PARTNERSHIP INTEREST OR OTHER OWNERSHIP INTEREST ARISING 47 FROM THE MAKING OF A QUALIFIED INVESTMENT WHICH WAS THE BASIS, IN WHOLE 48 OR IN PART, FOR THE ALLOWANCE OF THE CREDIT PROVIDED FOR UNDER SUBPARA- 49 GRAPH TWO OF PARAGRAPH (A) OF THIS SUBDIVISION, OR WHERE AN INVESTMENT 50 WHICH WAS THE BASIS FOR SUCH ALLOWANCE IS IN ANY MANNER, IN WHOLE OR IN 51 PART, RECOVERED BY SUCH TAXPAYER, AND SUCH DISPOSITION OR RECOVERY 52 OCCURS DURING THE TAXABLE YEAR OR WITHIN ONE HUNDRED EIGHT MONTHS FROM 53 THE CLOSE OF THE TAXABLE YEAR WITH RESPECT TO WHICH SUCH CREDIT IS 54 ALLOWED, THE TAXPAYER SHALL ADD BACK, WITH RESPECT TO THE TAXABLE YEAR 55 IN WHICH THE DISPOSITION OR RECOVERY DESCRIBED IN SUBPARAGRAPH ONE OF S. 6359--C 89 1 THIS PARAGRAPH OCCURRED THE REQUIRED PORTION OF THE CREDIT ORIGINALLY 2 ALLOWED. 3 (3) THE REQUIRED PORTION OF THE CREDIT ORIGINALLY ALLOWED SHALL BE THE 4 PRODUCT OF (A) THE PORTION OF SUCH CREDIT ATTRIBUTABLE TO THE PROPERTY 5 DISPOSED OF AND (B) THE APPLICABLE PERCENTAGE. 6 (4) THE APPLICABLE PERCENTAGE SHALL BE: 7 (A) FOR CREDITS ALLOWED PURSUANT TO SUBPARAGRAPH ONE OF PARAGRAPH (A) 8 OF THIS SUBDIVISION: 9 (I) ONE HUNDRED PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS WITHIN 10 THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED OR WITHIN 11 TWELVE MONTHS OF THE END OF SUCH TAXABLE YEAR, 12 (II) SEVENTY-FIVE PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS MORE 13 THAN TWELVE BUT NOT MORE THAN TWENTY-FOUR MONTHS AFTER THE END OF THE 14 TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED, 15 (III) FIFTY PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS MORE THAN 16 TWENTY-FOUR MONTHS BUT NOT MORE THAN THIRTY-SIX MONTHS AFTER THE END OF 17 THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED, OR 18 (IV) TWENTY-FIVE PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS MORE 19 THAN THIRTY-SIX MONTHS BUT NOT MORE THAN FORTY-EIGHT MONTHS AFTER THE 20 END OF THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED; OR 21 (B) FOR CREDITS ALLOWED PURSUANT TO SUBPARAGRAPH TWO OF PARAGRAPH (A) 22 OF THIS SUBDIVISION: 23 (I) ONE HUNDRED PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS WITHIN 24 THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED OR WITHIN 25 TWELVE MONTHS OF THE END OF SUCH TAXABLE YEAR, 26 (II) EIGHTY PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS MORE THAN 27 TWELVE BUT NOT MORE THAN FORTY-EIGHT MONTHS AFTER THE END OF THE TAXABLE 28 YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED, 29 (III) SIXTY PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS MORE THAN 30 FORTY-EIGHT MONTHS BUT NOT MORE THAN SEVENTY-TWO MONTHS AFTER THE END OF 31 THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED, 32 (IV) FORTY PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS MORE THAN 33 SEVENTY-TWO MONTHS BUT NOT MORE THAN NINETY-SIX MONTHS AFTER THE END OF 34 THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED, OR 35 (V) TWENTY PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS MORE THAN 36 NINETY-SIX MONTHS BUT NOT MORE THAN ONE HUNDRED EIGHT MONTHS AFTER THE 37 END OF THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED. 38 9. CREDIT FOR THE SPECIAL ADDITIONAL MORTGAGE RECORDING TAX. (A) 39 APPLICATION OF CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE CRED- 40 ITED AGAINST THE TAX IMPOSED BY THIS ARTICLE, EQUAL TO THE AMOUNT OF THE 41 SPECIAL ADDITIONAL MORTGAGE RECORDING TAX PAID BY THE TAXPAYER PURSUANT 42 TO THE PROVISIONS OF SUBDIVISION ONE-A OF SECTION TWO HUNDRED 43 FIFTY-THREE OF THIS CHAPTER OR MORTGAGES RECORDED. PROVIDED, HOWEVER, NO 44 CREDIT SHALL BE ALLOWED WITH RESPECT TO A MORTGAGE OF REAL PROPERTY 45 PRINCIPALLY IMPROVED OR TO BE IMPROVED BY ONE OR MORE STRUCTURES 46 CONTAINING IN THE AGGREGATE NOT MORE THAN SIX RESIDENTIAL DWELLING 47 UNITS, EACH DWELLING UNIT HAVING ITS OWN SEPARATE COOKING FACILITIES, 48 WHERE THE REAL PROPERTY IS LOCATED IN ONE OR MORE OF THE COUNTIES 49 COMPRISING THE METROPOLITAN COMMUTER TRANSPORTATION AREA. PROVIDED 50 FURTHER, HOWEVER, NO CREDIT SHALL BE ALLOWED WITH RESPECT TO A MORTGAGE 51 OF REAL PROPERTY PRINCIPALLY IMPROVED OR TO BE IMPROVED BY ONE OR MORE 52 STRUCTURES CONTAINING IN THE AGGREGATE NOT MORE THAN SIX RESIDENTIAL 53 DWELLING UNITS, EACH DWELLING UNIT HAVING ITS OWN SEPARATE COOKING 54 FACILITIES, WHERE THE REAL PROPERTY IS LOCATED IN THE COUNTY OF ERIE. 55 (B) CARRYOVER. IN NO EVENT SHALL THE CREDIT HEREIN PROVIDED FOR BE 56 ALLOWED IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN THE S. 6359--C 90 1 FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION 2 ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. IF, HOWEVER, THE AMOUNT 3 OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR, INCLUD- 4 ING ANY CREDIT CARRIED OVER FROM A PRIOR TAXABLE YEAR, REDUCES THE TAX 5 TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED 6 DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXA- 7 BLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY BE 8 DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS. 9 10. CREDIT FOR SERVICING CERTAIN MORTGAGES. (A) GENERAL. EVERY TAXPAY- 10 ER MEETING THE REQUIREMENTS OF THE STATE OF NEW YORK MORTGAGE AGENCY 11 APPLICABLE TO THE SERVICING OF MORTGAGES ACQUIRED BY SUCH AGENCY PURSU- 12 ANT TO THE STATE OF NEW YORK MORTGAGE AGENCY ACT, WHICH SHALL HAVE 13 ENTERED INTO A CONTRACT WITH THE STATE OF NEW YORK MORTGAGE AGENCY TO 14 SERVICE MORTGAGES ACQUIRED BY SUCH AGENCY PURSUANT TO THE STATE OF NEW 15 YORK MORTGAGE AGENCY ACT, SHALL HAVE CREDITED TO IT ANNUALLY AN AMOUNT 16 EQUAL TO TWO AND NINETY-THREE ONE HUNDREDTHS PER CENTUM OF THE TOTAL 17 PRINCIPAL AND INTEREST COLLECTED BY THE TAXPAYER DURING ITS TAXABLE YEAR 18 ON EACH SUCH MORTGAGE SECURED BY A LIEN ON REAL ESTATE IMPROVED BY A 19 ONE-FAMILY TO FOUR-FAMILY RESIDENTIAL STRUCTURE AND AN AMOUNT EQUAL TO 20 THE INTEREST COLLECTED BY THE TAXPAYER DURING ITS TAXABLE YEAR ON EACH 21 SUCH MORTGAGE SECURED BY A LIEN ON REAL PROPERTY IMPROVED BY A STRUCTURE 22 OCCUPIED AS THE RESIDENCE OF FIVE OR MORE FAMILIES LIVING INDEPENDENTLY 23 OF EACH OTHER, MULTIPLIED BY A FRACTION THE DENOMINATOR OF WHICH SHALL 24 BE THE INTEREST RATE PAYABLE ON THE MORTGAGE (COMPUTED TO FIVE DECIMAL 25 PLACES) AND THE NUMERATOR OF WHICH SHALL BE .00125 IN THE CASE OF SUCH A 26 MORTGAGE ACQUIRED BY SUCH AGENCY FOR LESS THAN ONE MILLION DOLLARS, AND 27 .00100 IN THE CASE OF SUCH A MORTGAGE ACQUIRED BY SUCH AGENCY FOR ONE 28 MILLION DOLLARS OR MORE. IN NO EVENT SHALL THE CREDIT ALLOWED UNDER THIS 29 SUBDIVISION REDUCE THE TAX TO LESS THAN THE FIXED DOLLAR MINIMUM AMOUNT 30 PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION TWO HUNDRED 31 TEN OF THIS ARTICLE. IN COMPUTING SUCH TAX CREDIT FOR THE SERVICING OF 32 MORTGAGES ON ONE-FAMILY TO FOUR-FAMILY RESIDENTIAL STRUCTURES, THE 33 TAXPAYER SHALL NOT BE ENTITLED TO CREDIT FOR THE COLLECTION OF CURTAIL- 34 MENT OR PAYMENTS IN DISCHARGE OF ANY SUCH MORTGAGE. FOR THE PURPOSES OF 35 THIS SUBDIVISION, 36 (B)(I) A "CURTAILMENT" SHALL MEAN AMOUNTS PAID BY MORTGAGORS 37 (A) IN EXCESS OF THE MONTHLY CONSTANT DUE DURING THE MONTH OF 38 COLLECTION AND 39 (B) IN REDUCTION OF THE UNPAID PRINCIPAL BALANCE OF THE MORTGAGE; IN 40 THE ABSENCE OF CLEAR EVIDENCE TO THE CONTRARY, AMOUNTS PAID IN EXCESS OF 41 THE MONTHLY CONSTANT DUE DURING THE MONTH OF COLLECTION SHALL BE DEEMED 42 TO BE IN REDUCTION OF THE UNPAID PRINCIPAL BALANCE OF THE MORTGAGE; AND 43 (II) "MONTHLY CONSTANT" SHALL MEAN THE AMOUNT OF PRINCIPAL AND INTER- 44 EST WHICH IS DUE AND PAYABLE ACCORDING TO THE MORTGAGE DOCUMENTS ON EACH 45 PERIODIC PAYMENT DATE. 46 11. AGRICULTURAL PROPERTY TAX CREDIT. (A) GENERAL. IN THE CASE OF A 47 TAXPAYER WHICH IS AN ELIGIBLE FARMER OR AN ELIGIBLE FARMER WHO HAS PAID 48 TAXES PURSUANT TO A LAND CONTRACT, THERE SHALL BE ALLOWED A CREDIT FOR 49 THE ALLOWABLE SCHOOL DISTRICT PROPERTY TAXES. THE TERM "ALLOWABLE SCHOOL 50 DISTRICT PROPERTY TAXES" MEANS THE SCHOOL DISTRICT PROPERTY TAXES PAID 51 DURING THE TAXABLE YEAR ON QUALIFIED AGRICULTURAL PROPERTY, SUBJECT TO 52 THE ACREAGE LIMITATION PROVIDED IN PARAGRAPH (E) OF THIS SUBDIVISION AND 53 THE INCOME LIMITATION PROVIDED IN PARAGRAPH (F) OF THIS SUBDIVISION. 54 (B) ELIGIBLE FARMER. FOR PURPOSES OF THIS SUBDIVISION, THE TERM 55 "ELIGIBLE FARMER" MEANS A TAXPAYER WHOSE FEDERAL GROSS INCOME FROM FARM- 56 ING FOR THE TAXABLE YEAR IS AT LEAST TWO-THIRDS OF EXCESS FEDERAL GROSS S. 6359--C 91 1 INCOME. THE TERM "ELIGIBLE FARMER" ALSO INCLUDES A CORPORATION OTHER 2 THAN THE TAXPAYER OF RECORD FOR QUALIFIED AGRICULTURAL LAND WHICH HAS 3 PAID THE SCHOOL DISTRICT PROPERTY TAXES ON SUCH LAND PURSUANT TO A 4 CONTRACT FOR THE FUTURE PURCHASE OF SUCH LAND; PROVIDED THAT SUCH CORPO- 5 RATION HAS A FEDERAL GROSS INCOME FROM FARMING FOR THE TAXABLE YEAR 6 WHICH IS AT LEAST TWO-THIRDS OF EXCESS FEDERAL GROSS INCOME; AND 7 PROVIDED FURTHER THAT, IN DETERMINING SUCH INCOME ELIGIBILITY, A TAXPAY- 8 ER MAY, FOR ANY TAXABLE YEAR, USE THE AVERAGE OF SUCH FEDERAL GROSS 9 INCOME FROM FARMING FOR THAT TAXABLE YEAR AND SUCH INCOME FOR THE TWO 10 CONSECUTIVE TAXABLE YEARS IMMEDIATELY PRECEDING SUCH TAXABLE YEAR. 11 EXCESS FEDERAL GROSS INCOME MEANS THE AMOUNT OF FEDERAL GROSS INCOME 12 FROM ALL SOURCES FOR THE TAXABLE YEAR IN EXCESS OF THIRTY THOUSAND 13 DOLLARS. FOR THE PURPOSES OF THIS PARAGRAPH, PAYMENTS FROM THE STATE'S 14 FARMLAND PROTECTION PROGRAM, ADMINISTERED BY THE DEPARTMENT OF AGRICUL- 15 TURE AND MARKETS, SHALL BE INCLUDED AS FEDERAL GROSS INCOME FROM FARMING 16 FOR OTHERWISE ELIGIBLE FARMERS. 17 (C) SCHOOL DISTRICT PROPERTY TAXES. FOR PURPOSES OF THIS SUBDIVISION, 18 THE TERM "SCHOOL DISTRICT PROPERTY TAXES" MEANS ALL PROPERTY TAXES, 19 SPECIAL AD VALOREM LEVIES AND SPECIAL ASSESSMENTS, EXCLUSIVE OF PENAL- 20 TIES AND INTEREST, LEVIED FOR SCHOOL DISTRICT PURPOSES ON THE QUALIFIED 21 AGRICULTURAL PROPERTY OWNED BY THE TAXPAYER. 22 (D) QUALIFIED AGRICULTURAL PROPERTY. FOR PURPOSES OF THIS SUBDIVISION, 23 THE TERM "QUALIFIED AGRICULTURAL PROPERTY" MEANS LAND LOCATED IN THIS 24 STATE WHICH IS USED IN AGRICULTURAL PRODUCTION, AND LAND IMPROVEMENTS, 25 STRUCTURES AND BUILDINGS (EXCLUDING BUILDINGS USED FOR THE TAXPAYER'S 26 RESIDENTIAL PURPOSE) LOCATED ON SUCH LAND WHICH ARE USED OR OCCUPIED TO 27 CARRY OUT SUCH PRODUCTION. QUALIFIED AGRICULTURAL PROPERTY ALSO INCLUDES 28 LAND SET ASIDE OR RETIRED UNDER A FEDERAL SUPPLY MANAGEMENT OR SOIL 29 CONSERVATION PROGRAM OR LAND THAT AT THE TIME IT BECOMES SUBJECT TO A 30 CONSERVATION EASEMENT MET THE REQUIREMENTS UNDER THIS PARAGRAPH. 31 (E) ACREAGE LIMITATION. (I) ELIGIBLE TAXES. IN THE EVENT THAT THE 32 QUALIFIED AGRICULTURAL PROPERTY OWNED BY THE TAXPAYER INCLUDES LAND IN 33 EXCESS OF THE BASE ACREAGE AS PROVIDED IN THIS PARAGRAPH, THE AMOUNT OF 34 SCHOOL DISTRICT PROPERTY TAXES ELIGIBLE FOR CREDIT UNDER THIS SUBDIVI- 35 SION SHALL BE THAT PORTION OF THE SCHOOL DISTRICT PROPERTY TAXES WHICH 36 BEARS THE SAME RATIO TO THE TOTAL SCHOOL DISTRICT PROPERTY TAXES PAID 37 DURING THE TAXABLE YEAR, AS THE ACREAGE ALLOWABLE UNDER THIS PARAGRAPH 38 BEARS TO THE ENTIRE ACREAGE OF SUCH LAND. 39 (II) ALLOWABLE ACREAGE. THE ALLOWABLE ACREAGE IS THE SUM OF THE BASE 40 ACREAGE SET FORTH BELOW AND FIFTY PERCENT OF THE INCREMENTAL ACREAGE. 41 THE INCREMENTAL ACREAGE IS THE EXCESS OF THE ENTIRE ACREAGE OF QUALIFIED 42 AGRICULTURAL LAND OWNED BY THE TAXPAYER OVER THE BASE ACREAGE. EXCEPT AS 43 PROVIDED IN SUBPARAGRAPH (III) OF THIS PARAGRAPH, THE BASE ACREAGE IS 44 THREE HUNDRED FIFTY ACRES. 45 THE TOTAL BASE ACREAGE MAY BE INCREASED BY ANY ACREAGE ENROLLED OR 46 PARTICIPATING DURING THE TAXABLE YEAR IN A FEDERAL ENVIRONMENTAL CONSER- 47 VATION ACREAGE RESERVE PROGRAM PURSUANT TO TITLE THREE OF THE FEDERAL 48 AGRICULTURE IMPROVEMENT AND REFORM ACT OF NINETEEN HUNDRED NINETY-SIX. 49 (III) BASE ACREAGE OF RELATED PERSONS. WHERE THE TAXPAYER AND ONE OR 50 MORE RELATED PERSONS EACH OWN QUALIFIED AGRICULTURAL PROPERTY ON THE 51 FIRST DAY OF MARCH OF ANY YEAR, THE BASE ACREAGE UNDER SUBPARAGRAPH (II) 52 OF THIS PARAGRAPH SHALL BE DIVIDED EQUALLY AND ALLOTTED AMONG THE 53 TAXPAYER AND SUCH RELATED PERSONS, AND THE TAXPAYER'S BASE ACREAGE FOR 54 THE TAXABLE YEAR WHICH INCLUDES SUCH MARCH FIRST SHALL BE LIMITED TO ITS 55 ALLOTTED SHARE. PROVIDED, HOWEVER, IF THE TAXPAYER AND ALL SUCH RELATED 56 PERSONS CONSENT (AT SUCH TIME AND IN SUCH MANNER AS THE COMMISSIONER MAY S. 6359--C 92 1 PRESCRIBE) TO AN UNEQUAL DIVISION, THE TAXPAYER'S BASE ACREAGE FOR SUCH 2 TAXABLE YEAR SHALL BE LIMITED TO ITS ALLOTTED SHARE UNDER SUCH UNEQUAL 3 DIVISION. 4 (IV) RELATED PERSONS. (A) FOR PURPOSES OF SUBPARAGRAPH (III) OF THIS 5 PARAGRAPH, THE TERM "RELATED PERSON" MEANS: 6 (I) A CORPORATION SUBJECT TO TAX UNDER THIS ARTICLE, WHERE THE TAXPAY- 7 ER AND THE CORPORATION ARE MEMBERS OF THE SAME CONTROLLED GROUP, AS 8 DEFINED IN SECTION 267(F) OF THE INTERNAL REVENUE CODE; 9 (II) AN INDIVIDUAL, PARTNERSHIP, ESTATE OR TRUST, WHERE MORE THAN 10 FIFTY PERCENT IN VALUE OF THE OUTSTANDING STOCK OF THE TAXPAYER IS 11 OWNED, DIRECTLY OR INDIRECTLY, BY OR FOR SUCH INDIVIDUAL, PARTNERSHIP, 12 ESTATE OR TRUST OR BY OR FOR THE GRANTOR OF SUCH TRUST; 13 (III) A CORPORATION SUBJECT TO TAX UNDER THIS ARTICLE, OR A PARTNER- 14 SHIP, ESTATE OR TRUST, IF THE SAME PERSON OWNS MORE THAN FIFTY PERCENT 15 IN VALUE OF THE OUTSTANDING STOCK OF THE TAXPAYER AND MORE THAN FIFTY 16 PERCENT IN VALUE OF THE OUTSTANDING STOCK OF THE CORPORATION, OR MORE 17 THAN FIFTY PERCENT OF THE CAPITAL OR PROFITS INTEREST IN THE PARTNER- 18 SHIP, OR MORE THAN FIFTY PERCENT OF THE BENEFICIAL INTEREST IN THE 19 ESTATE OR TRUST; 20 (IV) A PARTNERSHIP, ESTATE OR TRUST OF WHICH THE TAXPAYER OWNS, 21 DIRECTLY OR INDIRECTLY, MORE THAN FIFTY PERCENT OF THE CAPITAL, PROFITS 22 OR BENEFICIAL INTEREST. 23 (B) IN DETERMINING WHETHER A PERSON IS A RELATED PERSON WITHIN THE 24 MEANING OF THIS SUBPARAGRAPH: 25 (I) STOCK OWNED, DIRECTLY OR INDIRECTLY, BY OR FOR A CORPORATION, 26 PARTNERSHIP, ESTATE OR TRUST SHALL BE CONSIDERED AS BEING OWNED PROPOR- 27 TIONATELY BY OR FOR ITS SHAREHOLDERS, PARTNERS OR BENEFICIARIES; 28 (II) AN INDIVIDUAL SHALL BE CONSIDERED AS OWNING THE STOCK OWNED, 29 DIRECTLY OR INDIRECTLY, BY OR FOR HIS SPOUSE; 30 (III) STOCK CONSTRUCTIVELY OWNED BY A PERSON BY REASON OF THE APPLICA- 31 TION OF ITEM (I) OF THIS CLAUSE SHALL, FOR THE PURPOSE OF APPLYING ITEM 32 (I) OR (II) OF THIS CLAUSE, BE TREATED AS ACTUALLY OWNED BY SUCH PERSON. 33 (F) INCOME LIMITATION. (I) IN THE EVENT THAT THE MODIFIED ENTIRE NET 34 INCOME OF THE TAXPAYER EXCEEDS TWO HUNDRED THOUSAND DOLLARS, THE ALLOW- 35 ABLE SCHOOL DISTRICT PROPERTY TAXES UNDER PARAGRAPH (A) OF THIS SUBDIVI- 36 SION SHALL BE THE ELIGIBLE TAXES UNDER SUBPARAGRAPH (I) OF PARAGRAPH (E) 37 OF THIS SUBDIVISION REDUCED BY THE PRODUCT OF THE AMOUNT OF SUCH ELIGI- 38 BLE TAXES AND A PERCENTAGE, SUCH PERCENTAGE TO BE DETERMINED BY MULTI- 39 PLYING ONE HUNDRED PERCENT BY A FRACTION, THE NUMERATOR OF WHICH IS THE 40 LESSER OF ONE HUNDRED THOUSAND DOLLARS OR THE EXCESS OF THE TAXPAYER'S 41 MODIFIED ENTIRE NET INCOME OVER TWO HUNDRED THOUSAND DOLLARS AND THE 42 DENOMINATOR OF WHICH IS ONE HUNDRED THOUSAND DOLLARS. FOR PURPOSES OF 43 THE PRECEDING SENTENCE, THE TERM "ELIGIBLE TAXES", WHERE THE ACREAGE 44 LIMITATION OF PARAGRAPH (E) OF THIS SUBDIVISION DOES NOT APPLY, SHALL 45 MEAN THE TOTAL SCHOOL DISTRICT PROPERTY TAXES PAID DURING THE TAXABLE 46 YEAR. 47 (II) THE TERM "MODIFIED ENTIRE NET INCOME" MEANS THE ENTIRE NET INCOME 48 FOR THE TAXABLE YEAR REDUCED BY THE AMOUNT OF PRINCIPAL PAID ON FARM 49 INDEBTEDNESS DURING THE TAXABLE YEAR. THE TERM "FARM INDEBTEDNESS" MEANS 50 DEBT INCURRED OR REFINANCED WHICH IS SECURED BY FARM PROPERTY, WHERE THE 51 PROCEEDS OF THE DEBT ARE DISBURSED FOR EXPENDITURES INCURRED IN THE 52 BUSINESS OF FARMING. 53 (G) CARRYOVER. IN NO EVENT SHALL THE CREDIT PROVIDED HEREIN BE ALLOWED 54 IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN THE FIXED 55 DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF 56 SECTION TWO HUNDRED TEN OF THIS ARTICLE. IF, HOWEVER, THE AMOUNT OF S. 6359--C 93 1 CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE 2 TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE 3 FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH 4 TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY 5 BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS. PROVIDED, 6 HOWEVER, IN LIEU OF CARRYING OVER THE UNUSED PORTION OF SUCH CREDIT, THE 7 TAXPAYER MAY ELECT TO TREAT SUCH UNUSED PORTION AS AN OVERPAYMENT OF TAX 8 TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 9 ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER EXCEPT THAT NO INTEREST SHALL BE 10 PAID ON SUCH OVERPAYMENT. 11 (H) NONQUALIFIED USE. (I) NO CREDIT IN CONVERSION YEAR. IN THE EVENT 12 THAT QUALIFIED AGRICULTURAL PROPERTY IS CONVERTED BY THE TAXPAYER TO 13 NONQUALIFIED USE, CREDIT UNDER THIS SUBDIVISION SHALL NOT BE ALLOWED 14 WITH RESPECT TO SUCH PROPERTY FOR THE TAXABLE YEAR OF CONVERSION (THE 15 CONVERSION YEAR). 16 (II) CREDIT RECAPTURE. IF THE CONVERSION BY THE TAXPAYER OF QUALIFIED 17 AGRICULTURAL PROPERTY TO NONQUALIFIED USE OCCURS DURING THE PERIOD OF 18 THE TWO TAXABLE YEARS FOLLOWING THE TAXABLE YEAR FOR WHICH THE CREDIT 19 UNDER THIS SUBDIVISION WAS FIRST CLAIMED WITH RESPECT TO SUCH PROPERTY, 20 THE CREDIT ALLOWED WITH RESPECT TO SUCH PROPERTY FOR THE TAXABLE YEARS 21 PRIOR TO THE CONVERSION YEAR MUST BE ADDED BACK IN THE CONVERSION YEAR. 22 WHERE THE PROPERTY CONVERTED INCLUDES LAND, AND WHERE THE CONVERSION IS 23 OF ONLY A PORTION OF SUCH LAND, THE CREDIT ALLOWED WITH RESPECT TO THE 24 PROPERTY CONVERTED SHALL BE DETERMINED BY MULTIPLYING THE ENTIRE CREDIT 25 UNDER THIS SUBDIVISION FOR THE TAXABLE YEARS PRIOR TO THE CONVERSION 26 YEAR BY A FRACTION, THE NUMERATOR OF WHICH IS THE ACREAGE CONVERTED AND 27 THE DENOMINATOR OF WHICH IS THE ENTIRE ACREAGE OF SUCH LAND OWNED BY THE 28 TAXPAYER IMMEDIATELY PRIOR TO THE CONVERSION. 29 (III) EXCEPTION TO RECAPTURE. SUBPARAGRAPH (II) OF THIS PARAGRAPH 30 SHALL NOT APPLY TO THE CONVERSION OF PROPERTY WHERE THE CONVERSION IS BY 31 REASON OF INVOLUNTARY CONVERSION, WITHIN THE MEANING OF SECTION ONE 32 THOUSAND THIRTY-THREE OF THE INTERNAL REVENUE CODE. 33 (IV) CONVERSION TO NONQUALIFIED USE. FOR PURPOSES OF THIS PARAGRAPH, A 34 SALE OR OTHER DISPOSITION OF QUALIFIED AGRICULTURAL PROPERTY ALONE SHALL 35 NOT CONSTITUTE A CONVERSION TO A NONQUALIFIED USE. 36 (I) SPECIAL RULES. FOR PURPOSES OF THIS SUBDIVISION, THE TERM "FEDERAL 37 GROSS INCOME FROM FARMING" SHALL INCLUDE GROSS INCOME FROM THE 38 PRODUCTION OF MAPLE SYRUP, CIDER, CHRISTMAS TREES DERIVED FROM A MANAGED 39 CHRISTMAS TREE OPERATION WHETHER DUG FOR TRANSPLANTING OR CUT FROM THE 40 STUMP, OR FROM A COMMERCIAL HORSE BOARDING OPERATION AS DEFINED IN 41 SUBDIVISION THIRTEEN OF SECTION THREE HUNDRED ONE OF THE AGRICULTURE AND 42 MARKETS LAW, OR FROM THE SALE OF WINE FROM A LICENSED FARM WINERY AS 43 PROVIDED FOR IN ARTICLE SIX OF THE ALCOHOLIC BEVERAGE CONTROL LAW, OR 44 FROM THE SALE OF CIDER FROM A LICENSED FARM CIDERY AS PROVIDED FOR IN 45 SECTION FIFTY-EIGHT-C OF THE ALCOHOLIC BEVERAGE CONTROL LAW. 46 (J) ELECTION TO DEEM GROSS INCOME OF NEW YORK C CORPORATION TO SHARE- 47 HOLDERS. FOR PURPOSES OF THIS SUBDIVISION, FEDERAL GROSS INCOME FROM 48 FARMING SHALL BE ZERO FOR ANY TAXABLE YEAR OF A NEW YORK C CORPORATION 49 FOR WHICH THE ELECTION UNDER PARAGRAPH NINE OF SUBSECTION (N) OF SECTION 50 SIX HUNDRED SIX OF THIS CHAPTER IS IN EFFECT. 51 12. CREDIT FOR EMPLOYMENT OF PERSONS WITH DISABILITIES. (A) ALLOWANCE 52 OF CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS HERE- 53 INAFTER PROVIDED, AGAINST THE TAX IMPOSED BY THIS ARTICLE, FOR EMPLOYING 54 WITHIN THE STATE A QUALIFIED EMPLOYEE. 55 (B) QUALIFIED EMPLOYEE. A QUALIFIED EMPLOYEE IS AN INDIVIDUAL: S. 6359--C 94 1 (1) WHO IS CERTIFIED BY THE EDUCATION DEPARTMENT, OR IN THE CASE OF AN 2 INDIVIDUAL WHO IS BLIND OR VISUALLY HANDICAPPED, BY THE STATE AGENCY 3 RESPONSIBLE FOR PROVISION OF VOCATIONAL REHABILITATION SERVICES TO THE 4 BLIND AND VISUALLY HANDICAPPED: (I) AS A PERSON WITH A DISABILITY WHICH 5 CONSTITUTES OR RESULTS IN A SUBSTANTIAL HANDICAP TO EMPLOYMENT AND (II) 6 AS HAVING COMPLETED OR AS RECEIVING SERVICES UNDER AN INDIVIDUALIZED 7 WRITTEN REHABILITATION PLAN APPROVED BY THE EDUCATION DEPARTMENT OR 8 OTHER STATE AGENCY RESPONSIBLE FOR PROVIDING VOCATIONAL REHABILITATION 9 SERVICES TO SUCH INDIVIDUAL; AND 10 (2) WHO HAS WORKED ON A FULL-TIME BASIS FOR THE EMPLOYER WHO IS CLAIM- 11 ING THE CREDIT FOR AT LEAST ONE HUNDRED EIGHTY DAYS OR FOUR HUNDRED 12 HOURS. 13 (C) AMOUNT OF CREDIT. EXCEPT AS PROVIDED IN PARAGRAPH (D) OF THIS 14 SUBDIVISION, THE AMOUNT OF CREDIT SHALL BE THIRTY-FIVE PERCENT OF THE 15 FIRST SIX THOUSAND DOLLARS IN QUALIFIED FIRST-YEAR WAGES EARNED BY EACH 16 QUALIFIED EMPLOYEE. "QUALIFIED FIRST-YEAR WAGES" MEANS WAGES PAID OR 17 INCURRED BY THE TAXPAYER DURING THE TAXABLE YEAR TO QUALIFIED EMPLOYEES 18 WHICH ARE ATTRIBUTABLE, WITH RESPECT TO ANY SUCH EMPLOYEE, TO SERVICES 19 RENDERED DURING THE ONE-YEAR PERIOD BEGINNING WITH THE DAY THE EMPLOYEE 20 BEGINS WORK FOR THE TAXPAYER. 21 (D) CREDIT WHERE FEDERAL WORK OPPORTUNITY TAX CREDIT APPLIES. WITH 22 RESPECT TO ANY QUALIFIED EMPLOYEE WHOSE QUALIFIED FIRST-YEAR WAGES UNDER 23 PARAGRAPH (C) OF THIS SUBDIVISION ALSO CONSTITUTE QUALIFIED FIRST-YEAR 24 WAGES FOR PURPOSES OF THE WORK OPPORTUNITY TAX CREDIT FOR VOCATIONAL 25 REHABILITATION REFERRALS UNDER SECTION FIFTY-ONE OF THE INTERNAL REVENUE 26 CODE, THE AMOUNT OF CREDIT UNDER THIS SUBDIVISION SHALL BE THIRTY-FIVE 27 PERCENT OF THE FIRST SIX THOUSAND DOLLARS IN QUALIFIED SECOND-YEAR WAGES 28 EARNED BY EACH SUCH EMPLOYEE. "QUALIFIED SECOND-YEAR WAGES" MEANS WAGES 29 PAID OR INCURRED BY THE TAXPAYER DURING THE TAXABLE YEAR TO QUALIFIED 30 EMPLOYEES WHICH ARE ATTRIBUTABLE, WITH RESPECT TO ANY SUCH EMPLOYEE, TO 31 SERVICES RENDERED DURING THE ONE-YEAR PERIOD BEGINNING ONE YEAR AFTER 32 THE EMPLOYEE BEGINS WORK FOR THE TAXPAYER. 33 (E) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA- 34 BLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE 35 FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION 36 ONE OF SECTION TWO HUNDRED TEN OF THIS CHAPTER. HOWEVER, IF THE AMOUNT 37 OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES 38 THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON 39 THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN 40 SUCH TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS, 41 AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS. 42 (F) COORDINATION WITH FEDERAL WORK OPPORTUNITY TAX CREDIT. THE 43 PROVISIONS OF SECTION FIFTY-ONE AND FIFTY-TWO OF THE INTERNAL REVENUE 44 CODE, AS SUCH SECTIONS APPLIED ON OCTOBER FIRST, NINETEEN HUNDRED NINE- 45 TY-SIX, THAT APPLY TO THE FEDERAL WORK OPPORTUNITY TAX CREDIT FOR VOCA- 46 TIONAL REHABILITATION REFERRALS SHALL APPLY TO THE CREDIT UNDER THIS 47 SUBDIVISION TO THE EXTENT THAT SUCH SECTIONS ARE CONSISTENT WITH THE 48 SPECIFIC PROVISIONS OF THIS SUBDIVISION, PROVIDED THAT IN THE EVENT OF A 49 CONFLICT THE PROVISIONS OF THIS SUBDIVISION SHALL CONTROL. 50 13. CREDIT FOR PURCHASE OF AN AUTOMATED EXTERNAL DEFIBRILLATOR. A 51 TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS HEREINAFTER 52 PROVIDED, AGAINST THE TAX IMPOSED BY THIS ARTICLE, FOR THE PURCHASE, 53 OTHER THAN FOR RESALE, OF AN AUTOMATED EXTERNAL DEFIBRILLATOR, AS SUCH 54 TERM IS DEFINED IN SECTION THREE THOUSAND-B OF THE PUBLIC HEALTH LAW. 55 THE AMOUNT OF CREDIT SHALL BE THE COST TO THE TAXPAYER OF AUTOMATED 56 EXTERNAL DEFIBRILLATORS PURCHASED DURING THE TAXABLE YEAR, SUCH CREDIT S. 6359--C 95 1 NOT TO EXCEED FIVE HUNDRED DOLLARS WITH RESPECT TO EACH UNIT PURCHASED. 2 THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT 3 REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE FIXED DOLLAR MINIMUM 4 AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION TWO 5 HUNDRED TEN OF THIS CHAPTER. 6 14. CREDIT FOR PURCHASE OF LONG-TERM CARE INSURANCE. (A) GENERAL. A 7 TAXPAYER SHALL BE ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY THIS ARTI- 8 CLE EQUAL TO TWENTY PERCENT OF THE PREMIUM PAID DURING THE TAXABLE YEAR 9 FOR LONG-TERM CARE INSURANCE. IN ORDER TO QUALIFY FOR SUCH CREDIT, THE 10 TAXPAYER'S PREMIUM PAYMENT MUST BE FOR THE PURCHASE OF OR FOR CONTINUING 11 COVERAGE UNDER A LONG-TERM CARE INSURANCE POLICY THAT QUALIFIES FOR SUCH 12 CREDIT PURSUANT TO SECTION ONE THOUSAND ONE HUNDRED SEVENTEEN OF THE 13 INSURANCE LAW. 14 (B) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY YEAR 15 SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE FIXED DOLLAR 16 MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION 17 TWO HUNDRED TEN OF THIS ARTICLE. IF, HOWEVER, THE AMOUNT OF CREDIT 18 ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO 19 SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED 20 DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXA- 21 BLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY BE 22 DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS. 23 15. LOW-INCOME HOUSING CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAYER 24 SHALL BE ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY THIS ARTICLE WITH 25 RESPECT TO THE OWNERSHIP OF ELIGIBLE LOW-INCOME BUILDINGS, COMPUTED AS 26 PROVIDED IN SECTION EIGHTEEN OF THIS CHAPTER. 27 (B) APPLICATION OF CREDIT. THE CREDIT AND CARRYOVERS OF SUCH CREDIT 28 ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT, IN THE 29 AGGREGATE, REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE FIXED 30 DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF 31 SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED- 32 IT OR CARRYOVERS OF SUCH CREDIT, OR BOTH, ALLOWED UNDER THIS SUBDIVISION 33 FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER 34 OTHERWISE PAYS TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT 35 OF CREDIT OR CARRYOVERS OF SUCH CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXA- 36 BLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY BE 37 DEDUCTED FROM THE TAX FOR SUCH YEAR OR YEARS. 38 (C) CREDIT RECAPTURE. FOR PROVISIONS REQUIRING RECAPTURE OF CREDIT, 39 SEE SUBDIVISION (B) OF SECTION EIGHTEEN OF THIS CHAPTER. 40 16. GREEN BUILDING CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAYER SHALL 41 BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION NINETEEN OF 42 THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE. 43 (B) CARRYOVERS. THE CREDIT AND CARRYOVERS OF SUCH CREDIT ALLOWED UNDER 44 THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT, IN THE AGGREGATE, 45 REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE FIXED DOLLAR MINIMUM 46 AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION TWO 47 HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CREDIT OR CARRY- 48 OVERS OF SUCH CREDIT, OR BOTH, ALLOWED UNDER THIS SUBDIVISION FOR ANY 49 TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE 50 PAYS TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT 51 OR CARRYOVERS OF SUCH CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR 52 MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY BE DEDUCTED 53 FROM THE TAX FOR SUCH YEAR OR YEARS. 54 17. BROWNFIELD REDEVELOPMENT TAX CREDIT. (A) ALLOWANCE OF CREDIT. A 55 TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN S. 6359--C 96 1 SECTION TWENTY-ONE OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS 2 ARTICLE. 3 (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION 4 FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS 5 THAN THE FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF 6 SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF 7 THE AMOUNT OF CREDITS ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE 8 YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS 9 TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS 10 NOT DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT 11 OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF 12 SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE 13 PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF 14 THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON. 15 18. REMEDIATED BROWNFIELD CREDIT FOR REAL PROPERTY TAXES FOR QUALIFIED 16 SITES. (A) ALLOWANCE OF CREDIT. A TAXPAYER WHICH IS A DEVELOPER OF A 17 QUALIFIED SITE SHALL BE ALLOWED A CREDIT FOR ELIGIBLE REAL PROPERTY 18 TAXES, TO BE COMPUTED AS PROVIDED IN SUBDIVISION (B) OF SECTION TWENTY- 19 TWO OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE. FOR 20 PURPOSES OF THIS SUBDIVISION, THE TERMS "QUALIFIED SITE" AND "DEVELOPER" 21 SHALL HAVE THE SAME MEANING AS SET FORTH IN PARAGRAPHS TWO AND THREE, 22 RESPECTIVELY, OF SUBDIVISION (A) OF SECTION TWENTY-TWO OF THIS CHAPTER. 23 (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION 24 FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS 25 THAN THE FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF 26 SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF 27 THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR 28 REDUCES THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX 29 BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT 30 DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF 31 TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF 32 SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE 33 PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF 34 THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON. 35 19. ENVIRONMENTAL REMEDIATION INSURANCE CREDIT. (A) ALLOWANCE OF CRED- 36 IT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN 37 SECTION TWENTY-THREE OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS 38 ARTICLE. 39 (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION 40 FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS 41 THAN THE FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF 42 SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF 43 THE AMOUNT OF CREDITS ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE 44 YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS 45 TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS 46 NOT DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT 47 OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF 48 SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE 49 PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF 50 THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON. 51 20. EMPIRE STATE FILM PRODUCTION CREDIT. (A) ALLOWANCE OF CREDIT. A 52 TAXPAYER WHO IS ELIGIBLE PURSUANT TO SECTION TWENTY-FOUR OF THIS CHAPTER 53 SHALL BE ALLOWED A CREDIT TO BE COMPUTED AS PROVIDED IN SUCH SECTION 54 TWENTY-FOUR AGAINST THE TAX IMPOSED BY THIS ARTICLE. 55 (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION 56 FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS S. 6359--C 97 1 THAN THE FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF 2 SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. PROVIDED, 3 HOWEVER, THAT IF THE AMOUNT OF THE CREDIT ALLOWABLE UNDER THIS SUBDIVI- 4 SION FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE 5 TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, 6 THE EXCESS SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR 7 REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE THOUSAND 8 EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS OF 9 SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER 10 NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON. 11 21. SECURITY TRAINING TAX CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAYER 12 SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION TWEN- 13 TY-SIX OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE. 14 (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION 15 FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS 16 THAN THE FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF 17 SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS CHAPTER. HOWEVER, IF 18 THE AMOUNT OF CREDITS ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE 19 YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS 20 TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS 21 NOT DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT 22 OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF 23 SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE 24 PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF 25 THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON. 26 22. CONSERVATION EASEMENT TAX CREDIT. (A) CREDIT ALLOWED. IN THE CASE 27 OF A TAXPAYER WHO OWNS LAND THAT IS SUBJECT TO A CONSERVATION EASEMENT 28 HELD BY A PUBLIC OR PRIVATE CONSERVATION AGENCY, THERE SHALL BE ALLOWED 29 A CREDIT FOR TWENTY-FIVE PERCENT OF THE ALLOWABLE SCHOOL DISTRICT, COUN- 30 TY AND TOWN REAL PROPERTY TAXES ON SUCH LAND. IN NO SUCH CASE SHALL THE 31 CREDIT ALLOWED UNDER THIS SUBDIVISION IN COMBINATION WITH ANY OTHER 32 CREDIT FOR SUCH SCHOOL DISTRICT, COUNTY AND TOWN REAL PROPERTY TAXES 33 UNDER THIS SECTION EXCEED SUCH TAXES. 34 (B) CONSERVATION EASEMENT. FOR PURPOSES OF THIS SUBDIVISION, THE TERM 35 "CONSERVATION EASEMENT" MEANS A PERPETUAL AND PERMANENT CONSERVATION 36 EASEMENT AS DEFINED IN ARTICLE FORTY-NINE OF THE ENVIRONMENTAL CONSERVA- 37 TION LAW THAT SERVES TO PROTECT OPEN SPACE, SCENIC, NATURAL RESOURCES, 38 BIODIVERSITY, AGRICULTURAL, WATERSHED AND/OR HISTORIC PRESERVATION 39 RESOURCES. ANY CONSERVATION EASEMENT FOR WHICH A TAX CREDIT IS CLAIMED 40 UNDER THIS SUBDIVISION SHALL BE FILED WITH THE DEPARTMENT OF ENVIRON- 41 MENTAL CONSERVATION, AS PROVIDED FOR IN ARTICLE FORTY-NINE OF THE ENVI- 42 RONMENTAL CONSERVATION LAW AND SUCH CONSERVATION EASEMENT SHALL COMPLY 43 WITH THE PROVISIONS OF TITLE THREE OF SUCH ARTICLE, AND THE PROVISIONS 44 OF SUBDIVISION (H) OF SECTION 170 OF THE INTERNAL REVENUE CODE. DEDI- 45 CATIONS OF LAND FOR OPEN SPACE THROUGH THE EXECUTION OF CONSERVATION 46 EASEMENTS FOR THE PURPOSE OF FULFILLING DENSITY REQUIREMENTS TO OBTAIN 47 SUBDIVISION OR BUILDING PERMITS SHALL NOT BE CONSIDERED A CONSERVATION 48 EASEMENT UNDER THIS SUBDIVISION. 49 (C) LAND. FOR PURPOSES OF THIS SUBDIVISION, THE TERM "LAND" MEANS A 50 FEE SIMPLE TITLE TO REAL PROPERTY LOCATED IN THIS STATE, WITH OR WITHOUT 51 IMPROVEMENTS THEREON; RIGHTS OF WAY; WATER AND RIPARIAN RIGHTS; EASE- 52 MENTS; PRIVILEGES AND ALL OTHER RIGHTS OR INTERESTS OF ANY LAND OR 53 DESCRIPTION IN, RELATING TO OR CONNECTED WITH REAL PROPERTY, EXCLUDING 54 BUILDINGS, STRUCTURES, OR IMPROVEMENTS. 55 (D) PUBLIC OR PRIVATE CONSERVATION AGENCY. FOR PURPOSES OF THIS SUBDI- 56 VISION, THE TERM "PUBLIC OR PRIVATE CONSERVATION AGENCY" MEANS ANY S. 6359--C 98 1 STATE, LOCAL, OR FEDERAL GOVERNMENTAL BODY; OR ANY PRIVATE NOT-FOR-PRO- 2 FIT CHARITABLE CORPORATION OR TRUST WHICH IS AUTHORIZED TO DO BUSINESS 3 IN THE STATE OF NEW YORK, IS ORGANIZED AND OPERATED TO PROTECT LAND FOR 4 NATURAL RESOURCES, CONSERVATION OR HISTORIC PRESERVATION PURPOSES, IS 5 EXEMPT FROM FEDERAL INCOME TAXATION UNDER SECTION 501(C)(3) OF THE 6 INTERNAL REVENUE CODE, AND HAS THE POWER TO ACQUIRE, HOLD AND MAINTAIN 7 LAND AND/OR INTERESTS IN LAND FOR SUCH PURPOSES. 8 (E) CREDIT LIMITATION. THE AMOUNT OF THE CREDIT THAT MAY BE CLAIMED BY 9 A TAXPAYER PURSUANT TO THIS SUBSECTION SHALL NOT EXCEED FIVE THOUSAND 10 DOLLARS IN ANY GIVEN YEAR. 11 (F) APPLICATION OF THE CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVI- 12 SION FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO 13 LESS THAN THE FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF 14 SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF 15 THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE 16 YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS 17 TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF THE CREDIT 18 THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAY- 19 MENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS 20 OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER, 21 EXCEPT THAT, NO INTEREST SHALL BE PAID THEREON. 22 23. EMPIRE STATE COMMERCIAL PRODUCTION CREDIT. (A) ALLOWANCE OF CRED- 23 IT. A TAXPAYER THAT IS ELIGIBLE PURSUANT TO PROVISIONS OF SECTION TWEN- 24 TY-EIGHT OF THIS CHAPTER SHALL BE ALLOWED A CREDIT TO BE COMPUTED AS 25 PROVIDED IN SUCH SECTION AGAINST THE TAX IMPOSED BY THIS ARTICLE. 26 (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION 27 FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS 28 THAN THE FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF 29 SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. PROVIDED, 30 HOWEVER, THAT IF THE AMOUNT OF THE CREDIT ALLOWABLE UNDER THIS SUBDIVI- 31 SION FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE 32 TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, 33 FIFTY PERCENT OF THE EXCESS SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO 34 BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE 35 THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS 36 OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER 37 NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON. THE BALANCE OF SUCH 38 CREDIT NOT CREDITED OR REFUNDED IN SUCH TAXABLE YEAR MAY BE CARRIED OVER 39 TO THE IMMEDIATELY SUCCEEDING TAXABLE YEAR AND MAY BE DEDUCTED FROM THE 40 TAXPAYER'S TAX FOR SUCH YEAR. THE EXCESS, IF ANY, OF THE AMOUNT OF CRED- 41 IT OVER THE TAX FOR SUCH SUCCEEDING YEAR SHALL BE TREATED AS AN OVERPAY- 42 MENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS 43 OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, 44 THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF 45 THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON. 46 (C) EXPIRATION OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION 47 SHALL NOT BE APPLICABLE TO TAXABLE YEARS BEGINNING ON OR AFTER DECEMBER 48 THIRTY-FIRST, TWO THOUSAND SEVENTEEN. 49 24. BIOFUEL PRODUCTION CREDIT. (A) GENERAL. A TAXPAYER SHALL BE 50 ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION TWENTY-EIGHT OF 51 THIS CHAPTER ADDED AS PART X OF CHAPTER SIXTY-TWO OF THE LAWS OF TWO 52 THOUSAND SIX, AGAINST THE TAX IMPOSED BY THIS ARTICLE. THE CREDIT 53 ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE 54 TAX DUE FOR SUCH YEAR TO LESS THAN THE FIXED DOLLAR MINIMUM AMOUNT 55 PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION TWO HUNDRED 56 TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CREDIT ALLOWED UNDER S. 6359--C 99 1 THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT OR 2 IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED DOLLAR MINIMUM 3 AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR 4 SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED IN 5 ACCORDANCE WITH THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF 6 THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS OF SUBSECTION (C) OF 7 SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO 8 INTEREST SHALL BE PAID THEREON. THE TAX CREDIT ALLOWED PURSUANT TO THIS 9 SECTION SHALL APPLY TO TAXABLE YEARS BEGINNING BEFORE JANUARY FIRST, TWO 10 THOUSAND TWENTY. 11 25. CLEAN HEATING FUEL CREDIT. (A) GENERAL. A TAXPAYER SHALL BE 12 ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY THIS ARTICLE. SUCH CREDIT, 13 TO BE COMPUTED AS HEREINAFTER PROVIDED, SHALL BE ALLOWED FOR BIOHEAT, 14 USED FOR SPACE HEATING OR HOT WATER PRODUCTION FOR RESIDENTIAL PURPOSES 15 WITHIN THIS STATE PURCHASED BEFORE JANUARY FIRST, TWO THOUSAND SEVEN- 16 TEEN. SUCH CREDIT SHALL BE $0.01 PER PERCENT OF BIODIESEL PER GALLON OF 17 BIOHEAT, NOT TO EXCEED TWENTY CENTS PER GALLON, PURCHASED BY SUCH 18 TAXPAYER. 19 (B) DEFINITIONS. FOR PURPOSES OF THIS SUBDIVISION, THE FOLLOWING DEFI- 20 NITIONS SHALL APPLY: 21 (I) "BIODIESEL" SHALL MEAN A FUEL COMPRISED EXCLUSIVELY OF MONO-ALKYL 22 ESTERS OF LONG CHAIN FATTY ACIDS DERIVED FROM VEGETABLE OILS OR ANIMAL 23 FATS, DESIGNATED B100, WHICH MEETS THE SPECIFICATIONS OF AMERICAN SOCIE- 24 TY OF TESTING AND MATERIALS DESIGNATION D 6751. 25 (II) "BIOHEAT" SHALL MEAN A FUEL COMPRISED OF BIODIESEL BLENDED WITH 26 CONVENTIONAL HOME HEATING OIL, WHICH MEETS THE SPECIFICATIONS OF THE 27 AMERICAN SOCIETY OF TESTING AND MATERIALS DESIGNATION D 396 OR D 975. 28 (C) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION 29 FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS 30 THAN THE FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF 31 SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF 32 THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR 33 REDUCES THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX 34 BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT 35 DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF 36 TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF 37 SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE 38 PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF 39 THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON. 40 26. CREDIT FOR REHABILITATION OF HISTORIC PROPERTIES. (A) APPLICATION 41 OF CREDIT. (I) FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, 42 TWO THOUSAND TEN, AND BEFORE JANUARY FIRST, TWO THOUSAND TWENTY, A 43 TAXPAYER SHALL BE ALLOWED A CREDIT AS HEREINAFTER PROVIDED, AGAINST THE 44 TAX IMPOSED BY THIS ARTICLE, IN AN AMOUNT EQUAL TO ONE HUNDRED PERCENT 45 OF THE AMOUNT OF CREDIT ALLOWED THE TAXPAYER FOR THE SAME TAXABLE YEAR 46 WITH RESPECT TO A CERTIFIED HISTORIC STRUCTURE UNDER SUBSECTION (C)(2) 47 OF SECTION 47 OF THE INTERNAL REVENUE CODE WITH RESPECT TO A CERTIFIED 48 HISTORIC STRUCTURE LOCATED WITHIN THE STATE. PROVIDED, HOWEVER, THE 49 CREDIT SHALL NOT EXCEED FIVE MILLION DOLLARS. 50 (II) FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO THOU- 51 SAND TWENTY, A TAXPAYER SHALL BE ALLOWED A CREDIT AS HEREINAFTER 52 PROVIDED, AGAINST THE TAX IMPOSED BY THIS ARTICLE, IN AN AMOUNT EQUAL TO 53 THIRTY PERCENT OF THE AMOUNT OF CREDIT ALLOWED THE TAXPAYER FOR THE SAME 54 TAXABLE YEAR WITH RESPECT TO A CERTIFIED HISTORIC STRUCTURE UNDER 55 SUBSECTION (C)(3) OF SECTION 47 OF THE INTERNAL REVENUE CODE WITH 56 RESPECT TO A CERTIFIED HISTORIC STRUCTURE LOCATED WITHIN THE STATE. S. 6359--C 100 1 PROVIDED, HOWEVER, THE CREDIT SHALL NOT EXCEED ONE HUNDRED THOUSAND 2 DOLLARS. 3 (B) IF THE TAXPAYER IS A PARTNER IN A PARTNERSHIP OR A SHAREHOLDER IN 4 A NEW YORK S CORPORATION, THEN THE CREDIT CAPS IMPOSED IN SUBPARAGRAPH 5 (A) OF THIS PARAGRAPH SHALL BE APPLIED AT THE ENTITY LEVEL, SO THAT THE 6 AGGREGATE CREDIT ALLOWED TO ALL THE PARTNERS OR SHAREHOLDERS OF EACH 7 SUCH ENTITY IN THE TAXABLE YEAR DOES NOT EXCEED THE CREDIT CAP THAT IS 8 APPLICABLE IN THAT TAXABLE YEAR. 9 (B) TAX CREDITS ALLOWED PURSUANT TO THIS SUBDIVISION SHALL BE ALLOWED 10 IN THE TAXABLE YEAR THAT THE QUALIFIED REHABILITATION IS PLACED IN 11 SERVICE UNDER SECTION 167 OF THE FEDERAL INTERNAL REVENUE CODE. 12 (C) IF THE CREDIT ALLOWED THE TAXPAYER PURSUANT TO SECTION 47 OF THE 13 INTERNAL REVENUE CODE WITH RESPECT TO A QUALIFIED REHABILITATION IS 14 RECAPTURED PURSUANT TO SUBSECTION (A) OF SECTION 50 OF THE INTERNAL 15 REVENUE CODE, A PORTION OF THE CREDIT ALLOWED UNDER THIS SUBSECTION MUST 16 BE ADDED BACK IN THE SAME TAXABLE YEAR AND IN THE SAME PROPORTION AS THE 17 FEDERAL CREDIT. 18 (D) THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR 19 SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE AMOUNT 20 PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION TWO HUNDRED 21 TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF THE CREDIT ALLOWED UNDER 22 THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT OR 23 IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED DOLLAR MINIMUM 24 AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR 25 SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE RECREDITED OR REFUNDED 26 IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF 27 THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS OF SUBSECTION (C) OF 28 SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO 29 INTEREST SHALL BE PAID THEREON. 30 (E) TO BE ELIGIBLE FOR THE CREDIT ALLOWABLE UNDER THIS SUBDIVISION, 31 THE REHABILITATION PROJECT SHALL BE IN WHOLE OR IN PART LOCATED WITHIN A 32 CENSUS TRACT WHICH IS IDENTIFIED AS BEING AT OR BELOW ONE HUNDRED 33 PERCENT OF THE STATE MEDIAN FAMILY INCOME AS CALCULATED AS OF JANUARY 34 FIRST OF EACH YEAR USING THE MOST RECENT FIVE YEAR ESTIMATE FROM THE 35 AMERICAN COMMUNITY SURVEY PUBLISHED BY THE UNITED STATES CENSUS BUREAU. 36 27. CREDITS OF NEW YORK S CORPORATIONS. (A) GENERAL. NOTWITHSTANDING 37 THE PROVISIONS OF THIS SECTION, NO CARRYOVER OF CREDIT ALLOWABLE IN A 38 NEW YORK C YEAR SHALL BE DEDUCTED FROM THE TAX OTHERWISE DUE UNDER THIS 39 ARTICLE IN A NEW YORK S YEAR, AND NO CREDIT ALLOWABLE IN A NEW YORK S 40 YEAR, OR CARRYOVER OF SUCH CREDIT, SHALL BE DEDUCTED FROM THE TAX 41 IMPOSED BY THIS ARTICLE. HOWEVER, A NEW YORK S YEAR SHALL BE TREATED AS 42 A TAXABLE YEAR FOR PURPOSES OF DETERMINING THE NUMBER OF TAXABLE YEARS 43 TO WHICH A CREDIT MAY BE CARRIED OVER UNDER THIS SECTION. NOTWITHSTAND- 44 ING THE FIRST SENTENCE OF THIS SUBDIVISION, HOWEVER, THE CREDIT FOR THE 45 SPECIAL ADDITIONAL MORTGAGE RECORDING TAX SHALL BE ALLOWED AS PROVIDED 46 IN SUBDIVISION FIFTEEN OF THIS SECTION, AND THE CARRYOVER OF ANY SUCH 47 CREDIT SHALL BE DETERMINED WITHOUT REGARD TO WHETHER THE CREDIT IS 48 CARRIED FROM A NEW YORK C YEAR TO A NEW YORK S YEAR OR VICE-VERSA. 49 29. HIRE A VET CREDIT. (A) ALLOWANCE OF CREDIT. FOR TAXABLE YEARS 50 BEGINNING ON OR AFTER JANUARY FIRST, TWO THOUSAND FIFTEEN AND BEFORE 51 JANUARY FIRST, TWO THOUSAND SEVENTEEN, A TAXPAYER SHALL BE ALLOWED A 52 CREDIT, TO BE COMPUTED AS PROVIDED IN THIS SUBDIVISION, AGAINST THE TAX 53 IMPOSED BY THIS ARTICLE, FOR HIRING AND EMPLOYING, FOR NOT LESS THAN ONE 54 YEAR AND FOR NOT LESS THAN THIRTY-FIVE HOURS EACH WEEK, A QUALIFIED 55 VETERAN WITHIN THE STATE. THE TAXPAYER MAY CLAIM THE CREDIT IN THE YEAR 56 IN WHICH THE QUALIFIED VETERAN COMPLETES ONE YEAR OF EMPLOYMENT BY THE S. 6359--C 101 1 TAXPAYER. IF THE TAXPAYER CLAIMS THE CREDIT ALLOWED UNDER THIS SUBDIVI- 2 SION, THE TAXPAYER MAY NOT USE THE HIRING OF A QUALIFIED VETERAN THAT IS 3 THE BASIS FOR THIS CREDIT IN THE BASIS OF ANY OTHER CREDIT ALLOWED UNDER 4 THIS ARTICLE. 5 (B) QUALIFIED VETERAN. A QUALIFIED VETERAN IS AN INDIVIDUAL: 6 (1) WHO SERVED ON ACTIVE DUTY IN THE UNITED STATES ARMY, NAVY, AIR 7 FORCE, MARINE CORPS, COAST GUARD OR THE RESERVES THEREOF, OR WHO SERVED 8 IN ACTIVE MILITARY SERVICE OF THE UNITED STATES AS A MEMBER OF THE ARMY 9 NATIONAL GUARD, AIR NATIONAL GUARD, NEW YORK GUARD OR NEW YORK NAVAL 10 MILITIA; WHO WAS RELEASED FROM ACTIVE DUTY BY GENERAL OR HONORABLE 11 DISCHARGE AFTER SEPTEMBER ELEVENTH, TWO THOUSAND ONE; 12 (2) WHO COMMENCES EMPLOYMENT BY THE QUALIFIED TAXPAYER ON OR AFTER 13 JANUARY FIRST, TWO THOUSAND FOURTEEN, AND BEFORE JANUARY FIRST, TWO 14 THOUSAND SIXTEEN; AND 15 (3) WHO CERTIFIES BY SIGNED AFFIDAVIT, UNDER PENALTY OF PERJURY, THAT 16 HE OR SHE HAS NOT BEEN EMPLOYED FOR THIRTY-FIVE OR MORE HOURS DURING ANY 17 WEEK IN THE ONE HUNDRED EIGHTY DAY PERIOD IMMEDIATELY PRIOR TO HIS OR 18 HER EMPLOYMENT BY THE TAXPAYER. 19 (C) EMPLOYER PROHIBITION. AN EMPLOYER SHALL NOT DISCHARGE AN EMPLOYEE 20 AND HIRE A QUALIFYING VETERAN SOLELY FOR THE PURPOSE OF QUALIFYING FOR 21 THIS CREDIT. 22 (D) AMOUNT OF CREDIT. THE AMOUNT OF THE CREDIT SHALL BE TEN PERCENT OF 23 THE TOTAL AMOUNT OF WAGES PAID TO THE QUALIFIED VETERAN DURING THE 24 VETERAN'S FIRST FULL YEAR OF EMPLOYMENT. PROVIDED, HOWEVER, THAT, IF THE 25 QUALIFIED VETERAN IS A DISABLED VETERAN, AS DEFINED IN PARAGRAPH (B) OF 26 SUBDIVISION ONE OF SECTION EIGHTY-FIVE OF THE CIVIL SERVICE LAW, THE 27 AMOUNT OF THE CREDIT SHALL BE FIFTEEN PERCENT OF THE TOTAL AMOUNT OF 28 WAGES PAID TO THE QUALIFIED VETERAN DURING THE VETERAN'S FIRST FULL YEAR 29 OF EMPLOYMENT. THE CREDIT ALLOWED PURSUANT TO THIS SUBDIVISION SHALL NOT 30 EXCEED IN ANY TAXABLE YEAR, FIVE THOUSAND DOLLARS FOR ANY QUALIFIED 31 VETERAN AND FIFTEEN THOUSAND DOLLARS FOR ANY QUALIFIED VETERAN WHO IS A 32 DISABLED VETERAN. 33 (E) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA- 34 BLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE 35 AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION TWO 36 HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CREDIT ALLOWABLE 37 UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH 38 AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED DOLLAR 39 MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXABLE YEAR 40 MAY BE CARRIED OVER TO THE FOLLOWING THREE YEARS AND MAY BE DEDUCTED 41 FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS. 42 30. ALTERNATIVE FUELS AND ELECTRIC VEHICLE RECHARGING PROPERTY CREDIT. 43 (A) GENERAL. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS 44 HEREINAFTER PROVIDED, AGAINST THE TAX IMPOSED BY THIS ARTICLE FOR ALTER- 45 NATIVE FUEL VEHICLE REFUELING AND ELECTRIC VEHICLE RECHARGING PROPERTY 46 PLACED IN SERVICE DURING THE TAXABLE YEAR. 47 (B) ALTERNATIVE FUEL VEHICLE REFUELING PROPERTY AND ELECTRIC VEHICLE 48 RECHARGING PROPERTY. THE CREDIT UNDER THIS SUBDIVISION FOR ALTERNATIVE 49 FUEL VEHICLE REFUELING PROPERTY AND ELECTRIC VEHICLE RECHARGING PROPERTY 50 SHALL EQUAL FOR EACH INSTALLATION OF PROPERTY THE LESSER OF FIVE THOU- 51 SAND DOLLARS OR FIFTY PERCENT OF THE COST OF ANY SUCH PROPERTY: 52 (I) WHICH IS LOCATED IN THIS STATE; 53 (II) WHICH CONSTITUTES ALTERNATIVE FUEL VEHICLE REFUELING PROPERTY OR 54 ELECTRIC VEHICLE RECHARGING PROPERTY; AND S. 6359--C 102 1 (III) FOR WHICH NONE OF THE COST HAS BEEN PAID FOR FROM THE PROCEEDS 2 OF GRANTS, INCLUDING GRANTS FROM THE NEW YORK STATE ENERGY RESEARCH AND 3 DEVELOPMENT AUTHORITY OR THE NEW YORK POWER AUTHORITY. 4 (C) DEFINITIONS. (I) THE TERM "ALTERNATIVE FUEL VEHICLE REFUELING 5 PROPERTY" MEANS ALL OF THE EQUIPMENT NEEDED TO DISPENSE ANY FUEL AT 6 LEAST EIGHTY-FIVE PERCENT OF THE VOLUME OF WHICH CONSISTS OF ONE OR MORE 7 OF THE FOLLOWING: NATURAL GAS, LIQUIFIED NATURAL GAS, LIQUIFIED PETROLE- 8 UM, OR HYDROGEN. 9 (II) THE TERM "ELECTRIC VEHICLE RECHARGING PROPERTY" MEANS ALL OF THE 10 EQUIPMENT NEEDED TO CONVEY ELECTRIC POWER FROM THE ELECTRIC GRID OR 11 ANOTHER POWER SOURCE TO AN ONBOARD VEHICLE ENERGY STORAGE SYSTEM. 12 (D) CARRYOVERS. IN NO EVENT SHALL THE CREDIT UNDER THIS SUBDIVISION BE 13 ALLOWED IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN THE 14 AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION TWO 15 HUNDRED TEN OF THIS ARTICLE. PROVIDED, HOWEVER, THAT IF THE AMOUNT OF 16 CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE 17 TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE 18 FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH 19 TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY 20 BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS. 21 (E) CREDIT RECAPTURE. IF, AT ANY TIME BEFORE THE END OF ITS RECOVERY 22 PERIOD, ALTERNATIVE FUEL VEHICLE REFUELING OR ELECTRIC VEHICLE RECHARG- 23 ING PROPERTY CEASES TO BE QUALIFIED, A RECAPTURE AMOUNT MUST BE ADDED 24 BACK IN THE YEAR IN WHICH SUCH CESSATION OCCURS. 25 (I) ALTERNATIVE FUEL VEHICLE REFUELING PROPERTY OR ELECTRIC VEHICLE 26 RECHARGING PROPERTY CEASES TO BE QUALIFIED IF: 27 (I) THE PROPERTY NO LONGER QUALIFIES AS ALTERNATIVE FUEL VEHICLE REFU- 28 ELING PROPERTY OR ELECTRIC VEHICLE RECHARGING PROPERTY; OR 29 (II) FIFTY PERCENT OR MORE OF THE USE OF THE PROPERTY IN A TAXABLE 30 YEAR IS OTHER THAN IN A TRADE OR BUSINESS IN THIS STATE; OR 31 (III) THE TAXPAYER RECEIVING THE CREDIT UNDER THIS SUBDIVISION SELLS 32 OR DISPOSES OF THE PROPERTY AND KNOWS OR HAS REASON TO KNOW THAT THE 33 PROPERTY WILL BE USED IN A MANNER DESCRIBED IN CLAUSES (I) AND (II) OF 34 THIS SUBPARAGRAPH. 35 (II) RECAPTURE AMOUNT. THE RECAPTURE AMOUNT IS EQUAL TO THE CREDIT 36 ALLOWABLE UNDER THIS SUBDIVISION MULTIPLIED BY A FRACTION, THE NUMERATOR 37 OF WHICH IS THE TOTAL RECOVERY PERIOD FOR THE PROPERTY MINUS THE NUMBER 38 OF RECOVERY YEARS PRIOR TO, BUT NOT INCLUDING, THE RECAPTURE YEAR, AND 39 THE DENOMINATOR OF WHICH IS THE TOTAL RECOVERY PERIOD. 40 (F) TERMINATION. THE CREDIT ALLOWED BY PARAGRAPH (B) OF THIS SUBDIVI- 41 SION SHALL NOT APPLY IN TAXABLE YEARS BEGINNING AFTER DECEMBER 42 THIRTY-FIRST, TWO THOUSAND SEVENTEEN. 43 31. EXCELSIOR JOBS PROGRAM CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAYER 44 WILL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION THIRTY- 45 ONE OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE. 46 (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION 47 FOR ANY TAXABLE YEAR MAY NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS 48 THAN THE AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF 49 SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED- 50 IT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX 51 TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED 52 DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH 53 TAXABLE YEAR WILL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR 54 REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE THOUSAND 55 EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS OF S. 6359--C 103 1 SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER 2 NOTWITHSTANDING, NO INTEREST WILL BE PAID THEREON. 3 32. EMPIRE STATE FILM POST PRODUCTION CREDIT. (A) ALLOWANCE OF CREDIT. 4 A TAXPAYER WHO IS ELIGIBLE PURSUANT TO SECTION THIRTY-ONE OF THIS CHAP- 5 TER SHALL BE ALLOWED A CREDIT TO BE COMPUTED AS PROVIDED IN SUCH SECTION 6 THIRTY-ONE AGAINST THE TAX IMPOSED BY THIS ARTICLE. 7 (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION 8 FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS 9 THAN THE AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF 10 SECTION TWO HUNDRED TEN OF THIS ARTICLE. PROVIDED, HOWEVER, THAT IF THE 11 AMOUNT OF THE CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE 12 YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS 13 TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, FIFTY PERCENT OF THE 14 EXCESS SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR 15 REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE THOUSAND 16 EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS OF 17 SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER 18 NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON. THE BALANCE OF SUCH 19 CREDIT NOT CREDITED OR REFUNDED IN SUCH TAXABLE YEAR MAY BE A CARRYOVER 20 TO THE IMMEDIATELY SUCCEEDING TAXABLE YEAR AND MAY BE DEDUCTED FROM THE 21 TAXPAYER'S TAX FOR SUCH YEAR. THE EXCESS, IF ANY, OF THE AMOUNT OF THE 22 CREDIT OVER THE TAX FOR SUCH SUCCEEDING YEAR SHALL BE TREATED AS AN 23 OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE 24 PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, 25 HOWEVER, THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHT- 26 Y-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THER- 27 EON. 28 33. TEMPORARY DEFERRAL NONREFUNDABLE PAYOUT CREDIT. (A) ALLOWANCE OF 29 CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED 30 IN SUBDIVISION ONE OF SECTION THIRTY-FOUR OF THIS CHAPTER, AGAINST THE 31 TAX IMPOSED BY THIS ARTICLE. 32 (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION 33 FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR THAT YEAR TO LESS 34 THAN THE AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF 35 SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED- 36 IT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX 37 TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED 38 DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH 39 TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY 40 BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS. 41 34. TEMPORARY DEFERRAL REFUNDABLE PAYOUT CREDIT. (A) ALLOWANCE OF 42 CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED 43 IN SUBDIVISION TWO OF SECTION THIRTY-FOUR OF THIS CHAPTER, AGAINST THE 44 TAX IMPOSED BY THIS ARTICLE. 45 (B) APPLICATION OF CREDIT. IN NO EVENT SHALL THE CREDIT UNDER THIS 46 SUBDIVISION BE ALLOWED IN AN AMOUNT WHICH WILL REDUCE THE TAX TO LESS 47 THAN THE AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF 48 SECTION TWO HUNDRED TEN OF THIS ARTICLE. IF, HOWEVER, THE AMOUNT OF 49 CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE 50 TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE 51 FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH 52 TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE REFUNDED IN 53 ACCORDANCE WITH THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF 54 THIS CHAPTER, PROVIDED HOWEVER, THAT NO INTEREST SHALL BE PAID THEREON. 55 35. ECONOMIC TRANSFORMATION AND FACILITY REDEVELOPMENT PROGRAM TAX 56 CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, S. 6359--C 104 1 TO BE COMPUTED AS PROVIDED IN SECTION THIRTY-FIVE OF THIS CHAPTER, 2 AGAINST THE TAX IMPOSED BY THIS ARTICLE. 3 (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION 4 FOR ANY TAXABLE YEAR MAY NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS 5 THAN THE AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF 6 SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED- 7 IT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX 8 TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED 9 DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH 10 TAXABLE YEAR WILL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR 11 REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE THOUSAND 12 EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS OF 13 SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER 14 NOTWITHSTANDING, NO INTEREST WILL BE PAID THEREON. 15 36. NEW YORK YOUTH WORKS TAX CREDIT. (A) A TAXPAYER THAT HAS BEEN 16 CERTIFIED BY THE COMMISSIONER OF LABOR AS A QUALIFIED EMPLOYER PURSUANT 17 TO SECTION TWENTY-FIVE-A OF THE LABOR LAW SHALL BE ALLOWED A CREDIT 18 AGAINST THE TAX IMPOSED BY THIS ARTICLE EQUAL TO (I) FIVE HUNDRED 19 DOLLARS PER MONTH FOR UP TO SIX MONTHS FOR EACH QUALIFIED EMPLOYEE THE 20 EMPLOYER EMPLOYS IN A FULL-TIME JOB OR TWO HUNDRED FIFTY DOLLARS PER 21 MONTH FOR UP TO SIX MONTHS FOR EACH QUALIFIED EMPLOYEE THE EMPLOYER 22 EMPLOYS IN A PART-TIME JOB OF AT LEAST TWENTY HOURS PER WEEK OR TEN 23 HOURS PER WEEK WHEN THE QUALIFIED EMPLOYEE IS ENROLLED IN HIGH SCHOOL 24 FULL-TIME, (II) ONE THOUSAND DOLLARS FOR EACH QUALIFIED EMPLOYEE WHO IS 25 EMPLOYED FOR AT LEAST AN ADDITIONAL SIX MONTHS BY THE QUALIFIED EMPLOYER 26 IN A FULL-TIME JOB OR FIVE HUNDRED DOLLARS FOR EACH QUALIFIED EMPLOYEE 27 WHO IS EMPLOYED FOR AT LEAST AN ADDITIONAL SIX MONTHS BY THE QUALIFIED 28 EMPLOYER IN A PART-TIME JOB OF AT LEAST TWENTY HOURS PER WEEK OR TEN 29 HOURS PER WEEK WHEN THE QUALIFIED EMPLOYEE IS ENROLLED IN HIGH SCHOOL 30 FULL-TIME, AND (III) AN ADDITIONAL ONE THOUSAND DOLLARS FOR EACH QUALI- 31 FIED EMPLOYEE WHO IS EMPLOYED FOR AT LEAST AN ADDITIONAL YEAR AFTER THE 32 FIRST YEAR OF THE EMPLOYEE'S EMPLOYMENT BY THE QUALIFIED EMPLOYER IN A 33 FULL-TIME JOB OR FIVE HUNDRED DOLLARS FOR EACH QUALIFIED EMPLOYEE WHO IS 34 EMPLOYED FOR AT LEAST AN ADDITIONAL YEAR AFTER THE FIRST YEAR OF THE 35 EMPLOYEE'S EMPLOYMENT BY THE QUALIFIED EMPLOYER IN A PART-TIME JOB OF AT 36 LEAST TWENTY HOURS PER WEEK OR TEN HOURS PER WEEK WHEN THE QUALIFIED 37 EMPLOYEE IS ENROLLED IN HIGH SCHOOL FULL-TIME. FOR PURPOSES OF THIS 38 SUBDIVISION, THE TERM "QUALIFIED EMPLOYEE" SHALL HAVE THE SAME MEANING 39 AS SET FORTH IN SUBDIVISION (B) OF SECTION TWENTY-FIVE-A OF THE LABOR 40 LAW. THE PORTION OF THE CREDIT DESCRIBED IN SUBPARAGRAPH (I) OF THIS 41 PARAGRAPH SHALL BE ALLOWED FOR THE TAXABLE YEAR IN WHICH THE WAGES ARE 42 PAID TO THE QUALIFIED EMPLOYEE, AND THE PORTION OF THE CREDIT DESCRIBED 43 IN SUBPARAGRAPH (II) OF THIS PARAGRAPH SHALL BE ALLOWED IN THE TAXABLE 44 YEAR IN WHICH THE ADDITIONAL SIX MONTH PERIOD ENDS. 45 (B) THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR MAY 46 NOT REDUCE THE TAX DUE FOR THAT YEAR TO LESS THAN THE AMOUNT PRESCRIBED 47 IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS 48 ARTICLE. HOWEVER, IF THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBDI- 49 VISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO THAT AMOUNT OR IF THE 50 TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, 51 ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN THAT TAXABLE YEAR WILL BE TREATED 52 AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH 53 THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. 54 PROVIDED, HOWEVER, NO INTEREST WILL BE PAID THEREON. 55 (C) THE TAXPAYER MAY BE REQUIRED TO ATTACH TO ITS TAX RETURN ITS 56 CERTIFICATE OF ELIGIBILITY ISSUED BY THE COMMISSIONER OF LABOR PURSUANT S. 6359--C 105 1 TO SECTION TWENTY-FIVE-A OF THE LABOR LAW. IN NO EVENT SHALL THE TAXPAY- 2 ER BE ALLOWED A CREDIT GREATER THAN THE AMOUNT OF THE CREDIT LISTED ON 3 THE CERTIFICATE OF ELIGIBILITY. NOTWITHSTANDING ANY PROVISION OF THIS 4 CHAPTER TO THE CONTRARY, THE COMMISSIONER AND THE COMMISSIONER'S DESIG- 5 NEES MAY RELEASE THE NAMES AND ADDRESSES OF ANY TAXPAYER CLAIMING THIS 6 CREDIT AND THE AMOUNT OF THE CREDIT EARNED BY THE TAXPAYER. PROVIDED, 7 HOWEVER, IF A TAXPAYER CLAIMS THIS CREDIT BECAUSE IT IS A MEMBER OF A 8 LIMITED LIABILITY COMPANY OR A PARTNER IN A PARTNERSHIP, ONLY THE AMOUNT 9 OF CREDIT EARNED BY THE ENTITY AND NOT THE AMOUNT OF CREDIT CLAIMED BY 10 THE TAXPAYER MAY BE RELEASED. 11 37. EMPIRE STATE JOBS RETENTION PROGRAM CREDIT. (A) ALLOWANCE OF CRED- 12 IT. A TAXPAYER WILL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN 13 SECTION THIRTY-SIX OF THIS CHAPTER, AGAINST THE TAXES IMPOSED BY THIS 14 ARTICLE. 15 (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION 16 FOR ANY TAXABLE YEAR WILL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS 17 THAN THE AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF 18 SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED- 19 IT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX 20 TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED 21 DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH 22 TAXABLE YEAR WILL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR 23 REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE THOUSAND 24 EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS OF 25 SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER 26 NOTWITHSTANDING, NO INTEREST WILL BE PAID THEREON. 27 38. CREDIT FOR COMPANIES WHO PROVIDE TRANSPORTATION TO INDIVIDUALS 28 WITH DISABILITIES. (A) ALLOWANCE AND AMOUNT OF CREDIT. A TAXPAYER, WHO 29 PROVIDES A TAXICAB SERVICE AS DEFINED IN SECTION ONE HUNDRED 30 FORTY-EIGHT-A OF THE VEHICLE AND TRAFFIC LAW, OR A LIVERY SERVICE AS 31 DEFINED IN SECTION ONE HUNDRED TWENTY-ONE-E OF THE VEHICLE AND TRAFFIC 32 LAW, SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN THIS 33 SUBDIVISION, AGAINST THE TAX IMPOSED BY THIS ARTICLE. THE AMOUNT OF THE 34 CREDIT SHALL BE EQUAL TO THE INCREMENTAL COST ASSOCIATED WITH UPGRADING 35 A VEHICLE SO THAT IT IS ACCESSIBLE BY INDIVIDUALS WITH DISABILITIES AS 36 DEFINED IN PARAGRAPH (B) OF THIS SUBDIVISION. PROVIDED, HOWEVER, THAT 37 SUCH CREDIT SHALL NOT EXCEED TEN THOUSAND DOLLARS PER VEHICLE. FOR 38 PURPOSES OF THIS SUBDIVISION, PURCHASES OF NEW VEHICLES THAT ARE 39 INITIALLY MANUFACTURED TO BE ACCESSIBLE FOR INDIVIDUALS WITH DISABILI- 40 TIES AND FOR WHICH THERE IS NO COMPARABLE MAKE AND MODEL THAT DOES NOT 41 INCLUDE THE EQUIPMENT NECESSARY TO PROVIDE ACCESSIBILITY TO INDIVIDUALS 42 WITH DISABILITIES, THE CREDIT SHALL BE TEN THOUSAND DOLLARS PER VEHICLE. 43 (B) DEFINITION. THE TERM "ACCESSIBLE BY INDIVIDUALS WITH DISABILITIES" 44 SHALL, FOR THE PURPOSES OF THIS SUBDIVISION, REFER TO A VEHICLE THAT 45 COMPLIES WITH FEDERAL REGULATIONS PROMULGATED PURSUANT TO THE AMERICANS 46 WITH DISABILITIES ACT APPLICABLE TO VANS UNDER TWENTY-TWO FEET IN 47 LENGTH, BY THE FEDERAL DEPARTMENT OF TRANSPORTATION, IN CODE OF FEDERAL 48 REGULATIONS, TITLE 49, PARTS 37 AND 38, AND BY THE FEDERAL ARCHITECTURE 49 AND TRANSPORTATION BARRIERS COMPLIANCE BOARD, IN CODE OF FEDERAL REGU- 50 LATIONS, TITLE 36, SECTION 1192.23, AND THE FEDERAL MOTOR VEHICLE SAFETY 51 STANDARDS, CODE OF FEDERAL REGULATIONS, TITLE 49, PART 57. 52 (C) APPLICATION OF CREDIT. IN NO EVENT SHALL THE CREDIT ALLOWED UNDER 53 THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCE THE TAX DUE FOR SUCH YEAR 54 TO LESS THAN THE AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE 55 OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF 56 CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE S. 6359--C 106 1 TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE 2 FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN 3 SUCH TAXABLE YEAR SHALL BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS, 4 AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS. 5 39. BEER PRODUCTION CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO 6 BE COMPUTED AS PROVIDED IN SECTION THIRTY-SEVEN OF THIS CHAPTER, AGAINST 7 THE TAX IMPOSED BY THIS ARTICLE. IN NO EVENT SHALL THE CREDIT ALLOWED 8 UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCE THE TAX DUE FOR SUCH 9 YEAR TO LESS THAN THE AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION 10 ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT 11 OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES 12 THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON 13 THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCT- 14 IBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO 15 BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE 16 THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS 17 OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER 18 NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON. 19 40. MINIMUM WAGE REIMBURSEMENT CREDIT. (A) ALLOWANCE OF CREDIT. A 20 TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN 21 SECTION THIRTY-EIGHT OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS 22 ARTICLE. 23 (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION 24 FOR ANY TAXABLE YEAR MAY NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS 25 THAN THE AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF 26 SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED- 27 IT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX 28 TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED 29 DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH 30 TAXABLE YEAR WILL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR 31 REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE THOUSAND 32 EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS OF 33 SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER 34 NOTWITHSTANDING, NO INTEREST WILL BE PAID THEREON. 35 41. THE TAX-FREE NY AREA TAX ELIMINATION CREDIT. A TAXPAYER SHALL BE 36 ALLOWED A CREDIT TO BE COMPUTED AS PROVIDED IN SECTION FORTY OF THIS 37 CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE. UNLESS THE TAXPAYER 38 HAS A TAX-FREE NY AREA ALLOCATION FACTOR OF ONE HUNDRED PERCENT, THE 39 CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT 40 REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE AMOUNT PRESCRIBED IN 41 PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS 42 ARTICLE. HOWEVER, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXABLE 43 YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR 44 REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE THOUSAND 45 EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS OF 46 SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER 47 NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON. 48 42. ALTERNATIVE BASE CREDIT. (A) IF THE TAX IMPOSED ON A TAXPAYER BY 49 SUBDIVISION ONE OF SECTION TWO HUNDRED NINE OF THIS ARTICLE IS THE 50 AMOUNT PRESCRIBED IN PARAGRAPH (B) OF SUBDIVISION ONE OF SECTION TWO 51 HUNDRED TEN OF THIS ARTICLE, THE TAXPAYER SHALL BE ALLOWED A CREDIT 52 AGAINST THE TAX IMPOSED UNDER THIS ARTICLE EQUAL TO THE AMOUNT OF TAX 53 PAID TO ANOTHER STATE COMPUTED ON A TAX BASE IDENTICAL TO THE TAX BASE 54 PRESCRIBED IN SUCH PARAGRAPH (B). IF THE TAX IMPOSED ON A TAXPAYER BY 55 SUBDIVISION ONE OF SECTION TWO HUNDRED NINE OF THIS ARTICLE IS THE 56 AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION TWO S. 6359--C 107 1 HUNDRED TEN OF THIS ARTICLE, THE TAXPAYER SHALL BE ALLOWED A CREDIT 2 AGAINST THE TAX IMPOSED UNDER THIS ARTICLE EQUAL TO THE AMOUNT OF TAX 3 PAID TO ANOTHER STATE COMPUTED ON A TAX BASE IDENTICAL TO THE TAX BASE 4 PRESCRIBED IN SUCH PARAGRAPH (D). 5 (B) IN NO EVENT SHALL THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR 6 ANY TAXABLE YEAR REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE 7 AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION TWO 8 HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CREDIT ALLOWED 9 UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH 10 AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED DOLLAR 11 MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE 12 YEAR SHALL BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS, AND MAY BE 13 DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS. 14 43. THE TAX-FREE NY AREA EXCISE TAX ON TELECOMMUNICATION SERVICES 15 CREDIT. A TAXPAYER THAT IS A BUSINESS OR OWNER OF A BUSINESS THAT IS 16 LOCATED IN A TAX-FREE NY AREA APPROVED PURSUANT TO ARTICLE TWENTY-ONE OF 17 THE ECONOMIC DEVELOPMENT LAW SHALL BE ALLOWED A CREDIT EQUAL TO THE 18 EXCISE TAX ON TELECOMMUNICATION SERVICES IMPOSED BY SECTION ONE HUNDRED 19 EIGHTY-SIX-E OF THIS CHAPTER AND PASSED THROUGH TO SUCH BUSINESS DURING 20 THE TAXABLE YEAR TO THE EXTENT NOT OTHERWISE DEDUCTED IN COMPUTING 21 ENTIRE NET INCOME UNDER THIS ARTICLE. HOWEVER, ANY AMOUNT OF CREDIT NOT 22 DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF 23 TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF 24 SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. THIS CREDIT MAY BE 25 CLAIMED ONLY WHERE ANY TAX IMPOSED BY SUCH SECTION ONE HUNDRED 26 EIGHTY-SIX-E HAS BEEN SEPARATELY STATED ON A BILL FROM THE PROVIDER OF 27 TELECOMMUNICATION SERVICES AND PAID BY SUCH BUSINESS WITH RESPECT TO 28 SUCH SERVICES RENDERED WITHIN A TAX-FREE NY AREA DURING THE TAXABLE 29 YEAR. UNLESS THE TAXPAYER HAS A TAX-FREE NY AREA ALLOCATION FACTOR OF 30 ONE HUNDRED PERCENT, THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY 31 TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE 32 AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION TWO 33 HUNDRED TEN OF THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS OF 34 SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER 35 NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON. 36 44. REAL PROPERTY TAX CREDIT FOR MANUFACTURERS. (A) A QUALIFIED NEW 37 YORK MANUFACTURER, AS DEFINED IN SUBPARAGRAPH (VI) OF PARAGRAPH (A) OF 38 SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE, WILL BE 39 ALLOWED A CREDIT EQUAL TO TWENTY PERCENT OF THE REAL PROPERTY TAX IT 40 PAID DURING THE TAXABLE YEAR FOR REAL PROPERTY OWNED BY SUCH MANUFACTUR- 41 ER IN NEW YORK WHICH WAS PRINCIPALLY USED DURING THE TAXABLE YEAR FOR 42 MANUFACTURING TO THE EXTENT NOT DEDUCTED IN DETERMINING ENTIRE NET 43 INCOME. THIS CREDIT WILL NOT BE ALLOWED IF THE REAL PROPERTY TAXES THAT 44 ARE THE BASIS FOR THIS CREDIT ARE INCLUDED IN THE CALCULATION OF ANOTHER 45 CREDIT CLAIMED BY THE TAXPAYER. 46 (B) (1) FOR PURPOSES OF THIS SUBDIVISION, THE TERM REAL PROPERTY TAX 47 MEANS A CHARGE IMPOSED UPON REAL PROPERTY BY OR ON BEHALF OF A COUNTY, 48 CITY, TOWN, VILLAGE OR SCHOOL DISTRICT FOR MUNICIPAL OR SCHOOL DISTRICT 49 PURPOSES, PROVIDED THAT THE CHARGE IS LEVIED FOR THE GENERAL PUBLIC 50 WELFARE BY THE PROPER TAXING AUTHORITIES AT A LIKE RATE AGAINST ALL 51 PROPERTY OVER WHICH SUCH AUTHORITIES HAVE JURISDICTION, AND PROVIDED 52 THAT WHERE TAXES ARE LEVIED PURSUANT TO ARTICLE EIGHTEEN OR NINETEEN OF 53 THE REAL PROPERTY TAX LAW, THE PROPERTY MUST HAVE BEEN TAXED AT THE RATE 54 DETERMINED FOR THE CLASS IN WHICH IT IS CONTAINED, AS PROVIDED BY SUCH 55 ARTICLE EIGHTEEN OR NINETEEN, WHICHEVER IS APPLICABLE. THE TERM REAL 56 PROPERTY TAX DOES NOT INCLUDE A CHARGE FOR LOCAL BENEFITS, INCLUDING ANY S. 6359--C 108 1 PORTION OF THAT CHARGE THAT IS PROPERLY ALLOCATED TO THE COSTS ATTRIBUT- 2 ABLE TO MAINTENANCE OR INTEREST, WHEN (I) THE PROPERTY SUBJECT TO THE 3 CHARGE IS LIMITED TO THE PROPERTY THAT BENEFITS FROM THE CHARGE, OR (II) 4 THE AMOUNT OF THE CHARGE IS DETERMINED BY THE BENEFIT TO THE PROPERTY 5 ASSESSED, OR (III) THE IMPROVEMENT FOR WHICH THE CHARGE IS ASSESSED 6 TENDS TO INCREASE THE PROPERTY VALUE. 7 (2) IN ADDITION, THE TERM REAL PROPERTY TAX INCLUDES TAXES PAID BY THE 8 TAXPAYER UPON REAL PROPERTY PRINCIPALLY USED DURING THE TAXABLE YEAR BY 9 THE TAXPAYER IN MANUFACTURING WHERE THE TAXPAYER LEASES SUCH REAL PROP- 10 ERTY FROM AN UNRELATED THIRD PARTY IF THE FOLLOWING CONDITIONS ARE 11 SATISFIED: (I) THE TAX MUST BE PAID BY THE TAXPAYER AS LESSEE PURSUANT 12 TO EXPLICIT REQUIREMENTS IN A WRITTEN LEASE, AND (II) THE TAXPAYER AS 13 LESSEE HAS PAID SUCH TAXES DIRECTLY TO THE TAXING AUTHORITY AND HAS 14 RECEIVED A WRITTEN RECEIPT FOR PAYMENT OF TAXES FROM THE TAXING AUTHORI- 15 TY. IN THE CASE OF A COMBINED GROUP THAT CONSTITUTES A QUALIFIED NEW 16 YORK MANUFACTURER, THE CONDITIONS IN THE PRECEDING SENTENCE ARE SATIS- 17 FIED IF ONE CORPORATION IN THE COMBINED GROUP IS THE LESSEE AND ANOTHER 18 CORPORATION IN THE COMBINED GROUP MAKES THE PAYMENTS TO THE TAXING 19 AUTHORITY. 20 (3) THE TERM REAL PROPERTY TAX DOES NOT INCLUDE A PAYMENT MADE BY THE 21 TAXPAYER IN CONNECTION WITH AN AGREEMENT FOR THE PAYMENT IN LIEU OF 22 TAXES ON REAL PROPERTY AS DEFINED IN SUBDIVISION SEVENTEEN OF SECTION 23 EIGHT HUNDRED FIFTY-FOUR OF THE GENERAL MUNICIPAL LAW, WHETHER SUCH 24 PROPERTY IS OWNED OR LEASED BY THE TAXPAYER, UNLESS THE PAYMENT IN LIEU 25 OF TAXES WAS MADE PURSUANT TO A PAYMENT IN LIEU OF TAX AGREEMENT THAT 26 WAS ENTERED INTO IN CONJUNCTION WITH THE SETTLEMENT OF A TAX CERTIORARI 27 PROCEEDING COMMENCED PURSUANT TO ARTICLE SEVEN OF THE REAL PROPERTY TAX 28 LAW. 29 (4) THE REAL PROPERTY TAXES MUST BE PAID BY THE TAXPAYER IN THE YEAR 30 SUCH TAXES BECOME A LIEN ON THE REAL PROPERTY. 31 (C) CREDIT RECAPTURE. WHERE A QUALIFIED NEW YORK MANUFACTURER'S REAL 32 PROPERTY TAXES WHICH WERE THE BASIS FOR THE ALLOWANCE OF THE CREDIT 33 PROVIDED FOR UNDER THIS SUBDIVISION ARE SUBSEQUENTLY REDUCED AS A RESULT 34 OF A FINAL ORDER IN ANY PROCEEDING UNDER ARTICLE SEVEN OF THE REAL PROP- 35 ERTY TAX LAW OR OTHER PROVISION OF LAW, THE TAXPAYER SHALL ADD BACK, IN 36 THE TAXABLE YEAR IN WHICH SUCH FINAL ORDER IS ISSUED, THE EXCESS OF (1) 37 THE AMOUNT OF CREDIT ORIGINALLY ALLOWED FOR A TAXABLE YEAR OVER (2) THE 38 AMOUNT OF CREDIT DETERMINED BASED UPON THE REDUCED REAL PROPERTY TAXES. 39 IF SUCH FINAL ORDER REDUCES REAL PROPERTY TAXES FOR MORE THAN ONE YEAR, 40 THE TAXPAYER MUST DETERMINE HOW MUCH OF SUCH REDUCTION IS ATTRIBUTABLE 41 TO EACH YEAR COVERED BY SUCH FINAL ORDER AND CALCULATE THE AMOUNT OF 42 CREDIT WHICH IS REQUIRED BY THIS SUBDIVISION TO BE RECAPTURED FOR EACH 43 YEAR BASED ON SUCH REDUCTION. 44 (D) THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR 45 SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE AMOUNT 46 PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION TWO HUNDRED 47 TEN OF THIS CHAPTER. HOWEVER, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN 48 SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CRED- 49 ITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE THOU- 50 SAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS OF 51 SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER 52 NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON. 53 45. ORDER OF CREDITS. (A) CREDITS ALLOWABLE UNDER THIS ARTICLE WHICH 54 CANNOT BE CARRIED OVER AND WHICH ARE NOT REFUNDABLE SHALL BE DEDUCTED 55 FIRST. THE CREDIT ALLOWABLE UNDER SUBDIVISION SIX OF THIS SECTION SHALL 56 BE DEDUCTED IMMEDIATELY AFTER THE DEDUCTION OF ALL CREDITS ALLOWABLE S. 6359--C 109 1 UNDER THIS ARTICLE WHICH CANNOT BE CARRIED OVER AND WHICH ARE NOT 2 REFUNDABLE, WHETHER OR NOT A PORTION OF SUCH CREDIT IS REFUNDABLE. 3 CREDITS ALLOWABLE UNDER THIS ARTICLE WHICH CAN BE CARRIED OVER, AND 4 CARRYOVERS OF SUCH CREDITS, SHALL BE DEDUCTED NEXT AFTER THE DEDUCTION 5 OF THE CREDIT ALLOWABLE UNDER SUBDIVISION SIX OF THIS SECTION, AND AMONG 6 SUCH CREDITS, THOSE WHOSE CARRYOVER IS OF LIMITED DURATION SHALL BE 7 DEDUCTED BEFORE THOSE WHOSE CARRYOVER IS OF UNLIMITED DURATION. CREDITS 8 ALLOWABLE UNDER THIS ARTICLE WHICH ARE REFUNDABLE (OTHER THAN THE CREDIT 9 ALLOWABLE UNDER SUBDIVISION SIX OF THIS SECTION) SHALL BE DEDUCTED LAST. 10 46. NOTWITHSTANDING THE REPEAL OF THE CREDIT PROVISIONS CONTAINED IN 11 SECTION TWO HUNDRED TEN OF THIS ARTICLE OR IN ARTICLE THIRTY-TWO OF THIS 12 CHAPTER AND THE ENACTMENT OF THIS SECTION BY A CHAPTER OF THE LAWS OF 13 TWO THOUSAND FOURTEEN: 14 (A) A TAXPAYER SHALL BE ALLOWED TO UTILIZE ANY CARRYFORWARD AMOUNTS OF 15 CREDITS TO WHICH THE TAXPAYER WAS ENTITLED AS OF THE CLOSE OF THE TAXA- 16 BLE YEAR BEGINNING ON OR AFTER JANUARY FIRST, TWO THOUSAND FOURTEEN AND 17 BEFORE JANUARY FIRST, TWO THOUSAND FIFTEEN, OTHER THAN THE CARRYFORWARD 18 AMOUNT OF THE MINIMUM TAX CREDIT PROVIDED UNDER SUBDIVISION THIRTEEN OF 19 SECTION TWO HUNDRED TEN, AS THAT SUBDIVISION WAS IN EFFECT ON DECEMBER 20 THIRTY-FIRST, TWO THOUSAND FOURTEEN. 21 (B) A TAXPAYER SHALL BE REQUIRED IN A TAXABLE YEAR BEGINNING ON OR 22 AFTER JANUARY FIRST, TWO THOUSAND FIFTEEN, TO RECAPTURE ALL OR A PORTION 23 OF A CREDIT ALLOWED UNDER A CREDIT PROVISION IN SECTION TWO HUNDRED TEN 24 OR ARTICLE THIRTY-TWO OF THIS CHAPTER FOR A TAXABLE YEAR BEGINNING PRIOR 25 TO JANUARY FIRST, TWO THOUSAND FIFTEEN IF RECAPTURE WOULD HAVE BEEN 26 REQUIRED UNDER SUCH CREDIT PROVISION. 27 S 18. The tax law is amended by adding a new section 210-C to read as 28 follows: 29 S 210-C. COMBINED REPORTS. 1. TAX. THE TAX ON A COMBINED REPORT SHALL 30 BE THE HIGHEST OF THE PRODUCTS OF (I) THE COMBINED BUSINESS INCOME BASE 31 MULTIPLIED BY THE TAX RATE SPECIFIED IN PARAGRAPH (A) OF SUBDIVISION ONE 32 OF SECTION TWO HUNDRED TEN OF THIS ARTICLE; (II) THE COMBINED CAPITAL 33 BASE MULTIPLIED BY THE TAX RATE SPECIFIED IN PARAGRAPH (B) OF SUBDIVI- 34 SION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE, BUT NOT EXCEEDING 35 THE LIMITATION PROVIDED FOR IN THAT PARAGRAPH (B); OR (III) THE FIXED 36 DOLLAR MINIMUM THAT IS ATTRIBUTABLE TO THE DESIGNATED AGENT OF THE 37 COMBINED GROUP. IN ADDITION, THE TAX ON A COMBINED REPORT SHALL INCLUDE 38 THE FIXED DOLLAR MINIMUM TAX SPECIFIED IN PARAGRAPH (D) OF SUBDIVISION 39 ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE FOR EACH MEMBER OF THE 40 COMBINED GROUP, OTHER THAN THE DESIGNATED AGENT, THAT IS A TAXPAYER. 41 (B) THE COMBINED BUSINESS INCOME BASE IS THE AMOUNT OF THE COMBINED 42 BUSINESS INCOME OF THE COMBINED GROUP THAT IS APPORTIONED TO THE STATE, 43 REDUCED BY ANY NET OPERATING LOSS DEDUCTION FOR THE COMBINED GROUP. THE 44 COMBINED CAPITAL BASE IS THE AMOUNT OF THE COMBINED CAPITAL OF THE 45 COMBINED GROUP THAT IS APPORTIONED TO THE STATE. 46 2. COMBINED REPORTS REQUIRED. (A) EXCEPT AS PROVIDED IN PARAGRAPH (C) 47 OF THIS SUBDIVISION, ANY TAXPAYER (I) WHICH OWNS OR CONTROLS EITHER 48 DIRECTLY OR INDIRECTLY MORE THAN FIFTY PERCENT OF THE CAPITAL STOCK OF 49 ONE OR MORE OTHER CORPORATIONS, OR (II) MORE THAN FIFTY PERCENT OF THE 50 CAPITAL STOCK OF WHICH IS OWNED OR CONTROLLED EITHER DIRECTLY OR INDI- 51 RECTLY BY ONE OR MORE OTHER CORPORATIONS, OR (III) MORE THAN FIFTY 52 PERCENT OF THE CAPITAL STOCK OF WHICH AND THE CAPITAL STOCK OF ONE OR 53 MORE OTHER CORPORATIONS, IS OWNED OR CONTROLLED, DIRECTLY OR INDIRECTLY, 54 BY THE SAME INTERESTS, AND (IV) THAT IS ENGAGED IN A UNITARY BUSINESS 55 WITH THOSE CORPORATIONS, SHALL MAKE A COMBINED REPORT WITH THOSE OTHER 56 CORPORATIONS. S. 6359--C 110 1 (B) A CORPORATION REQUIRED TO MAKE A COMBINED REPORT WITHIN THE MEAN- 2 ING OF THIS SECTION SHALL ALSO INCLUDE (I) A CAPTIVE REIT AND A CAPTIVE 3 RIC IF THE CAPTIVE REIT OR CAPTIVE RIC IS NOT REQUIRED TO BE INCLUDED IN 4 A COMBINED REPORT UNDER ARTICLE THIRTY-THREE OF THIS CHAPTER; (II) AN 5 OVERCAPITALIZED CAPTIVE INSURANCE COMPANY; AND (III) AN ALIEN CORPO- 6 RATION THAT SATISFIES THE CONDITIONS IN PARAGRAPH (A) OF THIS SUBDIVI- 7 SION IF (I) UNDER ANY PROVISION OF THE INTERNAL REVENUE CODE, THAT 8 CORPORATION IS TREATED AS A "DOMESTIC CORPORATION" AS DEFINED IN SECTION 9 SEVEN THOUSAND SEVEN HUNDRED ONE OF THE INTERNAL REVENUE CODE, OR (II) 10 IT HAS EFFECTIVELY CONNECTED INCOME FOR THE TAXABLE YEAR PURSUANT TO 11 CLAUSE (IV) OF THE OPENING PARAGRAPH OF SUBDIVISION NINE OF SECTION TWO 12 HUNDRED EIGHT OF THIS ARTICLE. 13 (C) A CORPORATION REQUIRED OR PERMITTED TO MAKE A COMBINED REPORT 14 UNDER THIS SECTION DOES NOT INCLUDE (I) A CORPORATION THAT IS SUBJECT TO 15 FRANCHISE TAX, OR WOULD BE IF DOING BUSINESS IN THIS STATE UNDER ARTICLE 16 NINE OR THIRTY-THREE OF THIS CHAPTER; (II) A REIT THAT IS NOT A CAPTIVE 17 REIT, AND A RIC THAT IS NOT A CAPTIVE RIC; (III) A NEW YORK S CORPO- 18 RATION; (IV) A CORPORATION THAT IS SUBJECT TO TAX UNDER THIS ARTICLE 19 SOLELY AS A RESULT OF ITS OWNERSHIP OF A LIMITED PARTNER INTEREST IN A 20 LIMITED PARTNERSHIP THAT IS DOING BUSINESS, EMPLOYING CAPITAL, OWNING OR 21 LEASING PROPERTY, MAINTAINING AN OFFICE IN THIS STATE, OR DERIVING 22 RECEIPTS FROM ACTIVITY IN THIS STATE, PROVIDED THAT THE CORPORATION IS 23 NOT OTHERWISE REQUIRED TO FILE A COMBINED REPORT PURSUANT TO THIS 24 SECTION; OR (V) AN ALIEN CORPORATION THAT HAS NO EFFECTIVELY CONNECTED 25 INCOME FOR THE TAXABLE YEAR PURSUANT TO CLAUSE (IV) OF THE OPENING PARA- 26 GRAPH OF SUBDIVISION NINE OF SECTION TWO HUNDRED EIGHT OF THIS ARTICLE. 27 (D) A COMBINED REPORT SHALL BE FILED BY THE DESIGNATED AGENT OF THE 28 COMBINED GROUP AS DETERMINED UNDER SUBDIVISION SEVEN OF THIS SECTION. 29 3. COMMONLY OWNED GROUP ELECTION. (A) SUBJECT TO THE PROVISIONS OF 30 PARAGRAPH (C) OF SUBDIVISION TWO OF THIS SECTION, A TAXPAYER MAY ELECT 31 TO TREAT AS ITS COMBINED GROUP ALL CORPORATIONS THAT MEET THE OWNERSHIP 32 REQUIREMENTS DESCRIBED IN PARAGRAPH (A) OF SUBDIVISION TWO OF THIS 33 SECTION (SUCH CORPORATIONS COLLECTIVELY REFERRED TO IN THIS SUBDIVISION 34 AS THE "COMMONLY OWNED GROUP"). IF THAT ELECTION IS MADE, THE COMMONLY 35 OWNED GROUP SHALL CALCULATE THE COMBINED BUSINESS INCOME, COMBINED CAPI- 36 TAL, AND FIXED DOLLAR MINIMUM BASES OF ALL MEMBERS OF THE GROUP IN 37 ACCORDANCE WITH PARAGRAPH FOUR OF THIS SUBDIVISION, WHETHER OR NOT THAT 38 BUSINESS INCOME OR BUSINESS CAPITAL IS FROM A SINGLE UNITARY BUSINESS. 39 (B) THE ELECTION UNDER THIS SUBDIVISION SHALL BE MADE ON AN ORIGINAL, 40 TIMELY FILED RETURN OF THE COMBINED GROUP. ANY CORPORATION ENTERING A 41 COMMONLY OWNED GROUP SUBSEQUENT TO THE YEAR OF ELECTION SHALL BE 42 INCLUDED IN THE COMBINED GROUP AND IS CONSIDERED TO HAVE WAIVED ANY 43 OBJECTION TO ITS INCLUSION IN THE COMBINED GROUP. 44 (C) THE ELECTION SHALL BE IRREVOCABLE, AND BINDING FOR AND APPLICABLE 45 TO THE TAXABLE YEAR FOR WHICH IT IS MADE AND FOR THE NEXT SIX TAXABLE 46 YEARS. THE ELECTION WILL AUTOMATICALLY BE RENEWED FOR ANOTHER SEVEN 47 TAXABLE YEARS AFTER IT HAS BEEN IN EFFECT FOR SEVEN TAXABLE YEARS UNLESS 48 IT IS AFFIRMATIVELY REVOKED. THE REVOCATION SHALL BE MADE ON AN 49 ORIGINAL, TIMELY FILED RETURN FOR THE FIRST TAXABLE YEAR AFTER THE 50 COMPLETION OF A SEVEN YEAR PERIOD FOR WHICH AN ELECTION UNDER THIS 51 SUBDIVISION WAS IN PLACE. IN THE CASE OF A REVOCATION, A NEW ELECTION 52 UNDER THIS SUBDIVISION SHALL NOT BE PERMITTED IN ANY OF THE IMMEDIATELY 53 FOLLOWING THREE TAXABLE YEARS. IN DETERMINING THE SEVEN AND THREE YEAR 54 PERIODS DESCRIBED IN THIS PARAGRAPH, SHORT TAXABLE YEARS SHALL NOT BE 55 CONSIDERED OR COUNTED. S. 6359--C 111 1 (D) NOTWITHSTANDING PARAGRAPH (A) OF THIS SUBDIVISION FOR TAXABLE 2 YEARS COMMENCING ON OR AFTER JANUARY FIRST, TWO THOUSAND FOURTEEN BUT 3 ENDING BEFORE JANUARY FIRST, TWO THOUSAND SEVENTEEN, A TAXPAYER MAY 4 ELECT TO TREAT AS ITS COMBINED GROUP ALL CORPORATIONS THAT ARE INCLUDED 5 IN A TAXPAYERS FEDERAL TAX RETURN CONSOLIDATED GROUP AS ALLOWED BY 6 INTERNAL REVENUE CODE SECTION 1501 AND AS DEFINED BY INTERNAL REVENUE 7 CODE SECTION 1504. 8 4. COMPUTATION OF TAX BASES ON A COMBINED REPORT. (A) IN COMPUTING THE 9 TAX BASES FOR A COMBINED REPORT, THE COMBINED GROUP SHALL GENERALLY BE 10 TREATED AS A SINGLE CORPORATION, EXCEPT AS OTHERWISE PROVIDED, AND 11 SUBJECT TO ANY REGULATIONS OR GUIDANCE ISSUED BY THE COMMISSIONER OR THE 12 DEPARTMENT. 13 (B)(I) IN COMPUTING COMBINED BUSINESS INCOME, ALL INTERCORPORATE DIVI- 14 DENDS SHALL BE ELIMINATED, AND ALL OTHER INTERCORPORATE TRANSACTIONS 15 SHALL BE DEFERRED IN A MANNER SIMILAR TO THE UNITED STATES TREASURY 16 REGULATIONS RELATING TO INTERCOMPANY TRANSACTIONS UNDER SECTION FIFTEEN 17 HUNDRED TWO OF THE INTERNAL REVENUE CODE. AN INCOME, DEDUCTION, GAIN, 18 OR LOSS RECOGNITION OR CREDIT RECAPTURE EVENT THAT WOULD OTHERWISE OCCUR 19 PURSUANT TO SUCH RULES WHEN A CORPORATION JOINS A CONSOLIDATED RETURN 20 GROUP SHALL BE DEEMED NOT TO OCCUR WHEN SUCH RECOGNITION OR RECAPTURE 21 EVENT RESULTS FROM A CORPORATION FILING A COMBINED REPORT UNDER THIS 22 ARTICLE FOR ITS FIRST TAXABLE YEAR COMMENCING ON OR AFTER JANUARY FIRST, 23 TWO THOUSAND FIFTEEN, WITH ANOTHER CORPORATION OR CORPORATIONS WITH 24 WHICH IT COULD NOT HAVE FILED COMBINED REPORTS FOR PRIOR TAXABLE YEARS 25 OR FROM A CORPORATION NOT FILING A COMBINED REPORT FOR ITS FIRST TAXABLE 26 YEAR COMMENCING ON OR AFTER JANUARY FIRST, TWO THOUSAND FIFTEEN, WITH A 27 CORPORATION OR CORPORATIONS WITH WHICH IT FILED A COMBINED REPORT FOR 28 THE IMMEDIATELY PRECEDING TAXABLE YEAR. 29 (II) IN COMPUTING COMBINED CAPITAL, ALL INTERCORPORATE STOCKHOLDINGS, 30 INTERCORPORATE BILLS, INTERCORPORATE NOTES RECEIVABLE AND PAYABLE, 31 INTERCORPORATE ACCOUNTS RECEIVABLE AND PAYABLE, AND OTHER INTERCORPORATE 32 INDEBTEDNESS, SHALL BE ELIMINATED. 33 (C) QUALIFICATION FOR CREDITS, INCLUDING ANY LIMITATIONS THEREON, 34 SHALL BE DETERMINED SEPARATELY FOR EACH OF THE MEMBERS OF THE COMBINED 35 GROUP, AND SHALL NOT BE DETERMINED ON A COMBINED GROUP BASIS, EXCEPT AS 36 OTHERWISE PROVIDED. HOWEVER, THE CREDITS SHALL BE APPLIED AGAINST THE 37 COMBINED TAX OF THE GROUP. TO THE EXTENT THAT A PROVISION OF SECTION TWO 38 HUNDRED TEN-B OF THIS ARTICLE LIMITS A CREDIT TO THE FIXED DOLLAR MINI- 39 MUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION TWO 40 HUNDRED TEN OF THIS ARTICLE, SUCH FIXED DOLLAR MINIMUM AMOUNT SHALL BE 41 THE FIXED DOLLAR MINIMUM AMOUNT THAT IS ATTRIBUTABLE TO THE DESIGNATED 42 AGENT OF THE COMBINED GROUP. 43 (D)(I) A NET OPERATING LOSS DEDUCTION IS ALLOWED IN COMPUTING THE 44 COMBINED BUSINESS INCOME BASE. SUCH DEDUCTION MAY REDUCE THE TAX ON THE 45 COMBINED BUSINESS INCOME BASE TO THE HIGHER OF THE TAX ON THE COMBINED 46 CAPITAL BASE OR THE FIXED DOLLAR MINIMUM. A COMBINED NET OPERATING LOSS 47 DEDUCTION IS EQUAL TO THE AMOUNT OF COMBINED NET OPERATING LOSS OR LOSS- 48 ES FROM ONE OR MORE TAXABLE YEARS THAT ARE CARRIED FORWARD TO A PARTIC- 49 ULAR INCOME YEAR. A COMBINED NET OPERATING LOSS IS THE COMBINED BUSINESS 50 LOSS INCURRED IN A PARTICULAR TAXABLE YEAR MULTIPLIED BY THE COMBINED 51 APPORTIONMENT FACTOR FOR THAT YEAR DETERMINED AS PROVIDED IN SUBDIVISION 52 FIVE OF THIS SECTION. 53 (II) THE COMBINED NET OPERATING LOSS DEDUCTION AND COMBINED NET OPER- 54 ATING LOSS ARE ALSO SUBJECT TO THE PROVISIONS CONTAINED IN CLAUSES ONE 55 THROUGH SIX OF SUBPARAGRAPH (VIII) OF PARAGRAPH (A) OF SUBDIVISION ONE 56 OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. S. 6359--C 112 1 (III) IN THE CASE OF A CORPORATION THAT FILES A COMBINED REPORT, 2 EITHER IN THE YEAR THE NET OPERATING LOSS IS INCURRED OR IN THE YEAR IN 3 WHICH A DEDUCTION IS CLAIMED ON ACCOUNT OF THE LOSS, THE COMBINED NET 4 OPERATING LOSS DEDUCTION IS DETERMINED AS IF THE COMBINED GROUP IS A 5 SINGLE CORPORATION AND IS SUBJECT TO THE SAME LIMITATIONS THAT WOULD 6 APPLY FOR FEDERAL INCOME TAX PURPOSES UNDER THE INTERNAL REVENUE CODE 7 AND THE CODE OF FEDERAL REGULATIONS AS IF SUCH CORPORATION HAD FILED FOR 8 SUCH TAXABLE YEAR A CONSOLIDATED FEDERAL INCOME TAX RETURN WITH THE SAME 9 CORPORATIONS INCLUDED IN THE COMBINED REPORT. IF A CORPORATION FILES A 10 COMBINED REPORT, REGARDLESS OF WHETHER IT FILED A SEPARATE RETURN OR 11 CONSOLIDATED RETURN FOR FEDERAL INCOME TAX PURPOSES, THE NET OPERATING 12 LOSS AND NET OPERATING LOSS DEDUCTION FOR THE COMBINED GROUP MUST BE 13 COMPUTED AS IF THE CORPORATION HAD FILED A CONSOLIDATED RETURN FOR THE 14 SAME CORPORATIONS FOR FEDERAL INCOME TAX PURPOSES. 15 (IV) IN GENERAL, ANY NET OPERATING LOSS CARRYOVER FROM A YEAR IN WHICH 16 A COMBINED REPORT WAS FILED SHALL BE BASED ON THE COMBINED NET OPERATING 17 LOSS OF THE GROUP OF CORPORATIONS FILING SUCH REPORT. THE PORTION OF THE 18 COMBINED LOSS ATTRIBUTABLE TO ANY MEMBER OF THE GROUP THAT FILES A SEPA- 19 RATE REPORT FOR A SUCCEEDING TAXABLE YEAR WILL BE AN AMOUNT BEARING THE 20 SAME RELATION TO THE COMBINED LOSS AS THE NET OPERATING LOSS OF SUCH 21 CORPORATION BEARS TO THE TOTAL NET OPERATING LOSS OF ALL MEMBERS OF THE 22 GROUP HAVING SUCH LOSSES TO THE EXTENT THAT THEY ARE TAKEN INTO ACCOUNT 23 IN COMPUTING THE COMBINED NET OPERATING LOSS. 24 (E) ANY ELECTION MADE PURSUANT TO PARAGRAPH (B) OF SUBDIVISION SIX, 25 AND PARAGRAPHS (B) AND (C) OF SUBDIVISION SIX-A OF SECTION TWO HUNDRED 26 EIGHT OF THIS ARTICLE SHALL APPLY TO ALL MEMBERS OF THE COMBINED GROUP. 27 (F)(I) IN THE CASE OF A CAPTIVE REIT OR CAPTIVE RIC REQUIRED UNDER 28 THIS SECTION TO BE INCLUDED IN A COMBINED REPORT, ENTIRE NET INCOME 29 SHALL BE COMPUTED AS REQUIRED UNDER SUBDIVISION FIVE (IN THE CASE OF A 30 CAPTIVE REIT) OR SUBDIVISION SEVEN (IN THE CASE OF A CAPTIVE RIC) OF 31 SECTION TWO HUNDRED NINE OF THIS ARTICLE. HOWEVER, THE DEDUCTION UNDER 32 THE INTERNAL REVENUE CODE FOR DIVIDENDS PAID BY THE CAPTIVE REIT OR 33 CAPTIVE RIC TO ANY MEMBER OF THE AFFILIATED GROUP THAT INCLUDES THE 34 CORPORATION THAT DIRECTLY OR INDIRECTLY OWNS OVER FIFTY PERCENT OF THE 35 VOTING STOCK OF THE CAPTIVE REIT OR CAPTIVE RIC SHALL NOT BE ALLOWED. 36 FOR PURPOSES OF THIS SUBPARAGRAPH, THE TERM "AFFILIATED GROUP" MEANS 37 "AFFILIATED GROUP" AS DEFINED IN SECTION FIFTEEN HUNDRED FOUR OF THE 38 INTERNAL REVENUE CODE, BUT WITHOUT REGARD TO THE EXCEPTIONS PROVIDED FOR 39 IN SUBSECTION (B) OF THAT SECTION. 40 (II) IN THE CASE OF AN OVERCAPITALIZED CAPTIVE INSURANCE COMPANY 41 REQUIRED UNDER THIS SECTION TO BE INCLUDED IN A COMBINED REPORT, ENTIRE 42 NET INCOME SHALL BE COMPUTED AS REQUIRED BY SUBDIVISION NINE OF SECTION 43 TWO HUNDRED EIGHT OF THIS ARTICLE. 44 5. APPORTIONMENT ON A COMBINED REPORT. (A) IN DETERMINING THE APPOR- 45 TIONMENT FACTOR FOR A COMBINED REPORT, THE RECEIPTS, NET INCOME, NET 46 GAINS AND OTHER ITEMS OF ALL MEMBERS OF THE COMBINED GROUP, WHETHER OR 47 NOT THEY ARE A TAXPAYER, ARE INCLUDED AND INTERCORPORATE RECEIPTS, 48 INCOME AND GAINS ARE ELIMINATED. RECEIPTS, NET INCOME, NET GAINS AND 49 OTHER ITEMS ARE SOURCED AS PROVIDED IN SECTION TWO HUNDRED TEN-A OF THIS 50 ARTICLE. 51 (B) AN ELECTION MADE TO APPORTION INCOME AND GAINS FROM QUALIFYING 52 FINANCIAL INSTRUMENTS PURSUANT TO SUBPARAGRAPH ONE OF PARAGRAPH (A) OF 53 SUBDIVISION FIVE OF SECTION TWO HUNDRED TEN-A OF THIS ARTICLE SHALL 54 APPLY TO ALL MEMBERS OF THE COMBINED GROUP. S. 6359--C 113 1 6. LIABILITY OF COMBINED GROUP MEMBERS. EVERY MEMBER OF THE COMBINED 2 GROUP THAT IS SUBJECT TO TAX UNDER THIS ARTICLE SHALL BE JOINTLY AND 3 SEVERALLY LIABLE FOR THE TAX DUE PURSUANT TO A COMBINED REPORT. 4 7. DESIGNATED AGENT. EACH COMBINED GROUP SHALL HAVE ONE DESIGNATED 5 AGENT, WHICH SHALL BE A TAXPAYER. THE DESIGNATED AGENT IS THE PARENT 6 CORPORATION OF THE COMBINED GROUP. IF THERE IS NO SUCH PARENT CORPO- 7 RATION, OR THE PARENT CORPORATION IS NOT A TAXPAYER, THEN ANOTHER MEMBER 8 OF THE COMBINED GROUP THAT IS A TAXPAYER MAY BE APPOINTED AS THE DESIG- 9 NATED AGENT. ONLY THE DESIGNATED AGENT MAY ACT ON BEHALF OF THE MEMBERS 10 OF THE COMBINED GROUP FOR MATTERS RELATING TO THE COMBINED REPORT. 11 S 19. Subdivisions 2-a, 3, 4 and 5 of section 211 of the tax law, 12 subdivision 2-a as added and subdivision 5 as amended by chapter 817 of 13 the laws of 1987, subdivision 3 as amended by chapter 770 of the laws of 14 1992, subdivision 4 as amended by section 2 of part T of chapter 407 of 15 the laws of 1999, the opening paragraph and the second undesignated 16 paragraph of paragraph (a) of subdivision 4 as amended by section 1, 17 subparagraph 4 of paragraph (a) of subdivision 4 as amended by section 18 2, and subparagraph 5 of paragraph (a) of subdivision 4 as amended by 19 section 3 of part J of chapter 60 of the laws of 2007, subparagraph 6 of 20 paragraph (a) of subdivision 4 as added by section 3 of part FF1 of 21 chapter 57 of the laws of 2008, subparagraph 7 of paragraph (a) of 22 subdivision 4 as added by section 2 and subparagraph 1 of paragraph (b) 23 of subdivision 4 as amended by section 3 of part E1 of chapter 57 of the 24 laws of 2009, are amended to read as follows: 25 2-a. The [tax commission] COMMISSIONER may prescribe regulations and 26 instructions requiring returns of information to be made and filed in 27 conjunction with the reports required to be filed pursuant to [section 28 two hundred eleven] THIS ARTICLE, relating to payments made to share- 29 holders owning, directly or indirectly, individually or in the aggre- 30 gate, more than fifty percent of the issued capital stock of the taxpay- 31 er, where such payments are treated as payments of interest in the 32 computation of entire net income [or minimum taxable income] reported on 33 such reports. 34 3. If the amount of taxable income [or alternative minimum taxable 35 income] for any year of any taxpayer (including any taxpayer which has 36 elected to be taxed under subchapter s of chapter one of the internal 37 revenue code), as returned to the United States treasury department is 38 changed or corrected by the commissioner of internal revenue or other 39 officer of the United States or other competent authority, or where a 40 renegotiation of a contract or subcontract with the United States 41 results in a change in taxable income [or alternative minimum taxable 42 income], such taxpayer shall report such changed or corrected taxable 43 income [or alternative minimum taxable income], or the results of such 44 renegotiation, within ninety days (or one hundred twenty days, in the 45 case of a taxpayer making a combined report under this article for such 46 year) after the final determination of such change or correction or 47 renegotiation, or as required by the commissioner, and shall concede the 48 accuracy of such determination or state wherein it is erroneous. The 49 allowance of a tentative carryback adjustment based upon a net operating 50 loss carryback or net capital loss carryback pursuant to section sixty- 51 four hundred eleven of the internal revenue code, as amended, shall be 52 treated as a final determination for purposes of this subdivision. Any 53 taxpayer filing an amended return with such department shall also file 54 within ninety days (OR ONE HUNDRED TWENTY DAYS, IN THE CASE OF A TAXPAY- 55 ER MAKING A COMBINED REPORT UNDER THIS ARTICLE FOR SUCH YEAR) thereafter 56 an amended report with the commissioner. S. 6359--C 114 1 4. [(a) Combined reports permitted or required. Any taxpayer, which 2 owns or controls either directly or indirectly substantially all the 3 capital stock of one or more other corporations, or substantially all 4 the capital stock of which is owned or controlled either directly or 5 indirectly by one or more other corporations or by interests which own 6 or control either directly or indirectly substantially all the capital 7 stock of one or more other corporations, (hereinafter referred to in 8 this paragraph as "related corporations"), shall make a combined report 9 covering any related corporations if there are substantial intercorpo- 10 rate transactions among the related corporations, regardless of the 11 transfer price for such intercorporate transactions. It is not necessary 12 that there be substantial intercorporate transactions between any one 13 corporation and every other related corporation. It is necessary, howev- 14 er, that there be substantial intercorporate transactions between the 15 taxpayer and a related corporation or collectively, a group of such 16 related corporations. The report shall set forth such information as the 17 commissioner may require, subject to the provisions of subparagraphs one 18 through five of this paragraph. 19 In determining whether there are substantial intercorporate trans- 20 actions, the commissioner shall consider and evaluate all activities and 21 transactions of the taxpayer and its related corporations. Activities 22 and transactions that will be considered include, but are not limited 23 to: (i) manufacturing, acquiring goods or property, or performing 24 services, for related corporations; (ii) selling goods acquired from 25 related corporations; (iii) financing sales of related corporations; 26 (iv) performing related customer services using common facilities and 27 employees for related corporations; (v) incurring expenses that benefit, 28 directly or indirectly, one or more related corporations, and (vi) 29 transferring assets, including such assets as accounts receivable, 30 patents or trademarks from one or more related corporations. 31 (1) Any corporation which owns or controls either directly or indi- 32 rectly substantially all the capital stock of a DISC not exempt from tax 33 under paragraph (i) of subdivision nine of section two hundred eight of 34 this article shall be allowed, at the election of such corporation, to 35 make a report on a combined basis covering such DISC, but the failure of 36 such corporation to make such election shall not prohibit the commis- 37 sioner from requiring a combined report covering such corporation and 38 such DISC. 39 (2)(i) No taxpayer may be permitted to make a report on a combined 40 basis covering any such other corporations where such taxpayer or any 41 such other corporation allocates in accordance with clause (A) of 42 subparagraph seven of paragraph (a) of subdivision three of section two 43 hundred ten of this article (relating to aviation corporations) and such 44 taxpayer or any such other corporation does not so allocate, unless such 45 taxpayer or such other corporation is a qualified air freight forwarder 46 with respect to such other corporation or such taxpayer, respectively, 47 and all taxpayers included on such combined report elect, by filing such 48 combined report, to have such qualified air freight forwarder so 49 included. 50 (ii) A corporation is a qualified air freight forwarder with respect 51 to another corporation: 52 (A) if it owns or controls either directly or indirectly all of the 53 capital stock of such other corporation, or if all of its capital stock 54 is owned or controlled either directly or indirectly by such other 55 corporation, or if all of the capital stock of both corporations is 56 owned or controlled either directly or indirectly by the same interests, S. 6359--C 115 1 (B) if it is principally engaged in the business of air freight 2 forwarding, and 3 (C) if its air freight forwarding business is carried on principally 4 with the airline or airlines operated by such other corporation. 5 (3) No taxpayer may be permitted to make a report on a combined basis 6 covering any such other corporations where such taxpayer or any such 7 other corporation allocates in accordance with subparagraph eight of 8 paragraph (a) of subdivision three of section two hundred ten of this 9 article (relating to railroad and trucking corporations) and such 10 taxpayer or any such other corporation does not so allocate. 11 (4) Except as provided in the first undesignated paragraph of this 12 paragraph, no combined report covering any corporation shall be required 13 unless the commissioner deems such a report necessary, because of 14 inter-company transactions or some agreement, understanding, arrangement 15 or transaction referred to in subdivision five of this section, in order 16 properly to reflect the tax liability under this article. 17 (5) A corporation organized under the laws of a country other than the 18 United States shall not be required or permitted to make a report on a 19 combined basis. 20 (6) (i) For purposes of this subparagraph, the term "closest control- 21 ling stockholder" means the corporation that indirectly owns or controls 22 over fifty percent of the voting stock of a captive REIT or captive RIC, 23 is subject to tax under this article, article thirty-two or thirty-three 24 of this chapter or otherwise required to be included in a combined 25 return or report under this article, article thirty-two or thirty-three 26 of this chapter, and is the fewest tiers of corporations away in the 27 ownership structure from the captive REIT or captive RIC. The commis- 28 sioner is authorized to prescribe by regulation or published guidance 29 the criteria for determining the closest controlling stockholder. 30 (ii) A captive REIT or a captive RIC must be included in a combined 31 report with the corporation that directly owns or controls over fifty 32 percent of the voting stock of the captive REIT or captive RIC if that 33 corporation is subject to tax or required to be included in a combined 34 report under this article. 35 (iii) If over fifty percent of the voting stock of a captive REIT or 36 captive RIC is not directly owned or controlled by a corporation that is 37 subject to tax or required to be included in a combined report under 38 this article, then the captive REIT or captive RIC must be included in a 39 combined return or report with the corporation that is the closest 40 controlling stockholder of the captive REIT or captive RIC. If the clos- 41 est controlling stockholder of the captive REIT or captive RIC is 42 subject to tax or otherwise required to be included in a combined report 43 under this article, then the captive REIT or captive RIC must be 44 included in a combined report under this article. 45 (iv) If the corporation that directly owns or controls the voting 46 stock of the captive REIT or captive RIC is described in subparagraph 47 two, three or five of this paragraph as a corporation not permitted to 48 make a combined report, then the provisions in clause (iii) of this 49 subparagraph must be applied to determine the corporation in whose 50 combined return or report the captive REIT or captive RIC should be 51 included. If, under clause (iii) of this subparagraph, the corporation 52 that is the closest controlling stockholder of the captive REIT or 53 captive RIC is described in subparagraph two, three or five of this 54 paragraph as a corporation not permitted to make a combined return, then 55 that corporation is deemed to not be in the ownership structure of the S. 6359--C 116 1 captive REIT or captive RIC, and the closest controlling stockholder 2 will be determined without regard to that corporation. 3 (v) If a captive REIT owns the stock of a qualified REIT subsidiary 4 (as defined in paragraph two of subsection (i) of section eight hundred 5 fifty-six of the internal revenue code), then the qualified REIT subsid- 6 iary must be included in a combined report with the captive REIT. 7 (vi) If a captive REIT or a captive RIC is required under this subpar- 8 agraph to be included in a combined report with another corporation, and 9 that other corporation is also required to be included in a combined 10 report with another related corporation or corporations under this para- 11 graph, then the captive REIT or the captive RIC must be included in that 12 combined report with those corporations. 13 (vii) If a captive REIT or a captive RIC is not required to be 14 included in a combined report with another corporation under clause (ii) 15 or (iii) of this subparagraph, or in a combined return under the 16 provisions of either subparagraph (v) of paragraph two of subsection (f) 17 of section fourteen hundred sixty-two or paragraph four of subdivision 18 (f) of section fifteen hundred fifteen of this chapter, then the captive 19 REIT or captive RIC is subject to the opening provisions of this para- 20 graph and the provisions of subparagraph four of this paragraph. The 21 captive REIT or captive RIC must be included in a combined report under 22 this article with another corporation if either the substantial inter- 23 corporate transactions requirement in the opening provisions of this 24 paragraph or the inter-company transactions or agreement, understanding, 25 arrangement or transaction requirement of subparagraph four of this 26 paragraph is satisfied and more than fifty percent of the voting stock 27 of the captive REIT or the captive RIC and substantially all of the 28 capital stock of that other corporation are owned and controlled, 29 directly or indirectly, by the same corporation. 30 (7) (i) For purposes of this subparagraph, the term "closest control- 31 ling stockholder" means the corporation that indirectly owns or controls 32 over fifty percent of the voting stock of an overcapitalized captive 33 insurance company; is subject to tax under this article or article thir- 34 ty-two of this chapter, or is otherwise required to be included in a 35 combined return or report under this article or article thirty-two of 36 this chapter; and is the fewest tiers of corporations away in the owner- 37 ship structure from the overcapitalized captive insurance company. The 38 commissioner is authorized to prescribe by regulation or published guid- 39 ance the criteria for determining the closest controlling stockholder. 40 (ii) An overcapitalized captive insurance company must be included in 41 a combined report with the corporation that directly owns or controls 42 over fifty percent of the voting stock of the overcapitalized captive 43 insurance company if that corporation is subject to tax or required to 44 be included in a combined report under this article. 45 (iii) If over fifty percent of the voting stock of an overcapitalized 46 captive insurance company is not directly owned or controlled by a 47 corporation that is subject to tax or required to be included in a 48 combined report under this article, then the overcapitalized captive 49 insurance company must be included in a combined return or report with 50 the corporation that is the closest controlling stockholder of the over- 51 capitalized captive insurance company. If the closest controlling stock- 52 holder of the overcapitalized captive insurance company is subject to 53 tax or otherwise required to be included in a combined report under this 54 article, then the overcapitalized captive insurance company must be 55 included in a combined report under this article. S. 6359--C 117 1 (iv) If the corporation that directly owns or controls the voting 2 stock of the overcapitalized captive insurance company is described in 3 subparagraph two, three, or five of this paragraph as a corporation not 4 permitted to make a combined report, then the provisions in clause (iii) 5 of this subparagraph must be applied to determine the corporation in 6 whose combined return or report the overcapitalized captive insurance 7 company should be included. If, under clause (iii) of this subparagraph, 8 the corporation that is the closest controlling stockholder of the over- 9 capitalized captive insurance company is described in subparagraph two, 10 three or five of this paragraph as a corporation not permitted to make a 11 combined return, then that corporation is deemed not to be in the owner- 12 ship structure of the overcapitalized captive insurance company, and the 13 closest controlling stockholder will be determined without regard to 14 that corporation. 15 (v) If an overcapitalized captive insurance company is required under 16 this subparagraph to be included in a combined report with another 17 corporation, and that other corporation is also required to be included 18 in a combined report with another related corporation or corporations 19 under this paragraph, then the overcapitalized captive insurance company 20 must be included in that combined report with those corporations. 21 (vi) If an overcapitalized captive insurance company is not required 22 to be included in a combined report with another corporation under 23 clause (ii) or (iii) of this subparagraph, or in a combined return under 24 the provisions of subparagraph (v) of paragraph two of subsection (f) of 25 section fourteen hundred sixty-two of this chapter, then the overcapi- 26 talized captive insurance company is subject to the opening provisions 27 of this paragraph and the provisions of subparagraph four of this para- 28 graph. The overcapitalized captive insurance company must be included in 29 a combined report under this article with another corporation if either 30 the substantial intercorporate transactions requirement in the opening 31 provisions of this paragraph or the inter-company transactions or agree- 32 ment, understanding, arrangement or transaction requirement of subpara- 33 graph four of this paragraph is satisfied, and both more than fifty 34 percent of the voting stock of the overcapitalized captive insurance 35 company and substantially all of the capital stock of that other corpo- 36 ration are owned and controlled, directly or indirectly, by the same 37 corporation. 38 (b) Computation. (1) Tax. (i) In the case of a combined report the tax 39 shall be measured by the combined entire net income, combined minimum 40 taxable income, combined pre-nineteen hundred ninety minimum taxable 41 income or combined capital, of all the corporations included in the 42 report, including any captive REIT, captive RIC or overcapitalized 43 captive insurance company; provided, however, in no event shall the tax 44 measured by combined capital exceed the limitation provided for in para- 45 graph (b) of subdivision one of section two hundred ten of this article. 46 (ii) In the case of a captive REIT or captive RIC required under this 47 subdivision to be included in a combined report, entire net income must 48 be computed as required under subdivision five (in the case of a captive 49 REIT) or subdivision seven (in the case of a captive RIC) of section two 50 hundred nine of this article. However, the deduction under the internal 51 revenue code for dividends paid by the captive REIT or captive RIC to 52 any member of the affiliated group that includes the corporation that 53 directly or indirectly owns over fifty percent of the voting stock of 54 the captive REIT or captive RIC shall not be allowed for taxable years 55 beginning on or after January first, two thousand eight. The term 56 "affiliated group" means "affiliated group" as defined in section S. 6359--C 118 1 fifteen hundred four of the internal revenue code, but without regard to 2 the exceptions provided for in subsection (b) of that section. 3 (iii) In the case of an overcapitalized captive insurance company 4 required under this subdivision to be included in a combined report, 5 entire net income must be computed as required by subdivision nine of 6 section two hundred eight of this article. 7 (2) Tax bases. In computing combined entire net income, combined mini- 8 mum taxable income or combined pre-nineteen hundred ninety minimum taxa- 9 ble income intercorporate dividends shall be eliminated, in computing 10 combined business and investment capital intercorporate stockholdings 11 and intercorporate bills, notes and accounts receivable and payable and 12 other intercorporate indebtedness shall be eliminated and in computing 13 combined subsidiary capital intercorporate stockholdings shall be elimi- 14 nated, provided, however, that intercorporate dividends from a DISC or a 15 former DISC not exempt from tax under paragraph (i) of subdivision nine 16 of section two hundred eight of this article which are taxable as busi- 17 ness income under this article shall not be eliminated. 18 (3) Air freight forwarders: allocation. Notwithstanding any provision 19 of law to the contrary, where a combined report includes a qualified air 20 freight forwarder and a corporation described in subparagraph seven of 21 paragraph (a) of subdivision three of section two hundred ten of this 22 chapter (relating to aviation corporations), in computing the combined 23 business allocation percentage such subparagraph seven shall be applied 24 with respect to such qualified air freight forwarder] FOR PROVISIONS 25 RELATING TO COMBINED REPORTS, SEE SECTION TWO HUNDRED TEN-C OF THIS 26 ARTICLE. 27 5. In case it shall appear to the [tax commission] COMMISSIONER that 28 any agreement, understanding or arrangement exists between the taxpayer 29 and any other corporation or any person or firm, whereby the activity, 30 business, income or capital of the taxpayer within the state is improp- 31 erly or inaccurately reflected, the [tax commission] COMMISSIONER is 32 authorized and empowered, in [its] THE COMMISSIONER'S discretion and in 33 such manner as [it] THE COMMISSIONER may determine, to adjust items of 34 income, deductions and capital, and to eliminate assets in computing any 35 [allocation] APPORTIONMENT percentage provided only that any income 36 directly traceable thereto be also excluded from entire net income, 37 [minimum taxable income or pre-nineteen hundred ninety minimum taxable 38 income,] so as equitably to determine the tax. Where (a) any taxpayer 39 conducts its activity or business under any agreement, arrangement or 40 understanding in such manner as either directly or indirectly to benefit 41 its members or stockholders, or any of them, or any person or persons 42 directly or indirectly interested in such activity or business, by 43 entering into any transaction at more or less than a fair price which, 44 but for such agreement, arrangement or understanding, might have been 45 paid or received therefor, or (b) any taxpayer, a substantial portion of 46 whose capital stock is owned either directly or indirectly by another 47 corporation, enters into any transaction with such other corporation on 48 such terms as to create an improper loss or net income, the [tax commis- 49 sion] COMMISSIONER may include in the entire net income[, minimum taxa- 50 ble income or pre-nineteen hundred ninety minimum taxable income] of the 51 taxpayer the fair profits which, but for such agreement, arrangement or 52 understanding, the taxpayer might have derived from such transaction. 53 WHERE ANY TAXPAYER OWNS, DIRECTLY OR INDIRECTLY, MORE THAN FIFTY PERCENT 54 OF THE CAPITAL STOCK OF ANOTHER CORPORATION SUBJECT TO TAX UNDER SECTION 55 FIFTEEN HUNDRED TWO-A OF THIS CHAPTER AND FIFTY PERCENT OR LESS OF WHOSE 56 GROSS RECEIPTS FOR THE TAXABLE YEAR CONSIST OF PREMIUMS, THE COMMISSION- S. 6359--C 119 1 ER MAY INCLUDE IN THE ENTIRE NET INCOME OF THE TAXPAYER, AS A DEEMED 2 DISTRIBUTION, THE AMOUNT OF THE NET INCOME OF THE OTHER CORPORATION THAT 3 IS IN EXCESS OF ITS NET PREMIUM INCOME. 4 S 19-a. Subdivision 13 of section 211 of the tax law is REPEALED. 5 S 20. Intentionally omitted. 6 S 21. Intentionally omitted. 7 S 22. Intentionally omitted. 8 S 23. Paragraph 4 of subdivision (f) of section 1515 of the tax law, 9 as amended by section 16 of part FF-1 of chapter 57 of the laws of 2008, 10 is amended to read as follows: 11 (4)(i) For purposes of this paragraph, the term "closest controlling 12 stockholder" means the corporation that indirectly owns or controls over 13 fifty percent of the voting stock of a captive REIT or captive RIC, is 14 subject to tax under section fifteen hundred one of this article[,] OR 15 article nine-A [or article thirty-two] of this chapter or required to be 16 included in a combined return or report under this article[,] OR article 17 nine-A [or article thirty-two] of this chapter, and is the fewest tiers 18 of corporations away in the ownership structure from the captive REIT or 19 captive RIC. The commissioner is authorized to prescribe by regulation 20 or published guidance the criteria for determining the closest control- 21 ling stockholder. 22 (ii) A captive REIT or a captive RIC must be included in a combined 23 return with the corporation that directly owns or controls over fifty 24 percent of the voting stock of the captive REIT or captive RIC if that 25 corporation is a life insurance corporation and is subject to tax or 26 required to be included in a combined return under this article. 27 (iii) If over fifty percent of the voting stock of a captive REIT or 28 captive RIC is not directly owned or controlled by a life insurance 29 corporation that is subject to tax or required to be included in a 30 combined return under this article, [then the captive REIT or captive 31 RIC must be included in a combined report or return with the corporation 32 that is the closest controlling stockholder of the captive REIT or 33 captive RIC. If] AND the closest controlling stockholder of the captive 34 REIT or captive RIC is a life insurance corporation that is subject to 35 tax or required to be included in a combined return under this article, 36 then the captive REIT or captive RIC must be included in a combined 37 return WITH THE CLOSEST CONTROLLING STOCKHOLDER under this article. 38 (iv) If a captive REIT owns the stock of a qualified REIT subsidiary 39 (as defined in paragraph two of subsection (i) of section eight hundred 40 fifty-six of the internal revenue code) AND THE CAPTIVE REIT IS REQUIRED 41 TO BE INCLUDED IN A COMBINED RETURN UNDER SUBPARAGRAPHS (II) OR (III) OF 42 THIS PARAGRAPH, then the qualified REIT subsidiary must be included in 43 any combined return required to be made by the captive REIT that owns 44 the stock of the qualified REIT subsidiary. 45 (v) If a captive REIT or a captive RIC is required under this para- 46 graph to be included in a combined return with another corporation, and 47 that other corporation is required to be included in a combined return 48 with another [related] corporation under this subdivision, then the 49 captive REIT or the captive RIC must be included in that combined return 50 with the other [related] corporation. 51 S 24. Subdivisions (a), (b) and (c) of section 12 of the tax law, as 52 added by chapter 615 of the laws of 1998, are amended to read as 53 follows: 54 (a) For purposes of subdivision (b) of this section, the term "person" 55 shall mean a corporation, joint stock company or association, insurance 56 corporation, or banking corporation, as such terms are defined in S. 6359--C 120 1 section one hundred eighty-three, one hundred eighty-four, or one 2 hundred eighty-six, or in article nine-A[, thirty-two] or thirty-three 3 of this chapter, imposing tax on such entities. 4 (b) No person shall be subject to the taxes imposed under section one 5 hundred eighty-three, one hundred eighty-four or one hundred eighty-six, 6 or article nine-A[, thirty-two] or thirty-three of this chapter, solely 7 by reason of (1) having its advertising stored on a server or other 8 computer equipment located in this state (other than a server or other 9 computer equipment owned or leased by such person), or (2) having its 10 advertising disseminated or displayed on the Internet by an individual 11 or entity subject to tax under section one hundred eighty-three, one 12 hundred eighty-four or one hundred eighty-six, or article nine-A, twen- 13 ty-two[, thirty-two] or thirty-three of this chapter. 14 (c) A person, as such term is defined in subdivision (a) of section 15 eleven hundred one of this chapter, shall not be deemed to be a vendor, 16 for purposes of article twenty-eight of this chapter, solely by reason 17 of (1) having its advertising stored on a server or other computer 18 equipment located in this state (other than a server or other computer 19 equipment owned or leased by such person), or (2) having its advertising 20 disseminated or displayed on the Internet by an individual or entity 21 subject to tax under section one hundred eighty-three, one hundred 22 eighty-four or one hundred eighty-six, or article nine-A, twenty-two[, 23 thirty-two] or thirty-three of this chapter. 24 S 25. Paragraph 1 of subdivision (a) of section 14 of the tax law, as 25 amended by section 3 of part V1 of chapter 109 of the laws of 2006, is 26 amended to read as follows: 27 (1) except as provided in paragraphs one-a and one-b of this subdivi- 28 sion, for purposes of section one hundred eighty-seven-j and articles 29 nine-A, twenty-two[, thirty-two] and thirty-three of this chapter, for 30 each of the taxable years within the "business tax benefit period," 31 which period shall consist of (A) in the case of a business enterprise 32 with a test date occurring on or before December thirty-first, two thou- 33 sand one, the first fifteen taxable years beginning on or after January 34 first, two thousand one, (B) in the case of a business enterprise with a 35 test date occurring on or after January first, two thousand two, but 36 prior to April first, two thousand five, the fifteen taxable years next 37 following the business enterprise's test year, and (C) in the case of a 38 business enterprise which is first certified under article eighteen-B of 39 the general municipal law on or after April first, two thousand five, 40 the ten taxable years starting with the taxable year in which the busi- 41 ness enterprise's first date of certification under article eighteen-B 42 of the general municipal law occurs, but only with respect to each of 43 such business tax benefit period years for which the employment test is 44 met, 45 S 26. Subdivision (f) of section 14 of the tax law, as amended by 46 section 10 of part CC of chapter 85 of the laws of 2002, is amended to 47 read as follows: 48 (f) Taxable year. The term "taxable year" means the taxable year of 49 the business enterprise under section one hundred eighty-three, one 50 hundred eighty-four, one hundred eighty-five or former section one 51 hundred eighty-six of article nine, or under article nine-A, twenty- 52 two[, thirty-two] or thirty-three of this chapter. If a business enter- 53 prise does not have a taxable year because it is exempt from taxation or 54 otherwise not required to file a return under any of such sections of 55 article nine or under article nine-A, twenty-two[, thirty-two] or thir- 56 ty-three, then the term "taxable year" means (i) the business enter- S. 6359--C 121 1 prise's federal taxable year, or, (ii) if the enterprise does not have a 2 federal taxable year, the calendar year. 3 S 27. Paragraph 1 of subdivision (i) of section 14 of the tax law, as 4 amended by section 5 of part A of chapter 63 of the laws of 2005, is 5 amended to read as follows: 6 (1) for purposes of section one hundred eighty-seven-j of article 7 nine, and articles nine-A, twenty-two[, thirty-two] and thirty-three of 8 this chapter, on the first day of the taxable year during which revoca- 9 tion of its certification under article eighteen-B of the general munic- 10 ipal law occurs, and 11 S 28. Paragraphs 1 and 2 of subdivision (j) of section 14 of the tax 12 law, as amended by section 10 of part CC of chapter 85 of the laws of 13 2002, are amended to read as follows: 14 (1) A new business shall include any corporation, except a corporation 15 which is substantially similar in operation and in ownership to a busi- 16 ness entity (or entities) taxable, or previously taxable, under section 17 one hundred eighty-three, one hundred eighty-four, one hundred eighty- 18 five or one hundred eighty-six of article nine; article nine-A[, article 19 thirty-two] or thirty-three of this chapter; article twenty-three of 20 this chapter or which would have been subject to tax under such article 21 twenty-three (as such article was in effect on January first, nineteen 22 hundred eighty), ARTICLE THIRTY-TWO OF THIS CHAPTER OR WHICH WOULD HAVE 23 BEEN SUBJECT TO TAX UNDER SUCH ARTICLE THIRTY-TWO (AS SUCH ARTICLE WAS 24 IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN) or the income 25 (or losses) of which is (or was) includable under article twenty-two of 26 this chapter. 27 (2) For purposes of article twenty-two of this chapter, an individual 28 who is either a sole proprietor or a member of a partnership shall qual- 29 ify as an owner of a new business unless the business of which the indi- 30 vidual is an owner is substantially similar in operation and in owner- 31 ship to a business entity taxable, or previously taxable, under section 32 one hundred eighty-three, one hundred eighty-four, one hundred eighty- 33 five or one hundred eighty-six of article nine; article nine-A[, thir- 34 ty-two] or ARTICLE thirty-three of this chapter; article twenty-three of 35 this chapter or which would have been subject to tax under such article 36 twenty-three (as such article was in effect on January first, nineteen 37 hundred eighty); ARTICLE THIRTY-TWO OF THIS CHAPTER OR WHICH WOULD HAVE 38 BEEN SUBJECT TO TAX UNDER SUCH ARTICLE THIRTY-TWO AS SUCH ARTICLE WAS IN 39 EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN or the income (or 40 losses) of which is (or was) includable under article twenty-two. 41 S 29. Clauses (i) and (ii) of subparagraph (A) of paragraph 4 of 42 subdivision (j) of section 14 of the tax law, as added by section 5 of 43 part A of chapter 63 of the laws of 2005, are amended to read as 44 follows: 45 (i) Notwithstanding paragraphs one and two of this subdivision, a new 46 business shall include any corporation which is identical in operation 47 and ownership to a business entity (or entities) taxable under section 48 one hundred eighty-three, one hundred eighty-four or one hundred eight- 49 y-five of article nine; article nine-A[, article thirty-two] or thirty- 50 three of this chapter or the income (or losses) of which is includable 51 under article twenty-two of this chapter, provided such corporation and 52 such business entity or entities are operating in different counties in 53 the state. 54 (ii) Notwithstanding paragraphs one and two of this subdivision, an 55 individual who is either a sole proprietor or a member of a partnership 56 shall qualify as an owner of a new business if the business of which the S. 6359--C 122 1 individual is an owner is identical in operation and in ownership to a 2 business entity (or entities) taxable under section one hundred eighty- 3 three, one hundred eighty-four or one hundred eighty-five of article 4 nine; article nine-A[, article thirty-two] or thirty-three of this chap- 5 ter or the income (or losses) of which is includable under article twen- 6 ty-two of this chapter, provided such business and such business entity 7 or entities are operating in different counties in the state. 8 S 30. Subparagraph (B) of paragraph 4 of subdivision (j) of section 14 9 of the tax law, as amended by chapter 161 of the laws of 2005, is 10 amended to read as follows: 11 (B) Notwithstanding any provisions of this subdivision to the contrary 12 and notwithstanding subdivision c of section eighteen of part CC of 13 chapter eighty-five of the laws of two thousand two, a corporation or 14 partnership, which was first certified under article eighteen-B of the 15 general municipal law before August first, two thousand two, has a base 16 period of zero years or zero employment for its base period, and is 17 similar in operation and in ownership to a business entity or entities 18 taxable, or previously taxable, under sections specified in paragraph 19 one or two of this subdivision or which would have been subject to tax 20 under article twenty-three of this chapter (as such article was in 21 effect on January first, nineteen hundred eighty) OR WHICH WOULD HAVE 22 BEEN SUBJECT TO TAX UNDER ARTICLE THIRTY-TWO OF THIS CHAPTER (AS SUCH 23 ARTICLE WAS IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN) 24 or the income or losses of which is or was includable under article 25 twenty-two of this chapter shall not be deemed a new business if it was 26 not formed for a valid business purpose, as such term is defined in 27 clause (D) of subparagraph one of paragraph (o) of subdivision nine of 28 section two hundred eight of this chapter and was formed solely to gain 29 empire zone benefits. 30 S 31. Subdivision (k) of section 14 of the tax law, as amended by 31 section 5 of part A of chapter 63 of the laws of 2005, is amended to 32 read as follows: 33 (k) If the designation of an area as an empire zone is no longer in 34 effect because section nine hundred sixty-nine of the general municipal 35 law was not amended to extend the effective date of such designation so 36 that the designations of all empire zones pursuant to article eighteen-B 37 of the general municipal law have expired, a business enterprise that 38 was certified pursuant to article eighteen-B of the general municipal 39 law on the day immediately preceding the day on which such designation 40 expired shall be deemed to continue to be certified under such article 41 eighteen-B for purposes of this section, and sections fifteen, sixteen, 42 section one hundred eighty-seven-j, subdivisions [twenty-seven] FIVE and 43 [twenty-eight] SIX of section two hundred [ten] TEN-B, subsections (bb) 44 and (cc) of section six hundred six, subdivision (z) of section eleven 45 hundred fifteen[, subsections (o) and (p) of section fourteen hundred 46 fifty-six,] and subdivisions (r) and (s) of section fifteen hundred 47 eleven of this chapter. In addition, if the designation of an area as an 48 empire zone is no longer in effect because section nine hundred sixty- 49 nine of the general municipal law was not amended to extend the effec- 50 tive date of such designation so that the designations of all empire 51 zones pursuant to article eighteen-B of the general municipal law have 52 expired, all references to empire zones in the provisions of this chap- 53 ter listed in the previous sentence shall be read as meaning areas 54 designated as empire zones on the day immediately preceding the day on 55 which such designation expired. S. 6359--C 123 1 S 32. Subdivisions (a) and (h) of section 15 of the tax law, as 2 amended by section 5 of part A of chapter 63 of the laws of 2005, are 3 amended to read as follows: 4 (a) Allowance of credit. A taxpayer which is a qualified empire zone 5 enterprise (QEZE), or which is a sole proprietor of a QEZE or a member 6 of a partnership which is a QEZE, and which is subject to tax under 7 article nine-A, twenty-two[, thirty-two] or thirty-three of this chap- 8 ter, shall be allowed a credit against such tax, pursuant to the 9 provisions referenced in subdivision (h) of this section, for eligible 10 real property taxes. 11 (h) Definitions and cross-references. For definitions of terms used in 12 this section see section fourteen of this article. For application of 13 the credit provided for in this section, see the following provisions of 14 this chapter: 15 (1) Article 9: Section 187-j. 16 (2) Article 9-A: Section [210] 210-B: subdivision [27] 5. 17 (3) Article 22: Section 606: subsections (i) and (bb). 18 (4) [Article 32: Section 1456: subsection (o). 19 (5)] Article 33: Section 1511: subdivision (r). 20 S 33. Subdivision (a) of section 16 of the tax law, as added by 21 section 2 of part GG of chapter 63 of the laws of 2000, is amended to 22 read as follows: 23 (a) Allowance of credit. A taxpayer which is a qualified empire zone 24 enterprise (QEZE), or which is a sole proprietor of a QEZE or a member 25 of a partnership which is a QEZE, and which is subject to tax under 26 article nine-A, twenty-two[, thirty-two] or thirty-three of this chap- 27 ter, shall be allowed a credit against such tax, pursuant to the 28 provisions referenced in subdivision (g) of this section, to be computed 29 as hereinafter provided. 30 S 34. Paragraph 1, clause (ii) of subparagraph (B) of paragraph 2, and 31 subparagraph (A) of paragraph 3 of subdivision (f) of section 16 of the 32 tax law, as amended by section 14 of part CC of chapter 85 of the laws 33 of 2002, are amended to read as follows: 34 (1) General. The tax factor shall be, in the case of article nine-A of 35 this chapter, the [larger of the amounts] AMOUNT of tax determined for 36 the taxable year under [paragraphs] PARAGRAPH (a) [and (c)] of subdivi- 37 sion one of section two hundred ten of such article. The tax factor 38 shall be, in the case of article twenty-two of this chapter, the tax 39 determined for the taxable year under subsections (a) through (d) of 40 section six hundred one of such article. [The tax factor shall be, in 41 the case of article thirty-two of this chapter, the larger of the 42 amounts of tax determined for the taxable year under subsection (a) and 43 paragraph two of subsection (b) of section fourteen hundred fifty-five 44 of such article.] The tax factor shall be, in the case of article thir- 45 ty-three of this chapter, the larger of the amounts of tax determined 46 for the taxable year under paragraphs one and three of subdivision (a) 47 of section fifteen hundred two of such article. 48 (ii) For purposes of article nine-A[, thirty-two or thirty-three] of 49 this chapter, the term "partner's income from the partnership" means 50 partnership items of income, gain, loss and deduction, and New York 51 modifications thereto, entering into [entire net] BUSINESS income[, 52 minimum taxable income, alternative entire net income or entire net 53 income plus compensation] and the term "partner's entire income" means 54 [entire net] BUSINESS income[, minimum taxable income, alternative 55 entire net income or entire net income plus compensation,] allocated 56 within the state. FOR PURPOSES OF ARTICLE THIRTY-THREE OF THIS CHAPTER, S. 6359--C 124 1 THE TERM "PARTNER'S INCOME FROM THE PARTNERSHIP" MEANS PARTNERSHIP ITEMS 2 OF INCOME, GAIN, LOSS AND DEDUCTION, AND NEW YORK MODIFICATIONS THERETO, 3 ENTERING INTO ENTIRE NET INCOME OR ENTIRE NET INCOME PLUS COMPENSATION 4 AND THE TERM "PARTNER'S ENTIRE INCOME" MEANS ENTIRE NET INCOME, OR 5 ENTIRE NET INCOME PLUS COMPENSATION, ALLOCATED WITHIN THE STATE. For 6 purposes of article twenty-two of this chapter, the term "partner's 7 income from the partnership" means partnership items of income, gain, 8 loss and deduction, and New York modifications thereto, entering into 9 New York adjusted gross income, and the term "partner's entire income" 10 means New York adjusted gross income. 11 (A) Where the taxpayer is a qualified empire zone enterprise and is 12 required or permitted to make a return or report on a combined basis 13 under article nine-A[, thirty-two] or ARTICLE thirty-three of this chap- 14 ter, the taxpayer's tax factor shall be the amount determined in para- 15 graph one of this subdivision which is attributable to the income of the 16 qualified empire zone enterprise. Such attribution shall be made in 17 accordance with the ratio of the qualified empire zone enterprise's 18 income allocated within the state to the combined group's income, or in 19 accordance with such other methods as the commissioner may prescribe as 20 providing an apportionment which reasonably reflects the portion of the 21 combined group's tax attributable to the income of the qualified empire 22 zone enterprise. In no event may the ratio so determined exceed 1.0. 23 S 35. Subdivision (g) of section 16 of the tax law, as added by 24 section 2 of part GG of chapter 63 of the laws of 2000, is amended to 25 read as follows: 26 (g) Definitions and cross-references. For definitions of terms used in 27 this section see sections fourteen and fifteen of this article. For 28 application of the credit provided for in this section, see the follow- 29 ing provisions of this chapter: 30 (1) Article 9-A: Section [210] 210-B: subdivision [28]6. 31 (2) Article 22: Section 606: subsections (i) and (cc). 32 (3) [Article 32: Section 1456: subsection (p). 33 (4)] Article 33: Section 1511: subdivision (s). 34 S 36. Paragraph 1 of subdivision (b) of section 17 of the tax law, as 35 added by section 43 of part S1 of chapter 57 of the laws of 2009, is 36 amended to read as follows: 37 (1) The empire zones tax benefits report must contain the following 38 information about the empire zone tax credits claimed under articles 39 nine, nine-A, twenty-two[, thirty-two] and thirty-three of this chapter 40 during the previous calendar year: 41 (A) the name of each taxpayer claiming a credit; and 42 (B) the amount of each credit earned by each taxpayer. 43 S 37. Subdivisions (a) and (d) of section 18 of the tax law, as added 44 by section 2 of part CC of chapter 63 of the laws of 2000, are amended 45 to read as follows: 46 (a) Allowance of credit. A taxpayer subject to tax under article 47 nine-A, twenty-two[, thirty-two] or thirty-three of this chapter shall 48 be allowed a credit against such tax, pursuant to the provisions refer- 49 enced in subdivision (d) of this section, with respect to the ownership 50 of eligible low-income buildings for which an eligibility statement has 51 been issued by the commissioner of housing and community renewal. The 52 amount of the credit shall be the credit amount for each such building 53 allocated by such commissioner as provided in article two-A of the 54 public housing law. The credit amount shall be allowed for each of the 55 ten taxable years in the credit period, and any reduction in first-year S. 6359--C 125 1 credit as provided in subdivision two of section twenty-two of such law 2 shall be allowed in the eleventh taxable year. 3 (d) Cross-references. For application of the credit provided for in 4 this section, see the following provisions of this chapter: 5 (1) Article 9-A: Section [210] 210-B: subdivision [30] 15, 6 (2) Article 22: Section 606: subsections (i) and (x), 7 (3) [Article 32: Section 1456: subsection (l), 8 (4)] Article 33: Section 1511: subdivision (n). 9 S 38. Subparagraph (A) of paragraph 1 of subdivision (a) and subdivi- 10 sion (f) of section 19 of the tax law, as added by section 2 of part II 11 of chapter 63 of the laws of 2000, are amended to read as follows: 12 (A) Green building credit. A taxpayer subject to tax under article 13 nine, nine-A, twenty-two[, thirty-two] or thirty-three of this chapter 14 shall be allowed a green building credit against such tax, pursuant to 15 the provisions referenced in subdivision (f) of this section. Provided, 16 however, no credit shall be allowed under this section unless the 17 taxpayer has complied with the applicable requirements of paragraph two 18 of subdivision (d) of this section (relating to reports to DEC). The 19 amount of the credit shall be the sum of the credit components specified 20 in paragraphs two through seven of this subdivision. Provided, however, 21 the amount of each such credit component shall not exceed the limit set 22 forth in the initial credit component certificate obtained pursuant to 23 subdivision (c) of this section. In the determination of such credit 24 components, no cost paid or incurred by the taxpayer shall be the basis 25 for more than one such component. 26 (f) Cross-references. For application of the credit provided for in 27 this section, see the following provisions of this chapter: 28 (1) Article nine: Section one hundred eighty-seven-d; 29 (2) Article nine-A: Subdivision [thirty-one] SIXTEEN of section two 30 hundred [ten] TEN-B; 31 (3) Article twenty-two: Subsections (i) and (y) of section six hundred 32 six; 33 (4) [Article thirty-two: Subsection (m) of section fourteen hundred 34 fifty-six; 35 (5)] Article thirty-three: Subdivision (o) of section fifteen hundred 36 eleven. 37 S 39. Paragraphs 1 and 5 of subdivision (a) of section 21 of the tax 38 law, as amended by section 1 of part H of chapter 577 of the laws of 39 2004, are amended to read as follows: 40 (1) General. A taxpayer subject to tax under article nine, nine-A, 41 twenty-two[, thirty-two] or thirty-three of this chapter shall be 42 allowed a credit against such tax, pursuant to the provisions referenced 43 in subdivision (f) of this section. Such credit shall be allowed with 44 respect to a qualified site, as such term is defined in paragraph one of 45 subdivision (b) of this section. The amount of the credit in a taxable 46 year shall be the sum of the credit components specified in paragraphs 47 two, three and four of this subdivision applicable in such year. 48 (5) Applicable percentage. For purposes of paragraphs two, three and 49 four of this subdivision, the applicable percentage shall be twelve 50 percent in the case of credits claimed under article nine, nine-A[, 51 thirty-two] or thirty-three of this chapter, and ten percent in the case 52 of credits claimed under article twenty-two of this chapter, except that 53 where at least fifty percent of the area of the qualified site relating 54 to the credit provided for in this section is located in an environ- 55 mental zone as defined in paragraph six of subdivision (b) of this 56 section, the applicable percentage shall be increased by an additional S. 6359--C 126 1 eight percent. Provided, however, as afforded in section 27-1419 of the 2 environmental conservation law, if the certificate of completion indi- 3 cates that the qualified site has been remediated to Track 1 as that 4 term is described in subdivision four of section 27-1415 of the environ- 5 mental conservation law, the applicable percentage set forth in the 6 first sentence of this paragraph shall be increased by an additional two 7 percent. 8 S 39-a. Subdivisions (c) and (f) of section 21 of the tax law, as 9 added by section 1 of part H of chapter 1 of the laws of 2003, are 10 amended to read as follows: 11 (c) Qualifying property. Property which qualifies for the credit 12 provided for under this section and also for a credit provided for (1) 13 under either subdivision [twelve] ONE or subdivision [twelve-B] THREE of 14 section two hundred [ten] TEN-B of this chapter, or both, OR (2) 15 subsection (a) or subsection (j) of section six hundred six of this 16 chapter, or both[, (3) the credit provided for under subsection (i) of 17 section fourteen hundred fifty-six of this chapter, or (4) the credit 18 provided under subdivision (q) of section fifteen hundred eleven of this 19 chapter] may be the basis for either the credit provided for under this 20 section or one of the credits enumerated in paragraph one[,] OR two[, 21 three or four] of this subdivision, but not both. 22 (f) Cross-references. For application of the credit provided for in 23 this section, see the following provisions of this chapter: 24 (1) Article 9: Section 187-g 25 (2) Article 9-A: Section [210] 210-B, subdivision [33] 17 26 (3) Article 22: Section 606, subsections (i) and (dd) 27 (4) [Article 32: Section 1456, subsection (q) 28 (5)] Article 33: Section 1511, subdivision (u). 29 S 40. Paragraph 3 of subdivision (a) and paragraphs 1 and 9 of subdi- 30 vision (b) of section 22 of the tax law, as amended by section 4 of part 31 H of chapter 577 of the laws of 2004, are amended to read as follows: 32 (3) Developer. (i) A "developer" is a taxpayer under article nine, 33 nine-A, twenty-two[, thirty-two] or thirty-three of this chapter who or 34 which either (I) has been issued a certificate of completion with 35 respect to a qualified site or (II) has purchased or in any other way 36 has been conveyed all or any portion of a qualified site from a taxpayer 37 or any other party who or which has been issued a certificate of 38 completion with respect to such site provided, such purchase or convey- 39 ance occurs within seven years of the effective date of the certificate 40 of completion issued with respect to such qualified site. Provided 41 further, that the taxpayer who or which is purchasing all or any portion 42 of a qualified site and the taxpayer or any other party who or which has 43 been issued a certificate of completion with respect to such site may 44 not be related persons, as such term is defined in subparagraph (C) of 45 paragraph three of subsection (b) of section four hundred sixty-five of 46 the internal revenue code. 47 (ii) Where the entity to whom a certificate of completion has been 48 issued is a partnership, or where the entity which has purchased all or 49 any portion of a qualified site from a taxpayer who or which has been 50 issued a certificate of completion with respect to such site within the 51 applicable time limit is a partnership, any partner in such partnership 52 who or which is taxable under article nine, nine-A, twenty-two[, thir- 53 ty-two] or thirty-three of this chapter shall be a developer under this 54 paragraph. Where the entity to whom a certificate of completion has been 55 issued is a New York S corporation, or where the entity which has 56 purchased all or any portion of a qualified site from a taxpayer who or S. 6359--C 127 1 which has been issued a certificate of completion with respect to such 2 site within the applicable time limit is a New York S corporation, any 3 shareholder in such New York S corporation shall be a developer under 4 this paragraph. 5 (1) Allowance of credit. A developer of a qualified site who or which 6 is subject to tax under article nine, nine-A, twenty-two[, thirty-two] 7 or thirty-three of this chapter, shall be allowed a credit against such 8 tax, pursuant to the provisions referenced in paragraph nine of this 9 subdivision, for eligible real property taxes imposed on such site. 10 (9) Cross-references. For application of the credit provided for in 11 this subdivision, see the following provisions of this chapter: 12 (i) Article 9: Section 187-h. 13 (ii) Article 9-A: Section [210] 210-B: subdivision [34] 18. 14 (iii) Article 22: Section 606: subsections (i) and (ee). 15 (iv) [Article 32: Section 1456: subsection (r). 16 (v)] Article 33: Section 1511: subdivision (v). 17 S 41. Subdivision (a) of section 23 of the tax law, as amended by 18 section 10 of part H chapter 577 of the laws of 2004, is amended to read 19 as follows: 20 (a) Allowance of credit. General. A taxpayer subject to tax under 21 article nine, nine-A, twenty-two[, thirty-two] or thirty-three of this 22 chapter shall be allowed a credit against such tax, pursuant to the 23 provisions referenced in subdivision (e) of this section. The amount of 24 such credit shall be equal to the lesser of thirty thousand dollars or 25 fifty percent of the premiums paid on or after the date of the brown- 26 field site cleanup agreement executed by the taxpayer and the department 27 of environmental conservation pursuant to section 27-1409 of the envi- 28 ronmental conservation law by the taxpayer for environmental remediation 29 insurance issued with respect to a qualified site. 30 S 42. Subdivision (e) of section 23 of the tax law, as added by 31 section 19 of part H of chapter 1 of the laws of 2003, is amended to 32 read as follows: 33 (e) Cross-references. For application of the credit provided for in 34 this section, see the following provisions of this chapter: 35 (1) Article 9: Section 187-i 36 (2) Article 9-A: Section [210] 210-B, subdivision [35] 19 37 (3) Article 22: Section 606, subsections (i) and (ff) 38 (4) [Article 32: Section 1456, subsection (s) 39 (5)] Article 33: Section 1511, subdivision (w). 40 S 43. Paragraphs 1 and 2 of subdivision (a) and clause (i) of subpara- 41 graph (D) of paragraph 1 of subdivision (b) of section 25 of the tax 42 law, as added by section 1 of part N of chapter 61 of the laws of 2005, 43 are amended to read as follows: 44 (1) Every taxpayer, or person as defined in section seven thousand 45 seven hundred one of the internal revenue code, required to file a 46 disclosure statement with the internal revenue service pursuant to 47 section six thousand eleven of the internal revenue code, or the regu- 48 lations promulgated thereunder, related to a reportable transaction or a 49 listed transaction, as those terms are defined in such section or regu- 50 lations, must attach a duplicate of such disclosure statement to the 51 return or report required to be filed by such taxpayer or person for the 52 taxable year under article nine, nine-A, twenty-two[, thirty-two] or 53 thirty-three of this chapter, and provide such other information related 54 to such disclosure as prescribed by the commissioner. Such disclosure 55 shall be made notwithstanding that one member of an affiliated group, as 56 defined by section fifteen hundred four of the internal revenue code, S. 6359--C 128 1 may file such disclosure statement with the internal revenue service on 2 behalf of its affiliates including such taxpayer or person. 3 (2) Every taxpayer or such person who participates in a New York 4 reportable transaction for a taxable year must disclose such partic- 5 ipation with its return or report required to be filed under article 6 nine, nine-A, twenty-two[, thirty-two] or thirty-three of this chapter 7 for the taxable year in a form prescribed by the commissioner, and 8 provide such other information related to such transaction as prescribed 9 by the commissioner. A New York reportable transaction is a transaction 10 that has the potential to be a tax avoidance transaction as determined 11 by the commissioner. 12 (i) the list required to be maintained by such person pursuant to 13 section six thousand one hundred twelve of the internal revenue code 14 identifies or is required to identify a taxpayer subject to tax under 15 article nine, nine-A, twenty-two[, thirty-two] or thirty-three of this 16 chapter, and 17 S 44. Subdivisions (a) and (f) of section 26 of the tax law, as added 18 by chapter 537 of the laws of 2005, are amended to read as follows: 19 (a) Allowance of credit. A taxpayer, which is subject to tax under 20 article nine, nine-A, twenty-two[, thirty-two] or thirty-three of this 21 chapter and which is a qualified building owner, shall be allowed a 22 credit against such tax. The amount of the credit allowed under this 23 section shall equal the sum of the number of qualified security officers 24 providing protection to a building or buildings owned by the taxpayer 25 multiplied by three thousand dollars. Provided, however, that in the 26 case of a worker not so employed for a full year, such amount shall be 27 prorated to reflect the length of such employment under regulations of 28 the commissioner. 29 (f) Cross-references. For application of the credit provided for in 30 this section, see the following provisions of this chapter: 31 (1) article 9: section 187-n. 32 (2) article 9-A: section [210] 210-B: subdivision [37] 21. 33 (3) article 22: section 606: subsection (ii). 34 (4) [article 32: section 1456: subsection (t). 35 (5)] article 33: section 1511: subdivision (x). 36 S 45. Paragraph 3 of subdivision (a) and subdivision (c) of section 28 37 of the tax law, as added by section 2 of part V of chapter 62 of the 38 laws of 2006, are amended to read as follows: 39 (3) No qualified production costs used by a taxpayer either as the 40 basis for the allowance of the credit provided for under this section or 41 used in the calculation of the credit provided for under this section 42 shall be used by such taxpayer to claim any other credit allowed pursu- 43 ant to this chapter. 44 Notwithstanding any provisions of this section to the contrary, a 45 corporation or partnership, which otherwise qualifies as a qualified 46 commercial production company, and is similar in operation and in owner- 47 ship to a business entity or entities taxable, or previously taxable, 48 under section one hundred eighty-three, one hundred eighty-four or one 49 hundred eighty-five of article nine; article nine-A[, article thirty- 50 two] or thirty-three of this chapter or which would have been subject to 51 tax under article twenty-three of this chapter (as such article was in 52 effect on January first, nineteen hundred eighty) OR WHICH WOULD HAVE 53 BEEN SUBJECT TO TAX UNDER ARTICLE THIRTY-TWO OF THIS CHAPTER (AS SUCH 54 ARTICLE WAS IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN) 55 or the income or losses of which is or was includable under article 56 twenty-two of this chapter shall not be deemed a new or separate busi- S. 6359--C 129 1 ness, and therefore shall not be eligible for empire state commercial 2 production benefits, if it was not formed for a valid business purpose, 3 as such term is defined in clause (D) of subparagraph one of paragraph 4 (o) of subdivision nine of section two hundred eight of this chapter and 5 was formed solely to gain empire state commercial production credit 6 benefits. 7 (c) Cross-references. For application of the credit provided for in 8 this section, see the following provision of this chapter: 9 (1) article 9-A: section [210] 210-B: subdivision [38] 23. 10 (2) article 22: section 606: subsection (jj). 11 S 46. Subdivision (d) of section 28 of the tax law, as added by 12 section 1 of part X of chapter 62 of the laws of 2006, is amended to 13 read as follows: 14 (d) Cross-references. For application of the credit provided for in 15 this section, see the following provisions of this chapter: 16 (1) Article 9: Section 187-c. 17 (2) Article 9-A: Section [210] 210-B, subdivision [38] 24. 18 (3) Article 22: Section 606, subsections (i) and (jj). 19 S 47. The opening paragraph of subdivision (a) and subdivisions (c) 20 and (g) of section 31 of the tax law, the opening paragraph of subdivi- 21 sion (a) and subdivision (g) as amended by section 7 of part G of chap- 22 ter 61 of the laws of 2011, subdivision (c) as added by section 2 of 23 part MM of chapter 59 of the laws of 2010, are amended to read as 24 follows: 25 General. A taxpayer subject to tax under section one hundred eighty- 26 five, article nine-A, twenty-two[, thirty-two] or thirty-three of this 27 chapter shall be allowed a credit against such tax, pursuant to the 28 provisions referenced in subdivision (g) of this section. The amount of 29 the credit, allowable for up to ten consecutive taxable years, is the 30 sum of the following four credit components: 31 (c) Election of credit. A taxpayer who or which is qualified to claim 32 the excelsior investment tax credit component and is also qualified to 33 claim the investment tax credit provided for under subdivision [twelve] 34 ONE of section two hundred [ten,] TEN-B OR subsection (a) of section six 35 hundred six[, or subsection (i) of section fourteen hundred fifty-six] 36 of this chapter, may claim either the excelsior investment tax credit 37 component or the investment tax credit, but not both with regard to a 38 particular piece of property. In addition, a taxpayer who or which is 39 qualified to claim the excelsior investment tax credit component and is 40 also qualified to claim the brownfield tangible property credit compo- 41 nent under section twenty-one of this article, as added by chapter one 42 of the laws of two thousand three, may claim either the excelsior 43 investment tax credit component or such tangible property credit compo- 44 nent, but not both with regard to a particular piece of property. The 45 election to claim the excelsior investment tax credit component, the 46 investment tax credit or the brownfield tangible property credit compo- 47 nent, with regard to the same property, is irrevocable. 48 (g) Cross-references. For application of the credit provided for in 49 this section, see the following provisions of this chapter: 50 (1) article 9: section 187-q. 51 (2) article 9-A: section [210] 210-B: subdivision [41] 31. 52 (3) article 22: section 606: subsection (qq). 53 (4) [article 32: section 1456: subsection (u). 54 (5)] article 33: section 1511: subdivision (y). S. 6359--C 130 1 S 48. Subdivision (d) of section 31 of the tax law, as added by 2 section 12 of part Q of chapter 57 of the laws of 2010, is amended to 3 read as follows: 4 (d) Cross-references. For application of the credit provided for in 5 this section, see the following provisions of this chapter: 6 (1) article 9-A: section [210] 210-B: subdivision [41] 32. 7 (2) article 22: section 606: subsection (qq). 8 S 49. Subdivision 3 of section 34 of the tax law, as added by section 9 2 of part Y of chapter 57 of the laws of 2010, is amended to read as 10 follows: 11 3. (a) For application of the temporary deferral nonrefundable payout 12 credit, see the following provisions of this chapter: 13 (1) Article 9: section 187-0 14 (2) Article 9-A: section [210(41)] 210-B(33) 15 (3) Article 22: section 606(qq) 16 (4) [Article 32: section 1456(v) 17 (5)] Article 33: section 1511(y) 18 (b) For application of the temporary deferral refundable payout cred- 19 it, see the following provisions of this chapter: 20 (1) Article 9: section 187-p 21 (2) Article 9-A: section [210(42)] 210-B(34) 22 (3) Article 22: section 606(rr) 23 (4) [Article 32: section 1456(w) 24 (5)] Article 33: section 1511(z) 25 S 50. The opening paragraph of subdivision (a), subparagraph (C) of 26 paragraph 2 of subdivision (e), and subdivision (f) of section 35 of the 27 tax law, as added by section 3 of part V of chapter 61 of the laws of 28 2011, are amended to read as follows: 29 A taxpayer which is a participant or the owner of a participant in the 30 economic transformation and facility redevelopment program under article 31 eighteen of the economic development law that is subject to tax under 32 section one hundred eighty-five of article nine, or article nine-A, 33 twenty-two[, thirty-two] or thirty-three of this chapter shall be 34 allowed the sum of following components against such tax, pursuant to 35 the provisions referenced in subdivision (f) of this section. 36 (C) the business entity must not be substantially similar in ownership 37 and operation to another taxpayer taxable or previously taxable under 38 section one hundred eighty-three, one hundred eighty-four or one hundred 39 eighty-five of article nine, former section one hundred eighty-six of 40 this chapter or article nine-A, twenty-two[, thirty-two] or thirty-three 41 of this chapter OR FORMER ARTICLE THIRTY-TWO OF THIS CHAPTER or the 42 income or losses of which is or was includable under article twenty-two 43 of this chapter; 44 (f) Cross-references. For application of the credits provided for in 45 this section, see the following provisions of this chapter: 46 (1) section 185: section 187-r. 47 (2) article 9-A: section [210(43)] 210-B(35). 48 (3) article 22: section 606 (ss). 49 (4) [article 32: section 1456(x). 50 (5)] article 33: section 1511 (aa). 51 S 51. Subdivisions (a) and (e) of section 36 of the tax law, as added 52 by section 2 of part E of chapter 56 of the laws of 2011, are amended to 53 read as follows: 54 (a) Allowance of credit. A taxpayer subject to tax under article 55 nine-A, twenty-two[, thirty-two] or thirty-three of this chapter shall 56 be allowed a credit against such tax, pursuant to the provisions refer- S. 6359--C 131 1 enced in subdivision (e) of this section. The amount of the credit, 2 allowable for ten consecutive tax years, is equal to the amount deter- 3 mined pursuant to section four hundred twenty-five of the economic 4 development law. 5 (e) Cross-references. For application of the credit provided for in 6 this section, see the following provisions of this chapter: 7 (1) article 9-A: section [210] 210-B, subdivision [44] 37; 8 (2) article 22: section 606, subsection (tt); 9 (3) [article 32: section 1456, subsection (y); 10 (4)] article 33, section 1511, subdivision (bb). 11 S 52. Subdivision (c) of section 37 of the tax law, as added by chap- 12 ter 109 of the laws of 2012, is amended to read as follows: 13 (c) Cross-references. For application of the credit provided for in 14 this section, see the following provisions of this chapter: 15 (1) Article 9-A: Section [210] 210-B, subdivision [45] 39. 16 (2) Article 22: Section 606, subsections (i) and (uu). 17 S 52-a. Subdivision (c) of section 39 of the tax law is REPEALED. 18 S 53. Paragraphs 2, 3 and 4 of subdivision (k) of section 39 of the 19 tax law, paragraphs 2 and 3 as added by section 2 of part A of chapter 20 68 of the laws of 2013, paragraph 4 as amended by section 2 of part T of 21 this act, are amended to read as follows: 22 [(2) Article 9: section 180, subdivision 3. 23 (3) Article 9: section 181, subdivision 3.] 24 (4) Article 9-A: section [210] 210-B, subdivision [47] 41 and subdivi- 25 sion [48] 43. 26 S 54. Subdivision 1 of section 171-a of the tax law, as amended by 27 section 1 of part R of chapter 60 of the laws of 2004, is amended to 28 read as follows: 29 1. All taxes, interest, penalties and fees collected or received by 30 the commissioner or the commissioner's duly authorized agent under arti- 31 cles nine (except section one hundred eighty-two-a thereof and except as 32 otherwise provided in section two hundred five thereof), nine-A, 33 twelve-A (except as otherwise provided in section two hundred eighty- 34 four-d thereof), thirteen, thirteen-A (except as otherwise provided in 35 section three hundred twelve thereof), eighteen, nineteen, twenty 36 (except as otherwise provided in section four hundred eighty-two there- 37 of), twenty-one, twenty-two, twenty-six, twenty-six-B, twenty-eight 38 (except as otherwise provided in section eleven hundred two or eleven 39 hundred three thereof), twenty-eight-A, thirty-one (except as otherwise 40 provided in section fourteen hundred twenty-one thereof), [thirty-two,] 41 thirty-three and thirty-three-A of this chapter shall be deposited daily 42 in one account with such responsible banks, banking houses or trust 43 companies as may be designated by the comptroller, to the credit of the 44 comptroller. Such an account may be established in one or more of such 45 depositories. Such deposits shall be kept separate and apart from all 46 other money in the possession of the comptroller. The comptroller shall 47 require adequate security from all such depositories. Of the total 48 revenue collected or received under such articles of this chapter, the 49 comptroller shall retain in the comptroller's hands such amount as the 50 commissioner may determine to be necessary for refunds or reimbursements 51 under such articles of this chapter [and article ten thereof] out of 52 which amount the comptroller shall pay any refunds or reimbursements to 53 which taxpayers shall be entitled under the provisions of such articles 54 of this chapter [and article ten thereof]. The commissioner and the 55 comptroller shall maintain a system of accounts showing the amount of 56 revenue collected or received from each of the taxes imposed by such S. 6359--C 132 1 articles. The comptroller, after reserving the amount to pay such 2 refunds or reimbursements, shall, on or before the tenth day of each 3 month, pay into the state treasury to the credit of the general fund all 4 revenue deposited under this section during the preceding calendar month 5 and remaining to the comptroller's credit on the last day of such 6 preceding month, (i) except that the comptroller shall pay to the state 7 department of social services that amount of overpayments of tax imposed 8 by article twenty-two of this chapter and the interest on such amount 9 which is certified to the comptroller by the commissioner as the amount 10 to be credited against past-due support pursuant to subdivision six of 11 section one hundred seventy-one-c of this [chapter] ARTICLE, (ii) and 12 except that the comptroller shall pay to the New York state higher 13 education services corporation and the state university of New York or 14 the city university of New York respectively that amount of overpayments 15 of tax imposed by article twenty-two of this chapter and the interest on 16 such amount which is certified to the comptroller by the commissioner as 17 the amount to be credited against the amount of defaults in repayment of 18 guaranteed student loans and state university loans or city university 19 loans pursuant to subdivision five of section one hundred seventy-one-d 20 and subdivision six of section one hundred seventy-one-e of this [chap- 21 ter] ARTICLE, (iii) and except further that, notwithstanding any law, 22 the comptroller shall credit to the revenue arrearage account, pursuant 23 to section ninety-one-a of the state finance law, that amount of over- 24 payment of tax imposed by article nine, nine-A, twenty-two, thirty, 25 thirty-A, thirty-B[, thirty-two] or thirty-three of this chapter, and 26 any interest thereon, which is certified to the comptroller by the 27 commissioner as the amount to be credited against a past-due legally 28 enforceable debt owed to a state agency pursuant to paragraph (a) of 29 subdivision six of section one hundred seventy-one-f of this article, 30 provided, however, he shall credit to the special offset fiduciary 31 account, pursuant to section ninety-one-c of the state finance law, any 32 such amount creditable as a liability as set forth in paragraph (b) of 33 subdivision six of section one hundred seventy-one-f of this article, 34 (iv) and except further that the comptroller shall pay to the city of 35 New York that amount of overpayment of tax imposed by article nine, 36 nine-A, twenty-two, thirty, thirty-A, thirty-B[, thirty-two,] or thir- 37 ty-three of this chapter and any interest thereon that is certified to 38 the comptroller by the commissioner as the amount to be credited against 39 city of New York tax warrant judgment debt pursuant to section one 40 hundred seventy-one-l of this article, (v) and except further that the 41 comptroller shall pay to a non-obligated spouse that amount of overpay- 42 ment of tax imposed by article twenty-two of this chapter and the inter- 43 est on such amount which has been credited pursuant to section one 44 hundred seventy-one-c, one hundred seventy-one-d, one hundred seventy- 45 one-e, one hundred seventy-one-f or one hundred seventy-one-l of this 46 article and which is certified to the comptroller by the commissioner as 47 the amount due such non-obligated spouse pursuant to paragraph six of 48 subsection (b) of section six hundred fifty-one of this chapter; and 49 (vi) the comptroller shall deduct a like amount which the comptroller 50 shall pay into the treasury to the credit of the general fund from 51 amounts subsequently payable to the department of social services, the 52 state university of New York, the city university of New York, or the 53 higher education services corporation, or the revenue arrearage account 54 or special offset fiduciary account pursuant to section ninety-one-a or 55 ninety-one-c of the state finance law, as the case may be, whichever had 56 been credited the amount originally withheld from such overpayment, and S. 6359--C 133 1 (vii) with respect to amounts originally withheld from such overpayment 2 pursuant to section one hundred seventy-one-l of this article and paid 3 to the city of New York, the comptroller shall collect a like amount 4 from the city of New York. 5 S 55. Subdivision 2 of section 171-a of the tax law, as amended by 6 chapter 57 of the laws of 1993, is amended to read as follows: 7 2. Notwithstanding subdivision one of this section or any other 8 provision of law to the contrary, the taxes imposed pursuant to sections 9 one hundred eighty-three-a, one hundred eighty-four-a, [one hundred 10 eighty-six-b,] one hundred eighty-six-c, [one hundred eighty-nine-a,] 11 two hundred nine-B[, fourteen hundred fifty-five-b] and fifteen hundred 12 five-a of this chapter, reduced by an amount for administrative costs, 13 shall be deposited to the credit of the metropolitan mass transportation 14 operating assistance account in the mass transportation operating 15 assistance fund, created pursuant to section eighty-eight-a of the state 16 finance law, as such taxes are received. The amount for administrative 17 costs shall be determined by the commissioner to represent reasonable 18 costs of the department of taxation and finance in administering, 19 collecting, determining and distributing such taxes. Of the total reven- 20 ue collected or received under such sections of this chapter, the comp- 21 troller shall retain in his hands such amount as the commissioner may 22 determine to be necessary for refunds or reimbursements under such 23 sections of this chapter out of which amount the comptroller shall pay 24 any refunds or reimbursements to which taxpayers shall be entitled under 25 provisions of such sections. The tax commissioner and the comptroller 26 shall maintain a system of accounts showing the amount of revenue 27 collected or received from each of the taxes imposed by such sections. 28 S 56. Paragraphs (b) and (c) of subdivision 1 of section 171-f of the 29 tax law, as amended by chapter 81 of the laws of 1995, are amended to 30 read as follows: 31 (b) "taxpayer" shall mean a corporation, association, company, part- 32 nership, estate, trust, liquidator, fiduciary or other entity or indi- 33 vidual who or which is liable for any tax or other imposition imposed by 34 or pursuant to article nine, nine-A, twenty-two, thirty, thirty-A, thir- 35 ty-B[, thirty-two,] or thirty-three of this chapter or article two-E of 36 the general city law, which tax or other imposition is administered by 37 the commissioner of taxation and finance, or who or which is under a 38 duty to perform an act under or pursuant to such tax or imposition, 39 excluding a state agency, a municipal corporation or a district corpo- 40 ration; and (c) "overpayment" shall mean an overpayment which has been 41 requested or determined to be refunded, a refund or a reimbursement, of 42 a tax or other imposition imposed by or pursuant to article nine, 43 nine-A, twenty-two, thirty, thirty-A, thirty-B[, thirty-two,] or thir- 44 ty-three of this chapter or article two-E of the general city law, which 45 is administered by the commissioner of taxation and finance. 46 S 57. Subdivision 2 of section 171-f of the tax law, as added by chap- 47 ter 55 of the laws of 1992, is amended to read as follows: 48 (2) The commissioner of taxation and finance, upon agreement with the 49 state comptroller and acting as an agent for the state comptroller, 50 shall set forth the procedures for crediting any overpayment by a 51 taxpayer of any tax or other imposition imposed by or authorized to be 52 imposed pursuant to article nine, nine-A, twenty-two, thirty, thirty-A, 53 thirty-B[, thirty-two,] or thirty-three of this chapter or article two-E 54 of the general city law, which is administered by the commissioner of 55 taxation and finance, and the interest on any such overpayments, against 56 the amount of a past-due legally enforceable debt owed by such taxpayer S. 6359--C 134 1 to a state agency. An implementation plan shall be developed by the 2 division of the budget and the department of taxation and finance which 3 shall provide, but not be limited to, guidance with respect to coordi- 4 nation of debt collection pursuant to this section and subdivision twen- 5 ty-seventh of section one hundred seventy-one of this article. This 6 section shall not be deemed to abrogate or limit in any way the powers 7 and authority of the state comptroller to set off debts owed the state 8 against payments from the state, under the constitution of the state or 9 any other law. 10 S 58. Paragraphs (a) and (b) of subdivision 1 of section 171-l of the 11 tax law, as added by section 6 of part R of chapter 60 of the laws of 12 2004, are amended to read as follows: 13 (a) "taxpayer" shall mean a corporation, association, company, part- 14 nership, estate, trust, liquidator, fiduciary or other entity or indi- 15 vidual who or which is liable for any tax or other imposition imposed by 16 or pursuant to article nine, nine-A, twenty-two, thirty, thirty-A, thir- 17 ty-B[, thirty-two,] or thirty-three of this chapter, which tax or other 18 imposition is administered by the commissioner of taxation and finance, 19 or who or which is under a duty to perform an act under or pursuant to 20 such tax or imposition, excluding a state agency, a municipal corpo- 21 ration or a district corporation; 22 (b) "overpayment" shall mean an overpayment which has been requested 23 or determined to be refunded, a refund or a reimbursement, of a tax or 24 other imposition imposed by or pursuant to article nine, nine-A, twen- 25 ty-two, thirty, thirty-A, thirty-B[, thirty-two,] or thirty-three of 26 this chapter, which is administered by the commissioner of taxation and 27 finance; and 28 S 59. Paragraph (b) of subdivision 1 of section 183 of the tax law, as 29 amended by section 1 of part Y of chapter 63 of the laws of 2000, is 30 amended to read as follows: 31 (b) For the privilege of exercising its corporate franchise, or of 32 doing business, or of employing capital, or of owning or leasing proper- 33 ty in this state in a corporate or organized capacity, or of maintaining 34 an office in this state, every domestic corporation, joint-stock company 35 or association formed for or principally engaged in the conduct of 36 canal, steamboat, ferry (except a ferry company operating between any of 37 the boroughs of the city of New York under a lease granted by the city), 38 express, navigation, pipe line, transfer, baggage express, omnibus, 39 taxicab, telegraph, or telephone business, or formed for or principally 40 engaged in the conduct of two or more of such businesses, and every 41 domestic corporation, joint-stock company or association formed for or 42 principally engaged in the conduct of a railroad, palace car, sleeping 43 car or trucking business or formed for or principally engaged in the 44 conduct of two or more of such businesses and which has made an election 45 pursuant to subdivision ten of this section, and every other domestic 46 corporation, joint-stock company or association principally engaged in 47 the conduct of a transportation or transmission business, except a 48 corporation, joint-stock company or association formed for or principal- 49 ly engaged in the conduct of a railroad, palace car, sleeping car or 50 trucking business or formed for or principally engaged in the conduct of 51 two or more of such businesses and which has not made the election 52 provided for in subdivision ten of this section, and except a corpo- 53 ration, joint-stock company or association principally engaged in the 54 conduct of aviation (including air freight forwarders acting as princi- 55 pal and like indirect air carriers) and except a corporation principally 56 engaged in providing telecommunication services between aircraft and S. 6359--C 135 1 dispatcher, aircraft and air traffic control or ground station and 2 ground station (or any combination of the foregoing), at least ninety 3 percent of the voting stock of which corporation is owned, directly or 4 indirectly, by air carriers and which corporation's principal function 5 is to fulfill the requirements of (i) the federal aviation adminis- 6 tration (or the successor thereto) or (ii) the international civil 7 aviation organization (or the successor thereto), relating to the exist- 8 ence of a communication system between aircraft and dispatcher, aircraft 9 and air traffic control or ground station and ground station (or any 10 combination of the foregoing) for the purposes of air safety and naviga- 11 tion [and except a corporation, joint-stock company or association 12 subject to taxation under article thirty-two of this chapter,] shall 13 pay, in advance, an annual tax to be computed upon the basis of the 14 amount of its capital stock within this state during the preceding year, 15 and upon each dollar of such amount. Provided, however, a corporation, 16 joint-stock company or association formed for or principally engaged in 17 the transportation, transmission or distribution of gas, electricity or 18 steam shall not be subject to tax under this section or section one 19 hundred eighty-four of this article. 20 S 60. Subdivision 10 of section 183 of the tax law, as added by chap- 21 ter 309 of the laws of 1996, is amended to read as follows: 22 10. Election. [With respect to taxable years beginning after nineteen 23 hundred ninety-seven, every] EVERY corporation, joint-stock company or 24 association formed for or principally engaged in the conduct of a rail- 25 road (including surface railroad, whether or not operated by steam, 26 subway railroad or elevated railroad), palace car, sleeping car or 27 trucking business or formed for or principally engaged in the conduct of 28 two or more of such businesses, which would be subject to article nine-A 29 [or thirty-two] of this chapter if the election provided for under this 30 subdivision were not made, may elect to be subject to the provisions of 31 this section and, as applicable, section one hundred eighty-four of this 32 article, rather than the provisions of such article nine-A [or thirty- 33 two]. [In the case of such a corporation, joint-stock company or associ- 34 ation subject to the tax imposed under this section and, as applicable, 35 section one hundred eighty-four of this article, for the taxable year 36 ending December thirty-first, nineteen hundred ninety-seven, such corpo- 37 ration, joint-stock company or association must make such election on or 38 before March fifteenth, nineteen hundred ninety-eight, and such election 39 shall apply to the taxable year ending on December thirty-first, nine- 40 teen hundred ninety-eight and to succeeding taxable years, until 41 revoked. In the case of such a corporation, joint-stock company or asso- 42 ciation which is not subject to the tax imposed under this section and, 43 as applicable, section one hundred eighty-four of this article for the 44 taxable year ending December thirty-first, nineteen hundred ninety-sev- 45 en, but thereafter would be subject to article nine-A or thirty-two of 46 this chapter if the election provided for under this subdivision were 47 not made, such] SUCH corporation, joint-stock company or association 48 must make such election by the first day on which such corporation, 49 joint-stock company or association would be required to file a return or 50 report (without regard to extensions) under this section or section one 51 hundred eighty-four of this article, or section one hundred eighty- 52 three-a or one hundred[-]eighty-four-a of this article, or article 53 nine-A [or thirty-two] of this chapter. An election made pursuant to 54 this subdivision shall continue to be in effect until revoked by the 55 taxpayer. A revocation of the election to be subject to this section 56 and, as applicable, section one hundred eighty-four of this article, S. 6359--C 136 1 shall be irrevocable. Such election, and a revocation thereof, shall be 2 made in the manner prescribed by the commissioner, whether by regulation 3 or otherwise. Such revocation shall apply as of the first day of January 4 next following the end of a taxable year with respect to which the 5 taxpayer had been subject to this section and, as applicable, section 6 one hundred eighty-four of this article, by reason of an election made 7 pursuant to this subdivision. 8 S 61. The section heading and subdivisions 1 and 5 of section 183-a of 9 the tax law, the section heading as added by chapter 931 of the laws of 10 1982, subdivision 1 as amended by section 1 of part A of chapter 59 of 11 the laws of 2013 and subdivision 5 as amended by chapter 945 of the laws 12 of 1990, are amended to read as follows: 13 [Temporary metropolitan] METROPOLITAN transportation business tax 14 surcharge on transportation and transmission corporations and associ- 15 ations. 1. The term "corporation" as used in this section shall include 16 an association, within the meaning of paragraph three of subsection (a) 17 of section seventy-seven hundred one of the internal revenue code 18 (including a limited liability company), a publicly traded partnership 19 treated as a corporation for purposes of the internal revenue code 20 pursuant to section seventy-seven hundred four thereof and any business 21 conducted by a trustee or trustees wherein interest or ownership is 22 evidenced by certificates or other written instruments. Every corpo- 23 ration, joint-stock company or association formed for or principally 24 engaged in the conduct of canal, steamboat, ferry (except a ferry compa- 25 ny operating between any of the boroughs of the city of New York under a 26 lease granted by the city), express, navigation, pipe line, transfer, 27 baggage express, omnibus, taxicab, telegraph, or telephone business, or 28 formed for or principally engaged in the conduct of two or more such 29 businesses, and every corporation, joint-stock company or association 30 formed for or principally engaged in the conduct of a railroad, palace 31 car, sleeping car or trucking business or formed for or principally 32 engaged in the conduct of two or more of such businesses and which has 33 made an election pursuant to subdivision ten of section one hundred 34 eighty-three of this article, and every other corporation, joint-stock 35 company or association principally engaged in the conduct of a transpor- 36 tation or transmission business, except a corporation, joint-stock 37 company or association formed for or principally engaged in the conduct 38 of a railroad, palace car, sleeping car or trucking business or formed 39 for or principally engaged in the conduct of two or more of such busi- 40 nesses and which has not made the election provided for in subdivision 41 ten of section one hundred eighty-three of this article, and except a 42 corporation, joint-stock company or association principally engaged in 43 the conduct of aviation (including air freight forwarders acting as 44 principal and like indirect air carriers) and except a corporation prin- 45 cipally engaged in providing telecommunication services between aircraft 46 and dispatcher, aircraft and air traffic control or ground station and 47 ground station (or any combination of the foregoing), at least ninety 48 percent of the voting stock of which corporation is owned, directly or 49 indirectly, by air carriers and which corporation's principal function 50 is to fulfill the requirements of (i) the federal aviation adminis- 51 tration (or the successor thereto) or (ii) the international civil 52 aviation organization (or the successor thereto), relating to the exist- 53 ence of a communication system between aircraft and dispatcher, aircraft 54 and air traffic control or ground station and ground station (or any 55 combination of the foregoing) for the purposes of air safety and naviga- 56 tion [and except a corporation, joint-stock company or association which S. 6359--C 137 1 is liable to taxation under article thirty-two of this chapter], shall 2 pay for the privilege of exercising its corporate franchise, or of doing 3 business, or of employing capital, or of owning or leasing property in 4 the metropolitan commuter transportation district in such corporate or 5 organized capacity, or of maintaining an office in such district, a tax 6 surcharge [for all or any part of its years commencing on or after Janu- 7 ary first, nineteen hundred eighty-two but ending before December thir- 8 ty-first, two thousand eighteen], which tax surcharge, in addition to 9 the tax imposed by section one hundred eighty-three of this article, 10 shall be computed at the rate of [eighteen percent of the tax imposed 11 under such section one hundred eighty-three for such years or any part 12 of such years ending before December thirty-first, nineteen hundred 13 eighty-three after the deduction of any credits otherwise allowable 14 under this article, and at the rate of] seventeen percent of the tax 15 imposed under such section for such years or any part of such years 16 [ending on or after December thirty-first, nineteen hundred eighty- 17 three] after the deduction of any credits otherwise allowable under this 18 article; provided, however, that such rates of tax surcharge shall be 19 applied only to that portion of the tax imposed under section one 20 hundred eighty-three of this article after the deduction of any credits 21 otherwise allowable under this article which is attributable to the 22 taxpayer's business activity carried on within the metropolitan commuter 23 transportation district as so determined in the manner prescribed by the 24 rules and regulations promulgated by the commissioner[; and provided, 25 further, that the tax surcharge imposed by this section shall not be 26 imposed upon any taxpayer for more than four hundred thirty-two months]. 27 5. [The report covering the tax surcharge which must be calculated 28 pursuant to this section based upon the tax reportable on the report due 29 by March fifteenth, nineteen hundred eighty-two under section one 30 hundred eighty-three of this article shall be filed on or before March 31 fifteenth, nineteen hundred eighty-three. The report covering the tax 32 surcharge which must be calculated pursuant to this section based upon 33 the tax reportable on the report due by March fifteenth, nineteen 34 hundred eighty-three under section one hundred eighty-three of this 35 article shall be filed on or before March fifteenth, nineteen hundred 36 eighty-four. The report covering the tax surcharge which must be calcu- 37 lated pursuant to this section based upon the tax reportable on the 38 report due by March fifteenth, nineteen hundred eighty-four under 39 section one hundred eighty-three of this article shall be filed on or 40 before March fifteenth, nineteen hundred eighty-five. The report cover- 41 ing the tax surcharge which must be calculated pursuant to this section 42 based upon the tax reportable on the report due by March fifteenth, 43 nineteen hundred eighty-five under section one hundred eighty-three of 44 this article shall be filed on or before March fifteenth, nineteen 45 hundred eighty-six. The report covering the tax surcharge which must be 46 calculated pursuant to this section based upon the tax reportable on the 47 report due by March fifteenth, nineteen hundred eighty-six under section 48 one hundred eighty-three of this article shall be filed on or before 49 March fifteenth, nineteen hundred eighty-seven. The report covering the 50 tax surcharge which must be calculated pursuant to this section based 51 upon the tax reportable on the report due by March fifteenth, nineteen 52 hundred eighty-seven under section one hundred eighty-three of this 53 article shall be filed on or before March fifteenth, nineteen hundred 54 eighty-eight. The report covering the tax surcharge which must be calcu- 55 lated pursuant to this section based upon the tax reportable on the 56 report due by March fifteenth, nineteen hundred eighty-eight under S. 6359--C 138 1 section one hundred eighty-three of this article shall be filed on or 2 before March fifteenth, nineteen hundred eighty-nine. The report cover- 3 ing the tax surcharge which must be calculated pursuant to this section 4 based upon the tax reportable on the report due by March fifteenth, 5 nineteen hundred eighty-nine under section one hundred eighty-three of 6 this article shall be filed on or before March fifteenth, nineteen 7 hundred ninety.] The report covering the tax surcharge which must be 8 calculated pursuant to this section based upon the tax reportable on the 9 report due by March fifteenth of any year [subsequent to nineteen 10 hundred eighty-nine] under section one hundred eighty-three of this 11 article shall be filed on or before March fifteenth of the year next 12 succeeding such year. An extension pursuant to section one hundred nine- 13 ty-three OF THIS ARTICLE shall be allowed only if a taxpayer files with 14 the commissioner an application for extension in such form as said 15 commissioner may prescribe by regulation and pays on or before the date 16 of such filing in addition to any other amounts required under this 17 article, either ninety percent of the entire tax surcharge required to 18 be paid under this section for the applicable period, or not less than 19 the tax surcharge shown on the taxpayer's report for the preceding year, 20 if such preceding year consisted of twelve months. The tax surcharge 21 imposed by this section shall be payable to the commissioner in full at 22 the time the report is required to be filed, and such tax surcharge or 23 the balance thereof, imposed on any taxpayer which ceases to exercise 24 its franchise or be subject to the tax surcharge imposed by this section 25 shall be payable to the commissioner at the time the report is required 26 to be filed, provided such tax surcharge of a domestic corporation which 27 continues to possess its franchise shall be subject to adjustment as the 28 circumstances may require; all other tax surcharges of any such taxpay- 29 er, which pursuant to the foregoing provisions of this section would 30 otherwise be payable subsequent to the time such report is required to 31 be filed, shall nevertheless be payable at such time. All of the 32 provisions of this article presently applicable to section one hundred 33 eighty-three of this article are applicable to the tax surcharge imposed 34 by this section except for section one hundred ninety-two of this arti- 35 cle. 36 S 62. Subdivision 1 of section 184 of the tax law, as amended by 37 section 2 of part Y of chapter 63 of the laws of 2000, is amended to 38 read as follows: 39 1. The term "corporation" as used in this section shall include an 40 association, within the meaning of paragraph three of subsection (a) of 41 section seventy-seven hundred one of the internal revenue code (includ- 42 ing a limited liability company), a publicly traded partnership treated 43 as a corporation for purposes of the internal revenue code pursuant to 44 section seventy-seven hundred four thereof. 45 Every corporation, joint-stock company or association formed for or 46 principally engaged in the conduct of canal, steamboat, ferry (except a 47 ferry company operating between any of the boroughs of the city of New 48 York under a lease granted by the city), express, navigation, pipe line, 49 transfer, baggage express, omnibus, taxicab, telegraph or local tele- 50 phone business, or formed for or principally engaged in the conduct of 51 two or more of such businesses, and every corporation, joint-stock 52 company or association formed for or principally engaged in the conduct 53 of surface railroad, whether or not operated by steam, subway railroad, 54 elevated railroad, palace car, sleeping car or trucking business or 55 formed for or principally engaged in the conduct of two or more such 56 businesses and which has made an election pursuant to subdivision ten of S. 6359--C 139 1 section one hundred eighty-three of this article, and every other corpo- 2 ration, joint-stock company or association formed for or principally 3 engaged in the conduct of a transportation or transmission business 4 (other than a telephone business), except a corporation, joint-stock 5 company or association formed for or principally engaged in the conduct 6 of a surface railroad, whether or not operated by steam, subway rail- 7 road, elevated railroad, palace car, sleeping car or trucking business 8 or formed for or principally engaged in the conduct of two or more of 9 such businesses and which has not made the election provided for in 10 subdivision ten of section one hundred eighty-three of this article, 11 and, except a corporation, joint-stock company or association principal- 12 ly engaged in the conduct of aviation (including air freight forwarders 13 acting as principal and like indirect air carriers) and except a corpo- 14 ration principally engaged in providing telecommunication services 15 between aircraft and dispatcher, aircraft and air traffic control or 16 ground station and ground station (or any combination of the foregoing), 17 at least ninety percent of the voting stock of which corporation is 18 owned, directly or indirectly, by air carriers and which corporation's 19 principal function is to fulfill the requirements of (i) the federal 20 aviation administration (or the successor thereto) or (ii) the interna- 21 tional civil aviation organization (or the successor thereto), relating 22 to the existence of a communication system between aircraft and 23 dispatcher, aircraft and air traffic control or ground station and 24 ground station (or any combination of the foregoing) for the purposes of 25 air safety and navigation and [except a corporation, joint-stock company 26 or association which is liable to taxation under article thirty-two of 27 this chapter,] for the privilege of exercising its corporate franchise, 28 or of doing business, or of employing capital, or of owning or leasing 29 property in this state in a corporate or organized capacity, or main- 30 taining an office in this state, shall pay a franchise tax which shall 31 be equal to [(i) three-quarters of one percent for taxable years ending 32 before two thousand one, provided that for a taxable year ending in two 33 thousand the rate shall be reduced to three-eighths of one percent 34 effective July first, two thousand with the result that for purposes of 35 implementation of such change in rate the applicable rate for such a 36 year shall be nine-sixteenths of one percent, and (ii)] three-eighths of 37 one percent for taxable years commencing after two thousand, upon its 38 gross earnings from all sources within this state; except that, [for 39 taxable years commencing on or after January first, nineteen hundred 40 eighty-five and ending on or before December thirty-first, nineteen 41 hundred eighty-nine, every corporation, joint-stock company or associ- 42 ation formed for or principally engaged in the conduct of telephone or 43 telegraph business shall pay a franchise tax which shall be equal to 44 three-tenths of one per centum upon its gross earnings from all sources 45 within this state and,] for taxable years commencing on or after January 46 first, nineteen hundred ninety, every corporation, joint-stock company 47 or association formed for or principally engaged in the conduct of local 48 telephone business, or telegraph business shall pay a franchise tax 49 which shall be equal to [(i) three-quarters of one percent for taxable 50 years ending before two thousand one, provided that for a taxable year 51 ending in two thousand the rate shall be reduced to three-eighths of one 52 percent effective July first, two thousand with the result that for 53 purposes of implementation of such change in rate the applicable rate 54 for such a year shall be nine-sixteenths of one percent, and (ii)] 55 three-eighths of one percent for taxable years commencing after two 56 thousand, upon its gross earnings from all sources within this state, S. 6359--C 140 1 except that a corporation, joint-stock company or association formed for 2 or principally engaged in the conduct of a local telephone business 3 shall exclude the following earnings (but not in any event earnings 4 derived by such taxpayer from the provision of carrier access services) 5 derived by such taxpayer from sales for ultimate consumption of telecom- 6 munications service to its customers (i) thirty percent of separately 7 charged intra-LATA toll service (which shall also include interregion 8 regional calling plan service) and (ii) one hundred percent of separate- 9 ly charged inter-LATA, interstate or international telecommunications 10 service; and except that [corporations, joint-stock companies or associ- 11 ations formed for or principally engaged in the conduct of surface rail- 12 road, whether or not operated by steam, subway railroad, elevated rail- 13 road, palace car or sleeping car, business or any other corporation 14 formed for or principally engaged in the conduct of a railroad business, 15 for taxable years prior to nineteen hundred ninety-seven, and] corpo- 16 rations, joint-stock companies or associations formed for or principally 17 engaged in the conduct of canal, steamboat, ferry (except a ferry compa- 18 ny operating between any of the boroughs of the city of New York under a 19 lease granted by the city), navigation or any corporation formed for or 20 principally engaged in the operation of vessels, shall pay a franchise 21 tax which shall be equal to three-quarters of one per centum upon its 22 gross earnings from all sources within this state, excluding earnings 23 derived from business of an interstate or foreign character; except that 24 for taxable years beginning in nineteen hundred ninety-seven or there- 25 after, in the case of a corporation, joint-stock company or association 26 which, with respect to taxable years beginning after nineteen hundred 27 ninety-seven, has made an election pursuant to subdivision ten of 28 section one hundred eighty-three of this article and which is formed for 29 or principally engaged in the conduct of surface railroad, whether or 30 not operated by steam, subway railroad, elevated railroad, palace car, 31 sleeping car or trucking business or formed for or principally engaged 32 in the conduct of two or more of such businesses, such corporation, 33 joint-stock company or association shall pay a franchise tax which shall 34 be equal to [(i) six-tenths of one percent for taxable years ending 35 before two thousand one, provided that for a taxable year ending in two 36 thousand the rate shall be reduced to three-eighths of one percent 37 effective July first, two thousand with the result that for purposes of 38 implementation of such change in rate the applicable rate for such a 39 year shall be thirty-nine eightieths of one percent, and (ii)] three- 40 eighths of one percent for taxable years commencing after two thousand, 41 upon its gross earnings from all sources within this state, provided 42 that in the case of a corporation, joint-stock company or association 43 formed for or principally engaged in the conduct of surface railroad, 44 whether or not operated by steam, subway railroad, elevated railroad, 45 palace car or sleeping car business, or formed for or principally 46 engaged in the conduct of two or more of such businesses, such gross 47 earnings shall not include earnings derived from business of an inter- 48 state or foreign character. 49 Provided, however, with respect to railroad, elevated railroad, palace 50 car or sleeping car business or any other corporation formed for or 51 principally engaged in the conduct of a railroad business and canal, 52 steamboat, ferry (except a ferry company operating between any of the 53 boroughs of the city of New York under a lease granted by the city), 54 navigation or any corporation formed for or principally engaged in the 55 operation of vessels where the gross earnings from such transportation 56 business both originating and terminating within this state and travers- S. 6359--C 141 1 ing both this state and another state or states or country shall be 2 subject to the franchise tax imposed by this section (except where such 3 corporation, joint-stock company or association is formed for or princi- 4 pally engaged in the conduct of a railroad (including surface railroad, 5 whether or not operated by steam, subway railroad or elevated railroad), 6 palace car or sleeping car business or formed for or principally engaged 7 in the conduct of two or more of such businesses, and has not made the 8 election provided for under subdivision ten of section one hundred 9 eighty-three of this article) and such earnings shall be allocated to 10 this state in the same ratio that the mileage within the state bears to 11 the total mileage of such business. Provided, further, a corporation, 12 joint-stock company or association formed for or principally engaged in 13 the transportation, transmission or distribution of gas, electricity or 14 steam shall not be subject to tax under this section or section one 15 hundred eighty-three of this article. 16 The term "local telephone business" means the provision or furnishing 17 of telecommunication services for hire wherein the service furnished by 18 the provider thereof consists of carrier access service or the service 19 originates and terminates within the same local access and transport 20 area ("LATA"), a local access and transport area being that geographic 21 area as established and approved, and as so set and in existence on July 22 first, nineteen hundred ninety-four, pursuant to the modification of 23 final judgment in United States v. Western Electric Company (civil 24 action no. 82-0192) in the United States district court for the District 25 of Columbia or within the LATA-like Rochester non-associated independent 26 area. 27 The term "telecommunication services" shall have the meaning ascribed 28 to such term in section one hundred eighty-six-e of this article. 29 S 63. The section heading and the opening paragraph of subdivision 1 30 of section 184-a of the tax law, the section heading as added by chapter 31 931 of the laws of 1982 and the opening paragraph of subdivision 1 as 32 amended by section 2 of part A of chapter 59 of the laws of 2013, are 33 amended to read as follows: 34 Additional [temporary] metropolitan transportation business tax 35 surcharge on transportation and transmission corporations and associ- 36 ations services. 37 The term "corporation" as used in this section shall include an asso- 38 ciation, within the meaning of paragraph three of subsection (a) of 39 section seventy-seven hundred one of the internal revenue code (includ- 40 ing a limited liability company), and a publicly traded partnership 41 treated as a corporation for purposes of the internal revenue code 42 pursuant to section seventy-seven hundred four thereof. Every corpo- 43 ration, joint-stock company or association formed for or principally 44 engaged in the conduct of canal, steamboat, ferry (except a ferry compa- 45 ny operating between any of the boroughs of the city of New York under a 46 lease granted by the city), express, navigation, pipe line, transfer, 47 baggage express, omnibus, taxicab, telegraph or local telephone busi- 48 ness, or formed for or principally engaged in the conduct of two or more 49 such businesses, and every corporation, joint-stock company or associ- 50 ation formed for or principally engaged in the conduct of a surface 51 railroad, whether or not operated by steam, subway railroad, elevated 52 railroad, palace car, sleeping car or trucking business or principally 53 engaged in the conduct of two or more such businesses and which has made 54 an election pursuant to subdivision ten of section one hundred eighty- 55 three of this article, and every other corporation, joint-stock company 56 or association formed for or principally engaged in the conduct of a S. 6359--C 142 1 transportation or transmission business (other than a telephone busi- 2 ness) except a corporation, joint-stock company or association formed 3 for or principally engaged in the conduct of a surface railroad, whether 4 or not operated by steam, subway railroad, elevated railroad, palace 5 car, sleeping car or trucking business or principally engaged in the 6 conduct of two or more such businesses and which has not made the 7 election provided for in subdivision ten of section one hundred eighty- 8 three of this article, and except a corporation, joint-stock company or 9 association principally engaged in the conduct of aviation (including 10 air freight forwarders acting as principal and like indirect air carri- 11 ers) and except a corporation principally engaged in providing telecom- 12 munication services between aircraft and dispatcher, aircraft and air 13 traffic control or ground station and ground station (or any combination 14 of the foregoing), at least ninety percent of the voting stock of which 15 corporation is owned, directly or indirectly, by air carriers and which 16 corporation's principal function is to fulfill the requirements of (i) 17 the federal aviation administration (or the successor thereto) or (ii) 18 the international civil aviation organization (or the successor there- 19 to), relating to the existence of a communication system between 20 aircraft and dispatcher, aircraft and air traffic control or ground 21 station and ground station (or any combination of the foregoing) for the 22 purposes of air safety and navigation [and except a corporation, joint- 23 stock company or association which is liable to taxation under article 24 thirty-two of this chapter], shall pay for the privilege of exercising 25 its corporate franchise, or of doing business, or of employing capital, 26 or of owning or leasing property in the metropolitan commuter transpor- 27 tation district in such corporate or organized capacity, or of maintain- 28 ing an office in such district, a tax surcharge [for all or any part of 29 its taxable years commencing on or after January first, nineteen hundred 30 eighty-two, but ending before December thirty-first, two thousand eigh- 31 teen], which tax surcharge, in addition to the tax imposed by section 32 one hundred eighty-four of this article, shall be computed at the rate 33 of [eighteen percent of the tax imposed under such section one hundred 34 eighty-four for such taxable years or any part of such taxable years 35 ending before December thirty-first, nineteen hundred eighty-three after 36 the deduction of any credits otherwise allowable under this article, and 37 at the rate of] seventeen percent of the tax imposed under such section 38 for such taxable years or any part of such taxable years [ending on or 39 after December thirty-first, nineteen hundred eighty-three] after the 40 deduction of any credits otherwise allowable under this article; 41 provided, however, that such rates of tax surcharge shall be applied 42 only to that portion of the tax imposed under section one hundred eight- 43 y-four of this article after the deduction of any credits otherwise 44 allowable under this article which is attributable to the taxpayer's 45 business activity carried on within the metropolitan commuter transpor- 46 tation district[; and provided, further, that the tax surcharge imposed 47 by this section on corporations, joint-stock companies and associations 48 formed for or principally engaged in the conduct of telephone or tele- 49 graph business shall be computed in accordance with this subdivision and 50 paragraph (c) of subdivision two of this section as if the three-quar- 51 ters of one percent rate of tax provided for in subdivision one of 52 section one hundred eighty-four of this article were applicable to such 53 telephone and telegraph businesses for taxable years commencing on or 54 after January first, nineteen hundred eighty-five and ending on or 55 before December thirty-first, nineteen hundred eighty-nine; and 56 provided, further, that the tax surcharge imposed by this section shall S. 6359--C 143 1 not be imposed upon any taxpayer for more than four hundred thirty-two 2 months]. Provided, however, that for taxable years beginning in two 3 thousand and thereafter, for purposes of this subdivision the tax 4 imposed under section one hundred eighty-four of this article shall be 5 deemed to have been imposed at the rate of three-quarters of one 6 percent, except that in the case of a corporation, joint-stock company 7 or association which has made an election pursuant to subdivision ten of 8 section one hundred eighty-three of this article, for purposes of this 9 subdivision the tax imposed under section one hundred eighty-four of 10 this article shall be deemed to have been imposed at the rate of six- 11 tenths of one percent. 12 S 64. Subdivision 8 of section 186-a of the tax law is REPEALED. 13 S 65. The section heading and subdivision 1 of section 186-c of the 14 tax law, the section heading as amended by chapter 2 of the laws of 15 1995, subdivision 1 as amended by section 3 of part II-1 of chapter 57 16 of the laws of 2008, subparagraph 1 of paragraph (a) of subdivision 1 as 17 amended by section 3 of part A of chapter 59 of the laws of 2013, are 18 amended to read as follows: 19 [Temporary metropolitan] METROPOLITAN transportation business tax 20 surcharge on utility services and excise tax on sale of telecommuni- 21 cation services. 1. (a) (1) Every utility doing business in the metro- 22 politan commuter transportation district shall pay a tax surcharge, in 23 addition to the tax imposed by section one hundred eighty-six-a of this 24 article[, for all or any parts of its taxable years commencing on or 25 after January first, nineteen hundred eighty-two but ending before 26 December thirty-first, two thousand eighteen], to be computed [at the 27 rate of eighteen percent of the tax imposed under section one hundred 28 eighty-six-a of this article for such taxable years or any part of such 29 taxable years ending before December thirty-first, nineteen hundred 30 eighty-three after the deduction of any credits otherwise allowable 31 under this article, and] at the rate of seventeen percent of the tax 32 imposed under such section [for such taxable years or any part of such 33 taxable years ending on or after December thirty-first, nineteen hundred 34 eighty-three] after the deduction of credits otherwise allowable under 35 this article except any utility credit provided for by article thir- 36 teen-A of this chapter; provided, however, that such rates of tax 37 surcharge shall be applied only to that portion of the tax imposed under 38 section one hundred eighty-six-a of this article after the deduction of 39 credits otherwise allowable under this article, except any utility cred- 40 it provided for by article thirteen-A of this chapter, which is attrib- 41 utable to the taxpayer's gross income or gross operating income from 42 business activity carried on within the metropolitan commuter transpor- 43 tation district[; and provided, further, that the tax surcharge imposed 44 by this section shall not be imposed upon any taxpayer for more than 45 four hundred thirty-two months]. 46 (2) Provided however, that [commencing January first, two thousand,] 47 in the case of the tax imposed under paragraph (a) of subdivision one of 48 section one hundred eighty-six-a of this article (relating to providers 49 of telecommunications services) such tax surcharge shall be calculated 50 as if the tax imposed under section one hundred eighty-six-a of this 51 article were imposed at a rate of three and one-half percent. 52 (b) In addition to the surcharge imposed by paragraph (a) of this 53 subdivision, there is hereby imposed a surcharge on the gross receipts 54 from telecommunication services relating to the metropolitan commuter 55 transportation district at the rate of seventeen percent of the state 56 tax rate under section one hundred eighty-six-e of this article [for all S. 6359--C 144 1 or part of taxable years commencing on and after January first, nineteen 2 hundred ninety-five but ending before December thirty-first, two thou- 3 sand thirteen]. All the definitions and other provisions of section one 4 hundred eighty-six-e of this article shall apply to the tax imposed by 5 this paragraph with such modification and limitation as may be necessary 6 (including substituting the words "metropolitan commuter transportation 7 district" for "state" where appropriate) in order to adapt the language 8 of such section one hundred eighty-six-e of this article to the 9 surcharge imposed by this paragraph within such metropolitan commuter 10 transportation district so as to include (1) any intra-district telecom- 11 munication services, except any telecommunication services the gross 12 receipts from which are subject to tax under subparagraph four of this 13 paragraph, (2) any inter-district telecommunication services which orig- 14 inate or terminate in such district and are charged to a service address 15 therein regardless of where the amounts charged for such services are 16 billed or ultimately paid, except any telecommunications services the 17 gross receipts from which are subject to tax under subparagraph four of 18 this paragraph, (3) as apportioned to such district, private telecommu- 19 nication services, except any telecommunication services the gross 20 receipts from which are subject to tax under subparagraph four of this 21 paragraph, and (4) mobile telecommunications service provided by a home 22 service provider where the place of primary use is within such metropol- 23 itan commuter transportation district. Provided however, [commencing 24 October first, nineteen hundred ninety-eight] such tax surcharge shall 25 be calculated as if the tax imposed under section one hundred eighty- 26 six-e of this article were imposed at a rate of three and one-half 27 percent. 28 S 66. Clause (iii) of subparagraph (D) of paragraph 3 of subsection 29 (b) of section 605 of the tax law, as added by chapter 658 of the laws 30 of 2003, is amended to read as follows: 31 (iii) Provided further, that for the purposes of item (I) of clause 32 (i) of this subparagraph, a trustee which is a banking corporation as 33 defined in subsection (a) of section fourteen hundred fifty-two of this 34 chapter, AS SUCH SECTION WAS IN EFFECT ON DECEMBER THIRTY-FIRST, TWO 35 THOUSAND FOURTEEN, and which is domiciled outside the state of New York 36 at the time it becomes a trustee of the trust shall be deemed to contin- 37 ue to be a trustee domiciled outside the state of New York notwithstand- 38 ing that it thereafter otherwise becomes a trustee domiciled in the 39 state of New York by virtue of being acquired by, or becoming an office 40 or branch of, a corporate trustee domiciled within the state of New 41 York. 42 S 67. Subparagraph (A) of paragraph 10 of subsection (a) of section 43 606 of the tax law, as amended by section 3 of part CC of chapter 85 of 44 the laws of 2002, is amended to read as follows: 45 (A) the business of which the individual is an owner is substantially 46 similar in operation and in ownership to a business entity taxable, or 47 previously taxable, under section one hundred eighty-three, one hundred 48 eighty-four[,] OR one hundred eighty-five [or one hundred eighty-six] of 49 article nine; article nine-A[, thirty-two] or thirty-three of this chap- 50 ter; article twenty-three of this chapter or which would have been 51 subject to tax under such article twenty-three (as such article was in 52 effect on January first, nineteen hundred eighty), ARTICLE THIRTY-TWO OF 53 THIS CHAPTER OR WHICH WOULD HAVE BEEN SUBJECT TO TAX UNDER SUCH ARTICLE 54 THIRTY-TWO (AS SUCH ARTICLE WAS IN EFFECT ON DECEMBER THIRTY-FIRST, TWO 55 THOUSAND FOURTEEN) or the income (or losses) of which is (or was) 56 includable under article twenty-two of this chapter whereby the intent S. 6359--C 145 1 and purpose of this paragraph and paragraph five of this subsection with 2 respect to refunding of credit to new business would be evaded; or 3 S 68. Subparagraph (B) of paragraph 1 of subsection (i) of section 606 4 of the tax law, as amended by section 7 of part C-1 of chapter 57 of the 5 laws of 2009, clause (ix) as amended by section 4 of part G of chapter 6 59 of the laws of 2013, clause (xxxi) as added by section 5 of part MM 7 of chapter 59 of the laws of 2010, clause (xxxi) as added by section 14 8 of part Q of chapter 57 of the laws of 2010, clause (xxxii) as added by 9 section 6 of part V of chapter 61 of the laws of 2011, clause (xxxiii) 10 as added by section 4 of part D of chapter 56 of the laws of 2011, 11 clause (xxxiii) as added by section 5 of part E of chapter 56 of the 12 laws of 2011, clause (xxxiii) as added by chapter 604 of the laws of 13 2011, clause (xxxiv) as added by chapter 109 of the laws of 2012, clause 14 (xxxv) as added by section 2 of part AA of chapter 59 of the laws of 15 2013, and clause (xxxvi) as added by section 8 of part A of chapter 68 16 of the laws of 2013, and clause (xxxvii) as added by section 5 of part T 17 of this act, is amended to read as follows: 18 (B) shall be treated as the owner of a new business with respect to 19 such share if the corporation qualifies as a new business pursuant to 20 paragraph [(j)] (F) of subdivision [twelve] ONE of section two hundred 21 [ten] TEN-B of this chapter. 22 With respect to the following The corporation's credit base under 23 credit under this section: section two hundred [ten or section 24 fourteen hundred fifty-six] TEN-B 25 of this chapter is: 26 (i) Investment tax credit under Investment credit base or qualified 27 subsection (a) rehabilitation expenditures under 28 subdivision [twelve] ONE of section 29 two hundred [ten] TEN-B 30 (ii) Empire zone investment Cost or other basis under 31 tax credit under subsection (j) subdivision [twelve-B] THREE 32 of section two hundred [ten] TEN-B 33 [(iii) Empire zone wage tax credit Eligible wages under subdivision 34 under subsection (k) nineteen of section two hundred 35 ten or subsection (e) of section 36 fourteen hundred fifty-six 37 (iv) Empire zone capital tax Qualified investments and 38 credit under subsection (l) contributions under subdivision 39 twenty of section two hundred ten 40 or subsection (d) of section 41 fourteen hundred fifty-six] 42 (v) Agricultural property tax Allowable school district property 43 credit under subsection (n) taxes under subdivision 44 [twenty-two] ELEVEN of 45 section two hundred [ten] 46 TEN-B 47 (vi) Credit for employment of Qualified first-year wages or 48 persons with disabilities qualified second-year wages under 49 under subsection (o) subdivision [twenty-three] TWELVE S. 6359--C 146 1 of section two hundred [ten or 2 subsection (f) of section 3 fourteen hundred fifty-six] TEN-B 4 (vii) Employment incentive credit Applicable investment credit base 5 under subsection (a-1) under subdivision [twelve-D] TWO 6 of section two hundred [ten] 7 TEN-B 8 (viii) Empire zone employment Applicable investment credit 9 incentive credit under subsection under subdivision [twelve-C] 10 (j-1) FOUR of section 11 two hundred [ten] TEN-B 12 (ix) Alternative fuels Amount of credit under subdivision 13 and electric vehicle [twenty-four] THIRTY of section 14 recharging property two hundred [ten] TEN-B 15 credit under subsection (p) 16 (x) Qualified emerging technology Applicable credit base under 17 company employment credit under subdivision [twelve-E] SEVEN 18 subsection (q) of section two hundred [ten] TEN-B 19 (xi) Qualified emerging technology Qualified investments under 20 company capital tax credit under subdivision [twelve-F] EIGHT 21 subsection (r) of section two hundred [ten] TEN-B 22 (xii) Credit for purchase of an Cost of an automated external 23 automated external defibrillator defibrillator under subdivision 24 under subsection (s) [twenty-five] THIRTEEN of section 25 two hundred [ten or subsection 26 (j) of section fourteen hundred 27 fifty-six] TEN-B 28 (xiii) Low-income housing credit Credit amount under subdivision 29 under subsection (x) [thirty] FIFTEEN of section 30 two hundred [ten or subsection 31 (l) of section fourteen 32 hundred fifty-six] TEN-B 33 [(xiv) Credit for transportation For taxable years beginning 34 improvement contributions under before January first, two thousand 35 subsection (z) nine, amount of credit under 36 subdivision thirty-two of 37 section two hundred ten 38 or subsection (n) of section 39 fourteen hundred fifty-six] 40 (xv) QEZE credit for real property Amount of credit under subdivision 41 taxes under subsection (bb) [twenty-seven] FIVE of 42 section two hundred [ten 43 or subsection (o) of section 44 fourteen hundred fifty-six] 45 TEN-B 46 (xvi) QEZE tax reduction credit Amount of benefit period factor, S. 6359--C 147 1 under subsection (cc) employment increase factor and zone 2 allocation factor (without regard 3 to pro ration) under subdivision 4 [twenty-eight] SIX of 5 section two hundred [ten 6 or subsection (p) of section 7 fourteen hundred fifty-six] 8 TEN-B and amount 9 of tax factor as determined under 10 subdivision (f) of section sixteen 11 (xvii) Green building credit under Amount of green building credit 12 subsection (y) under subdivision [thirty-one] 13 SIXTEEN of section two 14 hundred [ten or subsection (m) 15 of section fourteen hundred 16 fifty-six] TEN-B 17 (xviii) Credit for long-term care Qualified costs under subdivision 18 insurance premiums under subsection [twenty-five-a] FOURTEEN 19 (aa) of section two hundred [ten 20 or subsection (k) of 21 section fourteen hundred fifty-six] 22 TEN-B 23 (xix) Brownfield redevelopment Amount of credit under subdivision 24 credit under subsection (dd) [thirty-three] SEVENTEEN 25 of section two hundred 26 [ten or subsection (q) of section 27 fourteen hundred fifty-six] 28 TEN-B 29 (xx) Remediated brownfield credit Amount of credit under subdivision 30 for real property taxes for [thirty-four] EIGHTEEN 31 qualified sites under subsection of section two hundred 32 (ee) [ten of subsection (r) of section 33 fourteen hundred fifty-six] 34 TEN-B 35 (xxi) Environmental remediation Amount of credit under subdivision 36 insurance credit under subsection [thirty-five] NINETEEN 37 (ff) of section two hundred 38 [ten or subsection (s) of section 39 fourteen hundred fifty-six] 40 TEN-B 41 (xxii) Empire state film Amount of credit for qualified 42 production credit under production costs in production of a 43 subsection (gg) qualified film under subdivision 44 [thirty-six] TWENTY of 45 section two hundred [ten] TEN-B 46 [(xxiii) Qualified emerging Qualifying expenditures and 47 technology company facilities, development activities under 48 operations and training credit subdivision twelve-G of section two 49 under subsection (nn) hundred ten] S. 6359--C 148 1 (xxiv) Security training tax credit Amount of credit under subdivision 2 under subsection (ii) [thirty-seven] TWENTY-ONE 3 of section two hundred 4 [ten or under subsection (t) of 5 section fourteen hundred fifty-six] 6 TEN-B 7 [(xxv) Credit for qualified fuel For taxable years beginning before 8 cell electric generating January first, two thousand nine, 9 equipment expenditures amount of credit under subdivision 10 under subsection (g-2) thirty-seven of section two hundred 11 ten or subsection (t) of section 12 fourteen hundred fifty-six] 13 (xxvi) Empire state commercial Amount of credit for qualified 14 production credit under subsection production costs in production of 15 (jj) a qualified commercial under 16 subdivision [thirty-eight] 17 TWENTY-THREE of 18 section two hundred [ten] 19 TEN-B 20 (xxvii) Biofuel production tax Amount of credit under subdivision 21 credit under subsection (jj) [thirty-eight] TWENTY-FOUR 22 of section two hundred [ten] 23 TEN-B 24 (xxviii) Clean heating fuel credit Amount of credit under subdivision 25 under subsection (mm) [thirty-nine] TWENTY-FIVE of 26 section two hundred [ten] 27 TEN-B 28 (xxix) Credit for rehabilitation Amount of credit under subdivision 29 of historic properties under [forty] TWENTY-SIX of 30 subsection (oo) section two hundred [ten] 31 TEN-B 32 (xxxi) Excelsior jobs program tax Amount of credit under subdivision 33 credit under subsection (qq) [forty-one] THIRTY-ONE of 34 section two hundred [ten 35 or under subdivision (u) of 36 section fourteen hundred fifty-six] 37 TEN-B 38 (xxxi) Empire state film Amount of credit for 39 post production credit under qualified post production 40 subsection (qq) costs of a qualified film 41 under subdivision [forty-one] 42 THIRTY-TWO of section 43 two hundred [ten] TEN-B 44 (xxxii) Economic transformation Amount of credit under subdivision 45 and facility redevelopment credit [forty-three] THIRTY-FIVE 46 of section [210 or under 47 subsection (x) of section fourteen 48 hundred fifty-six] TWO HUNDRED S. 6359--C 149 1 TEN-B 2 (xxxiii) New York youth works Amount of credit under 3 tax credit subdivision [forty-four] THIRTY-SIX 4 of section two hundred [ten] 5 TEN-B 6 (xxxiii) Empire state jobs Amount of credit under 7 retention program credit subdivision [forty-four] 8 THIRTY-SEVEN of section 9 two hundred [ten or under 10 subsection (y) of section 11 fourteen hundred fifty-six] 12 TEN-B 13 (xxxiii) Credit for companies who Amount of credit under 14 provide transportation to subdivision [forty-four] 15 individuals with disabilities THIRTY-EIGHT of section 16 under subsection (tt) two hundred [ten] TEN-B 17 (xxxiv) Beer production credit Amount of credit under 18 under subsection (uu) [subdivision] subdivision 19 [forty-five] THIRTY-NINE of 20 section two hundred [ten] 21 TEN-B 22 (xxxv) Hire a vet credit Amount of credit under subdivision 23 under subsection (a-2) [twenty-three-a] TWENTY-NINE 24 of section two hundred [ten 25 or subsection (e-1) of 26 of section fourteen hundred 27 fifty-six] TEN-B 28 (xxxv) Minimum wage reimbursement Amount of credit under subdivision 29 credit under subsection (aaa) [forty-six] FORTY 30 of section two hundred 31 [ten or subsection (z) of 32 section fourteen hundred 33 fifty-six] TEN-B 34 (xxxvi) Tax-free NY area tax Amount of credit under 35 elimination credit subdivision [forty-seven] FORTY-ONE 36 of section two hundred [ten] 37 TEN-B 38 (xxxvii) Tax-free NY area Amount of credit under 39 excise tax on subdivision [forty-eight] 40 telecommunications services FORTY-THREE of section 41 credit under subsection (xx) two hundred [ten] TEN-B 42 (XXXVIII) REAL PROPERTY TAX AMOUNT OF CREDIT UNDER 43 CREDIT FOR MANUFACTURERS SUBDIVISION FORTY-FOUR 44 UNDER SUBSECTION (YY) OF SECTION 45 TWO HUNDRED TEN-B S. 6359--C 150 1 S 69. Subparagraphs (A) and (B) of paragraph 3 of subsection (i) of 2 section 606 of the tax law, as added by chapter 170 of the laws of 1994, 3 are amended to read as follows: 4 (A) Credit carryover. Any excess credit under subparagraph (A) of 5 paragraph one of this subsection, as it was in effect for taxable years 6 beginning before nineteen hundred ninety-four, may be carried over to 7 the shareholder's following year or years and may be deducted from such 8 shareholder's tax for such year or years, except that any excess credit 9 attributable to subdivision [twelve] ONE of section two hundred [ten] 10 TEN-B of this chapter shall in no event be carried over beyond the ten 11 taxable years next following the taxable year of origin. 12 (B) Credit recapture. Any redetermination of credit required by this 13 subsection as it was in effect for taxable years beginning before nine- 14 teen hundred ninety-four, upon disposition or cessation of qualified use 15 of property pursuant to paragraph [(g)] (E) of subdivision [twelve] ONE, 16 OR paragraph (f) of subdivision [twelve-B or paragraph (f) of subdivi- 17 sion eighteen] THREE of section two hundred [ten] TEN-B of this chapter 18 shall be attributed in pro rata shares to the shareholders who were 19 allowed credit under this subsection with respect to such property, and 20 the reduction of a shareholder's proportionate stock interest shall be 21 treated as a disposition of property for which a redetermination of 22 credit under such paragraphs is required with respect to such sharehold- 23 er. 24 S 69-a. Intentionally omitted. 25 S 70. Subparagraph (B) of paragraph 3 and paragraph 21 of subsection 26 (b) and paragraph 21 of subsection (c) of section 612 of the tax law, 27 subparagraph (B) of paragraph 3 of subsection (b) as amended by section 28 57, paragraph 21 of subsection (b) as amended by section 59 and para- 29 graph 21 of subsection (c) as amended by section 60 of part A of chapter 30 389 of the laws of 1997, are amended to read as follows: 31 (B) Shareholders of S corporations. In the case of a shareholder of an 32 S corporation, with respect to taxes imposed upon or payable by the 33 corporation, the term "income taxes" in subparagraph (A) of this para- 34 graph shall also include the taxes imposed under [articles] ARTICLE 35 nine-A [and thirty-two] of this chapter, regardless of the measure of 36 such tax, but shall not otherwise include taxes imposed by this or any 37 other state of the United States, or any political subdivision of this 38 or any other state, or the District of Columbia. 39 (21) In relation to the disposition of stock or indebtedness of a 40 corporation which elected under subchapter s of chapter one of the 41 internal revenue code for any taxable year of such corporation begin- 42 ning, in the case of a corporation taxable under article nine-A of this 43 chapter, after December thirty-first, nineteen hundred eighty, [and in 44 the case of a corporation taxable under article thirty-two of this chap- 45 ter, after December thirty-first, nineteen hundred ninety-six,] the 46 amount required to be added to federal adjusted gross income pursuant to 47 subsection (n) of this section. 48 (21) In relation to the disposition of stock or indebtedness of a 49 corporation which elected under subchapter s of chapter one of the 50 internal revenue code for any taxable year of such corporation begin- 51 ning, in the case of a corporation taxable under article nine-A of this 52 chapter, after December thirty-first, nineteen hundred eighty, [and in 53 the case of a corporation taxable under article thirty-two of this chap- 54 ter, after December thirty-first, nineteen hundred ninety-six,] the 55 amounts required to be subtracted from federal adjusted gross income 56 pursuant to subsection (n) of this section. S. 6359--C 151 1 S 71. Paragraph 2 of subsection (a) of section 632 of the tax law, as 2 amended by section 2 of part C of chapter 57 of the laws of 2010, is 3 amended to read as follows: 4 (2) In determining New York source income of a nonresident shareholder 5 of an S corporation where the election provided for in subsection (a) of 6 section six hundred sixty of this article is in effect, there shall be 7 included only the portion derived from or connected with New York sourc- 8 es of such shareholder's pro rata share of items of S corporation 9 income, loss and deduction entering into his federal adjusted gross 10 income, increased by reductions for taxes described in paragraphs two 11 and three of subsection (f) of section thirteen hundred sixty-six of the 12 internal revenue code, as such portion shall be determined under regu- 13 lations of the commissioner consistent with the applicable methods and 14 rules for allocation under article nine-A [or thirty-two] of this chap- 15 ter, regardless of whether or not such item or reduction is included in 16 entire net income under article nine-A [or thirty-two] for the tax year. 17 If a nonresident is a shareholder in an S corporation where the election 18 provided for in subsection (a) of section six hundred sixty of this 19 article is in effect, and the S corporation has distributed an install- 20 ment obligation under section 453(h)(1)(A) of the Internal Revenue Code, 21 then any gain recognized on the receipt of payments from the installment 22 obligation for federal income tax purposes will be treated as New York 23 source income allocated in a manner consistent with the applicable meth- 24 ods and rules for allocation under article nine-A [or thirty-two] of 25 this chapter in the year that the assets were sold. In addition, if the 26 shareholders of the S corporation have made an election under section 27 338(h)(10) of the Internal Revenue Code, then any gain recognized on the 28 deemed asset sale for federal income tax purposes will be treated as New 29 York source income allocated in a manner consistent with the applicable 30 methods and rules for allocation under article nine-A [or thirty-two] of 31 this chapter in the year that the shareholder made the section 32 338(h)(10) election. For purposes of a section 338(h)(10) election, when 33 a nonresident shareholder exchanges his or her S corporation stock as 34 part of the deemed liquidation, any gain or loss recognized shall be 35 treated as the disposition of an intangible asset and will not increase 36 or offset any gain recognized on the deemed assets sale as a result of 37 the section 338(h)(10) election. 38 S 72. Subparagraph (A) of paragraph 4 of subsection (c) of section 658 39 of the tax law, as amended by section 1 of part DD of chapter 686 of the 40 laws of 2003, is amended to read as follows: 41 (A) General. Every entity which is a partnership, other than a public- 42 ly traded partnership as defined in section 7704 of the federal Internal 43 Revenue Code, subchapter K limited liability company or an S corporation 44 for which the election provided for in subsection (a) of section six 45 hundred sixty of this [article] PART is in effect, which has partners, 46 members or shareholders who are nonresident individuals, as defined 47 under subsection (b) of section six hundred five of this article, or C 48 corporations, and which has any income derived from New York sources, 49 determined in accordance with the applicable rules of section six 50 hundred thirty-one of this article as in the case of a nonresident indi- 51 vidual, shall pay estimated tax on such income on behalf of such part- 52 ners, members or shareholders in the manner and at the times prescribed 53 by subsection (c) of section six hundred eighty-five of this article. 54 For purposes of this paragraph, the term "estimated tax" shall mean a 55 partner's, member's or shareholder's distributive share or pro rata 56 share of the entity income derived from New York sources, multiplied by S. 6359--C 152 1 the highest rate of tax prescribed by section six hundred one of this 2 article for the taxable year of any partner, member or shareholder who 3 is an individual taxpayer, or paragraph (a) of subdivision one of 4 section two hundred ten of this chapter for the taxable year of any 5 partner, member or shareholder which is a C corporation, whether or not 6 such C corporation is subject to tax under article nine, nine-A[, thir- 7 ty-two,] or thirty-three of this chapter, and reduced by the distribu- 8 tive share or pro rata share of any credits determined under section one 9 hundred eighty-seven, one hundred eighty-seven-a, six hundred six[, 10 fourteen hundred fifty-six] or fifteen hundred eleven of this chapter, 11 whichever is applicable, derived from the entity. 12 S 73. Subsections (a) and (h) of section 660 of the tax law, 13 subsection (a) as amended by section 50 and subsection (h) as amended by 14 section 66 of part A of chapter 389 of the laws of 1997, are amended to 15 read as follows: 16 (a) Election. If a corporation is an eligible S corporation, the 17 shareholders of the corporation may elect in the manner set forth in 18 subsection (b) of this section to take into account, to the extent 19 provided for in this article (or in article thirteen of this chapter, in 20 the case of a shareholder which is a taxpayer under such article), the S 21 corporation items of income, loss, deduction and reductions for taxes 22 described in paragraphs two and three of subsection (f) of section thir- 23 teen hundred sixty-six of the internal revenue code which are taken into 24 account for federal income tax purposes for the taxable year. No 25 election under this subsection shall be effective unless all sharehold- 26 ers of the corporation have so elected. An eligible S corporation is (i) 27 an S corporation which is subject to tax under article nine-A [or thir- 28 ty-two] of this chapter, OR (ii) an S corporation which is the parent of 29 a qualified subchapter S subsidiary subject to tax under article nine-A, 30 where the shareholders of such parent corporation are entitled to make 31 the election under this subsection by reason of subparagraph three of 32 paragraph (k) of subdivision nine of section two hundred eight of this 33 chapter[; or (iii) an S corporation which is the parent of a qualified 34 subchapter S corporation subject to tax under article thirty-two, where 35 the shareholders of such parent are entitled to make the election under 36 this subsection by reason of paragraph three of subsection (o) of 37 section fourteen hundred fifty-three of this chapter]. 38 (h) Cross reference. For definitions relating to S corporations, see 39 subdivision one-A of section two hundred eight [and subsections (f) and 40 (g) of section fourteen hundred fifty] of this chapter. 41 S 74. Paragraph 1 of subsection (i) of section 660 of the tax law, as 42 added by section 1 of part L of chapter 60 of the laws of 2007, is 43 amended to read as follows: 44 (1) Notwithstanding the provisions in subsection (a) of this section, 45 in the case of an eligible S corporation for which the election under 46 subsection (a) of this section is not in effect for the current taxable 47 year, the shareholders of an eligible S corporation are deemed to have 48 made that election effective for the eligible S corporation's entire 49 current taxable year, if the eligible S corporation's investment income 50 for the current taxable year is more than fifty percent of its federal 51 gross income for such year [provided that this subsection shall not 52 apply to an eligible S corporation that is subject to tax under article 53 thirty-two of this chapter]. IN DETERMINING AN ELIGIBLE S CORPORATION'S 54 INVESTMENT INCOME, THE INVESTMENT INCOME OF A QUALIFIED SUBCHAPTER S 55 SUBSIDIARY OWNED DIRECTLY OR INDIRECTLY BY THE ELIGIBLE S CORPORATION 56 SHALL BE INCLUDED. S. 6359--C 153 1 S 75. Paragraph 3 of subsection (c) of section 1085 of the tax law, as 2 amended by section 15 of part Y of chapter 63 of the laws of 2000, is 3 amended to read as follows: 4 (3) The provisions of this subsection and subsections (d) and (e) of 5 this section shall apply to the failure of a taxpayer to file a declara- 6 tion of estimated tax surcharge or the failure to pay all or any part of 7 an amount which is applied as an installment against such estimated tax 8 surcharge pursuant to sections one hundred ninety-seven-a, one hundred 9 ninety-seven-b, two hundred thirteen-a, two hundred thirteen-b, [four- 10 teen hundred sixty, fourteen hundred sixty-one,] fifteen hundred thir- 11 teen and fifteen hundred fourteen of this chapter. For purposes of 12 applying this section and subsections (d) and (e) of this section to the 13 estimated tax surcharge, where appropriate the term "tax" shall be read 14 to mean "tax surcharge," and the terms "amount required to be paid," 15 "amount which would be required to be paid," and "amount which would 16 have been required to be paid" shall be computed as the product of (1) 17 such amount computed without regard to the tax surcharges imposed under 18 sections one hundred eighty-four-a, one hundred eighty-six-c, one 19 hundred eighty-eight, two hundred nine-A, two hundred nine-B, [fourteen 20 hundred fifty-five-A, fourteen hundred fifty-five-B,] fifteen hundred 21 five-a, and fifteen hundred twenty of this chapter, and (2) the MTA 22 percentage. The term "MTA percentage" shall mean the product of (A) the 23 tax rate applicable under such sections imposing such surcharges and (B) 24 the percentage utilized in determining the portion of the taxpayer's 25 business activity carried on within the metropolitan commuter transpor- 26 tation district under such sections. 27 S 76. The opening paragraph of subparagraph (A) of paragraph 3 of 28 subsection (d) of section 1085 of the tax law, as amended by chapter 170 29 of the laws of 1994, is amended to read as follows: 30 An amount equal to ninety-one percent of the tax for the taxable year 31 computed on all items entering into the computation of the tax or taxes 32 of the taxpayer for the taxable year under article nine, nine-A[, thir- 33 ty-two] or thirty-three of this chapter. For purposes of computing the 34 tax, all items of receipts, income and expenses shall be placed on an 35 annualized basis-- 36 S 77. Clause (i) of subparagraph (A) of paragraph 4 of subsection (d) 37 of section 1085 of the tax law, as amended by chapter 57 of the laws of 38 1993, is amended to read as follows: 39 (i) take the items entering into the computation of the tax or taxes 40 of the taxpayer for the taxable year under article nine, nine-A[, thir- 41 ty-two] or thirty-three of this chapter, for all months during the taxa- 42 ble year preceding the filing month, 43 S 78. Paragraph 5 of subsection (d) of section 1085 of the tax law, as 44 added by chapter 61 of the laws of 1989, is amended to read as follows: 45 (5) In the case of any declaration installment, any reduction in such 46 installment resulting from the application of paragraph three or four of 47 this subsection shall be recaptured by increasing the amount of the next 48 installment determined under paragraph one or two of this subsection or 49 paragraph one of subsection (c) of this section by the amount of such 50 reduction (and by increasing subsequent installments to the extent that 51 the reduction has not previously been recaptured under this paragraph). 52 For purposes of the preceding sentence, a declaration installment means 53 any installment of estimated tax other than the mandatory first install- 54 ment required under paragraph (a) of subdivision one of section one 55 hundred ninety-seven-b, subdivision (a) of section two hundred thir- S. 6359--C 154 1 teen-b[, subsection (a) of section fourteen hundred sixty-one] or subdi- 2 vision (a) of section fifteen hundred fourteen of this chapter. 3 S 79. Paragraph 1 of subsection (e) of section 1085 of the tax law, as 4 amended by section 28-p of part H-3 of chapter 62 of the laws of 2003, 5 is amended to read as follows: 6 (1) Paragraphs (1) and (2) of subsection (d) of this section shall not 7 apply in the case of any corporation (or any predecessor corporation) 8 which had [entire net] BUSINESS income, or the portion thereof allocated 9 within the state, of one million dollars or more for any taxable year 10 during the three taxable years immediately preceding the taxable year 11 involved; provided, however, that in the case of a corporation subject 12 to tax under section fifteen hundred two-a of this chapter, paragraphs 13 (1) and (2) of subsection (d) of this section shall not apply if such 14 corporation had entire net income, or the portion thereof allocated 15 within the state, of one million dollars or more for any of the three 16 taxable years immediately preceding the taxable year involved, or if the 17 direct premiums subject to tax under section fifteen hundred two-a of 18 this chapter of the corporation for any of such three preceding taxable 19 years beginning on or after January first, two thousand three equals or 20 exceeds three million seven hundred fifty thousand dollars. 21 S 80. Subsections (m) and (o) of section 1085 of the tax law are 22 REPEALED. 23 S 81. Clause (ii) of subparagraph (B) of paragraph 2 of subsection 24 (q), paragraph 3 of subsection (s) and the closing paragraph of para- 25 graph 1 of subsection (t) of section 1085 of the tax law, as added by 26 section 10 of part N of chapter 61 of the laws of 2005, are amended to 27 read as follows: 28 (ii) fifty percent of the gross income that the organizer or material 29 advisor derived with respect to activities that were the basis for the 30 requirement to file, disclose or provide information pursuant to section 31 six thousand eleven of the internal revenue code, to the extent such 32 gross income is attributable to the avoidance of any tax imposed under 33 article nine, nine-A[, thirty-two,] or thirty-three of this chapter. 34 (3) For purposes of this subsection, the term "understatement of 35 liability" means any understatement of the net amount payable with 36 respect to any tax imposed under article nine, nine-A[, thirty-two,] or 37 thirty-three of this chapter or any overstatement of the net amount 38 creditable or refundable with respect to any such tax. 39 shall pay, with respect to each activity described in subparagraph (A) 40 of this paragraph, a penalty equal to one thousand dollars or, if the 41 person establishes that it is lesser, one hundred percent of the gross 42 income derived (or to be derived) by such person from such activity to 43 the extent such gross income is attributed to the avoidance of any tax 44 imposed under articles nine, nine-A[, thirty-two] or thirty-three of 45 this chapter; provided, however, that if an activity with respect to 46 which a penalty imposed under this subsection involves a statement 47 described in clause (i) of subparagraph (B) of paragraph one of this 48 subsection, the penalty shall be equal to fifty percent of the gross 49 income derived (or to be derived) from that activity within the state by 50 the person on which the penalty is imposed. For purposes of the preced- 51 ing sentence, activities described in clause (i) of subparagraph (A) of 52 this paragraph with respect to each entity or arrangement shall be 53 treated as a separate activity and participation in each sale described 54 in clause (ii) of subparagraph (A) of this paragraph shall be so treat- 55 ed. S. 6359--C 155 1 S 82. The opening paragraph of subsection (c) of section 1087 of the 2 tax law, as separately amended by chapters 760 and 770 of the laws of 3 1992, is amended to read as follows: 4 If a taxpayer is required by subdivision three of section two hundred 5 eleven[, subsection (e) of section fourteen hundred sixty-two] or para- 6 graph one of subdivision (e) of section fifteen hundred fifteen OF THIS 7 CHAPTER, to file a report or amended return in respect of (i) a decrease 8 or increase in federal taxable income or federal alternative minimum 9 taxable income or federal tax, or (ii) a federal change or correction or 10 renegotiation, or computation or recomputation of tax, which is treated 11 in the same manner as if it were an overpayment for federal income tax 12 purposes, claim for credit or refund of any resulting overpayment of tax 13 shall be filed by the taxpayer within two years from the time such 14 report or amended return was required to be filed with the commissioner 15 [of taxation and finance]. If the report or amended return required by 16 any such provision of law is not filed within the period therein speci- 17 fied, no interest shall be payable on any claim for credit or refund of 18 the overpayment attributable to the federal change or correction. The 19 amount of such credit or refund-- 20 S 83. Subsection (g) of section 1088 of the tax law, as amended by 21 chapter 61 of the laws of 1989 and relettered by chapter 55 of the laws 22 of 1992, is amended to read as follows: 23 (g) Cross-reference.--For provision with respect to interest after 24 failure to file a report or amended return under subdivision three of 25 section two hundred eleven[, subsection (e) of section fourteen hundred 26 sixty-two] or paragraph one of subdivision (e) of section fifteen 27 hundred fifteen, see subsection (c) of section one thousand eighty-sev- 28 en. 29 S 84. Paragraph 2 of subsection (b) of section 1096 of the tax law, as 30 amended by chapter 411 of the laws of 1986, is amended to read as 31 follows: 32 (2) The [tax commission] COMMISSIONER may take any action under para- 33 graph one of this subdivision to inquire into the commission of an 34 offense connected with the administration or enforcement of this article 35 or article nine, [nine-a] NINE-A, thirteen, [thirteen-a, thirty-two,] 36 THIRTEEN-A or thirty-three of this chapter, provided, however, that 37 notwithstanding the provisions of section one hundred seventy-four of 38 this chapter no such action shall be taken when a referral by the 39 department or the [tax commission] COMMISSIONER to the attorney general, 40 a district attorney or any other prosecutorial agency is in effect. 41 Provided, however, the [tax commission] COMMISSIONER shall have power, 42 during the period when such referral is in effect, to examine or to 43 cause to have examined, by any agent or representative designated by it 44 for that purpose, any books, papers, records or memoranda bearing upon 45 the matters required to be included in the return, where such books, 46 papers, records or memoranda are in its possession, or where such books, 47 papers, records or memoranda are in the possession of the attorney 48 general, district attorney or other prosecutorial agency to which such 49 referral is made. 50 S 85. Paragraph 1 of subsection (e) of section 1096 of the tax law, as 51 amended by section 8 of subpart D of part V1 of chapter 57 of the laws 52 of 2009, is amended to read as follows: 53 (1) Authority to set interest rates.---The commissioner shall set the 54 overpayment and underpayment rates of interest to be paid pursuant to 55 sections two hundred thirteen, two hundred thirteen-b, two hundred 56 fifty-eight, two hundred sixty-three, two hundred ninety-four, one thou- S. 6359--C 156 1 sand eighty-four, one thousand eighty-five[,] AND one thousand eighty- 2 eight[, fourteen hundred sixty-one and fourteen hundred sixty-three] of 3 this chapter, but if no such rate or rates of interest are set, such 4 overpayment rate shall be deemed to be set at six percent per annum and 5 such underpayment rate shall be deemed to be set at seven and one-half 6 percent per annum. Such overpayment and underpayment rates shall be the 7 rates prescribed in paragraph two of this subsection, but the underpay- 8 ment rate shall not be less than seven and one-half percent per annum. 9 Any such rates set by the commissioner shall apply to taxes, or any 10 portion thereof, which remain or become due or overpaid on or after the 11 date on which such rates become effective and shall apply only with 12 respect to interest computed or computable for periods or portions of 13 periods occurring in the period during which such rates are in effect. 14 S 86. Subdivision (b) of section 1201-a of the tax law, as amended by 15 section 5 of part Y of chapter 62 of the laws of 2006, is amended to 16 read as follows: 17 (b) Empire state film production credit. Any city in this state having 18 a population of one million or more, acting through its local legisla- 19 tive body, is hereby authorized to adopt and amend local laws to allow a 20 credit against the general corporation tax and the unincorporated busi- 21 ness tax imposed pursuant to the authority of chapter seven hundred 22 seventy-two of the laws of nineteen hundred sixty-six which shall be 23 substantially identical to the credit allowed under section twenty-four 24 of this chapter, except that (A) the percentage of qualified production 25 costs used to calculate such credit shall be five percent, (B) whenever 26 such section twenty-four references the state, such words shall be read 27 as referencing the city, (C) such credit shall be allowed only to a 28 taxpayer which is a qualified film production company, and (D) the 29 effective date of such credit shall be July first, two thousand six. 30 Such credit shall be applied in a manner consistent with the credit 31 allowed under subdivision [thirty-six] TWENTY of section two hundred 32 [ten] TEN-B of this chapter except as may be necessary to take into 33 account differences between the general corporation tax and the unincor- 34 porated business tax. 35 S 87. Subdivision (c) of section 1201-a of the tax law, as amended by 36 chapter 300 of the laws of 2007, is amended to read as follows: 37 (c) Empire state commercial production credit. Any city in this state 38 having a population of one million or more, acting through its local 39 legislative body, is hereby authorized to adopt and amend local laws to 40 allow a credit against the general corporation tax and the unincorporat- 41 ed business tax imposed pursuant to the authority of chapter seven 42 hundred seventy-two of the laws of nineteen hundred sixty-six which 43 shall be substantially identical to the credit allowed under the 44 provisions of section twenty-eight of this chapter, except that (A) the 45 percentage of qualified production costs used to calculate such credit 46 shall be five percent, (B) whenever such section twenty-eight references 47 the state, such words shall be read as referencing the city, (C) such 48 credit shall be allowed only to a taxpayer that is a qualified commer- 49 cial production company, and (D) the effective date of such credit shall 50 be as provided in local laws. Such credit shall be applied in a manner 51 consistent with the credit allowed under subdivision [thirty-eight] 52 TWENTY-THREE of section two hundred [ten] TEN-B of this chapter except 53 as may be necessary to take into account differences between the general 54 corporation tax and unincorporated business tax. 55 S 88. The section heading and paragraphs 1 and 3 of subdivision (a) of 56 section 1505-a of the tax law, the section heading as added by chapter S. 6359--C 157 1 11 of the laws of 1983 and paragraphs 1 and 3 of subdivision (a) as 2 amended by section 6 of part A of chapter 59 of the laws of 2013, are 3 amended to read as follows: 4 [Temporary metropolitan] METROPOLITAN transportation business tax 5 surcharge on insurance corporations. 6 (1) Every domestic insurance corporation and every foreign or alien 7 insurance corporation, and every life insurance corporation described in 8 subdivision (b) of section fifteen hundred one of this article, for the 9 privilege of exercising its corporate franchise, or of doing business, 10 or of employing capital, or of owning or leasing property in the metro- 11 politan commuter transportation district in a corporate or organized 12 capacity, or of maintaining an office in the metropolitan commuter 13 transportation district, [for all or any part of its taxable years 14 commencing on or after January first, nineteen hundred eighty-two, but 15 ending before December thirty-first, two thousand eighteen,] except 16 corporations specified in subdivision (c) of section fifteen hundred 17 twelve of this article, shall annually pay, in addition to the taxes 18 otherwise imposed by this article, a tax surcharge on the taxes imposed 19 under this article after the deduction of any credits otherwise allow- 20 able under this article as allocated to such district. Such taxes shall 21 be allocated to such district for purposes of computing such tax 22 surcharge upon taxpayers subject to tax under subdivision (b) of section 23 fifteen hundred ten of this article by applying the methodology, proce- 24 dures and computations set forth in subdivisions (a) and (b) of section 25 fifteen hundred four of this article, except that references to terms 26 denoting New York premiums, and total wages, salaries, personal service 27 compensation and commissions within New York shall be read as denoting 28 within the metropolitan commuter transportation district and terms 29 denoting total premiums and total wages, salaries, personal service 30 compensation and commissions shall be read as denoting within the state. 31 If it shall appear to the commissioner that the application of the meth- 32 odology, procedures and computations set forth in such subdivisions (a) 33 and (b) does not properly reflect the activity, business or income of a 34 taxpayer within the metropolitan commuter transportation district, then 35 the commissioner shall be authorized, in the commissioner's discretion, 36 to adjust such methodology, procedures and computations for the purpose 37 of allocating such taxes by: 38 (A) excluding one or more factors therein; 39 (B) including one or more other factors therein, such as expenses, 40 purchases, receipts other than premiums, real property or tangible 41 personal property; or 42 (C) any other similar or different method which allocates such taxes 43 by attributing a fair and proper portion of such taxes to the metropol- 44 itan commuter transportation district. The commissioner from time to 45 time shall publish all rulings of general public interest with respect 46 to any application of the provisions of the preceding sentence. The 47 commissioner may promulgate rules and regulations to further implement 48 the provisions of this section. 49 (3) Such tax surcharge shall be computed at the rate of [eighteen 50 percent of the taxes imposed under sections fifteen hundred one and 51 fifteen hundred ten of this article as limited by section fifteen 52 hundred five of this article, as allocated to such district, for such 53 taxable years or any part of such taxable years ending before December 54 thirty-first, nineteen hundred eighty-three after the deduction of any 55 credits otherwise allowable under this article, at the rate of seventeen 56 percent of the taxes imposed under such sections as limited by section S. 6359--C 158 1 fifteen hundred five of this article, as allocated to such district, for 2 such taxable years or any part of such taxable years ending on or after 3 December thirty-first, nineteen hundred eighty-three and before January 4 first, two thousand three after the deduction of any credits otherwise 5 allowable under this article, and at the rate of] seventeen percent of 6 the taxes imposed under sections fifteen hundred one, fifteen hundred 7 two-a, and fifteen hundred ten of this article, as limited or otherwise 8 determined by subdivision (a) or (b) of section fifteen hundred five of 9 this article, as allocated to such district, [for such taxable years or 10 any part of such taxable years ending after December thirty-first, two 11 thousand two] after the deduction of any credits otherwise allowable 12 under this article[; provided, however, that the tax surcharge imposed 13 by this section shall not be imposed upon any taxpayer for more than 14 four hundred thirty-two months]. Provided however, that for taxable 15 years commencing on or after July first, two thousand, and in the case 16 of taxpayers subject to tax under section fifteen hundred two-a of this 17 article, for taxable years of such taxpayers beginning on or after July 18 first, two thousand and before January first, two thousand three, such 19 surcharge shall be calculated as if (i) the rate of the tax computed 20 under paragraph one of subdivision (a) of section fifteen hundred two of 21 this article was nine percent and (ii) the rate of the limitation on tax 22 set forth in section fifteen hundred five of this article for domestic, 23 foreign and alien insurance corporations except life insurance corpo- 24 rations was two and six-tenths percent. 25 S 89. Section 1825 of the tax law, as amended by section 2 of part E 26 of chapter 25 of the laws of 2009, is amended to read as follows: 27 S 1825. Violation of secrecy provisions of the tax law.--Any person 28 who violates the provisions of subdivision (b) of section twenty-one, 29 subdivision one of section two hundred two, subdivision eight of section 30 two hundred eleven, subdivision (a) of section three hundred fourteen, 31 subdivision one or two of section four hundred thirty-seven, section 32 four hundred eighty-seven, subdivision one or two of section five 33 hundred fourteen, subsection (e) of section six hundred ninety-seven, 34 subsection (a) of section nine hundred ninety-four, subdivision (a) of 35 section eleven hundred forty-six, section twelve hundred eighty-seven, 36 subdivision (a) of section fourteen hundred eighteen, [subsection (a) of 37 section fourteen hundred sixty-seven,] subdivision (a) of section 38 fifteen hundred eighteen, subdivision (a) of section fifteen hundred 39 fifty-five of this chapter, and subdivision (e) of section 11-1797 of 40 the administrative code of the city of New York shall be guilty of a 41 misdemeanor. 42 S 90. Subdivisions (s) and (t) of section 957 of the general municipal 43 law, as amended by section 1 of part S1 of chapter 57 of the laws of 44 2009, are amended to read as follows: 45 (s) "Qualified investment project" shall mean a project (i) located 46 within an empire zone, (ii) at which five hundred or more jobs will be 47 created, provided such jobs are new to the state and are in addition to 48 any other jobs previously created by the owner of such project in the 49 state, and (iii) which will consist of tangible personal property and 50 other tangible property, including buildings and structural components 51 of buildings, described in subparagraphs (i), (ii), (iii), (iv) and 52 clause (A) or (C) of subparagraph (v) of paragraph (b) of subdivision 53 [twelve-B] THREE of section two hundred [ten] TEN-B of the tax law, the 54 basis of which for federal income tax purposes will equal or exceed 55 seven hundred fifty million dollars. Provided however, the owner of such S. 6359--C 159 1 project does not employ more than two hundred persons in the state at 2 the time such project is commenced. 3 (t) "Significant capital investment project" shall mean a project (i) 4 located within an empire zone, (ii) which will be either a newly 5 constructed facility or a newly constructed addition to or expansion of 6 a qualified investment project, consisting of tangible personal property 7 and other tangible property, including buildings and structural compo- 8 nents of buildings, described in subparagraphs (i), (ii), (iii), (iv) 9 and clause (A) or (C) of subparagraph (v) of paragraph (b) of subdivi- 10 sion [twelve-B] THREE of section two hundred [ten] TEN-B of the tax law, 11 the basis of which for federal income tax purposes will equal or exceed 12 seven hundred fifty million dollars, (iii) which is constructed after 13 the basis for federal income tax purposes of the property comprising 14 such qualified investment project equals or exceeds seven hundred fifty 15 million dollars, and (iv) at which five hundred or more jobs will be 16 created, provided such jobs are new to the state and are in addition to 17 any other jobs previously created by the owner of such project in the 18 state. 19 S 91. Intentionally omitted. 20 S 92. Intentionally omitted. 21 S 93. Intentionally omitted. 22 S 94. Intentionally omitted. 23 S 95. Intentionally omitted. 24 S 96. Intentionally omitted. 25 S 97. Intentionally omitted. 26 S 98. Intentionally omitted. 27 S 99. Notwithstanding any provisions of law to the contrary and 28 notwithstanding the repeal of article 32 of the tax law by section one 29 of this act, the repeal of section 180 of the tax law by section two of 30 this act and the repeal of section 181 of the tax law by section three 31 of this act, all provisions of such article and such sections, in 32 respect to the imposition, exemption, assessment, payment, payment over, 33 determination, collection, and credit or refund of tax, interest and 34 penalty imposed thereunder, the filing of forms and returns, the preser- 35 vation of records for the purposes of such tax, the secrecy of returns, 36 the disposition of revenues, and the civil and criminal penalties appli- 37 cable to the violation of the provisions of such article 32 and such 38 sections 180 and 181, shall continue in full force and effect with 39 respect to all such tax accrued for taxable years beginning before Janu- 40 ary 1, 2015; and all actions and proceedings, civil or criminal, 41 commenced or authorized to be commenced under or by virtue of any 42 provision of such article 32 or by virtue of any provision of such 43 section 180 or 181 so repealed, and pending or able to be commenced 44 immediately prior to the taking effect of such repeal, may be commenced, 45 prosecuted and defended to final effect in the same manner as they might 46 if such provisions were not so repealed. 47 S 100. Subdivision 1 of section 187 of the tax law, as amended by 48 chapter 2 of the laws of 1995, is amended to read as follows: 49 1. A taxpayer shall be allowed a credit, to be credited against the 50 taxes imposed by this article, other than the taxes and fees imposed by 51 sections [one hundred eighty, one hundred eighty-one,] one hundred 52 eighty-six-a and one hundred eighty-six-e of this chapter. The amount of 53 the credit shall be the amount of the special additional mortgage 54 recording tax paid by the taxpayer pursuant to the provisions of subdi- 55 vision one-a of section two hundred fifty-three of this chapter on mort- 56 gages recorded on and after January first, nineteen hundred seventy- S. 6359--C 160 1 nine. Provided, however, that the amount of such credit allowable 2 against the tax imposed by section one hundred eighty-four of this chap- 3 ter shall be the excess of the amount of such special additional mort- 4 gage recording tax paid over the amount of any credit allowed by this 5 section against the tax imposed by section one hundred eighty-three of 6 this chapter. Provided further, however, no credit shall be allowed with 7 respect to a mortgage of real property principally improved or to be 8 improved by one or more structures containing in the aggregate not more 9 than six residential dwelling units, each dwelling unit having its own 10 separate cooking facilities, where the real property is located in one 11 or more of the counties comprising the metropolitan commuter transporta- 12 tion district and where the mortgage is recorded on or after May first, 13 nineteen hundred eighty-seven. Provided further, however, no credit 14 shall be allowed with respect to a mortgage of real property principally 15 improved or to be improved by one or more structures containing in the 16 aggregate not more than six residential dwelling units, each dwelling 17 unit having its own separate cooking facilities, where the real property 18 is located in the county of Erie and where the mortgage is recorded on 19 or after May first, nineteen hundred eighty-seven. 20 S 101. Subdivision 1 of section 187-a of the tax law, as added by 21 chapter 142 of the laws of 1997, is amended to read as follows: 22 1. Allowance of credit. A taxpayer shall be allowed a credit, to be 23 computed as hereinafter provided, against the taxes imposed by this 24 article, other than the taxes imposed by sections [one hundred eighty, 25 one hundred eighty-one,] one hundred eighty-six-a, one hundred eighty- 26 six-e and one hundred eighty-nine of this article, for employing within 27 the state a qualified employee. Provided, however, the amount of credit 28 allowed by this section against the tax imposed by section one hundred 29 eighty-four of this article shall be the excess of the credit computed 30 under this section over the amount of credit allowed by this section 31 against the tax imposed by section one hundred eighty-three of this 32 article. 33 S 102. Subdivision 1 of section 190 of the tax law, as amended by 34 section 17 of part B of chapter 58 of the laws of 2004, is amended to 35 read as follows: 36 1. General. A taxpayer shall be allowed a credit against the tax 37 imposed by this article[, other than the taxes and fees imposed by 38 sections one hundred eighty and one hundred eighty-one of this article,] 39 equal to twenty percent of the premium paid during the taxable year for 40 long-term care insurance. In order to qualify for such credit, the 41 taxpayer's premium payment must be for the purchase of or for continuing 42 coverage under a long-term care insurance policy that qualifies for such 43 credit pursuant to section one thousand one hundred seventeen of the 44 insurance law. 45 S 103. Subdivision 5 of section 192 of the tax law is REPEALED. 46 S 104. Clauses 1 and 2 of subparagraph (A) and subparagraph (B) of 47 paragraph (iii) of subdivision 9 of section 16-v of section 1 of chapter 48 174 of the laws of 1968 constituting the urban development corporation 49 act, as added by section 1 of part C of chapter 59 of the laws of 2013, 50 is amended to read as follows: 51 (1) over fifty percent of the number of shares of stock entitling the 52 holders thereof to vote for the election of directors or trustees is 53 owned or controlled, either directly or indirectly, by a taxpayer 54 subject to tax under the following provisions of the tax law: article 55 nine-A; section one hundred eighty-three, OR one hundred eighty-four [or S. 6359--C 161 1 one hundred eighty-five] of article nine; [article thirty-two] or arti- 2 cle thirty-three; or 3 (2) is substantially similar in operation and in ownership to a busi- 4 ness entity (or entities) taxable or previously taxable under the 5 following provisions of the tax law: article nine-A; section one hundred 6 eighty-three, one hundred eighty-four, FORMER SECTION one hundred eight- 7 y-five or former section one hundred eighty-six of article nine; FORMER 8 article thirty-two; article thirty-three; article twenty-three, or would 9 have been subject to tax under such article twenty-three (as such arti- 10 cle was in effect on January first, nineteen hundred eighty) or the 11 income (or losses) of which is (or was) includable under article twen- 12 ty-two; or 13 (B) a sole proprietorship, partnership, limited partnership, limited 14 liability company, or New York subchapter S corporation that is not 15 substantially similar in operation and in ownership to a business entity 16 (or entities) taxable, or previously taxable, under article nine-A of 17 the tax law, section one hundred eighty-three, one hundred eighty-four, 18 FORMER SECTION one hundred eighty-five or former section one hundred 19 eighty-six of article nine of the tax law, FORMER article thirty-two or 20 ARTICLE thirty-three of the tax law, article twenty-three of the tax law 21 or which would have been subject to tax under such article twenty-three 22 (as such article was in effect on January first, nineteen hundred 23 eighty) or the income (or losses) of which is (or was) includable under 24 article twenty-two of the tax law; and 25 S 105. Section 206 of the tax law, as added by chapter 69 of the laws 26 of 1978, is amended to read as follows: 27 S 206. Deposit and disposition of revenue. The [license fees,] 28 taxes, percentage, interest and other charges imposed by this article 29 shall be collected and deposited and receipts therefor issued by the 30 [tax commission, except that such license fees, taxes, percentage, 31 interest and other charges imposed by section one hundred eighty of this 32 chapter shall be collected and deposited and receipts therefor issued by 33 the proper state officer in accordance with the provisions of subdivi- 34 sion two of section one hundred eighty of this chapter,] COMMISSIONER 35 and all revenues so collected or received shall be deposited and 36 disposed of pursuant to the provisions of section one hundred seventy- 37 one-a of this chapter. 38 S 106. Subsection (a) of section 1080 of the tax law, as added by 39 chapter 188 of the laws of 1964, is amended to read as follows: 40 (a) General.--- The provisions of this article shall apply to the 41 administration of and the procedures with respect to the taxes imposed 42 by articles nine [(except section one hundred eighty)], AND nine-a[, 43 nine-b and nine-c] of this chapter for taxable years or periods ending 44 on or after December thirty-first, nineteen hundred sixty-four. 45 S 107. Subdivisions (a) and (c) of section 1809 of the tax law, as 46 added by section 1 of subpart A of part S of chapter 57 of the laws of 47 2010, are amended to read as follows: 48 (a) Any person who, with intent to evade payment of any tax imposed 49 under article nine [(other than under section one hundred eighty or one 50 hundred eighty-one)], nine-A, thirteen, [thirty-two,] thirty-three or 51 thirty-three-A of this chapter, fails to file a return or report for 52 three consecutive taxable years shall be guilty of a class E felony, 53 provided that such person had an unpaid tax liability, in excess of the 54 threshold amount with respect to each of the three consecutive taxable 55 years. The threshold amount in the case of a taxable year under article 56 nine-A of this chapter ending after June thirtieth, nineteen hundred S. 6359--C 162 1 eighty-nine is the applicable fixed dollar minimum prescribed under 2 paragraph (d) of subdivision one of section two hundred ten of this 3 chapter. In the event such fixed dollar minimum is less than two hundred 4 fifty dollars, the threshold amount in the case of such taxable year is 5 two hundred fifty dollars. In all other cases the threshold amount is 6 two hundred fifty dollars. 7 (c) As used in this section, the terms "return" and "report" shall 8 mean a return or report required under section one hundred ninety-two, 9 two hundred eleven, two hundred ninety-four, [fourteen hundred sixty- 10 two,] fifteen hundred fifteen or fifteen hundred fifty-four of this 11 chapter. It shall not include any return or report referred to in 12 section one hundred ninety-seven-a, two hundred thirteen-a, [fourteen 13 hundred sixty] or fifteen hundred thirteen of this chapter. 14 S 108. Paragraphs (d), (e), (g), (h) and (q) of section 104-A of the 15 business corporation law, subdivisions (d), (e) and (q) as amended by 16 chapter 166 of the laws of 1991, subdivision (g) as added by chapter 591 17 of the laws of 1982, and subdivision (h) as amended by chapter 117 of 18 the laws of 1986, are amended to read as follows: 19 (d) For filing a certificate of incorporation pursuant to section four 20 hundred two of this chapter, one hundred twenty-five dollars [plus the 21 tax on shares prescribed by section one hundred eighty of the tax law]. 22 (e) For filing a certificate of amendment pursuant to section eight 23 hundred five of this chapter, sixty dollars [plus the tax on shares 24 prescribed by section one hundred eighty of the tax law if such certif- 25 icate shows a change of shares]. 26 (g) For filing a restated certificate of incorporation pursuant to 27 section eight hundred seven of this chapter, sixty dollars [plus the tax 28 on shares prescribed by section one hundred eighty of the tax law if 29 such certificate shows a change of shares]. 30 (h) For filing a certificate of merger or consolidation pursuant to 31 section nine hundred four of this chapter, or a certificate of exchange 32 pursuant to section nine hundred thirteen (other than paragraph (g) of 33 section nine hundred thirteen) of this chapter, sixty dollars [plus the 34 tax on shares prescribed by section one hundred eighty of the tax law if 35 such certificate shows a change of shares]. 36 (q) For filing a certificate of incorporation by a professional 37 service corporation pursuant to section fifteen hundred three of this 38 chapter, one hundred twenty-five dollars [plus the tax on shares 39 prescribed by section one hundred eighty of the tax law]. 40 S 109. Subdivision 8 of section 7-a of the general associations law, 41 as added by chapter 575 of the laws of 1964, is amended to read as 42 follows: 43 8. The provisions of section ninety-six of the executive law prescrib- 44 ing the fee to be collected by the department of state for filing a 45 certificate of incorporation under the business corporation law shall 46 apply to the certificate of incorporation to be filed pursuant to this 47 section[, and the organization tax payable under section one hundred 48 eighty of the tax law in respect of a corporation formed under the busi- 49 ness corporation law shall be paid before the department of state shall 50 file such certificate of incorporation]. 51 S 110. Paragraph 1 of subdivision (a) of section 1502 of the tax law, 52 as amended by section 4 of part N of chapter 60 of the laws of 2007, is 53 amended to read as follows: 54 (1) for taxable years beginning before July first, two thousand, nine 55 percent of the taxpayer's entire net income, or portion thereof allo- 56 cated within this state, for the taxable year, or part thereof, except S. 6359--C 163 1 that for taxable years beginning prior to January first, nineteen 2 hundred seventy-eight, the rate shall be four and five-tenths percent; 3 for taxable years beginning after June thirtieth, two thousand and 4 before July first, two thousand one, eight and one-half percent of the 5 taxpayer's entire net income, or portion thereof allocated within this 6 state, for the taxable year, or part thereof; for taxable years begin- 7 ning after June thirtieth, two thousand one and before July first, two 8 thousand two, eight percent of the taxpayer's entire net income, or 9 portion thereof allocated within this state, for the taxable year, or 10 part thereof; for taxable years beginning after June thirtieth, two 11 thousand two and before January first, two thousand seven, seven and 12 one-half percent of the taxpayer's entire net income, or portion thereof 13 allocated within this state, for the taxable year, or part thereof; 14 [and] for taxable years beginning on or after January first, two thou- 15 sand seven AND BEFORE DECEMBER THIRTY-FIRST, TWO THOUSAND FIFTEEN, seven 16 and one-tenth percent of the taxpayer's entire net income, or portion 17 thereof allocated within this state, for the taxable year, or part ther- 18 eof; AND FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO 19 THOUSAND SIXTEEN, SIX AND ONE-HALF PERCENT OF THE TAXPAYER'S ENTIRE NET 20 INCOME, OR PORTION THEREOF ALLOCATED WITHIN THIS STATE, FOR THE TAXABLE 21 YEAR, OR PART THEREOF; or 22 S 111. Paragraphs 1 and 2 of subdivision (l) of section 11-640 of the 23 administrative code of the city of New York, as amended by section 3 of 24 part R of chapter 59 of the laws of 2012, is amended to read as follows: 25 (1) Notwithstanding anything to the contrary contained in this section 26 other than subdivision (m) of this section, a corporation that was in 27 existence before January first, two thousand [twelve] FOURTEEN and was 28 subject to tax under subchapter two of this chapter for its last taxable 29 year beginning before January first, two thousand [twelve] FOURTEEN, 30 shall continue to be taxable under such subchapter for all taxable years 31 beginning on or after January first, two thousand [twelve] FOURTEEN and 32 before January first, two thousand [fifteen] SEVENTEEN. The preceding 33 sentence shall not apply to any taxable year during which such corpo- 34 ration is a banking corporation described in paragraphs one through 35 eight of subdivision (a) of this section. Notwithstanding anything to 36 the contrary contained in this section other than subdivision (m) of 37 this section, a banking corporation or corporation that was in existence 38 before January first, two thousand [twelve] FOURTEEN and was subject to 39 tax under this subchapter for its last taxable year beginning before 40 January first, two thousand [twelve] FOURTEEN, shall continue to be 41 taxable under this subchapter for all taxable years beginning on or 42 after January first, two thousand [twelve] FOURTEEN and before January 43 first, two thousand [fifteen] SEVENTEEN only if the corporation is a 44 banking corporation as defined in subdivision (a) of this section or the 45 corporation satisfies the requirements for a corporation to elect to be 46 taxable under this subchapter. Provided further, that nothing in this 47 subdivision shall prohibit a corporation that elected pursuant to subdi- 48 vision (d) of this section to be taxable under subchapter two of this 49 chapter from revoking that election in accordance with subdivision (d) 50 of this section. For purposes of this paragraph, a corporation shall be 51 considered to be subject to tax under subchapter two of this chapter for 52 a taxable year if such corporation was not a taxpayer but was properly 53 included in a combined report filed pursuant to subdivision four of 54 section 11-605 of this chapter for such taxable year and a corporation 55 shall be considered to be subject to tax under this subchapter for a 56 taxable year if such corporation was not a taxpayer but was properly S. 6359--C 164 1 included in a combined report filed pursuant to subdivision (f) or (g) 2 of section 11-646 of this part for such taxable year. A corporation that 3 was in existence before January first, two thousand [twelve] FOURTEEN 4 but first becomes a taxpayer in a taxable year beginning on or after 5 January first, two thousand [twelve] FOURTEEN and before January first, 6 two thousand [fifteen] SEVENTEEN, shall be considered for purposes of 7 this paragraph to have been subject to tax under subchapter two of this 8 chapter for its last taxable year beginning before January first, two 9 thousand [twelve] FOURTEEN if such corporation would have been subject 10 to tax under such subchapter for such taxable year if it had been a 11 taxpayer during such taxable year. A corporation that was in existence 12 before January first, two thousand [twelve] FOURTEEN but first becomes a 13 taxpayer in a taxable year beginning on or after January first, two 14 thousand [twelve] FOURTEEN and before January first, two thousand 15 [fifteen] SEVENTEEN, shall be considered for purposes of this paragraph 16 to have been subject to tax under this subchapter for its last taxable 17 year beginning before January first, two thousand [twelve] FOURTEEN if 18 such corporation would have been subject to tax under this subchapter 19 for such taxable year if it had been a taxpayer during such taxable 20 year. 21 (2) Notwithstanding anything to the contrary contained in this section 22 other than subdivision (m) of this section, a corporation formed on or 23 after January first, two thousand [twelve] FOURTEEN and before January 24 first, two thousand [fifteen] SEVENTEEN may elect to be subject to tax 25 under this subchapter or under subchapter two of this chapter for its 26 first taxable year beginning on or after January first, two thousand 27 [twelve] FOURTEEN and before January first, two thousand [fifteen] 28 SEVENTEEN in which either (i) sixty-five percent or more of its voting 29 stock is owned or controlled, directly or indirectly by a financial 30 holding company, provided the corporation whose voting stock is so owned 31 or controlled is principally engaged in activities that are described in 32 section 4(k)(4) or 4(k)(5) of the federal bank holding company act of 33 nineteen hundred fifty-six, as amended and the regulations promulgated 34 pursuant to the authority of such section or (ii) it is a financial 35 subsidiary. An election under this paragraph may not be made by a corpo- 36 ration described in paragraphs one through eight of subdivision (a) of 37 this section or in subdivision (e) of this section. In addition, an 38 election under this paragraph may not be made by a corporation that is a 39 party to a reorganization, as defined in subsection (a) of section 368 40 of the internal revenue code of 1986, as amended, of a corporation 41 described in paragraph one of this subdivision if both corporations were 42 sixty-five percent or more owned or controlled, directly or indirectly 43 by the same interests at the time of the reorganization. 44 An election under this paragraph must be made by the taxpayer on or 45 before the due date for filing its return (determined with regard to 46 extensions of time for filing) for the applicable taxable year. The 47 election to be taxed under subchapter two of this chapter shall be made 48 by the taxpayer by filing the return required pursuant to subdivision 49 one of section 11-605 of this chapter and the election to be taxed under 50 this subchapter shall be made by the taxpayer by filing the return 51 required pursuant to subdivision (a) of section 11-646 of this part. Any 52 election made pursuant to this paragraph shall be irrevocable and shall 53 apply to each subsequent taxable year beginning on or after January 54 first, two thousand [twelve] FOURTEEN and before January first, two 55 thousand [fifteen] SEVENTEEN, provided that the stock ownership and 56 activities requirements described in subparagraph (i) of this paragraph S. 6359--C 165 1 are met or such corporation described in subparagraph (ii) of this para- 2 graph continues as a financial subsidiary. 3 S 112. Subparagraph (iv) of paragraph 2 of subdivision (f) of section 4 11-646 of the administrative code of the city of New York, as amended by 5 section 4 of part R of chapter 59 of the laws of 2012, is amended to 6 read as follows: 7 (iv) (A) Notwithstanding any provision of this paragraph, any bank 8 holding company exercising its corporate franchise or doing business in 9 the city may make a return on a combined basis without seeking the 10 permission of the commissioner with any banking corporation exercising 11 its corporate franchise or doing business in the city in a corporate or 12 organized capacity sixty-five percent or more of whose voting stock is 13 owned or controlled, directly or indirectly, by such bank holding compa- 14 ny, for the first taxable year beginning on or after January first, two 15 thousand and before January first, two thousand [fifteen] SEVENTEEN 16 during which such bank holding company registers for the first time 17 under the federal bank holding company act, as amended, and also elects 18 to be a financial holding company. In addition, for each subsequent 19 taxable year beginning after January first, two thousand and before 20 January first, two thousand [fifteen] SEVENTEEN, any such bank holding 21 company may file on a combined basis without seeking the permission of 22 the commissioner with any banking corporation that is exercising its 23 corporate franchise or doing business in the city and sixty-five percent 24 or more of whose voting stock is owned or controlled, directly or indi- 25 rectly, by such bank holding company if either such banking corporation 26 is exercising its corporate franchise or doing business in the city in a 27 corporate or organized capacity for the first time during such subse- 28 quent taxable year, or sixty-five percent or more of the voting stock of 29 such banking corporation is owned or controlled, directly or indirectly, 30 by such bank holding company for the first time during such subsequent 31 taxable year. Provided however, for each subsequent taxable year begin- 32 ning after January first, two thousand and before January first, two 33 thousand [fifteen] SEVENTEEN, a banking corporation described in either 34 of the two preceding sentences which filed on a combined basis with any 35 such bank holding company in a previous taxable year, must continue to 36 file on a combined basis with such bank holding company if such banking 37 corporation, during such subsequent taxable year, continues to exercise 38 its corporate franchise or do business in the city in a corporate or 39 organized capacity and sixty-five percent or more of such banking corpo- 40 ration's voting stock continues to be owned or controlled, directly or 41 indirectly, by such bank holding company, unless the permission of the 42 commissioner has been obtained to file on a separate basis for such 43 subsequent taxable year. Provided further, however, for each subsequent 44 taxable year beginning after January first, two thousand and before 45 January first, two thousand [fifteen] SEVENTEEN, a banking corporation 46 described in either of the first two sentences of this clause which did 47 not file on a combined basis with any such bank holding company in a 48 previous taxable year, may not file on a combined basis with such bank 49 holding company during any such subsequent taxable year unless the 50 permission of the commissioner has been obtained to file on a combined 51 basis for such subsequent taxable year. 52 (B) Notwithstanding any provision of this paragraph other than clause 53 (A) of this subparagraph, the commissioner may not require a bank hold- 54 ing company which, during a taxable year beginning on or after January 55 first, two thousand and before January first, two thousand [fifteen] 56 SEVENTEEN, registers for the first time during such taxable year under S. 6359--C 166 1 the federal bank holding company act, as amended, and also elects to be 2 a financial holding company, to make a return on a combined basis for 3 any taxable year beginning on or after January first, two thousand and 4 before January first, two thousand [fifteen] SEVENTEEN with a banking 5 corporation sixty-five percent or more of whose voting stock is owned or 6 controlled, directly or indirectly, by such bank holding company. 7 S 113. Severability. If any provision of this act shall for any 8 reason be finally adjudged by any court of competent jurisdiction to be 9 invalid, such judgment shall not affect, impair, or invalidate the 10 remainder of this act, but shall be confined in its operation to the 11 provision directly involved in the controversy in which such judgment 12 shall have been rendered. It is hereby declared to be in the intent of 13 the legislature that this act would have been enacted even if such 14 invalid provision had not been included in this act. Provided further, 15 if a court of final, competent jurisdiction adjudges the tax rates 16 imposed on qualified New York manufacturers to be invalid, qualified New 17 York manufacturers shall be subject to the same tax rates as all other 18 taxpayers subject to tax under article 9-A of the tax law. Provided 19 further, if a court of final, competent jurisdiction adjudges that any 20 of the tax credits provided by this act to be invalid, such credit or 21 credits shall be deemed repealed and shall be of no force and effect as 22 to any taxpayers. 23 S 114. This act shall take effect January 1, 2015 and shall apply to 24 taxable years commencing on or after such date; provided that the amend- 25 ments to section 25 of the tax law made by section forty-three of this 26 act shall not affect the repeal of such section and shall be deemed 27 repealed therewith; provided, further, that the amendments to the open- 28 ing paragraph of subdivision (a), subparagraph (C) of paragraph 2 of 29 subdivision (e) and subdivision (f) of section 35 of the tax law made by 30 section fifty of this act shall not affect the repeal of such provisions 31 and shall be deemed repealed therewith; provided, further, that the 32 amendments to clause (xxxii) of subparagraph (B) of paragraph 1 of 33 subsection (i) of section 606 of the tax law made by section sixty-eight 34 of this act shall not affect the repeal of such clause and shall be 35 deemed repealed therewith; provided, further, that the amendments to 36 clause (xxxiii) of subparagraph (B) of paragraph 1 of subsection (i) of 37 section 606 of the tax law made by section sixty-eight of this act shall 38 not affect the repeal of such clause and shall be deemed repealed there- 39 with; and provided, further, that the amendments to clause (ii) of 40 subparagraph (B) of paragraph 2 of subsection (q), paragraph 3 of 41 subsection (s) and the closing paragraph of paragraph 1 of subsection 42 (t) of section 1085 of the tax law made by section eighty-one of this 43 act shall not affect the repeal of such provisions and shall be deemed 44 repealed therewith. 45 PART B 46 Section 1. Subparagraph (iii) of paragraph (a) of subdivision 14 of 47 section 425 of the real property tax law, as added by section 1 of part 48 J of chapter 57 of the laws of 2013, is amended to read as follows: 49 (iii) An owner who fails to register by the registration deadline so 50 established shall be permitted to file a petition with the commissioner 51 requesting that the commissioner excuse such failure and accept a late 52 registration, provided that such petition shall explain why such failure 53 occurred and shall be filed no later than one year after such deadline, 54 AND PROVIDED FURTHER THAT IF THE COMMISSIONER ACCEPTS A LATE REGISTRA- S. 6359--C 167 1 TION AFTER HAVING DIRECTED THE REMOVAL OF THE BASIC STAR EXEMPTION FROM 2 THE PROPERTY TO WHICH THE REGISTRATION PERTAINS, THEN IN LIEU OF DIRECT- 3 ING THE EXEMPTION TO BE RESTORED, THE COMMISSIONER IS AUTHORIZED IN HIS 4 OR HER DISCRETION TO REMIT DIRECTLY TO THE PROPERTY OWNER OR OWNERS THE 5 TAX SAVINGS THAT THE EXEMPTION WOULD HAVE YIELDED HAD IT NOT BEEN 6 REMOVED, AND TO FURTHER DIRECT THE ASSESSOR TO RESTORE THE EXEMPTION ON 7 A PROSPECTIVE BASIS WITHOUT A NEW APPLICATION UNLESS THE ASSESSOR HAS 8 REASON TO BELIEVE THAT THE PROPERTY OWNER IS NO LONGER ELIGIBLE FOR 9 REASONS OTHER THAN A FAILURE TO REGISTER; 10 S 2. This act shall take effect immediately and shall be deemed to 11 have been in full force and effect on and after April 1, 2014. 12 PART C 13 Section 1. Section 2 of chapter 540 of the laws of 1992, amending the 14 real property tax law relating to oil and gas charges, as amended by 15 section 1 of part A of chapter 59 of the laws of 2012, is amended to 16 read as follows: 17 S 2. This act shall take effect immediately and shall be deemed to 18 have been in full force and effect on and after April 1, 1992; provided, 19 however that any charges imposed by section 593 of the real property tax 20 law as added by section one of this act shall first be due for values 21 for assessment rolls with tentative completion dates after July 1, 1992, 22 and provided further, that this act shall remain in full force and 23 effect until March 31, [2015] 2018, at which time section 593 of the 24 real property tax law as added by section one of this act shall be 25 repealed. 26 S 2. This act shall take effect immediately. 27 PART D 28 Intentionally Omitted 29 PART E 30 Section 1. Subsection (a) of section 653 of the tax law, as amended by 31 chapter 65 of the laws of 1985, is amended to read as follows: 32 (a) General. (1) Any return, statement or other document required to 33 be made pursuant to this article shall be signed in accordance with 34 regulations or instructions prescribed by the [tax commission] COMMIS- 35 SIONER. The fact that an individual's name is signed to a return, 36 statement, or other document, shall be prima facie evidence for all 37 purposes that the return, statement or other document was actually 38 signed by him OR HER. 39 (2) IN THE CASE OF AN ELECTRONICALLY FILED INDIVIDUAL'S PERSONAL 40 INCOME TAX RETURN PREPARED BY A TAX PREPARER, AN AUTHORIZATION TO FILE 41 ANY RETURN, STATEMENT OR OTHER DOCUMENT REQUIRED TO BE MADE PURSUANT TO 42 THIS ARTICLE SIGNED BY THE TAXPAYER IN ACCORDANCE WITH THE REGULATIONS 43 OR INSTRUCTIONS PRESCRIBED BY THE COMMISSIONER AND RECEIVED ELECTRON- 44 ICALLY BY THE TAX PREPARER SHALL SATISFY THE SIGNATURE REQUIREMENTS 45 UNDER THIS ARTICLE. 46 S 2. This act shall take effect immediately and shall apply to returns 47 filed for taxable years beginning on or after January 1, 2014. 48 PART F S. 6359--C 168 1 Intentionally Omitted 2 PART G 3 Section 1. Section 2 of part I of chapter 58 of the laws of 2006, 4 relating to providing an enhanced earned income tax credit, as amended 5 by section 1 of part L of chapter 59 of the laws of 2012, is amended to 6 read as follows: 7 S 2. This act shall take effect immediately and shall apply to taxable 8 years beginning on or after January 1, 2006 and before January 1, [2015] 9 2017. 10 S 2. This act shall take effect immediately. 11 PART H 12 Section 1. The general obligations law is amended by adding a new 13 section 3-505 to read as follows: 14 S 3-505. ENFORCEMENT OF DELINQUENT TAX LIABILITIES THROUGH ELECTRONIC 15 TAX CLEARANCES FOR OCCUPATIONAL, PROFESSIONAL AND BUSINESS LICENSES. 16 1. AS USED IN THIS SECTION: 17 A. "GOVERNMENT ENTITY" MEANS THE STATE OF NEW YORK, OR ANY OF ITS 18 AGENCIES, POLITICAL SUBDIVISIONS, INSTRUMENTALITIES, PUBLIC CORPORATIONS 19 (INCLUDING A PUBLIC CORPORATION CREATED PURSUANT TO AGREEMENT OR COMPACT 20 WITH ANOTHER STATE OR CANADA), OR COMBINATION THEREOF, RESPONSIBLE FOR 21 DETERMINING WHETHER A LICENSE SHALL BE ISSUED OR RENEWED. 22 B. "ELECTRONIC LICENSE APPLICATION" MEANS ANY ELECTRONIC DATA FORM 23 THAT MUST BE COMPLETED BY AN APPLICANT TO OBTAIN OR RENEW A LICENSE, OR 24 AN ELECTRONIC DATA PROCESS WHICH IS USED BY A GOVERNMENT ENTITY TO PROC- 25 ESS DATA RECEIVED FROM AN APPLICANT SEEKING TO RECEIVE OR RENEW A 26 LICENSE. 27 C. "ELECTRONIC TAX CLEARANCE" MEANS AN ELECTRONIC COMMUNICATION FROM 28 THE DEPARTMENT OF TAXATION AND FINANCE INDICATING THAT AN APPLICANT HAD 29 NO PAST-DUE TAX LIABILITIES, AS THAT TERM IS DEFINED IN SECTION ONE 30 HUNDRED SEVENTY-ONE-W OF THE TAX LAW, OR THAT NO CONCLUSIVE MATCH COULD 31 BE MADE. 32 D. "LICENSE" MEANS ANY CERTIFICATE, LICENSE, PERMIT OR GRANT OF 33 PERMISSION REQUIRED BY LAW OR AGENCY REGULATION AS A CONDITION FOR THE 34 LAWFUL PRACTICE OF ANY OCCUPATION, EMPLOYMENT, TRADE, VOCATION, BUSI- 35 NESS, OR PROFESSION, INCLUDING ANY REGISTRATION REQUIRED BY LAW OR AGEN- 36 CY REGULATION AS A CONDITION FOR SUCH LAWFUL PRACTICE. THIS SHALL 37 INCLUDE, BUT IS NOT LIMITED TO, ANY LICENSE GRANTED TO AN INDIVIDUAL OR 38 ENTITY BY THE STATE EDUCATION DEPARTMENT, THE DEPARTMENT OF STATE, OR 39 THE OFFICE OF COURT ADMINISTRATION. PROVIDED, HOWEVER, THAT "LICENSE" 40 SHALL NOT, FOR THE PURPOSES OF THIS SECTION, INCLUDE ANY LICENSE OR 41 PERMIT TO OWN, POSSESS, CARRY, OR FIRE ANY EXPLOSIVE, PISTOL, HANDGUN, 42 RIFLE, SHOTGUN, OTHER FIREARM OR AMMUNITION. 43 2. NOTWITHSTANDING ANY OTHER PROVISION OF LAW, AND WHEN NOT ALREADY 44 REQUIRED BY ANOTHER PROVISION OF LAW OR REGULATION, ANY GOVERNMENT ENTI- 45 TY MAY ELECT TO CONDITION THE ISSUANCE OR RENEWAL OF A LICENSE ON THE 46 ABSENCE OF PAST-DUE TAX LIABILITIES AND TO MAKE SUCH DETERMINATION 47 THROUGH THE RECEIPT OF AN ELECTRONIC TAX CLEARANCE FROM THE DEPARTMENT 48 OF TAXATION AND FINANCE AS PROVIDED FOR IN SECTION ONE HUNDRED SEVENTY- 49 ONE-W OF THE TAX LAW. 50 3. ANY APPLICANT FOR A LICENSE SUBJECT TO ELECTRONIC TAX CLEARANCE 51 SHALL BE REQUIRED TO PROVIDE ANY INFORMATION DEEMED NECESSARY BY THE S. 6359--C 169 1 GOVERNMENT ENTITY AND THE DEPARTMENT OF TAXATION AND FINANCE TO EFFI- 2 CIENTLY AND ACCURATELY PROVIDE AN ELECTRONIC TAX CLEARANCE, AND THE 3 FAILURE BY THE APPLICANT TO PROVIDE SUCH INFORMATION SHALL RENDER THE 4 APPLICATION INCOMPLETE. 5 4. THE APPLICATION FOR A LICENSE SUBJECT TO ELECTRONIC TAX CLEARANCE, 6 OR THE INSTRUCTIONS FOR SUCH APPLICATION, SHALL CLEARLY INFORM THE 7 APPLICANT THAT AN ELECTRONIC TAX CLEARANCE WILL BE PERFORMED AND THAT, 8 IF THE TAX CLEARANCE IS DENIED, THE APPLICANT MUST CONTACT THE DEPART- 9 MENT OF TAXATION AND FINANCE TO RESOLVE ANY PAST-DUE TAX LIABILITIES 10 BEFORE THE APPLICATION FOR A LICENSE OR RENEWAL MAY BE RESUBMITTED. 11 5. IF AN ELECTRONIC TAX CLEARANCE IS DENIED BY THE DEPARTMENT OF TAXA- 12 TION AND FINANCE, THE GOVERNMENT ENTITY SHALL DENY ISSUANCE OR RENEWAL 13 OF THE REQUESTED LICENSE AND SHALL ELECTRONICALLY NOTIFY THE APPLICANT 14 TO CONTACT THE DEPARTMENT OF TAXATION AND FINANCE TO RESOLVE THE 15 PAST-DUE TAX LIABILITIES AND THAT NO LICENSE MAY BE ISSUED OR RENEWED 16 UNTIL THE TAX LIABILITIES ARE RESOLVED. 17 6. ANY TAX CLEARANCE OR RELATED COMMUNICATIONS SHALL BE BY SECURE 18 ELECTRONIC COMMUNICATION BETWEEN THE DEPARTMENT OF TAXATION AND FINANCE 19 AND THE REQUESTING GOVERNMENT ENTITY SUCH THAT PROCESSING OF THE ELEC- 20 TRONIC APPLICATION IS NOT DELAYED IF THE ELECTRONIC TAX CLEARANCE IS 21 RECEIVED. NOTWITHSTANDING ANY OTHER LAW TO THE CONTRARY, A GOVERNMENT 22 ENTITY SHALL BE AUTHORIZED TO SHARE ANY APPLICANT DATA OR INFORMATION 23 WITH THE DEPARTMENT OF TAXATION AND FINANCE THAT IS NECESSARY TO ENSURE 24 THE PROPER MATCHING OF THE APPLICANT TO THE TAX RECORDS MAINTAINED BY 25 THE DEPARTMENT OF TAXATION AND FINANCE. 26 7. NO FEE SHALL BE CHARGED TO THE APPLICANT FOR THE PURPOSES OF 27 RECEIVING AN ELECTRONIC TAX CLEARANCE. 28 S 2. The tax law is amended by adding a new section 171-w to read as 29 follows: 30 S 171-W. ENFORCEMENT OF DELINQUENT TAX LIABILITIES THROUGH ELECTRONIC 31 TAX CLEARANCES FOR OCCUPATIONAL, PROFESSIONAL AND BUSINESS LICENSES. 1. 32 IN ACCORDANCE WITH SECTION 3-505 OF THE GENERAL OBLIGATIONS LAW, THE 33 COMMISSIONER SHALL COOPERATE WITH ANY GOVERNMENT ENTITY THAT ELECTS TO 34 REQUIRE AN ELECTRONIC TAX CLEARANCE AS A PART OF AN ELECTRONIC LICENSE 35 APPLICATION PROCESS FOR WHICH THE GOVERNMENT ENTITY IS RESPONSIBLE. FOR 36 THE PURPOSES OF THIS SECTION, THE TERM "TAX LIABILITIES" SHALL MEAN ANY 37 TAX, SURCHARGE, OR FEE ADMINISTERED BY THE COMMISSIONER, OR ANY PENALTY 38 OR INTEREST OWED BY AN INDIVIDUAL OR ENTITY. THE TERM "PAST-DUE TAX 39 LIABILITIES" MEANS ANY UNPAID TAX LIABILITIES EQUAL TO OR IN EXCESS OF 40 TEN THOUSAND DOLLARS WHICH HAVE BECOME FIXED AND FINAL SUCH THAT THE 41 TAXPAYER NO LONGER HAS ANY RIGHT TO ADMINISTRATIVE OR JUDICIAL REVIEW. 42 FOR THE PURPOSES OF THIS SECTION, THE TERMS "GOVERNMENT ENTITY," "ELEC- 43 TRONIC LICENSE APPLICATION," AND "LICENSE" SHALL HAVE THE SAME MEANING 44 AS PROVIDED IN SECTION 3-505 OF THE GENERAL OBLIGATIONS LAW. 45 2. THE COMMISSIONER, OR HIS OR HER DESIGNEE, SHALL COOPERATE WITH ANY 46 GOVERNMENT ENTITY EXERCISING ITS AUTHORITY PURSUANT TO SECTION 3-505 OF 47 THE GENERAL OBLIGATIONS LAW TO ESTABLISH PROCEDURES BY WHICH THE DEPART- 48 MENT SHALL ELECTRONICALLY RECEIVE A TAX CLEARANCE REQUEST AS AN ELEC- 49 TRONIC LICENSE APPLICATION IS PROCESSED, AND ELECTRONICALLY TRANSMIT 50 SUCH TAX CLEARANCE TO THE GOVERNMENT ENTITY. THESE PROCEDURES SHALL 51 INCLUDE THE IDENTIFICATION OF OWNERS, OFFICERS OR RESPONSIBLE PERSONS 52 SUBJECT TO ELECTRONIC TAX CLEARANCE IN CONJUNCTION WITH AN APPLICATION 53 BY AN ENTITY, AND ANY OTHER PROCEDURES DEEMED NECESSARY TO CARRY OUT THE 54 PROVISIONS OF THIS SECTION. 55 3. IN ANY INSTANCE WHERE A LICENSE OR LICENSE RENEWAL PROVIDED BY THE 56 GOVERNMENT ENTITY IS OF A TYPE THAT MAY BE ISSUED ONLY TO AN INDIVIDUAL S. 6359--C 170 1 OR ENTITY THAT IS A PERSON REQUIRED TO REGISTER PURSUANT TO SECTION ONE 2 THOUSAND ONE HUNDRED THIRTY-FOUR OF THIS CHAPTER, THE DEPARTMENT SHALL 3 ALSO VERIFY THAT THE APPLICANT IS REGISTERED PURSUANT TO SUCH SECTION, 4 AND NO ELECTRONIC TAX CLEARANCE MAY BE ISSUED UNLESS THE APPLICANT IS 5 REGISTERED PURSUANT TO SUCH SECTION. 6 4. IF A TAX CLEARANCE IS DENIED, THE GOVERNMENT ENTITY PROCESSING THE 7 APPLICATION SHALL PROVIDE NOTICE TO THE APPLICANT TO CONTACT THE DEPART- 8 MENT. WHEN THE APPLICANT CONTACTS THE DEPARTMENT, THE DEPARTMENT SHALL 9 INFORM THE APPLICANT (A) WHAT PAST-DUE TAX LIABILITIES ARE AT ISSUE; (B) 10 THAT AN ELECTRONIC TAX CLEARANCE MAY BE RECEIVED BY FULLY SATISFYING THE 11 PAST-DUE TAX LIABILITIES OR BY MAKING PAYMENT ARRANGEMENTS SATISFACTORY 12 TO THE COMMISSIONER OR, IF THE APPLICANT NEEDS TO REGISTER FOR SALES TAX 13 PURPOSES, BY REGISTERING PURSUANT TO SECTION ONE THOUSAND ONE HUNDRED 14 THIRTY-FOUR OF THIS CHAPTER; AND (C) THE GROUNDS FOR CHALLENGING THE 15 DENIAL OF AN ELECTRONIC TAX CLEARANCE LISTED IN SUBDIVISION FIVE OF THIS 16 SECTION. THE GOVERNMENT ENTITY SHALL ALSO INFORM THE APPLICANT THAT AN 17 APPLICATION MAY BE RESUBMITTED AFTER PAYMENT FOR THE PAST-DUE TAX 18 LIABILITIES HAS CLEARED, OR, IF A PAYMENT PLAN IS AGREED TO, AFTER THE 19 FIRST PAYMENT PURSUANT TO SUCH PLAN HAS CLEARED. 20 5. (A) NOTWITHSTANDING ANY OTHER PROVISION OF LAW, AND EXCEPT AS 21 SPECIFICALLY PROVIDED HEREIN, AN APPLICANT DENIED AN ELECTRONIC TAX 22 CLEARANCE SHALL HAVE NO RIGHT TO COMMENCE A COURT ACTION OR PROCEEDING 23 OR SEEK ANY OTHER LEGAL RECOURSE AGAINST THE DEPARTMENT OR THE GOVERN- 24 MENT ENTITY RELATED TO THE DENIAL OF AN ELECTRONIC TAX CLEARANCE BY THE 25 DEPARTMENT. AN APPLICANT MAY CHALLENGE SUCH DENIAL OF AN ELECTRONIC TAX 26 CLEARANCE ONLY ON THE GROUNDS THAT: 27 (I) THE INDIVIDUAL OR ENTITY DENIED THE ELECTRONIC TAX CLEARANCE IS 28 NOT THE INDIVIDUAL OR ENTITY WITH THE PAST-DUE TAX LIABILITIES AT ISSUE; 29 (II) THE PAST-DUE TAX LIABILITIES WERE SATISFIED; (III) THE APPLICANT'S 30 WAGES ARE BEING GARNISHED FOR THE PAYMENT OF CHILD SUPPORT OR COMBINED 31 CHILD AND SPOUSAL SUPPORT PURSUANT TO AN INCOME EXECUTION ISSUED PURSU- 32 ANT TO SECTION FIVE THOUSAND TWO HUNDRED FORTY-ONE OR FIVE THOUSAND TWO 33 HUNDRED FORTY-TWO OF THE CIVIL PRACTICE LAW AND RULES OR ANOTHER STATE'S 34 INCOME WITHHOLDING ORDER AS AUTHORIZED UNDER PART FIVE OF ARTICLE FIVE-B 35 OF THE FAMILY COURT ACT, OR GARNISHED BY THE DEPARTMENT FOR THE PAYMENT 36 OF THE PAST-DUE TAX LIABILITIES AT ISSUE; (IV) THE APPLICANT IS MAKING 37 CHILD SUPPORT PAYMENTS OR COMBINED CHILD AND SPOUSAL SUPPORT PAYMENTS 38 PURSUANT TO A SATISFACTORY PAYMENT ARRANGEMENT UNDER SECTION ONE HUNDRED 39 ELEVEN-B OF THE SOCIAL SERVICES LAW WITH A SUPPORT COLLECTION UNIT OR 40 OTHERWISE MAKING PERIODIC PAYMENTS IN ACCORDANCE WITH SECTION FOUR 41 HUNDRED FORTY OF THE FAMILY COURT ACT; OR (V) IF THE ONLY BASIS FOR THE 42 DENIAL OF AN ELECTRONIC TAX CLEARANCE WAS THE APPLICANT'S FAILURE TO 43 REGISTER PURSUANT TO SECTION ONE THOUSAND ONE HUNDRED THIRTY-FOUR OF 44 THIS CHAPTER, THAT THE APPLICANT WAS PROPERLY REGISTERED PURSUANT TO 45 SUCH SECTION ONE THOUSAND ONE HUNDRED THIRTY-FOUR. 46 (B) AN APPLICANT SEEKING TO CHALLENGE THE DENIAL OF AN ELECTRONIC TAX 47 CLEARANCE MUST PROTEST TO THE DEPARTMENT OR THE DIVISION OF TAX APPEALS 48 NO LATER THAN SIXTY DAYS FROM THE DATE OF THE ELECTRONIC NOTIFICATION TO 49 THE APPLICANT, PURSUANT TO SUBDIVISION FOUR OF SECTION 3-505 OF THE 50 GENERAL OBLIGATIONS LAW, THAT THE ELECTRONIC TAX CLEARANCE WAS DENIED. 51 (C) NOTHING IN THIS SUBDIVISION IS INTENDED TO LIMIT ANY APPLICANT 52 FROM SEEKING RELIEF FROM JOINT AND SEVERAL LIABILITY PURSUANT TO SECTION 53 SIX HUNDRED FIFTY-FOUR OF THIS CHAPTER, TO THE EXTENT THAT HE OR SHE IS 54 ELIGIBLE PURSUANT TO THAT SECTION, OR ESTABLISHING TO THE DEPARTMENT 55 THAT THE ENFORCEMENT OF THE UNDERLYING TAX LIABILITIES HAS BEEN STAYED S. 6359--C 171 1 BY THE FILING OF A PETITION PURSUANT TO THE BANKRUPTCY CODE OF 1978 2 (TITLE ELEVEN OF THE UNITED STATES CODE). 3 6. NOTWITHSTANDING ANY OTHER PROVISION OF LAW, THE DEPARTMENT MAY 4 EXCHANGE WITH A GOVERNMENT ENTITY ANY DATA OR INFORMATION NECESSARY 5 THAT, IN THE DISCRETION OF THE COMMISSIONER, IS NECESSARY FOR THE IMPLE- 6 MENTATION OF ANY ELECTRONIC TAX CLEARANCE. HOWEVER, NO OTHER AGENCY MAY 7 RE-DISCLOSE THIS INFORMATION TO ANY OTHER ENTITY OR PERSON, OTHER THAN 8 FOR THE PURPOSE OF INFORMING THE APPLICANT THAT THE APPLICATION FOR A 9 LICENSE OR THE RENEWAL OF SUCH LICENSE WILL NOT BE PROCESSED DUE TO THE 10 LACK OF A REQUIRED TAX CLEARANCE AUTHORIZED BY ANY PROVISION OF LAW 11 UNLESS OTHERWISE PERMITTED BY LAW. 12 7. EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION, THE ACTIVITIES TO 13 COLLECT PAST-DUE TAX LIABILITIES UNDERTAKEN BY THE DEPARTMENT PURSUANT 14 TO THIS SECTION SHALL NOT IN ANY WAY LIMIT, RESTRICT OR IMPAIR THE 15 DEPARTMENT FROM EXERCISING ANY OTHER AUTHORITY TO COLLECT OR ENFORCE TAX 16 LIABILITIES UNDER ANY OTHER APPLICABLE PROVISION OF LAW. 17 8. EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION, THE PROVISIONS OF 18 THIS SECTION ARE NOT APPLICABLE TO THE TAX CLEARANCE REQUIRED BY SECTION 19 ONE HUNDRED SEVENTY-ONE-V OF THIS CHAPTER. 20 S 3. This act shall take effect June 1, 2014; provided, however, that 21 the department of taxation and finance and any government entity elect- 22 ing to receive an electronic tax clearance from the department of taxa- 23 tion and finance may work to execute the necessary procedures and tech- 24 nical changes to support the electronic tax clearance process as 25 described in sections one and two of this act before that date; 26 provided, further, that this effective date will not impact the adminis- 27 tration of any electronic tax clearance program authorized by another 28 provision of law. 29 PART I 30 Section 1. Subsection (b) of section 612 of the tax law is amended by 31 adding a new paragraph 40 to read as follows: 32 (40) IN THE CASE OF A BENEFICIARY OF A TRUST NOT SUBJECT TO TAX PURSU- 33 ANT TO SUBPARAGRAPH (D) OF PARAGRAPH THREE OF SUBSECTION (B) OF SECTION 34 SIX HUNDRED FIVE OF THIS ARTICLE (EXCEPT FOR AN INCOMPLETE GIFT 35 NON-GRANTOR TRUST, AS DEFINED BY PARAGRAPH FORTY-ONE OF THIS 36 SUBSECTION), THE AMOUNT OF ANY ACCUMULATION DISTRIBUTION AS DESCRIBED IN 37 SUBSECTION (B) OF SECTION SIX HUNDRED SIXTY-FIVE OF THE INTERNAL REVENUE 38 CODE FOR THE TAX YEAR NOT TO EXCEED THE UNDISTRIBUTED NET INCOME AS 39 DESCRIBED IN SUBSECTION (A) OF SECTION SIX HUNDRED SIXTY-FIVE OF THE 40 INTERNAL REVENUE CODE FOR APPLICABLE YEARS, SUCH AMOUNT TO BE DETERMINED 41 WITHOUT REGARD TO SUBSECTION (C) OF SECTION SIX HUNDRED SIXTY-FIVE OF 42 THE INTERNAL REVENUE CODE, TO THE EXTENT NOT ALREADY INCLUDED IN FEDERAL 43 GROSS INCOME FOR THE TAX YEAR, EXCEPT THAT, IN COMPUTING THE AMOUNT TO 44 BE ADDED UNDER THIS PARAGRAPH, SUCH BENEFICIARY SHALL DISREGARD INCOME 45 EARNED BY A TRUST IN A TAXABLE YEAR STARTING BEFORE JANUARY FIRST, TWO 46 THOUSAND FOURTEEN AND IN ANY TAXABLE YEAR IN WHICH ANY OF THE FOLLOWING 47 CONDITIONS EXIST: (I) SUCH BENEFICIARY WAS NOT A RESIDENT OF THE STATE 48 DURING SUCH TAXABLE YEAR; (II) THE INCOME ACCUMULATED BY THE TRUST WAS 49 ACCUMULATED PRIOR TO THE BIRTH OF THE BENEFICIARY; OR (III) THE INCOME 50 ACCUMULATED BY THE TRUST WAS ACCUMULATED PRIOR TO THE BENEFICIARY'S 51 TWENTY-FIRST BIRTHDAY. FOR PURPOSES OF THIS PARAGRAPH, A BENEFICIARY 52 SHALL BE DEFINED AS A NEW YORK RESIDENT WHO, BUT FOR THE EXCEPTIONS SET 53 FORTH ABOVE IN SUBPARAGRAPHS (I), (II) AND (III) OF THIS PARAGRAPH, IS S. 6359--C 172 1 ELIGIBLE TO RECEIVE A DISTRIBUTION DURING THE TAX YEAR IN WHICH THE 2 DISTRIBUTION FIRST COULD HAVE BEEN MADE. 3 S 2. Subsection (b) of section 612 of the tax law is amended by adding 4 a new paragraph 41 to read as follows: 5 (41) IN THE CASE OF A TAXPAYER WHO TRANSFERRED PROPERTY TO AN INCOM- 6 PLETE GIFT NON-GRANTOR TRUST, THE INCOME OF THE TRUST, LESS ANY 7 DEDUCTIONS OF THE TRUST, TO THE EXTENT SUCH INCOME AND DEDUCTIONS OF 8 SUCH TRUST WOULD BE TAKEN INTO ACCOUNT IN COMPUTING THE TAXPAYER'S 9 FEDERAL TAXABLE INCOME IF SUCH TRUST IN ITS ENTIRETY WERE TREATED AS A 10 GRANTOR TRUST FOR FEDERAL TAX PURPOSES. FOR PURPOSES OF THIS PARAGRAPH, 11 AN "INCOMPLETE GIFT NON-GRANTOR TRUST" MEANS A RESIDENT TRUST THAT MEETS 12 THE FOLLOWING CONDITIONS: (I) THE TRUST DOES NOT QUALIFY AS A GRANTOR 13 TRUST UNDER SECTION SIX HUNDRED SEVENTY-ONE THROUGH SIX HUNDRED SEVEN- 14 TY-NINE OF THE INTERNAL REVENUE CODE, AND (2) THE GRANTOR'S TRANSFER OF 15 ASSETS TO THE TRUST IS TREATED AS AN INCOMPLETE GIFT UNDER SECTION TWEN- 16 TY-FIVE HUNDRED ELEVEN OF THE INTERNAL REVENUE CODE, AND THE REGULATIONS 17 THEREUNDER. 18 S 3. Section 621 of the tax law, as added by chapter 272 of the laws 19 of 1963 and subsection (a) as amended by chapter 267 of the laws of 20 1987, is amended to read as follows: 21 S 621. [Credit] CREDITS to trust beneficiary receiving accumulation 22 distribution. (a) General. A resident beneficiary of a trust whose New 23 York adjusted gross income includes all or part of an accumulation 24 distribution by such trust, as defined in section six hundred sixty-five 25 of the internal revenue code, INCLUDING A BENEFICIARY WHO IS REQUIRED TO 26 MAKE THE MODIFICATION REQUIRED BY PARAGRAPH FORTY OF SUBSECTION (B) OF 27 SECTION SIX HUNDRED TWELVE OF THIS PART, shall be allowed (1) a credit 28 against the tax otherwise due under this article for all or a propor- 29 tionate part of any tax paid by the trust under this article or under 30 FORMER article sixteen of this chapter (as such article was in effect on 31 or before December thirtieth, nineteen hundred sixty), for any preceding 32 taxable year which would not have been payable if the trust had in fact 33 made distributions to its beneficiaries at the times and in the amounts 34 specified in section six hundred sixty-six of the internal revenue code; 35 AND (2) A CREDIT AGAINST THE TAXES IMPOSED BY THIS ARTICLE FOR THE TAXA- 36 BLE YEAR FOR ANY INCOME TAX IMPOSED ON THE TRUST FOR THE TAXABLE YEAR OR 37 ANY PRIOR TAXABLE YEAR BY ANOTHER STATE OF THE UNITED STATES, A POLI- 38 TICAL SUBDIVISION THEREOF, OR THE DISTRICT OF COLUMBIA, UPON INCOME BOTH 39 DERIVED THEREFROM AND SUBJECT TO TAX UNDER THIS ARTICLE, PROVIDED THAT 40 THE AMOUNT OF THE CREDIT SHALL NOT EXCEED THE PERCENTAGE OF THE TAX 41 OTHERWISE DUE UNDER THIS ARTICLE DETERMINED BY DIVIDING THE PORTION OF 42 THE INCOME THAT IS BOTH TAXABLE TO THE TRUST IN SUCH OTHER JURISDICTION 43 AND TAXABLE TO THE BENEFICIARY UNDER THIS ARTICLE BY THE TOTAL AMOUNT OF 44 THE BENEFICIARY'S NEW YORK INCOME. 45 (b) Limitation. The [credit] CREDITS under this section shall not 46 reduce the tax otherwise due from the beneficiary under this article to 47 an amount less than would have been due if the accumulation distribution 48 or his part thereof were excluded from his New York adjusted gross 49 income. 50 S 4. Section 658 of the tax law is amended by adding a new subsection 51 (f) to read as follows: 52 (F) (1) EVERY NONRESIDENT TRUST OR A TRUST DESCRIBED BY SUBPARAGRAPH 53 (D) OF PARAGRAPH THREE OF SUBSECTION (B) OF SECTION SIX HUNDRED FIVE OF 54 THIS ARTICLE SHALL MAKE A RETURN FOR ANY TAXABLE YEAR IN WHICH IT MAKES 55 AN ACCUMULATION DISTRIBUTION WITHIN THE MEANING OF SUBDIVISION (B) OF 56 SECTION SIX HUNDRED SIXTY-FIVE OF THE INTERNAL REVENUE CODE TO A BENEFI- S. 6359--C 173 1 CIARY WHO IS A RESIDENT, WHICH RETURN SHALL INCLUDE (I) INFORMATION 2 IDENTIFYING SUCH RESIDENT, (II) THE AMOUNT OF SUCH ACCUMULATION DISTRIB- 3 UTION, AND (III) SUCH OTHER INFORMATION AS THE COMMISSIONER MAY REQUIRE. 4 (2) EVERY RESIDENT TRUST THAT DOES NOT FILE THE RETURN REQUIRED BY 5 SECTION SIX HUNDRED FIFTY-ONE OF THIS PART ON THE GROUND THAT IT IS NOT 6 SUBJECT TO TAX PURSUANT TO SUBPARAGRAPH (D) OF PARAGRAPH THREE OF 7 SUBSECTION (B) OF SECTION SIX HUNDRED FIVE OF THIS ARTICLE FOR THE TAXA- 8 BLE YEAR SHALL MAKE A RETURN FOR SUCH TAXABLE YEAR SUBSTANTIATING ITS 9 ENTITLEMENT TO THAT EXEMPTION AND PROVIDING SUCH OTHER INFORMATION AS 10 THE COMMISSIONER MAY REQUIRE. 11 (3) THE RETURNS REQUIRED BY THIS SUBSECTION SHALL BE FILED ON OR 12 BEFORE THE FIFTEENTH DAY OF THE FOURTH MONTH FOLLOWING THE CLOSE OF EACH 13 TAXABLE YEAR. FOR PURPOSES OF THIS PARAGRAPH, "TAXABLE YEAR" MEANS A 14 YEAR OR A PERIOD WHICH WOULD BE A TAXABLE YEAR OF THE TRUST IF IT WERE 15 SUBJECT TO TAX UNDER THIS ARTICLE. 16 S 5. Paragraph 2 of subsection (h) of section 685 of the tax law, as 17 amended by chapter 190 of the laws of 1990, is amended to read as 18 follows: 19 (2) If any partnership [or], S corporation, OR TRUST required to file 20 a return or report under subsection (c) OR SUBSECTION (F) of section six 21 hundred fifty-eight or under section six hundred fifty-nine OF THIS 22 ARTICLE for any taxable year fails to file such return or report at the 23 time prescribed therefor (determined with regard to any extension of 24 time for filing), or files a return or report which fails to show the 25 information required under such subsection (c) or section six hundred 26 fifty-nine OF THIS ARTICLE, unless it is shown that such failure is due 27 to reasonable cause and not due to willful neglect, there shall, upon 28 notice and demand by the commissioner and in the same manner as tax, be 29 paid by the partnership or S corporation a penalty for each month (or 30 fraction thereof) during which such failure continues (but not to exceed 31 five months). The amount of such penalty for any month is the product of 32 fifty dollars, multiplied by the number of partners in the partnership 33 or shareholders in the S corporation during any part of the taxable year 34 who were subject to tax under this article during any part of such taxa- 35 ble year, EXCEPT THAT, IN THE CASE OF A TRUST, THE PENALTY SHALL BE 36 EQUAL TO ONE HUNDRED FIFTY DOLLARS A MONTH UP TO A MAXIMUM OF FIFTEEN 37 HUNDRED DOLLARS PER TAXABLE YEAR. 38 S 6. Subdivision (b) of section 11-1712 of the administrative code of 39 the city of New York is amended by adding a new paragraph 36 to read as 40 follows: 41 (36) IN THE CASE OF A BENEFICIARY OF A TRUST NOT SUBJECT TO TAX PURSU- 42 ANT TO SUBPARAGRAPH (D) OF PARAGRAPH THREE OF SUBSECTION (B) OF SECTION 43 11-1705 OF THIS CHAPTER (EXCEPT FOR AN INCOMPLETE GIFT NON-GRANTOR 44 TRUST, AS DEFINED BY PARAGRAPH THIRTY-SEVEN OF THIS SUBDIVISION), THE 45 AMOUNT OF ANY ACCUMULATION DISTRIBUTION AS DESCRIBED IN SUBSECTION (B) 46 OF SECTION SIX HUNDRED SIXTY-FIVE OF THE INTERNAL REVENUE CODE FOR THE 47 TAX YEAR NOT TO EXCEED THE UNDISTRIBUTED NET INCOME AS DESCRIBED IN 48 SUBSECTION (A) OF SECTION SIX HUNDRED SIXTY-FIVE OF THE INTERNAL REVENUE 49 CODE FOR APPLICABLE YEARS, SUCH AMOUNT TO BE DETERMINED WITHOUT REGARD 50 TO SUBSECTION (C) OF SECTION SIX HUNDRED SIXTY-FIVE OF THE INTERNAL 51 REVENUE CODE, TO THE EXTENT NOT ALREADY INCLUDED IN FEDERAL GROSS INCOME 52 FOR THE TAX YEAR, EXCEPT THAT, IN COMPUTING THE AMOUNT TO BE ADDED UNDER 53 THIS PARAGRAPH, SUCH BENEFICIARY SHALL DISREGARD INCOME EARNED BY A 54 TRUST IN A TAXABLE YEAR STARTING BEFORE JANUARY FIRST, TWO THOUSAND 55 FOURTEEN AND IN ANY TAXABLE YEAR IN WHICH ANY OF THE FOLLOWING CONDI- 56 TIONS EXIST: (I) SUCH BENEFICIARY WAS NOT A RESIDENT OF THE STATE DURING S. 6359--C 174 1 SUCH TAXABLE YEAR; (II) THE INCOME ACCUMULATED BY THE TRUST WAS ACCUMU- 2 LATED PRIOR TO THE BIRTH OF THE BENEFICIARY; OR (III) THE INCOME ACCUMU- 3 LATED BY THE TRUST WAS ACCUMULATED PRIOR TO THE BENEFICIARY'S 4 TWENTY-FIRST BIRTHDAY. FOR PURPOSES OF THIS PARAGRAPH, A BENEFICIARY 5 SHALL BE DEFINED AS A NEW YORK RESIDENT WHO, BUT FOR THE EXCEPTIONS SET 6 FORTH ABOVE IN SUBPARAGRAPHS (I), (II) AND (III) OF THIS PARAGRAPH, IS 7 ELIGIBLE TO RECEIVE A DISTRIBUTION DURING THE TAX YEAR IN WHICH THE 8 DISTRIBUTION FIRST COULD HAVE BEEN MADE. 9 S 7. Subdivision (b) of section 11-1712 of the administrative code of 10 the city of New York is amended by adding a new paragraph 37 to read as 11 follows: 12 (37) IN THE CASE OF A TAXPAYER WHO TRANSFERRED PROPERTY TO AN INCOM- 13 PLETE GIFT NON-GRANTOR TRUST, THE INCOME OF THE TRUST, LESS ANY 14 DEDUCTIONS OF SUCH TRUST, TO THE EXTENT SUCH INCOME AND DEDUCTIONS OF 15 SUCH TRUST WOULD BE TAKEN INTO ACCOUNT IN COMPUTING THE TAXPAYER'S 16 FEDERAL TAXABLE INCOME IF SUCH TRUST IN ITS ENTIRETY WERE TREATED AS A 17 GRANTOR TRUST FOR FEDERAL TAX PURPOSES. FOR PURPOSES OF THIS PARAGRAPH, 18 AN "INCOMPLETE GIFT NON-GRANTOR TRUST" MEANS A RESIDENT TRUST THAT MEETS 19 THE FOLLOWING CONDITIONS: (I) THE TRUST DOES NOT QUALIFY AS A GRANTOR 20 TRUST UNDER SECTION SIX HUNDRED SEVENTY-ONE THROUGH SIX HUNDRED SEVEN- 21 TY-NINE OF THE INTERNAL REVENUE CODE, AND (2) THE GRANTOR'S TRANSFER OF 22 ASSETS TO THE TRUST IS TREATED AS AN INCOMPLETE GIFT UNDER SECTION TWEN- 23 TY FIVE HUNDRED ELEVEN OF THE INTERNAL REVENUE CODE, AND THE REGULATIONS 24 THEREUNDER. 25 S 8. Section 11-1721 of the administrative code of the city of New 26 York, subdivisions (a) and (b) as amended by section 72 and such section 27 as renumbered by section 43 of chapter 639 of the laws of 1986, is 28 amended to read as follows: 29 S 11-1721 [Credit] CREDITS to trust beneficiary receiving accumulation 30 distribution. (a) General. A city resident beneficiary of a trust whose 31 city adjusted gross income includes all or part of an accumulation 32 distribution by such trust, as defined in section six hundred sixty-five 33 of the internal revenue code, INCLUDING A BENEFICIARY WHO IS REQUIRED TO 34 MAKE THE MODIFICATION REQUIRED BY PARAGRAPH THIRTY-SIX OF SUBDIVISION 35 (B) OF SECTION 11-1712 OF THIS SUBCHAPTER, shall be allowed (1) a credit 36 against the tax otherwise due under this chapter for all or a propor- 37 tionate part of any tax paid by the trust under this chapter or under 38 FORMER title T of chapter forty-six of this code, as it was in effect 39 prior to September first, nineteen hundred eighty-six, for any preceding 40 taxable year which would not have been payable if the trust had in fact 41 made distributions to its beneficiaries at the times and in the amounts 42 specified in section six hundred sixty-six of the internal revenue code; 43 AND (2) A CREDIT AGAINST THE TAXES IMPOSED BY THIS CHAPTER FOR THE TAXA- 44 BLE YEAR FOR ANY INCOME TAX IMPOSED FOR THE TAXABLE YEAR OR ANY PRIOR 45 TAXABLE YEAR BY ANOTHER STATE OF THE UNITED STATES, A POLITICAL SUBDIVI- 46 SION THEREOF, OR THE DISTRICT OF COLUMBIA, UPON INCOME BOTH DERIVED 47 THEREFROM AND SUBJECT TO TAX UNDER THIS CHAPTER, PROVIDED THAT THE 48 AMOUNT OF THE CREDIT SHALL NOT EXCEED THE PERCENTAGE OF THE TAX OTHER- 49 WISE DUE UNDER THIS CHAPTER DETERMINED BY DIVIDING THE PORTION OF THE 50 INCOME THAT IS BOTH TAXABLE TO THE TRUST IN SUCH OTHER JURISDICTION AND 51 TAXABLE TO THE BENEFICIARY UNDER THIS CHAPTER BY THE TOTAL AMOUNT OF THE 52 BENEFICIARY'S NEW YORK CITY INCOME. 53 (b) Limitation. The [credit] CREDITS under this section shall not 54 reduce the tax otherwise due from the beneficiary under this chapter to 55 an amount less than would have been due if the accumulation distribution S. 6359--C 175 1 or his or her part thereof were excluded from his or her city adjusted 2 gross income. 3 S 9. This act shall take effect immediately and shall apply to taxable 4 years beginning on or after January 1, 2014, provided that sections one 5 and six of this act shall not apply to income of a nonresident trust or 6 an exempt resident trust paid to a beneficiary before June 1, 2014, and 7 sections two and seven of this act shall not apply to income from a 8 trust that is liquidated before June 1, 2014. 9 PART J 10 Section 1. Section 602 of the tax law is REPEALED. 11 S 2. Paragraph 4 of subsection (c) and paragraph 4 of subsection (d) 12 of section 606 of the tax law, paragraph 4 of subsection (c) as added by 13 chapter 309 of the laws of 1996 and paragraph 4 of subsection (d) as 14 amended by chapter 2 of the laws of 1995, are amended to read as 15 follows: 16 (4) Part-year residents. In the case of a part-year resident taxpayer, 17 the credit under this subsection shall be allowed against the tax deter- 18 mined under subsections (a) through (d) of section six hundred one 19 reduced by the credit permitted under subsection (b) of this section, 20 and any excess credit after such application shall be allowed against 21 the [taxes] TAX imposed by [sections six hundred two and] SECTION six 22 hundred three. Any remaining excess, after such application, shall be 23 refunded as provided in paragraph two hereof, provided, however, that 24 any overpayment under such paragraph shall be limited to the amount of 25 the remaining excess multiplied by a fraction, the numerator of which is 26 federal adjusted gross income for the period of residence, computed as 27 if the taxable year for federal income tax purposes were limited to the 28 period of residence, and the denominator of which is federal adjusted 29 gross income for the taxable year. 30 (4) Part-year residents. In the case of a part-year resident taxpayer, 31 the credit under this subsection shall be allowed against the tax deter- 32 mined under subsections (a) through (d) of section six hundred one 33 reduced by the credits permitted under subsections (b), (c) and (m) of 34 this section, and any excess credit after such application shall be 35 allowed against the [taxes] TAX imposed by [sections six hundred two 36 and] SECTION six hundred three. Any remaining excess, after such appli- 37 cation, shall be refunded as provided in paragraph two hereof, provided, 38 however, that any overpayment under such paragraph shall be limited to 39 the amount of the remaining excess multiplied by a fraction, the numera- 40 tor of which is federal adjusted gross income for the period of resi- 41 dence, computed as if the taxable year for federal income tax purposes 42 were limited to the period of residence, and the denominator of which is 43 federal adjusted gross income for the taxable year. 44 S 3. Section 622 of the tax law is REPEALED. 45 S 4. Section 636 of the tax law is REPEALED. 46 S 5. Subsections (a), (b) and (c) of section 639 of the tax law, as 47 added by chapter 170 of the laws of 1994, are amended to read as 48 follows: 49 (a) If an individual changes status from resident to nonresident he 50 shall, regardless of his method of accounting, accrue to the period of 51 residence any items of income, gain, loss, deduction, [items of tax 52 preference] or ordinary income portion of a lump sum distribution accru- 53 ing prior to the change of status, with the applicable modifications and 54 adjustments to federal adjusted gross income[,] AND itemized deductions S. 6359--C 176 1 [and items of tax preference] under sections six hundred twelve[,] AND 2 six hundred fifteen [and six hundred twenty-two], if not otherwise prop- 3 erly includible or allowable for New York income tax purposes for such 4 period or a prior taxable year under his method of accounting. 5 (b) If an individual changes status from nonresident to resident he 6 shall, regardless of his method of accounting, accrue to the period of 7 nonresidence any items of income, gain, loss or deduction, [items of tax 8 preference] or ordinary income portion of a lump sum distribution accru- 9 ing prior to the change of status, with the applicable modifications and 10 adjustments to federal adjusted gross income[,] AND itemized deductions 11 [and items of tax preference] under sections six hundred twelve[,] AND 12 six hundred fifteen [and six hundred twenty-two], other than items 13 derived from or connected with New York sources, if not otherwise prop- 14 erly includible or allowable for New York income tax purposes for such 15 period or for a prior taxable year under his method of accounting. 16 (c) No item of income, gain, loss, deduction, [item of tax prefer- 17 ence,] ordinary income portion of a lump sum distribution or modifica- 18 tion or adjustment which is accrued under this section shall be taken 19 into account in determining the tax under this article for any subse- 20 quent taxable year. 21 S 6. Paragraphs 1, 2, 3 and 4 of subsection (a) of section 651 of the 22 tax law, paragraph 1 as amended by chapter 333 of the laws of 1987, 23 paragraph 2 as amended by chapter 28 of the laws of 1987, and paragraphs 24 3 and 4 as amended by chapter 170 of the laws of 1994, are amended to 25 read as follows: 26 (1) every resident individual (A) required to file a federal income 27 tax return for the taxable year, or (B) having federal adjusted gross 28 income for the taxable year, increased by the modifications under 29 subsection (b) of section six hundred twelve, in excess of four thousand 30 dollars, or in excess of his New York standard deduction, if lower, or 31 (C) [subject to tax under section six hundred two, or (D)] having 32 received during the taxable year a lump sum distribution any portion of 33 which is subject to tax under section six hundred three; 34 (2) every resident estate or trust required to file a federal income 35 tax return for the taxable year, or having any New York taxable income 36 for the taxable year, determined under section six hundred eighteen, [or 37 subject to tax under section six hundred two,] or having received during 38 the taxable year a lump sum distribution any portion of which is subject 39 to tax under section six hundred three; 40 (3) every nonresident or part-year resident individual having New York 41 source income for the taxable year, determined under part III of this 42 article, and having New York adjusted gross income for the taxable year, 43 determined under part II of this article, in excess of the taxpayer's 44 New York standard deduction, [or subject to tax under section six 45 hundred two,] or having received during the taxable year a lump sum 46 distribution any portion of which is subject to tax under section six 47 hundred three; and 48 (4) every nonresident estate or trust or part-year resident trust 49 having New York source income for the taxable year, determined under 50 part III of this article, and having New York adjusted gross income for 51 the taxable year, determined under paragraph four of subsection (e) of 52 section six hundred one, [or subject to tax under section six hundred 53 two,] or having received during the taxable year a lump sum distribution 54 any portion of which is subject to tax under section six hundred three. S. 6359--C 177 1 S 7. Paragraph 6 of subsection (b) of section 654 of the tax law, as 2 added by section 5 of part Q of chapter 407 of the laws of 1999, is 3 amended to read as follows: 4 (6) In subparagraph (B) of paragraph two of subsection (d), the phrase 5 "section 1 or 55" shall be read as "section six hundred one [or six 6 hundred two] of this article". 7 S 8. Section 659 of the tax law, as amended by chapter 577 of the laws 8 of 1997, is amended to read as follows: 9 S 659. Report of federal changes, corrections or disallowances. If 10 the amount of a taxpayer's federal taxable income, [federal items of tax 11 preference,] total taxable amount or ordinary income portion of a lump 12 sum distribution or includible gain of a trust reported on his federal 13 income tax return for any taxable year, or the amount of a taxpayer's 14 earned income credit or credit for employment-related expenses set forth 15 on such return, or the amount of any federal foreign tax credit affect- 16 ing the calculation of the credit for Canadian provincial taxes under 17 section six hundred twenty or six hundred twenty-A of this article, or 18 the amount of any claim of right adjustment, is changed or corrected by 19 the United States internal revenue service or other competent authority 20 or as the result of a renegotiation of a contract or subcontract with 21 the United States, or the amount an employer is required to deduct and 22 withhold from wages for federal income tax withholding purposes is 23 changed or corrected by such service or authority or if a taxpayer's 24 claim for credit or refund of federal income tax is disallowed in whole 25 or in part, the taxpayer or employer shall report such change or 26 correction or disallowance within ninety days after the final determi- 27 nation of such change, correction, renegotiation or disallowance, or as 28 otherwise required by the commissioner, and shall concede the accuracy 29 of such determination or state wherein it is erroneous. The allowance 30 of a tentative carryback adjustment based upon a net operating loss 31 carryback pursuant to section sixty-four hundred eleven of the internal 32 revenue code shall be treated as a final determination for purposes of 33 this section. Any taxpayer filing an amended federal income tax return 34 and any employer filing an amended federal return of income tax withheld 35 shall also file within ninety days thereafter an amended return under 36 this article, and shall give such information as the commissioner may 37 require. The commissioner may by regulation prescribe such exceptions 38 to the requirements of this section as he or she deems appropriate. For 39 purposes of this section, (i) the term "taxpayer" shall include a part- 40 nership having a resident partner or having any income derived from New 41 York sources, and a corporation with respect to which the taxable year 42 of such change, correction, disallowance or amendment is a year with 43 respect to which the election provided for in subsection (a) of section 44 six hundred sixty of this article is in effect, and (ii) the term 45 "federal income tax return" shall include the returns of income required 46 under sections six thousand thirty-one and six thousand thirty-seven of 47 the internal revenue code. In the case of such a corporation, such 48 report shall also include any change or correction of the taxes 49 described in paragraphs two and three of subsection (f) of section thir- 50 teen hundred sixty-six of the internal revenue code. Reports made under 51 this section by a partnership or corporation shall indicate the portion 52 of the change in each item of income, gain, loss or deduction (and, in 53 the case of a corporation, of each change in, or disallowance of a claim 54 for credit or refund of, a tax referred to in the preceding sentence) 55 allocable to each partner or shareholder and shall set forth such iden- S. 6359--C 178 1 tifying information with respect to such partner or shareholder as may 2 be prescribed by the commissioner. 3 S 9. Subsection (d) of section 683 of the tax law, as amended by chap- 4 ter 170 of the laws of 1994, is amended to read as follows: 5 (d) Omission of income, [item of tax preference,] total taxable amount 6 or ordinary income portion of a lump sum distribution on return.--The 7 tax may be assessed at any time within six years after the return was 8 filed if-- 9 (1) an individual omits from his New York adjusted gross income, [the 10 sum of his items of tax preference,] or the total taxable amount or 11 ordinary income portion of a lump sum distribution an amount properly 12 includible therein which is in excess of twenty-five percent of the 13 amount of New York adjusted gross income, [the sum of the items of tax 14 preference,] or the total taxable amount or ordinary income portion of a 15 lump sum distribution stated in the return, or 16 (2) an estate or trust omits from its New York adjusted gross income, 17 [the sum of its items of tax preference,] or the total taxable amount or 18 ordinary income portion of a lump sum distribution an amount properly 19 includible therein which is in excess of twenty-five percent of the 20 amount stated in the return of New York adjusted gross income determined 21 in accordance with paragraph four of subsection (e) of section six 22 hundred one, [or the sum of the items of tax preference,] or the total 23 taxable amount or ordinary income portion of a lump sum distribution, 24 respectively. For purposes of this subsection there shall not be taken 25 into account any amount which is omitted in the return if such amount is 26 disclosed in the return, or in a statement attached to the return, in a 27 manner adequate to apprise the commissioner of the nature and amount of 28 the item of income, [tax preference,] total taxable amount or ordinary 29 income portion of a lump sum distribution. 30 S 10. Subparagraph (B) of paragraph 4 of subsection (c) of section 685 31 of the tax law, as amended by chapter 28 of the laws of 1987, is amended 32 to read as follows: 33 (B) Determination of annualized income installment.--In the case of 34 any required installment, the annualized income installment is the 35 excess, if any, of an amount equal to the applicable percentage of the 36 tax for the taxable year computed by placing on an annualized basis the 37 taxable income [and minimum taxable income] for months in the taxable 38 year ending before the due date for the installment, over the aggregate 39 amount of any prior required installments for the taxable year. The 40 applicable percentage of the tax shall be twenty-two and one-half 41 percent in the case of the first installment, forty-five percent in the 42 case of the second installment, sixty-seven and one-half percent in the 43 case of the third installment and ninety percent in the case of the 44 fourth installment, and shall be computed without regard to any increase 45 in the rates applicable to the taxable year unless such increase was 46 enacted at least thirty days prior to the due date of the installment. 47 S 11. Paragraphs 2 and 3 of subsection (a) of section 1301 of the tax 48 law, as amended by chapter 209 of the laws of 2011, are amended to read 49 as follows: 50 (2) [for taxable years beginning before two thousand fifteen, a city 51 minimum income tax on such residents, and 52 (3)] for taxable years beginning after nineteen hundred seventy-six, a 53 separate tax on the ordinary income portion of lump sum distributions of 54 such residents, at the rates provided for herein, such taxes to be 55 administered, collected and distributed by the commissioner as provided 56 for in this article. S. 6359--C 179 1 S 12. Section 1301-A of the tax law is REPEALED. 2 S 13. Subsection (a) of section 1302 of the tax law, as amended by 3 chapter 333 of the laws of 1987, is amended to read as follows: 4 (a) Imposition of tax. The city personal income tax (other than the 5 [city minimum income tax and the] city separate tax on the ordinary 6 income portion of lump sum distributions) imposed pursuant to the 7 authority of this article shall be imposed for each taxable year on the 8 city taxable income of every city resident individual, estate and trust. 9 A taxpayer's taxable year for purposes of a tax imposed pursuant to the 10 authority of this article shall be the same as his taxable year under 11 article twenty-two of this chapter. 12 S 14. The opening paragraph of subsection (a) of section 1304 of the 13 tax law, as amended by section 134 of part A of chapter 389 of the laws 14 of 1997, is amended to read as follows: 15 A tax (other than the [city minimum income tax, the] city separate tax 16 relating to qualified higher education funds and the city separate tax 17 on the ordinary income portion of lump sum distributions) imposed pursu- 18 ant to the authority of section thirteen hundred one of this article 19 shall be determined as follows: 20 S 15. Subsection (c) of section 1307 of the tax law, as amended by 21 chapter 712 of the laws of 2004, is amended to read as follows: 22 (c) When an individual changes his status from city resident to city 23 nonresident, or from city nonresident to city resident, he shall, 24 regardless of his method of accounting, accrue any items of income, 25 gain, loss, deduction[, items of tax preference] or ordinary income 26 portion of a lump sum distribution accruing prior to the change of 27 status, with the applicable modifications and adjustments to federal 28 adjusted gross income[,] AND itemized deductions [and items of tax pref- 29 erence] under sections six hundred twelve[,] AND six hundred fifteen 30 [and six hundred twenty-two], if not otherwise properly includible or 31 allowable for New York income tax purposes for such period or a prior 32 taxable year under his method of accounting. Such accruals shall be made 33 as provided in section six hundred thirty-nine of this chapter. 34 S 16. Subsection (a) of section 1306 of the tax law, as amended by 35 chapter 333 of the laws of 1987, is amended to read as follows: 36 (a) General. On or before the fifteenth day of the fourth month 37 following the close of a taxable year, an income tax return under a city 38 tax imposed pursuant to the authority of this article shall be made and 39 filed by or for every city resident individual, estate or trust required 40 to file a New York state personal income tax (including [a minimum 41 income tax and] a city separate tax on the ordinary income portion of 42 lump sum distributions) return for the taxable year. 43 S 17. Section 11-1702 of the administrative code of the city of New 44 York is REPEALED. 45 S 18. Subdivision (a) of section 11-1704 of the administrative code of 46 the city of New York, as amended by chapter 17 of the laws of 1997, is 47 amended to read as follows: 48 (a) In addition to the taxes imposed by sections 11-1701[, 11-1702] 49 and 11-1703, there is hereby imposed for each taxable year beginning 50 after nineteen hundred eighty-nine but before nineteen hundred ninety- 51 nine, a tax surcharge on the city taxable income of every city resident 52 individual, estate and trust. 53 S 19. Subdivision (c) of section 11-1704 of the administrative code of 54 the city of New York, as amended by chapter 271 of the laws of 1991, is 55 amended to read as follows: S. 6359--C 180 1 (c) The tax surcharge imposed pursuant to this section shall be admin- 2 istered, collected and distributed by the commissioner of taxation and 3 finance in the same manner as the taxes imposed pursuant to sections 4 11-1701[, 11-1702] and 11-1703, and all of the provisions of this chap- 5 ter, including sections 11-1706, 11-1721 and 11-1773, shall apply to the 6 tax surcharge imposed by this section. 7 S 20. Section 11-1722 of the administrative code of the city of New 8 York is REPEALED. 9 S 21. Subdivision (a) of section 11-1751 of the administrative code of 10 the city of New York, as amended by chapter 333 of the laws of 1987, is 11 amended to read as follows: 12 (a) General. On or before the fifteenth day of the fourth month 13 following the close of a taxable year, an income tax return under this 14 chapter shall be made and filed by or for every city resident individ- 15 ual, estate or trust required to file a New York state personal income 16 tax (including a [minimum income tax and] separate tax on the ordinary 17 income portion of lump sum distributions) return for the taxable year. 18 S 22. Subdivision (b) of section 11-1754 of the administrative code of 19 the city of New York, as amended by chapter 712 of the laws of 2004, is 20 amended to read as follows: 21 (b) City taxable income [and city minimum taxable income] as city 22 resident. The city taxable income [and city minimum taxable income] for 23 the portion of the year during which he or she is a city resident shall 24 be determined, except as provided in subdivision (c), as if his or her 25 taxable year for federal income tax purposes were limited to the period 26 of his or her city resident status. 27 S 23. Paragraph 6 of subdivision (b) of section 11-1755 of the admin- 28 istrative code of the city of New York, as added by section 17 of part Q 29 of chapter 407 of the laws of 1999, is amended to read as follows: 30 (6) In subparagraph (B) of paragraph two of subsection (d), the phrase 31 "section 1 or 55" shall be read as "section 11-1701 [or 11-1702] of this 32 chapter". 33 S 24. Section 11-1759 of the administrative code of the city of New 34 York, as amended by chapter 577 of the laws of 1997, is amended to read 35 as follows: 36 S 11-1759 Report of federal changes, corrections or disallowances. If 37 the amount of a taxpayer's federal taxable income, [federal items of tax 38 preference,] total taxable amount or ordinary income portion of a lump 39 sum distribution or includible gain of a trust reported on his federal 40 income tax return for any taxable year, or the amount of any claim of 41 right adjustment, is changed or corrected by the United States internal 42 revenue service or other competent authority, or as the result of a 43 renegotiation of a contract or subcontract with the United States or the 44 amount an employer is required to deduct and withhold from wages for 45 federal income tax withholding purposes is changed or corrected by such 46 service or authority or if a taxpayer's claim for credit or refund of 47 federal income tax is disallowed in whole or in part, the taxpayer or 48 employer shall report such change or correction or disallowance within 49 ninety days after the final determination of such change, correction, 50 renegotiation, or disallowance, or as otherwise required by the commis- 51 sioner, and shall concede the accuracy of such determination or state 52 wherein it is erroneous. The allowance of a tentative carryback adjust- 53 ment based upon a net operating loss carryback pursuant to section 54 sixty-four hundred eleven of the internal revenue code shall be treated 55 as a final determination for purposes of this section. Any taxpayer 56 filing an amended federal income tax return and any employer filing an S. 6359--C 181 1 amended federal return of income tax withheld shall also file within 2 ninety days thereafter an amended return under this chapter, and shall 3 give such information as the commissioner may require. The commissioner 4 may by regulation prescribe such exceptions to the requirements of this 5 section as he or she deems appropriate. For purposes of this section, 6 (i) the term "taxpayer" shall include a partnership having a resident 7 partner or having any income derived from New York sources, and a corpo- 8 ration with respect to which the taxable year of such change, 9 correction, disallowance or amendment is a year with respect to which 10 the election provided for in subsection (a) of section six hundred sixty 11 of the tax law is in effect, and (ii) the term "federal income tax 12 return" shall include the returns of income required under sections six 13 thousand thirty-one and six thousand thirty-seven of the internal reven- 14 ue code. In the case of such a corporation, such report shall also 15 include any change or correction of the taxes described in paragraphs 16 two and three of subsection (f) of section thirteen hundred sixty-six of 17 the internal revenue code. Reports made under this section by a partner- 18 ship or corporation shall indicate the portion of the change in each 19 item of income, gain, loss or deduction (and, in the case of a corpo- 20 ration, of each change in, or disallowance of a claim for credit or 21 refund of, a tax referred to in the preceding sentence) allocable to 22 each partner or shareholder and shall set forth such identifying infor- 23 mation with respect to such partner or shareholder as may be prescribed 24 by the commissioner. 25 S 25. Subdivision (d) of section 11-1783 of the administrative code of 26 the city of New York, as amended by chapter 170 of the laws of 1994, is 27 amended to read as follows: 28 (d) Omission of income, [item of tax preference,] total taxable amount 29 or ordinary income portion of a lump sum distribution on return. The tax 30 may be assessed at any time within six years after the return was filed 31 if: 32 (1) an individual omits from his city adjusted gross income[, the sum 33 of his items of tax preference, or] the total taxable amount or ordinary 34 income portion of a lump sum distribution an amount properly includible 35 therein which is in excess of twenty-five percent of the amount of city 36 adjusted gross income[, the sum of the items of tax preference] or the 37 total taxable amount or ordinary income portion of a lump sum distrib- 38 ution stated in the return, or 39 (2) an estate or trust omits from its city adjusted gross income, [the 40 sum of its items of tax preference,] or the total taxable amount or 41 ordinary income portion of a lump sum distribution an amount properly 42 includible therein which is in excess of twenty-five percent of the 43 amount stated in the return of city adjusted gross income, [or the sum 44 of the items of tax preference,] or the total taxable amount or ordinary 45 income portion of a lump sum distribution, respectively. For purposes of 46 this paragraph, city adjusted gross income means New York adjusted gross 47 income as determined under paragraph four of subsection (e) of section 48 six hundred one of the tax law. 49 For purposes of this subdivision there shall not be taken into account 50 any amount which is omitted in the return if such amount is disclosed in 51 the return, or in a statement attached to the return, in a manner 52 adequate to apprise the commissioner of the nature and amount of the 53 item of income, [tax preference,] the total taxable amount or ordinary 54 income portion of a lump sum distribution. S. 6359--C 182 1 S 26. Subparagraph (B) of paragraph 4 of subdivision (c) of section 2 11-1785 of the administrative code of the city of New York, as amended 3 by chapter 333 of the laws of 1987, is amended to read as follows: 4 (B) Determination of annualized income installment. In the case of any 5 required installment, the annualized income installment is the excess, 6 if any, of an amount equal to the applicable percentage of the tax for 7 the taxable year computed by placing on an annualized basis the taxable 8 income [and minimum taxable income] for months in the taxable year 9 ending before the due date for the installment, over the aggregate 10 amount of any prior required installments for the taxable year. The 11 applicable percentage of the tax shall be twenty-two and one-half 12 percent in the case of the first installment, forty-five percent in the 13 case of the second installment, sixty-seven and one-half percent in the 14 case of the third installment and ninety percent in the case of the 15 fourth installment, and shall be computed without regard to any increase 16 in the rates applicable to the taxable year unless such increase was 17 enacted at least thirty days prior to the due date of the installment. 18 S 27. This act shall take effect immediately and apply to taxable 19 years beginning on or after January 1, 2014. 20 PART K 21 Intentionally Omitted 22 PART L 23 Intentionally Omitted 24 PART M 25 Section 1. Paragraphs 1 and 4 of subsection (vv) of section 606 of the 26 tax law, as added by section 1 of part CC of chapter 59 of the laws of 27 2013, are amended to read as follows: 28 1. An individual taxpayer who meets the eligibility standards in para- 29 graph two of this subsection shall be allowed a credit against the taxes 30 imposed by this article of three hundred fifty dollars per return for 31 tax [years] YEAR two thousand fourteen[, two thousand fifteen, and two 32 thousand sixteen]. 33 4. For [each] THE year this credit is allowed, on or before October 34 fifteenth of such year, the commissioner shall determine the taxpayer's 35 eligibility for this credit utilizing the information available to the 36 commissioner on the taxpayer's personal income tax return filed for the 37 taxable year two years prior to the taxable year in which the credit is 38 allowed. For those taxpayers whom the commissioner has determined eligi- 39 ble for this credit, the commissioner shall advance a payment of three 40 hundred fifty dollars. When a taxpayer files his or her return for the 41 taxable year, such taxpayer shall properly reconcile that payment on his 42 or her return. 43 S 2. This act shall take effect immediately. 44 PART N S. 6359--C 183 1 Section 1. Paragraph 1 of subsection (a) of section 651 of the tax 2 law, as amended by chapter 333 of the laws of 1987, is amended to read 3 as follows: 4 (1) every resident individual (A) required to file a federal income 5 tax return for the taxable year, or (B) having federal adjusted gross 6 income for the taxable year, increased by the modifications under 7 subsection (b) of section six hundred twelve OF THIS ARTICLE, in excess 8 of [four thousand dollars, or in excess of] his OR HER New York standard 9 deduction, [if lower,] or (C) subject to tax under section six hundred 10 two OF THIS ARTICLE, or (D) having received during the taxable year a 11 lump sum distribution any portion of which is subject to tax under 12 section six hundred three OF THIS ARTICLE; 13 S 2. This act shall take effect immediately and apply to taxable years 14 beginning on or after January 1, 2014. 15 PART O 16 Section 1. Paragraph 1 of subdivision (a) of section 28 of the tax 17 law, as amended by section 1 of part I of chapter 59 of the laws of 18 2012, is amended to read as follows: 19 (1) A taxpayer which is a qualified commercial production company, or 20 which is a sole proprietor of a qualified commercial production company, 21 and which is subject to tax under article nine-A or twenty-two of this 22 chapter, shall be allowed a credit against such tax, pursuant to the 23 provisions referenced in subdivision (c) of this section, to be computed 24 as provided in this section. Provided, however, to be eligible for such 25 credit, at least seventy-five percent of the production costs (excluding 26 post production costs) paid or incurred directly and predominantly in 27 the actual filming or recording of the qualified commercial must be 28 costs incurred in New York state. The tax credit allowed pursuant to 29 this section shall apply to taxable years beginning before January 30 first, two thousand [fifteen] SEVENTEEN. 31 S 2. Subparagraph (iii) of paragraph 2 of subdivision (a) of section 32 28 of the tax law, as amended by section 2 of part I of chapter 59 of 33 the laws of 2012, is amended to read as follows: 34 (iii) The state annually will disburse three million of the total 35 seven million in tax credits to all eligible production companies who 36 film or record a qualified commercial outside of the metropolitan commu- 37 ter transportation district as defined in section twelve hundred sixty- 38 two of the public authorities law; provided, however, that if, after 39 JULY THIRTY-FIRST the state reviews all applications from eligible 40 production companies who film or record a qualified commercial outside 41 of the metropolitan commuter district for a given year, tax credits 42 remain unallocated under this subparagraph, those credits shall be 43 allotted to the credits set forth in subparagraph (i) of this paragraph 44 for use consistent with the purposes of such subparagraph. The amount of 45 the credit shall be the product (or pro rata share of the product, in 46 the case of a member of a partnership) of five percent of the qualified 47 production costs paid or incurred in the production of a qualified 48 commercial, provided that the qualified production costs paid or 49 incurred are attributable to the use of tangible property or the 50 performance of services within the state in the production of such qual- 51 ified commercial. To be eligible for said credit the total qualified 52 production costs of a qualified production company must be greater than 53 [two] ONE hundred thousand dollars in the aggregate during the calendar S. 6359--C 184 1 year. Such credit will be applied to qualified production costs exceed- 2 ing [two] ONE hundred thousand dollars in a calendar year. 3 S 3. Paragraph (a) of subdivision 38 of section 210 of the tax law, 4 as amended by section 3 of part I of chapter 59 of the laws of 2012, is 5 amended to read as follows: 6 (a) Allowance of credit. A taxpayer that is eligible pursuant to 7 provisions of section twenty-eight of this chapter shall be allowed a 8 credit to be computed as provided in such section against the tax 9 imposed by this article. The tax credit allowed pursuant to this section 10 shall apply to taxable years beginning before January first, two thou- 11 sand [fifteen] SEVENTEEN. 12 S 4. Paragraph 1 of subsection (jj) of section 606 of the tax law, as 13 amended by section 4 of part I of chapter 59 of the laws of 2012, is 14 amended to read as follows: 15 (1) Allowance of credit. A taxpayer that is eligible pursuant to the 16 provisions of section twenty-eight of this chapter shall be allowed a 17 credit to be computed as provided in such section against the tax 18 imposed by this article. The tax credit allowed pursuant to this section 19 shall apply to taxable years beginning before January first, two thou- 20 sand [fifteen] SEVENTEEN. 21 S 5. This act shall take effect immediately. 22 PART P 23 Section 1. Subdivision 4 of section 22 of the public housing law, as 24 amended by section 2 of part J of chapter 59 of the laws of 2012, is 25 amended to read as follows: 26 4. Statewide limitation. The aggregate dollar amount of credit which 27 the commissioner may allocate to eligible low-income buildings under 28 this article shall be [forty-eight] FIFTY-SIX million dollars. The limi- 29 tation provided by this subdivision applies only to allocation of the 30 aggregate dollar amount of credit by the commissioner, and does not 31 apply to allowance to a taxpayer of the credit with respect to an eligi- 32 ble low-income building for each year of the credit period. 33 S 2. Subdivision 4 of section 22 of the public housing law, as amended 34 by section one of this act, is amended to read as follows: 35 4. Statewide limitation. The aggregate dollar amount of credit which 36 the commissioner may allocate to eligible low-income buildings under 37 this article shall be [fifty-six] SIXTY-FOUR million dollars. The limi- 38 tation provided by this subdivision applies only to allocation of the 39 aggregate dollar amount of credit by the commissioner, and does not 40 apply to allowance to a taxpayer of the credit with respect to an eligi- 41 ble low-income building for each year of the credit period. 42 S 3. This act shall take effect immediately; provided, however, that 43 section two of this act shall take effect April 1, 2015. 44 PART Q 45 Section 1. This act enacts into law components of legislation which 46 are necessary to implement the provisions relating to brownfields. Each 47 component is wholly contained within a Subpart identified as Subparts A 48 through B. The effective date for each particular provision contained 49 within such Subpart is set forth in the last section of such Part. Any 50 provision in any section contained within a Subpart, including the 51 effective date of the Subpart, which makes a reference to a section "of 52 this act", when used in connection with that particular component, shall S. 6359--C 185 1 be deemed to mean and refer to the corresponding section of the Subpart 2 in which it is found. Section three of this act sets forth the general 3 effective date of this act. 4 SUBPART A 5 Section 1. Subdivision (b) of section 27-1318 of the environmental 6 conservation law, as amended by section 2 of part E of chapter 577 of 7 the laws of 2004, is amended to read as follows: 8 (b) Within [sixty] ONE HUNDRED EIGHTY days of commencement of the 9 remedial design, the owner of an inactive hazardous waste disposal site, 10 and/or any person responsible for implementing a remedial program at 11 such site, where institutional or engineering controls are employed 12 pursuant to this title, shall execute an environmental easement pursuant 13 to title thirty-six of article seventy-one of this chapter. 14 S 2. Subdivisions 2 and 7-a of section 27-1405 of the environmental 15 conservation law, subdivision 2 as amended and subdivision 7-a as added 16 by section 2 of part A of chapter 577 of the laws of 2004, are amended 17 and four new subdivisions 14-a, 14-b, 20-a, and 29 are added to read as 18 follows: 19 2. "Brownfield site" or "site" shall mean any real property[, the 20 redevelopment or reuse of which may be complicated by the presence or 21 potential presence of] WHERE a contaminant OR CONTAMINANTS, DO NOT OVER- 22 WHELMINGLY CONSIST OF HISTORICAL FILL, AND EXCEED AT MORE THAN MINIMAL 23 LEVELS THE SOIL CLEANUP OBJECTIVES ESTABLISHED PURSUANT TO SUBDIVISION 24 SIX OF SECTION 27-1415 OF THIS TITLE OR OTHER HEALTH-BASED OR ENVIRON- 25 MENTAL STANDARDS PROMULGATED BY THE DEPARTMENT THAT ARE APPLICABLE BASED 26 ON THE REASONABLY ANTICIPATED USE OF THE PROPERTY, AS DETERMINED BY THE 27 APPLICANT, WHICH CONTAMINATION IS DEMONSTRATED BY COMPLETION AND 28 SUBMISSION OF AN ASTM PHASE II ENVIRONMENTAL ASSESSMENT REPORT WITHIN 29 NINETY DAYS OF APPLICATION SUBMISSION, AND, IN ADDITION, IS CHARACTER- 30 IZED BY ANY OR ALL OF THE FOLLOWING: (I) A CURRENT LEGACY OF VACANCY OR 31 ABANDONMENT FROM PREVIOUS INDUSTRIAL OR COMMERCIAL ACTIVITY OR TAX 32 DELINQUENCY FOR AT LEAST ONE YEAR PRIOR TO THE DATE OF APPLICATION; OR 33 (II) A CURRENT AND HISTORICAL LEGACY OF SEVERE ECONOMIC OR FUNCTIONAL 34 UNDERUTILIZATION INCLUDING USE OF SUCH SITE AS A HAZARDOUS WASTE OR 35 SOLID WASTE FACILITY; OR (III) IN THE CASE OF A SITE CHARACTERIZED 36 PRIMARILY BY FORMER INDUSTRIAL ACTIVITY, FUNCTIONAL OBSOLESCENCE; OR 37 (IV) THE PROJECTED COST OF THE INVESTIGATION AND REMEDIATION BASED ON 38 THE REASONABLY ANTICIPATED USE OF THE PROPERTY AS DETERMINED BY THE 39 APPLICANT EXCEEDS FIFTY PERCENT OF THE CERTIFIED APPRAISED VALUE OF THE 40 PROPERTY ABSENT CONTAMINATION; OR (V) THE SITE HAS BEEN CERTIFIED BY THE 41 MUNICIPALITY IN WHICH THE SITE IS LOCATED AS MEETING ANY OF THE CONDI- 42 TIONS SET FORTH IN THIS OPENING PARAGRAPH. [Such term] EXCEPT AS 43 PROVIDED IN PARAGRAPH (F) OF THIS SUBDIVISION, BROWNFIELD SITE OR SITE 44 shall not include real property: 45 (a) listed in the registry of inactive hazardous waste disposal sites 46 under section 27-1305 of this article at the time of application to this 47 program and given a classification as described in subparagraph one or 48 two of paragraph b of subdivision two of section 27-1305 of this arti- 49 cle; [provided, however except until July first, two thousand five, real 50 property listed in the registry of inactive hazardous waste disposal 51 sites under subparagraph two of paragraph b of subdivision two of 52 section 27-1305 of this article prior to the effective date of this 53 article, where such real property is owned by a volunteer shall not be 54 deemed ineligible to participate and further provided that the status of S. 6359--C 186 1 any such site as listed in the registry shall not be altered prior to 2 the issuance of a certificate of completion pursuant to section 27-1419 3 of this title]. THE DEPARTMENT'S ASSESSMENT OF ELIGIBILITY UNDER THIS 4 PARAGRAPH SHALL NOT CONSTITUTE A FINDING CONCERNING LIABILITY WITH 5 RESPECT TO THE PROPERTY; 6 (b) listed on the national priorities list established under authority 7 of 42 U.S.C. section 9605; 8 (c) subject to an enforcement action under title seven or nine of this 9 article, [except] OR PERMITTED AS a treatment, storage or disposal 10 facility [subject to a permit]; provided, that nothing herein contained 11 shall be deemed otherwise to exclude from the scope of the term "brown- 12 field site" a hazardous waste treatment, storage or disposal facility 13 having interim status according to regulations promulgated by the 14 commissioner; 15 (d) subject to an order for cleanup pursuant to article twelve of the 16 navigation law or pursuant to title ten of article seventeen of this 17 chapter except such property shall not be deemed ineligible if it is 18 subject to a stipulation agreement; or 19 (e) subject to any other on-going state or federal environmental 20 enforcement action related to the contamination which is at or emanating 21 from the site subject to the present application. 22 (F) IF A VOLUNTEER SUBMITS A REQUEST FOR PARTICIPATION FOR REAL PROP- 23 ERTY THAT WOULD OTHERWISE BE DEEMED EXCLUDED FROM CLASSIFICATION AS A 24 BROWNFIELD SITE PURSUANT TO PARAGRAPH (A), (C), (D), OR (E) OF THIS 25 SUBDIVISION, SUCH REAL PROPERTY SHALL NOT BE EXCLUDED, REGARDLESS OF THE 26 STATUS OF ANY REMEDIAL PROGRAM AT THE SITE, EVEN IF THE PROPERTY IS IN 27 THE OPERATION, MAINTENANCE AND MONITORING PHASE, PROVIDED THERE IS STILL 28 CONTAMINATION ON THE PROPERTY TO REMEDIATE, AND FURTHER PROVIDED THE 29 VOLUNTEER ENTERS INTO A BROWNFIELD SITE CLEANUP AGREEMENT IN ACCORDANCE 30 WITH SECTION 27-1409 OF THIS TITLE REQUIRING THE VOLUNTEER TO COMPLETE 31 THE REQUIRED REMEDIATION TO IMPLEMENT A REDEVELOPMENT PROJECT. IF A SITE 32 IS ADMITTED INTO THE PROGRAM, THE RELEVANT STATUTES AND REGULATIONS OF 33 THE PROGRAM SHALL SERVE AS THE PRIMARY GUIDANCE TO THE DEPARTMENT FOR 34 THE DEPARTMENT'S OVERSIGHT AND OTHER RESPONSIBILITIES TOWARD THE SITE 35 AND THE SITE'S APPLICANTS. ANY ON-GOING STATE REMEDIAL PROGRAM, ENFORCE- 36 MENT ACTION OR ORDER WITH REGARD TO THE SITE SHALL BE STAYED BY THE 37 BROWNFIELD SITE CLEANUP AGREEMENT, AND SHALL TERMINATE WHEN THE VOLUN- 38 TEER RECEIVES A CERTIFICATE OF COMPLETION PURSUANT TO SECTION 27-1419 OF 39 THIS TITLE, EXCEPT TO THE EXTENT THE ON-GOING STATE REMEDIAL PROGRAM, 40 ENFORCEMENT ACTION OR ORDER IS SEEKING TO REQUIRE AN OWNER OF THE SITE 41 AT THE TIME OF THE DISPOSAL, OR OTHER PERSON RESPONSIBLE ACCORDING TO 42 APPLICABLE PRINCIPLES OF STATUTORY OR COMMON LAW LIABILITY, TO ADDRESS 43 AN IMMINENT AND SUBSTANTIAL THREAT TO PUBLIC HEALTH OR THE ENVIRONMENT 44 OR PAY PENALTIES OR RESPONSE COSTS, IN WHICH CASE THE DEPARTMENT CAN 45 CONTINUE TO SEEK ENFORCEMENT AGAINST THE RESPONSIBLE PARTIES. IN THE 46 EVENT THE BROWNFIELD SITE CLEANUP AGREEMENT IS TERMINATED, OR THE VOLUN- 47 TEER OR SUBSEQUENT SITE OWNER OR OPERATOR FAIL TO COMPLY WITH THE TERMS 48 OF AN ENVIRONMENTAL EASEMENT IF ONE HAS BEEN CREATED PURSUANT TO TITLE 49 THIRTY-SIX OF ARTICLE SEVENTY-ONE OF THIS CHAPTER, ANY STATE REMEDIAL 50 PROGRAM, ENFORCEMENT ACTION OR ORDER MAY RESUME OR BE RECOMMENCED AFTER 51 TIMELY NOTICE TO ALL CONCERNED PARTIES. IF THE PROPERTY IS LISTED IN 52 THE REGISTRY OF INACTIVE HAZARDOUS WASTE DISPOSAL SITES UNDER SECTION 53 27-1305 OF THIS ARTICLE, IT SHALL CEASE TO BE CLASSIFIED IN THE REGISTRY 54 UPON ISSUANCE OF THE CERTIFICATE OF COMPLETION PERTAINING TO THE CURRENT 55 AND FUTURE STATUS OF THE PROPERTY, UNLESS SUCH CERTIFICATE IS REVOKED 56 FOR GOOD CAUSE. S. 6359--C 187 1 7-a. "Contaminant" shall mean hazardous waste, HISTORIC FILL MATERIAL, 2 and/or petroleum as such terms are defined in this section. 3 14-A. "SEVERE ECONOMIC OR FUNCTIONAL UNDERUTILIZATION" SHALL MEAN THE 4 BROWNFIELD SITE AND ANY IMPROVEMENTS: (A) ON WHICH A BUILDING OR BUILD- 5 INGS CONTAINING NO MORE THAN FIFTY PERCENT OF THE PERMISSIBLE FLOOR AREA 6 UNDER APPLICABLE ZONING IS BEING UTILIZED; OR (B) HAS A VALUE OF EQUAL 7 TO OR LESS THAN SEVENTY PERCENT OF THE FLOOR AREA OF THE AVERAGE VALU- 8 ATION OF LAND IN THE COUNTY OR CITY IN WHICH THE LAND IS LOCATED, EXCEPT 9 IN A CITY HAVING A POPULATION OF ONE MILLION OR MORE INHABITANTS WHERE 10 THE AVERAGE VALUATION SHALL BE BASED ON THE COUNTY IN WHICH THE LAND IS 11 LOCATED. 12 14-B. "FUNCTIONAL OBSOLESCENCE" SHALL MEAN THE BROWNFIELD SITE AND ANY 13 IMPROVEMENTS THEREON THAT: (A) CAN NO LONGER BE FUNCTIONALLY OR ECONOM- 14 ICALLY UTILIZED IN THE CAPACITY IN WHICH IT WAS FORMERLY UTILIZED 15 BECAUSE OF: (I) THE CONFIGURATION OF THE BUILDING; OR (II) SUBSTANTIAL 16 STRUCTURAL DEFECTS NOT BROUGHT ABOUT BY DEFERRED MAINTENANCE PRACTICES 17 OR INTENTIONAL CONDUCT; OR (B) THE ENTIRE SITE OR A SIGNIFICANT PORTION 18 THEREOF, WITH OR WITHOUT IMPROVEMENTS IS USED IRREGULARLY OR INTERMIT- 19 TENTLY; OR (C) THE FUNCTIONALITY OF THE EQUIPMENT INSIDE THE BUILDING OR 20 BUILDINGS IS OBSOLETE FOR A MODERN DAY APPLICATION; OR (D) HAS BEEN 21 CERTIFIED BY THE MUNICIPALITY IN WHICH THE SITE IS LOCATED AS UNDERUTI- 22 LIZED PURSUANT TO THE CRITERIA IN THIS SUBDIVISION. 23 20-A. "MINIMALLY CONTAMINATED SITE" SHALL MEAN ANY REAL PROPERTY WHERE 24 A CONTAMINANT IS PRESENT AT LEVELS THAT ONLY MINIMALLY EXCEED THE SOIL 25 CLEANUP OBJECTIVES ESTABLISHED PURSUANT TO SUBDIVISION SIX OF SECTION 26 27-1415 OF THIS TITLE OR OTHER APPLICABLE OR RELEVANT AND APPROPRIATE 27 REQUIREMENTS. 28 29. "HISTORIC FILL MATERIAL" MEANS NON-INDIGENOUS MATERIAL, DEPOSITED 29 OR DISPOSED OF TO RAISE THE TOPOGRAPHIC ELEVATION OF REAL PROPERTY, 30 WHICH MATERIAL MAY HAVE BEEN CONTAMINATED PRIOR TO EMPLACEMENT, WHICH 31 CONTAINS CONTAMINANTS SIGNIFICANTLY ABOVE THE RESTRICTED SOIL CLEANUP 32 OBJECTIVES ESTABLISHED PURSUANT TO SUBDIVISION SIX OF SECTION 27-1415 OF 33 THIS TITLE BASED ON THE REASONABLY ANTICIPATED USE OF THE PROPERTY, AS 34 DETERMINED BY THE APPLICANT, AND IS IN NO WAY CONNECTED WITH THE SUBSE- 35 QUENT OPERATIONS AT THE LOCATION OF THE EMPLACEMENT AND WHICH INCLUDES, 36 WITHOUT LIMITATION, CONSTRUCTION AND DEMOLITION DEBRIS INCLUDING UNCON- 37 TAMINATED SOLID WASTE RESULTING FROM THE CONSTRUCTION, REMODELING, 38 REPAIR AND DEMOLITION OF UTILITIES, STRUCTURES, LAND CLEARING AND ROADS. 39 HISTORIC FILL MATERIAL MAY INCLUDE COAL, COAL ASH, COAL RESIDUE, WOOD 40 ASH, MUNICIPAL SOLID WASTE INCINERATOR ASH, CONSTRUCTION AND DEMOLITION 41 DEBRIS, DREDGED SEDIMENTS, RAILROAD BALLAST, REFUSE, LAND CLEARING 42 DEBRIS, SOIL, SLAG, AND SOLID WASTE. IT MAY ALSO INCLUDE SOLID WASTE 43 RESULTING FROM DREDGE SPOILS, INCINERATOR RESIDUE, DEMOLITION DEBRIS, 44 COAL ASH, FLY ASH, AND NONHAZARDOUS WASTE. HISTORIC FILL MATERIAL DOES 45 NOT INCLUDE ANY MATERIAL WHICH IS CHEMICAL PRODUCTION WASTE OR WASTE 46 FROM PROCESSING OF METAL OR MINERAL ORES, RESIDUES, SLAG OR TAILINGS. IN 47 ADDITION, HISTORIC FILL MATERIAL DOES NOT INCLUDE ANY MATERIAL CONNECTED 48 WITH A MUNICIPAL SOLID WASTE SITE BUILT AFTER NINETEEN HUNDRED 49 SIXTY-TWO. 50 S 3. Subdivision 1 and paragraph (a) of subdivision 8 of section 51 27-1407 of the environmental conservation law, as amended by section 3 52 of part A of chapter 577 of the laws of 2004, are amended to read as 53 follows: 54 1. A person who seeks to participate in this program shall submit a 55 request to the department on a form provided by the department. Such 56 form shall include information to be determined by the department suffi- S. 6359--C 188 1 cient to allow the department to determine eligibility and the current, 2 intended and reasonably anticipated future land use of the site pursuant 3 to section 27-1415 of this title. ANY SUCH PERSON SHALL SUBMIT AN ASTM 4 PHASE II ENVIRONMENTAL SITE INVESTIGATION REPORT WITH AN APPLICATION OR 5 WITHIN NINETY DAYS OF SUBMISSION OF THE APPLICATION TO DEMONSTRATE THAT 6 THE SITE MEETS THE CONTAMINATION CRITERIA IN THE BROWNFIELD SITE DEFI- 7 NITION OF THIS TITLE. 8 (a) the department determines that the request is for real property 9 which does not meet the requirements of a brownfield site as defined in 10 this title, BUT SUCH REJECTION, IN AND BY ITSELF, DOES NOT PROHIBIT THE 11 SITE FROM QUALIFYING FOR THE NY RAPID PROGRAM IN SECTION 27-1437 OF THIS 12 TITLE; or 13 S 4. Intentionally omitted. 14 S 5. Subdivision 6 of section 27-1407 of the environmental conserva- 15 tion law, as added by section 1 of part A of chapter 1 of the laws of 16 2003, is amended to read as follows: 17 6. The department shall use all best efforts to expeditiously notify 18 the applicant within forty-five days after receiving their request for 19 participation WHETHER THE SITE MEETS THE BROWNFIELD SITE DEFINITION AND 20 that such request is either accepted or rejected. FOR APPLICANTS THAT 21 DO NOT SUBMIT AN ASTM PHASE II ENVIRONMENT SITE INVESTIGATION REPORT 22 WITH THEIR APPLICATION, THE FORTY-FIVE DAY ACCEPTANCE OR REJECTION OF 23 THEIR APPLICATION IS DEFERRED UNTIL THE DATE PROOF OF CONTAMINATION IS 24 RECEIVED, WHICH SHALL BE RECEIVED NO LATER THAN NINETY DAYS AFTER 25 SUBMISSION OF THE APPLICATION. FOR APPLICANTS THAT MEET THE BROWNFIELD 26 SITE DEFINITION CONTAMINATION CRITERIA BUT THE DEPARTMENT DETERMINES 27 HAVE NOT DEMONSTRATED ONE OF THE OTHER BROWNFIELD SITE CHARACTERIZATION 28 CRITERIA, THE APPLICANT IS ENTITLED TO PARTICIPATE IN THE NY RAPID 29 PROGRAM PURSUANT TO SECTION 27-1437 OF THIS TITLE. IF THE APPLICANT 30 CONTENDS THAT A PROPER DEMONSTRATION OF THE CHARACTERIZATION CRITERIA 31 HAS BEEN MADE, BUT THE DEPARTMENT HAS REJECTED THE DEMONSTRATION, THE 32 APPLICANT MAY ELECT TO COMMENCE THE DISPUTE RESOLUTION PROCESS PURSUANT 33 TO SUBDIVISION THREE OF SECTION 27-1409 OF THIS TITLE. 34 S 6. Subdivision 9 of section 27-1407 of the environmental conserva- 35 tion law is amended by adding a new paragraph (g) to read as follows: 36 (G) THE PERSON'S PARTICIPATION IN ANY REMEDIAL PROGRAM UNDER THE 37 DEPARTMENT'S OVERSIGHT WAS TERMINATED BY THE DEPARTMENT OR BY A COURT 38 FOR FAILURE TO SUBSTANTIALLY COMPLY WITH AN AGREEMENT OR ORDER WITHIN 39 THE LAST FORTY-TWO MONTHS. 40 S 7. Subdivisions 2, 3 and 7 of section 27-1409 of the environmental 41 conservation law, as amended by section 4 of part A of chapter 577 of 42 the laws of 2004, are amended to read as follows: 43 2. One requiring (A) the [applicant] PARTICIPANT to pay for state 44 costs, INCLUDING THE RECOVERY OF STATE COSTS INCURRED BEFORE THE EFFEC- 45 TIVE DATE OF SUCH AGREEMENT; provided, however, that SUCH COSTS MAY BE 46 BASED ON A REASONABLE FLAT-FEE FOR OVERSIGHT, WHICH SHALL REFLECT THE 47 PROJECTED FUTURE STATE COSTS INCURRED IN NEGOTIATING AND OVERSEEING 48 IMPLEMENTATION OF SUCH AGREEMENT; AND 49 (B) with respect to a brownfield site which the department has deter- 50 mined constitutes a significant threat to the public health or environ- 51 ment the department may include a provision requiring the applicant to 52 provide a technical assistance grant, as described in subdivision four 53 of section 27-1417 of this title and under the conditions described 54 therein, to an eligible party in accordance with procedures established 55 under such program, with the cost of such a grant incurred by a volun- 56 teer serving as an offset against such state costs[. Where the appli- S. 6359--C 189 1 cant is a participant, the department shall include provisions relating 2 to recovery of state costs incurred before the effective date of such 3 agreement]; 4 3. One setting forth a process for resolving disputes arising from the 5 DEMONSTRATION OF PROOF SUBMITTED TO QUALIFY FOR THE BROWNFIELD SITE 6 DEFINITION, OR AN evaluation, analysis, and oversight of the implementa- 7 tion of the REPORT OR work plan as described; 8 7. One stating that the [department] STATE shall not consider the 9 applicant an operator of such brownfield site based solely upon 10 execution or implementation of such brownfield site cleanup agreement 11 for purposes of remediation liability; 12 S 8. Intentionally omitted. 13 S 9. Subdivision 2 of section 27-1413 of the environmental conserva- 14 tion law, as amended by section 6 of part A of chapter 577 of the laws 15 of 2004, is amended to read as follows: 16 2. For all [other] sites NOT ELIGIBLE TO PARTICIPATE IN THE NY RAPID 17 PROGRAM PURSUANT TO SECTION 27-1437 OF THIS TITLE, the applicant shall 18 develop and evaluate at least two remedial alternatives, one of which 19 would achieve a Track 1 cleanup. The department shall have the 20 discretion to require the evaluation of additional alternatives at a 21 site that has been determined to pose a significant threat. The appli- 22 cant shall submit the alternatives analysis [as a part of the remedial 23 work plan] to the department for review, approval, modification or 24 rejection. 25 S 10. Subdivision 4 of section 27-1415 of the environmental conserva- 26 tion law, as amended by section 7 of part A of chapter 577 of the laws 27 of 2004, is amended to read as follows: 28 4. Tracks. The commissioner, in consultation with the commissioner of 29 health, shall propose within twelve months and thereafter timely promul- 30 gate regulations which create a multi-track approach for the remediation 31 of contamination, and, commencing on the effective date of such regu- 32 lations, utilize such multi-track approach. Such regulations shall 33 provide that groundwater use in Tracks 2, 3 or 4 can be either 34 restricted or unrestricted. The tracks shall be as follows: 35 Track 1: The remedial program shall achieve a cleanup level that will 36 allow the site to be used for any purpose without restriction and with- 37 out reliance on the long-term employment of institutional or engineering 38 controls, and shall achieve contaminant-specific remedial action objec- 39 tives for soil which conform with those contained in the generic table 40 of contaminant-specific remedial action objectives for unrestricted use 41 developed pursuant to subdivision six of this section. Provided, howev- 42 er, that volunteers whose proposed remedial program [for the remediation 43 of groundwater] (1)(I) may require the long-term employment of institu- 44 tional or engineering controls FOR THE REMEDIATION OF GROUNDWATER after 45 the bulk reduction of groundwater contamination to asymptotic levels has 46 been achieved OR (II) MAY REQUIRE AN INSTITUTIONAL OR ENGINEERING 47 CONTROL FOR MORE THAN FIVE YEARS SOLELY TO ADDRESS SOIL VAPOR INTRUSION 48 FROM THEIR OWN SITE OR LONGER TO ADDRESS OFF-SITE VAPOR ENTERING THE 49 SITE; but (2) whose program would otherwise conform with the require- 50 ments necessary to qualify for Track 1, shall qualify for Track 1. 51 Track 2: The remedial program may include restrictions on the use of 52 the site or reliance on the long-term employment of engineering and/or 53 institutional controls, but shall achieve contaminant-specific remedial 54 action objectives for soil which conform with those contained in one of 55 the generic tables developed pursuant to subdivision six of this section S. 6359--C 190 1 without the use of institutional or engineering controls to reach such 2 objectives. 3 Track 3: The remedial program shall achieve contaminant-specific reme- 4 dial action objectives for soil which conform with the criteria used to 5 develop the generic tables for such objectives developed pursuant to 6 subdivision six of this section but may use site specific data to deter- 7 mine such objectives. 8 Track 4: The remedial program shall achieve a cleanup level that will 9 be protective for the site's current, intended or reasonably anticipated 10 residential, commercial, or industrial use with restrictions and with 11 reliance on the long-term employment of institutional or engineering 12 controls to achieve such level. The regulations shall include a 13 provision requiring that a cleanup level which poses a risk in excee- 14 dance of an excess cancer risk of one in one million for carcinogenic 15 end points and a hazard index of one for non-cancer end points for a 16 specific contaminant at a specific site may be approved by the depart- 17 ment without requiring the use of institutional or engineering controls 18 to eliminate exposure only upon a site specific finding by the commis- 19 sioner, in consultation with the commissioner of health, that such level 20 shall be protective of public health and environment. Such finding shall 21 be included in the draft remedial work plan for the site and fully 22 described in the notice and fact sheet provided for such work plan. 23 S 11. Intentionally omitted. 24 S 12. Paragraph (h) of subdivision 3 of section 27-1417 of the envi- 25 ronmental conservation law is REPEALED, paragraph (i) is relettered 26 paragraph (h) and paragraph (f), as amended by section 8 of part A of 27 chapter 577 of the laws of 2004, is amended to read as follows: 28 (f) Before the department [finalizes] SELECTS a proposed [remedial 29 work plan] REMEDY FROM THE ALTERNATIVES SET FORTH IN THE ALTERNATIVES 30 ANALYSIS AS PRESCRIBED BY SECTION 27-1413 OF THIS TITLE or makes a 31 determination that site conditions meet the requirements of this title 32 without the necessity for remediation pursuant to section 27-1411 of 33 this title, the department, in consultation with the applicant, must 34 notify individuals on the brownfield site contact list. Such notice 35 shall include a fact sheet describing such plan and provide for a 36 forty-five day public comment period. The commissioner shall hold a 37 public meeting if requested by the affected community and the commis- 38 sioner has found that the site constitutes a significant threat to the 39 public health or the environment. Further, the affected community may 40 request a public meeting at sites that do not constitute a significant 41 threat. (1) To the extent that the department has determined that site 42 conditions do not pose a significant threat and the site is being 43 addressed by a volunteer, the notice shall state that the department has 44 determined that no remediation is required for the off-site areas and 45 that the department's determination of a significant threat is subject 46 to this forty-five day comment period. (2) If the [remedial work plan] 47 REMEDY includes a Track 2, Track 3 or Track 4 remedy at a non-signifi- 48 cant threat site, such comment period shall apply both to the approval 49 of the alternatives analysis by the department, IF APPLICABLE, and the 50 proposed remedy selected by the applicant. 51 S 13. Paragraph (a) of subdivision 2 and subdivision 3 of section 52 27-1419 of the environmental conservation law, paragraph (a) of subdivi- 53 sion 2 as added by section 1 of part A of chapter 1 of the laws of 2003 54 and subdivision 3 as amended by chapter 390 of the laws of 2008, are 55 amended to read as follows: S. 6359--C 191 1 (a) a description of the remediation activities completed pursuant to 2 the remedial work plan AND ANY INTERIM REMEDIAL MEASURES for the brown- 3 field site; 4 3. Upon receipt of the final engineering report, the department shall 5 review such report and the data submitted pursuant to the brownfield 6 site cleanup agreement as well as any other relevant information regard- 7 ing the brownfield site. Upon satisfaction of the commissioner that the 8 remediation requirements set forth in this title have been or will be 9 achieved in accordance with the timeframes, if any, established in the 10 remedial work plan, the commissioner shall issue a written certificate 11 of completion[, such]. THE certificate shall include such information as 12 determined by the department of taxation and finance, including but not 13 limited to the brownfield site boundaries included in the final engi- 14 neering report, the date of the brownfield site CLEANUP agreement 15 [pursuant to section 27-1409 of this title,] and the applicable percent- 16 ages available AS OF THE DATE OF THE CERTIFICATE OF COMPLETION for that 17 site for purposes of section twenty-one of the tax law[, with such 18 percentages to be determined as follows with respect to such qualified 19 site] for which the department has issued a notice to the taxpayer after 20 June twenty-third, two thousand eight that its request for participation 21 has been accepted under subdivision six of section 27-1407 of this 22 title[: 23 For the purposes of calculating], THE APPLICABLE PERCENTAGE FOR the 24 site preparation credit component pursuant to paragraph two of subdivi- 25 sion (a) of section twenty-one of the tax law, and the on-site groundwa- 26 ter remediation credit component pursuant to paragraph four of subdivi- 27 sion (a) of section twenty-one of the tax law[, the applicable 28 percentage] shall be based on the level of cleanup achieved pursuant to 29 subdivision four of section 27-1415 of this title and the level of 30 cleanup of soils to contaminant-specific soil cleanup objectives promul- 31 gated pursuant to subdivision six of section 27-1415 of this title, up 32 to a maximum of fifty percent, as follows: 33 (a) soil cleanup for unrestricted use, the protection of groundwater 34 or the protection of ecological resources, the applicable percentage 35 shall be fifty percent; 36 (b) soil cleanup for residential use, the applicable percentage shall 37 be forty percent, except for Track 4 which shall be twenty-eight 38 percent; 39 (c) soil cleanup for commercial use, the applicable percentage shall 40 be thirty-three percent, except for Track 4 which shall be twenty-five 41 percent; 42 (d) soil cleanup for industrial use, the applicable percentage shall 43 be twenty-seven percent, except for Track 4 which shall be twenty-two 44 percent. 45 NOTWITHSTANDING ANY OTHER PROVISION OF LAW TO THE CONTRARY, THE SITE 46 PREPARATION COMPONENT CREDIT AVAILABLE FOR ANY QUALIFIED SITE PURSUANT 47 TO THIS SUBDIVISION SHALL NOT EXCEED FIFTEEN MILLION DOLLARS. 48 S 14. Subdivision 5 of section 27-1419 of the environmental conserva- 49 tion law, as amended by section 9 of part A of chapter 577 of the laws 50 of 2004, is amended to read as follows: 51 5. A certificate of completion issued pursuant to this section may be 52 transferred [to the applicant's successors or assigns upon transfer or 53 sale of the brownfield site] BY THE APPLICANT OR SUBSEQUENT HOLDER OF 54 THE CERTIFICATE OF COMPLETION TO A SUCCESSOR TO A REAL PROPERTY INTER- 55 EST, INCLUDING LEGAL TITLE, EQUITABLE TITLE OR LEASEHOLD, IN ALL OR A 56 PART OF THE BROWNFIELD SITE FOR WHICH THE CERTIFICATE OF COMPLETION WAS S. 6359--C 192 1 ISSUED. Further, a certificate of completion may be modified or revoked 2 by the commissioner upon a finding that: 3 (a) Either the applicant, or the applicant's successors or assigns, 4 has failed to comply with the terms and conditions of the brownfield 5 site cleanup agreement; 6 (b) The applicant made a misrepresentation of a material fact tending 7 to demonstrate that it was qualified as a volunteer; 8 (c) Either the applicant, or the applicant's successors or assigns, 9 made a misrepresentation of a material fact tending to demonstrate that 10 the cleanup levels identified in the brownfield site cleanup agreement 11 were reached; [or] 12 (d) THE ENVIRONMENTAL EASEMENT CREATED AND RECORDED PURSUANT TO TITLE 13 THIRTY-SIX OF ARTICLE SEVENTY-ONE OF THIS CHAPTER NO LONGER PROVIDES AN 14 EFFECTIVE OR ENFORCEABLE MEANS OF ENSURING THE PERFORMANCE OF MAINTE- 15 NANCE, MONITORING OR OPERATING REQUIREMENTS, OR THE RESTRICTIONS ON 16 FUTURE USES, INCLUDING RESTRICTIONS ON DRILLING FOR OR WITHDRAWING 17 GROUNDWATER; OR 18 (E) There is good cause for such modification or revocation. 19 S 15. Section 27-1423 of the environmental conservation law is 20 REPEALED. 21 S 16. Section 27-1429 of the environmental conservation law, as 22 amended by section 13 of part A of chapter 577 of the laws of 2004, is 23 amended to read as follows: 24 S 27-1429. Permit waivers. 25 The department[, by and through the commissioner,] shall be EXEMPT, 26 AND SHALL BE authorized to exempt a person from the requirement to 27 obtain any state or local permit or other authorization for any activity 28 needed to implement a program for the investigation and/or remediation 29 of contamination AT OR EMANATING FROM A BROWNFIELD SITE; provided that 30 the activity is conducted in a manner which satisfies all substantive 31 technical requirements applicable to like activity conducted pursuant to 32 a permit. 33 S 17. Subdivision 1 of section 27-1431 of the environmental conserva- 34 tion law is amended by adding a new paragraph c to read as follows: 35 C. TO INSPECT FOR COMPLIANCE WITH THE SITE MANAGEMENT PLAN APPROVED BY 36 THE DEPARTMENT, INCLUDING (I) INSPECTION OF THE PERFORMANCE OF MAINTE- 37 NANCE, MONITORING AND OPERATIONAL ACTIVITIES REQUIRED AS PART OF THE 38 REMEDIAL PROGRAM FOR THE SITE, AND (II) TAKING SAMPLES IN ACCORDANCE 39 WITH PARAGRAPH A OF THIS SUBDIVISION. 40 S 17-a. Section 27-1435 of the environmental conservation law is 41 REPEALED. 42 S 18. The environmental conservation law is amended by adding a new 43 section 27-1437 to read as follows: 44 S 27-1437. NY RAPID PROGRAM. 45 1. NOTWITHSTANDING THE PROVISIONS OF THIS TITLE OR ANY OTHER PROVISION 46 OF LAW, THE DEPARTMENT SHALL PROMULGATE REGULATIONS TO ESTABLISH THE NEW 47 YORK REMEDIATION ACCELERATED PERFORMANCE INTERIM DESIGN (NY RAPID) 48 PROGRAM THAT WILL OFFER AN EXPEDITED PROCESS AND GRANT A LIABILITY WAIV- 49 ER TO VOLUNTEERS THAT SUCCESSFULLY REMEDIATE MINIMALLY CONTAMINATED 50 SITES OR A SITE WHERE CONTAMINATION IS OVERWHELMINGLY THE RESULT OF THE 51 USE OR PLACEMENT OF HISTORIC FILL MATERIAL ON OR UNDER THE SITE. 52 2. VOLUNTEERS MAY APPLY AND BE ACCEPTED FOR ENTRANCE INTO NY RAPID IF 53 THE SITE MEETS THE FOLLOWING REQUIREMENTS: 54 A. CONTAMINATION IS PRESENT BUT OTHERWISE DOES NOT MEET THE DEFI- 55 NITIONS APPLICABLE TO SUBDIVISION TWO OF SECTION 27-1405 OF THIS TITLE. 56 B. THE REDEVELOPMENT OF SUCH SITE IS COMPLICATED BY: S. 6359--C 193 1 (I) THE PRESENCE OF HISTORIC FILL IS THE OVERWHELMING SOURCE OF 2 CONTAMINATION; OR 3 (II) LEVELS OF CONTAMINATION THAT ARE AT OR NEAR THE LEVELS ESTAB- 4 LISHED BY THE APPLICABLE SOIL CLEAN-UP OBJECTIVES PURSUANT TO SUBDIVI- 5 SION SIX OF SECTION 27-1415 OF THIS TITLE; PROVIDED, HOWEVER, SUCH SITE 6 SHALL NOT INCLUDE REAL PROPERTY WITH LEVELS OF CONTAMINATION FOR A 7 SINGLE OR MULTIPLE CONTAMINATES, THE SOURCES OF SUCH LEVELS ARE FROM 8 HISTORICAL FILL, THAT ARE SIGNIFICANTLY GREATER THAN THE APPLICABLE SOIL 9 CLEAN-UP OBJECTIVES PURSUANT TO SUBDIVISION SIX OF SECTION 27-1415 OF 10 THIS TITLE. 11 3. SITES THAT HAVE RECEIVED A NOTICE OF COMPLETION FROM THE CITY OF 12 NEW YORK UNDER THE LOCAL BROWNFIELD CLEANUP PROGRAM SHALL BE ELIGIBLE. 13 4. THE APPLICANT SHALL WAIVE IN WRITING ANY CLAIM FOR TAX CREDITS 14 PURSUANT TO SECTION TWENTY-ONE OF THE TAX LAW ON A FORM PRESCRIBED BY 15 THE DEPARTMENT. 16 5. THE DEPARTMENT SHALL EXEMPT A VOLUNTEER FROM PROCEDURAL REQUIRE- 17 MENTS OF THIS TITLE THAT THE DEPARTMENT MAY SPECIFY WHICH ARE OTHERWISE 18 APPLICABLE TO IMPLEMENTATION OF AN INVESTIGATION AND/OR REMEDIATION OF 19 CONTAMINATION, PROVIDED THAT THE ACTIVITY IS CONDUCTED IN A MANNER WHICH 20 SATISFIES ALL SUBSTANTIVE TECHNICAL REQUIREMENTS APPLICABLE TO LIKE 21 ACTIVITY CONDUCTED PURSUANT TO THIS TITLE. THE APPROVED WORK PLAN FOR A 22 BROWNFIELD SITE SHALL INCLUDE THE PROCEDURAL REQUIREMENTS THE DEPARTMENT 23 DETERMINES ARE APPROPRIATE BASED ON SITE SPECIFIC CONSIDERATIONS AND 24 CONSIDERATION OF SECTION 27-1417 OF THIS TITLE. 25 6. A. UPON RECEIPT OF THE FINAL ENGINEERING REPORT PURSUANT TO SUBDI- 26 VISION TWO OF SECTION 27-1419 OF THIS TITLE, THE DEPARTMENT SHALL REVIEW 27 SUCH REPORT AND THE DATA SUBMITTED PURSUANT TO A NY RAPID SITE CLEANUP 28 AGREEMENT AS WELL AS ANY OTHER RELEVANT INFORMATION REGARDING THE NY 29 RAPID SITE. UPON SATISFACTION OF THE COMMISSIONER THAT THE REMEDIATION 30 REQUIREMENTS SET FORTH IN THIS TITLE HAVE BEEN OR WILL BE ACHIEVED IN 31 ACCORDANCE WITH THE TIMEFRAMES, IF ANY, ESTABLISHED IN THE REMEDIAL WORK 32 PLAN, THE COMMISSIONER SHALL ISSUE A WRITTEN CERTIFICATE OF COMPLETION. 33 SUCH CERTIFICATE SHALL INCLUDE, BUT NOT BE LIMITED TO, THE BROWNFIELD 34 SITE BOUNDARIES INCLUDED IN THE FINAL ENGINEERING REPORT. 35 B. PARAGRAPHS FOUR, FIVE, SIX, SEVEN, AND EIGHT OF SECTIONS 27-1419 36 AND 27-1421 OF THIS TITLE SHALL APPLY TO CERTIFICATES OF COMPLETION 37 ISSUED TO NY RAPID PROGRAM PARTICIPANTS. 38 S 19. The opening paragraph of subdivision 10 of section 71-3605 of 39 the environmental conservation law, as added by section 2 of part A of 40 chapter 1 of the laws of 2003, is amended to read as follows: 41 An environmental easement may be enforced in law or equity by its 42 grantor, by the state, or any affected local government as defined in 43 section 71-3603 of this title. Such easement is enforceable against the 44 owner of the burdened property, any lessees, and any person using the 45 land. Enforcement shall not be defeated because of any subsequent 46 adverse possession, laches, estoppel, REVERSION or waiver. No general 47 law of the state which operates to defeat the enforcement of any inter- 48 est in real property shall operate to defeat the enforcement of any 49 environmental easement unless such general law expressly states the 50 intent to defeat the enforcement of such easement or provides for the 51 exercise of the power of eminent domain. It is not a defense in any 52 action to enforce an environmental easement that: 53 S 20. Intentionally omitted. 54 S 21. Paragraph 3 of subdivision (a) of section 21 of the tax law, as 55 amended by chapter 390 of the laws of 2008, is amended to read as 56 follows: S. 6359--C 194 1 (3) Tangible property credit component. The tangible property credit 2 component shall be equal to the applicable percentage of the cost or 3 other basis for federal income tax purposes of tangible personal proper- 4 ty and other tangible property, including buildings and structural 5 components of buildings, which constitute qualified tangible property; 6 provided[, however,] that in determining the cost or other basis of such 7 property, the taxpayer shall exclude the acquisition cost of any item of 8 property with respect to which a credit under this section was allowable 9 to another taxpayer. The credit component amount so determined shall be 10 allowed for the taxable year in which such qualified tangible property 11 is placed in service; PROVIDED, HOWEVER, THAT SUCH PROPERTY SHALL BE 12 PLACED IN SERVICE DURING THE ONE HUNDRED TWENTY MONTH PERIOD THAT BEGINS 13 WITH THE FIRST DAY OF THE FIRST TAXABLE YEAR IN WHICH QUALIFIED TANGIBLE 14 PROPERTY IS PLACED IN SERVICE on a qualified site [with respect to which 15 a certificate of completion has been issued to the taxpayer for up to 16 ten taxable years after the date of the issuance of such certificate of 17 completion]. The tangible property credit component shall be allowed 18 with respect to property leased to a second party only if such second 19 party is either (i) not a party responsible for the disposal of hazard- 20 ous waste or the discharge of petroleum at the site according to appli- 21 cable principles of statutory or common law liability, or (ii) a party 22 responsible according to applicable principles of statutory or common 23 law liability if such party's liability arises solely from operation of 24 the site subsequent to the disposal of hazardous waste or the discharge 25 of petroleum, and is so certified by the commissioner of environmental 26 conservation at the request of the taxpayer, pursuant to section 27-1419 27 of the environmental conservation law. Notwithstanding any other 28 provision of law to the contrary, in the case of allowance of credit 29 under this section to such a lessor, the commissioner shall have the 30 authority to reveal to such lessor any information, with respect to the 31 issue of qualified use of property by the lessee, which is the basis for 32 the denial in whole or in part, or for the recapture, of the credit 33 claimed by such lessor. For purposes of the tangible property credit 34 component allowed under this section the taxpayer to whom the certif- 35 icate of completion is issued, as provided for under subdivision five of 36 section 27-1419 of the environmental conservation law, may transfer the 37 benefits and burdens of the certificate of completion, which run with 38 the land and to the applicant's successors or assigns upon transfer or 39 sale of all or any portion of an interest or estate in the qualified 40 site. However, the taxpayer to whom certificate's benefits and burdens 41 are transferred shall not include the cost of acquiring all or any 42 portion of an interest or estate in the site and the amounts included in 43 the cost or other basis for federal income tax purposes of qualified 44 tangible property already claimed by the previous taxpayer pursuant to 45 this section. 46 S 22. Subparagraph (A) of paragraph 3-a of subdivision (a) of section 47 21 of the tax law, as added by chapter 390 of the laws of 2008, is 48 amended to read as follows: 49 (A) Notwithstanding any other provision of law to the contrary, the 50 tangible property credit component available for any qualified site 51 pursuant to paragraph three of this subdivision shall not exceed thir- 52 ty-five million dollars or three times the SUM OF THE costs included in 53 the calculation of the site preparation credit component and the on-site 54 groundwater remediation credit component under paragraphs two and four, 55 respectively, of this subdivision, AND THE COSTS THAT WOULD HAVE BEEN 56 INCLUDED IN THE CALCULATION OF SUCH COMPONENTS IF NOT TREATED AS AN S. 6359--C 195 1 EXPENSE AND DEDUCTED PURSUANT TO SECTION ONE HUNDRED NINETY-EIGHT OF THE 2 INTERNAL REVENUE CODE, whichever is less; provided, however, that: (1) 3 in the case of a qualified site to be used primarily for manufacturing 4 activities, the tangible property credit component available for any 5 qualified site pursuant to paragraph three of this subdivision shall not 6 exceed forty-five million dollars or six times the SUM OF THE costs 7 included in the calculation of the site preparation credit component and 8 the on-site groundwater remediation credit component under paragraphs 9 two and four, respectively, of this subdivision, AND THE COSTS THAT 10 WOULD HAVE BEEN INCLUDED IN THE CALCULATION OF SUCH COMPONENTS IF NOT 11 TREATED AS AN EXPENSE AND DEDUCTED PURSUANT TO SECTION ONE HUNDRED NINE- 12 TY-EIGHT OF THE INTERNAL REVENUE CODE, whichever is less; and (2) the 13 provisions of this paragraph shall not apply to any qualified site for 14 which the department of environmental conservation has issued a notice 15 to the taxpayer before June twenty-third, two thousand eight that its 16 request for participation has been accepted under subdivision six of 17 section 27-1407 of the environmental conservation law. 18 S 23. Subparagraph (D) of paragraph 3-a of subdivision (a) of section 19 21 of the tax law, as added by chapter 390 of the laws of 2008, is 20 amended to read as follows: 21 (D) If the qualifying site is located in a brownfield opportunity area 22 and is developed in conformance with the goals and priorities estab- 23 lished for that applicable brownfield opportunity area as designated 24 pursuant to section nine hundred seventy-r of the general municipal law, 25 the applicable percentage of the tangible property credit component will 26 be increased by [two] FOUR percent. 27 S 24. Subdivision 2 of section 355 of the economic development law, as 28 amended by section 4 of part G of chapter 61 of the laws of 2011, is 29 amended to read as follows: 30 2. Excelsior investment tax credit component. A participant in the 31 excelsior jobs program shall be eligible to claim a credit on qualified 32 investments. The credit shall be equal to two percent of the cost or 33 other basis for federal income tax purposes of the qualified investment. 34 A participant may not claim both the excelsior investment tax credit 35 component and the investment tax credit set forth in subdivision twelve 36 of section two hundred ten, subsection (a) of section six hundred six, 37 subsection (i) of section fourteen hundred fifty-six, or subdivision (q) 38 of section fifteen hundred eleven of the tax law for the same property 39 in any taxable year, except that a participant may claim both the 40 excelsior investment tax credit component and the investment tax credit 41 for research and development property. [In addition, a taxpayer who or 42 which is qualified to claim the excelsior investment tax credit compo- 43 nent and is also qualified to claim the brownfield tangible property 44 credit component under section twenty-one of the tax law may claim 45 either the excelsior investment tax credit component or such tangible 46 property credit component, but not both with regard to a particular 47 piece of property.] A credit may not be claimed until a business enter- 48 prise has received a certificate of tax credit, provided that qualified 49 investments made on or after the issuance of the certificate of eligi- 50 bility but before the issuance of the certificate of tax credit to the 51 business enterprise, may be claimed in the first taxable year for which 52 the business enterprise is allowed to claim the credit. Expenses 53 incurred prior to the date the certificate of eligibility is issued are 54 not eligible to be included in the calculation of the credit. S. 6359--C 196 1 S 25. Paragraph 5 of subdivision (a) of section 21 of the tax law, as 2 amended by section 1 of part H of chapter 577 of the laws of 2004, is 3 amended to read as follows: 4 (5) Applicable percentage. For purposes of paragraphs two, three and 5 four of this subdivision, the applicable percentage shall be twelve 6 percent [in the case of credits claimed under article nine, nine-A, 7 thirty-two or thirty-three of this chapter, and ten percent in the case 8 of credits claimed under article twenty-two of this chapter,] except 9 that where at least fifty percent of the area of the qualified site 10 relating to the credit provided for in this section is located in an 11 environmental zone as defined in paragraph six of subdivision (b) of 12 this section, the applicable percentage shall be increased by an addi- 13 tional eight percent. Provided, however, as afforded in section 27-1419 14 of the environmental conservation law, if the certificate of completion 15 indicates that the qualified site has been remediated to Track 1 as that 16 term is described in subdivision four of section 27-1415 of the environ- 17 mental conservation law, the applicable percentage set forth in the 18 first sentence of this paragraph shall be increased by an additional two 19 percent. 20 S 26. Section 22 of the tax law is REPEALED. 21 S 27. Paragraphs 2, 4 and 6 of subdivision (b) of section 21 of the 22 tax law, as amended by section 1 of part H of chapter 577 of the laws of 23 2004, subparagraph (B) and the closing paragraph of paragraph 6 as 24 amended by section 1 of part G of chapter 62 of the laws of 2006, are 25 amended to read as follows: 26 (2) Site preparation costs. The term "site preparation costs" shall 27 mean all amounts properly [chargeable] CHARGED to a capital account, (i) 28 which are paid or incurred in connection with a site's qualification for 29 a certificate of completion, AND WHICH MAY INCLUDE COSTS ATTRIBUTABLE TO 30 ACTIVITIES UNDERTAKEN UNDER THE OVERSIGHT OF THE DEPARTMENT OF HEALTH OR 31 THE DEPARTMENT OF LABOR TO REMEDIATE REGULATED MATERIALS INCLUDING 32 ASBESTOS, LEAD OR POLYCHLORINATED BIPHENYLS IN BUILDINGS WHICH WILL 33 REMAIN ON THE SITE, and (ii) all other site preparation costs paid or 34 incurred in connection with preparing a site for the erection of a 35 building or a component of a building, or otherwise to establish a site 36 as usable for its industrial, commercial (including the commercial 37 development of residential housing), recreational or conservation 38 purposes. Site preparation costs shall include, but not be limited to, 39 the costs of excavation, temporary electric wiring, scaffolding, demoli- 40 tion costs, and the costs of fencing and security facilities. Site prep- 41 aration costs shall not include the cost of acquiring the site and shall 42 not include amounts included in the cost or other basis for federal 43 income tax purposes of qualified tangible property, as described in 44 paragraph three of this subdivision. 45 (4) On-site groundwater remediation costs. The term "on-site groundwa- 46 ter remediation costs" shall mean all amounts properly [chargeable] 47 CHARGED to a capital account, (i) which are paid or incurred in 48 connection with a site's qualification for a certificate of completion, 49 and (ii) include costs which are paid or incurred in connection with the 50 remediation of on-site groundwater contamination and PAID OR incurred to 51 implement a requirement of the remedial work plan or an interim remedial 52 measure work plan for a qualified site which are imposed pursuant to 53 subdivisions two and three of section 27-1411 of the environmental 54 conservation law. 55 (6) Environmental zones (EN-Zones). An "environmental zone" shall mean 56 an area designated as such by the commissioner of [economic development] S. 6359--C 197 1 LABOR. Such areas so designated are areas which are census tracts and 2 block numbering areas which, as of the [two thousand] MOST RECENT 3 census, satisfy either of the following criteria: 4 (A) areas that have both: 5 (i) a poverty rate of at least twenty percent for the year to which 6 the data relate; and 7 (ii) an unemployment rate of at least one and one-quarter times the 8 statewide unemployment rate for the year to which the data relate, or; 9 (B) areas that have a poverty rate of at least two times the poverty 10 rate for the county in which the areas are located for the year to which 11 the data relate [provided, however, that a qualified site shall only be 12 deemed to be located in an environmental zone under this subparagraph 13 (B) if such site was the subject of a brownfield site cleanup agreement 14 pursuant to section 27-1409 of the environmental conservation law that 15 was entered into prior to September first, two thousand ten]. 16 Such designation shall be made and a list of all such environmental 17 zones shall be established by the commissioner of [economic development] 18 LABOR no later than [December thirty-first, two thousand four provided, 19 however, that a qualified site shall only be deemed to be located in an 20 environmental zone under subparagraph (B) of this paragraph if such site 21 was the subject of a brownfield site cleanup agreement pursuant to 22 section 27-1409 of the environmental conservation law that was entered 23 into prior to September first, two thousand ten] NINETY DAYS FOLLOWING 24 THE OFFICIAL PUBLICATION OF THE MOST RECENT CENSUS. 25 S 28. Subdivision (a) of section 23 of the tax law, as amended by 26 section 10 of part H of chapter 577 of the laws of 2004, is amended to 27 read as follows: 28 (a) Allowance of credit. General. A taxpayer subject to tax under 29 article nine, nine-A, twenty-two, thirty-two or thirty-three of this 30 chapter shall be allowed a credit against such tax, pursuant to the 31 provisions referenced in subdivision (e) of this section. The amount of 32 such credit shall be equal to the lesser of [thirty] NINETY thousand 33 dollars or fifty percent of the premiums paid on or after the date of 34 the brownfield site cleanup agreement executed by the taxpayer and the 35 department of environmental conservation pursuant to section 27-1409 of 36 the environmental conservation law by the taxpayer for environmental 37 remediation insurance issued with respect to a qualified site. 38 S 29. Section 171-r of the tax law is amended by adding a new subdivi- 39 sion (e) to read as follows: 40 (E) THE COMMISSIONER, IN CONSULTATION WITH THE COMMISSIONER OF ENVI- 41 RONMENTAL CONSERVATION, SHALL PUBLISH BY JANUARY THIRTY-FIRST, TWO THOU- 42 SAND FIFTEEN A SUPPLEMENTAL BROWNFIELD CREDIT REPORT CONTAINING THE 43 INFORMATION REQUIRED BY THIS SECTION ABOUT THE CREDITS CLAIMED FOR THE 44 YEARS TWO THOUSAND FIVE, TWO THOUSAND SIX, AND TWO THOUSAND SEVEN. 45 S 30. Section 171-s of the tax law is REPEALED. 46 S 31. Paragraph (d) of subdivision 7 of section 27-1415 of the envi- 47 ronmental conservation law, as added by section 1 of part A of chapter 1 48 of the laws of 2003, is amended to read as follows: 49 (d) The commissioner shall create, update, and maintain a database 50 system for public information purposes and to monitor and track all 51 brownfield sites subject to this title. Data incorporated into such 52 system for each site for which information has been collected pursuant 53 to this title shall include, but shall not be limited to, a site summa- 54 ry, name of site owner, location, status of site remedial activity, 55 WHETHER THE SITE IS LOCATED IN A BROWNFIELD OPPORTUNITY AREA AS DEFINED 56 IN SECTION NINE HUNDRED SEVENTY-R OF THE GENERAL MUNICIPAL LAW, and, if S. 6359--C 198 1 one has been created pursuant to title thirty-six of article seventy-one 2 of this chapter, a copy of the environmental easement, and a contact 3 number to obtain additional information. Sites shall be added to such 4 system upon the execution of a brownfield site cleanup agreement pursu- 5 ant to section 27-1409 of this title. If and when an environmental ease- 6 ment is modified or extinguished, the copy of the environmental easement 7 contained in the database shall be updated accordingly. Such database 8 shall be in such a format that it can be readily searched by affected 9 local governments and the public for purposes including but not limited 10 to determining whether an environmental easement has been recorded for a 11 site pursuant to title thirty-six of article seventy-one of this chap- 12 ter. The database shall be available electronically. Information from 13 this database shall be incorporated into the geographic information 14 system created and maintained by the department pursuant to section 15 3-0315 of this chapter. 16 S 31-a. Paragraph b of subdivision 2 of section 970-r of the general 17 municipal law, as added by section 1 of part F of chapter 1 of the laws 18 of 2003, is amended to read as follows: 19 b. Activities eligible to receive such assistance shall include, but 20 are not limited to, the assembly and development of basic information 21 about: 22 (1) the borders of the [proposed] brownfield opportunity area; 23 (2) the number and size of brownfield sites; 24 (3) current and anticipated uses of the properties in the [proposed] 25 BROWNFIELD OPPORTUNITY area; 26 (4) current and anticipated future conditions of groundwater in the 27 [proposed] BROWNFIELD OPPORTUNITY area; 28 (5) known data about the environmental conditions of the properties in 29 the [proposed] BROWNFIELD OPPORTUNITY area; 30 (6) ownership of the properties in the [proposed] BROWNFIELD OPPORTU- 31 NITY area AND WHETHER THE OWNERS WOULD LIKE TO PARTICIPATE DIRECTLY IN 32 THE BROWNFIELD OPPORTUNITY PLANNING PROCESS; and 33 (7) preliminary descriptions of possible remediation strategies, reuse 34 opportunities, necessary infrastructure improvements and other public or 35 private measures needed to stimulate investment, promote revitalization, 36 and enhance community health and environmental conditions. 37 S 31-b. Paragraph a of subdivision 3 of section 970-r of the general 38 municipal law, as amended by chapter 390 of the laws of 2008, is amended 39 to read as follows: 40 a. Within the limits of appropriations therefor, the secretary is 41 authorized to provide, on a competitive basis, financial assistance to 42 municipalities, to community based organizations, to community boards, 43 or to municipalities and community based organizations acting in cooper- 44 ation to prepare a nomination for designation of a brownfield opportu- 45 nity area. Such financial assistance shall not exceed ninety percent of 46 the costs of such nomination for any such area. A NOMINATION STUDY MUST 47 INCLUDE SUFFICIENT INFORMATION TO DESIGNATE THE BROWNFIELD OPPORTUNITY 48 AREA DISTRICT. THE CONTENTS OF THE NOMINATION STUDY SHALL BE DEVELOPED 49 BASED ON PRE-NOMINATION STUDY INFORMATION, WHICH SHALL PRINCIPALLY 50 CONSIST OF AN AREA-WIDE ASTM PHASE I ENVIRONMENTAL SITE ASSESSMENT 51 STUDY, OR A PRE-EXISTING AREA-WIDE ASTM PHASE I SITE ASSESSMENT STUDY, 52 DOCUMENTING THE HISTORIC BROWNFIELD USES IN THE DISTRICT. A NOMINATION 53 STUDY IS NOT INTENDED TO BE EQUIVALENT TO OR TO SERVE AS A MASTER PLAN, 54 COMPREHENSIVE PLAN, OR OTHER EQUIVALENT LAND USE STUDY, BUT RATHER IS 55 INTENDED TO BE A BASIC PLAN FOR DESIGNATION OF THE AREA AS A BROWNFIELD 56 OPPORTUNITY DISTRICT BASED ON HISTORIC BROWNFIELD USE INFORMATION AND S. 6359--C 199 1 THE COMMUNITY PARTICIPATION REQUIRED IN THIS SECTION. A MASTER PLAN, 2 COMPREHENSIVE PLAN OR EQUIVALENT LAND USE STUDY MAY BE SEPARATELY DEVEL- 3 OPED UNDER THIS PROGRAM AS AN IMPLEMENTATION STRATEGY FOR THE FINAL 4 BROWNFIELD OPPORTUNITY AREA PLAN. SINCE A NOMINATION STUDY IS NOT EQUIV- 5 ALENT TO A FINAL LAND USE PLAN, THE PREPARATION OF THE NOMINATION STUDY 6 DOES NOT REQUIRE REVIEW UNDER THE STATE ENVIRONMENTAL QUALITY REVIEW ACT 7 PURSUANT TO ARTICLE EIGHT OF THE ENVIRONMENTAL CONSERVATION LAW, AND A 8 BROWNFIELD OPPORTUNITY AREA CAN BE DESIGNATED BASED EXCLUSIVELY ON A 9 NOMINATION STUDY. IN THE EVENT THE MUNICIPALITY AND/OR COMMUNITY BASED 10 ORGANIZATION ELECT TO DEVELOP IMPLEMENTATION STRATEGIES, INCLUDING BUT 11 NOT LIMITED TO A MASTER PLAN, COMPREHENSIVE PLAN OR URBAN RENEWAL PLAN, 12 REVIEW UNDER THE STATE ENVIRONMENTAL QUALITY REVIEW ACT UNDER ARTICLE 13 EIGHT OF THE ENVIRONMENTAL CONSERVATION LAW IS REQUIRED. NO SUCH NOMI- 14 NATION STUDY SHALL SUPERSEDE AN EXISTING MASTER PLAN OR EQUIVALENT LAND 15 USE STUDY. 16 S 31-c. Subdivision 4 of section 970-r of the general municipal law, 17 as amended by chapter 390 of the laws of 2008, is amended to read as 18 follows: 19 4. Designation of brownfield opportunity area. [Upon completion of] 20 A. WITHIN THIRTY-SIX MONTHS OF THE SUBMISSION OF AN APPLICATION FOR 21 STATE ASSISTANCE PURSUANT TO SUBDIVISION THREE OF THIS SECTION, THE 22 APPLICANT SHALL COMPLETE AND SUBMIT a nomination for designation of a 23 brownfield opportunity area[, it]. THE COMPLETED NOMINATION shall be 24 forwarded by the applicant to the secretary, who shall determine whether 25 it is consistent with the provisions of this section. If the secretary 26 determines that the nomination [is consistent] PLAN PROPERLY DESIGNATES 27 THE BROWNFIELD OPPORTUNITY AREA AND HAS COMPLIED with the provisions of 28 this section, the brownfield opportunity area shall be designated AND NO 29 FURTHER STUDIES OR PLANS ARE REQUIRED TO FINALIZE THE DESIGNATION OF THE 30 BROWNFIELD OPPORTUNITY AREA DISTRICT. THE SECRETARY SHALL MAKE A DETER- 31 MINATION OF WHETHER THE NOMINATED PLAN SHOULD BE FINALIZED AND DESIG- 32 NATED WITHIN NINETY DAYS OF RECEIPT OF SUCH NOMINATION. IF THE APPLICANT 33 HAS ELECTED TO PREPARE A FINAL BROWNFIELD OPPORTUNITY PLAN, INCLUDING 34 IMPLEMENTATION STRATEGIES SUCH AS SPECIFIC FUNDING REQUESTS FROM CERTAIN 35 STATE AGENCIES TO ENHANCE DEVELOPMENT OF THE PLAN OR DEVELOPMENT OF MORE 36 FORMAL LAND USE PLANS SUCH AS A MASTER PLAN, COMPREHENSIVE PLAN AND/OR 37 URBAN RENEWAL PLAN, UPON RECEIPT OF ONE OR MORE OF THESE PLANS, THE 38 SECRETARY, IN CONSULTATION WITH ANY OTHER INVOLVED AGENCIES AND/OR OTHER 39 AGENCY FROM WHICH A FUNDING REQUEST HAS BEEN MADE, SHALL REVIEW SUCH 40 PLAN OR PLANS, AND IF REQUIRED, THE ASSOCIATED ENVIRONMENTAL IMPACT 41 REVIEW ANALYSIS PURSUANT TO THE STATE ENVIRONMENTAL QUALITY REVIEW ACT 42 UNDER ARTICLE EIGHT OF THE ENVIRONMENTAL CONSERVATION LAW. If the secre- 43 tary determines that the nomination [is not consistent] PLAN AND/OR THE 44 FINAL BROWNFIELD OPPORTUNITY AREA PLAN DO NOT COMPLY with the provisions 45 of this section, the secretary shall make recommendations in writing to 46 the applicant of the manner and nature in which the nomination PLAN OR 47 THE FINAL BROWNFIELD OPPORTUNITY AREA PLAN should be amended TO BE IN 48 COMPLIANCE. THE APPLICANT SHALL HAVE THIRTY DAYS TO AMEND THE NOMINATION 49 TO BRING THE PLAN INTO COMPLIANCE. IF THE SECRETARY DETERMINES THAT THE 50 AMENDED NOMINATION STILL IS NOT IN COMPLIANCE, THE APPLICANT SHALL BE 51 INELIGIBLE FOR ANY ADDITIONAL STATE ASSISTANCE OFFERED UNDER THIS ARTI- 52 CLE UNTIL SUCH NOMINATION IS DEEMED TO BE IN COMPLIANCE. 53 (B) THE SECRETARY SHALL PROVIDE ASSISTANCE TO APPLICANTS WHO REQUEST 54 ASSISTANCE ON THE CONTENTS OF LAND USE PLANS, BUT MUNICIPAL APPLICANTS 55 HAVE FINAL AUTHORITY ON THE CONTENTS OF LAND USE PLANS PROVIDED SUCH 56 PLANS ARE CONSISTENT WITH THIS SECTION PURSUANT TO SECTION TWO HUNDRED S. 6359--C 200 1 SIXTY-ONE OF THE TOWN LAW, SECTION SEVEN-SEVEN HUNDRED OF THE VILLAGE 2 LAW, SUBDIVISIONS TWENTY-FOUR AND TWENTY-FIVE OF SECTION TWENTY OF THE 3 GENERAL CITY LAW, SECTION TEN OF THE MUNICIPAL HOME RULE LAW AND SECTION 4 TEN OF THE STATUTE OF LOCAL GOVERNMENTS. 5 S 32. Section 31 of part H of chapter 1 of the laws of 2003, amending 6 the tax law relating to brownfield redevelopment tax credits, remediated 7 brownfield credit for real property taxes for qualified sites and envi- 8 ronmental remediation insurance credits, as amended by chapter 474 of 9 the laws of 2012, is amended to read as follows: 10 S 31. The tax credits allowed under section 21, 22 or 23 of the tax 11 law and the corresponding provisions in articles 9, 9-A, 22, 32 and 33 12 of the tax law, as added by the provisions of sections one through twen- 13 ty-nine of this act, shall not be applicable if the [remediation] 14 certificate OF COMPLETION required to qualify for any of such credits is 15 issued after December 31, [2015] 2025. 16 S 33. Intentionally omitted. 17 S 34. Paragraph c of subdivision 3 of section 27-0923 of the environ- 18 mental conservation law, as amended by section 5 of part I of chapter 19 577 of the laws of 2004, is amended to read as follows: 20 c. For the purpose of this section, generation of hazardous waste 21 shall not include retrieval or creation of hazardous waste which must be 22 disposed of under an order of or agreement with the department pursuant 23 to title thirteen or title fourteen of this article or under a contract 24 OR AGREEMENT with the department pursuant to title five of article 25 fifty-six of this chapter OR UNDER AN ORDER OF OR AGREEMENT WITH THE 26 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY OR AN ORDER OF A COURT OF 27 COMPETENT JURISDICTION, RELATED TO A FACILITY ADDRESSED PURSUANT TO THE 28 COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT (42 29 U.S.C. 9601 ET SEQ.) OR UNDER A WRITTEN AGREEMENT WITH A MUNICIPALITY 30 WHICH IS SUBJECT TO A MEMORANDUM OF AGREEMENT WITH THE DEPARTMENT 31 RELATED TO THE REMEDIATION OF BROWNFIELD SITES. 32 S 35. Subparagraphs (i) and (vi) of paragraph d of subdivision 1 of 33 section 72-0402 of the environmental conservation law, as amended by 34 chapter 99 of the laws of 2010, are amended to read as follows: 35 (i) under a contract with the department, or with the department's 36 written approval and in compliance with department regulations, or 37 pursuant to an order of the department, the United States environmental 38 protection agency or a court OF COMPETENT JURISDICTION, related to the 39 cleanup or remediation of a hazardous materials or hazardous waste 40 spill, discharge, or surficial cleanup, pursuant to this chapter; or 41 (vi) under a brownfield site cleanup agreement with the department 42 pursuant to section 27-1409 of this chapter OR UNDER AN AGREEMENT WITH 43 A MUNICIPALITY WHICH IS SUBJECT TO A MEMORANDUM OF AGREEMENT WITH THE 44 DEPARTMENT RELATED TO THE REMEDIATION OF BROWNFIELD SITES; or 45 S 36. Subdivision 1 of section 1285-q of the public authorities law, 46 as added by section 6 of part I of chapter 1 of the laws of 2003, is 47 amended to read as follows: 48 1. Subject to chapter fifty-nine of the laws of two thousand, but 49 notwithstanding any other provisions of law to the contrary, in order to 50 assist the corporation in undertaking the administration and the financ- 51 ing of hazardous waste site remediation projects for payment of the 52 state's share of the costs of the remediation of hazardous waste sites, 53 in accordance with title thirteen of article twenty-seven of the envi- 54 ronmental conservation law and section ninety-seven-b of the state 55 finance law, and for payment of state costs associated with the remedi- 56 ation of offsite contamination at significant threat sites as provided S. 6359--C 201 1 in section 27-1411 of the environmental conservation law, AND FOR ENVI- 2 RONMENTAL RESTORATION PROJECTS PURSUANT TO TITLE FIVE OF ARTICLE FIFTY- 3 SIX OF THE ENVIRONMENTAL CONSERVATION LAW pursuant to capital appropri- 4 ations made to the department of environmental conservation, the 5 director of the division of budget and the corporation are each author- 6 ized to enter into one or more service contracts, none of which shall 7 exceed twenty years in duration, upon such terms and conditions as the 8 director and the corporation may agree, so as to annually provide to the 9 corporation in the aggregate, a sum not to exceed the annual debt 10 service payments and related expenses required for any bonds and notes 11 authorized pursuant to section twelve hundred ninety of this title. Any 12 service contract entered into pursuant to this section shall provide 13 that the obligation of the state to fund or to pay the amounts therein 14 provided for shall not constitute a debt of the state within the meaning 15 of any constitutional or statutory provision and shall be deemed execu- 16 tory only to the extent of moneys available for such purposes, subject 17 to annual appropriation by the legislature. Any such service contract or 18 any payments made or to be made thereunder may be assigned and pledged 19 by the corporation as security for its bonds and notes, as authorized 20 pursuant to section twelve hundred ninety of this title. 21 S 37. Section 56-0501 of the environmental conservation law, as added 22 by chapter 413 of the laws of 1996, is amended to read as follows: 23 S 56-0501. Allocation of moneys. 24 1. Of the moneys received by the state from the sale of bonds pursuant 25 to the Clean Water/Clean Air Bond Act of 1996, two hundred million 26 dollars ($200,000,000) shall be available for disbursements for environ- 27 mental restoration projects. 28 2. ENVIRONMENTAL RESTORATION PROJECTS MAY BE FUNDED USING THE PROCEEDS 29 OF BONDS ISSUED PURSUANT TO SECTION TWELVE HUNDRED EIGHTY-FIVE-Q OF THE 30 PUBLIC AUTHORITIES LAW. 31 S 38. Subdivision 6 of section 56-0502 of the environmental conserva- 32 tion law, as amended by section 2 of part D of chapter 577 of the laws 33 of 2004, is amended to read as follows: 34 6. "State assistance", for purposes of this title, shall mean in the 35 case of a contract authorized by subdivision one of section 56-0503 of 36 this title, payments made to a municipality to reimburse the munici- 37 pality for the state share of the costs incurred by the municipality to 38 undertake an environmental restoration project OR IN THE CASE OF AN 39 AGREEMENT AUTHORIZED BY SUBDIVISION THREE OF SECTION 56-0503 OF THIS 40 TITLE, COSTS INCURRED BY THE STATE TO UNDERTAKE AN ENVIRONMENTAL RESTO- 41 RATION PROJECT BUT NOT REIMBURSED BY A MUNICIPALITY. 42 S 39. Paragraph (c) of subdivision 2 of section 56-0503 of the envi- 43 ronmental conservation law, as amended by section 4 of part D of chapter 44 1 of the laws of 2003, is amended and a new subdivision 3 is added to 45 read as follows: 46 (c) A provision that THE MUNICIPALITY SHALL ASSIST IN IDENTIFYING A 47 RESPONSIBLE PARTY BY SEARCHING LOCAL RECORDS, INCLUDING PROPERTY TAX 48 ROLLS, OR DOCUMENT REVIEWS, AND if, in accordance with the required 49 departmental approval of any settlement with a responsible party, any 50 responsible party payments become available to the municipality, before, 51 during or after the completion of an environmental restoration project, 52 which were not included when the state share was calculated pursuant to 53 this section, the state assistance share shall be recalculated, and the 54 municipality shall pay to the state, for deposit into the environmental 55 restoration project account of the hazardous waste remedial fund estab- 56 lished under section ninety-seven-b of the state finance law, the S. 6359--C 202 1 difference between the original state assistance payment and the recal- 2 culated state share. Recalculation of the state share shall be done each 3 time a payment from a responsible party is received by the municipality; 4 3. THE DEPARTMENT MAY UNDERTAKE AN ENVIRONMENTAL RESTORATION PROJECT 5 ON BEHALF OF A MUNICIPALITY UPON REQUEST. IF THE DEPARTMENT UNDERTAKES 6 THE PROJECT ON BEHALF OF THE MUNICIPALITY, THE STATE SHALL ENTER INTO AN 7 AGREEMENT WITH THE MUNICIPALITY AND THE AGREEMENT SHALL REQUIRE THE 8 MUNICIPALITY TO PERIODICALLY PROVIDE ITS SHARE TO THE STATE FOR COSTS 9 INCURRED DURING THE PROGRESS OF SUCH PROJECT. THE MUNICIPALITY'S SHARE 10 SHALL BE THE SAME AS WOULD BE REQUIRED UNDER SUBDIVISION ONE OF THIS 11 SECTION. THE AGREEMENT SHALL INCLUDE ALL PROVISIONS SPECIFIED IN SUBDI- 12 VISION TWO OF THIS SECTION AS APPROPRIATE. FOR PURPOSES OF PROJECTS 13 SUBJECT TO AGREEMENTS UNDER THIS SUBDIVISION, ALL REFERENCES TO 14 CONTRACTS IN THIS TITLE SHALL ALSO APPLY TO AGREEMENTS UNDER THIS SUBDI- 15 VISION AS APPROPRIATE. 16 S 40. Subdivision 4 of section 56-0505 of the environmental conserva- 17 tion law, as amended by section 5 of part D of chapter 1 of the laws of 18 2003, is amended to read as follows: 19 4. After completion of such project, the municipality may use the 20 property for public purposes or may dispose of it. If the municipality 21 shall dispose of such property by sale to a responsible party, such 22 party shall pay to such municipality, in addition to such other consid- 23 eration, an amount of money constituting the amount of state assistance 24 provided [to the municipality] under this title plus accrued interest 25 and transaction costs and the municipality shall deposit that money into 26 the environmental restoration project account of the hazardous waste 27 remedial fund established under section ninety-seven-b of the state 28 finance law. 29 S 41. Subdivisions 3 and 4 of section 56-0508 of the environmental 30 conservation law, as added by section 7 of part D of chapter 1 of the 31 laws of 2003, are amended to read as follows: 32 3. such temporary incidents of ownership by such taxing district shall 33 also qualify it as being the owner of such property [for the purposes of 34 obtaining] TO BE ELIGIBLE FOR funding from the state of New York for 35 such environmental restoration investigation project under this article 36 or for such funding from any source pursuant to any other state, feder- 37 al, or local law, but such incidents of ownership shall not be suffi- 38 cient to qualify it as the owner of such property for the purposes of 39 holding it wholly or partially liable for any damages, past, present, or 40 future from any release of any hazardous material, substance, or contam- 41 inant into the air, ground, or water, unless such release was caused by 42 such taxing district. 43 4. within thirty days of the completion of the environmental restora- 44 tion investigation project and the receipt by the taxing jurisdiction of 45 the final report of such investigation, such taxing jurisdiction shall 46 file such report with the court on notice to the court and all other 47 parties of record, and the stay of the foreclosure shall be lifted 48 (unless lifted earlier by a prior court order), and all incidents of 49 temporary ownership of the taxing jurisdiction that was awarded such 50 taxing district, except any right [to receive funding] for the environ- 51 mental restoration investigation project TO BE FUNDED, shall cease to 52 exist, and nothing in this subdivision shall preclude the taxing juris- 53 diction that conducted the environmental restoration investigation 54 project or the taxing jurisdiction that commenced the foreclosure 55 action, if it is a different taxing jurisdiction than the taxing juris- 56 diction which conducted the investigation, from withdrawing the parcel S. 6359--C 203 1 from foreclosure pursuant to section eleven hundred thirty-eight of the 2 real property tax law. 3 S 42. Subdivision 2 and paragraph (f) of subdivision 3 of section 97-b 4 of the state finance law, as amended by section 4 of part I of chapter 1 5 of the laws of 2003, are amended to read as follows: 6 2. Such fund shall consist of all of the following: 7 (a) moneys appropriated for transfer to the fund's site investigation 8 and construction account; (b) all fines and other sums accumulated in 9 the fund prior to April first, nineteen hundred eighty-eight pursuant to 10 section 71-2725 of the environmental conservation law for deposit in the 11 fund's site investigation and construction account; (c) all moneys 12 collected or received by the department of taxation and finance pursuant 13 to section 27-0923 of the environmental conservation law for deposit in 14 the fund's industry fee transfer account; (d) all moneys paid into the 15 fund pursuant to section 72-0201 of the environmental conservation law 16 which shall be deposited in the fund's industry fee transfer account; 17 (e) all moneys paid into the fund pursuant to section one hundred eight- 18 y-six of the navigation law which shall be deposited in the fund's 19 industry fee transfer account; (f) [all moneys paid into the fund by 20 municipalities for repayment of landfill closure loans made pursuant to 21 title five of article fifty-two of the environmental conservation law 22 for deposit in the fund's site investigation and construction account; 23 (g)] all monies recovered under sections 56-0503, 56-0505 and 56-0507 of 24 the environmental conservation law into the fund's environmental resto- 25 ration project account; [(h) all] (G) fees paid into the fund pursuant 26 to section [72-0403] 72-0402 of the environmental conservation law which 27 shall be deposited in the fund's industry fee transfer account; [(i)] 28 (H) payments received for all state costs incurred in negotiating and 29 overseeing the implementation of brownfield site cleanup agreements 30 pursuant to title fourteen OF ARTICLE TWENTY-SEVEN of the environmental 31 conservation law shall be deposited in the hazardous waste remediation 32 oversight and assistance account; and [(j)] (I) other moneys credited or 33 transferred thereto from any other fund or source for deposit in the 34 fund's site investigation and construction account. 35 (f) to undertake such remedial measures as the department of environ- 36 mental conservation may determine necessary due to environmental condi- 37 tions related to the property subject to an agreement [to provide state 38 assistance] OR CONTRACT under title five of article fifty-six of the 39 environmental conservation law [that were unknown to such department at 40 the time of its approval of such agreement which indicates that condi- 41 tions on such property are not sufficiently protective of human health 42 for its reasonably anticipated uses or due to information received, in 43 whole or in part, after such department's approval of such agreement's 44 final engineering report and certification], which indicates that such 45 agreement's remedial activities are not sufficiently protective of human 46 health for such property's reasonably anticipated uses; and, [respecting 47 the monies in the environmental restoration project account in excess of 48 ten million dollars,] shall provide state assistance under title five of 49 article fifty-six of the environmental conservation law; 50 S 43. Severability. If any clause, sentence, paragraph, subdivision, 51 section or part of this act shall be adjudged by any court of competent 52 jurisdiction to be invalid, such judgment shall not affect, impair or 53 invalidate the remainder thereof, but shall be confined in its operation 54 to the clause, sentence, paragraph, subdivision, section or part thereof 55 directly involved in the controversy in which such judgment shall have 56 been rendered. It is hereby declared to be the intent of the legislature S. 6359--C 204 1 that this act would have been enacted even if such invalid provisions 2 had not been included herein. 3 S 44. This act shall take effect immediately and shall apply to sites 4 that submit an application for acceptance into the brownfield cleanup 5 program on or after July 1, 2014; provided, however, that the department 6 of environmental conservation shall not charge volunteers in the brown- 7 field cleanup program for oversight costs for any sites in the program 8 incurred on or after July 1, 2014; and provided further, however, that 9 section twenty-four of this act shall apply to any site where a certif- 10 icate of completion has been issued on or after June 30, 2008. 11 SUBPART B 12 Section 1. Paragraph (a) of subdivision 2 of section 176 of the navi- 13 gation law, as amended by chapter 584 of the laws of 1992, is amended to 14 read as follows: 15 (a) Upon the occurrence of a discharge of petroleum, the department 16 shall respond promptly and proceed to cleanup and remove the discharge 17 in accordance with environmental priorities or may, at its discretion, 18 direct the discharger to promptly cleanup and remove the discharge. IF 19 A PERSON THE DEPARTMENT DEEMS A DISCHARGER, AND THUS DIRECTS TO CLEANUP 20 AND REMOVE THE DISCHARGE PURSUANT TO THIS SECTION PRESENTS THE DEPART- 21 MENT WITH EVIDENCE THAT A THIRD PARTY IS SOLELY RESPONSIBLE FOR THE 22 DISCHARGE AND REQUESTS THE DEPARTMENT TO DETERMINE WHETHER THE EVIDENCE 23 ESTABLISHES THE THIRD PARTY IS IN FACT SOLELY RESPONSIBLE, THE DEPART- 24 MENT SHALL, WITHIN THIRTY DAYS OF RECEIPT OF SUCH REQUEST, DETERMINE IN 25 WRITING EITHER THAT THE THIRD PARTY: (I) SHALL BE DEEMED A DISCHARGER BY 26 THE DEPARTMENT, AND SHALL BE DIRECTED TO UNDERTAKE THE CLEANUP AND 27 REMOVAL OF THE DISCHARGE; OR (II) WILL NOT BE DEEMED A DISCHARGER BY THE 28 DEPARTMENT BECAUSE THE INFORMATION PRESENTED DOES NOT ESTABLISH THE 29 RESPONSIBILITY OF THE THIRD PARTY BY A PREPONDERANCE OF THE EVIDENCE. IF 30 THE DEPARTMENT DETERMINES THAT THE PERSON THE DEPARTMENT INITIALLY DEEMS 31 A DISCHARGER AND THE THIRD PARTY ARE BOTH DISCHARGERS, THE DEPARTMENT 32 SHALL, WITHIN THIRTY DAYS OF SUCH REQUEST, ADVISE EACH OF THE PARTIES 33 THAT THEY ARE DEEMED DISCHARGERS SUBJECT TO APPORTIONMENT OF LIABILITY 34 FOR THE DISCHARGE PURSUANT TO SUBDIVISIONS ONE AND TWO OF SECTION ONE 35 HUNDRED EIGHTY OF THIS ARTICLE. The department shall be responsible for 36 cleanup and removal or as the case may be, for retaining agents and 37 contractors who shall operate under the direction of that department for 38 such purposes. Implementation of cleanup and removal procedures after 39 each discharge shall be conducted in accordance with environmental 40 priorities and procedures established by the department. 41 S 2. Subdivision 8 of section 176 of the navigation law, as added by 42 chapter 712 of the laws of 1989, is amended and a new subdivision 9 is 43 added to read as follows: 44 8. Notwithstanding any other provision of law to the contrary, includ- 45 ing but not limited to SUBDIVISION (C) OF section 15-108 of the general 46 obligations law, every person providing cleanup, removal of discharge of 47 petroleum or relocation of persons pursuant to this section shall be 48 entitled to contribution from any other responsible party. 49 9. THE FOLLOWING SHALL NOT BE DEEMED A FINAL AGENCY ACTION SUBJECT TO 50 REVIEW PURSUANT TO ARTICLE SEVENTY-EIGHT OF THE CIVIL PRACTICE LAW AND 51 RULES, AND SHALL NOT HAVE A BINDING EFFECT ON ANY PARTY IN PENDING OR 52 FUTURE PROCEEDINGS REGARDING THE DISCHARGE: (A) A DETERMINATION OR 53 ACTION OF THE DEPARTMENT PURSUANT TO SUBDIVISION ONE, TWO, OR THREE OF 54 THIS SECTION, INCLUDING BUT NOT LIMITED TO, A DETERMINATION OF THE S. 6359--C 205 1 REASONABLENESS OF ANY COSTS INCURRED; (B) A DETERMINATION OR ACTION OF 2 THE ADMINISTRATOR PURSUANT TO SECTION ONE HUNDRED EIGHTY, ONE HUNDRED 3 EIGHTY-ONE-A, OR ONE HUNDRED EIGHTY-THREE OF THIS ARTICLE, INCLUDING THE 4 FILING OF AN ENVIRONMENTAL LIEN. 5 S 3. Subdivisions 1 and 2 of section 180 of the navigation law, subdi- 6 vision 1 as added by chapter 845 of the laws of 1977 and subdivision 2 7 as amended by chapter 672 of the laws of 1991, are amended to read as 8 follows: 9 1. To represent the state in meetings with the alleged discharger OR 10 DISCHARGERS and claimants concerning liability for the discharge and 11 amount of the claims, AND, IF THERE IS MORE THAN ONE DISCHARGER IN A 12 MEETING, TO APPORTION LIABILITY FOR THE DISCHARGE; 13 2. To determine if hearings are needed to settle particular claims 14 filed by injured persons AND TO APPORTION LIABILITY BETWEEN AND AMONG 15 DISCHARGERS; 16 S 4. Subdivision 1 of section 181 of the navigation law, as amended by 17 chapter 712 of the laws of 1989, is amended and a new subdivision 7 is 18 added to read as follows: 19 1. (A) Any person who has discharged petroleum shall be strictly 20 liable, without regard to fault, for all cleanup and removal costs and 21 all direct and indirect damages, no matter by whom sustained, as defined 22 in this section, UNLESS THE LIABILITY LIMITATION AS DESCRIBED UNDER 23 PARAGRAPH (B) OF THIS SUBDIVISION APPLIES. In addition to cleanup and 24 removal costs and damages, any such person who is notified of such 25 release and who did not undertake relocation of persons residing in the 26 area of the discharge in accordance with paragraph (c) of subdivision 27 seven of section one hundred seventy-six of this article, shall be 28 liable to the fund for an amount equal to two times the actual and 29 necessary expense incurred by the fund for such relocation pursuant to 30 section one hundred seventy-seven-a of this article. 31 (B) (I) ANY PERSON WHO AGREES TO REMEDIATE THE DISCHARGE TO THE SATIS- 32 FACTION OF THE DEPARTMENT, AND IN CONFORMANCE WITH THIS ARTICLE, SHALL 33 BE ENTITLED TO RECEIVE LIABILITY LIMITATION. SUCH AGREEMENT SHALL BE 34 CALLED THE LIABILITY LIMITATION AGREEMENT AND SHALL BE WRITTEN AND 35 EXECUTED BY BOTH THE DEPARTMENT AND SUCH PERSON. AFTER EXECUTION OF THE 36 LIABILITY LIMITATION AGREEMENT, SUCH PERSON SHALL NOT BE LIABLE TO THE 37 STATE UPON ANY STATUTORY OR COMMON LAW CAUSE OF ACTION, ARISING OUT OF 38 THE PRESENCE OF ANY CONTAMINATION IN, ON, OR EMANATING FROM THE SITE 39 THAT WAS THE SUBJECT OF THE LIABILITY LIMITATION, EXCEPT THAT SUCH 40 PERSON SHALL NOT RECEIVE A RELEASE FOR NATURAL RESOURCE DAMAGES THAT MAY 41 BE AVAILABLE UNDER LAW. THE LIABILITY LIMITATION SHALL APPLY TO ALL 42 SUCCESSORS IN OWNERSHIP OF THE PROPERTY AND TO ALL PERSONS WHO LEASE THE 43 PROPERTY OR WHO ENGAGE IN OPERATIONS ON THE PROPERTY, PROVIDED THAT SUCH 44 PERSONS ACT WITH DUE CARE AND IN GOOD FAITH TO ADHERE TO THE REQUIRE- 45 MENTS OF THE LIABILITY LIMITATION AGREEMENT. 46 (II) A LIABILITY LIMITATION AGREEMENT AND THE PROTECTIONS IT AFFORDS 47 SHALL NOT APPLY TO ANY DISCHARGE THAT OCCURS SUBSEQUENT TO THE EXECUTION 48 OF THE LIABILITY LIMITATION AGREEMENT, NOR SHALL A LIABILITY LIMITATION 49 AGREEMENT AND THE PROTECTIONS IT AFFORDS RELIEVE ANY PERSON OF THE OBLI- 50 GATIONS TO COMPLY IN THE FUTURE WITH LAWS AND REGULATIONS. THE STATE 51 NONETHELESS SHALL RESERVE ALL OF ITS RIGHTS CONCERNING, AND SUCH LIABIL- 52 ITY LIMITATION SHALL NOT EXTEND TO, ANY FURTHER INVESTIGATION AND/OR 53 REMEDIATION THE DEPARTMENT DEEMS NECESSARY DUE TO FRAUD, NONCOMPLIANCE 54 WITH THE TERMS THAT FORMED THE LIABILITY LIMITATION AGREEMENT, OR A 55 WRITTEN FINDING BY THE DEPARTMENT THAT A CHANGE IN AN ENVIRONMENTAL 56 STANDARD, FACTOR, OR CRITERION UPON WHICH THE LIABILITY LIMITATION S. 6359--C 206 1 AGREEMENT WAS BASED WOULD RENDER REMEDIATION ACTIVITIES NO LONGER 2 PROTECTIVE OF PUBLIC HEALTH OR THE ENVIRONMENT. NOTHING IN THIS SECTION 3 SHALL AFFECT THE LIABILITY OF THE PERSON RESPONSIBLE FOR SUCH PERSON'S 4 OWN ACTS OR OMISSIONS CAUSING WRONGFUL DEATH OR PERSONAL INJURY. NOTHING 5 IN THIS SECTION SHALL AFFECT THE LIABILITY OF ANY PERSON WITH RESPECT TO 6 ANY CIVIL ACTION BROUGHT BY A PARTY OTHER THAN THE STATE. THE PROVISIONS 7 OF THIS SECTION SHALL NOT AFFECT AN ACTION OR A CLAIM, INCLUDING A STAT- 8 UTORY OR COMMON LAW CLAIM FOR CONTRIBUTION OR INDEMNIFICATION, THAT SUCH 9 PERSON HAS OR MAY HAVE AGAINST A THIRD PARTY. 10 7. NOTWITHSTANDING ANY OTHER PROVISION OF THIS SECTION, A PUBLIC 11 CORPORATION SHALL NOT BE LIABLE FOR THE DISCHARGE OF PETROLEUM AT A SITE 12 IF SUCH PUBLIC CORPORATION ACQUIRED SUCH SITE INVOLUNTARILY, AND SUCH 13 PUBLIC CORPORATION RETAINED SUCH SITE WITHOUT PARTICIPATING IN THE 14 DEVELOPMENT OF SUCH SITE. THIS EXEMPTION SHALL NOT APPLY TO ANY PUBLIC 15 CORPORATION THAT HAS (A) CAUSED OR CONTRIBUTED TO THE DISCHARGE OF 16 PETROLEUM FROM OR AT THE SITE, (B) PURCHASED, SOLD, REFINED, TRANS- 17 PORTED, OR DISCHARGED PETROLEUM FROM OR AT SUCH SITE, OR (C) CAUSED THE 18 PURCHASE, SALE, REFINEMENT, TRANSPORTATION, OR DISCHARGE OF PETROLEUM 19 FROM OR AT SUCH SITE. THE TERMS "PARTICIPATION IN DEVELOPMENT," "PUBLIC 20 CORPORATION" AND "INVOLUNTARY ACQUISITION OF OWNERSHIP OR CONTROL" SHALL 21 HAVE THE SAME MEANING AS THOSE TERMS ARE DEFINED IN PARAGRAPHS (C), (D) 22 AND (E) OF SUBDIVISION TWO OF SECTION 27-1323 OF THE ENVIRONMENTAL 23 CONSERVATION LAW. HOWEVER, "PARTICIPATION IN DEVELOPMENT" SHALL NOT 24 INCLUDE IMPROVEMENTS WHICH ARE PART OF A CLEANUP AND REMOVAL OF A 25 DISCHARGE OF PETROLEUM PURSUANT TO THIS ARTICLE. 26 S 5. Section 183 of the navigation law, as added by chapter 845 of the 27 laws of 1977, is amended to read as follows: 28 S 183. Settlements. The administrator shall attempt to promote and 29 arrange a settlement between the claimant and the person OR PERSONS 30 responsible for the discharge. If the source of the discharge can be 31 determined and liability is conceded, the claimant and the alleged 32 discharger OR DISCHARGERS may agree to a settlement which shall be final 33 and binding upon the parties and which will waive all recourse against 34 the fund. TO THE EXTENT AN ALLEGED DISCHARGER PRESENTS EVIDENCE TO THE 35 ADMINISTRATOR THAT ANOTHER PARTY IS WHOLLY OR PARTIALLY RESPONSIBLE FOR 36 THE CLAIM, AND REQUESTS THE ADMINISTRATOR TO CONSIDER WHETHER SUCH 37 INFORMATION PRESENTED ESTABLISHES BY A PREPONDERANCE OF THE EVIDENCE 38 THAT THE THIRD PARTY IS IN FACT WHOLLY OR PARTIALLY RESPONSIBLE, THE 39 ADMINISTRATOR WITHIN THIRTY DAYS OF RECEIPT OF SUCH REQUEST SHALL EITHER 40 DETERMINE: (1) IN WRITING, IF THE THIRD PARTY SHALL BE DEEMED AN ADDI- 41 TIONAL DISCHARGER TO ANY PENDING OR ANTICIPATED CLAIM OR (2) IF AN 42 ADMINISTRATIVE HEARING AS TO LIABILITY IS NECESSARY. 43 S 6. This act shall take effect immediately. 44 S 2. Severability clause. If any clause, sentence, paragraph, subdivi- 45 sion, section or part of this act shall be adjudged by a court of compe- 46 tent jurisdiction to be invalid, such judgment shall not affect, impair 47 or invalidate the remainder thereof, but shall be confined in its opera- 48 tion to the clause, sentence, paragraph, subdivision, section or part 49 thereof directly involved in the controversy in which such judgment 50 shall have been rendered. It is hereby declared to be the intent of the 51 legislature that this act would have been enacted even if such invalid 52 provisions had not been included herein. 53 S 3. This act shall take effect immediately provided, however, that 54 the applicable effective date of Subparts A through B of this act shall 55 be as specifically set forth in the last section of such Subparts. S. 6359--C 207 1 PART R 2 Section 1. Section 210 of the tax law is amended by adding a new 3 subdivision 49 to read as follows: 4 49. REAL PROPERTY TAX CREDIT FOR MANUFACTURERS. (A) A QUALIFIED NEW 5 YORK MANUFACTURER AS DEFINED IN SUBPARAGRAPH (VI) OF PARAGRAPH (A) OF 6 SUBDIVISION ONE OF THIS SECTION WILL BE ALLOWED A CREDIT EQUAL TO TWENTY 7 PERCENT OF THE REAL PROPERTY TAX IT PAID DURING THE TAXABLE YEAR FOR 8 REAL PROPERTY OWNED BY SUCH MANUFACTURER IN NEW YORK WHICH WAS PRINCI- 9 PALLY USED DURING THE TAXABLE YEAR FOR MANUFACTURING TO THE EXTENT NOT 10 DEDUCTED IN DETERMINING ENTIRE NET INCOME. THIS CREDIT WILL NOT BE 11 ALLOWED IF THE REAL PROPERTY TAXES THAT ARE THE BASIS FOR THIS CREDIT 12 ARE INCLUDED IN THE CALCULATION OF ANOTHER CREDIT CLAIMED BY THE TAXPAY- 13 ER. 14 (B) (1) FOR PURPOSES OF THIS SUBDIVISION, THE TERM REAL PROPERTY TAX 15 MEANS A CHARGE IMPOSED UPON REAL PROPERTY BY OR ON BEHALF OF A COUNTY, 16 CITY, TOWN, VILLAGE OR SCHOOL DISTRICT FOR MUNICIPAL OR SCHOOL DISTRICT 17 PURPOSES, PROVIDED THAT THE CHARGE IS LEVIED FOR THE GENERAL PUBLIC 18 WELFARE BY THE PROPER TAXING AUTHORITIES AT A LIKE RATE AGAINST ALL 19 PROPERTY OVER WHICH SUCH AUTHORITIES HAVE JURISDICTION, AND PROVIDED 20 THAT WHERE TAXES ARE LEVIED PURSUANT TO ARTICLE EIGHTEEN OR NINETEEN OF 21 THE REAL PROPERTY TAX LAW, THE PROPERTY MUST HAVE BEEN TAXED AT THE RATE 22 DETERMINED FOR THE CLASS IN WHICH IT IS CONTAINED, AS PROVIDED BY SUCH 23 ARTICLE EIGHTEEN OR NINETEEN, WHICHEVER IS APPLICABLE. THE TERM REAL 24 PROPERTY TAX DOES NOT INCLUDE A CHARGE FOR LOCAL BENEFITS, INCLUDING ANY 25 PORTION OF THAT CHARGE THAT IS PROPERLY ALLOCATED TO THE COSTS ATTRIBUT- 26 ABLE TO MAINTENANCE OR INTEREST, WHEN (I) THE PROPERTY SUBJECT TO THE 27 CHARGE IS LIMITED TO THE PROPERTY THAT BENEFITS FROM THE CHARGE, OR (II) 28 THE AMOUNT OF THE CHARGE IS DETERMINED BY THE BENEFIT TO THE PROPERTY 29 ASSESSED, OR (III) THE IMPROVEMENT FOR WHICH THE CHARGE IS ASSESSED 30 TENDS TO INCREASE THE PROPERTY VALUE. 31 (2) IN ADDITION, THE TERM REAL PROPERTY TAX INCLUDES TAXES PAID BY THE 32 TAXPAYER UPON REAL PROPERTY PRINCIPALLY USED DURING THE TAXABLE YEAR BY 33 THE TAXPAYER IN MANUFACTURING WHERE THE TAXPAYER LEASES SUCH REAL PROP- 34 ERTY FROM AN UNRELATED THIRD PARTY IF THE FOLLOWING CONDITIONS ARE 35 SATISFIED: (I) THE TAX MUST BE PAID BY THE TAXPAYER AS LESSEE PURSUANT 36 TO EXPLICIT REQUIREMENTS IN A WRITTEN LEASE, AND (II) THE TAXPAYER AS 37 LESSEE HAS PAID SUCH TAXES DIRECTLY TO THE TAXING AUTHORITY AND HAS 38 RECEIVED A WRITTEN RECEIPT FOR PAYMENT OF TAXES FROM THE TAXING AUTHORI- 39 TY. IN THE CASE OF A COMBINED GROUP THAT CONSTITUTES A QUALIFIED NEW 40 YORK MANUFACTURER, THE CONDITIONS IN THE PRECEDING SENTENCE ARE SATIS- 41 FIED IF ONE CORPORATION IN THE COMBINED GROUP IS THE LESSEE AND ANOTHER 42 CORPORATION IN THE COMBINED GROUP MAKES THE PAYMENTS TO THE TAXING 43 AUTHORITY. 44 (3) THE TERM REAL PROPERTY TAX DOES NOT INCLUDE A PAYMENT MADE BY THE 45 TAXPAYER IN CONNECTION WITH AN AGREEMENT FOR THE PAYMENT IN LIEU OF 46 TAXES ON REAL PROPERTY AS DEFINED IN SUBDIVISION SEVENTEEN OF SECTION 47 EIGHT HUNDRED FIFTY-FOUR OF THE GENERAL MUNICIPAL LAW, WHETHER SUCH 48 PROPERTY IS OWNED OR LEASED BY THE TAXPAYER, UNLESS THE PAYMENT IN LIEU 49 OF TAXES WAS MADE PURSUANT TO A PAYMENT IN LIEU OF TAX AGREEMENT THAT 50 WAS ENTERED INTO IN CONJUNCTION WITH THE SETTLEMENT OF A TAX CERTIORARI 51 PROCEEDING COMMENCED PURSUANT TO ARTICLE SEVEN OF THE REAL PROPERTY TAX 52 LAW. 53 (4) THE REAL PROPERTY TAXES MUST BE PAID BY THE TAXPAYER IN THE YEAR 54 SUCH TAXES BECOME A LIEN ON THE REAL PROPERTY. S. 6359--C 208 1 (C) CREDIT RECAPTURE. WHERE A QUALIFIED NEW YORK MANUFACTURER'S REAL 2 PROPERTY TAXES WHICH WERE THE BASIS FOR THE ALLOWANCE OF THE CREDIT 3 PROVIDED FOR UNDER THIS SUBDIVISION ARE SUBSEQUENTLY REDUCED AS A RESULT 4 OF A FINAL ORDER IN ANY PROCEEDING UNDER ARTICLE SEVEN OF THE REAL PROP- 5 ERTY TAX LAW OR OTHER PROVISION OF LAW, THE TAXPAYER SHALL ADD BACK, IN 6 THE TAXABLE YEAR IN WHICH SUCH FINAL ORDER IS ISSUED, THE EXCESS OF (1) 7 THE AMOUNT OF CREDIT ORIGINALLY ALLOWED FOR A TAXABLE YEAR OVER (2) THE 8 AMOUNT OF CREDIT DETERMINED BASED UPON THE REDUCED REAL PROPERTY TAXES. 9 IF SUCH FINAL ORDER REDUCES REAL PROPERTY TAXES FOR MORE THAN ONE YEAR, 10 THE TAXPAYER MUST DETERMINE HOW MUCH OF SUCH REDUCTION IS ATTRIBUTABLE 11 TO EACH YEAR COVERED BY SUCH FINAL ORDER AND CALCULATE THE AMOUNT OF 12 CREDIT WHICH IS REQUIRED BY THIS SUBDIVISION TO BE RECAPTURED FOR EACH 13 YEAR BASED ON SUCH REDUCTION. 14 (D) THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR 15 SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE AMOUNT 16 PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF THIS SECTION. HOWEVER, 17 ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREAT- 18 ED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE 19 WITH THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. 20 PROVIDED, HOWEVER, THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOU- 21 SAND EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE 22 PAID THEREON. 23 S 2. Paragraph (b) of subdivision 9 of section 208 of the tax law is 24 amended by adding a new subparagraph 21 to read as follows: 25 (21) THE AMOUNT OF ANY FEDERAL DEDUCTION FOR REAL PROPERTY TAXES TO 26 THE EXTENT SUCH TAXES ARE USED AS THE BASIS OF THE CALCULATION OF THE 27 REAL PROPERTY TAX CREDIT FOR MANUFACTURERS ALLOWED UNDER SUBDIVISION 28 FORTY-NINE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. 29 S 3. Subparagraph (B) of paragraph 1 of subsection (i) of section 606 30 of the tax law is amended by adding a new clause (xxxviii) to read as 31 follows: 32 (XXXVIII) REAL PROPERTY TAX AMOUNT OF CREDIT UNDER 33 CREDIT FOR MANUFACTURERS UNDER SUBDIVISION FORTY-NINE OF 34 SUBSECTION (YY) SECTION TWO HUNDRED TEN 35 S 4. Subsections (yy) and (zz) of section 606 of the tax law, as 36 relettered by section 5 of part H of chapter 1 of the laws of 2003, are 37 relettered subsections (yyy) and (zzz) and a new subsection (yy) is 38 added to read as follows: 39 (YY) REAL PROPERTY TAX CREDIT FOR MANUFACTURERS. (1) A QUALIFIED NEW 40 YORK MANUFACTURER WILL BE ALLOWED A CREDIT EQUAL TO TWENTY PERCENT OF 41 THE REAL PROPERTY TAX IT PAID DURING THE TAXABLE YEAR FOR REAL PROPERTY 42 OWNED BY SUCH MANUFACTURER IN NEW YORK WHICH WAS PRINCIPALLY USED DURING 43 THE TAXABLE YEAR FOR MANUFACTURING TO THE EXTENT NOT DEDUCTED IN COMPUT- 44 ING FEDERAL ADJUSTED GROSS INCOME. THIS CREDIT WILL NOT BE ALLOWED IF 45 THE REAL PROPERTY TAXES THAT ARE THE BASIS FOR THIS CREDIT ARE INCLUDED 46 IN THE CALCULATION OF ANOTHER CREDIT CLAIMED BY THE TAXPAYER. 47 (2)(A) THE TERM QUALIFIED NEW YORK MANUFACTURER HAS THE SAME MEANING 48 AS UNDER SUBPARAGRAPH (VI) OF PARAGRAPH (A) OF SUBDIVISION ONE OF 49 SECTION TWO HUNDRED TEN OF THIS CHAPTER. 50 (B) (I) THE TERM REAL PROPERTY TAX MEANS A CHARGE IMPOSED UPON REAL 51 PROPERTY BY OR ON BEHALF OF A COUNTY, CITY, TOWN, VILLAGE OR SCHOOL 52 DISTRICT FOR MUNICIPAL OR SCHOOL DISTRICT PURPOSES, PROVIDED THAT THE 53 CHARGE IS LEVIED FOR THE GENERAL PUBLIC WELFARE BY THE PROPER TAXING 54 AUTHORITIES AT A LIKE RATE AGAINST ALL PROPERTY OVER WHICH SUCH AUTHORI- S. 6359--C 209 1 TIES HAVE JURISDICTION, AND PROVIDED THAT WHERE TAXES ARE LEVIED PURSU- 2 ANT TO ARTICLE EIGHTEEN OR NINETEEN OF THE REAL PROPERTY TAX LAW, THE 3 PROPERTY MUST HAVE BEEN TAXED AT THE RATE DETERMINED FOR THE CLASS IN 4 WHICH IT IS CONTAINED, AS PROVIDED BY SUCH ARTICLE EIGHTEEN OR NINETEEN, 5 WHICHEVER IS APPLICABLE. THE TERM REAL PROPERTY TAX DOES NOT INCLUDE A 6 CHARGE FOR LOCAL BENEFITS, INCLUDING ANY PORTION OF THAT CHARGE THAT IS 7 PROPERLY ALLOCATED TO THE COSTS ATTRIBUTABLE TO MAINTENANCE OR INTEREST, 8 WHEN (I) THE PROPERTY SUBJECT TO THE CHARGE IS LIMITED TO THE PROPERTY 9 THAT BENEFITS FROM THE CHARGE, OR (II) THE AMOUNT OF THE CHARGE IS 10 DETERMINED BY THE BENEFIT TO THE PROPERTY ASSESSED, OR (III) THE 11 IMPROVEMENT FOR WHICH THE CHARGE IS ASSESSED TENDS TO INCREASE THE PROP- 12 ERTY VALUE. 13 (II) IN ADDITION, THE TERM REAL PROPERTY TAX INCLUDES TAXES PAID BY 14 THE TAXPAYER UPON REAL PROPERTY PRINCIPALLY USED DURING THE TAXABLE YEAR 15 BY THE TAXPAYER IN MANUFACTURING WHERE THE TAXPAYER LEASES SUCH REAL 16 PROPERTY FROM AN UNRELATED THIRD PARTY IF THE FOLLOWING CONDITIONS ARE 17 SATISFIED: (I) THE TAX MUST BE PAID BY THE TAXPAYER AS LESSEE PURSUANT 18 TO EXPLICIT REQUIREMENTS IN A WRITTEN LEASE, AND (II) THE TAXPAYER AS 19 LESSEE HAS PAID SUCH TAXES DIRECTLY TO THE TAXING AUTHORITY AND HAS 20 RECEIVED A WRITTEN RECEIPT FOR PAYMENT OF TAXES FROM THE TAXING AUTHORI- 21 TY. IN THE CASE OF A COMBINED GROUP THAT CONSTITUTES A QUALIFIED NEW 22 YORK MANUFACTURER, THE CONDITIONS IN THE PRECEDING SENTENCE ARE SATIS- 23 FIED IF ONE CORPORATION IN THE COMBINED GROUP IS THE LESSEE AND ANOTHER 24 CORPORATION IN THE COMBINED GROUP MAKES THE PAYMENTS TO THE TAXING 25 AUTHORITY. 26 (III) THE TERM REAL PROPERTY TAX DOES NOT INCLUDE A PAYMENT MADE BY 27 THE TAXPAYER IN CONNECTION WITH AN AGREEMENT FOR THE PAYMENT IN LIEU OF 28 TAXES ON REAL PROPERTY AS DEFINED IN SUBDIVISION SEVENTEEN OF SECTION 29 EIGHT HUNDRED FIFTY-FOUR OF THE GENERAL MUNICIPAL LAW, WHETHER SUCH 30 PROPERTY IS OWNED OR LEASED BY THE TAXPAYER, UNLESS THE PAYMENT IN LIEU 31 OF TAXES WAS MADE PURSUANT TO A PAYMENT IN LIEU OF TAX AGREEMENT THAT 32 WAS ENTERED INTO IN CONJUNCTION WITH THE SETTLEMENT OF A TAX CERTIORARI 33 PROCEEDING COMMENCED PURSUANT TO ARTICLE SEVEN OF THE REAL PROPERTY TAX 34 LAW. 35 (IV) THE REAL PROPERTY TAXES MUST BE PAID BY THE TAXPAYER IN THE YEAR 36 SUCH TAXES BECOME A LIEN ON THE REAL PROPERTY. 37 (3) CREDIT RECAPTURE. WHERE A QUALIFIED NEW YORK MANUFACTURER'S REAL 38 PROPERTY TAXES WHICH WERE THE BASIS FOR THE ALLOWANCE OF THE CREDIT 39 PROVIDED FOR UNDER THIS SUBDIVISION ARE SUBSEQUENTLY REDUCED AS A RESULT 40 OF A FINAL ORDER IN ANY PROCEEDING UNDER ARTICLE SEVEN OF THE REAL PROP- 41 ERTY TAX LAW OR OTHER PROVISION OF LAW, THE TAXPAYER SHALL ADD BACK, IN 42 THE TAXABLE YEAR IN WHICH SUCH FINAL ORDER IS ISSUED, THE EXCESS OF (I) 43 THE AMOUNT OF CREDIT ORIGINALLY ALLOWED FOR A TAXABLE YEAR OVER (II) THE 44 AMOUNT OF CREDIT DETERMINED BASED UPON THE REDUCED REAL PROPERTY TAXES. 45 IF SUCH FINAL ORDER REDUCES REAL PROPERTY TAXES FOR MORE THAN ONE YEAR, 46 THE TAXPAYER MUST DETERMINE HOW MUCH OF SUCH REDUCTION IS ATTRIBUTABLE 47 TO EACH YEAR COVERED BY SUCH FINAL ORDER AND CALCULATE THE AMOUNT OF 48 CREDIT WHICH IS REQUIRED BY THIS SUBDIVISION TO BE RECAPTURED FOR EACH 49 YEAR BASED ON SUCH REDUCTION. 50 (4) IF THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBSECTION FOR ANY 51 TAXABLE YEAR EXCEEDS THE TAXPAYER'S TAX FOR SUCH YEAR, THE EXCESS WILL 52 BE TREATED AS AN OVERPAYMENT TO BE CREDITED OR REFUNDED IN ACCORDANCE 53 WITH THE PROVISIONS OF SECTION SIX HUNDRED EIGHTY-SIX OF THIS ARTICLE, 54 PROVIDED HOWEVER, NO INTEREST WILL BE PAID THEREON. 55 S 4-a. Subsection (b) of section 612 of the tax law is amended by 56 adding a new paragraph 40 to read as follows: S. 6359--C 210 1 (40) THE AMOUNT OF ANY FEDERAL DEDUCTION FOR REAL PROPERTY TAXES TO 2 THE EXTENT SUCH TAXES ARE USED AS THE BASIS OF THE CALCULATION OF THE 3 REAL PROPERTY TAX CREDIT FOR MANUFACTURERS ALLOWED UNDER SUBSECTION (YY) 4 OF SECTION SIX HUNDRED SIX OF THIS ARTICLE. 5 S 5. Subparagraph (vii) of paragraph (a) of subdivision 1 of section 6 210 of the tax law, as added by section 1 of part Z of chapter 59 of the 7 laws of 2013, is amended to read as follows: 8 (vii) For a qualified New York manufacturer, as defined in subpara- 9 graph (vi) of this paragraph, the rate at which the tax is computed [in 10 effect for taxable years beginning on or after January first, two thou- 11 sand thirteen and before January first, two thousand fourteen for quali- 12 fied New York manufacturers shall be reduced by nine and two-tenths 13 percent for taxable years commencing on or after January first, two 14 thousand fourteen and before January first, two thousand fifteen, twelve 15 and three-tenths percent for taxable years commencing on or after Janu- 16 ary first, two thousand fifteen and before January first, two thousand 17 sixteen, fifteen and four-tenths percent for taxable years commencing on 18 or after January first, two thousand sixteen and before January first, 19 two thousand eighteen, and twenty-five percent for taxable years begin- 20 ning on or after January first, two thousand eighteen] SHALL BE ZERO 21 PERCENT OF THE TAXPAYER'S BUSINESS INCOME BASE. 22 S 6. This act shall take effect immediately and shall apply to taxable 23 years beginning on or after January 1, 2014; provided that sections one, 24 two, three and five of this act shall expire December 31, 2014 when upon 25 such date such provisions shall be deemed repealed. 26 PART S 27 Intentionally Omitted 28 PART T 29 Section 1. Section 39 of the tax law is amended by adding a new subdi- 30 vision (c-1) to read as follows: 31 (C-1) EXCISE TAX ON TELECOMMUNICATION SERVICES. SUCH BUSINESS OR OWNER 32 OF A BUSINESS SHALL BE ELIGIBLE FOR A CREDIT OF THE EXCISE TAX ON TELE- 33 COMMUNICATION SERVICES IMPOSED BY SECTION ONE HUNDRED EIGHTY-SIX-E OF 34 THIS CHAPTER THAT IS PASSED THROUGH TO SUCH BUSINESS, PURSUANT TO THE 35 PROVISIONS REFERENCED IN SUBDIVISION (K) OF THIS SECTION. 36 S 2. Paragraphs 4 and 6 of subdivision (k) of section 39 of the tax 37 law, as added by section 2 of part A of chapter 68 of the laws of 2013, 38 are amended to read as follows: 39 (4) Article 9-A: section 210, subdivision 47 AND SUBDIVISION 48. 40 (6) Article 22: section 606, subsection (ww) AND SUBSECTION (XX). 41 S 2-a. Paragraph (b) of subdivision 9 of section 208 of the tax law is 42 amended by adding a new subparagraph 20-a to read as follows: 43 (20-A) THE AMOUNT OF ANY FEDERAL DEDUCTION FOR THE EXCISE TAX ON TELE- 44 COMMUNICATION SERVICES TO THE EXTENT SUCH TAXES ARE USED AS THE BASIS OF 45 THE CALCULATION OF THE TAX-FREE NY AREA EXCISE TAX ON TELECOMMUNICATION 46 SERVICES CREDIT ALLOWED UNDER SUBDIVISION FORTY-EIGHT OF SECTION TWO 47 HUNDRED TEN OF THIS ARTICLE. 48 S 3. Section 210 of the tax law is amended by adding a new subdivision 49 48 to read as follows: 50 48. THE TAX-FREE NY AREA EXCISE TAX ON TELECOMMUNICATION SERVICES 51 CREDIT. A TAXPAYER THAT IS A BUSINESS OR OWNER OF A BUSINESS THAT IS S. 6359--C 211 1 LOCATED IN A TAX-FREE NY AREA APPROVED PURSUANT TO ARTICLE TWENTY-ONE OF 2 THE ECONOMIC DEVELOPMENT LAW SHALL BE ALLOWED A CREDIT EQUAL TO THE 3 EXCISE TAX ON TELECOMMUNICATION SERVICES IMPOSED BY SECTION ONE HUNDRED 4 EIGHTY-SIX-E OF THIS CHAPTER AND PASSED THROUGH TO SUCH BUSINESS DURING 5 THE TAXABLE YEAR TO THE EXTENT NOT OTHERWISE DEDUCTED IN COMPUTING 6 ENTIRE NET INCOME. HOWEVER, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH 7 TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR 8 REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE THOUSAND 9 EIGHTY-SIX OF THIS CHAPTER. THIS CREDIT MAY BE CLAIMED ONLY WHERE ANY 10 TAX IMPOSED BY SUCH SECTION ONE HUNDRED EIGHTY-SIX-E HAS BEEN SEPARATELY 11 STATED ON A BILL FROM THE PROVIDER OF TELECOMMUNICATION SERVICES AND 12 PAID BY SUCH BUSINESS WITH RESPECT TO SUCH SERVICES RENDERED WITHIN A 13 TAX-FREE NY AREA DURING THE TAXABLE YEAR. UNLESS THE TAXPAYER HAS A 14 TAX-FREE NY AREA ALLOCATION FACTOR OF ONE HUNDRED PERCENT, THE CREDIT 15 ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE 16 TAX DUE FOR SUCH YEAR TO LESS THAN THE AMOUNT PRESCRIBED IN PARAGRAPH 17 (D) OF SUBDIVISION ONE OF THIS SECTION. PROVIDED, HOWEVER, THE 18 PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF 19 THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON. 20 S 4. Section 606 of the tax law is amended by adding a new subsection 21 (xx) to read as follows: 22 (XX) THE TAX-FREE NY AREA EXCISE TAX ON TELECOMMUNICATION SERVICES 23 CREDIT. A TAXPAYER THAT IS A BUSINESS OR OWNER OF A BUSINESS THAT IS 24 LOCATED IN A TAX-FREE NY AREA APPROVED PURSUANT TO ARTICLE TWENTY-ONE OF 25 THE ECONOMIC DEVELOPMENT LAW SHALL BE ALLOWED A CREDIT EQUAL TO THE 26 EXCISE TAX ON TELECOMMUNICATION SERVICES IMPOSED BY SECTION ONE HUNDRED 27 EIGHTY-SIX-E OF THIS CHAPTER AND PASSED THROUGH TO SUCH BUSINESS DURING 28 THE TAXABLE YEAR TO THE EXTENT NOT OTHERWISE DEDUCTED IN COMPUTING 29 FEDERAL ADJUSTED GROSS INCOME. THIS CREDIT MAY BE CLAIMED ONLY WHERE 30 ANY TAX IMPOSED BY SUCH SECTION ONE HUNDRED EIGHTY-SIX-E HAS BEEN SEPA- 31 RATELY STATED ON A BILL FROM THE PROVIDER OF TELECOMMUNICATION SERVICES 32 AND PAID BY SUCH TAXPAYER WITH RESPECT TO SUCH SERVICES RENDERED WITHIN 33 A TAX-FREE NY AREA DURING THE TAXABLE YEAR. IF THE AMOUNT OF THE CREDIT 34 ALLOWED UNDER THIS SUBSECTION FOR ANY TAXABLE YEAR EXCEEDS THE TAXPAY- 35 ER'S TAX FOR SUCH YEAR, THE EXCESS WILL BE TREATED AS AN OVERPAYMENT TO 36 BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION SIX 37 HUNDRED EIGHTY-SIX OF THIS ARTICLE, PROVIDED, HOWEVER, THAT NO INTEREST 38 WILL BE PAID THEREON. 39 S 5. Subparagraph (B) of paragraph 1 of subsection (i) of section 606 40 of the tax law is amended by adding a new clause (xxxvii) to read as 41 follows: 42 (XXXVII) TAX FREE NY AREA EXCISE AMOUNT OF CREDIT UNDER 43 TAX ON TELECOMMUNICATION SERVICES SUBDIVISION FORTY-EIGHT 44 CREDIT UNDER SUBSECTION (XX) OF SECTION TWO HUNDRED TEN 45 S 5-a. Subsection (b) of section 612 of the tax law is amended by 46 adding a new paragraph 39-a to read as follows: 47 (39-A) THE AMOUNT OF ANY FEDERAL DEDUCTION FOR THE EXCISE TAX ON TELE- 48 COMMUNICATION SERVICES TO THE EXTENT SUCH TAXES ARE USED AS THE BASIS OF 49 THE CALCULATION OF TAX-FREE NY AREA EXCISE TAX ON TELECOMMUNICATION 50 SERVICES CREDIT ALLOWED UNDER SUBSECTION (XX) OF SECTION SIX HUNDRED SIX 51 OF THIS ARTICLE. 52 S 6. This act shall take effect immediately and shall apply to taxable 53 years beginning on or after January 1, 2014. 54 PART U S. 6359--C 212 1 Section 1. Paragraph (a) of subdivision 44 of section 210 of the tax 2 law, as amended by section 2 of part T of chapter 59 of the laws of 3 2012, is amended to read as follows: 4 (a) A taxpayer that has been certified by the commissioner of labor as 5 a qualified employer pursuant to section twenty-five-a of the labor law 6 shall be allowed a credit against the tax imposed by this article equal 7 to (i) five hundred dollars per month for up to six months for each 8 qualified employee the employer employs in a full-time job or two 9 hundred fifty dollars per month for up to six months for each qualified 10 employee the employer employs in a part-time job of at least twenty 11 hours per week OR TEN HOURS PER WEEK WHEN THE QUALIFIED EMPLOYEE IS 12 ENROLLED IN HIGH SCHOOL FULL-TIME, and (ii) one thousand dollars for 13 each qualified employee who is employed for at least an additional six 14 months by the qualified employer in a full-time job or five hundred 15 dollars for each qualified employee who is employed for at least an 16 additional six months by the qualified employer in a part-time job of at 17 least twenty hours per week OR TEN HOURS PER WEEK WHEN THE QUALIFIED 18 EMPLOYEE IS ENROLLED IN HIGH SCHOOL FULL-TIME, AND (III) AN ADDITIONAL 19 ONE THOUSAND DOLLARS FOR EACH QUALIFIED EMPLOYEE WHO IS EMPLOYED FOR AT 20 LEAST AN ADDITIONAL YEAR AFTER THE FIRST YEAR OF THE EMPLOYEE'S EMPLOY- 21 MENT BY THE QUALIFIED EMPLOYER IN A FULL-TIME JOB OR FIVE HUNDRED 22 DOLLARS FOR EACH QUALIFIED EMPLOYEE WHO IS EMPLOYED FOR AT LEAST AN 23 ADDITIONAL YEAR AFTER THE FIRST YEAR OF THE EMPLOYEE'S EMPLOYMENT BY THE 24 QUALIFIED EMPLOYER IN A PART-TIME JOB OF AT LEAST TWENTY HOURS PER WEEK 25 OR TEN HOURS PER WEEK WHEN THE QUALIFIED EMPLOYEE IS ENROLLED IN HIGH 26 SCHOOL FULL-TIME. For purposes of this subdivision, the term "qualified 27 employee" shall have the same meaning as set forth in subdivision (b) of 28 section twenty-five-a of the labor law. The portion of the credit 29 described in subparagraph (i) of this paragraph shall be allowed for the 30 taxable year in which the wages are paid to the qualified employee, and 31 the portion of the credit described in subparagraph (ii) of this para- 32 graph shall be allowed in the taxable year in which the additional six 33 month period ends. 34 S 2. Paragraph 1 of subsection (tt) of section 606 of the tax law, as 35 amended by section 3 of part T of chapter 59 of the laws of 2012, is 36 amended to read as follows: 37 (1) A taxpayer that has been certified by the commissioner of labor as 38 a qualified employer pursuant to section twenty-five-a of the labor law 39 shall be allowed a credit against the tax imposed by this article equal 40 to (A) five hundred dollars per month for up to six months for each 41 qualified employee the employer employs in a full-time job or two 42 hundred fifty dollars per month for up to six months for each qualified 43 employee the employer employs in a part-time job of at least twenty 44 hours per week OR TEN HOURS PER WEEK WHEN THE QUALIFIED EMPLOYEE IS 45 ENROLLED IN HIGH SCHOOL FULL-TIME, and (B) one thousand dollars for each 46 qualified employee who is employed for at least an additional six months 47 by the qualified employer in a full-time job or five hundred dollars for 48 each qualified employee who is employed for at least an additional six 49 months by the qualified employer in a part-time job of at least twenty 50 hours per week OR TEN HOURS PER WEEK WHEN THE QUALIFIED EMPLOYEE IS 51 ENROLLED IN HIGH SCHOOL FULL-TIME, AND (C) AN ADDITIONAL ONE THOUSAND 52 DOLLARS FOR EACH QUALIFIED EMPLOYEE WHO IS EMPLOYED FOR AT LEAST AN 53 ADDITIONAL YEAR AFTER THE FIRST YEAR OF THE EMPLOYEE'S EMPLOYMENT BY THE 54 QUALIFIED EMPLOYER IN A FULL-TIME JOB OR FIVE HUNDRED DOLLARS FOR EACH 55 QUALIFIED EMPLOYEE WHO IS EMPLOYED FOR AT LEAST AN ADDITIONAL YEAR AFTER 56 THE FIRST YEAR OF THE EMPLOYEE'S EMPLOYMENT BY THE QUALIFIED EMPLOYER IN S. 6359--C 213 1 A PART-TIME JOB OF AT LEAST TWENTY HOURS PER WEEK OR TEN HOURS PER WEEK 2 WHEN THE QUALIFIED EMPLOYEE IS ENROLLED IN HIGH SCHOOL FULL-TIME. A 3 taxpayer that is a partner in a partnership, member of a limited liabil- 4 ity company or shareholder in an S corporation that has been certified 5 by the commissioner of labor as a qualified employer pursuant to section 6 twenty-five-a of the labor law shall be allowed its pro rata share of 7 the credit earned by the partnership, limited liability company or S 8 corporation. For purposes of this subsection, the term "qualified 9 employee" shall have the same meaning as set forth in subdivision (b) of 10 section twenty-five-a of the labor law. The portion of the credit 11 described in subparagraph (A) of this paragraph shall be allowed for the 12 taxable year in which the wages are paid to the qualified employee, and 13 the portion of the credit described in subparagraph (B) of this para- 14 graph shall be allowed in the taxable year in which the additional six 15 month period ends. 16 S 3. Subdivision (a) of section 25-a of the labor law, as amended by 17 section 2 of part DD of chapter 59 of the laws of 2013, is amended to 18 read as follows: 19 (a) The commissioner is authorized to establish and administer the New 20 York youth works tax credit program to provide tax incentives to employ- 21 ers for employing at risk youth in part-time and full-time positions. 22 There will be five distinct pools of tax incentives. Program one will 23 cover tax incentives allocated for two thousand twelve and two thousand 24 thirteen. Program two will cover tax incentives allocated in two thou- 25 sand fourteen to be used in two thousand fourteen and fifteen. Program 26 three will cover tax incentives allocated in two thousand fifteen to be 27 used in two thousand fifteen and sixteen. Program four will cover tax 28 incentives allocated in two thousand sixteen to be used in two thousand 29 sixteen and seventeen. Program five will cover tax incentives allocated 30 in two thousand seventeen to be used in two thousand seventeen and eigh- 31 teen. The commissioner is authorized to allocate up to twenty-five 32 million dollars of tax credits under program one, [six] TEN million 33 dollars of tax credits under program two, [six] TEN million dollars of 34 tax credits under program three, [and six] TEN million dollars of tax 35 credits under program four, and [six] TEN million dollars of tax credits 36 under program five. 37 S 4. This act shall take effect immediately and apply to taxable years 38 beginning on or after January 1, 2014. 39 PART V 40 Section 1. Section 19 of Part W-1 of chapter 109 of the laws of 2006 41 amending the tax law and other laws relating to providing exemptions, 42 reimbursements and credits from various taxes for certain alternative 43 fuels, as amended by section 1 of part D of chapter 59 of the laws of 44 2012, is amended to read as follows: 45 S 19. This act shall take effect immediately; provided, however, that 46 sections one through thirteen of this act shall take effect September 1, 47 2006 and shall be deemed repealed on September 1, [2014] 2016 and such 48 repeal shall apply in accordance with the applicable transitional 49 provisions of sections 1106 and 1217 of the tax law, and shall apply to 50 sales made, fuel compounded or manufactured, and uses occurring on or 51 after such date, and with respect to sections seven through eleven of 52 this act, in accordance with applicable transitional provisions of 53 sections 1106 and 1217 of the tax law; provided, however, that the 54 commissioner of taxation and finance shall be authorized on and after S. 6359--C 214 1 the date this act shall have become a law to adopt and amend any rules 2 or regulations and to take any steps necessary to implement the 3 provisions of this act; provided further that sections fourteen through 4 sixteen of this act shall take effect immediately and shall apply to 5 taxable years beginning on or after January 1, 2006. 6 S 2. This act shall take effect immediately. 7 PART W 8 Section 1. Section 11 of part EE of chapter 63 of the laws of 2000, 9 amending the tax law and other laws relating to modifying the distrib- 10 ution of funds from the motor vehicle fuel excise tax, as amended by 11 section 1 of part M of chapter 61 of the laws of 2011, is amended to 12 read as follows: 13 S 11. Notwithstanding any other law, rule or regulation to the contra- 14 ry, the comptroller is hereby authorized and directed to deposit in 15 equal monthly installments and distribute pursuant to the provisions of 16 subdivision (d) of section 301-j of the tax law amounts listed below to 17 the credit of the dedicated highway and bridge trust fund and the dedi- 18 cated mass transportation trust fund from all motor vehicle receipts now 19 deposited into the general fund pursuant to provisions of the vehicle 20 and traffic law: twenty-eight million four hundred thousand dollars 21 from April 1, 2002 through March 31, 2003, sixty-seven million nine 22 hundred thousand dollars from April 1, 2003 through March 31, 2004, one 23 hundred seventy million one hundred thousand dollars from April 1, 2004 24 through March 31, 2005, and one hundred percent of all motor vehicle 25 receipts pursuant to provisions of the vehicle and traffic law that are 26 not otherwise directed to be deposited in a fund other than the general 27 fund from April 1, 2005 through March 31, 2006, and the same amount each 28 year thereafter UNTIL MARCH 31, 2014. FROM APRIL 1, 2014 THROUGH MARCH 29 31, 2015, AND EACH YEAR THEREAFTER, THE COMPTROLLER SHALL, ON A QUARTER- 30 LY BASIS, CERTIFY AND TRANSFER SIXTEEN MILLION FOUR HUNDRED NINETY-EIGHT 31 THOUSAND TWO HUNDRED FIFTY-FIVE DOLLARS TO THE DEDICATED HIGHWAY AND 32 BRIDGE TRUST FUND AND FIFTEEN MILLION SIX HUNDRED SIXTY-FIVE THOUSAND 33 TWO HUNDRED FORTY-FIVE DOLLARS TO THE DEDICATED MASS TRANSPORTATION 34 TRUST FUND. 35 S 2. Paragraph (f) of subdivision 4 of section 503 of the vehicle and 36 traffic law, as added by section 1 of part W of chapter 59 of the laws 37 of 2006, is amended to read as follows: 38 (f) Notwithstanding any other provision of law to the contrary, 39 commencing April first, two thousand six and ending March thirty-first, 40 two thousand [seven] FOURTEEN, IN EACH YEAR, the first forty million 41 seven hundred thousand dollars of fees collected pursuant to this subdi- 42 vision and section eleven hundred ninety-nine of this chapter, in the 43 aggregate, shall be paid to the state comptroller who shall deposit such 44 money in the state treasury pursuant to section one hundred twenty-one 45 of the state finance law to the credit of the general fund. Any such 46 fees collected in excess of such amount shall be paid to the credit of 47 the comptroller on account of the dedicated highway and bridge trust 48 fund established pursuant to section eighty-nine-b of the state finance 49 law. [Commencing April first, two thousand seven and ending March thir- 50 ty-first, two thousand eight, and for each such fiscal year thereafter, 51 the first forty million seven hundred thousand dollars of fees collected 52 pursuant to this subdivision and section eleven hundred ninety-nine of 53 this chapter, in the aggregate, shall be paid to the state comptroller 54 who shall deposit such money in the state treasury pursuant to section S. 6359--C 215 1 one hundred twenty-one of the state finance law to the credit of the 2 general fund. Any such fees collected in excess of such amount for each 3 such state fiscal year, shall be paid to the credit of the comptroller 4 on account of the dedicated highway and bridge trust fund established 5 pursuant to section eighty-nine-b of the state finance law.] COMMENCING 6 APRIL FIRST, TWO THOUSAND FOURTEEN AND FOR EACH SUCH FISCAL YEAR THERE- 7 AFTER, ANY SUCH FEES COLLECTED PURSUANT TO THIS SUBDIVISION AND SECTION 8 ELEVEN HUNDRED NINETY-NINE OF THIS CHAPTER SHALL BE PAID TO THE CREDIT 9 OF THE COMPTROLLER ON ACCOUNT OF THE DEDICATED HIGHWAY AND BRIDGE TRUST 10 FUND ESTABLISHED PURSUANT TO SECTION EIGHTY-NINE-B OF THE STATE FINANCE 11 LAW. 12 S 3. This act shall take effect immediately and shall be deemed to 13 have been in full force and effect on and after April 1, 2014. 14 PART X 15 Section 1. Section 951 of the tax law, as amended by chapter 67 of the 16 laws of 1978, subsection (a) as amended by section 1 of part T of chap- 17 ter 57 of the laws of 2010, subsection (b) as amended by section 5 of 18 part A of chapter 389 of the laws of 1997 and subsection (c) as added by 19 chapter 538 of the laws of 2013, is amended to read as follows: 20 S 951. Applicable internal revenue code provisions.-- (a) [Dates] 21 GENERAL. For purposes of this article, any reference to the internal 22 revenue code means the United States Internal Revenue Code of 1986, with 23 all amendments enacted on or before [July twenty-second, nineteen 24 hundred ninety-eight,] JANUARY FIRST, TWO THOUSAND FOURTEEN and, unless 25 specifically provided otherwise in this article, any reference to Decem- 26 ber thirty-first, nineteen hundred seventy-six or January first, nine- 27 teen hundred seventy-seven contained in the provisions of such code 28 which are applicable to the determination of the tax imposed by this 29 article shall be read as a reference to June thirtieth, nineteen hundred 30 seventy-eight or July first, nineteen hundred seventy-eight, respective- 31 ly. [Notwithstanding the foregoing, the unified credit against the 32 estate tax provided in section two thousand ten of the internal revenue 33 code shall, for purposes of this article, be the amount allowable as if 34 the federal applicable exclusion amount were one million dollars.] 35 (b) [Applicable generation-skipping transfer tax provisions.--Where 36 any reference is made in this article (or in the provisions of the 37 internal revenue code which are made applicable by section two, as 38 amended, of chapter one thousand thirteen of the laws of nineteen 39 hundred sixty-two, to the determination of the tax imposed by this arti- 40 cle and appended thereto) to provisions of the internal revenue code 41 contained in section one thousand twenty-five of this chapter, such 42 internal revenue code provisions contained in such section one thousand 43 twenty-five shall apply to the provisions of this article in the same 44 manner and with the same force and effect as if the language of such 45 provisions of the internal revenue code had been incorporated in full 46 into this article except to the extent that any such provision is either 47 inconsistent with a provision of this article or is not relevant there- 48 to. 49 (c)] Disposition to surviving spouse who is not a United States citi- 50 zen. In the case of an estate where a federal estate tax return is not 51 required for federal estate tax purposes, a disposition to a surviving 52 spouse that would qualify for the federal estate tax marital deduction 53 under section 2056 of the internal revenue code if not for the limita- 54 tion imposed by subsection (d)(1) of such section shall nonetheless be S. 6359--C 216 1 treated as qualifying for the federal estate tax marital deduction for 2 purposes of computing the tax imposed by section nine hundred fifty-two 3 of this part, without requiring that such disposition pass to the 4 surviving spouse in a qualified domestic trust as required for federal 5 purposes by internal revenue code section 2056(d)(2). 6 S 2. Section 952 of the tax law, as added by section 9 of part A of 7 chapter 389 of the laws of 1997, subsection (b) as amended by section 3 8 of part I of chapter 60 of the laws of 2004, is amended to read as 9 follows: 10 S 952. Tax imposed. (a) A tax is hereby imposed on the transfer of the 11 New York estate by every deceased individual who at his or her death was 12 a resident of New York state. [The tax imposed by this subsection shall 13 be an amount equal to the maximum amount allowable against the federal 14 estate tax as a credit for state death taxes under section two thousand 15 eleven of the internal revenue code.] 16 (b) [If the transfer of any part of the estate of a deceased resident 17 includes real or tangible personal property having an actual situs 18 outside New York state, the tax imposed by subsection (a) of this 19 section shall be reduced by an amount determined by multiplying the 20 maximum amount of the federal credit for state death taxes by a frac- 21 tion, the numerator of which is the decedent's federal gross estate 22 reduced by his or her New York gross estate and the denominator of which 23 is his or her federal gross estate.] COMPUTATION OF TAX. THE TAX IMPOSED 24 BY THIS SECTION SHALL BE COMPUTED ON THE DECEASED RESIDENT'S NEW YORK 25 TAXABLE ESTATE AS FOLLOWS: 26 IN THE CASE OF DECEDENTS DYING ON OR AFTER APRIL 1, 2014 AND BEFORE 27 APRIL 1, 2015 28 IF THE NEW YORK TAXABLE ESTATE IS: THE TAX IS: 29 NOT OVER $500,000 3.06% OF TAXABLE ESTATE 30 OVER $500,000 BUT NOT OVER $1,000,000 $15,300 PLUS 5.0% OF EXCESS OVER 31 $500,000 32 OVER $1,000,000 BUT NOT OVER $1,500,000 $40,300 PLUS 5.5% OF EXCESS OVER 33 $1,000,000 34 OVER $1,500,000 BUT NOT OVER $2,100,000 $67,800 PLUS 6.5% OF EXCESS OVER 35 $1,500,000 36 OVER $2,100,000 BUT NOT OVER $2,600,000 $106,800 PLUS 8.0% OF EXCESS 37 OVER $2,100,000 38 OVER $2,600,000 BUT NOT OVER $3,100,000 $146,800 PLUS 8.8% OF EXCESS OVER 39 $2,600,000 40 OVER $3,100,000 BUT NOT OVER $3,600,000 $190,800 PLUS 9.6% OF EXCESS OVER 41 $3,100,000 42 OVER $3,600,000 BUT NOT OVER $4,100,000 $238,800 PLUS 10.4% OF EXCESS 43 OVER $3,600,000 44 OVER $4,100,000 BUT NOT OVER $5,100,000 $290,800 PLUS 11.2% OF EXCESS 45 OVER $4,100,000 46 OVER $5,100,000 BUT NOT OVER $6,100,000 $402,800 PLUS 12.0% OF EXCESS 47 OVER $5,100,000 48 OVER $6,100,000 BUT NOT OVER $7,100,000 $522,800 PLUS 12.8% OF EXCESS 49 OVER $6,100,000 50 OVER $7,100,000 BUT NOT OVER $8,100,000 $650,800 PLUS 13.6% OF EXCESS 51 OVER $7,100,000 52 OVER $8,100,000 BUT NOT OVER $9,100,000 $786,800 PLUS 14.4% OF EXCESS 53 OVER $8,100,000 54 OVER $9,100,000 $930,800 PLUS 14.5% OF EXCESS OVER 55 $9,100,000 S. 6359--C 217 1 IN THE CASE OF DECEDENTS DYING ON OR AFTER APRIL 1, 2015 AND BEFORE 2 APRIL 1, 2016 3 IF THE NEW YORK TAXABLE ESTATE IS: THE TAX IS: 4 NOT OVER $500,000 3.06% OF TAXABLE ESTATE 5 OVER $500,000 BUT NOT OVER $1,000,000 $15,300 PLUS 5.0% OF EXCESS OVER 6 $500,000 7 OVER $1,000,000 BUT NOT OVER $1,500,000 $40,300 PLUS 5.5% OF EXCESS OVER 8 $1,000,000 9 OVER $1,500,000 BUT NOT OVER $2,100,000 $67,800 PLUS 6.5% OF EXCESS 10 OVER $1,500,000 11 OVER $2,100,000 BUT NOT OVER $2,600,000 $106,800 PLUS 8.0% OF EXCESS 12 OVER $2,100,000 13 OVER $2,600,000 BUT NOT OVER $3,100,000 $146,800 PLUS 8.8% OF EXCESS 14 OVER $2,600,000 15 OVER $3,100,000 BUT NOT OVER $3,600,000 $190,800 PLUS 9.6% OF EXCESS 16 OVER $3,100,000 17 OVER $3,600,000 BUT NOT OVER $4,100,000 $238,800 PLUS 10.4% OF EXCESS 18 OVER $3,600,000 19 OVER $4,100,000 BUT NOT OVER $5,100,000 $290,800 PLUS 11.2% OF EXCESS 20 OVER $4,100,000 21 OVER $5,100,000 BUT NOT OVER $6,100,000 $402,800 PLUS 12.0% OF EXCESS 22 OVER $5,100,000 23 OVER $6,100,000 BUT NOT OVER $7,100,000 $522,800 PLUS 12.8% OF EXCESS 24 OVER $6,100,000 25 OVER $7,100,000 $650,800 PLUS 13.0% OF EXCESS 26 OVER $7,100,000 27 IN THE CASE OF DECEDENTS DYING ON OR AFTER APRIL 1, 2016 AND BEFORE 28 APRIL 1, 2017 29 IF THE NEW YORK TAXABLE ESTATE IS: THE TAX IS: 30 NOT OVER $500,000 3.06% OF TAXABLE ESTATE 31 OVER $500,000 BUT NOT OVER $1,000,000 $15,300 PLUS 5.0% OF EXCESS OVER 32 $500,000 33 OVER $1,000,000 BUT NOT OVER $1,500,000 $40,300 PLUS 5.5% OF EXCESS OVER 34 $1,000,000 35 OVER $1,500,000 BUT NOT OVER $2,100,000 $67,800 PLUS 6.5% OF EXCESS 36 OVER $1,500,000 37 OVER $2,100,000 BUT NOT OVER $2,600,000 $106,800 PLUS 8.0% OF EXCESS 38 OVER $2,100,000 39 OVER $2,600,000 BUT NOT OVER $3,100,000 $146,800 PLUS 8.8% OF EXCESS 40 OVER $2,600,000 41 OVER $3,100,000 BUT NOT OVER $3,600,000 $190,800 PLUS 9.6% OF EXCESS 42 OVER $3,100,000 43 OVER $3,600,000 BUT NOT OVER $4,100,000 $238,800 PLUS 10.4% OF EXCESS 44 OVER $3,600,000 45 OVER $4,100,000 BUT NOT OVER $5,100,000 $290,800 PLUS 11.2% OF EXCESS 46 OVER $4,100,000 47 OVER $5,100,000 $402,800 PLUS 11.5% OF EXCESS 48 OVER $5,100,000 49 IN THE CASE OF DECEDENTS DYING ON OR AFTER APRIL 1, 2017 50 IF THE NEW YORK TAXABLE ESTATE IS: THE TAX IS: 51 NOT OVER $500,000 3.06% OF TAXABLE ESTATE 52 OVER $500,000 BUT NOT OVER $1,000,000 $15,300 PLUS 5.0% OF EXCESS OVER 53 $500,000 54 OVER $1,000,000 BUT NOT OVER $1,500,000 $40,300 PLUS 5.5% OF EXCESS OVER 55 $1,000,000 56 OVER $1,500,000 BUT NOT OVER $2,100,000 $67,800 PLUS 6.5% OF S. 6359--C 218 1 EXCESS OVER $1,500,000 2 OVER $2,100,000 BUT NOT OVER $2,600,000 $106,800 PLUS 8.0% OF 3 EXCESS OVER $2,100,000 4 OVER $2,600,000 BUT NOT OVER $3,100,000 $146,800 PLUS 8.8% OF 5 EXCESS OVER $2,600,000 6 OVER $3,100,000 BUT NOT OVER $3,600,000 $190,800 PLUS 9.6% OF EXCESS 7 OVER $3,100,000 8 OVER $3,600,000 $238,800 PLUS 10.0% OF EXCESS 9 OVER $3,600,000 10 (C) APPLICABLE CREDIT AMOUNT. (1) A CREDIT OF THE APPLICABLE CREDIT 11 AMOUNT SHALL BE ALLOWED AGAINST THE TAX IMPOSED BY THIS SECTION AS 12 PROVIDED IN THIS SUBSECTION. IN THE CASE OF A DECEDENT WHOSE NEW YORK 13 TAXABLE ESTATE IS LESS THAN OR EQUAL TO THE BASIC EXCLUSION AMOUNT, THE 14 APPLICABLE CREDIT AMOUNT SHALL BE THE AMOUNT OF TAX THAT WOULD BE DUE 15 UNDER SUBSECTION (B) OF THIS SECTION ON SUCH DECEDENT'S NEW YORK TAXABLE 16 ESTATE. IN THE CASE OF A DECEDENT WHOSE NEW YORK TAXABLE ESTATE EXCEEDS 17 THE BASIC EXCLUSION AMOUNT BY AN AMOUNT THAT IS LESS THAN OR EQUAL TO 18 FIVE PERCENT OF SUCH AMOUNT, THE APPLICABLE CREDIT AMOUNT SHALL BE THE 19 AMOUNT OF TAX THAT WOULD BE DUE UNDER SUBSECTION (B) OF THIS SECTION IF 20 THE AMOUNT ON WHICH THE TAX IS TO BE COMPUTED WERE EQUAL TO THE BASIC 21 EXCLUSION AMOUNT MULTIPLIED BY ONE MINUS A FRACTION, THE NUMERATOR OF 22 WHICH IS THE DECEDENT'S NEW YORK TAXABLE ESTATE MINUS THE BASIC EXCLU- 23 SION AMOUNT, AND THE DENOMINATOR OF WHICH IS FIVE PERCENT OF THE BASIC 24 EXCLUSION AMOUNT. PROVIDED, HOWEVER, THAT THE CREDIT ALLOWED BY THIS 25 SUBSECTION SHALL NOT EXCEED THE TAX IMPOSED BY THIS SECTION, AND NO 26 CREDIT SHALL BE ALLOWED TO THE ESTATE OF ANY DECEDENT WHOSE NEW YORK 27 TAXABLE ESTATE EXCEEDS ONE HUNDRED FIVE PERCENT OF THE BASIC EXCLUSION 28 AMOUNT. 29 (2) (A) FOR PURPOSES OF THIS SECTION, THE BASIC EXCLUSION AMOUNT SHALL 30 BE AS FOLLOWS: 31 IN THE CASE OF DECEDENTS DYING ON OR AFTER: THE BASIC EXCLUSION AMOUNT 32 IS: 33 APRIL 1, 2014 AND BEFORE APRIL 1, 2015 $ 2,062,500 34 APRIL 1, 2015 AND BEFORE APRIL 1, 2016 3,125,000 35 APRIL 1, 2016 AND BEFORE APRIL 1, 2017 4,187,500 36 APRIL 1, 2017 AND BEFORE JANUARY 1, 2019 5,250,000 37 (B) IN THE CASE OF ANY DECEDENT DYING IN A CALENDAR YEAR BEGINNING ON 38 OR AFTER JANUARY FIRST, TWO THOUSAND NINETEEN, THE BASIC EXCLUSION 39 AMOUNT FOR DECEDENTS DYING ON OR AFTER APRIL FIRST, TWO THOUSAND SEVEN- 40 TEEN AND BEFORE JANUARY FIRST, TWO THOUSAND NINETEEN SHALL BE INCREASED 41 BY AN AMOUNT EQUAL TO: 42 (I) SUCH BASIC EXCLUSION AMOUNT, MULTIPLIED BY 43 (II) THE COST-OF-LIVING ADJUSTMENT, WHICH SHALL BE THE PERCENTAGE BY 44 WHICH THE CONSUMER PRICE INDEX FOR THE PRECEDING CALENDAR YEAR EXCEEDS 45 THE CONSUMER PRICE INDEX FOR CALENDAR YEAR TWO THOUSAND TWELVE. 46 (C) (I) FOR PURPOSES OF THIS PARAGRAPH, "CONSUMER PRICE INDEX" MEANS 47 THE MOST RECENT CONSUMER PRICE INDEX FOR ALL-URBAN CONSUMERS PUBLISHED 48 BY THE UNITED STATES DEPARTMENT OF LABOR. 49 (II) IF ANY AMOUNT ADJUSTED UNDER THIS PARAGRAPH IS NOT A MULTIPLE OF 50 TEN THOUSAND DOLLARS, SUCH AMOUNT SHALL BE ROUNDED TO THE NEAREST MULTI- 51 PLE OF TEN THOUSAND DOLLARS. 52 S 3. Section 954 of the tax law, as amended by chapter 67 of the laws 53 of 1978, paragraph 1 of subsection (a) as amended by section 10 and 54 subsection (b) as amended by section 11 of part A of chapter 389 of the 55 laws of 1997, subsection (c) as amended by chapter 916 of the laws of 56 1982, paragraph 1 of subsection (c) as amended by section 3 of part A of S. 6359--C 219 1 chapter 407 of the laws of 1999 and such subsection (c) as relettered by 2 section 12 of part A of chapter 389 of the laws of 1997, is amended to 3 read as follows: 4 S 954. Resident's New York gross estate. (a) General.-- The New York 5 gross estate of a deceased resident means his OR HER federal gross 6 estate as defined in the internal revenue code (whether or not a federal 7 estate tax return is required to be filed) modified as follows: 8 (1) Reduced by the value of real or tangible personal property having 9 an actual situs outside New York state. 10 (2) Increased by the amount determined under section nine hundred 11 fifty-seven OF THIS PART (relating to limited powers of appointment 12 created prior to September first, nineteen hundred thirty). 13 (b) Valuation. -- (1) The New York gross estate shall be valued as of 14 the TIME OF THE DECEDENT'S DEATH, EXCEPT THAT IF A FEDERAL ESTATE TAX 15 RETURN IS FILED AND THE ALTERNATE VALUATION UNDER SECTION 2032 OF THE 16 INTERNAL REVENUE CODE IS ELECTED FOR FEDERAL ESTATE TAX PURPOSES, THE 17 NEW YORK GROSS ESTATE SHALL BE VALUED AS OF THE applicable federal valu- 18 ation date or dates. Any real property qualified under section two thou- 19 sand thirty-two-A of the internal revenue code shall have the same value 20 for purposes of the New York gross estate as it has for federal estate 21 tax purposes. 22 (2) IF SUCH ALTERNATE VALUATION COULD HAVE BEEN ELECTED PURSUANT TO 23 PARAGRAPH ONE OF THIS SUBSECTION, BUT FOR THE ABSENCE OF AN ESTATE 24 SUFFICIENT TO REQUIRE THE FILING OF A FEDERAL RETURN, THE NEW YORK GROSS 25 ESTATE MAY, UPON THE ELECTION OF THE EXECUTOR, BE VALUED AS OF THE 26 FEDERAL VALUATION DATE OR DATES WHICH WOULD HAVE APPLIED IF A FEDERAL 27 RETURN HAD BEEN FILED. HOWEVER, NO ELECTION MAY BE MADE UNDER THIS PARA- 28 GRAPH UNLESS SUCH ELECTION WILL DECREASE THE VALUE OF THE NEW YORK GROSS 29 ESTATE AND THE AMOUNT OF TAX IMPOSED BY THIS ARTICLE (REDUCED BY CREDITS 30 ALLOWABLE AGAINST SUCH TAX). ANY ELECTION MADE UNDER THIS PARAGRAPH 31 SHALL BE IRREVOCABLE. THE ELECTION ALLOWED BY THIS PARAGRAPH SHALL BE 32 MADE NO LATER THAN THE DATE PRESCRIBED FOR THE FILING OF THE RETURN 33 UNDER THIS ARTICLE (INCLUDING EXTENSIONS) OR ANY TIME THEREAFTER AS THE 34 COMMISSIONER MAY PRESCRIBE. 35 (c) Cross references.-- (1) For provisions of the internal revenue 36 code defining the federal gross estate, see: 37 Sec. 2031. Definition of gross estate. 38 Sec. 2032. Alternate valuation. 39 Sec. 2032A. Valuation of certain farm, etc., real property. 40 Sec. 2033. Property in which the decedent had an interest. 41 Sec. 2034. Dower or curtesy interest. 42 Sec. 2035. Adjustments for gifts made within three years of decedent's 43 death. 44 Sec. 2036. Transfers with retained life estate. 45 Sec. 2037. Transfers taking effect at death. 46 Sec. 2038. Revocable transfers. 47 Sec. 2039. Annuities. 48 Sec. 2040. Joint interests. 49 Sec. 2041. Powers of appointment. 50 Sec. 2042. Proceeds of life insurance. 51 Sec. 2043. Transfers for insufficient consideration. 52 Sec. 2044. Certain property for which marital deduction was previously 53 allowed. 54 Sec. 2045. Prior interests. 55 Sec. 2046. Disclaimers. S. 6359--C 220 1 (2) FOR PROVISIONS OF THE INTERNAL REVENUE CODE WHICH, EXCEPT TO THE 2 EXTENT THEY ARE INCONSISTENT WITH THE PROVISIONS OF THIS ARTICLE, ARE 3 PERTINENT TO THE COMPUTATION OF TAXABLE GIFTS AND THE TAX UNDER THIS 4 ARTICLE, SEE: 5 SEC. 2503. TAXABLE GIFTS. 6 SEC. 2511. TRANSFERS IN GENERAL. 7 SEC. 2512. VALUATION OF GIFTS. 8 SEC. 2513. GIFT BY HUSBAND OR WIFE TO THIRD PARTY. 9 SEC. 2514. POWERS OF APPOINTMENT. 10 SEC. 2516. CERTAIN PROPERTY SETTLEMENTS. 11 SEC. 2518. DISCLAIMERS. 12 SEC. 2519. DISPOSITIONS OF CERTAIN LIFE ESTATES. 13 SEC. 2522. CHARITABLE AND SIMILAR GIFTS. 14 SEC. 2523. GIFT TO SPOUSE. 15 SEC. 2524. EXTENT OF DEDUCTIONS. 16 SEC. 2701. SPECIAL VALUATION RULES IN CASE OF TRANSFERS OF CERTAIN 17 INTERESTS IN CORPORATIONS OR PARTNERSHIPS. 18 SEC. 2702. SPECIAL VALUATION RULES IN CASE OF TRANSFERS OF INTERESTS 19 IN TRUSTS. 20 SEC. 2703. CERTAIN RIGHTS AND RESTRICTIONS DISREGARDED. 21 SEC. 2704. TREATMENT OF CERTAIN LAPSING RIGHTS AND RESTRICTIONS. 22 SEC. 7872. TREATMENT OF LOANS WITH BELOW-MARKET INTEREST RATES. 23 (3) For effect of federal estate tax determinations, see section nine 24 hundred sixty-one of this article. 25 S 4. The tax law is amended by adding a new section 955 to read as 26 follows: 27 S 955. RESIDENT'S NEW YORK TAXABLE ESTATE. (A) GENERAL.--THE TAXABLE 28 ESTATE OF A NEW YORK RESIDENT SHALL BE HIS OR HER NEW YORK GROSS ESTATE, 29 MINUS THE DEDUCTIONS ALLOWABLE FOR DETERMINING HIS OR HER FEDERAL TAXA- 30 BLE ESTATE UNDER THE INTERNAL REVENUE CODE (WHETHER OR NOT A FEDERAL 31 ESTATE TAX RETURN IS REQUIRED TO BE FILED), EXCEPT TO THE EXTENT THAT 32 SUCH DEDUCTIONS RELATE TO REAL OR TANGIBLE PERSONAL PROPERTY SITUSED 33 OUTSIDE NEW YORK STATE. 34 (B) WAIVER OF DEDUCTIONS.-- IF THE RIGHT TO ANY DEDUCTION OTHERWISE 35 ALLOWABLE IS WAIVED FOR FEDERAL ESTATE TAX PURPOSES, IT SHALL BE CONSID- 36 ERED WAIVED FOR NEW YORK ESTATE TAX PURPOSES. 37 (C) QUALIFIED TERMINABLE INTEREST PROPERTY ELECTION.-- EXCEPT AS 38 OTHERWISE PROVIDED IN THIS SUBSECTION, THE ELECTION REFERRED TO IN PARA- 39 GRAPH (7) OF SUBSECTION (B) OF SECTION 2056 OF THE INTERNAL REVENUE CODE 40 SHALL NOT BE ALLOWED UNDER THIS ARTICLE UNLESS SUCH ELECTION WAS MADE 41 WITH RESPECT TO THE FEDERAL ESTATE TAX RETURN REQUIRED TO BE FILED UNDER 42 THE PROVISIONS OF THE INTERNAL REVENUE CODE BECAUSE THE DECEDENT'S GROSS 43 ESTATE AND ADJUSTED TAXABLE GIFTS, UNDER PARAGRAPH (2) OF SUBSECTION (B) 44 OF SECTION 2001 OF THE INTERNAL REVENUE CODE, EXCEED THE BASIC EXCLUSION 45 AMOUNT, UNDER PARAGRAPH 3 OF SUBSECTION (C) OF SECTION 2010 OF THE 46 INTERNAL REVENUE CODE, THAT IS IN EFFECT AT THE DECEDENT'S DEATH. WHERE 47 A FEDERAL ESTATE TAX RETURN IS ONLY REQUIRED TO BE FILED FOR PURPOSES OF 48 ELECTING THE DECEASED SPOUSAL UNUSED EXCLUSION AMOUNT UNDER PARAGRAPHS 49 (4) AND (5) OF SUBSECTION (C) OF SECTION 2010 OF THE INTERNAL REVENUE 50 CODE, THE EXECUTOR MAY MAKE THE ELECTION REFERRED TO IN SUCH PARAGRAPH 51 (7) WITH RESPECT TO THE TAX IMPOSED BY THIS ARTICLE ON THE RETURN OF THE 52 TAX IMPOSED BY THIS ARTICLE, IRRESPECTIVE OF WHETHER SUCH FEDERAL RETURN 53 IS FILED. ANY ELECTION MADE UNDER THIS SUBSECTION SHALL BE IRREVOCABLE. 54 (D) CROSS REFERENCES.-- FOR PROVISIONS OF THE INTERNAL REVENUE CODE 55 SPECIFYING THE DEDUCTIONS ALLOWABLE FOR FEDERAL ESTATE TAX PURPOSES, 56 SEE: S. 6359--C 221 1 SEC.2032(B). ALTERNATE VALUATION--SPECIAL RULE FOR DEDUCTIONS. 2 SEC.2046. DISCLAIMERS. 3 SEC.2053. EXPENSES, INDEBTEDNESS, AND TAXES. 4 SEC.2054. LOSSES. 5 SEC.2055. TRANSFERS FOR PUBLIC, CHARITABLE, AND RELIGIOUS USES. 6 SEC.2056. BEQUESTS, ETC., TO SURVIVING SPOUSE. 7 S 5. Subsections (b) and (d) of section 960 of the tax law, subsection 8 (b) as amended by section 4 of part I of chapter 60 of the laws of 2004 9 and subsection (d) as added by section 190 of the laws of 1980 and 10 relettered by section 15 of part A of chapter 389 of the laws of 1997, 11 are amended to read as follows: 12 (b) Computation of tax.--The tax imposed under subsection (a) shall be 13 the same as the tax that would be due, if the decedent had died a resi- 14 dent, under subsection (a) of section nine hundred fifty-two, except 15 that for purposes of [allocating] COMPUTING the tax under subsection (b) 16 of section nine hundred fifty-two, "New York [gross] TAXABLE estate"[, 17 in the numerator in subsection (b) of section nine hundred fifty-two,] 18 shall not include the value of any intangible personal property other- 19 wise includible in the deceased individual's New York gross estate, AND 20 SHALL NOT INCLUDE THE AMOUNT OF ANY GIFT UNLESS SUCH GIFT CONSISTS OF 21 REAL OR TANGIBLE PERSONAL PROPERTY HAVING AN ACTUAL SITUS IN NEW YORK 22 STATE OR INTANGIBLE PERSONAL PROPERTY EMPLOYED IN A BUSINESS, TRADE OR 23 PROFESSION CARRIED ON IN THIS STATE. 24 (d) Works of art on loan for exhibition. Notwithstanding the forego- 25 ing, the tax imposed under subsection (a) OF THIS SECTION on the trans- 26 fer, from any deceased individual who at his OR HER death was not a 27 resident of the state of New York, of works of art having an actual 28 situs in the state of New York and either (i) includible in his OR HER 29 federal gross estate or (ii) which would be includible in his OR HER New 30 York gross estate pursuant to section nine hundred fifty-seven (relating 31 to certain limited powers of appointment) if he OR SHE were a resident 32 of the state of New York, shall [be an amount equal to the transfer 33 taxes or death taxes of every character in respect of personal property 34 which would be imposed on such transfer or such works of art if the 35 actual situs of such works of art were the state or territory of the 36 United States of residence of such individual] NOT BE SUBJECT TO THE TAX 37 IMPOSED BY THIS SECTION if such works of art are [sited in the state of 38 New York solely for exhibition purposes,] loaned [for such] TO A PUBLIC 39 GALLERY LOCATED WITHIN THE STATE OF NEW YORK SOLELY FOR EXHIBITION 40 purposes [to a public gallery or museum (] BUT ONLY IF no part of the 41 net earnings of [which] SUCH PUBLIC GALLERY OR MUSEUM inure to the bene- 42 fit of any private stockholder or individual[)], and [(], at the time of 43 the death of such individual[)] SUCH WORKS OF ART ARE on exhibition or 44 en route to or from exhibition in such a public gallery or museum. 45 [Provided however, that if the state or territory of the United States 46 of residence of such individual imposes transfer taxes or death taxes on 47 such works of art which are sited in the state of New York for the 48 purposes herein specified, then such works of art shall not be subject 49 to the tax imposed by this section.] 50 S 6. Subsection (a) of section 971 of the tax law, as added by section 51 17 of part A of chapter 389 of the laws of 1997, is amended to read as 52 follows: 53 (a) Returns by executor. (1) Residents. In the case of the estate of 54 every individual dying on or after [February first, two thousand] APRIL 55 FIRST, TWO THOUSAND FOURTEEN, who at his or her death was a resident of 56 New York state, [if] his or her executor [is required to file a return S. 6359--C 222 1 with respect to the federal estate tax (determined as if the limitation 2 contained in subsection (a) of section nine hundred fifty-one of this 3 article were applicable in determining whether such executor is required 4 to file such federal return), the executor] shall make a return with 5 respect to the estate tax imposed by section nine hundred fifty-two of 6 this article IF THE DECEDENT'S FEDERAL GROSS ESTATE, INCREASED BY THE 7 AMOUNT OF ANY GIFT INCLUDIBLE IN HIS OR HER NEW YORK GROSS ESTATE, 8 EXCEEDS THE BASIC EXCLUSION AMOUNT APPLICABLE TO THE DECEDENT'S DATE OF 9 DEATH IN PARAGRAPH TWO OF SUBSECTION (C) OF SECTION NINE HUNDRED FIFTY- 10 TWO OF THIS ARTICLE. 11 (2) Nonresidents. In the case of the estate of every individual DYING 12 ON OR AFTER APRIL FIRST, TWO THOUSAND FOURTEEN, who at his or her death 13 was not a resident of New York state, [if his or her executor is 14 required to file a return with respect to the federal estate tax (deter- 15 mined as if the limitation contained in subsection (a) of section nine 16 hundred fifty-one of this article were applicable in determining whether 17 such executor is required to file such federal return) and] if such 18 individual's federal gross estate includes real or tangible personal 19 property having an actual situs in New York state, the executor shall 20 make a return with respect to the estate tax imposed by section nine 21 hundred sixty of this article IF THE DECEDENT'S FEDERAL GROSS ESTATE, 22 INCREASED BY THE AMOUNT OF ANY GIFT INCLUDIBLE IN HIS OR HER NEW YORK 23 GROSS ESTATE, EXCEEDS THE BASIC EXCLUSION AMOUNT APPLICABLE TO THE 24 DECEDENT'S DATE OF DEATH IN PARAGRAPH TWO OF SUBSECTION (C) OF SECTION 25 NINE HUNDRED FIFTY-TWO OF THIS ARTICLE. 26 S 7. Subsection (a) of section 997 of the tax law, as amended by 27 section 27 of part A of chapter 389 of the laws of 1997, is amended to 28 read as follows: 29 (a) The phrase "adjusted gross estate" shall be read as "adjusted 30 federal gross estate determined without reference to paragraphs (1) 31 [and], (2) AND (3) of subsection (a) of section nine hundred fifty-four" 32 of this article. 33 S 8. Article 26-B of the tax law is REPEALED. 34 S 9. Section 2 of chapter 1013 of the laws of 1962 amending the tax 35 law relating to imposing a tax on the transfer of estates of decedents 36 dying on or after April first, nineteen hundred sixty-three is REPEALED. 37 S 10. The tax law is amended by adding a new section 999-a to read as 38 follows: 39 S 999-A. APPENDIX TO ARTICLE TWENTY-SIX. THE FOLLOWING PROVISIONS OF 40 THE UNITED STATES INTERNAL REVENUE CODE OF 1986, WITH ALL AMENDMENTS 41 ENACTED ON OR BEFORE JANUARY FIRST, TWO THOUSAND FOURTEEN, SHALL APPLY 42 TO THE TAX IMPOSED BY THIS ARTICLE, TO THE EXTENT SPECIFIED IN THIS 43 ARTICLE. 44 S 2031. DEFINITION OF GROSS ESTATE. 45 (A) GENERAL.--THE VALUE OF THE GROSS ESTATE OF THE DECEDENT SHALL BE 46 DETERMINED BY INCLUDING TO THE EXTENT PROVIDED FOR IN THIS PART, THE 47 VALUE AT THE TIME OF HIS DEATH OF ALL PROPERTY, REAL OR PERSONAL, TANGI- 48 BLE OR INTANGIBLE, WHEREVER SITUATED. 49 (B) VALUATION OF UNLISTED STOCK AND SECURITIES.--IN THE CASE OF STOCK 50 AND SECURITIES OF A CORPORATION THE VALUE OF WHICH, BY REASON OF THEIR 51 NOT BEING LISTED ON AN EXCHANGE AND BY REASON OF THE ABSENCE OF SALES 52 THEREOF, CANNOT BE DETERMINED WITH REFERENCE TO BID AND ASKED PRICES OR 53 WITH REFERENCE TO SALES PRICES, THE VALUE THEREOF SHALL BE DETERMINED BY 54 TAKING INTO CONSIDERATION, IN ADDITION TO ALL OTHER FACTORS, THE VALUE 55 OF STOCK OR SECURITIES OF CORPORATIONS ENGAGED IN THE SAME OR A SIMILAR 56 LINE OF BUSINESS WHICH ARE LISTED ON AN EXCHANGE. S. 6359--C 223 1 (C) ESTATE TAX WITH RESPECT TO LAND SUBJECT TO A QUALIFIED CONSERVA- 2 TION EASEMENT.-- 3 (1) IN GENERAL.--IF THE EXECUTOR MAKES THE ELECTION DESCRIBED IN PARA- 4 GRAPH (6), THEN, EXCEPT AS OTHERWISE PROVIDED IN THIS SUBSECTION, THERE 5 SHALL BE EXCLUDED FROM THE GROSS ESTATE THE LESSER OF-- 6 (A) THE APPLICABLE PERCENTAGE OF THE VALUE OF LAND SUBJECT TO A QUALI- 7 FIED CONSERVATION EASEMENT, REDUCED BY THE AMOUNT OF ANY DEDUCTION UNDER 8 SECTION 2055(F) WITH RESPECT TO SUCH LAND, OR 9 (B) THE EXCLUSION LIMITATION. 10 (2) APPLICABLE PERCENTAGE.--FOR PURPOSES OF PARAGRAPH (1), THE TERM 11 "APPLICABLE PERCENTAGE" MEANS 40 PERCENT REDUCED (BUT NOT BELOW ZERO) BY 12 2 PERCENTAGE POINTS FOR EACH PERCENTAGE POINT (OR FRACTION THEREOF) BY 13 WHICH THE VALUE OF THE QUALIFIED CONSERVATION EASEMENT IS LESS THAN 30 14 PERCENT OF THE VALUE OF THE LAND (DETERMINED WITHOUT REGARD TO THE VALUE 15 OF SUCH EASEMENT AND REDUCED BY THE VALUE OF ANY RETAINED DEVELOPMENT 16 RIGHT (AS DEFINED IN PARAGRAPH (5)). THE VALUES TAKEN INTO ACCOUNT UNDER 17 THE PRECEDING SENTENCE SHALL BE SUCH VALUES AS OF THE DATE OF THE 18 CONTRIBUTION REFERRED TO IN PARAGRAPH (8)(B). 19 (3) EXCLUSION LIMITATION.--FOR PURPOSES OF PARAGRAPH (1), THE EXCLU- 20 SION LIMITATION IS THE LIMITATION DETERMINED IN ACCORDANCE WITH THE 21 FOLLOWING TABLE: 22 IN THE CASE OF ESTATES OF DECEDENTS DYING THE EXCLUSION LIMITATION 23 DURING: IS: 24 1998..................................... 100,000 25 1999..................................... 200,000 26 2000..................................... 300,000 27 2001..................................... 400,000 28 2002 OR THEREAFTER....................... 500,000 29 (4) TREATMENT OF CERTAIN INDEBTEDNESS.-- 30 (A) IN GENERAL.--THE EXCLUSION PROVIDED IN PARAGRAPH (1) SHALL NOT 31 APPLY TO THE EXTENT THAT THE LAND IS DEBT-FINANCED PROPERTY. 32 (B) DEFINITIONS.--FOR PURPOSES OF THIS PARAGRAPH-- 33 (I) DEBT-FINANCED PROPERTY.--THE TERM "DEBT-FINANCED PROPERTY" MEANS 34 ANY PROPERTY WITH RESPECT TO WHICH THERE IS AN ACQUISITION INDEBTEDNESS 35 (AS DEFINED IN CLAUSE (II)) ON THE DATE OF THE DECEDENT'S DEATH. 36 (II) ACQUISITION INDEBTEDNESS.--THE TERM "ACQUISITION INDEBTEDNESS" 37 MEANS, WITH RESPECT TO DEBT-FINANCED PROPERTY, THE UNPAID AMOUNT OF-- 38 (I) THE INDEBTEDNESS INCURRED BY THE DONOR IN ACQUIRING SUCH PROPERTY, 39 (II) THE INDEBTEDNESS INCURRED BEFORE THE ACQUISITION OF SUCH PROPERTY 40 IF SUCH INDEBTEDNESS WOULD NOT HAVE BEEN INCURRED BUT FOR SUCH ACQUISI- 41 TION, 42 (III) THE INDEBTEDNESS INCURRED AFTER THE ACQUISITION OF SUCH PROPERTY 43 IF SUCH INDEBTEDNESS WOULD NOT HAVE BEEN INCURRED BUT FOR SUCH ACQUISI- 44 TION AND THE INCURRENCE OF SUCH INDEBTEDNESS WAS REASONABLY FORESEEABLE 45 AT THE TIME OF SUCH ACQUISITION, AND 46 (IV) THE EXTENSION, RENEWAL, OR REFINANCING OF AN ACQUISITION INDEBT- 47 EDNESS. 48 (5) TREATMENT OF RETAINED DEVELOPMENT RIGHT.-- 49 (A) IN GENERAL.--PARAGRAPH (1) SHALL NOT APPLY TO THE VALUE OF ANY 50 DEVELOPMENT RIGHT RETAINED BY THE DONOR IN THE CONVEYANCE OF A QUALIFIED 51 CONSERVATION EASEMENT. 52 (B) TERMINATION OF RETAINED DEVELOPMENT RIGHT.--IF EVERY PERSON IN 53 BEING WHO HAS AN INTEREST (WHETHER OR NOT IN POSSESSION) IN THE LAND 54 EXECUTES AN AGREEMENT TO EXTINGUISH PERMANENTLY SOME OR ALL OF ANY 55 DEVELOPMENT RIGHTS (AS DEFINED IN SUBPARAGRAPH (D)) RETAINED BY THE 56 DONOR ON OR BEFORE THE DATE FOR FILING THE RETURN OF THE TAX IMPOSED BY S. 6359--C 224 1 SECTION 2001, THEN ANY TAX IMPOSED BY SECTION 2001 SHALL BE REDUCED 2 ACCORDINGLY. SUCH AGREEMENT SHALL BE FILED WITH THE RETURN OF THE TAX 3 IMPOSED BY SECTION 2001. THE AGREEMENT SHALL BE IN SUCH FORM AS THE 4 SECRETARY SHALL PRESCRIBE. 5 (C) ADDITIONAL TAX.--ANY FAILURE TO IMPLEMENT THE AGREEMENT DESCRIBED 6 IN SUBPARAGRAPH (B) NOT LATER THAN THE EARLIER OF-- 7 (I) THE DATE WHICH IS 2 YEARS AFTER THE DATE OF THE DECEDENT'S DEATH, 8 OR 9 (II) THE DATE OF THE SALE OF SUCH LAND SUBJECT TO THE QUALIFIED 10 CONSERVATION EASEMENT, 11 SHALL RESULT IN THE IMPOSITION OF AN ADDITIONAL TAX IN THE AMOUNT OF 12 THE TAX WHICH WOULD HAVE BEEN DUE ON THE RETAINED DEVELOPMENT RIGHTS 13 SUBJECT TO SUCH AGREEMENT. SUCH ADDITIONAL TAX SHALL BE DUE AND PAYABLE 14 ON THE LAST DAY OF THE 6TH MONTH FOLLOWING SUCH DATE. 15 (D) DEVELOPMENT RIGHT DEFINED.--FOR PURPOSES OF THIS PARAGRAPH, THE 16 TERM "DEVELOPMENT RIGHT" MEANS ANY RIGHT TO USE THE LAND SUBJECT TO THE 17 QUALIFIED CONSERVATION EASEMENT IN WHICH SUCH RIGHT IS RETAINED FOR ANY 18 COMMERCIAL PURPOSE WHICH IS NOT SUBORDINATE TO AND DIRECTLY SUPPORTIVE 19 OF THE USE OF SUCH LAND AS A FARM FOR FARMING PURPOSES (WITHIN THE MEAN- 20 ING OF SECTION 2032A(E)(5)). 21 (6) ELECTION.--THE ELECTION UNDER THIS SUBSECTION SHALL BE MADE ON OR 22 BEFORE THE DUE DATE (INCLUDING EXTENSIONS) FOR FILING THE RETURN OF TAX 23 IMPOSED BY SECTION 2001 AND SHALL BE MADE ON SUCH RETURN. SUCH AN 24 ELECTION, ONCE MADE, SHALL BE IRREVOCABLE. 25 (7) CALCULATION OF ESTATE TAX DUE.--AN EXECUTOR MAKING THE ELECTION 26 DESCRIBED IN PARAGRAPH (6) SHALL, FOR PURPOSES OF CALCULATING THE AMOUNT 27 OF TAX IMPOSED BY SECTION 2001, INCLUDE THE VALUE OF ANY DEVELOPMENT 28 RIGHT (AS DEFINED IN PARAGRAPH (5)) RETAINED BY THE DONOR IN THE CONVEY- 29 ANCE OF SUCH QUALIFIED CONSERVATION EASEMENT. THE COMPUTATION OF TAX ON 30 ANY RETAINED DEVELOPMENT RIGHT PRESCRIBED IN THIS PARAGRAPH SHALL BE 31 DONE IN SUCH MANNER AND ON SUCH FORMS AS THE SECRETARY SHALL PRESCRIBE. 32 (8) DEFINITIONS.--FOR PURPOSES OF THIS SUBSECTION-- 33 (A) LAND SUBJECT TO A QUALIFIED CONSERVATION EASEMENT.--THE TERM "LAND 34 SUBJECT TO A QUALIFIED CONSERVATION EASEMENT" MEANS LAND-- 35 (I) WHICH IS LOCATED IN THE UNITED STATES OR ANY POSSESSION OF THE 36 UNITED STATES, 37 (II) WHICH WAS OWNED BY THE DECEDENT OR A MEMBER OF THE DECEDENT'S 38 FAMILY AT ALL TIMES DURING THE 3-YEAR PERIOD ENDING ON THE DATE OF THE 39 DECEDENT'S DEATH, AND 40 (III) WITH RESPECT TO WHICH A QUALIFIED CONSERVATION EASEMENT HAS BEEN 41 MADE BY AN INDIVIDUAL DESCRIBED IN SUBPARAGRAPH (C), AS OF THE DATE OF 42 THE ELECTION DESCRIBED IN PARAGRAPH (6). 43 (B) QUALIFIED CONSERVATION EASEMENT.--THE TERM "QUALIFIED CONSERVATION 44 EASEMENT" MEANS A QUALIFIED CONSERVATION CONTRIBUTION (AS DEFINED IN 45 SECTION 170(H)(1)) OF A QUALIFIED REAL PROPERTY INTEREST (AS DEFINED IN 46 SECTION 170(H)(2)(C)), EXCEPT THAT CLAUSE (IV) OF SECTION 170(H)(4)(A) 47 SHALL NOT APPLY, AND THE RESTRICTION ON THE USE OF SUCH INTEREST 48 DESCRIBED IN SECTION 170(H)(2)(C) SHALL INCLUDE A PROHIBITION ON MORE 49 THAN A DE MINIMIS USE FOR A COMMERCIAL RECREATIONAL ACTIVITY. 50 (C) INDIVIDUAL DESCRIBED.--AN INDIVIDUAL IS DESCRIBED IN THIS SUBPARA- 51 GRAPH IF SUCH INDIVIDUAL IS-- 52 (I) THE DECEDENT, 53 (II) A MEMBER OF THE DECEDENT'S FAMILY, 54 (III) THE EXECUTOR OF THE DECEDENT'S ESTATE, OR 55 (IV) THE TRUSTEE OF A TRUST THE CORPUS OF WHICH INCLUDES THE LAND TO 56 BE SUBJECT TO THE QUALIFIED CONSERVATION EASEMENT. S. 6359--C 225 1 (D) MEMBER OF FAMILY.--THE TERM "MEMBER OF THE DECEDENT'S FAMILY" 2 MEANS ANY MEMBER OF THE FAMILY (AS DEFINED IN SECTION 2032A(E)(2)) OF 3 THE DECEDENT. 4 (9) TREATMENT OF EASEMENTS GRANTED AFTER DEATH.--IN ANY CASE IN WHICH 5 THE QUALIFIED CONSERVATION EASEMENT IS GRANTED AFTER THE DATE OF THE 6 DECEDENT'S DEATH AND ON OR BEFORE THE DUE DATE (INCLUDING EXTENSIONS) 7 FOR FILING THE RETURN OF TAX IMPOSED BY SECTION 2001, THE DEDUCTION 8 UNDER SECTION 2055(F) WITH RESPECT TO SUCH EASEMENT SHALL BE ALLOWED TO 9 THE ESTATE BUT ONLY IF NO CHARITABLE DEDUCTION IS ALLOWED UNDER CHAPTER 10 1 TO ANY PERSON WITH RESPECT TO THE GRANT OF SUCH EASEMENT. 11 (10) APPLICATION OF THIS SECTION TO INTERESTS IN PARTNERSHIPS, CORPO- 12 RATIONS, AND TRUSTS.--THIS SECTION SHALL APPLY TO AN INTEREST IN A PART- 13 NERSHIP, CORPORATION, OR TRUST IF AT LEAST 30 PERCENT OF THE ENTITY IS 14 OWNED (DIRECTLY OR INDIRECTLY) BY THE DECEDENT, AS DETERMINED UNDER THE 15 RULES DESCRIBED IN SECTION 2057(E)(3). 16 (D) CROSS REFERENCE.-- 17 FOR EXECUTOR'S RIGHT TO BE FURNISHED ON REQUEST A STATEMENT REGARDING 18 ANY VALUATION MADE BY THE SECRETARY WITHIN THE GROSS ESTATE, SEE SECTION 19 7517. 20 S 2032. ALTERNATE VALUATION. 21 (A) GENERAL.--THE VALUE OF THE GROSS ESTATE MAY BE DETERMINED, IF THE 22 EXECUTOR SO ELECTS, BY VALUING ALL THE PROPERTY INCLUDED IN THE GROSS 23 ESTATE AS FOLLOWS: 24 (1) IN THE CASE OF PROPERTY DISTRIBUTED, SOLD, EXCHANGED, OR OTHERWISE 25 DISPOSED OF, WITHIN 6 MONTHS AFTER THE DECEDENT'S DEATH SUCH PROPERTY 26 SHALL BE VALUED AS OF THE DATE OF DISTRIBUTION, SALE, EXCHANGE, OR OTHER 27 DISPOSITION. 28 (2) IN THE CASE OF PROPERTY NOT DISTRIBUTED, SOLD, EXCHANGED, OR 29 OTHERWISE DISPOSED OF, WITHIN 6 MONTHS AFTER THE DECEDENT'S DEATH SUCH 30 PROPERTY SHALL BE VALUED AS OF THE DATE 6 MONTHS AFTER THE DECEDENT'S 31 DEATH. 32 (3) ANY INTEREST OR ESTATE WHICH IS AFFECTED BY MERE LAPSE OF TIME 33 SHALL BE INCLUDED AT ITS VALUE AS OF THE TIME OF DEATH (INSTEAD OF THE 34 LATER DATE) WITH ADJUSTMENT FOR ANY DIFFERENCE IN ITS VALUE AS OF THE 35 LATER DATE NOT DUE TO MERE LAPSE OF TIME. 36 (B) SPECIAL RULES.--NO DEDUCTION UNDER THIS CHAPTER OF ANY ITEM SHALL 37 BE ALLOWED IF ALLOWANCE FOR SUCH ITEMS IS IN EFFECT GIVEN BY THE ALTER- 38 NATE VALUATION PROVIDED BY THIS SECTION. WHEREVER IN ANY OTHER 39 SUBSECTION OR SECTION OF THIS CHAPTER REFERENCE IS MADE TO THE VALUE OF 40 PROPERTY AT THE TIME OF THE DECEDENT'S DEATH, SUCH REFERENCE SHALL BE 41 DEEMED TO REFER TO THE VALUE OF SUCH PROPERTY USED IN DETERMINING THE 42 VALUE OF THE GROSS ESTATE. IN CASE OF AN ELECTION MADE BY THE EXECUTOR 43 UNDER THIS SECTION, THEN-- 44 (1) FOR PURPOSES OF THE CHARITABLE DEDUCTION UNDER SECTION 2055 OR 45 2106(A)(2), ANY BEQUEST, LEGACY, DEVISE, OR TRANSFER ENUMERATED THEREIN, 46 AND 47 (2) FOR THE PURPOSE OF THE MARITAL DEDUCTION UNDER SECTION 2056, ANY 48 INTEREST IN PROPERTY PASSING TO THE SURVIVING SPOUSE, 49 SHALL BE VALUED AS OF THE DATE OF THE DECEDENT'S DEATH WITH ADJUSTMENT 50 FOR ANY DIFFERENCE IN VALUE (NOT DUE TO MERE LAPSE OF TIME OR THE OCCUR- 51 RENCE OR NONOCCURRENCE OF A CONTINGENCY) OF THE PROPERTY AS OF THE DATE 52 6 MONTHS AFTER THE DECEDENT'S DEATH (SUBSTITUTING, IN THE CASE OF PROP- 53 ERTY DISTRIBUTED BY THE EXECUTOR OR TRUSTEE, OR SOLD, EXCHANGED, OR 54 OTHERWISE DISPOSED OF, DURING SUCH 6-MONTH PERIOD, THE DATE THEREOF). S. 6359--C 226 1 (C) ELECTION MUST DECREASE GROSS ESTATE AND ESTATE TAX.--NO ELECTION 2 MAY BE MADE UNDER THIS SECTION WITH RESPECT TO AN ESTATE UNLESS SUCH 3 ELECTION WILL DECREASE-- 4 (1) THE VALUE OF THE GROSS ESTATE, AND 5 (2) THE SUM OF THE TAX IMPOSED BY THIS CHAPTER AND THE TAX IMPOSED BY 6 CHAPTER 13 WITH RESPECT TO PROPERTY INCLUDIBLE IN THE DECEDENT'S GROSS 7 ESTATE (REDUCED BY CREDITS ALLOWABLE AGAINST SUCH TAXES). 8 (D) ELECTION.-- 9 (1) IN GENERAL.--THE ELECTION PROVIDED FOR IN THIS SECTION SHALL BE 10 MADE BY THE EXECUTOR ON THE RETURN OF THE TAX IMPOSED BY THIS CHAPTER. 11 SUCH ELECTION, ONCE MADE, SHALL BE IRREVOCABLE. 12 (2) EXCEPTION.--NO ELECTION MAY BE MADE UNDER THIS SECTION IF SUCH 13 RETURN IS FILED MORE THAN 1 YEAR AFTER THE TIME PRESCRIBED BY LAW 14 (INCLUDING EXTENSIONS) FOR FILING SUCH RETURN. 15 S 2032A. VALUATION OF CERTAIN FARM, ETC., REAL PROPERTY. 16 (A) VALUE BASED ON USE UNDER WHICH PROPERTY QUALIFIES.-- 17 (1) GENERAL RULE.--IF-- 18 (A) THE DECEDENT WAS (AT THE TIME OF HIS DEATH) A CITIZEN OR RESIDENT 19 OF THE UNITED STATES, AND 20 (B) THE EXECUTOR ELECTS THE APPLICATION OF THIS SECTION AND FILES THE 21 AGREEMENT REFERRED TO IN SUBSECTION (D)(2), 22 THEN, FOR PURPOSES OF THIS CHAPTER, THE VALUE OF QUALIFIED REAL PROP- 23 ERTY SHALL BE ITS VALUE FOR THE USE UNDER WHICH IT QUALIFIES, UNDER 24 SUBSECTION (B), AS QUALIFIED REAL PROPERTY. 25 (2) LIMITATION ON AGGREGATE REDUCTION IN FAIR MARKET VALUE.--THE 26 AGGREGATE DECREASE IN THE VALUE OF QUALIFIED REAL PROPERTY TAKEN INTO 27 ACCOUNT FOR PURPOSES OF THIS CHAPTER WHICH RESULTS FROM THE APPLICATION 28 OF PARAGRAPH (1) WITH RESPECT TO ANY DECEDENT SHALL NOT EXCEED $750,000. 29 (3) INFLATION ADJUSTMENT.--IN THE CASE OF ESTATES OF DECEDENTS DYING 30 IN A CALENDAR YEAR AFTER 1998, THE $750,000 AMOUNT CONTAINED IN PARA- 31 GRAPH (2) SHALL BE INCREASED BY AN AMOUNT EQUAL TO-- 32 (A) $750,000, MULTIPLIED BY 33 (B) THE COST-OF-LIVING ADJUSTMENT DETERMINED UNDER SECTION 1(F)(3) FOR 34 SUCH CALENDAR YEAR BY SUBSTITUTING "CALENDAR YEAR 1997" FOR "CALENDAR 35 YEAR 1992" IN SUBPARAGRAPH (B) THEREOF. 36 IF ANY AMOUNT AS ADJUSTED UNDER THE PRECEDING SENTENCE IS NOT A MULTI- 37 PLE OF $10,000, SUCH AMOUNT SHALL BE ROUNDED TO THE NEXT LOWEST MULTIPLE 38 OF $10,000. 39 (B) QUALIFIED REAL PROPERTY.-- 40 (1) IN GENERAL.--FOR PURPOSES OF THIS SECTION, THE TERM "QUALIFIED 41 REAL PROPERTY" MEANS REAL PROPERTY LOCATED IN THE UNITED STATES WHICH 42 WAS ACQUIRED FROM OR PASSED FROM THE DECEDENT TO A QUALIFIED HEIR OF THE 43 DECEDENT AND WHICH, ON THE DATE OF THE DECEDENT'S DEATH, WAS BEING USED 44 FOR A QUALIFIED USE BY THE DECEDENT OR A MEMBER OF THE DECEDENT'S FAMI- 45 LY, BUT ONLY IF-- 46 (A) 50 PERCENT OR MORE OF THE ADJUSTED VALUE OF THE GROSS ESTATE 47 CONSISTS OF THE ADJUSTED VALUE OF REAL OR PERSONAL PROPERTY WHICH-- 48 (I) ON THE DATE OF THE DECEDENT'S DEATH, WAS BEING USED FOR A QUALI- 49 FIED USE BY THE DECEDENT OR A MEMBER OF THE DECEDENT'S FAMILY, AND 50 (II) WAS ACQUIRED FROM OR PASSED FROM THE DECEDENT TO A QUALIFIED HEIR 51 OF THE DECEDENT. 52 (B) 25 PERCENT OR MORE OF THE ADJUSTED VALUE OF THE GROSS ESTATE 53 CONSISTS OF THE ADJUSTED VALUE OF REAL PROPERTY WHICH MEETS THE REQUIRE- 54 MENTS OF SUBPARAGRAPHS (A)(II) AND (C), 55 (C) DURING THE 8-YEAR PERIOD ENDING ON THE DATE OF THE DECEDENT'S 56 DEATH THERE HAVE BEEN PERIODS AGGREGATING 5 YEARS OR MORE DURING WHICH-- S. 6359--C 227 1 (I) SUCH REAL PROPERTY WAS OWNED BY THE DECEDENT OR A MEMBER OF THE 2 DECEDENT'S FAMILY AND USED FOR A QUALIFIED USE BY THE DECEDENT OR A 3 MEMBER OF THE DECEDENT'S FAMILY, AND 4 (II) THERE WAS MATERIAL PARTICIPATION BY THE DECEDENT OR A MEMBER OF 5 THE DECEDENT'S FAMILY IN THE OPERATION OF THE FARM OR OTHER BUSINESS, 6 AND 7 (D) SUCH REAL PROPERTY IS DESIGNATED IN THE AGREEMENT REFERRED TO IN 8 SUBSECTION (D)(2). 9 (2) QUALIFIED USE.--FOR PURPOSES OF THIS SECTION, THE TERM "QUALIFIED 10 USE" MEANS THE DEVOTION OF THE PROPERTY TO ANY OF THE FOLLOWING: 11 (A) USE AS A FARM FOR FARMING PURPOSES, OR 12 (B) USE IN A TRADE OR BUSINESS OTHER THAN THE TRADE OR BUSINESS OF 13 FARMING. 14 (3) ADJUSTED VALUE.--FOR PURPOSES OF PARAGRAPH (1), THE TERM "ADJUSTED 15 VALUE" MEANS-- 16 (A) IN THE CASE OF THE GROSS ESTATE, THE VALUE OF THE GROSS ESTATE FOR 17 PURPOSES OF THIS CHAPTER (DETERMINED WITHOUT REGARD TO THIS SECTION), 18 REDUCED BY ANY AMOUNTS ALLOWABLE AS A DEDUCTION UNDER PARAGRAPH (4) OF 19 SECTION 2053(A), OR 20 (B) IN THE CASE OF ANY REAL OR PERSONAL PROPERTY, THE VALUE OF SUCH 21 PROPERTY FOR PURPOSES OF THIS CHAPTER (DETERMINED WITHOUT REGARD TO THIS 22 SECTION), REDUCED BY ANY AMOUNTS ALLOWABLE AS A DEDUCTION IN RESPECT OF 23 SUCH PROPERTY UNDER PARAGRAPH (4) OF SECTION 2053(A). 24 (4) DECEDENTS WHO ARE RETIRED OR DISABLED.-- 25 (A) IN GENERAL.--IF, ON THE DATE OF THE DECEDENT'S DEATH, THE REQUIRE- 26 MENTS OF PARAGRAPH (1)(C)(II) WITH RESPECT TO THE DECEDENT FOR ANY PROP- 27 ERTY ARE NOT MET, AND THE DECEDENT-- 28 (I) WAS RECEIVING OLD-AGE BENEFITS UNDER TITLE II OF THE SOCIAL SECU- 29 RITY ACT FOR A CONTINUOUS PERIOD ENDING ON SUCH DATE, OR 30 (II) WAS DISABLED FOR A CONTINUOUS PERIOD ENDING ON SUCH DATE, 31 THEN PARAGRAPH (1)(C)(II) SHALL BE APPLIED WITH RESPECT TO SUCH PROP- 32 ERTY BY SUBSTITUTING "THE DATE ON WHICH THE LONGER OF SUCH CONTINUOUS 33 PERIODS BEGAN" FOR "THE DATE OF THE DECEDENT'S DEATH" IN PARAGRAPH 34 (1)(C). 35 (B) DISABLED DEFINED.--FOR PURPOSES OF SUBPARAGRAPH (A), AN INDIVIDUAL 36 SHALL BE DISABLED IF SUCH INDIVIDUAL HAS A MENTAL OR PHYSICAL IMPAIRMENT 37 WHICH RENDERS HIM UNABLE TO MATERIALLY PARTICIPATE IN THE OPERATION OF 38 THE FARM OR OTHER BUSINESS. 39 (C) COORDINATION WITH RECAPTURE.--FOR PURPOSES OF SUBSECTION 40 (C)(6)(B)(I), IF THE REQUIREMENTS OF PARAGRAPH (1)(C)(II) ARE MET WITH 41 RESPECT TO ANY DECEDENT BY REASON OF SUBPARAGRAPH (A), THE PERIOD ENDING 42 ON THE DATE ON WHICH THE CONTINUOUS PERIOD TAKEN INTO ACCOUNT UNDER 43 SUBPARAGRAPH (A) BEGAN SHALL BE TREATED AS THE PERIOD IMMEDIATELY BEFORE 44 THE DECEDENT'S DEATH. 45 (5) SPECIAL RULES FOR SURVIVING SPOUSES.-- 46 (A) IN GENERAL.--IF PROPERTY IS QUALIFIED REAL PROPERTY WITH RESPECT 47 TO A DECEDENT (HEREINAFTER IN THIS PARAGRAPH REFERRED TO AS THE "FIRST 48 DECEDENT") AND SUCH PROPERTY WAS ACQUIRED FROM OR PASSED FROM THE FIRST 49 DECEDENT TO THE SURVIVING SPOUSE OF THE FIRST DECEDENT, FOR PURPOSES OF 50 APPLYING THIS SUBSECTION AND SUBSECTION (C) IN THE CASE OF THE ESTATE OF 51 SUCH SURVIVING SPOUSE, ACTIVE MANAGEMENT OF THE FARM OR OTHER BUSINESS 52 BY THE SURVIVING SPOUSE SHALL BE TREATED AS MATERIAL PARTICIPATION BY 53 SUCH SURVIVING SPOUSE IN THE OPERATION OF SUCH FARM OR BUSINESS. 54 (B) SPECIAL RULE.--FOR THE PURPOSES OF SUBPARAGRAPH (A), THE DETERMI- 55 NATION OF WHETHER PROPERTY IS QUALIFIED REAL PROPERTY WITH RESPECT TO 56 THE FIRST DECEDENT SHALL BE MADE WITHOUT REGARD TO SUBPARAGRAPH (D) OF S. 6359--C 228 1 PARAGRAPH (1) AND WITHOUT REGARD TO WHETHER AN ELECTION UNDER THIS 2 SECTION WAS MADE. 3 (C) COORDINATION WITH PARAGRAPH (4).--IN ANY CASE IN WHICH TO DO SO 4 WILL ENABLE THE REQUIREMENTS OF PARAGRAPH (1)(C)(II) TO BE MET WITH 5 RESPECT TO THE SURVIVING SPOUSE, THIS SUBSECTION AND SUBSECTION (C) 6 SHALL BE APPLIED BY TAKING INTO ACCOUNT ANY APPLICATION OF PARAGRAPH 7 (4). 8 (C) TAX TREATMENT OF DISPOSITIONS AND FAILURES TO USE FOR QUALIFIED 9 USE.-- 10 (1) IMPOSITION OF ADDITIONAL ESTATE TAX.--IF, WITHIN 10 YEARS AFTER 11 THE DECEDENT'S DEATH AND BEFORE THE DEATH OF THE QUALIFIED HEIR-- 12 (A) THE QUALIFIED HEIR DISPOSES OF ANY INTEREST IN QUALIFIED REAL 13 PROPERTY (OTHER THAN BY A DISPOSITION TO A MEMBER OF HIS FAMILY), OR 14 (B) THE QUALIFIED HEIR CEASES TO USE FOR THE QUALIFIED USE THE QUALI- 15 FIED REAL PROPERTY WHICH WAS ACQUIRED (OR PASSED) FROM THE DECEDENT, 16 THEN, THERE IS HEREBY IMPOSED AN ADDITIONAL ESTATE TAX. 17 (2) AMOUNT OF ADDITIONAL TAX.-- 18 (A) IN GENERAL.--THE AMOUNT OF THE ADDITIONAL TAX IMPOSED BY PARAGRAPH 19 (1) WITH RESPECT TO ANY INTEREST SHALL BE THE AMOUNT EQUAL TO THE LESSER 20 OF-- 21 (I) THE ADJUSTED TAX DIFFERENCE ATTRIBUTABLE TO SUCH INTEREST, OR 22 (II) THE EXCESS OF THE AMOUNT REALIZED WITH RESPECT TO THE INTEREST 23 (OR, IN ANY CASE OTHER THAN A SALE OR EXCHANGE AT ARM'S LENGTH, THE FAIR 24 MARKET VALUE OF THE INTEREST) OVER THE VALUE OF THE INTEREST DETERMINED 25 UNDER SUBSECTION (A). 26 (B) ADJUSTED TAX DIFFERENCE ATTRIBUTABLE TO INTEREST.--FOR PURPOSES OF 27 SUBPARAGRAPH (A), THE ADJUSTED TAX DIFFERENCE ATTRIBUTABLE TO AN INTER- 28 EST IS THE AMOUNT WHICH BEARS THE SAME RATIO TO THE ADJUSTED TAX DIFFER- 29 ENCE WITH RESPECT TO THE ESTATE (DETERMINED UNDER SUBPARAGRAPH (C)) AS-- 30 (I) THE EXCESS OF THE VALUE OF SUCH INTEREST FOR PURPOSES OF THIS 31 CHAPTER (DETERMINED WITHOUT REGARD TO SUBSECTION (A)) OVER THE VALUE OF 32 SUCH INTEREST DETERMINED UNDER SUBSECTION (A), BEARS TO 33 (II) A SIMILAR EXCESS DETERMINED FOR ALL QUALIFIED REAL PROPERTY. 34 (C) ADJUSTED TAX DIFFERENCE WITH RESPECT TO THE ESTATE.--FOR PURPOSES 35 OF SUBPARAGRAPH (B), THE TERM "ADJUSTED TAX DIFFERENCE WITH RESPECT TO 36 THE ESTATE" MEANS THE EXCESS OF WHAT WOULD HAVE BEEN THE ESTATE TAX 37 LIABILITY BUT FOR SUBSECTION (A) OVER THE ESTATE TAX LIABILITY. FOR 38 PURPOSES OF THIS SUBPARAGRAPH, THE TERM "ESTATE TAX LIABILITY" MEANS THE 39 TAX IMPOSED BY SECTION 2001 REDUCED BY THE CREDITS ALLOWABLE AGAINST 40 SUCH TAX. 41 (D) PARTIAL DISPOSITIONS.--FOR PURPOSES OF THIS PARAGRAPH, WHERE THE 42 QUALIFIED HEIR DISPOSES OF A PORTION OF THE INTEREST ACQUIRED BY (OR 43 PASSING TO) SUCH HEIR (OR A PREDECESSOR QUALIFIED HEIR) OR THERE IS A 44 CESSATION OF USE OF SUCH A PORTION-- 45 (I) THE VALUE DETERMINED UNDER SUBSECTION (A) TAKEN INTO ACCOUNT UNDER 46 SUBPARAGRAPH (A)(II) WITH RESPECT TO SUCH PORTION SHALL BE ITS PRO RATA 47 SHARE OF SUCH VALUE OF SUCH INTEREST, AND 48 (II) THE ADJUSTED TAX DIFFERENCE ATTRIBUTABLE TO THE INTEREST TAKEN 49 INTO ACCOUNT WITH RESPECT TO THE TRANSACTION INVOLVING THE SECOND OR ANY 50 SUCCEEDING PORTION SHALL BE REDUCED BY THE AMOUNT OF THE TAX IMPOSED BY 51 THIS SUBSECTION WITH RESPECT TO ALL PRIOR TRANSACTIONS INVOLVING 52 PORTIONS OF SUCH INTEREST. 53 (E) SPECIAL RULE FOR DISPOSITION OF TIMBER.--IN THE CASE OF QUALIFIED 54 WOODLAND TO WHICH AN ELECTION UNDER SUBSECTION (E)(13)(A) APPLIES, IF 55 THE QUALIFIED HEIR DISPOSES OF (OR SEVERS) ANY STANDING TIMBER ON SUCH 56 QUALIFIED WOODLAND-- S. 6359--C 229 1 (I) SUCH DISPOSITION (OR SEVERANCE) SHALL BE TREATED AS A DISPOSITION 2 OF A PORTION OF THE INTEREST OF THE QUALIFIED HEIR IN SUCH PROPERTY, AND 3 (II) THE AMOUNT OF THE ADDITIONAL TAX IMPOSED BY PARAGRAPH (1) WITH 4 RESPECT TO SUCH DISPOSITION SHALL BE AN AMOUNT EQUAL TO THE LESSER OF-- 5 (I) THE AMOUNT REALIZED ON SUCH DISPOSITION (OR, IN ANY CASE OTHER 6 THAN A SALE OR EXCHANGE AT ARM'S LENGTH, THE FAIR MARKET VALUE OF THE 7 PORTION OF THE INTEREST DISPOSED OR SEVERED), OR 8 (II) THE AMOUNT OF ADDITIONAL TAX DETERMINED UNDER THIS PARAGRAPH 9 (WITHOUT REGARD TO THIS SUBPARAGRAPH) IF THE ENTIRE INTEREST OF THE 10 QUALIFIED HEIR IN THE QUALIFIED WOODLAND HAD BEEN DISPOSED OF, LESS THE 11 SUM OF THE AMOUNT OF THE ADDITIONAL TAX IMPOSED WITH RESPECT TO ALL 12 PRIOR TRANSACTIONS INVOLVING SUCH WOODLAND TO WHICH THIS SUBPARAGRAPH 13 APPLIED. 14 FOR PURPOSES OF THE PRECEDING SENTENCE, THE DISPOSITION OF A RIGHT TO 15 SEVER SHALL BE TREATED AS THE DISPOSITION OF THE STANDING TIMBER. THE 16 AMOUNT OF ADDITIONAL TAX IMPOSED UNDER PARAGRAPH (1) IN ANY CASE IN 17 WHICH A QUALIFIED HEIR DISPOSES OF HIS ENTIRE INTEREST IN THE QUALIFIED 18 WOODLAND SHALL BE REDUCED BY ANY AMOUNT DETERMINED UNDER THIS SUBPARA- 19 GRAPH WITH RESPECT TO SUCH WOODLAND. 20 (3) ONLY 1 ADDITIONAL TAX IMPOSED WITH RESPECT TO ANY 1 PORTION.--IN 21 THE CASE OF AN INTEREST ACQUIRED FROM (OR PASSING FROM) ANY DECEDENT, IF 22 SUBPARAGRAPH (A) OR (B) OF PARAGRAPH (1) APPLIES TO ANY PORTION OF AN 23 INTEREST, SUBPARAGRAPH (B) OR (A), AS THE CASE MAY BE, OF PARAGRAPH (1) 24 SHALL NOT APPLY WITH RESPECT TO THE SAME PORTION OF SUCH INTEREST. 25 (4) DUE DATE.--THE ADDITIONAL TAX IMPOSED BY THIS SUBSECTION SHALL 26 BECOME DUE AND PAYABLE ON THE DAY WHICH IS 6 MONTHS AFTER THE DATE OF 27 THE DISPOSITION OR CESSATION REFERRED TO IN PARAGRAPH (1). 28 (5) LIABILITY FOR TAX; FURNISHING OF BOND.--THE QUALIFIED HEIR SHALL 29 BE PERSONALLY LIABLE FOR THE ADDITIONAL TAX IMPOSED BY THIS SUBSECTION 30 WITH RESPECT TO HIS INTEREST UNLESS THE HEIR HAS FURNISHED BOND WHICH 31 MEETS THE REQUIREMENTS OF SUBSECTION (E)(11). 32 (6) CESSATION OF QUALIFIED USE.--FOR PURPOSES OF PARAGRAPH (1)(B), 33 REAL PROPERTY SHALL CEASE TO BE USED FOR THE QUALIFIED USE IF-- 34 (A) SUCH PROPERTY CEASES TO BE USED FOR THE QUALIFIED USE SET FORTH IN 35 SUBPARAGRAPH (A) OR (B) OF SUBSECTION (B)(2) UNDER WHICH THE PROPERTY 36 QUALIFIED UNDER SUBSECTION (B), OR 37 (B) DURING ANY PERIOD OF 8 YEARS ENDING AFTER THE DATE OF THE 38 DECEDENT'S DEATH AND BEFORE THE DATE OF THE DEATH OF THE QUALIFIED HEIR, 39 THERE HAD BEEN PERIODS AGGREGATING MORE THAN 3 YEARS DURING WHICH-- 40 (I) IN THE CASE OF PERIODS DURING WHICH THE PROPERTY WAS HELD BY THE 41 DECEDENT, THERE WAS NO MATERIAL PARTICIPATION BY THE DECEDENT OR ANY 42 MEMBER OF HIS FAMILY IN THE OPERATION OF THE FARM OR OTHER BUSINESS, AND 43 (II) IN THE CASE OF PERIODS DURING WHICH THE PROPERTY WAS HELD BY ANY 44 QUALIFIED HEIR, THERE WAS NO MATERIAL PARTICIPATION BY SUCH QUALIFIED 45 HEIR OR ANY MEMBER OF HIS FAMILY IN THE OPERATION OF THE FARM OR OTHER 46 BUSINESS. 47 (7) SPECIAL RULES.-- 48 (A) NO TAX IF USE BEGINS WITHIN 2 YEARS.--IF THE DATE ON WHICH THE 49 QUALIFIED HEIR BEGINS TO USE THE QUALIFIED REAL PROPERTY (HEREINAFTER IN 50 THIS SUBPARAGRAPH REFERRED TO AS THE COMMENCEMENT DATE) IS BEFORE THE 51 DATE 2 YEARS AFTER THE DECEDENT'S DEATH-- 52 (I) NO TAX SHALL BE IMPOSED UNDER PARAGRAPH (1) BY REASON OF THE FAIL- 53 URE BY THE QUALIFIED HEIR TO SO USE SUCH PROPERTY BEFORE THE COMMENCE- 54 MENT DATE, AND 55 (II) THE 10-YEAR PERIOD UNDER PARAGRAPH (1) SHALL BE EXTENDED BY THE 56 PERIOD AFTER THE DECEDENT'S DEATH AND BEFORE THE COMMENCEMENT DATE. S. 6359--C 230 1 (B) ACTIVE MANAGEMENT BY ELIGIBLE QUALIFIED HEIR TREATED AS MATERIAL 2 PARTICIPATION.--FOR PURPOSES OF PARAGRAPH (6)(B)(II), THE ACTIVE MANAGE- 3 MENT OF A FARM OR OTHER BUSINESS BY-- 4 (I) AN ELIGIBLE QUALIFIED HEIR, OR 5 (II) A FIDUCIARY OF AN ELIGIBLE QUALIFIED HEIR DESCRIBED IN CLAUSE 6 (II) OR (III) OF SUBPARAGRAPH (C), 7 SHALL BE TREATED AS MATERIAL PARTICIPATION BY SUCH ELIGIBLE QUALIFIED 8 HEIR IN THE OPERATION OF SUCH FARM OR BUSINESS. IN THE CASE OF AN ELIGI- 9 BLE QUALIFIED HEIR DESCRIBED IN CLAUSE (II), (III), OR (IV) OF SUBPARA- 10 GRAPH (C), THE PRECEDING SENTENCE SHALL APPLY ONLY DURING PERIODS DURING 11 WHICH SUCH HEIR MEETS THE REQUIREMENTS OF SUCH CLAUSE. 12 (C) ELIGIBLE QUALIFIED HEIR.--FOR PURPOSES OF THIS PARAGRAPH, THE TERM 13 "ELIGIBLE QUALIFIED HEIR" MEANS A QUALIFIED HEIR WHO-- 14 (I) IS THE SURVIVING SPOUSE OF THE DECEDENT, 15 (II) HAS NOT ATTAINED THE AGE OF 21, 16 (III) IS DISABLED (WITHIN THE MEANING OF SUBSECTION (B)(4)(B)), OR 17 (IV) IS A STUDENT. 18 (D) STUDENT.--FOR PURPOSES OF SUBPARAGRAPH (C), AN INDIVIDUAL SHALL BE 19 TREATED AS A STUDENT WITH RESPECT TO PERIODS DURING ANY CALENDAR YEAR IF 20 (AND ONLY IF) SUCH INDIVIDUAL IS A STUDENT (WITHIN THE MEANING OF 21 SECTION 152(F)(2)) FOR SUCH CALENDAR YEAR. 22 (E) CERTAIN RENTS TREATED AS QUALIFIED USE.--FOR PURPOSES OF THIS 23 SUBSECTION, A SURVIVING SPOUSE OR LINEAL DESCENDANT OF THE DECEDENT 24 SHALL NOT BE TREATED AS FAILING TO USE QUALIFIED REAL PROPERTY IN A 25 QUALIFIED USE SOLELY BECAUSE SUCH SPOUSE OR DESCENDANT RENTS SUCH PROP- 26 ERTY TO A MEMBER OF THE FAMILY OF SUCH SPOUSE OR DESCENDANT ON A NET 27 CASH BASIS. FOR PURPOSES OF THE PRECEDING SENTENCE, A LEGALLY ADOPTED 28 CHILD OF AN INDIVIDUAL SHALL BE TREATED AS THE CHILD OF SUCH INDIVIDUAL 29 BY BLOOD. 30 (8) QUALIFIED CONSERVATION CONTRIBUTION IS NOT A DISPOSITION.--A QUAL- 31 IFIED CONSERVATION CONTRIBUTION (AS DEFINED IN SECTION 170(H)) BY GIFT 32 OR OTHERWISE SHALL NOT BE DEEMED A DISPOSITION UNDER SUBSECTION 33 (C)(1)(A). 34 (D) ELECTION; AGREEMENT.-- 35 (1) ELECTION.--THE ELECTION UNDER THIS SECTION SHALL BE MADE ON THE 36 RETURN OF THE TAX IMPOSED BY SECTION 2001. SUCH ELECTION SHALL BE MADE 37 IN SUCH MANNER AS THE SECRETARY SHALL BY REGULATIONS PRESCRIBE. SUCH AN 38 ELECTION, ONCE MADE, SHALL BE IRREVOCABLE. 39 (2) AGREEMENT.--THE AGREEMENT REFERRED TO IN THIS PARAGRAPH IS A WRIT- 40 TEN AGREEMENT SIGNED BY EACH PERSON IN BEING WHO HAS AN INTEREST (WHETH- 41 ER OR NOT IN POSSESSION) IN ANY PROPERTY DESIGNATED IN SUCH AGREEMENT 42 CONSENTING TO THE APPLICATION OF SUBSECTION (C) WITH RESPECT TO SUCH 43 PROPERTY. 44 (3) MODIFICATION OF ELECTION AND AGREEMENT TO BE PERMITTED.--THE 45 SECRETARY SHALL PRESCRIBE PROCEDURES WHICH PROVIDE THAT IN ANY CASE IN 46 WHICH THE EXECUTOR MAKES AN ELECTION UNDER PARAGRAPH (1) (AND SUBMITS 47 THE AGREEMENT REFERRED TO IN PARAGRAPH (2)) WITHIN THE TIME PRESCRIBED 48 THEREFOR, BUT-- 49 (A) THE NOTICE OF ELECTION, AS FILED, DOES NOT CONTAIN ALL REQUIRED 50 INFORMATION, OR 51 (B) SIGNATURES OF 1 OR MORE PERSONS REQUIRED TO ENTER INTO THE AGREE- 52 MENT DESCRIBED IN PARAGRAPH (2) ARE NOT INCLUDED ON THE AGREEMENT AS 53 FILED, OR THE AGREEMENT DOES NOT CONTAIN ALL REQUIRED INFORMATION, 54 THE EXECUTOR WILL HAVE A REASONABLE PERIOD OF TIME (NOT EXCEEDING 90 55 DAYS) AFTER NOTIFICATION OF SUCH FAILURES TO PROVIDE SUCH INFORMATION OR 56 SIGNATURES. S. 6359--C 231 1 (E) DEFINITIONS; SPECIAL RULES.--FOR PURPOSES OF THIS SECTION-- 2 (1) QUALIFIED HEIR.--THE TERM "QUALIFIED HEIR" MEANS, WITH RESPECT TO 3 ANY PROPERTY, A MEMBER OF THE DECEDENT'S FAMILY WHO ACQUIRED SUCH PROP- 4 ERTY (OR TO WHOM SUCH PROPERTY PASSED) FROM THE DECEDENT. IF A QUALIFIED 5 HEIR DISPOSES OF ANY INTEREST IN QUALIFIED REAL PROPERTY TO ANY MEMBER 6 OF HIS FAMILY, SUCH MEMBER SHALL THEREAFTER BE TREATED AS THE QUALIFIED 7 HEIR WITH RESPECT TO SUCH INTEREST. 8 (2) MEMBER OF FAMILY.--THE TERM "MEMBER OF THE FAMILY" MEANS, WITH 9 RESPECT TO ANY INDIVIDUAL, ONLY-- 10 (A) AN ANCESTOR OF SUCH INDIVIDUAL, 11 (B) THE SPOUSE OF SUCH INDIVIDUAL, 12 (C) A LINEAL DESCENDANT OF SUCH INDIVIDUAL, OF SUCH INDIVIDUAL'S 13 SPOUSE, OR OF A PARENT OF SUCH INDIVIDUAL, OR 14 (D) THE SPOUSE OF ANY LINEAL DESCENDANT DESCRIBED IN SUBPARAGRAPH (C). 15 FOR PURPOSES OF THE PRECEDING SENTENCE, A LEGALLY ADOPTED CHILD OF AN 16 INDIVIDUAL SHALL BE TREATED AS THE CHILD OF SUCH INDIVIDUAL BY BLOOD. 17 (3) CERTAIN REAL PROPERTY INCLUDED.--IN THE CASE OF REAL PROPERTY 18 WHICH MEETS THE REQUIREMENTS OF SUBPARAGRAPH (C) OF SUBSECTION (B)(1), 19 RESIDENTIAL BUILDINGS AND RELATED IMPROVEMENTS ON SUCH REAL PROPERTY 20 OCCUPIED ON A REGULAR BASIS BY THE OWNER OR LESSEE OF SUCH REAL PROPERTY 21 OR BY PERSONS EMPLOYED BY SUCH OWNER OR LESSEE FOR THE PURPOSE OF OPER- 22 ATING OR MAINTAINING SUCH REAL PROPERTY, AND ROADS, BUILDINGS, AND OTHER 23 STRUCTURES AND IMPROVEMENTS FUNCTIONALLY RELATED TO THE QUALIFIED USE 24 SHALL BE TREATED AS REAL PROPERTY DEVOTED TO THE QUALIFIED USE. 25 (4) FARM.--THE TERM "FARM" INCLUDES STOCK, DAIRY, POULTRY, FRUIT, 26 FURBEARING ANIMAL, AND TRUCK FARMS, PLANTATIONS, RANCHES, NURSERIES, 27 RANGES, GREENHOUSES OR OTHER SIMILAR STRUCTURES USED PRIMARILY FOR THE 28 RAISING OF AGRICULTURAL OR HORTICULTURAL COMMODITIES, AND ORCHARDS AND 29 WOODLANDS. 30 (5) FARMING PURPOSES.--THE TERM "FARMING PURPOSES" MEANS- 31 (A) CULTIVATING THE SOIL OR RAISING OR HARVESTING ANY AGRICULTURAL OR 32 HORTICULTURAL COMMODITY (INCLUDING THE RAISING, SHEARING, FEEDING, 33 CARING FOR, TRAINING, AND MANAGEMENT OF ANIMALS) ON A FARM; 34 (B) HANDLING, DRYING, PACKING, GRADING, OR STORING ON A FARM ANY AGRI- 35 CULTURAL OR HORTICULTURAL COMMODITY IN ITS UNMANUFACTURED STATE, BUT 36 ONLY IF THE OWNER, TENANT, OR OPERATOR OF THE FARM REGULARLY PRODUCES 37 MORE THAN ONE-HALF OF THE COMMODITY SO TREATED; AND 38 (C)(I) THE PLANTING, CULTIVATING, CARING FOR, OR CUTTING OF TREES, OR 39 (II) THE PREPARATION (OTHER THAN MILLING) OF TREES FOR MARKET. 40 (6) MATERIAL PARTICIPATION.--MATERIAL PARTICIPATION SHALL BE DETER- 41 MINED IN A MANNER SIMILAR TO THE MANNER USED FOR PURPOSES OF PARAGRAPH 42 (1) OF SECTION 1402(A) (RELATING TO NET EARNINGS FROM SELF-EMPLOYMENT). 43 (7) METHOD OF VALUING FARMS.-- 44 (A) IN GENERAL.--EXCEPT AS PROVIDED IN SUBPARAGRAPH (B), THE VALUE OF 45 A FARM FOR FARMING PURPOSES SHALL BE DETERMINED BY DIVIDING-- 46 (I) THE EXCESS OF THE AVERAGE ANNUAL GROSS CASH RENTAL FOR COMPARABLE 47 LAND USED FOR FARMING PURPOSES AND LOCATED IN THE LOCALITY OF SUCH FARM 48 OVER THE AVERAGE ANNUAL STATE AND LOCAL REAL ESTATE TAXES FOR SUCH 49 COMPARABLE LAND, BY 50 (II) THE AVERAGE ANNUAL EFFECTIVE INTEREST RATE FOR ALL NEW FEDERAL 51 LAND BANK LOANS. 52 FOR PURPOSES OF THE PRECEDING SENTENCE, EACH AVERAGE ANNUAL COMPUTA- 53 TION SHALL BE MADE ON THE BASIS OF THE 5 MOST RECENT CALENDAR YEARS 54 ENDING BEFORE THE DATE OF THE DECEDENT'S DEATH. 55 (B) VALUE BASED ON NET SHARE RENTAL IN CERTAIN CASES.-- S. 6359--C 232 1 (I) IN GENERAL.--IF THERE IS NO COMPARABLE LAND FROM WHICH THE AVERAGE 2 ANNUAL GROSS CASH RENTAL MAY BE DETERMINED BUT THERE IS COMPARABLE LAND 3 FROM WHICH THE AVERAGE NET SHARE RENTAL MAY BE DETERMINED, SUBPARAGRAPH 4 (A)(I) SHALL BE APPLIED BY SUBSTITUTING "AVERAGE ANNUAL NET SHARE 5 RENTAL" FOR "AVERAGE ANNUAL GROSS CASH RENTAL". 6 (II) NET SHARE RENTAL.--FOR PURPOSES OF THIS PARAGRAPH, THE TERM "NET 7 SHARE RENTAL" MEANS THE EXCESS OF-- 8 (I) THE VALUE OF THE PRODUCE RECEIVED BY THE LESSOR OF THE LAND ON 9 WHICH SUCH PRODUCE IS GROWN, OVER 10 (II) THE CASH OPERATING EXPENSES OF GROWING SUCH PRODUCE WHICH, UNDER 11 THE LEASE, ARE PAID BY THE LESSOR. 12 (C) EXCEPTION.--THE FORMULA PROVIDED BY SUBPARAGRAPH (A) SHALL NOT BE 13 USED-- 14 (I) WHERE IT IS ESTABLISHED THAT THERE IS NO COMPARABLE LAND FROM 15 WHICH THE AVERAGE ANNUAL GROSS CASH RENTAL MAY BE DETERMINED, OR 16 (II) WHERE THE EXECUTOR ELECTS TO HAVE THE VALUE OF THE FARM FOR FARM- 17 ING PURPOSES DETERMINED AND THAT THERE IS NO COMPARABLE LAND FROM WHICH 18 THE AVERAGE NET SHARE RENTAL MAY BE DETERMINED UNDER PARAGRAPH (8). 19 (8) METHOD OF VALUING CLOSELY HELD BUSINESS INTERESTS, ETC.--IN ANY 20 CASE TO WHICH PARAGRAPH (7)(A) DOES NOT APPLY, THE FOLLOWING FACTORS 21 SHALL APPLY IN DETERMINING THE VALUE OF ANY QUALIFIED REAL PROPERTY: 22 (A) THE CAPITALIZATION OF INCOME WHICH THE PROPERTY CAN BE EXPECTED TO 23 YIELD FOR FARMING OR CLOSELY HELD BUSINESS PURPOSES OVER A REASONABLE 24 PERIOD OF TIME UNDER PRUDENT MANAGEMENT USING TRADITIONAL CROPPING 25 PATTERNS FOR THE AREA, TAKING INTO ACCOUNT SOIL CAPACITY, TERRAIN 26 CONFIGURATION, AND SIMILAR FACTORS, 27 (B) THE CAPITALIZATION OF THE FAIR RENTAL VALUE OF THE LAND FOR FARM- 28 LAND OR CLOSELY HELD BUSINESS PURPOSES, 29 (C) ASSESSED LAND VALUES IN A STATE WHICH PROVIDES A DIFFERENTIAL OR 30 USE VALUE ASSESSMENT LAW FOR FARMLAND OR CLOSELY HELD BUSINESS, 31 (D) COMPARABLE SALES OF OTHER FARM OR CLOSELY HELD BUSINESS LAND IN 32 THE SAME GEOGRAPHICAL AREA FAR ENOUGH REMOVED FROM A METROPOLITAN OR 33 RESORT AREA SO THAT NONAGRICULTURAL USE IS NOT A SIGNIFICANT FACTOR IN 34 THE SALES PRICE, AND 35 (E) ANY OTHER FACTOR WHICH FAIRLY VALUES THE FARM OR CLOSELY HELD 36 BUSINESS VALUE OF THE PROPERTY. 37 (9) PROPERTY ACQUIRED FROM DECEDENT.--PROPERTY SHALL BE CONSIDERED TO 38 HAVE BEEN ACQUIRED FROM OR TO HAVE PASSED FROM THE DECEDENT IF-- 39 (A) SUCH PROPERTY IS SO CONSIDERED UNDER SECTION 1014(B) (RELATING TO 40 BASIS OF PROPERTY ACQUIRED FROM A DECEDENT), 41 (B) SUCH PROPERTY IS ACQUIRED BY ANY PERSON FROM THE ESTATE, OR 42 (C) SUCH PROPERTY IS ACQUIRED BY ANY PERSON FROM A TRUST (TO THE 43 EXTENT SUCH PROPERTY IS INCLUDIBLE IN THE GROSS ESTATE OF THE DECEDENT). 44 (10) COMMUNITY PROPERTY.--IF THE DECEDENT AND HIS SURVIVING SPOUSE AT 45 ANY TIME HELD QUALIFIED REAL PROPERTY AS COMMUNITY PROPERTY, THE INTER- 46 EST OF THE SURVIVING SPOUSE IN SUCH PROPERTY SHALL BE TAKEN INTO ACCOUNT 47 UNDER THIS SECTION TO THE EXTENT NECESSARY TO PROVIDE A RESULT UNDER 48 THIS SECTION WITH RESPECT TO SUCH PROPERTY WHICH IS CONSISTENT WITH THE 49 RESULT WHICH WOULD HAVE OBTAINED UNDER THIS SECTION IF SUCH PROPERTY HAD 50 NOT BEEN COMMUNITY PROPERTY. 51 (11) BOND IN LIEU OF PERSONAL LIABILITY.--IF THE QUALIFIED HEIR MAKES 52 WRITTEN APPLICATION TO THE SECRETARY FOR DETERMINATION OF THE MAXIMUM 53 AMOUNT OF THE ADDITIONAL TAX WHICH MAY BE IMPOSED BY SUBSECTION (C) WITH 54 RESPECT TO THE QUALIFIED HEIR'S INTEREST, THE SECRETARY (AS SOON AS 55 POSSIBLE, AND IN ANY EVENT WITHIN 1 YEAR AFTER THE MAKING OF SUCH APPLI- 56 CATION) SHALL NOTIFY THE HEIR OF SUCH MAXIMUM AMOUNT. THE QUALIFIED S. 6359--C 233 1 HEIR, ON FURNISHING A BOND IN SUCH AMOUNT AND FOR SUCH PERIOD AS MAY BE 2 REQUIRED, SHALL BE DISCHARGED FROM PERSONAL LIABILITY FOR ANY ADDITIONAL 3 TAX IMPOSED BY SUBSECTION (C) AND SHALL BE ENTITLED TO A RECEIPT OR 4 WRITING SHOWING SUCH DISCHARGE. 5 (12) ACTIVE MANAGEMENT.--THE TERM "ACTIVE MANAGEMENT" MEANS THE MAKING 6 OF THE MANAGEMENT DECISIONS OF A BUSINESS (OTHER THAN THE DAILY OPERAT- 7 ING DECISIONS). 8 (13) SPECIAL RULES FOR WOODLANDS.-- 9 (A) IN GENERAL.--IN THE CASE OF ANY QUALIFIED WOODLAND WITH RESPECT TO 10 WHICH THE EXECUTOR ELECTS TO HAVE THIS SUBPARAGRAPH APPLY, TREES GROWING 11 ON SUCH WOODLAND SHALL NOT BE TREATED AS A CROP. 12 (B) QUALIFIED WOODLAND.--THE TERM "QUALIFIED WOODLAND" MEANS ANY REAL 13 PROPERTY WHICH-- 14 (I) IS USED IN TIMBER OPERATIONS, AND 15 (II) IS AN IDENTIFIABLE AREA OF LAND SUCH AS AN ACRE OR OTHER AREA FOR 16 WHICH RECORDS ARE NORMALLY MAINTAINED IN CONDUCTING TIMBER OPERATIONS. 17 (C) TIMBER OPERATIONS.--THE TERM "TIMBER OPERATIONS" MEANS-- 18 (I) THE PLANTING, CULTIVATING, CARING FOR, OR CUTTING OF TREES, OR 19 (II) THE PREPARATION (OTHER THAN MILLING) OF TREES FOR MARKET. 20 (D) ELECTION.--AN ELECTION UNDER SUBPARAGRAPH (A) SHALL BE MADE ON THE 21 RETURN OF THE TAX IMPOSED BY SECTION 2001. SUCH ELECTION SHALL BE MADE 22 IN SUCH MANNER AS THE SECRETARY SHALL BY REGULATIONS PRESCRIBE. SUCH AN 23 ELECTION, ONCE MADE, SHALL BE IRREVOCABLE. 24 (14) TREATMENT OF REPLACEMENT PROPERTY ACQUIRED IN SECTION 1031 OR 25 1033 TRANSACTIONS.-- 26 (A) IN GENERAL.--IN THE CASE OF ANY QUALIFIED REPLACEMENT PROPERTY, 27 ANY PERIOD DURING WHICH THERE WAS OWNERSHIP, QUALIFIED USE, OR MATERIAL 28 PARTICIPATION WITH RESPECT TO THE REPLACED PROPERTY BY THE DECEDENT OR 29 ANY MEMBER OF HIS FAMILY SHALL BE TREATED AS A PERIOD DURING WHICH THERE 30 WAS SUCH OWNERSHIP, USE, OR MATERIAL PARTICIPATION (AS THE CASE MAY BE) 31 WITH RESPECT TO THE QUALIFIED REPLACEMENT PROPERTY. 32 (B) LIMITATION.--SUBPARAGRAPH (A) SHALL NOT APPLY TO THE EXTENT THAT 33 THE FAIR MARKET VALUE OF THE QUALIFIED REPLACEMENT PROPERTY (AS OF THE 34 DATE OF ITS ACQUISITION) EXCEEDS THE FAIR MARKET VALUE OF THE REPLACED 35 PROPERTY (AS OF THE DATE OF ITS DISPOSITION). 36 (C) DEFINITIONS.--FOR PURPOSES OF THIS PARAGRAPH-- 37 (I) QUALIFIED REPLACEMENT PROPERTY.--THE TERM "QUALIFIED REPLACEMENT 38 PROPERTY" MEANS ANY REAL PROPERTY WHICH IS-- 39 (I) ACQUIRED IN AN EXCHANGE WHICH QUALIFIES UNDER SECTION 1031, OR 40 (II) THE ACQUISITION OF WHICH RESULTS IN THE NONRECOGNITION OF GAIN 41 UNDER SECTION 1033. 42 SUCH TERM SHALL ONLY INCLUDE PROPERTY WHICH IS USED FOR THE SAME QUAL- 43 IFIED USE AS THE REPLACED PROPERTY WAS BEING USED BEFORE THE EXCHANGE. 44 (II) REPLACED PROPERTY.--THE TERM "REPLACED PROPERTY" MEANS-- 45 (I) THE PROPERTY TRANSFERRED IN THE EXCHANGE WHICH QUALIFIES UNDER 46 SECTION 1031, OR 47 (II) THE PROPERTY COMPULSORILY OR INVOLUNTARILY CONVERTED (WITHIN THE 48 MEANING OF SECTION 1033). 49 (F) STATUTE OF LIMITATIONS.--IF QUALIFIED REAL PROPERTY IS DISPOSED OF 50 OR CEASES TO BE USED FOR A QUALIFIED USE, THEN-- 51 (1) THE STATUTORY PERIOD FOR THE ASSESSMENT OF ANY ADDITIONAL TAX 52 UNDER SUBSECTION (C) ATTRIBUTABLE TO SUCH DISPOSITION OR CESSATION SHALL 53 NOT EXPIRE BEFORE THE EXPIRATION OF 3 YEARS FROM THE DATE THE SECRETARY 54 IS NOTIFIED (IN SUCH MANNER AS THE SECRETARY MAY BY REGULATIONS 55 PRESCRIBE) OF SUCH DISPOSITION OR CESSATION (OR IF LATER IN THE CASE OF 56 AN INVOLUNTARY CONVERSION OR EXCHANGE TO WHICH SUBSECTION (H) OR (I) S. 6359--C 234 1 APPLIES, 3 YEARS FROM THE DATE THE SECRETARY IS NOTIFIED OF THE REPLACE- 2 MENT OF THE CONVERTED PROPERTY OR OF AN INTENTION NOT TO REPLACE OR OF 3 THE EXCHANGE OF PROPERTY), AND 4 (2) SUCH ADDITIONAL TAX MAY BE ASSESSED BEFORE THE EXPIRATION OF SUCH 5 3-YEAR PERIOD NOTWITHSTANDING THE PROVISIONS OF ANY OTHER LAW OR RULE OF 6 LAW WHICH WOULD OTHERWISE PREVENT SUCH ASSESSMENT. 7 (G) APPLICATION OF THIS SECTION AND SECTION 6324B TO INTERESTS IN 8 PARTNERSHIPS, CORPORATIONS, AND TRUSTS.--THE SECRETARY SHALL PRESCRIBE 9 REGULATIONS SETTING FORTH THE APPLICATION OF THIS SECTION AND SECTION 10 6324B IN THE CASE OF AN INTEREST IN A PARTNERSHIP, CORPORATION, OR TRUST 11 WHICH, WITH RESPECT TO THE DECEDENT, IS AN INTEREST IN A CLOSELY HELD 12 BUSINESS (WITHIN THE MEANING OF PARAGRAPH (1) OF SECTION 6166(B)). FOR 13 PURPOSES OF THE PRECEDING SENTENCE, AN INTEREST IN A DISCRETIONARY TRUST 14 ALL THE BENEFICIARIES OF WHICH ARE QUALIFIED HEIRS SHALL BE TREATED AS A 15 PRESENT INTEREST. 16 (H) SPECIAL RULES FOR INVOLUNTARY CONVERSIONS OF QUALIFIED REAL PROP- 17 ERTY.-- 18 (1) TREATMENT OF CONVERTED PROPERTY.-- 19 (A) IN GENERAL.--IF THERE IS AN INVOLUNTARY CONVERSION OF AN INTEREST 20 IN QUALIFIED REAL PROPERTY-- 21 (I) NO TAX SHALL BE IMPOSED BY SUBSECTION (C) ON SUCH CONVERSION IF 22 THE COST OF THE QUALIFIED REPLACEMENT PROPERTY EQUALS OR EXCEEDS THE 23 AMOUNT REALIZED ON SUCH CONVERSION, OR 24 (II) IF CLAUSE (I) DOES NOT APPLY, THE AMOUNT OF THE TAX IMPOSED BY 25 SUBSECTION (C) ON SUCH CONVERSION SHALL BE THE AMOUNT DETERMINED UNDER 26 SUBPARAGRAPH (B). 27 (B) AMOUNT OF TAX WHERE THERE IS NOT COMPLETE REINVESTMENT.--THE 28 AMOUNT DETERMINED UNDER THIS SUBPARAGRAPH WITH RESPECT TO ANY INVOLUN- 29 TARY CONVERSION IS THE AMOUNT OF THE TAX WHICH (BUT FOR THIS SUBSECTION) 30 WOULD HAVE BEEN IMPOSED ON SUCH CONVERSION REDUCED BY AN AMOUNT WHICH-- 31 (I) BEARS THE SAME RATIO TO SUCH TAX, AS 32 (II) THE COST OF THE QUALIFIED REPLACEMENT PROPERTY BEARS TO THE 33 AMOUNT REALIZED ON THE CONVERSION. 34 (2) TREATMENT OF REPLACEMENT PROPERTY.--FOR PURPOSES OF SUBSECTION 35 (C)-- 36 (A) ANY QUALIFIED REPLACEMENT PROPERTY SHALL BE TREATED IN THE SAME 37 MANNER AS IF IT WERE A PORTION OF THE INTEREST IN QUALIFIED REAL PROPER- 38 TY WHICH WAS INVOLUNTARILY CONVERTED; EXCEPT THAT WITH RESPECT TO SUCH 39 QUALIFIED REPLACEMENT PROPERTY THE 10-YEAR PERIOD UNDER PARAGRAPH (1) OF 40 SUBSECTION (C) SHALL BE EXTENDED BY ANY PERIOD, BEYOND THE 2-YEAR PERIOD 41 REFERRED TO IN SECTION 1033(A)(2)(B)(I), DURING WHICH THE QUALIFIED HEIR 42 WAS ALLOWED TO REPLACE THE QUALIFIED REAL PROPERTY, 43 (B) ANY TAX IMPOSED BY SUBSECTION (C) ON THE INVOLUNTARY CONVERSION 44 SHALL BE TREATED AS A TAX IMPOSED ON A PARTIAL DISPOSITION, AND 45 (C) PARAGRAPH (6) OF SUBSECTION (C) SHALL BE APPLIED-- 46 (I) BY NOT TAKING INTO ACCOUNT PERIODS AFTER THE INVOLUNTARY CONVER- 47 SION AND BEFORE THE ACQUISITION OF THE QUALIFIED REPLACEMENT PROPERTY, 48 AND 49 (II) BY TREATING MATERIAL PARTICIPATION WITH RESPECT TO THE CONVERTED 50 PROPERTY AS MATERIAL PARTICIPATION WITH RESPECT TO THE QUALIFIED 51 REPLACEMENT PROPERTY. 52 (3) DEFINITIONS AND SPECIAL RULES.--FOR PURPOSES OF THIS SUBSECTION-- 53 (A) INVOLUNTARY CONVERSION.--THE TERM "INVOLUNTARY CONVERSION" MEANS A 54 COMPULSORY OR INVOLUNTARY CONVERSION WITHIN THE MEANING OF SECTION 1033. 55 (B) QUALIFIED REPLACEMENT PROPERTY.--THE TERM "QUALIFIED REPLACEMENT 56 PROPERTY" MEANS-- S. 6359--C 235 1 (I) IN THE CASE OF AN INVOLUNTARY CONVERSION DESCRIBED IN SECTION 2 1033(A)(1), ANY REAL PROPERTY INTO WHICH THE QUALIFIED REAL PROPERTY IS 3 CONVERTED, OR 4 (II) IN THE CASE OF AN INVOLUNTARY CONVERSION DESCRIBED IN SECTION 5 1033(A)(2), ANY REAL PROPERTY PURCHASED BY THE QUALIFIED HEIR DURING THE 6 PERIOD SPECIFIED IN SECTION 1033(A)(2)(B) FOR PURPOSES OF REPLACING THE 7 QUALIFIED REAL PROPERTY. 8 SUCH TERM ONLY INCLUDES PROPERTY WHICH IS TO BE USED FOR THE QUALIFIED 9 USE SET FORTH IN SUBPARAGRAPH (A) OR (B) OF SUBSECTION (B)(2) UNDER 10 WHICH THE QUALIFIED REAL PROPERTY QUALIFIED UNDER SUBSECTION (A). 11 (4) CERTAIN RULES MADE APPLICABLE.--THE RULES OF THE LAST SENTENCE OF 12 SECTION 1033(A)(2)(A) SHALL APPLY FOR PURPOSES OF PARAGRAPH (3)(B)(II). 13 (I) EXCHANGES OF QUALIFIED REAL PROPERTY.-- 14 (1) TREATMENT OF PROPERTY EXCHANGED.-- 15 (A) EXCHANGES SOLELY FOR QUALIFIED EXCHANGE PROPERTY.--IF AN INTEREST 16 IN QUALIFIED REAL PROPERTY IS EXCHANGED SOLELY FOR AN INTEREST IN QUALI- 17 FIED EXCHANGE PROPERTY IN A TRANSACTION WHICH QUALIFIES UNDER SECTION 18 1031, NO TAX SHALL BE IMPOSED BY SUBSECTION (C) BY REASON OF SUCH 19 EXCHANGE. 20 (B) EXCHANGES WHERE OTHER PROPERTY RECEIVED.--IF AN INTEREST IN QUALI- 21 FIED REAL PROPERTY IS EXCHANGED FOR AN INTEREST IN QUALIFIED EXCHANGE 22 PROPERTY AND OTHER PROPERTY IN A TRANSACTION WHICH QUALIFIES UNDER 23 SECTION 1031, THE AMOUNT OF THE TAX IMPOSED BY SUBSECTION (C) BY REASON 24 OF SUCH EXCHANGE SHALL BE THE AMOUNT OF TAX WHICH (BUT FOR THIS SUBPARA- 25 GRAPH) WOULD HAVE BEEN IMPOSED ON SUCH EXCHANGE UNDER SUBSECTION (C)(1), 26 REDUCED BY AN AMOUNT WHICH-- 27 (I) BEARS THE SAME RATIO TO SUCH TAX, AS 28 (II) THE FAIR MARKET VALUE OF THE QUALIFIED EXCHANGE PROPERTY BEARS TO 29 THE FAIR MARKET VALUE OF THE QUALIFIED REAL PROPERTY EXCHANGED. 30 FOR PURPOSES OF CLAUSE (II) OF THE PRECEDING SENTENCE, FAIR MARKET 31 VALUE SHALL BE DETERMINED AS OF THE TIME OF THE EXCHANGE. 32 (2) TREATMENT OF QUALIFIED EXCHANGE PROPERTY.--FOR PURPOSES OF 33 SUBSECTION (C)-- 34 (A) ANY INTEREST IN QUALIFIED EXCHANGE PROPERTY SHALL BE TREATED IN 35 THE SAME MANNER AS IF IT WERE A PORTION OF THE INTEREST IN QUALIFIED 36 REAL PROPERTY WHICH WAS EXCHANGED, 37 (B) ANY TAX IMPOSED BY SUBSECTION (C) BY REASON OF THE EXCHANGE SHALL 38 BE TREATED AS A TAX IMPOSED ON A PARTIAL DISPOSITION, AND 39 (C) PARAGRAPH (6) OF SUBSECTION (C) SHALL BE APPLIED BY TREATING MATE- 40 RIAL PARTICIPATION WITH RESPECT TO THE EXCHANGED PROPERTY AS MATERIAL 41 PARTICIPATION WITH RESPECT TO THE QUALIFIED EXCHANGE PROPERTY. 42 (3) QUALIFIED EXCHANGE PROPERTY.--FOR PURPOSES OF THIS SUBSECTION, THE 43 TERM "QUALIFIED EXCHANGE PROPERTY" MEANS REAL PROPERTY WHICH IS TO BE 44 USED FOR THE QUALIFIED USE SET FORTH IN SUBPARAGRAPH (A) OR (B) OF 45 SUBSECTION (B)(2) UNDER WHICH THE REAL PROPERTY EXCHANGED THEREFOR 46 ORIGINALLY QUALIFIED UNDER SUBSECTION (A). 47 S 2033. PROPERTY IN WHICH THE DECEDENT HAD AN INTEREST. THE VALUE OF 48 THE GROSS ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY TO THE EXTENT 49 OF THE INTEREST THEREIN OF THE DECEDENT AT THE TIME OF HIS DEATH. 50 S 2034. DOWER OR CURTESY INTERESTS. THE VALUE OF THE GROSS ESTATE 51 SHALL INCLUDE THE VALUE OF ALL PROPERTY TO THE EXTENT OF ANY INTEREST 52 THEREIN OF THE SURVIVING SPOUSE, EXISTING AT THE TIME OF THE DECEDENT'S 53 DEATH AS DOWER OR CURTESY, OR BY VIRTUE OF A STATUTE CREATING AN ESTATE 54 IN LIEU OF DOWER OR CURTESY. S. 6359--C 236 1 S 2035. ADJUSTMENTS FOR CERTAIN GIFTS MADE WITHIN THREE YEARS OF 2 DECEDENT'S DEATH. (A) INCLUSION OF CERTAIN PROPERTY IN GROSS 3 ESTATE.--IF-- 4 (1) THE DECEDENT MADE A TRANSFER (BY TRUST OR OTHERWISE) OF AN INTER- 5 EST IN ANY PROPERTY, OR RELINQUISHED A POWER WITH RESPECT TO ANY PROPER- 6 TY, DURING THE 3-YEAR PERIOD ENDING ON THE DATE OF THE DECEDENT'S DEATH, 7 AND 8 (2) THE VALUE OF SUCH PROPERTY (OR AN INTEREST THEREIN) WOULD HAVE 9 BEEN INCLUDED IN THE DECEDENT'S GROSS ESTATE UNDER SECTION 2036, 2037, 10 2038, OR 2042 IF SUCH TRANSFERRED INTEREST OR RELINQUISHED POWER HAD 11 BEEN RETAINED BY THE DECEDENT ON THE DATE OF HIS DEATH, 12 THE VALUE OF THE GROSS ESTATE SHALL INCLUDE THE VALUE OF ANY PROPERTY 13 (OR INTEREST THEREIN) WHICH WOULD HAVE BEEN SO INCLUDED. 14 (B) INCLUSION OF GIFT TAX ON GIFTS MADE DURING 3 YEARS BEFORE 15 DECEDENT'S DEATH.--THE AMOUNT OF THE GROSS ESTATE (DETERMINED WITHOUT 16 REGARD TO THIS SUBSECTION) SHALL BE INCREASED BY THE AMOUNT OF ANY TAX 17 PAID UNDER CHAPTER 12 BY THE DECEDENT OR HIS ESTATE ON ANY GIFT MADE BY 18 THE DECEDENT OR HIS SPOUSE DURING THE 3-YEAR PERIOD ENDING ON THE DATE 19 OF THE DECEDENT'S DEATH. 20 (C) OTHER RULES RELATING TO TRANSFERS WITHIN 3 YEARS OF DEATH.-- 21 (1) IN GENERAL.--FOR PURPOSES OF-- 22 (A) SECTION 303(B) (RELATING TO DISTRIBUTIONS IN REDEMPTION OF STOCK 23 TO PAY DEATH TAXES), 24 (B) SECTION 2032A (RELATING TO SPECIAL VALUATION OF CERTAIN FARMS, 25 ETC., REAL PROPERTY), AND 26 (C) SUBCHAPTER C OF CHAPTER 64 (RELATING TO LIEN FOR TAXES), 27 THE VALUE OF THE GROSS ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY 28 TO THE EXTENT OF ANY INTEREST THEREIN OF WHICH THE DECEDENT HAS AT ANY 29 TIME MADE A TRANSFER, BY TRUST OR OTHERWISE, DURING THE 3-YEAR PERIOD 30 ENDING ON THE DATE OF THE DECEDENT'S DEATH. 31 (2) COORDINATION WITH SECTION 6166.--AN ESTATE SHALL BE TREATED AS 32 MEETING THE 35 PERCENT OF ADJUSTED GROSS ESTATE REQUIREMENT OF SECTION 33 6166(A)(1) ONLY IF THE ESTATE MEETS SUCH REQUIREMENT BOTH WITH AND WITH- 34 OUT THE APPLICATION OF SUBSECTION (A). 35 (3) MARITAL AND SMALL TRANSFERS.--PARAGRAPH (1) SHALL NOT APPLY TO ANY 36 TRANSFER (OTHER THAN A TRANSFER WITH RESPECT TO A LIFE INSURANCE POLICY) 37 MADE DURING A CALENDAR YEAR TO ANY DONEE IF THE DECEDENT WAS NOT 38 REQUIRED BY SECTION 6019 (OTHER THAN BY REASON OF SECTION 6019(2)) TO 39 FILE ANY GIFT TAX RETURN FOR SUCH YEAR WITH RESPECT TO TRANSFERS TO SUCH 40 DONEE. 41 (D) EXCEPTION.--SUBSECTION (A) AND PARAGRAPH (1) OF SUBSECTION (C) 42 SHALL NOT APPLY TO ANY BONA FIDE SALE FOR AN ADEQUATE AND FULL CONSIDER- 43 ATION IN MONEY OR MONEY'S WORTH. 44 (E) TREATMENT OF CERTAIN TRANSFERS FROM REVOCABLE TRUSTS.--FOR 45 PURPOSES OF THIS SECTION AND SECTION 2038, ANY TRANSFER FROM ANY PORTION 46 OF A TRUST DURING ANY PERIOD THAT SUCH PORTION WAS TREATED UNDER SECTION 47 676 AS OWNED BY THE DECEDENT BY REASON OF A POWER IN THE GRANTOR (DETER- 48 MINED WITHOUT REGARD TO SECTION 672(E)) SHALL BE TREATED AS A TRANSFER 49 MADE DIRECTLY BY THE DECEDENT. 50 S 2036. TRANSFERS WITH RETAINED LIFE ESTATE. (A) GENERAL RULE.--THE 51 VALUE OF THE GROSS ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY TO THE 52 EXTENT OF ANY INTEREST THEREIN OF WHICH THE DECEDENT HAS AT ANY TIME 53 MADE A TRANSFER (EXCEPT IN CASE OF A BONA FIDE SALE FOR AN ADEQUATE AND 54 FULL CONSIDERATION IN MONEY OR MONEY'S WORTH), BY TRUST OR OTHERWISE, 55 UNDER WHICH HE HAS RETAINED FOR HIS LIFE OR FOR ANY PERIOD NOT ASCER- S. 6359--C 237 1 TAINABLE WITHOUT REFERENCE TO HIS DEATH OR FOR ANY PERIOD WHICH DOES NOT 2 IN FACT END BEFORE HIS DEATH-- 3 (1) THE POSSESSION OR ENJOYMENT OF, OR THE RIGHT TO THE INCOME FROM, 4 THE PROPERTY, OR 5 (2) THE RIGHT, EITHER ALONE OR IN CONJUNCTION WITH ANY PERSON, TO 6 DESIGNATE THE PERSONS WHO SHALL POSSESS OR ENJOY THE PROPERTY OR THE 7 INCOME THEREFROM. 8 (B) VOTING RIGHTS.-- 9 (1) IN GENERAL.--FOR PURPOSES OF SUBSECTION (A)(1), THE RETENTION OF 10 THE RIGHT TO VOTE (DIRECTLY OR INDIRECTLY) SHARES OF STOCK OF A 11 CONTROLLED CORPORATION SHALL BE CONSIDERED TO BE A RETENTION OF THE 12 ENJOYMENT OF TRANSFERRED PROPERTY. 13 (2) CONTROLLED CORPORATION.--FOR PURPOSES OF PARAGRAPH (1), A CORPO- 14 RATION SHALL BE TREATED AS A CONTROLLED CORPORATION IF, AT ANY TIME 15 AFTER THE TRANSFER OF THE PROPERTY AND DURING THE 3-YEAR PERIOD ENDING 16 ON THE DATE OF THE DECEDENT'S DEATH, THE DECEDENT OWNED (WITH THE APPLI- 17 CATION OF SECTION 318), OR HAD THE RIGHT (EITHER ALONE OR IN CONJUNCTION 18 WITH ANY PERSON) TO VOTE, STOCK POSSESSING AT LEAST 20 PERCENT OF THE 19 TOTAL COMBINED VOTING POWER OF ALL CLASSES OF STOCK. 20 (3) COORDINATION WITH SECTION 2035.--FOR PURPOSES OF APPLYING SECTION 21 2035 WITH RESPECT TO PARAGRAPH (1), THE RELINQUISHMENT OR CESSATION OF 22 VOTING RIGHTS SHALL BE TREATED AS A TRANSFER OF PROPERTY MADE BY THE 23 DECEDENT. 24 (C) LIMITATION ON APPLICATION OF GENERAL RULE.--THIS SECTION SHALL NOT 25 APPLY TO A TRANSFER MADE BEFORE MARCH 4, 1931; NOR TO A TRANSFER MADE 26 AFTER MARCH 3, 1931, AND BEFORE JUNE 7, 1932, UNLESS THE PROPERTY TRANS- 27 FERRED WOULD HAVE BEEN INCLUDIBLE IN THE DECEDENT'S GROSS ESTATE BY 28 REASON OF THE AMENDATORY LANGUAGE OF THE JOINT RESOLUTION OF MARCH 3, 29 1931 (46 STAT. 1516). 30 S 2037. TRANSFERS TAKING EFFECT AT DEATH. (A) GENERAL RULE.--THE VALUE 31 OF THE GROSS ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY TO THE 32 EXTENT OF ANY INTEREST THEREIN OF WHICH THE DECEDENT HAS AT ANY TIME 33 AFTER SEPTEMBER 7, 1916, MADE A TRANSFER (EXCEPT IN CASE OF A BONA FIDE 34 SALE FOR AN ADEQUATE AND FULL CONSIDERATION IN MONEY OR MONEY'S WORTH), 35 BY TRUST OR OTHERWISE, IF-- 36 (1) POSSESSION OR ENJOYMENT OF THE PROPERTY CAN, THROUGH OWNERSHIP OF 37 SUCH INTEREST, BE OBTAINED ONLY BY SURVIVING THE DECEDENT, AND 38 (2) THE DECEDENT HAS RETAINED A REVERSIONARY INTEREST IN THE PROPERTY 39 (BUT IN THE CASE OF A TRANSFER MADE BEFORE OCTOBER 8, 1949, ONLY IF SUCH 40 REVERSIONARY INTEREST AROSE BY THE EXPRESS TERMS OF THE INSTRUMENT OF 41 TRANSFER), AND THE VALUE OF SUCH REVERSIONARY INTEREST IMMEDIATELY 42 BEFORE THE DEATH OF THE DECEDENT EXCEEDS 5 PERCENT OF THE VALUE OF SUCH 43 PROPERTY. 44 (B) SPECIAL RULES.--FOR PURPOSES OF THIS SECTION, THE TERM "REVERSION- 45 ARY INTEREST" INCLUDES A POSSIBILITY THAT PROPERTY TRANSFERRED BY THE 46 DECEDENT-- 47 (1) MAY RETURN TO HIM OR HIS ESTATE, OR 48 (2) MAY BE SUBJECT TO A POWER OF DISPOSITION BY HIM, 49 BUT SUCH TERM DOES NOT INCLUDE A POSSIBILITY THAT THE INCOME ALONE 50 FROM SUCH PROPERTY MAY RETURN TO HIM OR BECOME SUBJECT TO A POWER OF 51 DISPOSITION BY HIM. THE VALUE OF A REVERSIONARY INTEREST IMMEDIATELY 52 BEFORE THE DEATH OF THE DECEDENT SHALL BE DETERMINED (WITHOUT REGARD TO 53 THE FACT OF THE DECEDENT'S DEATH) BY USUAL METHODS OF VALUATION, INCLUD- 54 ING THE USE OF TABLES OF MORTALITY AND ACTUARIAL PRINCIPLES, UNDER REGU- 55 LATIONS PRESCRIBED BY THE SECRETARY. IN DETERMINING THE VALUE OF A 56 POSSIBILITY THAT PROPERTY MAY BE SUBJECT TO A POWER OF DISPOSITION BY S. 6359--C 238 1 THE DECEDENT, SUCH POSSIBILITY SHALL BE VALUED AS IF IT WERE A POSSIBIL- 2 ITY THAT SUCH PROPERTY MAY RETURN TO THE DECEDENT OR HIS ESTATE. 3 NOTWITHSTANDING THE FOREGOING, AN INTEREST SO TRANSFERRED SHALL NOT BE 4 INCLUDED IN THE DECEDENT'S GROSS ESTATE UNDER THIS SECTION IF POSSESSION 5 OR ENJOYMENT OF THE PROPERTY COULD HAVE BEEN OBTAINED BY ANY BENEFICIARY 6 DURING THE DECEDENT'S LIFE THROUGH THE EXERCISE OF A GENERAL POWER OF 7 APPOINTMENT (AS DEFINED IN SECTION 2041) WHICH IN FACT WAS EXERCISABLE 8 IMMEDIATELY BEFORE THE DECEDENT'S DEATH. 9 S 2038. REVOCABLE TRANSFERS. (A) IN GENERAL.--THE VALUE OF THE GROSS 10 ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY-- 11 (1) TRANSFERS AFTER JUNE 22, 1936.--TO THE EXTENT OF ANY INTEREST 12 THEREIN OF WHICH THE DECEDENT HAS AT ANY TIME MADE A TRANSFER (EXCEPT IN 13 CASE OF A BONA FIDE SALE FOR AN ADEQUATE AND FULL CONSIDERATION IN MONEY 14 OR MONEY'S WORTH), BY TRUST OR OTHERWISE, WHERE THE ENJOYMENT THEREOF 15 WAS SUBJECT AT THE DATE OF HIS DEATH TO ANY CHANGE THROUGH THE EXERCISE 16 OF A POWER (IN WHATEVER CAPACITY EXERCISABLE) BY THE DECEDENT ALONE OR 17 BY THE DECEDENT IN CONJUNCTION WITH ANY OTHER PERSON (WITHOUT REGARD TO 18 WHEN OR FROM WHAT SOURCE THE DECEDENT ACQUIRED SUCH POWER), TO ALTER, 19 AMEND, REVOKE, OR TERMINATE, OR WHERE ANY SUCH POWER IS RELINQUISHED 20 DURING THE 3-YEAR PERIOD ENDING ON THE DATE OF THE DECEDENT'S DEATH. 21 (2) TRANSFERS ON OR BEFORE JUNE 22, 1936.--TO THE EXTENT OF ANY INTER- 22 EST THEREIN OF WHICH THE DECEDENT HAS AT ANY TIME MADE A TRANSFER 23 (EXCEPT IN CASE OF A BONA FIDE SALE FOR AN ADEQUATE AND FULL CONSIDER- 24 ATION IN MONEY OR MONEY'S WORTH), BY TRUST OR OTHERWISE, WHERE THE 25 ENJOYMENT THEREOF WAS SUBJECT AT THE DATE OF HIS DEATH TO ANY CHANGE 26 THROUGH THE EXERCISE OF A POWER, EITHER BY THE DECEDENT ALONE OR IN 27 CONJUNCTION WITH ANY PERSON, TO ALTER, AMEND, OR REVOKE, OR WHERE THE 28 DECEDENT RELINQUISHED ANY SUCH POWER DURING THE 3-YEAR PERIOD ENDING ON 29 THE DATE OF THE DECEDENT'S DEATH. EXCEPT IN THE CASE OF TRANSFERS MADE 30 AFTER JUNE 22, 1936, NO INTEREST OF THE DECEDENT OF WHICH HE HAS MADE A 31 TRANSFER SHALL BE INCLUDED IN THE GROSS ESTATE UNDER PARAGRAPH (1) 32 UNLESS IT IS INCLUDIBLE UNDER THIS PARAGRAPH. 33 (B) DATE OF EXISTENCE OF POWER.--FOR PURPOSES OF THIS SECTION, THE 34 POWER TO ALTER, AMEND, REVOKE, OR TERMINATE SHALL BE CONSIDERED TO EXIST 35 ON THE DATE OF THE DECEDENT'S DEATH EVEN THOUGH THE EXERCISE OF THE 36 POWER IS SUBJECT TO A PRECEDENT GIVING OF NOTICE OR EVEN THOUGH THE 37 ALTERATION, AMENDMENT, REVOCATION, OR TERMINATION TAKES EFFECT ONLY ON 38 THE EXPIRATION OF A STATED PERIOD AFTER THE EXERCISE OF THE POWER, 39 WHETHER OR NOT ON OR BEFORE THE DATE OF THE DECEDENT'S DEATH NOTICE HAS 40 BEEN GIVEN OR THE POWER HAS BEEN EXERCISED. IN SUCH CASES PROPER ADJUST- 41 MENT SHALL BE MADE REPRESENTING THE INTERESTS WHICH WOULD HAVE BEEN 42 EXCLUDED FROM THE POWER IF THE DECEDENT HAD LIVED, AND FOR SUCH PURPOSE, 43 IF THE NOTICE HAS NOT BEEN GIVEN OR THE POWER HAS NOT BEEN EXERCISED ON 44 OR BEFORE THE DATE OF HIS DEATH, SUCH NOTICE SHALL BE CONSIDERED TO HAVE 45 BEEN GIVEN, OR THE POWER EXERCISED, ON THE DATE OF HIS DEATH. 46 S 2039. ANNUITIES. (A) GENERAL.--THE GROSS ESTATE SHALL INCLUDE THE 47 VALUE OF AN ANNUITY OR OTHER PAYMENT RECEIVABLE BY ANY BENEFICIARY BY 48 REASON OF SURVIVING THE DECEDENT UNDER ANY FORM OF CONTRACT OR AGREEMENT 49 ENTERED INTO AFTER MARCH 3, 1931 (OTHER THAN AS INSURANCE UNDER POLICIES 50 ON THE LIFE OF THE DECEDENT), IF, UNDER SUCH CONTRACT OR AGREEMENT, AN 51 ANNUITY OR OTHER PAYMENT WAS PAYABLE TO THE DECEDENT, OR THE DECEDENT 52 POSSESSED THE RIGHT TO RECEIVE SUCH ANNUITY OR PAYMENT, EITHER ALONE OR 53 IN CONJUNCTION WITH ANOTHER FOR HIS LIFE OR FOR ANY PERIOD NOT ASCER- 54 TAINABLE WITHOUT REFERENCE TO HIS DEATH OR FOR ANY PERIOD WHICH DOES NOT 55 IN FACT END BEFORE HIS DEATH. S. 6359--C 239 1 (B) AMOUNT INCLUDIBLE.--SUBSECTION (A) SHALL APPLY TO ONLY SUCH PART 2 OF THE VALUE OF THE ANNUITY OR OTHER PAYMENT RECEIVABLE UNDER SUCH 3 CONTRACT OR AGREEMENT AS IS PROPORTIONATE TO THAT PART OF THE PURCHASE 4 PRICE THEREFOR CONTRIBUTED BY THE DECEDENT. FOR PURPOSES OF THIS 5 SECTION, ANY CONTRIBUTION BY THE DECEDENT'S EMPLOYER OR FORMER EMPLOYER 6 TO THE PURCHASE PRICE OF SUCH CONTRACT OR AGREEMENT (WHETHER OR NOT TO 7 AN EMPLOYEE'S TRUST OR FUND FORMING PART OF A PENSION, ANNUITY, RETIRE- 8 MENT, BONUS OR PROFIT SHARING PLAN) SHALL BE CONSIDERED TO BE CONTRIB- 9 UTED BY THE DECEDENT IF MADE BY REASON OF HIS EMPLOYMENT. 10 S 2040. JOINT INTERESTS. (A) GENERAL RULE.--THE VALUE OF THE GROSS 11 ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY TO THE EXTENT OF THE 12 INTEREST THEREIN HELD AS JOINT TENANTS WITH RIGHT OF SURVIVORSHIP BY THE 13 DECEDENT AND ANY OTHER PERSON, OR AS TENANTS BY THE ENTIRETY BY THE 14 DECEDENT AND SPOUSE, OR DEPOSITED, WITH ANY PERSON CARRYING ON THE BANK- 15 ING BUSINESS, IN THEIR JOINT NAMES AND PAYABLE TO EITHER OR THE SURVI- 16 VOR, EXCEPT SUCH PART THEREOF AS MAY BE SHOWN TO HAVE ORIGINALLY 17 BELONGED TO SUCH OTHER PERSON AND NEVER TO HAVE BEEN RECEIVED OR 18 ACQUIRED BY THE LATTER FROM THE DECEDENT FOR LESS THAN AN ADEQUATE AND 19 FULL CONSIDERATION IN MONEY OR MONEY'S WORTH: PROVIDED, THAT WHERE SUCH 20 PROPERTY OR ANY PART THEREOF, OR PART OF THE CONSIDERATION WITH WHICH 21 SUCH PROPERTY WAS ACQUIRED, IS SHOWN TO HAVE BEEN AT ANY TIME ACQUIRED 22 BY SUCH OTHER PERSON FROM THE DECEDENT FOR LESS THAN AN ADEQUATE AND 23 FULL CONSIDERATION IN MONEY OR MONEY'S WORTH, THERE SHALL BE EXCEPTED 24 ONLY SUCH PART OF THE VALUE OF SUCH PROPERTY AS IS PROPORTIONATE TO THE 25 CONSIDERATION FURNISHED BY SUCH OTHER PERSON: PROVIDED FURTHER, THAT 26 WHERE ANY PROPERTY HAS BEEN ACQUIRED BY GIFT, BEQUEST, DEVISE, OR INHER- 27 ITANCE, AS A TENANCY BY THE ENTIRETY BY THE DECEDENT AND SPOUSE, THEN TO 28 THE EXTENT OF ONE-HALF OF THE VALUE THEREOF, OR, WHERE SO ACQUIRED BY 29 THE DECEDENT AND ANY OTHER PERSON AS JOINT TENANTS WITH RIGHT OF SURVI- 30 VORSHIP AND THEIR INTERESTS ARE NOT OTHERWISE SPECIFIED OR FIXED BY LAW, 31 THEN TO THE EXTENT OF THE VALUE OF A FRACTIONAL PART TO BE DETERMINED BY 32 DIVIDING THE VALUE OF THE PROPERTY BY THE NUMBER OF JOINT TENANTS WITH 33 RIGHT OF SURVIVORSHIP. 34 (B) CERTAIN JOINT INTERESTS OF HUSBAND AND WIFE.-- 35 (1) INTERESTS OF SPOUSE EXCLUDED FROM GROSS ESTATE.--NOTWITHSTANDING 36 SUBSECTION (A), IN THE CASE OF ANY QUALIFIED JOINT INTEREST, THE VALUE 37 INCLUDED IN THE GROSS ESTATE WITH RESPECT TO SUCH INTEREST BY REASON OF 38 THIS SECTION IS ONE-HALF OF THE VALUE OF SUCH QUALIFIED JOINT INTEREST. 39 (2) QUALIFIED JOINT INTEREST DEFINED.--FOR PURPOSES OF PARAGRAPH (1), 40 THE TERM "QUALIFIED JOINT INTEREST" MEANS ANY INTEREST IN PROPERTY HELD 41 BY THE DECEDENT AND THE DECEDENT'S SPOUSE AS-- 42 (A) TENANTS BY THE ENTIRETY, OR 43 (B) JOINT TENANTS WITH RIGHT OF SURVIVORSHIP, BUT ONLY IF THE DECEDENT 44 AND THE SPOUSE OF THE DECEDENT ARE THE ONLY JOINT TENANTS. 45 S 2041. POWERS OF APPOINTMENT. (A) IN GENERAL.--THE VALUE OF THE GROSS 46 ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY-- 47 (1) POWERS OF APPOINTMENT CREATED ON OR BEFORE OCTOBER 21, 1942.--TO 48 THE EXTENT OF ANY PROPERTY WITH RESPECT TO WHICH A GENERAL POWER OF 49 APPOINTMENT CREATED ON OR BEFORE OCTOBER 21, 1942, IS EXERCISED BY THE 50 DECEDENT-- 51 (A) BY WILL, OR 52 (B) BY A DISPOSITION WHICH IS OF SUCH NATURE THAT IF IT WERE A TRANS- 53 FER OF PROPERTY OWNED BY THE DECEDENT, SUCH PROPERTY WOULD BE INCLUDIBLE 54 IN THE DECEDENT'S GROSS ESTATE UNDER SECTIONS 2035 TO 2038, INCLUSIVE; 55 BUT THE FAILURE TO EXERCISE SUCH A POWER OR THE COMPLETE RELEASE OF 56 SUCH A POWER SHALL NOT BE DEEMED AN EXERCISE THEREOF. IF A GENERAL POWER S. 6359--C 240 1 OF APPOINTMENT CREATED ON OR BEFORE OCTOBER 21, 1942, HAS BEEN PARTIALLY 2 RELEASED SO THAT IT IS NO LONGER A GENERAL POWER OF APPOINTMENT, THE 3 EXERCISE OF SUCH POWER SHALL NOT BE DEEMED TO BE THE EXERCISE OF A 4 GENERAL POWER OF APPOINTMENT IF-- 5 (I) SUCH PARTIAL RELEASE OCCURRED BEFORE NOVEMBER 1, 1951, OR 6 (II) THE DONEE OF SUCH POWER WAS UNDER A LEGAL DISABILITY TO RELEASE 7 SUCH POWER ON OCTOBER 21, 1942, AND SUCH PARTIAL RELEASE OCCURRED NOT 8 LATER THAN 6 MONTHS AFTER THE TERMINATION OF SUCH LEGAL DISABILITY. 9 (2) POWERS CREATED AFTER OCTOBER 21, 1942.--TO THE EXTENT OF ANY PROP- 10 ERTY WITH RESPECT TO WHICH THE DECEDENT HAS AT THE TIME OF HIS DEATH A 11 GENERAL POWER OF APPOINTMENT CREATED AFTER OCTOBER 21, 1942, OR WITH 12 RESPECT TO WHICH THE DECEDENT HAS AT ANY TIME EXERCISED OR RELEASED SUCH 13 A POWER OF APPOINTMENT BY A DISPOSITION WHICH IS OF SUCH NATURE THAT IF 14 IT WERE A TRANSFER OF PROPERTY OWNED BY THE DECEDENT, SUCH PROPERTY 15 WOULD BE INCLUDIBLE IN THE DECEDENT'S GROSS ESTATE UNDER SECTIONS 2035 16 TO 2038, INCLUSIVE. FOR PURPOSES OF THIS PARAGRAPH (2), THE POWER OF 17 APPOINTMENT SHALL BE CONSIDERED TO EXIST ON THE DATE OF THE DECEDENT'S 18 DEATH EVEN THOUGH THE EXERCISE OF THE POWER IS SUBJECT TO A PRECEDENT 19 GIVING OF NOTICE OR EVEN THOUGH THE EXERCISE OF THE POWER TAKES EFFECT 20 ONLY ON THE EXPIRATION OF A STATED PERIOD AFTER ITS EXERCISE, WHETHER OR 21 NOT ON OR BEFORE THE DATE OF THE DECEDENT'S DEATH NOTICE HAS BEEN GIVEN 22 OR THE POWER HAS BEEN EXERCISED. 23 (3) CREATION OF ANOTHER POWER IN CERTAIN CASES.--TO THE EXTENT OF ANY 24 PROPERTY WITH RESPECT TO WHICH THE DECEDENT-- 25 (A) BY WILL, OR 26 (B) BY A DISPOSITION WHICH IS OF SUCH NATURE THAT IF IT WERE A TRANS- 27 FER OF PROPERTY OWNED BY THE DECEDENT SUCH PROPERTY WOULD BE INCLUDIBLE 28 IN THE DECEDENT'S GROSS ESTATE UNDER SECTION 2035, 2036, OR 2037, 29 EXERCISES A POWER OF APPOINTMENT CREATED AFTER OCTOBER 21, 1942, BY 30 CREATING ANOTHER POWER OF APPOINTMENT WHICH UNDER THE APPLICABLE LOCAL 31 LAW CAN BE VALIDLY EXERCISED SO AS TO POSTPONE THE VESTING OF ANY ESTATE 32 OR INTEREST IN SUCH PROPERTY, OR SUSPEND THE ABSOLUTE OWNERSHIP OR POWER 33 OF ALIENATION OF SUCH PROPERTY, FOR A PERIOD ASCERTAINABLE WITHOUT 34 REGARD TO THE DATE OF THE CREATION OF THE FIRST POWER. 35 (B) DEFINITIONS.--FOR PURPOSES OF SUBSECTION (A)-- 36 (1) GENERAL POWER OF APPOINTMENT.--THE TERM "GENERAL POWER OF APPOINT- 37 MENT" MEANS A POWER WHICH IS EXERCISABLE IN FAVOR OF THE DECEDENT, HIS 38 ESTATE, HIS CREDITORS, OR THE CREDITORS OF HIS ESTATE; EXCEPT THAT-- 39 (A) A POWER TO CONSUME, INVADE, OR APPROPRIATE PROPERTY FOR THE BENE- 40 FIT OF THE DECEDENT WHICH IS LIMITED BY AN ASCERTAINABLE STANDARD RELAT- 41 ING TO THE HEALTH, EDUCATION, SUPPORT, OR MAINTENANCE OF THE DECEDENT 42 SHALL NOT BE DEEMED A GENERAL POWER OF APPOINTMENT. 43 (B) A POWER OF APPOINTMENT CREATED ON OR BEFORE OCTOBER 21, 1942, 44 WHICH IS EXERCISABLE BY THE DECEDENT ONLY IN CONJUNCTION WITH ANOTHER 45 PERSON SHALL NOT BE DEEMED A GENERAL POWER OF APPOINTMENT. 46 (C) IN THE CASE OF A POWER OF APPOINTMENT CREATED AFTER OCTOBER 21, 47 1942, WHICH IS EXERCISABLE BY THE DECEDENT ONLY IN CONJUNCTION WITH 48 ANOTHER PERSON-- 49 (I) IF THE POWER IS NOT EXERCISABLE BY THE DECEDENT EXCEPT IN CONJUNC- 50 TION WITH THE CREATOR OF THE POWER--SUCH POWER SHALL NOT BE DEEMED A 51 GENERAL POWER OF APPOINTMENT. 52 (II) IF THE POWER IS NOT EXERCISABLE BY THE DECEDENT EXCEPT IN 53 CONJUNCTION WITH A PERSON HAVING A SUBSTANTIAL INTEREST IN THE PROPERTY, 54 SUBJECT TO THE POWER, WHICH IS ADVERSE TO EXERCISE OF THE POWER IN FAVOR 55 OF THE DECEDENT--SUCH POWER SHALL NOT BE DEEMED A GENERAL POWER OF 56 APPOINTMENT. FOR THE PURPOSES OF THIS CLAUSE A PERSON WHO, AFTER THE S. 6359--C 241 1 DEATH OF THE DECEDENT, MAY BE POSSESSED OF A POWER OF APPOINTMENT (WITH 2 RESPECT TO THE PROPERTY SUBJECT TO THE DECEDENT'S POWER) WHICH HE MAY 3 EXERCISE IN HIS OWN FAVOR SHALL BE DEEMED AS HAVING AN INTEREST IN THE 4 PROPERTY AND SUCH INTEREST SHALL BE DEEMED ADVERSE TO SUCH EXERCISE OF 5 THE DECEDENT'S POWER. 6 (III) IF (AFTER THE APPLICATION OF CLAUSES (I) AND (II)) THE POWER IS 7 A GENERAL POWER OF APPOINTMENT AND IS EXERCISABLE IN FAVOR OF SUCH OTHER 8 PERSON--SUCH POWER SHALL BE DEEMED A GENERAL POWER OF APPOINTMENT ONLY 9 IN RESPECT OF A FRACTIONAL PART OF THE PROPERTY SUBJECT TO SUCH POWER, 10 SUCH PART TO BE DETERMINED BY DIVIDING THE VALUE OF SUCH PROPERTY BY THE 11 NUMBER OF SUCH PERSONS (INCLUDING THE DECEDENT) IN FAVOR OF WHOM SUCH 12 POWER IS EXERCISABLE. 13 FOR PURPOSES OF CLAUSES (II) AND (III), A POWER SHALL BE DEEMED TO BE 14 EXERCISABLE IN FAVOR OF A PERSON IF IT IS EXERCISABLE IN FAVOR OF SUCH 15 PERSON, HIS ESTATE, HIS CREDITORS, OR THE CREDITORS OF HIS ESTATE. 16 (2) LAPSE OF POWER.--THE LAPSE OF A POWER OF APPOINTMENT CREATED AFTER 17 OCTOBER 21, 1942, DURING THE LIFE OF THE INDIVIDUAL POSSESSING THE POWER 18 SHALL BE CONSIDERED A RELEASE OF SUCH POWER. THE PRECEDING SENTENCE 19 SHALL APPLY WITH RESPECT TO THE LAPSE OF POWERS DURING ANY CALENDAR YEAR 20 ONLY TO THE EXTENT THAT THE PROPERTY, WHICH COULD HAVE BEEN APPOINTED BY 21 EXERCISE OF SUCH LAPSED POWERS, EXCEEDED IN VALUE, AT THE TIME OF SUCH 22 LAPSE, THE GREATER OF THE FOLLOWING AMOUNTS: 23 (A) $5,000, OR 24 (B) 5 PERCENT OF THE AGGREGATE VALUE, AT THE TIME OF SUCH LAPSE, OF 25 THE ASSETS OUT OF WHICH, OR THE PROCEEDS OF WHICH, THE EXERCISE OF THE 26 LAPSED POWERS COULD HAVE BEEN SATISFIED. 27 (3) DATE OF CREATION OF POWER.--FOR PURPOSES OF THIS SECTION, A POWER 28 OF APPOINTMENT CREATED BY A WILL EXECUTED ON OR BEFORE OCTOBER 21, 1942, 29 SHALL BE CONSIDERED A POWER CREATED ON OR BEFORE SUCH DATE IF THE PERSON 30 EXECUTING SUCH WILL DIES BEFORE JULY 1, 1949, WITHOUT HAVING REPUBLISHED 31 SUCH WILL, BY CODICIL OR OTHERWISE, AFTER OCTOBER 21, 1942. 32 S 2042. PROCEEDS OF LIFE INSURANCE. THE VALUE OF THE GROSS ESTATE 33 SHALL INCLUDE THE VALUE OF ALL PROPERTY-- 34 (1) RECEIVABLE BY THE EXECUTOR.--TO THE EXTENT OF THE AMOUNT RECEIV- 35 ABLE BY THE EXECUTOR AS INSURANCE UNDER POLICIES ON THE LIFE OF THE 36 DECEDENT. 37 (2) RECEIVABLE BY OTHER BENEFICIARIES.--TO THE EXTENT OF THE AMOUNT 38 RECEIVABLE BY ALL OTHER BENEFICIARIES AS INSURANCE UNDER POLICIES ON THE 39 LIFE OF THE DECEDENT WITH RESPECT TO WHICH THE DECEDENT POSSESSED AT HIS 40 DEATH ANY OF THE INCIDENTS OF OWNERSHIP, EXERCISABLE EITHER ALONE OR IN 41 CONJUNCTION WITH ANY OTHER PERSON. FOR PURPOSES OF THE PRECEDING 42 SENTENCE, THE TERM "INCIDENT OF OWNERSHIP" INCLUDES A REVERSIONARY 43 INTEREST (WHETHER ARISING BY THE EXPRESS TERMS OF THE POLICY OR OTHER 44 INSTRUMENT OR BY OPERATION OF LAW) ONLY IF THE VALUE OF SUCH REVERSION- 45 ARY INTEREST EXCEEDED 5 PERCENT OF THE VALUE OF THE POLICY IMMEDIATELY 46 BEFORE THE DEATH OF THE DECEDENT. AS USED IN THIS PARAGRAPH, THE TERM 47 "REVERSIONARY INTEREST" INCLUDES A POSSIBILITY THAT THE POLICY, OR THE 48 PROCEEDS OF THE POLICY, MAY RETURN TO THE DECEDENT OR HIS ESTATE, OR MAY 49 BE SUBJECT TO A POWER OF DISPOSITION BY HIM. THE VALUE OF A REVERSIONARY 50 INTEREST AT ANY TIME SHALL BE DETERMINED (WITHOUT REGARD TO THE FACT OF 51 THE DECEDENT'S DEATH) BY USUAL METHODS OF VALUATION, INCLUDING THE USE 52 OF TABLES OF MORTALITY AND ACTUARIAL PRINCIPLES, PURSUANT TO REGULATIONS 53 PRESCRIBED BY THE SECRETARY. IN DETERMINING THE VALUE OF A POSSIBILITY 54 THAT THE POLICY OR PROCEEDS THEREOF MAY BE SUBJECT TO A POWER OF DISPO- 55 SITION BY THE DECEDENT, SUCH POSSIBILITY SHALL BE VALUED AS IF IT WERE A S. 6359--C 242 1 POSSIBILITY THAT SUCH POLICY OR PROCEEDS MAY RETURN TO THE DECEDENT OR 2 HIS ESTATE. 3 S 2043. TRANSFERS FOR INSUFFICIENT CONSIDERATION. (A) IN GENERAL.--IF 4 ANY ONE OF THE TRANSFERS, TRUSTS, INTERESTS, RIGHTS, OR POWERS ENUMER- 5 ATED AND DESCRIBED IN SECTIONS 2035 TO 2038, INCLUSIVE, AND SECTION 2041 6 IS MADE, CREATED, EXERCISED, OR RELINQUISHED FOR A CONSIDERATION IN 7 MONEY OR MONEY'S WORTH, BUT IS NOT A BONA FIDE SALE FOR AN ADEQUATE AND 8 FULL CONSIDERATION IN MONEY OR MONEY'S WORTH, THERE SHALL BE INCLUDED IN 9 THE GROSS ESTATE ONLY THE EXCESS OF THE FAIR MARKET VALUE AT THE TIME OF 10 DEATH OF THE PROPERTY OTHERWISE TO BE INCLUDED ON ACCOUNT OF SUCH TRANS- 11 ACTION, OVER THE VALUE OF THE CONSIDERATION RECEIVED THEREFOR BY THE 12 DECEDENT. 13 (B) MARITAL RIGHTS NOT TREATED AS CONSIDERATION.-- 14 (1) IN GENERAL.--FOR PURPOSES OF THIS CHAPTER, A RELINQUISHMENT OR 15 PROMISED RELINQUISHMENT OF DOWER OR CURTESY, OR OF A STATUTORY ESTATE 16 CREATED IN LIEU OF DOWER OR CURTESY, OR OF OTHER MARITAL RIGHTS IN THE 17 DECEDENT'S PROPERTY OR ESTATE, SHALL NOT BE CONSIDERED TO ANY EXTENT A 18 CONSIDERATION "IN MONEY OR MONEY'S WORTH". 19 (2) EXCEPTION.--FOR PURPOSES OF SECTION 2053 (RELATING TO EXPENSES, 20 INDEBTEDNESS, AND TAXES), A TRANSFER OF PROPERTY WHICH SATISFIES THE 21 REQUIREMENTS OF PARAGRAPH (1) OF SECTION 2516 (RELATING TO CERTAIN PROP- 22 ERTY SETTLEMENTS) SHALL BE CONSIDERED TO BE MADE FOR AN ADEQUATE AND 23 FULL CONSIDERATION IN MONEY OR MONEY'S WORTH. 24 S 2044. CERTAIN PROPERTY FOR WHICH MARITAL DEDUCTION WAS PREVIOUSLY 25 ALLOWED. (A) GENERAL RULE.--THE VALUE OF THE GROSS ESTATE SHALL INCLUDE 26 THE VALUE OF ANY PROPERTY TO WHICH THIS SECTION APPLIES IN WHICH THE 27 DECEDENT HAD A QUALIFYING INCOME INTEREST FOR LIFE. 28 (B) PROPERTY TO WHICH THIS SECTION APPLIES.--THIS SECTION APPLIES TO 29 ANY PROPERTY IF-- 30 (1) A DEDUCTION WAS ALLOWED WITH RESPECT TO THE TRANSFER OF SUCH PROP- 31 ERTY TO THE DECEDENT-- 32 (A) UNDER SECTION 2056 BY REASON OF SUBSECTION (B)(7) THEREOF, OR 33 (B) UNDER SECTION 2523 BY REASON OF SUBSECTION (F) THEREOF, AND 34 (2) SECTION 2519 (RELATING TO DISPOSITIONS OF CERTAIN LIFE ESTATES) 35 DID NOT APPLY WITH RESPECT TO A DISPOSITION BY THE DECEDENT OF PART OR 36 ALL OF SUCH PROPERTY. 37 (C) PROPERTY TREATED AS HAVING PASSED FROM DECEDENT.--FOR PURPOSES OF 38 THIS CHAPTER AND CHAPTER 13, PROPERTY INCLUDIBLE IN THE GROSS ESTATE OF 39 THE DECEDENT UNDER SUBSECTION (A) SHALL BE TREATED AS PROPERTY PASSING 40 FROM THE DECEDENT. 41 S 2045. PRIOR INTERESTS. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED BY 42 LAW, SECTIONS 2034 TO 2042, INCLUSIVE, SHALL APPLY TO THE TRANSFERS, 43 TRUSTS, ESTATES, INTERESTS, RIGHTS, POWERS, AND RELINQUISHMENT OF 44 POWERS, AS SEVERALLY ENUMERATED AND DESCRIBED THEREIN, WHENEVER MADE, 45 CREATED, ARISING, EXISTING, EXERCISED, OR RELINQUISHED. 46 S 2046. DISCLAIMERS. FOR PROVISIONS RELATING TO THE EFFECT OF A QUALI- 47 FIED DISCLAIMER FOR PURPOSES OF THIS CHAPTER, SEE SECTION 2518. 48 S 2053. EXPENSES, INDEBTEDNESS, AND TAXES. (A) GENERAL RULE.--FOR 49 PURPOSES OF THE TAX IMPOSED BY SECTION 2001, THE VALUE OF THE TAXABLE 50 ESTATE SHALL BE DETERMINED BY DEDUCTING FROM THE VALUE OF THE GROSS 51 ESTATE SUCH AMOUNTS-- 52 (1) FOR FUNERAL EXPENSES, 53 (2) FOR ADMINISTRATION EXPENSES, 54 (3) FOR CLAIMS AGAINST THE ESTATE, AND 55 (4) FOR UNPAID MORTGAGES ON, OR ANY INDEBTEDNESS IN RESPECT OF, PROP- 56 ERTY WHERE THE VALUE OF THE DECEDENT'S INTEREST THEREIN, UNDIMINISHED BY S. 6359--C 243 1 SUCH MORTGAGE OR INDEBTEDNESS, IS INCLUDED IN THE VALUE OF THE GROSS 2 ESTATE, 3 AS ARE ALLOWABLE BY THE LAWS OF THE JURISDICTION, WHETHER WITHIN OR 4 WITHOUT THE UNITED STATES, UNDER WHICH THE ESTATE IS BEING ADMINISTERED. 5 (B) OTHER ADMINISTRATION EXPENSES.--SUBJECT TO THE LIMITATIONS IN 6 PARAGRAPH (1) OF SUBSECTION (C), THERE SHALL BE DEDUCTED IN DETERMINING 7 THE TAXABLE ESTATE AMOUNTS REPRESENTING EXPENSES INCURRED IN ADMINISTER- 8 ING PROPERTY NOT SUBJECT TO CLAIMS WHICH IS INCLUDED IN THE GROSS ESTATE 9 TO THE SAME EXTENT SUCH AMOUNTS WOULD BE ALLOWABLE AS A DEDUCTION UNDER 10 SUBSECTION (A) IF SUCH PROPERTY WERE SUBJECT TO CLAIMS, AND SUCH AMOUNTS 11 ARE PAID BEFORE THE EXPIRATION OF THE PERIOD OF LIMITATION FOR ASSESS- 12 MENT PROVIDED IN SECTION 6501. 13 (C) LIMITATIONS.-- 14 (1) LIMITATIONS APPLICABLE TO SUBSECTIONS (A) AND (B).-- 15 (A) CONSIDERATION FOR CLAIMS.--THE DEDUCTION ALLOWED BY THIS SECTION 16 IN THE CASE OF CLAIMS AGAINST THE ESTATE, UNPAID MORTGAGES, OR ANY 17 INDEBTEDNESS SHALL, WHEN FOUNDED ON A PROMISE OR AGREEMENT, BE LIMITED 18 TO THE EXTENT THAT THEY WERE CONTRACTED BONA FIDE AND FOR AN ADEQUATE 19 AND FULL CONSIDERATION IN MONEY OR MONEY'S WORTH; EXCEPT THAT IN ANY 20 CASE IN WHICH ANY SUCH CLAIM IS FOUNDED ON A PROMISE OR AGREEMENT OF THE 21 DECEDENT TO MAKE A CONTRIBUTION OR GIFT TO OR FOR THE USE OF ANY DONEE 22 DESCRIBED IN SECTION 2055 FOR THE PURPOSES SPECIFIED THEREIN, THE 23 DEDUCTION FOR SUCH CLAIMS SHALL NOT BE SO LIMITED, BUT SHALL BE LIMITED 24 TO THE EXTENT THAT IT WOULD BE ALLOWABLE AS A DEDUCTION UNDER SECTION 25 2055 IF SUCH PROMISE OR AGREEMENT CONSTITUTED A BEQUEST. 26 (B) CERTAIN TAXES.--ANY INCOME TAXES ON INCOME RECEIVED AFTER THE 27 DEATH OF THE DECEDENT, OR PROPERTY TAXES NOT ACCRUED BEFORE HIS DEATH, 28 OR ANY ESTATE, SUCCESSION, LEGACY, OR INHERITANCE TAXES, SHALL NOT BE 29 DEDUCTIBLE UNDER THIS SECTION. 30 (C) CERTAIN CLAIMS BY REMAINDERMEN.--NO DEDUCTION SHALL BE ALLOWED 31 UNDER THIS SECTION FOR A CLAIM AGAINST THE ESTATE BY A REMAINDERMAN 32 RELATING TO ANY PROPERTY DESCRIBED IN SECTION 2044. 33 (D) SECTION 6166 INTEREST.--NO DEDUCTION SHALL BE ALLOWED UNDER THIS 34 SECTION FOR ANY INTEREST PAYABLE UNDER SECTION 6601 ON ANY UNPAID 35 PORTION OF THE TAX IMPOSED BY SECTION 2001 FOR THE PERIOD DURING WHICH 36 AN EXTENSION OF TIME FOR PAYMENT OF SUCH TAX IS IN EFFECT UNDER SECTION 37 6166. 38 (2) LIMITATIONS APPLICABLE ONLY TO SUBSECTION (A).--IN THE CASE OF THE 39 AMOUNTS DESCRIBED IN SUBSECTION (A), THERE SHALL BE DISALLOWED THE 40 AMOUNT BY WHICH THE DEDUCTIONS SPECIFIED THEREIN EXCEED THE VALUE, AT 41 THE TIME OF THE DECEDENT'S DEATH, OF PROPERTY SUBJECT TO CLAIMS, EXCEPT 42 TO THE EXTENT THAT SUCH DEDUCTIONS REPRESENT AMOUNTS PAID BEFORE THE 43 DATE PRESCRIBED FOR THE FILING OF THE ESTATE TAX RETURN. FOR PURPOSES OF 44 THIS SECTION, THE TERM "PROPERTY SUBJECT TO CLAIMS" MEANS PROPERTY 45 INCLUDIBLE IN THE GROSS ESTATE OF THE DECEDENT WHICH, OR THE AVAILS OF 46 WHICH, WOULD UNDER THE APPLICABLE LAW, BEAR THE BURDEN OF THE PAYMENT OF 47 SUCH DEDUCTIONS IN THE FINAL ADJUSTMENT AND SETTLEMENT OF THE ESTATE, 48 EXCEPT THAT THE VALUE OF THE PROPERTY SHALL BE REDUCED BY THE AMOUNT OF 49 THE DEDUCTION UNDER SECTION 2054 ATTRIBUTABLE TO SUCH PROPERTY. 50 (D) CERTAIN FOREIGN DEATH TAXES.-- 51 (1) IN GENERAL.--NOTWITHSTANDING THE PROVISIONS OF SUBSECTION 52 (C)(1)(B), FOR PURPOSES OF THE TAX IMPOSED BY SECTION 2001, THE VALUE OF 53 THE TAXABLE ESTATE MAY BE DETERMINED, IF THE EXECUTOR SO ELECTS BEFORE 54 THE EXPIRATION OF THE PERIOD OF LIMITATION FOR ASSESSMENT PROVIDED IN 55 SECTION 6501, BY DEDUCTING FROM THE VALUE OF THE GROSS ESTATE THE AMOUNT 56 (AS DETERMINED IN ACCORDANCE WITH REGULATIONS PRESCRIBED BY THE SECRE- S. 6359--C 244 1 TARY) OF ANY ESTATE, SUCCESSION, LEGACY, OR INHERITANCE TAX IMPOSED BY 2 AND ACTUALLY PAID TO ANY FOREIGN COUNTRY, IN RESPECT OF ANY PROPERTY 3 SITUATED WITHIN SUCH FOREIGN COUNTRY AND INCLUDED IN THE GROSS ESTATE OF 4 A CITIZEN OR RESIDENT OF THE UNITED STATES, UPON A TRANSFER BY THE DECE- 5 DENT FOR PUBLIC, CHARITABLE, OR RELIGIOUS USES DESCRIBED IN SECTION 6 2055. THE DETERMINATION UNDER THIS PARAGRAPH OF THE COUNTRY WITHIN WHICH 7 PROPERTY IS SITUATED SHALL BE MADE IN ACCORDANCE WITH THE RULES APPLICA- 8 BLE UNDER SUBCHAPTER B (SEC. 2101 AND FOLLOWING) IN DETERMINING WHETHER 9 PROPERTY IS SITUATED WITHIN OR WITHOUT THE UNITED STATES. ANY ELECTION 10 UNDER THIS PARAGRAPH SHALL BE EXERCISED IN ACCORDANCE WITH REGULATIONS 11 PRESCRIBED BY THE SECRETARY. 12 (2) CONDITION FOR ALLOWANCE OF DEDUCTION.--NO DEDUCTION SHALL BE 13 ALLOWED UNDER PARAGRAPH (1) FOR A FOREIGN DEATH TAX SPECIFIED THEREIN 14 UNLESS THE DECREASE IN THE TAX IMPOSED BY SECTION 2001 WHICH RESULTS 15 FROM THE DEDUCTION PROVIDED IN PARAGRAPH (1) WILL INURE SOLELY FOR THE 16 BENEFIT OF THE PUBLIC, CHARITABLE, OR RELIGIOUS TRANSFEREES DESCRIBED IN 17 SECTION 2055 OR SECTION 2106(A)(2). IN ANY CASE WHERE THE TAX IMPOSED 18 BY SECTION 2001 IS EQUITABLY APPORTIONED AMONG ALL THE TRANSFEREES OF 19 PROPERTY INCLUDED IN THE GROSS ESTATE, INCLUDING THOSE DESCRIBED IN 20 SECTIONS 2055 AND 2106(A)(2) (TAKING INTO ACCOUNT ANY EXEMPTIONS, CRED- 21 ITS, OR DEDUCTIONS ALLOWED BY THIS CHAPTER), IN DETERMINING SUCH 22 DECREASE, THERE SHALL BE DISREGARDED ANY DECREASE IN THE FEDERAL ESTATE 23 TAX WHICH ANY TRANSFEREES OTHER THAN THOSE DESCRIBED IN SECTIONS 2055 24 AND 2106(A)(2) ARE REQUIRED TO PAY. 25 (3) EFFECT ON CREDIT FOR FOREIGN DEATH TAXES OF DEDUCTION UNDER THIS 26 SUBSECTION.-- 27 (A) ELECTION.--AN ELECTION UNDER THIS SUBSECTION SHALL BE DEEMED A 28 WAIVER OF THE RIGHT TO CLAIM A CREDIT, AGAINST THE FEDERAL ESTATE TAX, 29 UNDER A DEATH TAX CONVENTION WITH ANY FOREIGN COUNTRY FOR ANY TAX OR 30 PORTION THEREOF IN RESPECT OF WHICH A DEDUCTION IS TAKEN UNDER THIS 31 SUBSECTION. 32 (B) CROSS REFERENCE.-- 33 SEE SECTION 2011(D) FOR THE EFFECT OF A DEDUCTION TAKEN UNDER THIS 34 PARAGRAPH ON THE CREDIT FOR FOREIGN DEATH TAXES. 35 (E) MARITAL RIGHTS.-- 36 FOR PROVISIONS TREATING CERTAIN RELINQUISHMENTS OF MARITAL RIGHTS AS 37 CONSIDERATION IN MONEY OR MONEY'S WORTH, SEE SECTION 2043(B)(2). 38 S 2054. LOSSES. FOR PURPOSES OF THE TAX IMPOSED BY SECTION 2001, THE 39 VALUE OF THE TAXABLE ESTATE SHALL BE DETERMINED BY DEDUCTING FROM THE 40 VALUE OF THE GROSS ESTATE LOSSES INCURRED DURING THE SETTLEMENT OF 41 ESTATES ARISING FROM FIRES, STORMS, SHIPWRECKS, OR OTHER CASUALTIES, OR 42 FROM THEFT, WHEN SUCH LOSSES ARE NOT COMPENSATED FOR BY INSURANCE OR 43 OTHERWISE. 44 S 2055. TRANSFERS FOR PUBLIC, CHARITABLE, AND RELIGIOUS USES. 45 (A) IN GENERAL.--FOR PURPOSES OF THE TAX IMPOSED BY SECTION 2001, THE 46 VALUE OF THE TAXABLE ESTATE SHALL BE DETERMINED BY DEDUCTING FROM THE 47 VALUE OF THE GROSS ESTATE THE AMOUNT OF ALL BEQUESTS, LEGACIES, DEVISES, 48 OR TRANSFERS-- 49 (1) TO OR FOR THE USE OF THE UNITED STATES, ANY STATE, ANY POLITICAL 50 SUBDIVISION THEREOF, OR THE DISTRICT OF COLUMBIA, FOR EXCLUSIVELY PUBLIC 51 PURPOSES; 52 (2) TO OR FOR THE USE OF ANY CORPORATION ORGANIZED AND OPERATED EXCLU- 53 SIVELY FOR RELIGIOUS, CHARITABLE, SCIENTIFIC, LITERARY, OR EDUCATIONAL 54 PURPOSES, INCLUDING THE ENCOURAGEMENT OF ART, OR TO FOSTER NATIONAL OR 55 INTERNATIONAL AMATEUR SPORTS COMPETITION (BUT ONLY IF NO PART OF ITS 56 ACTIVITIES INVOLVE THE PROVISION OF ATHLETIC FACILITIES OR EQUIPMENT), S. 6359--C 245 1 AND THE PREVENTION OF CRUELTY TO CHILDREN OR ANIMALS, NO PART OF THE NET 2 EARNINGS OF WHICH INURES TO THE BENEFIT OF ANY PRIVATE STOCKHOLDER OR 3 INDIVIDUAL, WHICH IS NOT DISQUALIFIED FOR TAX EXEMPTION UNDER SECTION 4 501(C)(3) BY REASON OF ATTEMPTING TO INFLUENCE LEGISLATION, AND WHICH 5 DOES NOT PARTICIPATE IN, OR INTERVENE IN (INCLUDING THE PUBLISHING OR 6 DISTRIBUTING OF STATEMENTS), ANY POLITICAL CAMPAIGN ON BEHALF OF (OR IN 7 OPPOSITION TO) ANY CANDIDATE FOR PUBLIC OFFICE; 8 (3) TO A TRUSTEE OR TRUSTEES, OR A FRATERNAL SOCIETY, ORDER, OR ASSO- 9 CIATION OPERATING UNDER THE LODGE SYSTEM, BUT ONLY IF SUCH CONTRIBUTIONS 10 OR GIFTS ARE TO BE USED BY SUCH TRUSTEE OR TRUSTEES, OR BY SUCH FRATER- 11 NAL SOCIETY, ORDER, OR ASSOCIATION, EXCLUSIVELY FOR RELIGIOUS, CHARITA- 12 BLE, SCIENTIFIC, LITERARY, OR EDUCATIONAL PURPOSES, OR FOR THE 13 PREVENTION OF CRUELTY TO CHILDREN OR ANIMALS, SUCH TRUST, FRATERNAL 14 SOCIETY, ORDER, OR ASSOCIATION WOULD NOT BE DISQUALIFIED FOR TAX 15 EXEMPTION UNDER SECTION 501(C)(3) BY REASON OF ATTEMPTING TO INFLUENCE 16 LEGISLATION, AND SUCH TRUSTEE OR TRUSTEES, OR SUCH FRATERNAL SOCIETY, 17 ORDER, OR ASSOCIATION, DOES NOT PARTICIPATE IN, OR INTERVENE IN (INCLUD- 18 ING THE PUBLISHING OR DISTRIBUTING OF STATEMENTS), ANY POLITICAL 19 CAMPAIGN ON BEHALF OF (OR IN OPPOSITION TO) ANY CANDIDATE FOR PUBLIC 20 OFFICE; 21 (4) TO OR FOR THE USE OF ANY VETERANS' ORGANIZATION INCORPORATED BY 22 ACT OF CONGRESS, OR OF ITS DEPARTMENTS OR LOCAL CHAPTERS OR POSTS, NO 23 PART OF THE NET EARNINGS OF WHICH INURES TO THE BENEFIT OF ANY PRIVATE 24 SHAREHOLDER OR INDIVIDUAL; OR 25 (5) TO AN EMPLOYEE STOCK OWNERSHIP PLAN IF SUCH TRANSFER QUALIFIES AS 26 A QUALIFIED GRATUITOUS TRANSFER OF QUALIFIED EMPLOYER SECURITIES WITHIN 27 THE MEANING OF SECTION 664(G). 28 FOR PURPOSES OF THIS SUBSECTION, THE COMPLETE TERMINATION BEFORE THE 29 DATE PRESCRIBED FOR THE FILING OF THE ESTATE TAX RETURN OF A POWER TO 30 CONSUME, INVADE, OR APPROPRIATE PROPERTY FOR THE BENEFIT OF AN INDIVID- 31 UAL BEFORE SUCH POWER HAS BEEN EXERCISED BY REASON OF THE DEATH OF SUCH 32 INDIVIDUAL OR FOR ANY OTHER REASON SHALL BE CONSIDERED AND DEEMED TO BE 33 A QUALIFIED DISCLAIMER WITH THE SAME FULL FORCE AND EFFECT AS THOUGH HE 34 HAD FILED SUCH QUALIFIED DISCLAIMER. RULES SIMILAR TO THE RULES OF 35 SECTION 501(J) SHALL APPLY FOR PURPOSES OF PARAGRAPH (2). 36 (B) POWERS OF APPOINTMENT.--PROPERTY INCLUDIBLE IN THE DECEDENT'S 37 GROSS ESTATE UNDER SECTION 2041 (RELATING TO POWERS OF APPOINTMENT) 38 RECEIVED BY A DONEE DESCRIBED IN THIS SECTION SHALL, FOR PURPOSES OF 39 THIS SECTION, BE CONSIDERED A BEQUEST OF SUCH DECEDENT. 40 (C) DEATH TAXES PAYABLE OUT OF BEQUESTS.--IF THE TAX IMPOSED BY 41 SECTION 2001, OR ANY ESTATE, SUCCESSION, LEGACY, OR INHERITANCE TAXES, 42 ARE, EITHER BY THE TERMS OF THE WILL, BY THE LAW OF THE JURISDICTION 43 UNDER WHICH THE ESTATE IS ADMINISTERED, OR BY THE LAW OF THE JURISDIC- 44 TION IMPOSING THE PARTICULAR TAX, PAYABLE IN WHOLE OR IN PART OUT OF THE 45 BEQUESTS, LEGACIES, OR DEVISES OTHERWISE DEDUCTIBLE UNDER THIS SECTION, 46 THEN THE AMOUNT DEDUCTIBLE UNDER THIS SECTION SHALL BE THE AMOUNT OF 47 SUCH BEQUESTS, LEGACIES, OR DEVISES REDUCED BY THE AMOUNT OF SUCH TAXES. 48 (D) LIMITATION ON DEDUCTION.--THE AMOUNT OF THE DEDUCTION UNDER THIS 49 SECTION FOR ANY TRANSFER SHALL NOT EXCEED THE VALUE OF THE TRANSFERRED 50 PROPERTY REQUIRED TO BE INCLUDED IN THE GROSS ESTATE. 51 (E) DISALLOWANCE OF DEDUCTIONS IN CERTAIN CASES.-- 52 (1) NO DEDUCTION SHALL BE ALLOWED UNDER THIS SECTION FOR A TRANSFER TO 53 OR FOR THE USE OF AN ORGANIZATION OR TRUST DESCRIBED IN SECTION 508(D) 54 OR 4948(C)(4) SUBJECT TO THE CONDITIONS SPECIFIED IN SUCH SECTIONS. 55 (2) WHERE AN INTEREST IN PROPERTY (OTHER THAN AN INTEREST DESCRIBED IN 56 SECTION 170(F)(3)(B)) PASSES OR HAS PASSED FROM THE DECEDENT TO A S. 6359--C 246 1 PERSON, OR FOR A USE, DESCRIBED IN SUBSECTION (A), AND AN INTEREST 2 (OTHER THAN AN INTEREST WHICH IS EXTINGUISHED UPON THE DECEDENT'S DEATH) 3 IN THE SAME PROPERTY PASSES OR HAS PASSED (FOR LESS THAN AN ADEQUATE AND 4 FULL CONSIDERATION IN MONEY OR MONEY'S WORTH) FROM THE DECEDENT TO A 5 PERSON, OR FOR A USE, NOT DESCRIBED IN SUBSECTION (A), NO DEDUCTION 6 SHALL BE ALLOWED UNDER THIS SECTION FOR THE INTEREST WHICH PASSES OR HAS 7 PASSED TO THE PERSON, OR FOR THE USE, DESCRIBED IN SUBSECTION (A) 8 UNLESS-- 9 (A) IN THE CASE OF A REMAINDER INTEREST, SUCH INTEREST IS IN A TRUST 10 WHICH IS A CHARITABLE REMAINDER ANNUITY TRUST OR A CHARITABLE REMAINDER 11 UNITRUST (DESCRIBED IN SECTION 664) OR A POOLED INCOME FUND (DESCRIBED 12 IN SECTION 642(C)(5)), OR 13 (B) IN THE CASE OF ANY OTHER INTEREST, SUCH INTEREST IS IN THE FORM OF 14 A GUARANTEED ANNUITY OR IS A FIXED PERCENTAGE DISTRIBUTED YEARLY OF THE 15 FAIR MARKET VALUE OF THE PROPERTY (TO BE DETERMINED YEARLY). 16 (3) REFORMATIONS TO COMPLY WITH PARAGRAPH (2).-- 17 (A) IN GENERAL.--A DEDUCTION SHALL BE ALLOWED UNDER SUBSECTION (A) IN 18 RESPECT OF ANY QUALIFIED REFORMATION. 19 (B) QUALIFIED REFORMATION.--FOR PURPOSES OF THIS PARAGRAPH, THE TERM 20 "QUALIFIED REFORMATION" MEANS A CHANGE OF A GOVERNING INSTRUMENT BY 21 REFORMATION, AMENDMENT, CONSTRUCTION, OR OTHERWISE WHICH CHANGES A 22 REFORMABLE INTEREST INTO A QUALIFIED INTEREST BUT ONLY IF-- 23 (I) ANY DIFFERENCE BETWEEN-- 24 (I) THE ACTUARIAL VALUE (DETERMINED AS OF THE DATE OF THE DECEDENT'S 25 DEATH) OF THE QUALIFIED INTEREST, AND 26 (II) THE ACTUARIAL VALUE (AS SO DETERMINED) OF THE REFORMABLE INTER- 27 EST, 28 DOES NOT EXCEED 5 PERCENT OF THE ACTUARIAL VALUE (AS SO DETERMINED) OF 29 THE REFORMABLE INTEREST, 30 (II) IN THE CASE OF-- 31 (I) A CHARITABLE REMAINDER INTEREST, THE NONREMAINDER INTEREST (BEFORE 32 AND AFTER THE QUALIFIED REFORMATION) TERMINATED AT THE SAME TIME, OR 33 (II) ANY OTHER INTEREST, THE REFORMABLE INTEREST AND THE QUALIFIED 34 INTEREST ARE FOR THE SAME PERIOD, AND 35 (III) SUCH CHANGE IS EFFECTIVE AS OF THE DATE OF THE DECEDENT'S DEATH. 36 A NONREMAINDER INTEREST (BEFORE REFORMATION) FOR A TERM OF YEARS IN 37 EXCESS OF 20 YEARS SHALL BE TREATED AS SATISFYING SUBCLAUSE (I) OF 38 CLAUSE (II) IF SUCH INTEREST (AFTER REFORMATION) IS FOR A TERM OF 20 39 YEARS. 40 (C) REFORMABLE INTEREST.--FOR PURPOSES OF THIS PARAGRAPH-- 41 (I) IN GENERAL.--THE TERM "REFORMABLE INTEREST" MEANS ANY INTEREST FOR 42 WHICH A DEDUCTION WOULD BE ALLOWABLE UNDER SUBSECTION (A) AT THE TIME OF 43 THE DECEDENT'S DEATH BUT FOR PARAGRAPH (2). 44 (II) BENEFICIARY'S INTEREST MUST BE FIXED.--THE TERM "REFORMABLE 45 INTEREST" DOES NOT INCLUDE ANY INTEREST UNLESS, BEFORE THE REMAINDER 46 VESTS IN POSSESSION, ALL PAYMENTS TO PERSONS OTHER THAN AN ORGANIZATION 47 DESCRIBED IN SUBSECTION (A) ARE EXPRESSED EITHER IN SPECIFIED DOLLAR 48 AMOUNTS OR A FIXED PERCENTAGE OF THE FAIR MARKET VALUE OF THE PROPERTY. 49 FOR PURPOSES OF DETERMINING WHETHER ALL SUCH PAYMENTS ARE EXPRESSED AS A 50 FIXED PERCENTAGE OF THE FAIR MARKET VALUE OF THE PROPERTY, SECTION 51 664(D)(3) SHALL BE TAKEN INTO ACCOUNT. 52 (III) SPECIAL RULE WHERE TIMELY COMMENCEMENT OF REFORMATION.--CLAUSE 53 (II) SHALL NOT APPLY TO ANY INTEREST IF A JUDICIAL PROCEEDING IS 54 COMMENCED TO CHANGE SUCH INTEREST INTO A QUALIFIED INTEREST NOT LATER 55 THAN THE 90TH DAY AFTER-- 56 (I) IF AN ESTATE TAX RETURN IS REQUIRED TO BE FILED, THE LAST DATE S. 6359--C 247 1 (INCLUDING EXTENSIONS) FOR FILING SUCH RETURN, OR 2 (II) IF NO ESTATE TAX RETURN IS REQUIRED TO BE FILED, THE LAST DATE 3 (INCLUDING EXTENSIONS) FOR FILING THE INCOME TAX RETURN FOR THE 1ST 4 TAXABLE YEAR FOR WHICH SUCH A RETURN IS REQUIRED TO BE FILED BY THE 5 TRUST. 6 (IV) SPECIAL RULE FOR WILL EXECUTED BEFORE JANUARY 1, 1979, ETC.--IN 7 THE CASE OF ANY INTEREST PASSING UNDER A WILL EXECUTED BEFORE JANUARY 1, 8 1979, OR UNDER A TRUST CREATED BEFORE SUCH DATE, CLAUSE (II) SHALL NOT 9 APPLY. 10 (D) QUALIFIED INTEREST.--FOR PURPOSES OF THIS PARAGRAPH, THE TERM 11 "QUALIFIED INTEREST" MEANS AN INTEREST FOR WHICH A DEDUCTION IS ALLOW- 12 ABLE UNDER SUBSECTION (A). 13 (E) LIMITATION.--THE DEDUCTION REFERRED TO IN SUBPARAGRAPH (A) SHALL 14 NOT EXCEED THE AMOUNT OF THE DEDUCTION WHICH WOULD HAVE BEEN ALLOWABLE 15 FOR THE REFORMABLE INTEREST BUT FOR PARAGRAPH (2). 16 (F) SPECIAL RULE WHERE INCOME BENEFICIARY DIES.--IF (BY REASON OF THE 17 DEATH OF ANY INDIVIDUAL, OR BY TERMINATION OR DISTRIBUTION OF A TRUST IN 18 ACCORDANCE WITH THE TERMS OF THE TRUST INSTRUMENT) BY THE DUE DATE FOR 19 FILING THE ESTATE TAX RETURN (INCLUDING ANY EXTENSION THEREOF) A REFORM- 20 ABLE INTEREST IS IN A WHOLLY CHARITABLE TRUST OR PASSES DIRECTLY TO A 21 PERSON OR FOR A USE DESCRIBED IN SUBSECTION (A), A DEDUCTION SHALL BE 22 ALLOWED FOR SUCH REFORMABLE INTEREST AS IF IT HAD MET THE REQUIREMENTS 23 OF PARAGRAPH (2) ON THE DATE OF THE DECEDENT'S DEATH. FOR PURPOSES OF 24 THE PRECEDING SENTENCE, THE TERM "WHOLLY CHARITABLE TRUST" MEANS A CHAR- 25 ITABLE TRUST WHICH, UPON THE ALLOWANCE OF A DEDUCTION, WOULD BE 26 DESCRIBED IN SECTION 4947(A)(1). 27 (G) STATUTE OF LIMITATIONS.--THE PERIOD FOR ASSESSING ANY DEFICIENCY 28 OF ANY TAX ATTRIBUTABLE TO THE APPLICATION OF THIS PARAGRAPH SHALL NOT 29 EXPIRE BEFORE THE DATE 1 YEAR AFTER THE DATE ON WHICH THE SECRETARY IS 30 NOTIFIED THAT SUCH REFORMATION (OR OTHER PROCEEDING PURSUANT TO SUBPARA- 31 GRAPH (J)1 HAS OCCURRED. 32 (H) REGULATIONS.--THE SECRETARY SHALL PRESCRIBE SUCH REGULATIONS AS 33 MAY BE NECESSARY TO CARRY OUT THE PURPOSES OF THIS PARAGRAPH, INCLUDING 34 REGULATIONS PROVIDING SUCH ADJUSTMENTS IN THE APPLICATION OF THE 35 PROVISIONS OF SECTION 508 (RELATING TO SPECIAL RULES RELATING TO SECTION 36 501(C)(3) ORGANIZATIONS), SUBCHAPTER J (RELATING TO ESTATES, TRUSTS, 37 BENEFICIARIES, AND DECEDENTS), AND CHAPTER 42 (RELATING TO PRIVATE FOUN- 38 DATIONS) AS MAY BE NECESSARY BY REASON OF THE QUALIFIED REFORMATION. 39 (I) REFORMATIONS PERMITTED IN CASE OF REMAINDER INTERESTS IN RESIDENCE 40 OR FARM, POOLED INCOME FUNDS, ETC.--THE SECRETARY SHALL PRESCRIBE REGU- 41 LATIONS (CONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH) PERMITTING 42 REFORMATIONS IN THE CASE OF ANY FAILURE-- 43 (I) TO MEET THE REQUIREMENTS OF SECTION 170(F)(3)(B) (RELATING TO 44 REMAINDER INTERESTS IN PERSONAL RESIDENCE OR FARM, ETC.), OR 45 (II) TO MEET THE REQUIREMENTS OF SECTION 642(C)(5). 46 (J) VOID OR REFORMED TRUST IN CASES OF INSUFFICIENT REMAINDER INTER- 47 ESTS.--IN THE CASE OF A TRUST THAT WOULD QUALIFY (OR COULD BE REFORMED 48 TO QUALIFY PURSUANT TO SUBPARAGRAPH (B)) BUT FOR FAILURE TO SATISFY THE 49 REQUIREMENT OF PARAGRAPH (1)(D) OR (2)(D) OF SECTION 664(D), SUCH TRUST 50 MAY BE-- 51 (I) DECLARED NULL AND VOID AB INITIO, OR 52 (II) CHANGED BY REFORMATION, AMENDMENT, OR OTHERWISE TO MEET SUCH 53 REQUIREMENT BY REDUCING THE PAYOUT RATE OR THE DURATION (OR BOTH) OF ANY 54 NONCHARITABLE BENEFICIARY'S INTEREST TO THE EXTENT NECESSARY TO SATISFY 55 SUCH REQUIREMENT, S. 6359--C 248 1 PURSUANT TO A PROCEEDING THAT IS COMMENCED WITHIN THE PERIOD REQUIRED 2 IN SUBPARAGRAPH (C)(III). IN A CASE DESCRIBED IN CLAUSE (I), NO 3 DEDUCTION SHALL BE ALLOWED UNDER THIS TITLE FOR ANY TRANSFER TO THE 4 TRUST AND ANY TRANSACTIONS ENTERED INTO BY THE TRUST PRIOR TO BEING 5 DECLARED VOID SHALL BE TREATED AS ENTERED INTO BY THE TRANSFEROR. 6 (4) WORKS OF ART AND THEIR COPYRIGHTS TREATED AS SEPARATE PROPERTIES 7 IN CERTAIN CASES.-- 8 (A) IN GENERAL.--IN THE CASE OF A QUALIFIED CONTRIBUTION OF A WORK OF 9 ART, THE WORK OF ART AND THE COPYRIGHT ON SUCH WORK OF ART SHALL BE 10 TREATED AS SEPARATE PROPERTIES FOR PURPOSES OF PARAGRAPH (2). 11 (B) WORK OF ART DEFINED.--FOR PURPOSES OF THIS PARAGRAPH, THE TERM 12 "WORK OF ART" MEANS ANY TANGIBLE PERSONAL PROPERTY WITH RESPECT TO WHICH 13 THERE IS A COPYRIGHT UNDER FEDERAL LAW. 14 (C) QUALIFIED CONTRIBUTION DEFINED.--FOR PURPOSES OF THIS PARAGRAPH, 15 THE TERM "QUALIFIED CONTRIBUTION" MEANS ANY TRANSFER OF PROPERTY TO A 16 QUALIFIED ORGANIZATION IF THE USE OF THE PROPERTY BY THE ORGANIZATION IS 17 RELATED TO THE PURPOSE OR FUNCTION CONSTITUTING THE BASIS FOR ITS 18 EXEMPTION UNDER SECTION 501. 19 (D) QUALIFIED ORGANIZATION DEFINED.--FOR PURPOSES OF THIS PARAGRAPH, 20 THE TERM "QUALIFIED ORGANIZATION" MEANS ANY ORGANIZATION DESCRIBED IN 21 SECTION 501(C)(3) OTHER THAN A PRIVATE FOUNDATION (AS DEFINED IN SECTION 22 509). FOR PURPOSES OF THE PRECEDING SENTENCE, A PRIVATE OPERATING FOUN- 23 DATION (AS DEFINED IN SECTION 4942(J)(3)) SHALL NOT BE TREATED AS A 24 PRIVATE FOUNDATION. 25 (5) CONTRIBUTIONS TO DONOR ADVISED FUNDS.--A DEDUCTION OTHERWISE 26 ALLOWED UNDER SUBSECTION (A) FOR ANY CONTRIBUTION TO A DONOR ADVISED 27 FUND (AS DEFINED IN SECTION 4966(D)(2)) SHALL ONLY BE ALLOWED IF-- 28 (A) THE SPONSORING ORGANIZATION (AS DEFINED IN SECTION 4966(D)(1)) 29 WITH RESPECT TO SUCH DONOR ADVISED FUND IS NOT-- 30 (I) DESCRIBED IN PARAGRAPH (3) OR (4) OF SUBSECTION (A), OR 31 (II) A TYPE III SUPPORTING ORGANIZATION (AS DEFINED IN SECTION 32 4943(F)(5)(A)) WHICH IS NOT A FUNCTIONALLY INTEGRATED TYPE III SUPPORT- 33 ING ORGANIZATION (AS DEFINED IN SECTION 4943(F)(5)(B)), AND 34 (B) THE TAXPAYER OBTAINS A CONTEMPORANEOUS WRITTEN ACKNOWLEDGMENT 35 (DETERMINED UNDER RULES SIMILAR TO THE RULES OF SECTION 170(F)(8)(C)) 36 FROM THE SPONSORING ORGANIZATION (AS SO DEFINED) OF SUCH DONOR ADVISED 37 FUND THAT SUCH ORGANIZATION HAS EXCLUSIVE LEGAL CONTROL OVER THE ASSETS 38 CONTRIBUTED. 39 (F) SPECIAL RULE FOR IRREVOCABLE TRANSFERS OF EASEMENTS IN REAL 40 PROPERTY.--A DEDUCTION SHALL BE ALLOWED UNDER SUBSECTION (A) IN RESPECT 41 OF ANY TRANSFER OF A QUALIFIED REAL PROPERTY INTEREST (AS DEFINED IN 42 SECTION 170(H)(2)(C)) WHICH MEETS THE REQUIREMENTS OF SECTION 170(H) 43 (WITHOUT REGARD TO PARAGRAPH (4)(A) THEREOF). 44 (G) CROSS REFERENCES.-- 45 (1) FOR OPTION AS TO TIME FOR VALUATION FOR PURPOSE OF DEDUCTION UNDER 46 THIS SECTION, SEE SECTION 2032. 47 (2) FOR TREATMENT OF CERTAIN ORGANIZATIONS PROVIDING CHILD CARE, SEE 48 SECTION 501(K). 49 (3) FOR EXEMPTION OF GIFTS AND BEQUESTS TO OR FOR THE BENEFIT OF 50 LIBRARY OF CONGRESS, SEE SECTION 5 OF THE ACT OF MARCH 3, 1925, AS 51 AMENDED (2 U.S.C. 161). 52 (4) FOR TREATMENT OF GIFTS AND BEQUESTS FOR THE BENEFIT OF THE NAVAL 53 HISTORICAL CENTER AS GIFTS OR BEQUESTS TO OR FOR THE USE OF THE UNITED 54 STATES, SEE SECTION 7222 OF TITLE 10, UNITED STATES CODE. 55 (5) FOR TREATMENT OF GIFTS AND BEQUESTS TO OR FOR THE BENEFIT OF 56 NATIONAL PARK FOUNDATION AS GIFTS OR BEQUESTS TO OR FOR THE USE OF THE S. 6359--C 249 1 UNITED STATES, SEE SECTION 8 OF THE ACT OF DECEMBER 18, 1967 (16 U.S.C. 2 191). 3 (6) FOR TREATMENT OF GIFTS, DEVISES, OR BEQUESTS ACCEPTED BY THE 4 SECRETARY OF STATE, THE DIRECTOR OF THE INTERNATIONAL COMMUNICATION 5 AGENCY, OR THE DIRECTOR OF THE UNITED STATES INTERNATIONAL DEVELOPMENT 6 COOPERATION AGENCY AS GIFTS, DEVISES, OR BEQUESTS TO OR FOR THE USE OF 7 THE UNITED STATES, SEE SECTION 25 OF THE STATE DEPARTMENT BASIC AUTHORI- 8 TIES ACT OF 1956. 9 (7) FOR TREATMENT OF GIFTS OR BEQUESTS OF MONEY ACCEPTED BY THE ATTOR- 10 NEY GENERAL FOR CREDIT TO "COMMISSARY FUNDS, FEDERAL PRISONS" AS GIFTS 11 OR BEQUESTS TO OR FOR THE USE OF THE UNITED STATES, SEE SECTION 4043 OF 12 TITLE 18, UNITED STATES CODE. 13 (8) FOR PAYMENT OF TAX ON GIFTS AND BEQUESTS OF UNITED STATES OBLI- 14 GATIONS TO THE UNITED STATES, SEE SECTION 3113(E) OF TITLE 31, UNITED 15 STATES CODE. 16 (9) FOR TREATMENT OF GIFTS AND BEQUESTS FOR BENEFIT OF THE NAVAL ACAD- 17 EMY AS GIFTS OR BEQUESTS TO OR FOR THE USE OF THE UNITED STATES, SEE 18 SECTION 6973 OF TITLE 10, UNITED STATES CODE. 19 (10) FOR TREATMENT OF GIFTS AND BEQUESTS FOR BENEFIT OF THE NAVAL 20 ACADEMY MUSEUM AS GIFTS OR BEQUESTS TO OR FOR THE USE OF THE UNITED 21 STATES, SEE SECTION 6974 OF TITLE 10, UNITED STATES CODE. 22 (11) FOR EXEMPTION OF GIFTS AND BEQUESTS RECEIVED BY NATIONAL ARCHIVES 23 TRUST FUND BOARD, SEE SECTION 2308 OF TITLE 44, UNITED STATES CODE. 24 (12) FOR TREATMENT OF GIFTS AND BEQUESTS TO OR FOR THE USE OF INDIAN 25 TRIBAL GOVERNMENTS (OR THEIR SUBDIVISIONS), SEE SECTION 7871. 26 S 2056. BEQUESTS, ETC., TO SURVIVING SPOUSE. (A) ALLOWANCE OF MARITAL 27 DEDUCTION.--FOR PURPOSES OF THE TAX IMPOSED BY SECTION 2001, THE VALUE 28 OF THE TAXABLE ESTATE SHALL, EXCEPT AS LIMITED BY SUBSECTION (B), BE 29 DETERMINED BY DEDUCTING FROM THE VALUE OF THE GROSS ESTATE AN AMOUNT 30 EQUAL TO THE VALUE OF ANY INTEREST IN PROPERTY WHICH PASSES OR HAS 31 PASSED FROM THE DECEDENT TO HIS SURVIVING SPOUSE, BUT ONLY TO THE EXTENT 32 THAT SUCH INTEREST IS INCLUDED IN DETERMINING THE VALUE OF THE GROSS 33 ESTATE. 34 (B) LIMITATION IN THE CASE OF LIFE ESTATE OR OTHER TERMINABLE INTER- 35 EST.-- 36 (1) GENERAL RULE.--WHERE, ON THE LAPSE OF TIME, ON THE OCCURRENCE OF 37 AN EVENT OR CONTINGENCY, OR ON THE FAILURE OF AN EVENT OR CONTINGENCY TO 38 OCCUR, AN INTEREST PASSING TO THE SURVIVING SPOUSE WILL TERMINATE OR 39 FAIL, NO DEDUCTION SHALL BE ALLOWED UNDER THIS SECTION WITH RESPECT TO 40 SUCH INTEREST-- 41 (A) IF AN INTEREST IN SUCH PROPERTY PASSES OR HAS PASSED (FOR LESS 42 THAN AN ADEQUATE AND FULL CONSIDERATION IN MONEY OR MONEY'S WORTH) FROM 43 THE DECEDENT TO ANY PERSON OTHER THAN SUCH SURVIVING SPOUSE (OR THE 44 ESTATE OF SUCH SPOUSE); AND 45 (B) IF BY REASON OF SUCH PASSING SUCH PERSON (OR HIS HEIRS OR ASSIGNS) 46 MAY POSSESS OR ENJOY ANY PART OF SUCH PROPERTY AFTER SUCH TERMINATION OR 47 FAILURE OF THE INTEREST SO PASSING TO THE SURVIVING SPOUSE; 48 AND NO DEDUCTION SHALL BE ALLOWED WITH RESPECT TO SUCH INTEREST (EVEN 49 IF SUCH DEDUCTION IS NOT DISALLOWED UNDER SUBPARAGRAPHS (A) AND (B))-- 50 (C) IF SUCH INTEREST IS TO BE ACQUIRED FOR THE SURVIVING SPOUSE, 51 PURSUANT TO DIRECTIONS OF THE DECEDENT, BY HIS EXECUTOR OR BY THE TRUS- 52 TEE OF A TRUST. 53 FOR PURPOSES OF THIS PARAGRAPH, AN INTEREST SHALL NOT BE CONSIDERED AS 54 AN INTEREST WHICH WILL TERMINATE OR FAIL MERELY BECAUSE IT IS THE OWNER- 55 SHIP OF A BOND, NOTE, OR SIMILAR CONTRACTUAL OBLIGATION, THE DISCHARGE 56 OF WHICH WOULD NOT HAVE THE EFFECT OF AN ANNUITY FOR LIFE OR FOR A TERM. S. 6359--C 250 1 (2) INTEREST IN UNIDENTIFIED ASSETS.--WHERE THE ASSETS (INCLUDED IN 2 THE DECEDENT'S GROSS ESTATE) OUT OF WHICH, OR THE PROCEEDS OF WHICH, AN 3 INTEREST PASSING TO THE SURVIVING SPOUSE MAY BE SATISFIED INCLUDE A 4 PARTICULAR ASSET OR ASSETS WITH RESPECT TO WHICH NO DEDUCTION WOULD BE 5 ALLOWED IF SUCH ASSET OR ASSETS PASSED FROM THE DECEDENT TO SUCH SPOUSE, 6 THEN THE VALUE OF SUCH INTEREST PASSING TO SUCH SPOUSE SHALL, FOR 7 PURPOSES OF SUBSECTION (A), BE REDUCED BY THE AGGREGATE VALUE OF SUCH 8 PARTICULAR ASSETS. 9 (3) INTEREST OF SPOUSE CONDITIONAL ON SURVIVAL FOR LIMITED 10 PERIOD.--FOR PURPOSES OF THIS SUBSECTION, AN INTEREST PASSING TO THE 11 SURVIVING SPOUSE SHALL NOT BE CONSIDERED AS AN INTEREST WHICH WILL 12 TERMINATE OR FAIL ON THE DEATH OF SUCH SPOUSE IF-- 13 (A) SUCH DEATH WILL CAUSE A TERMINATION OR FAILURE OF SUCH INTEREST 14 ONLY IF IT OCCURS WITHIN A PERIOD NOT EXCEEDING 6 MONTHS AFTER THE 15 DECEDENT'S DEATH, OR ONLY IF IT OCCURS AS A RESULT OF A COMMON DISASTER 16 RESULTING IN THE DEATH OF THE DECEDENT AND THE SURVIVING SPOUSE, OR ONLY 17 IF IT OCCURS IN THE CASE OF EITHER SUCH EVENT; AND 18 (B) SUCH TERMINATION OR FAILURE DOES NOT IN FACT OCCUR. 19 (4) VALUATION OF INTEREST PASSING TO SURVIVING SPOUSE.--IN DETERMINING 20 FOR PURPOSES OF SUBSECTION (A) THE VALUE OF ANY INTEREST IN PROPERTY 21 PASSING TO THE SURVIVING SPOUSE FOR WHICH A DEDUCTION IS ALLOWED BY THIS 22 SECTION-- 23 (A) THERE SHALL BE TAKEN INTO ACCOUNT THE EFFECT WHICH THE TAX IMPOSED 24 BY SECTION 2001, OR ANY ESTATE, SUCCESSION, LEGACY, OR INHERITANCE TAX, 25 HAS ON THE NET VALUE TO THE SURVIVING SPOUSE OF SUCH INTEREST; AND 26 (B) WHERE SUCH INTEREST OR PROPERTY IS ENCUMBERED IN ANY MANNER, OR 27 WHERE THE SURVIVING SPOUSE INCURS ANY OBLIGATION IMPOSED BY THE DECEDENT 28 WITH RESPECT TO THE PASSING OF SUCH INTEREST, SUCH ENCUMBRANCE OR OBLI- 29 GATION SHALL BE TAKEN INTO ACCOUNT IN THE SAME MANNER AS IF THE AMOUNT 30 OF A GIFT TO SUCH SPOUSE OF SUCH INTEREST WERE BEING DETERMINED. 31 (5) LIFE ESTATE WITH POWER OF APPOINTMENT IN SURVIVING SPOUSE.--IN THE 32 CASE OF AN INTEREST IN PROPERTY PASSING FROM THE DECEDENT, IF HIS 33 SURVIVING SPOUSE IS ENTITLED FOR LIFE TO ALL THE INCOME FROM THE ENTIRE 34 INTEREST, OR ALL THE INCOME FROM A SPECIFIC PORTION THEREOF, PAYABLE 35 ANNUALLY OR AT MORE FREQUENT INTERVALS, WITH POWER IN THE SURVIVING 36 SPOUSE TO APPOINT THE ENTIRE INTEREST, OR SUCH SPECIFIC PORTION (EXER- 37 CISABLE IN FAVOR OF SUCH SURVIVING SPOUSE, OR OF THE ESTATE OF SUCH 38 SURVIVING SPOUSE, OR IN FAVOR OF EITHER, WHETHER OR NOT IN EACH CASE THE 39 POWER IS EXERCISABLE IN FAVOR OF OTHERS), AND WITH NO POWER IN ANY OTHER 40 PERSON TO APPOINT ANY PART OF THE INTEREST, OR SUCH SPECIFIC PORTION, TO 41 ANY PERSON OTHER THAN THE SURVIVING SPOUSE-- 42 (A) THE INTEREST OR SUCH PORTION THEREOF SO PASSING SHALL, FOR 43 PURPOSES OF SUBSECTION (A), BE CONSIDERED AS PASSING TO THE SURVIVING 44 SPOUSE, AND 45 (B) NO PART OF THE INTEREST SO PASSING SHALL, FOR PURPOSES OF PARA- 46 GRAPH (1)(A), BE CONSIDERED AS PASSING TO ANY PERSON OTHER THAN THE 47 SURVIVING SPOUSE. 48 THIS PARAGRAPH SHALL APPLY ONLY IF SUCH POWER IN THE SURVIVING SPOUSE 49 TO APPOINT THE ENTIRE INTEREST, OR SUCH SPECIFIC PORTION THEREOF, WHETH- 50 ER EXERCISABLE BY WILL OR DURING LIFE, IS EXERCISABLE BY SUCH SPOUSE 51 ALONE AND IN ALL EVENTS. 52 (6) LIFE INSURANCE OR ANNUITY PAYMENTS WITH POWER OF APPOINTMENT IN 53 SURVIVING SPOUSE.--IN THE CASE OF AN INTEREST IN PROPERTY PASSING FROM 54 THE DECEDENT CONSISTING OF PROCEEDS UNDER A LIFE INSURANCE, ENDOWMENT, 55 OR ANNUITY CONTRACT, IF UNDER THE TERMS OF THE CONTRACT SUCH PROCEEDS 56 ARE PAYABLE IN INSTALLMENTS OR ARE HELD BY THE INSURER SUBJECT TO AN S. 6359--C 251 1 AGREEMENT TO PAY INTEREST THEREON (WHETHER THE PROCEEDS, ON THE TERMI- 2 NATION OF ANY INTEREST PAYMENTS, ARE PAYABLE IN A LUMP SUM OR IN ANNUAL 3 OR MORE FREQUENT INSTALLMENTS), AND SUCH INSTALLMENT OR INTEREST 4 PAYMENTS ARE PAYABLE ANNUALLY OR AT MORE FREQUENT INTERVALS, COMMENCING 5 NOT LATER THAN 13 MONTHS AFTER THE DECEDENT'S DEATH, AND ALL AMOUNTS, OR 6 A SPECIFIC PORTION OF ALL SUCH AMOUNTS, PAYABLE DURING THE LIFE OF THE 7 SURVIVING SPOUSE ARE PAYABLE ONLY TO SUCH SPOUSE, AND SUCH SPOUSE HAS 8 THE POWER TO APPOINT ALL AMOUNTS, OR SUCH SPECIFIC PORTION, PAYABLE 9 UNDER SUCH CONTRACT (EXERCISABLE IN FAVOR OF SUCH SURVIVING SPOUSE, OR 10 OF THE ESTATE OF SUCH SURVIVING SPOUSE, OR IN FAVOR OF EITHER, WHETHER 11 OR NOT IN EACH CASE THE POWER IS EXERCISABLE IN FAVOR OF OTHERS), WITH 12 NO POWER IN ANY OTHER PERSON TO APPOINT SUCH AMOUNTS TO ANY PERSON OTHER 13 THAN THE SURVIVING SPOUSE-- 14 (A) SUCH AMOUNTS SHALL, FOR PURPOSES OF SUBSECTION (A), BE CONSIDERED 15 AS PASSING TO THE SURVIVING SPOUSE, AND 16 (B) NO PART OF SUCH AMOUNTS SHALL, FOR PURPOSES OF PARAGRAPH (1)(A), 17 BE CONSIDERED AS PASSING TO ANY PERSON OTHER THAN THE SURVIVING SPOUSE. 18 THIS PARAGRAPH SHALL APPLY ONLY IF, UNDER THE TERMS OF THE CONTRACT, 19 SUCH POWER IN THE SURVIVING SPOUSE TO APPOINT SUCH AMOUNTS, WHETHER 20 EXERCISABLE BY WILL OR DURING LIFE, IS EXERCISABLE BY SUCH SPOUSE ALONE 21 AND IN ALL EVENTS. 22 (7) ELECTION WITH RESPECT TO LIFE ESTATE FOR SURVIVING SPOUSE.-- 23 (A) IN GENERAL.--IN THE CASE OF QUALIFIED TERMINABLE INTEREST PROPER- 24 TY-- 25 (I) FOR PURPOSES OF SUBSECTION (A), SUCH PROPERTY SHALL BE TREATED AS 26 PASSING TO THE SURVIVING SPOUSE, AND 27 (II) FOR PURPOSES OF PARAGRAPH (1)(A), NO PART OF SUCH PROPERTY SHALL 28 BE TREATED AS PASSING TO ANY PERSON OTHER THAN THE SURVIVING SPOUSE. 29 (B) QUALIFIED TERMINABLE INTEREST PROPERTY DEFINED.--FOR PURPOSES OF 30 THIS PARAGRAPH-- 31 (I) IN GENERAL.--THE TERM "QUALIFIED TERMINABLE INTEREST PROPERTY" 32 MEANS PROPERTY-- 33 (I) WHICH PASSES FROM THE DECEDENT, 34 (II) IN WHICH THE SURVIVING SPOUSE HAS A QUALIFYING INCOME INTEREST 35 FOR LIFE, AND 36 (III) TO WHICH AN ELECTION UNDER THIS PARAGRAPH APPLIES. 37 (II) QUALIFYING INCOME INTEREST FOR LIFE.--THE SURVIVING SPOUSE HAS A 38 QUALIFYING INCOME INTEREST FOR LIFE IF-- 39 (I) THE SURVIVING SPOUSE IS ENTITLED TO ALL THE INCOME FROM THE PROP- 40 ERTY, PAYABLE ANNUALLY OR AT MORE FREQUENT INTERVALS, OR HAS A USUFRUCT 41 INTEREST FOR LIFE IN THE PROPERTY, AND 42 (II) NO PERSON HAS A POWER TO APPOINT ANY PART OF THE PROPERTY TO ANY 43 PERSON OTHER THAN THE SURVIVING SPOUSE. 44 SUBCLAUSE (II) SHALL NOT APPLY TO A POWER EXERCISABLE ONLY AT OR AFTER 45 THE DEATH OF THE SURVIVING SPOUSE. TO THE EXTENT PROVIDED IN REGU- 46 LATIONS, AN ANNUITY SHALL BE TREATED IN A MANNER SIMILAR TO AN INCOME 47 INTEREST IN PROPERTY (REGARDLESS OF WHETHER THE PROPERTY FROM WHICH THE 48 ANNUITY IS PAYABLE CAN BE SEPARATELY IDENTIFIED). 49 (III) PROPERTY INCLUDES INTEREST THEREIN.--THE TERM "PROPERTY" 50 INCLUDES AN INTEREST IN PROPERTY. 51 (IV) SPECIFIC PORTION TREATED AS SEPARATE PROPERTY.--A SPECIFIC 52 PORTION OF PROPERTY SHALL BE TREATED AS SEPARATE PROPERTY. 53 (V) ELECTION.--AN ELECTION UNDER THIS PARAGRAPH WITH RESPECT TO ANY 54 PROPERTY SHALL BE MADE BY THE EXECUTOR ON THE RETURN OF TAX IMPOSED BY 55 SECTION 2001. SUCH AN ELECTION, ONCE MADE, SHALL BE IRREVOCABLE. S. 6359--C 252 1 (C) TREATMENT OF SURVIVOR ANNUITIES.--IN THE CASE OF AN ANNUITY 2 INCLUDED IN THE GROSS ESTATE OF THE DECEDENT UNDER SECTION 2039 (OR, IN 3 THE CASE OF AN INTEREST IN AN ANNUITY ARISING UNDER THE COMMUNITY PROP- 4 ERTY LAWS OF A STATE, INCLUDED IN THE GROSS ESTATE OF THE DECEDENT UNDER 5 SECTION 2033) WHERE ONLY THE SURVIVING SPOUSE HAS THE RIGHT TO RECEIVE 6 PAYMENTS BEFORE THE DEATH OF SUCH SURVIVING SPOUSE-- 7 (I) THE INTEREST OF SUCH SURVIVING SPOUSE SHALL BE TREATED AS A QUALI- 8 FYING INCOME INTEREST FOR LIFE, AND 9 (II) THE EXECUTOR SHALL BE TREATED AS HAVING MADE AN ELECTION UNDER 10 THIS SUBSECTION WITH RESPECT TO SUCH ANNUITY UNLESS THE EXECUTOR OTHER- 11 WISE ELECTS ON THE RETURN OF TAX IMPOSED BY SECTION 2001. 12 AN ELECTION UNDER CLAUSE (II), ONCE MADE, SHALL BE IRREVOCABLE. 13 (8) SPECIAL RULE FOR CHARITABLE REMAINDER TRUSTS.-- 14 (A) IN GENERAL.--IF THE SURVIVING SPOUSE OF THE DECEDENT IS THE ONLY 15 BENEFICIARY OF A QUALIFIED CHARITABLE REMAINDER TRUST WHO IS NOT A CHAR- 16 ITABLE BENEFICIARY NOR AN ESOP BENEFICIARY, PARAGRAPH (1) SHALL NOT 17 APPLY TO ANY INTEREST IN SUCH TRUST WHICH PASSES OR HAS PASSED FROM THE 18 DECEDENT TO SUCH SURVIVING SPOUSE. 19 (B) DEFINITIONS.--FOR PURPOSES OF SUBPARAGRAPH (A)-- 20 (I) CHARITABLE BENEFICIARY.--THE TERM "CHARITABLE BENEFICIARY" MEANS 21 ANY BENEFICIARY WHICH IS AN ORGANIZATION DESCRIBED IN SECTION 170(C). 22 (II) ESOP BENEFICIARY.--THE TERM "ESOP BENEFICIARY" MEANS ANY BENEFI- 23 CIARY WHICH IS AN EMPLOYEE STOCK OWNERSHIP PLAN (AS DEFINED IN SECTION 24 4975(E)(7)) THAT HOLDS A REMAINDER INTEREST IN QUALIFIED EMPLOYER SECU- 25 RITIES (AS DEFINED IN SECTION 664(G)(4)) TO BE TRANSFERRED TO SUCH PLAN 26 IN A QUALIFIED GRATUITOUS TRANSFER (AS DEFINED IN SECTION 664(G)(1)). 27 (III) QUALIFIED CHARITABLE REMAINDER TRUST.--THE TERM "QUALIFIED CHAR- 28 ITABLE REMAINDER TRUST" MEANS A CHARITABLE REMAINDER ANNUITY TRUST OR A 29 CHARITABLE REMAINDER UNITRUST (DESCRIBED IN SECTION 664). 30 (9) DENIAL OF DOUBLE DEDUCTION.--NOTHING IN THIS SECTION OR ANY OTHER 31 PROVISION OF THIS CHAPTER SHALL ALLOW THE VALUE OF ANY INTEREST IN PROP- 32 ERTY TO BE DEDUCTED UNDER THIS CHAPTER MORE THAN ONCE WITH RESPECT TO 33 THE SAME DECEDENT. 34 (10) SPECIFIC PORTION.--FOR PURPOSES OF PARAGRAPHS (5), (6), AND 35 (7)(B)(IV), THE TERM "SPECIFIC PORTION" ONLY INCLUDES A PORTION DETER- 36 MINED ON A FRACTIONAL OR PERCENTAGE BASIS. 37 (C) DEFINITION.--FOR PURPOSES OF THIS SECTION, AN INTEREST IN PROPERTY 38 SHALL BE CONSIDERED AS PASSING FROM THE DECEDENT TO ANY PERSON IF AND 39 ONLY IF-- 40 (1) SUCH INTEREST IS BEQUEATHED OR DEVISED TO SUCH PERSON BY THE DECE- 41 DENT; 42 (2) SUCH INTEREST IS INHERITED BY SUCH PERSON FROM THE DECEDENT; 43 (3) SUCH INTEREST IS THE DOWER OR CURTESY INTEREST (OR STATUTORY 44 INTEREST IN LIEU THEREOF) OF SUCH PERSON AS SURVIVING SPOUSE OF THE 45 DECEDENT; 46 (4) SUCH INTEREST HAS BEEN TRANSFERRED TO SUCH PERSON BY THE DECEDENT 47 AT ANY TIME; 48 (5) SUCH INTEREST WAS, AT THE TIME OF THE DECEDENT'S DEATH, HELD BY 49 SUCH PERSON AND THE DECEDENT (OR BY THEM AND ANY OTHER PERSON) IN JOINT 50 OWNERSHIP WITH RIGHT OF SURVIVORSHIP; 51 (6) THE DECEDENT HAD A POWER (EITHER ALONE OR IN CONJUNCTION WITH ANY 52 PERSON) TO APPOINT SUCH INTEREST AND IF HE APPOINTS OR HAS APPOINTED 53 SUCH INTEREST TO SUCH PERSON, OR IF SUCH PERSON TAKES SUCH INTEREST IN 54 DEFAULT ON THE RELEASE OR NONEXERCISE OF SUCH POWER; OR 55 (7) SUCH INTEREST CONSISTS OF PROCEEDS OF INSURANCE ON THE LIFE OF THE 56 DECEDENT RECEIVABLE BY SUCH PERSON. S. 6359--C 253 1 EXCEPT AS PROVIDED IN PARAGRAPH (5) OR (6) OF SUBSECTION (B), WHERE AT 2 THE TIME OF THE DECEDENT'S DEATH IT IS NOT POSSIBLE TO ASCERTAIN THE 3 PARTICULAR PERSON OR PERSONS TO WHOM AN INTEREST IN PROPERTY MAY PASS 4 FROM THE DECEDENT, SUCH INTEREST SHALL, FOR PURPOSES OF SUBPARAGRAPHS 5 (A) AND (B) OF SUBSECTION (B)(1), BE CONSIDERED AS PASSING FROM THE 6 DECEDENT TO A PERSON OTHER THAN THE SURVIVING SPOUSE. 7 S 2103. DEFINITION OF GROSS ESTATE. FOR THE PURPOSE OF THE TAX IMPOSED 8 BY SECTION 2101, THE VALUE OF THE GROSS ESTATE OF EVERY DECEDENT NONRES- 9 IDENT NOT A CITIZEN OF THE UNITED STATES SHALL BE THAT PART OF HIS GROSS 10 ESTATE (DETERMINED AS PROVIDED IN SECTION 2031) WHICH AT THE TIME OF HIS 11 DEATH IS SITUATED IN THE UNITED STATES. 12 S 2104. PROPERTY WITHIN THE UNITED STATES. (A) STOCK IN CORPORA- 13 TION.--FOR PURPOSES OF THIS SUBCHAPTER SHARES OF STOCK OWNED AND HELD BY 14 A NONRESIDENT NOT A CITIZEN OF THE UNITED STATES SHALL BE DEEMED PROPER- 15 TY WITHIN THE UNITED STATES ONLY IF ISSUED BY A DOMESTIC CORPORATION. 16 (B) REVOCABLE TRANSFERS AND TRANSFERS WITHIN 3 YEARS OF DEATH.--FOR 17 PURPOSES OF THIS SUBCHAPTER, ANY PROPERTY OF WHICH THE DECEDENT HAS MADE 18 A TRANSFER, BY TRUST OR OTHERWISE, WITHIN THE MEANING OF SECTIONS 2035 19 TO 2038, INCLUSIVE, SHALL BE DEEMED TO BE SITUATED IN THE UNITED STATES, 20 IF SO SITUATED EITHER AT THE TIME OF THE TRANSFER OR AT THE TIME OF THE 21 DECEDENT'S DEATH. 22 (C) DEBT OBLIGATIONS.--FOR PURPOSES OF THIS SUBCHAPTER, DEBT OBLI- 23 GATIONS OF- 24 (1) A UNITED STATES PERSON, OR 25 (2) THE UNITED STATES, A STATE OR ANY POLITICAL SUBDIVISION THEREOF, 26 OR THE DISTRICT OF COLUMBIA, 27 OWNED AND HELD BY A NONRESIDENT NOT A CITIZEN OF THE UNITED STATES 28 SHALL BE DEEMED PROPERTY WITHIN THE UNITED STATES. WITH RESPECT TO 29 ESTATES OF DECEDENTS DYING AFTER DECEMBER 31, 1969, DEPOSITS WITH A 30 DOMESTIC BRANCH OF A FOREIGN CORPORATION, IF SUCH BRANCH IS ENGAGED IN 31 THE COMMERCIAL BANKING BUSINESS, SHALL, FOR PURPOSES OF THIS SUBCHAPTER, 32 BE DEEMED PROPERTY WITHIN THE UNITED STATES. THIS SUBSECTION SHALL NOT 33 APPLY TO A DEBT OBLIGATION TO WHICH SECTION 2105(B) APPLIES. 34 S 2105. PROPERTY WITHOUT THE UNITED STATES. (A) PROCEEDS OF LIFE INSU- 35 RANCE.--FOR PURPOSES OF THIS SUBCHAPTER, THE AMOUNT RECEIVABLE AS INSUR- 36 ANCE ON THE LIFE OF A NONRESIDENT NOT A CITIZEN OF THE UNITED STATES 37 SHALL NOT BE DEEMED PROPERTY WITHIN THE UNITED STATES. 38 (B) BANK DEPOSITS AND CERTAIN OTHER DEBT OBLIGATIONS.--FOR PURPOSES OF 39 THIS SUBCHAPTER, THE FOLLOWING SHALL NOT BE DEEMED PROPERTY WITHIN THE 40 UNITED STATES-- 41 (1) AMOUNTS DESCRIBED IN SECTION 871(I)(3), IF ANY INTEREST THEREON 42 WOULD NOT BE SUBJECT TO TAX BY REASON OF SECTION 871(I)(1) WERE SUCH 43 INTEREST RECEIVED BY THE DECEDENT AT THE TIME OF HIS DEATH, 44 (2) DEPOSITS WITH A FOREIGN BRANCH OF A DOMESTIC CORPORATION OR DOMES- 45 TIC PARTNERSHIP, IF SUCH BRANCH IS ENGAGED IN THE COMMERCIAL BANKING 46 BUSINESS, 47 (3) DEBT OBLIGATIONS, IF, WITHOUT REGARD TO WHETHER A STATEMENT MEET- 48 ING THE REQUIREMENTS OF SECTION 871(H)(5) HAS BEEN RECEIVED, ANY INTER- 49 EST THEREON WOULD BE ELIGIBLE FOR THE EXEMPTION FROM TAX UNDER SECTION 50 871(H)(1) WERE SUCH INTEREST RECEIVED BY THE DECEDENT AT THE TIME OF HIS 51 DEATH, AND 52 (4) OBLIGATIONS WHICH WOULD BE ORIGINAL ISSUE DISCOUNT OBLIGATIONS AS 53 DEFINED IN SECTION 871(G)(1) BUT FOR SUBPARAGRAPH (B)(I) THEREOF, IF ANY 54 INTEREST THEREON (WERE SUCH INTEREST RECEIVED BY THE DECEDENT AT THE 55 TIME OF HIS DEATH) WOULD NOT BE EFFECTIVELY CONNECTED WITH THE CONDUCT 56 OF A TRADE OR BUSINESS WITHIN THE UNITED STATES. S. 6359--C 254 1 NOTWITHSTANDING THE PRECEDING SENTENCE, IF ANY PORTION OF THE INTEREST 2 ON AN OBLIGATION REFERRED TO IN PARAGRAPH (3) WOULD NOT BE ELIGIBLE FOR 3 THE EXEMPTION REFERRED TO IN PARAGRAPH (3) BY REASON OF SECTION 4 871(H)(4) IF THE INTEREST WERE RECEIVED BY THE DECEDENT AT THE TIME OF 5 HIS DEATH, THEN AN APPROPRIATE PORTION (AS DETERMINED IN A MANNER 6 PRESCRIBED BY THE SECRETARY) OF THE VALUE (AS DETERMINED FOR PURPOSES OF 7 THIS CHAPTER) OF SUCH DEBT OBLIGATION SHALL BE DEEMED PROPERTY WITHIN 8 THE UNITED STATES. 9 (C) WORKS OF ART ON LOAN FOR EXHIBITION.--FOR PURPOSES OF THIS 10 SUBCHAPTER, WORKS OF ART OWNED BY A NONRESIDENT NOT A CITIZEN OF THE 11 UNITED STATES SHALL NOT BE DEEMED PROPERTY WITHIN THE UNITED STATES IF 12 SUCH WORKS OF ART ARE-- 13 (1) IMPORTED INTO THE UNITED STATES SOLELY FOR EXHIBITION PURPOSES, 14 (2) LOANED FOR SUCH PURPOSES, TO A PUBLIC GALLERY OR MUSEUM, NO PART 15 OF THE NET EARNINGS OF WHICH INURES TO THE BENEFIT OF ANY PRIVATE STOCK- 16 HOLDER OR INDIVIDUAL, AND 17 (3) AT THE TIME OF THE DEATH OF THE OWNER, ON EXHIBITION, OR ENROUTE 18 TO OR FROM EXHIBITION, IN SUCH A PUBLIC GALLERY OR MUSEUM. 19 S 2503. (A) GENERAL DEFINITION - THE TERM "TAXABLE GIFTS" MEANS THE 20 TOTAL AMOUNT OF GIFTS MADE DURING THE CALENDAR YEAR, LESS DEDUCTIONS 21 PROVIDED IN SUBCHAPTER C (SECTION 2522 AND FOLLOWING). 22 (B) EXCLUSIONS FROM GIFTS. (1) IN GENERAL.--IN THE CASE OF GIFTS 23 (OTHER THAN GIFTS OF FUTURE INTERESTS IN PROPERTY) MADE TO ANY PERSON BY 24 THE DONOR DURING THE CALENDAR YEAR, THE FIRST $10,000 OF SUCH GIFTS TO 25 SUCH PERSON SHALL NOT, FOR PURPOSES OF SUBSECTION (A), BE INCLUDED IN 26 THE TOTAL AMOUNT OF GIFTS MADE DURING SUCH YEAR. WHERE THERE HAS BEEN A 27 TRANSFER TO ANY PERSON OF A PRESENT INTEREST IN PROPERTY, THE POSSIBIL- 28 ITY THAT SUCH INTEREST MAY BE DIMINISHED BY THE EXERCISE OF A POWER 29 SHALL BE DISREGARDED IN APPLYING THIS SUBSECTION, IF NO PART OF SUCH 30 INTEREST WILL AT ANY TIME PASS TO ANY OTHER PERSON. 31 (2) INFLATION ADJUSTMENT.--IN THE CASE OF GIFTS MADE IN A CALENDAR 32 YEAR AFTER 1998, THE $10,000 AMOUNT CONTAINED IN PARAGRAPH (1) SHALL BE 33 INCREASED BY AN AMOUNT EQUAL TO-- 34 (A) $10,000, MULTIPLIED BY 35 (B) THE COST-OF-LIVING ADJUSTMENT DETERMINED UNDER SECTION 1(F)(3) FOR 36 SUCH CALENDAR YEAR BY SUBSTITUTING "CALENDAR YEAR 1997" FOR "CALENDAR 37 YEAR 1992" IN SUBPARAGRAPH (B) THEREOF. 38 IF ANY AMOUNT AS ADJUSTED UNDER THE PRECEDING SENTENCE IS NOT A MULTI- 39 PLE OF $1,000, SUCH AMOUNT SHALL BE ROUNDED TO THE NEXT LOWEST MULTIPLE 40 OF $1,000. 41 (C) TRANSFER FOR THE BENEFIT OF MINOR. -- NO PART OF A GIFT TO AN 42 INDIVIDUAL WHO HAS NOT ATTAINED THE AGE OF 21 YEARS ON THE DATE OF SUCH 43 TRANSFER SHALL BE CONSIDERED A GIFT OF A FUTURE INTEREST IN PROPERTY FOR 44 PURPOSES OF SUBSECTION (B) IF THE PROPERTY AND THE INCOME THEREFROM- 45 (1) MAY BE EXPENDED BY, OR FOR THE BENEFIT OF, THE DONEE BEFORE HIS 46 ATTAINING THE AGE OF 21 YEARS, AND 47 (2) WILL TO THE EXTENT NOT SO EXPENDED- 48 (A) PASS TO THE DONEE ON HIS ATTAINING THE AGE OF 21 YEARS, AND 49 (B) IN THE EVENT THE DONEE DIES BEFORE ATTAINING THE AGE OF 21 YEARS, 50 BE PAYABLE TO THE ESTATE OF THE DONEE OR AS HE MAY APPOINT UNDER A 51 GENERAL POWER OF APPOINTMENT AS DEFINED IN SECTION 2514(C). 52 {(D) REPEALED. PUB. L. 97-34, TITLE III, S 311(H)(5), AUG. 13, 1981, 53 95 STAT. 282} 54 (E) EXCLUSION FOR CERTAIN TRANSFERS FOR EDUCATIONAL EXPENSES OR 55 MEDICAL EXPENSES. (1) IN GENERAL. ANY QUALIFIED TRANSFER SHALL NOT BE 56 TREATED AS A TRANSFER OF PROPERTY BY GIFT FOR PURPOSES OF THIS CHAPTER. S. 6359--C 255 1 (2) QUALIFIED TRANSFER. FOR PURPOSES OF THIS SUBSECTION, THE TERM 2 "QUALIFIED TRANSFER" MEANS ANY AMOUNT PAID ON BEHALF OF AN INDIVIDUAL- 3 (A) AS TUITION TO AN EDUCATIONAL ORGANIZATION DESCRIBED IN SECTION 4 170(B)(1)(A)(II) FOR THE EDUCATION OR TRAINING OF SUCH INDIVIDUAL, OR 5 (B) TO ANY PERSON WHO PROVIDES MEDICAL CARE (AS DEFINED IN SECTION 6 213(D)) WITH RESPECT TO SUCH INDIVIDUAL AS PAYMENT FOR SUCH MEDICAL 7 CARE. 8 (F) WAIVER OF CERTAIN PENSION RIGHTS. IF ANY INDIVIDUAL WAIVES, BEFORE 9 THE DEATH OF A PARTICIPANT, ANY SURVIVOR BENEFIT, OR RIGHT TO SUCH BENE- 10 FIT, UNDER SECTION 401(A)(11) OR 417, SUCH WAIVER SHALL NOT BE TREATED 11 AS A TRANSFER OF PROPERTY BY GIFT FOR PURPOSES OF THIS CHAPTER. 12 (G) TREATMENT OF CERTAIN LOANS OF ARTWORKS. (1) IN GENERAL. FOR 13 PURPOSES OF THIS SUBTITLE, ANY LOAN OF A QUALIFIED WORK OF ART SHALL NOT 14 BE TREATED AS A TRANSFER (AND THE VALUE OF SUCH QUALIFIED WORK OF ART 15 SHALL BE DETERMINED AS IF SUCH LOAN HAD NOT BEEN MADE) IF- 16 (A) SUCH LOAN IS TO AN ORGANIZATION DESCRIBED IN SECTION 501(C)(3) AND 17 EXEMPT FROM TAX UNDER SECTION 501(C) (OTHER THAN A PRIVATE FOUNDATION), 18 AND 19 (B) THE USE OF SUCH WORK BY SUCH ORGANIZATION IS RELATED TO THE 20 PURPOSE OR FUNCTION CONSTITUTING THE BASIS FOR ITS EXEMPTION UNDER 21 SECTION 501. 22 (2) DEFINITIONS. FOR PURPOSES OF THIS SECTION- 23 (A) QUALIFIED WORK OF ART. THE TERM "QUALIFIED WORK OF ART" MEANS ANY 24 ARCHAEOLOGICAL, HISTORIC, OR CREATIVE TANGIBLE PERSONAL PROPERTY. 25 (B) PRIVATE FOUNDATION. THE TERM "PRIVATE FOUNDATION" HAS THE MEANING 26 GIVEN SUCH TERM BY SECTION 509, EXCEPT THAT SUCH TERM SHALL NOT INCLUDE 27 ANY PRIVATE OPERATING FOUNDATION (AS DEFINED IN SECTION 4942(J)(3)). 28 S 2511. TRANSFERS IN GENERAL. (A) SCOPE. SUBJECT TO THE LIMITATIONS 29 CONTAINED IN THIS CHAPTER, THE TAX IMPOSED BY SECTION 2501 SHALL APPLY 30 WHETHER THE TRANSFER IS IN TRUST OR OTHERWISE, WHETHER THE GIFT IS 31 DIRECT OR INDIRECT, AND WHETHER THE PROPERTY IS REAL OR PERSONAL, TANGI- 32 BLE OR INTANGIBLE; BUT IN THE CASE OF A NONRESIDENT NOT A CITIZEN OF THE 33 UNITED STATES, SHALL APPLY TO A TRANSFER ONLY IF THE PROPERTY IS SITU- 34 ATED WITHIN THE UNITED STATES. 35 (B) INTANGIBLE PROPERTY. FOR PURPOSES OF THIS CHAPTER, IN THE CASE OF 36 A NONRESIDENT NOT A CITIZEN OF THE UNITED STATES WHO IS EXCEPTED FROM 37 THE APPLICATION OF SECTION 2501(A)(2)- 38 (1) SHARES OF STOCK ISSUED BY A DOMESTIC CORPORATION, AND 39 (2) DEBT OBLIGATIONS OF- 40 --(A) A UNITED STATES PERSON, OR 41 --(B) THE UNITED STATES, A STATE OR ANY POLITICAL SUBDIVISION THEREOF, 42 OR THE DISTRICT OF COLUMBIA, 43 --WHICH ARE OWNED AND HELD BY SUCH NONRESIDENT SHALL BE DEEMED TO BE 44 PROPERTY SITUATED WITHIN THE UNITED STATES. 45 S 2512. VALUATION OF GIFTS. (A) IF THE GIFT IS MADE IN PROPERTY, THE 46 VALUE THEREOF AT THE DATE OF THE GIFT SHALL BE CONSIDERED THE AMOUNT OF 47 THE GIFT. 48 (B) WHERE PROPERTY IS TRANSFERRED FOR LESS THAN AN ADEQUATE AND FULL 49 CONSIDERATION IN MONEY OR MONEY'S WORTH, THEN THE AMOUNT BY WHICH THE 50 VALUE OF THE PROPERTY EXCEEDED THE VALUE OF THE CONSIDERATION SHALL BE 51 DEEMED A GIFT, AND SHALL BE INCLUDED IN COMPUTING THE AMOUNT OF GIFTS 52 MADE DURING THE CALENDAR YEAR. 53 S 2513. GIFT BY HUSBAND OR WIFE TO THIRD PARTY. (A) CONSIDERED AS MADE 54 ONE-HALF BY EACH. (1) IN GENERAL. A GIFT MADE BY ONE SPOUSE TO ANY 55 PERSON OTHER THAN HIS SPOUSE SHALL, FOR THE PURPOSES OF THIS CHAPTER, BE 56 CONSIDERED AS MADE ONE-HALF BY HIM AND ONE-HALF BY HIS SPOUSE, BUT ONLY S. 6359--C 256 1 IF AT THE TIME OF THE GIFT EACH SPOUSE IS A CITIZEN OR RESIDENT OF THE 2 UNITED STATES. THIS PARAGRAPH SHALL NOT APPLY WITH RESPECT TO A GIFT BY 3 A SPOUSE OF AN INTEREST IN PROPERTY IF HE CREATES IN HIS SPOUSE A GENER- 4 AL POWER OF APPOINTMENT, AS DEFINED IN SECTION 2514(C), OVER SUCH INTER- 5 EST. FOR PURPOSES OF THIS SECTION, AN INDIVIDUAL SHALL BE CONSIDERED AS 6 THE SPOUSE OF ANOTHER INDIVIDUAL ONLY IF HE IS MARRIED TO SUCH INDIVID- 7 UAL AT THE TIME OF THE GIFT AND DOES NOT REMARRY DURING THE REMAINDER OF 8 THE CALENDAR YEAR. 9 (2) CONSENT OF BOTH SPOUSES. PARAGRAPH (1) SHALL APPLY ONLY IF BOTH 10 SPOUSES HAVE SIGNIFIED (UNDER THE REGULATIONS PROVIDED FOR IN SUBSECTION 11 (B)) THEIR CONSENT TO THE APPLICATION OF PARAGRAPH (1) IN THE CASE OF 12 ALL SUCH GIFTS MADE DURING THE CALENDAR YEAR BY EITHER WHILE MARRIED TO 13 THE OTHER. 14 (B) MANNER AND TIME OF SIGNIFYING CONSENT. (1) MANNER. A CONSENT UNDER 15 THIS SECTION SHALL BE SIGNIFIED IN SUCH MANNER AS IS PROVIDED UNDER 16 REGULATIONS PRESCRIBED BY THE SECRETARY. 17 (2) TIME. SUCH CONSENT MAY BE SO SIGNIFIED AT ANY TIME AFTER THE CLOSE 18 OF THE CALENDAR YEAR IN WHICH THE GIFT WAS MADE, SUBJECT TO THE FOLLOW- 19 ING LIMITATIONS- 20 --(A) THE CONSENT MAY NOT BE SIGNIFIED AFTER THE 15TH DAY OF APRIL 21 FOLLOWING THE CLOSE OF SUCH YEAR, UNLESS BEFORE SUCH 15TH DAY NO RETURN 22 HAS BEEN FILED FOR SUCH YEAR BY EITHER SPOUSE, IN WHICH CASE THE CONSENT 23 MAY NOT BE SIGNIFIED AFTER A RETURN FOR SUCH YEAR IS FILED BY EITHER 24 SPOUSE. 25 --(B) THE CONSENT MAY NOT BE SIGNIFIED AFTER A NOTICE OF DEFICIENCY WITH 26 RESPECT TO THE TAX FOR SUCH YEAR HAS BEEN SENT TO EITHER SPOUSE IN 27 ACCORDANCE WITH SECTION 6212(A). 28 (C) REVOCATION OF CONSENT. REVOCATION OF A CONSENT PREVIOUSLY SIGNI- 29 FIED SHALL BE MADE IN SUCH MANNER AS IN PROVIDED UNDER REGULATIONS 30 PRESCRIBED BY THE SECRETARY, BUT THE RIGHT TO REVOKE A CONSENT PREVIOUS- 31 LY SIGNIFIED WITH RESPECT TO A CALENDAR YEAR- 32 (1) SHALL NOT EXIST AFTER THE 15TH DAY OF APRIL FOLLOWING THE CLOSE OF 33 SUCH YEAR IF THE CONSENT WAS SIGNIFIED ON OR BEFORE SUCH 15TH DAY; AND 34 (2) SHALL NOT EXIST IF THE CONSENT WAS NOT SIGNIFIED UNTIL AFTER SUCH 35 15TH DAY. 36 (D) JOINT AND SEVERAL LIABILITY FOR TAX. IF THE CONSENT REQUIRED BY 37 SUBSECTION (A)(2) IS SIGNIFIED WITH RESPECT TO A GIFT MADE IN ANY CALEN- 38 DAR YEAR, THE LIABILITY WITH RESPECT TO THE ENTIRE TAX IMPOSED BY THIS 39 CHAPTER OF EACH SPOUSE FOR SUCH YEAR SHALL BE JOINT AND SEVERAL. 40 S 2514. POWERS OF APPOINTMENT. (A) POWERS CREATED ON OR BEFORE OCTOBER 41 21, 1942. AN EXERCISE OF A GENERAL POWER OF APPOINTMENT CREATED ON OR 42 BEFORE OCTOBER 21, 1942, SHALL BE DEEMED A TRANSFER OF PROPERTY BY THE 43 INDIVIDUAL POSSESSING SUCH POWER; BUT THE FAILURE TO EXERCISE SUCH A 44 POWER OR THE COMPLETE RELEASE OF SUCH A POWER SHALL NOT BE DEEMED AN 45 EXERCISE THEREOF. IF A GENERAL POWER OF APPOINTMENT CREATED ON OR BEFORE 46 OCTOBER 21, 1942, HAS BEEN PARTIALLY RELEASED SO THAT IT IS NO LONGER A 47 GENERAL POWER OF APPOINTMENT, THE SUBSEQUENT EXERCISE OF SUCH POWER 48 SHALL NOT BE DEEMED TO BE THE EXERCISE OF A GENERAL POWER OF APPOINTMENT 49 IF- 50 (1) SUCH PARTIAL RELEASE OCCURRED BEFORE NOVEMBER 1, 1951, OR 51 (2) THE DONEE OF SUCH POWER WAS UNDER A LEGAL DISABILITY TO RELEASE 52 SUCH POWER ON OCTOBER 21, 1942, AND SUCH PARTIAL RELEASE OCCURRED NOT 53 LATER THAN SIX MONTHS AFTER THE TERMINATION OF SUCH LEGAL DISABILITY. 54 (B) POWERS CREATED AFTER OCTOBER 21, 1942. THE EXERCISE OR RELEASE OF 55 A GENERAL POWER OF APPOINTMENT CREATED AFTER OCTOBER 21, 1942, SHALL BE 56 DEEMED A TRANSFER OF PROPERTY BY THE INDIVIDUAL POSSESSING SUCH POWER. S. 6359--C 257 1 (C) DEFINITION OF GENERAL POWER OF APPOINTMENT. FOR PURPOSES OF THIS 2 SECTION, THE TERM "GENERAL POWER OF APPOINTMENT" MEANS A POWER WHICH IS 3 EXERCISABLE IN FAVOR OF THE INDIVIDUAL POSSESSING THE POWER (HEREAFTER 4 IN THIS SUBSECTION REFERRED TO AS THE "POSSESSOR"), HIS ESTATE, HIS 5 CREDITORS, OR THE CREDITORS OF HIS ESTATE; EXCEPT THAT- 6 (1) A POWER TO CONSUME, INVADE, OR APPROPRIATE PROPERTY FOR THE BENE- 7 FIT OF THE POSSESSOR WHICH IS LIMITED BY AN ASCERTAINABLE STANDARD 8 RELATING TO THE HEALTH, EDUCATION, SUPPORT, OR MAINTENANCE OF THE 9 POSSESSOR SHALL NOT BE DEEMED A GENERAL POWER OF APPOINTMENT. 10 (2) A POWER OF APPOINTMENT CREATED ON OR BEFORE OCTOBER 21, 1942, 11 WHICH IS EXERCISABLE BY THE POSSESSOR ONLY IN CONJUNCTION WITH ANOTHER 12 PERSON SHALL NOT BE DEEMED A GENERAL POWER OF APPOINTMENT. 13 (3) IN THE CASE OF A POWER OF APPOINTMENT CREATED AFTER OCTOBER 21, 14 1942, WHICH IS EXERCISABLE BY THE POSSESSOR ONLY IN CONJUNCTION WITH 15 ANOTHER PERSON- 16 --(A) IF THE POWER IS NOT EXERCISABLE BY THE POSSESSOR EXCEPT IN 17 CONJUNCTION WITH THE CREATOR OF THE POWER-SUCH POWER SHALL NOT BE DEEMED 18 A GENERAL POWER OF APPOINTMENT; 19 --(B) IF THE POWER IS NOT EXERCISABLE BY THE POSSESSOR EXCEPT IN 20 CONJUNCTION WITH A PERSON HAVING A SUBSTANTIAL INTEREST, IN THE PROPERTY 21 SUBJECT TO THE POWER, WHICH IS ADVERSE TO EXERCISE OF THE POWER IN FAVOR 22 OF THE POSSESSOR-SUCH POWER SHALL NOT BE DEEMED A GENERAL POWER OF 23 APPOINTMENT. FOR THE PURPOSES OF THIS SUBPARAGRAPH A PERSON WHO, AFTER 24 THE DEATH OF THE POSSESSOR, MAY BE POSSESSED OF A POWER OF APPOINTMENT 25 (WITH RESPECT TO THE PROPERTY SUBJECT TO THE POSSESSOR'S POWER) WHICH HE 26 MAY EXERCISE IN HIS OWN FAVOR SHALL BE DEEMED AS HAVING AN INTEREST IN 27 THE PROPERTY AND SUCH INTEREST SHALL BE DEEMED ADVERSE TO SUCH EXERCISE 28 OF THE POSSESSOR'S POWER; 29 --(C) IF (AFTER THE APPLICATION OF SUBPARAGRAPHS (A) AND (B)) THE POWER 30 IS A GENERAL POWER OF APPOINTMENT AND IS EXERCISABLE IN FAVOR OF SUCH 31 OTHER PERSON-SUCH POWER SHALL BE DEEMED A GENERAL POWER OF APPOINTMENT 32 ONLY IN RESPECT OF A FRACTIONAL PART OF THE PROPERTY SUBJECT TO SUCH 33 POWER, SUCH PART TO BE DETERMINED BY DIVIDING THE VALUE OF SUCH PROPERTY 34 BY THE NUMBER OF SUCH PERSONS (INCLUDING THE POSSESSOR) IN FAVOR OF WHOM 35 SUCH POWER IS EXERCISABLE. 36 --FOR PURPOSES OF SUBPARAGRAPHS (B) AND (C), A POWER SHALL BE DEEMED TO 37 BE EXERCISABLE IN FAVOR OF A PERSON IF IT IS EXERCISABLE IN FAVOR OF 38 SUCH PERSON, HIS ESTATE, HIS CREDITORS, OR THE CREDITORS OF HIS ESTATE. 39 (D) CREATION OF ANOTHER POWER IN CERTAIN CASES. IF A POWER OF APPOINT- 40 MENT CREATED AFTER OCTOBER 21, 1942, IS EXERCISED BY CREATING ANOTHER 41 POWER OF APPOINTMENT WHICH, UNDER THE APPLICABLE LOCAL LAW, CAN BE 42 VALIDLY EXERCISED SO AS TO POSTPONE THE VESTING OF ANY ESTATE OR INTER- 43 EST IN THE PROPERTY WHICH WAS SUBJECT TO THE FIRST POWER, OR SUSPEND THE 44 ABSOLUTE OWNERSHIP OR POWER OF ALIENATION OF SUCH PROPERTY, FOR A PERIOD 45 ASCERTAINABLE WITHOUT REGARD TO THE DATE OF THE CREATION OF THE FIRST 46 POWER, SUCH EXERCISE OF THE FIRST POWER SHALL, TO THE EXTENT OF THE 47 PROPERTY SUBJECT TO THE SECOND POWER, BE DEEMED A TRANSFER OF PROPERTY 48 BY THE INDIVIDUAL POSSESSING SUCH POWER. 49 (E) LAPSE OF POWER. THE LAPSE OF A POWER OF APPOINTMENT CREATED AFTER 50 OCTOBER 21, 1942, DURING THE LIFE OF THE INDIVIDUAL POSSESSING THE POWER 51 SHALL BE CONSIDERED A RELEASE OF SUCH POWER. THE RULE OF THE PRECEDING 52 SENTENCE SHALL APPLY WITH RESPECT TO THE LAPSE OF POWERS DURING ANY 53 CALENDAR YEAR ONLY TO THE EXTENT THAT THE PROPERTY WHICH COULD HAVE BEEN 54 APPOINTED BY EXERCISE OF SUCH LAPSED POWERS EXCEEDS IN VALUE THE GREATER 55 OF THE FOLLOWING AMOUNTS: 56 (1) $5,000, OR S. 6359--C 258 1 (2) 5 PERCENT OF THE AGGREGATE VALUE OF THE ASSETS OUT OF WHICH, OR 2 THE PROCEEDS OF WHICH, THE EXERCISE OF THE LAPSED POWERS COULD BE SATIS- 3 FIED. 4 (F) DATE OF CREATION OF POWER. FOR PURPOSES OF THIS SECTION A POWER OF 5 APPOINTMENT CREATED BY A WILL EXECUTED ON OR BEFORE OCTOBER 21, 1942, 6 SHALL BE CONSIDERED A POWER CREATED ON OR BEFORE SUCH DATE IF THE PERSON 7 EXECUTING SUCH WILL DIES BEFORE JULY 1, 1949, WITHOUT HAVING REPUBLISHED 8 SUCH WILL, BY CODICIL OR OTHERWISE, AFTER OCTOBER 21, 1942. 9 S 2516. CERTAIN PROPERTY SETTLEMENTS. WHERE A HUSBAND AND WIFE ENTER 10 INTO A WRITTEN AGREEMENT RELATIVE TO THEIR MARITAL AND PROPERTY RIGHTS 11 AND DIVORCE OCCURS WITHIN THE 3-YEAR PERIOD BEGINNING ON THE DATE 1 YEAR 12 BEFORE SUCH AGREEMENT IS ENTERED INTO (WHETHER OR NOT SUCH AGREEMENT IS 13 APPROVED BY THE DIVORCE DECREE), ANY TRANSFERS OF PROPERTY OR INTERESTS 14 IN PROPERTY MADE PURSUANT TO SUCH AGREEMENT- 15 (1) TO EITHER SPOUSE IN SETTLEMENT OF HIS OR HER MARITAL OR PROPERTY 16 RIGHTS, OR 17 (2) TO PROVIDE A REASONABLE ALLOWANCE FOR THE SUPPORT OF ISSUE OF THE 18 MARRIAGE DURING MINORITY, 19 --SHALL BE DEEMED TO BE TRANSFERS MADE FOR A FULL AND ADEQUATE CONSID- 20 ERATION IN MONEY OR MONEY'S WORTH. 21 S 2518. DISCLAIMERS. (A) GENERAL RULE. - FOR PURPOSES OF THIS SUBTI- 22 TLE, IF A PERSON MAKES A QUALIFIED DISCLAIMER WITH RESPECT TO ANY INTER- 23 EST IN PROPERTY, THIS SUBTITLE SHALL APPLY WITH RESPECT TO SUCH INTEREST 24 AS IF THE INTEREST HAD NEVER BEEN TRANSFERRED TO SUCH PERSON. 25 (B) QUALIFIED DISCLAIMER DEFINED. - FOR PURPOSES OF SUBSECTION (A), 26 THE TERM "QUALIFIED DISCLAIMER" MEANS AN IRREVOCABLE AND UNQUALIFIED 27 REFUSAL BY A PERSON TO ACCEPT AN INTEREST IN PROPERTY BUT ONLY IF - 28 (1) SUCH REFUSAL IS IN WRITING, 29 (2) SUCH WRITING IS RECEIVED BY THE TRANSFEROR OF THE INTEREST, HIS 30 LEGAL REPRESENTATIVE, OR THE HOLDER OF THE LEGAL TITLE TO THE PROPERTY 31 TO WHICH THE INTEREST RELATES NOT LATER THAN THE DATE WHICH IS 9 MONTHS 32 AFTER THE LATER OF - 33 (A) THE DATE ON WHICH THE TRANSFER CREATING THE INTEREST IN SUCH 34 PERSON IS MADE, OR 35 (B) THE DAY ON WHICH SUCH PERSON ATTAINS AGE 21, 36 (3) SUCH PERSON HAS NOT ACCEPTED THE INTEREST OR ANY OF ITS BENEFITS, 37 AND 38 (4) AS A RESULT OF SUCH REFUSAL, THE INTEREST PASSES WITHOUT ANY 39 DIRECTION ON THE PART OF THE PERSON MAKING THE DISCLAIMER AND PASSES 40 EITHER - 41 (A) TO THE SPOUSE OF THE DECEDENT, OR 42 (B) TO A PERSON OTHER THAN THE PERSON MAKING THE DISCLAIMER. 43 (C) OTHER RULES. FOR PURPOSES OF SUBSECTION (A)- 44 (1) DISCLAIMER OF UNDIVIDED PORTION OF INTEREST. A DISCLAIMER WITH 45 RESPECT TO AN UNDIVIDED PORTION OF AN INTEREST WHICH MEETS THE REQUIRE- 46 MENTS OF THE PRECEDING SENTENCE SHALL BE TREATED AS A QUALIFIED 47 DISCLAIMER OF SUCH PORTION OF THE INTEREST. 48 (2) POWERS. A POWER WITH RESPECT TO PROPERTY SHALL BE TREATED AS AN 49 INTEREST IN SUCH PROPERTY. 50 (3) CERTAIN TRANSFERS TREATED AS DISCLAIMERS. A WRITTEN TRANSFER OF 51 THE TRANSFEROR'S ENTIRE INTEREST IN THE PROPERTY- 52 (A) WHICH MEETS REQUIREMENTS SIMILAR TO THE REQUIREMENTS OF PARAGRAPHS 53 (2) AND (3) OF SUBSECTION (B), AND 54 (B) WHICH IS TO A PERSON OR PERSONS WHO WOULD HAVE RECEIVED THE PROP- 55 ERTY HAD THE TRANSFEROR MADE A QUALIFIED DISCLAIMER (WITHIN THE MEANING 56 OF SUBSECTION (B)), S. 6359--C 259 1 --SHALL BE TREATED AS A QUALIFIED DISCLAIMER. 2 S 2519. DISPOSITIONS OF CERTAIN LIFE ESTATES. (A) GENERAL RULE 3 --FOR PURPOSES OF THIS CHAPTER AND CHAPTER 11, ANY DISPOSITION OF ALL 4 OR PART OF A QUALIFYING INCOME INTEREST FOR LIFE IN ANY PROPERTY TO 5 WHICH THIS SECTION APPLIES SHALL BE TREATED AS A TRANSFER OF ALL INTER- 6 ESTS IN SUCH PROPERTY OTHER THAN THE QUALIFYING INCOME INTEREST. 7 (B) PROPERTY TO WHICH THIS SUBSECTION APPLIES. THIS SECTION APPLIES TO 8 ANY PROPERTY IF A DEDUCTION WAS ALLOWED WITH RESPECT TO THE TRANSFER OF 9 SUCH PROPERTY TO THE DONOR- 10 (1) UNDER SECTION 2056 BY REASON OF SUBSECTION (B)(7) THEREOF, OR 11 (2) UNDER SECTION 2523 BY REASON OF SUBSECTION (F) THEREOF. 12 (C) CROSS REFERENCE 13 --FOR RIGHT OF RECOVERY FOR GIFT TAX IN THE CASE OF PROPERTY TREATED AS 14 TRANSFERRED UNDER THIS SECTION, SEE SECTION 2207A(B). 15 S 2522. CHARITABLE AND SIMILAR GIFTS. (A) CITIZENS OR RESIDENTS. IN 16 COMPUTING TAXABLE GIFTS FOR THE CALENDAR YEAR, THERE SHALL BE ALLOWED AS 17 A DEDUCTION IN THE CASE OF A CITIZEN OR RESIDENT THE AMOUNT OF ALL GIFTS 18 MADE DURING SUCH YEAR TO OR FOR THE USE OF- 19 (1) THE UNITED STATES, ANY STATE, OR ANY POLITICAL SUBDIVISION THERE- 20 OF, OR THE DISTRICT OF COLUMBIA, FOR EXCLUSIVELY PUBLIC PURPOSES; 21 (2) A CORPORATION, OR TRUST, OR COMMUNITY CHEST, FUND, OR FOUNDATION, 22 ORGANIZED AND OPERATED EXCLUSIVELY FOR RELIGIOUS, CHARITABLE, SCIENTIF- 23 IC, LITERARY, OR EDUCATIONAL PURPOSES, OR TO FOSTER NATIONAL OR INTERNA- 24 TIONAL AMATEUR SPORTS COMPETITION (BUT ONLY IF NO PART OF ITS ACTIVITIES 25 INVOLVE THE PROVISION OF ATHLETIC FACILITIES OR EQUIPMENT), INCLUDING 26 THE ENCOURAGEMENT OF ART AND THE PREVENTION OF CRUELTY TO CHILDREN OR 27 ANIMALS, NO PART OF THE NET EARNINGS OF WHICH INURES TO THE BENEFIT OF 28 ANY PRIVATE SHAREHOLDER OR INDIVIDUAL, WHICH IS NOT DISQUALIFIED FOR TAX 29 EXEMPTION UNDER SECTION 501(C)(3) BY REASON OF ATTEMPTING TO INFLUENCE 30 LEGISLATION, AND WHICH DOES NOT PARTICIPATE IN, OR INTERVENE IN (INCLUD- 31 ING THE PUBLISHING OR DISTRIBUTING OF STATEMENTS), ANY POLITICAL 32 CAMPAIGN ON BEHALF OF (OR IN OPPOSITION TO) ANY CANDIDATE FOR PUBLIC 33 OFFICE; 34 (3) A FRATERNAL SOCIETY, ORDER, OR ASSOCIATION, OPERATING UNDER THE 35 LODGE SYSTEM, BUT ONLY IF SUCH GIFTS ARE TO BE USED EXCLUSIVELY FOR 36 RELIGIOUS, CHARITABLE, SCIENTIFIC, LITERARY, OR EDUCATIONAL PURPOSES, 37 INCLUDING THE ENCOURAGEMENT OF ART AND THE PREVENTION OF CRUELTY TO 38 CHILDREN OR ANIMALS; 39 (4) POSTS OR ORGANIZATIONS OF WAR VETERANS, OR AUXILIARY UNITS OR 40 SOCIETIES OF ANY SUCH POSTS OR ORGANIZATIONS, IF SUCH POSTS, ORGANIZA- 41 TIONS, UNITS, OR SOCIETIES ARE ORGANIZED IN THE UNITED STATES OR ANY OF 42 ITS POSSESSIONS, AND IF NO PART OF THEIR NET EARNINGS INSURES TO THE 43 BENEFIT OF ANY PRIVATE SHAREHOLDER OR INDIVIDUAL. 44 RULES SIMILAR TO THE RULES OF SECTION 501(J) SHALL APPLY FOR PURPOSES 45 OF PARAGRAPH (2). 46 (B) NONRESIDENTS. IN THE CASE OF A NONRESIDENT NOT A CITIZEN OF THE 47 UNITED STATES, THERE SHALL BE ALLOWED AS A DEDUCTION THE AMOUNT OF ALL 48 GIFTS MADE DURING SUCH YEAR TO OR FOR THE USE OF- 49 (1) THE UNITED STATES, ANY STATE, OR ANY POLITICAL SUBDIVISION THERE- 50 OF, OR THE DISTRICT OF COLUMBIA, FOR EXCLUSIVELY PUBLIC PURPOSES; 51 (2) A DOMESTIC CORPORATION ORGANIZED AND OPERATED EXCLUSIVELY FOR 52 RELIGIOUS, CHARITABLE, SCIENTIFIC, LITERARY, OR EDUCATIONAL PURPOSES, 53 INCLUDING THE ENCOURAGEMENT OF ART AND THE PREVENTION OF CRUELTY TO 54 CHILDREN OR ANIMALS, NO PART OF THE NET EARNINGS OF WHICH INURES TO THE 55 BENEFIT OF ANY PRIVATE SHAREHOLDER OR INDIVIDUAL, WHICH IS NOT DISQUALI- 56 FIED FOR TAX EXEMPTION UNDER SECTION 501(C)(3) BY REASON OF ATTEMPTING S. 6359--C 260 1 TO INFLUENCE LEGISLATION, AND WHICH DOES NOT PARTICIPATE IN, OR INTER- 2 VENE IN (INCLUDING THE PUBLISHING OR DISTRIBUTING OF STATEMENTS), ANY 3 POLITICAL CAMPAIGN ON BEHALF OF (OR IN OPPOSITION TO) ANY CANDIDATE FOR 4 PUBLIC OFFICE; 5 (3) A TRUST, OR COMMUNITY CHEST, FUND, OR FOUNDATION, ORGANIZED AND 6 OPERATED EXCLUSIVELY FOR RELIGIOUS, CHARITABLE, SCIENTIFIC, LITERARY, OR 7 EDUCATIONAL PURPOSES, INCLUDING THE ENCOURAGEMENT OF ART AND THE 8 PREVENTION OF CRUELTY TO CHILDREN OR ANIMALS, NO SUBSTANTIAL PART OF THE 9 ACTIVITIES OF WHICH IS CARRYING ON PROPAGANDA, OR OTHERWISE ATTEMPTING, 10 TO INFLUENCE LEGISLATION, AND WHICH DOES NOT PARTICIPATE IN, OR INTER- 11 VENE IN (INCLUDING THE PUBLISHING OR DISTRIBUTING OF STATEMENTS), ANY 12 POLITICAL CAMPAIGN ON BEHALF OF (OR IN OPPOSITION TO) ANY CANDIDATE FOR 13 PUBLIC OFFICE; BUT ONLY IF SUCH GIFTS ARE TO BE USED WITHIN THE UNITED 14 STATES EXCLUSIVELY FOR SUCH PURPOSES; 15 (4) A FRATERNAL SOCIETY, ORDER, OR ASSOCIATION, OPERATING UNDER THE 16 LODGE SYSTEM, BUT ONLY IF SUCH GIFTS ARE TO BE USED WITHIN THE UNITED 17 STATES EXCLUSIVELY FOR RELIGIOUS, CHARITABLE, SCIENTIFIC, LITERARY, OR 18 EDUCATIONAL PURPOSES, INCLUDING THE ENCOURAGEMENT OF ART AND THE 19 PREVENTION OF CRUELTY TO CHILDREN OR ANIMALS; 20 (5) POSTS OR ORGANIZATIONS OF WAR VETERANS, OR AUXILIARY UNITS OR 21 SOCIETIES OF ANY SUCH POSTS OR ORGANIZATIONS, IF SUCH POSTS, ORGANIZA- 22 TIONS, UNITS, OR SOCIETIES ARE ORGANIZED IN THE UNITED STATES OR ANY OF 23 ITS POSSESSIONS, AND IF NO PART OF THEIR NET EARNINGS INURES TO THE 24 BENEFIT OF ANY PRIVATE SHAREHOLDER OR INDIVIDUAL. 25 (C) DISALLOWANCE OF DEDUCTIONS IN CERTAIN CASES. (1) NO DEDUCTION 26 SHALL BE ALLOWED UNDER THIS SECTION FOR A GIFT TO OF 1 FOR THE USE OF AN 27 ORGANIZATION OR TRUST DESCRIBED IN SECTION 508(D) OR 4948(C)(4) SUBJECT 28 TO THE CONDITIONS SPECIFIED IN SUCH SECTIONS. 29 (2) WHERE A DONOR TRANSFERS AN INTEREST IN PROPERTY (OTHER THAN AN 30 INTEREST DESCRIBED IN SECTION 170(F)(3)(B)) TO A PERSON, OR FOR A USE, 31 DESCRIBED IN SUBSECTION (A) OR (B) AND AN INTEREST IN THE SAME PROPERTY 32 IS RETAINED BY THE DONOR, OR IS TRANSFERRED OR HAS BEEN TRANSFERRED (FOR 33 LESS THAN AN ADEQUATE AND FULL CONSIDERATION IN MONEY OR MONEY'S WORTH) 34 FROM THE DONOR TO A PERSON, OR FOR A USE, NOT DESCRIBED IN SUBSECTION 35 (A) OR (B), NO DEDUCTION SHALL BE ALLOWED UNDER THIS SECTION FOR THE 36 INTEREST WHICH IS, OR HAS BEEN TRANSFERRED TO THE PERSON, OR FOR THE 37 USE, DESCRIBED IN SUBSECTION (A) OR (B), UNLESS- 38 (A) IN THE CASE OF A REMAINDER INTEREST, SUCH INTEREST IS IN A TRUST 39 WHICH IS A CHARITABLE REMAINDER ANNUITY TRUST OR A CHARITABLE REMAINDER 40 UNITRUST (DESCRIBED IN SECTION 664) OR A POOLED INCOME FUND (DESCRIBED 41 IN SECTION 642(C)(5)), OR 42 (B) IN THE CASE OF ANY OTHER INTEREST, SUCH INTEREST IS IN THE FORM OF 43 A GUARANTEED ANNUITY OR IS A FIXED PERCENTAGE DISTRIBUTED YEARLY OF THE 44 FAIR MARKET VALUE OF THE PROPERTY (TO BE DETERMINED YEARLY). 45 (3) RULES SIMILAR TO THE RULES OF SECTION 2055(E)(4) SHALL APPLY FOR 46 PURPOSES OF PARAGRAPH (2). 47 (4) REFORMATIONS TO COMPLY WITH PARAGRAPH (2). (A) IN GENERAL -- A 48 DEDUCTION SHALL BE ALLOWED UNDER SUBSECTION (A) IN RESPECT OF ANY QUALI- 49 FIED REFORMATION (WITHIN THE MEANING OF SECTION 2055(E)(3)(B)). 50 (B) RULES SIMILAR TO SECTION 2055(E)(3) TO APPLY -- FOR PURPOSES OF 51 THIS PARAGRAPH, RULES SIMILAR TO THE RULES OF SECTION 2055(E)(3) SHALL 52 APPLY. 53 (5) CONTRIBUTIONS TO DONOR ADVISED FUNDS. A DEDUCTION OTHERWISE 54 ALLOWED UNDER SUBSECTION (A) FOR ANY CONTRIBUTION TO A DONOR ADVISED 55 FUND (AS DEFINED IN SECTION 4966(D)(2)) SHALL ONLY BE ALLOWED IF- S. 6359--C 261 1 --(A) THE SPONSORING ORGANIZATION (AS DEFINED IN SECTION 4966(D)(1)) 2 WITH RESPECT TO SUCH DONOR ADVISED FUND IS NOT- 3 --(I) DESCRIBED IN PARAGRAPH (3) OR (4) OF SUBSECTION (A), OR 4 --(II) A TYPE III SUPPORTING ORGANIZATION (AS DEFINED IN SECTION 5 4943(F)(5)(A)) WHICH IS NOT A FUNCTIONALLY INTEGRATED TYPE III SUPPORT- 6 ING ORGANIZATION (AS DEFINED IN SECTION 4943(F)(5)(B)), AND 7 --(B) THE TAXPAYER OBTAINS A CONTEMPORANEOUS WRITTEN ACKNOWLEDGMENT 8 (DETERMINED UNDER RULES SIMILAR TO THE RULES OF SECTION 170(F)(8)(C)) 9 FROM THE SPONSORING ORGANIZATION (AS SO DEFINED) OF SUCH DONOR ADVISED 10 FUND THAT SUCH ORGANIZATION HAS EXCLUSIVE LEGAL CONTROL OVER THE ASSETS 11 CONTRIBUTED. 12 (D) SPECIAL RULE FOR IRREVOCABLE TRANSFERS OF EASEMENTS IN REAL PROP- 13 ERTY. A DEDUCTION SHALL BE ALLOWED UNDER SUBSECTION (A) IN RESPECT OF 14 ANY TRANSFER OF A QUALIFIED REAL PROPERTY INTEREST (AS DEFINED IN 15 SECTION 170(H)(2)(C)) WHICH MEETS THE REQUIREMENTS OF SECTION 170(H) 16 (WITHOUT REGARD TO PARAGRAPH (4)(A) THEREOF). 17 (E) SPECIAL RULES FOR FRACTIONAL GIFTS 18 (1) DENIAL OF DEDUCTION IN CERTAIN CASES 19 (A) IN GENERAL 20 --NO DEDUCTION SHALL BE ALLOWED FOR A CONTRIBUTION OF AN UNDIVIDED 21 PORTION OF A TAXPAYER'S ENTIRE INTEREST IN TANGIBLE PERSONAL PROPERTY 22 UNLESS ALL INTERESTS IN THE PROPERTY ARE HELD IMMEDIATELY BEFORE SUCH 23 CONTRIBUTION BY- 24 --(I) THE TAXPAYER, OR 25 --(II) THE TAXPAYER AND THE DONEE. 26 (B) EXCEPTIONS 27 --THE SECRETARY MAY, BY REGULATION, PROVIDE FOR EXCEPTIONS TO SUBPARA- 28 GRAPH (A) IN CASES WHERE ALL PERSONS WHO HOLD AN INTEREST IN THE PROPER- 29 TY MAKE PROPORTIONAL CONTRIBUTIONS OF AN UNDIVIDED PORTION OF THE ENTIRE 30 INTEREST HELD BY SUCH PERSONS. 31 (2) RECAPTURE OF DEDUCTION IN CERTAIN CASES; ADDITION TO TAX 32 (A) IN GENERAL. THE SECRETARY SHALL PROVIDE FOR THE RECAPTURE OF AN 33 AMOUNT EQUAL TO ANY DEDUCTION ALLOWED UNDER THIS SECTION (PLUS INTEREST) 34 WITH RESPECT TO ANY CONTRIBUTION OF AN UNDIVIDED PORTION OF A TAXPAYER'S 35 ENTIRE INTEREST IN TANGIBLE PERSONAL PROPERTY- 36 --(I) IN ANY CASE IN WHICH THE DONOR DOES NOT CONTRIBUTE ALL OF THE 37 REMAINING INTERESTS IN SUCH PROPERTY TO THE DONEE (OR, IF SUCH DONEE IS 38 NO LONGER IN EXISTENCE, TO ANY PERSON DESCRIBED IN SECTION 170(C)) ON OR 39 BEFORE THE EARLIER OF- 40 --(I) THE DATE THAT IS 10 YEARS AFTER THE DATE OF THE INITIAL FRACTIONAL 41 CONTRIBUTION, OR 42 --(II) THE DATE OF THE DEATH OF THE DONOR, AND 43 --(II) IN ANY CASE IN WHICH THE DONEE HAS NOT, DURING THE PERIOD BEGIN- 44 NING ON THE DATE OF THE INITIAL FRACTIONAL CONTRIBUTION AND ENDING ON 45 THE DATE DESCRIBED IN CLAUSE (I)- 46 --(I) HAD SUBSTANTIAL PHYSICAL POSSESSION OF THE PROPERTY, AND 47 --(II) USED THE PROPERTY IN A USE WHICH IS RELATED TO A PURPOSE OR FUNC- 48 TION CONSTITUTING THE BASIS FOR THE ORGANIZATIONS' EXEMPTION UNDER 49 SECTION 501. 50 (B) ADDITION TO TAX. THE TAX IMPOSED UNDER THIS CHAPTER FOR ANY TAXA- 51 BLE YEAR FOR WHICH THERE IS A RECAPTURE UNDER SUBPARAGRAPH (A) SHALL BE 52 INCREASED BY 10 PERCENT OF THE AMOUNT SO RECAPTURED. 53 (C) INITIAL FRACTIONAL CONTRIBUTION. FOR PURPOSES OF THIS PARAGRAPH, 54 THE TERM "INITIAL FRACTIONAL CONTRIBUTION" MEANS, WITH RESPECT TO ANY 55 DONOR, THE FIRST GIFT OF AN UNDIVIDED PORTION OF THE DONOR'S ENTIRE S. 6359--C 262 1 INTEREST IN ANY TANGIBLE PERSONAL PROPERTY FOR WHICH A DEDUCTION IS 2 ALLOWED UNDER SUBSECTION (A) OR (B). 3 (F) CROSS REFERENCES 4 --(1) FOR TREATMENT OF CERTAIN ORGANIZATIONS PROVIDING CHILD CARE, SEE 5 SECTION 501(K). 6 --(2) FOR EXEMPTION OF CERTAIN GIFTS TO OR FOR THE BENEFIT OF THE UNITED 7 STATES AND FOR RULES OF CONSTRUCTION WITH RESPECT TO CERTAIN BEQUESTS, 8 SEE SECTION 2055(F). 9 --(3) FOR TREATMENT OF GIFTS TO OR FOR THE USE OF INDIAN TRIBAL GOVERN- 10 MENTS (OR THEIR SUBDIVISIONS), SEE SECTION 7871. 11 S 2523. GIFT TO SPOUSE (A) ALLOWANCE OF DEDUCTION. WHERE A DONOR 12 TRANSFERS DURING THE CALENDAR YEAR BY GIFT AN INTEREST IN PROPERTY TO A 13 DONEE WHO AT THE TIME OF THE GIFT IS THE DONOR'S SPOUSE, THERE SHALL BE 14 ALLOWED AS A DEDUCTION IN COMPUTING TAXABLE GIFTS FOR THE CALENDAR YEAR 15 AN AMOUNT WITH RESPECT TO SUCH INTEREST EQUAL TO ITS VALUE. 16 (B) LIFE ESTATE OR OTHER TERMINABLE INTEREST. WHERE, ON THE LAPSE OF 17 TIME, ON THE OCCURRENCE OF AN EVENT OR CONTINGENCY, OR ON THE FAILURE OF 18 AN EVENT OR CONTINGENCY TO OCCUR, SUCH INTEREST TRANSFERRED TO THE 19 SPOUSE WILL TERMINATE OR FAIL, NO DEDUCTION SHALL BE ALLOWED WITH 20 RESPECT TO SUCH INTEREST- 21 (1) IF THE DONOR RETAINS IN HIMSELF, OR TRANSFERS OR HAS TRANSFERRED 22 (FOR LESS THAN AN ADEQUATE AND FULL CONSIDERATION IN MONEY OR MONEY'S 23 WORTH) TO ANY PERSON OTH