S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  4907

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                            February 6, 2009
                               ___________

Introduced  by M. of A. MORELLE -- read once and referred to the Commit-
  tee on Ways and Means

AN ACT to amend the tax law, in relation to computing the combined allo-
  cation percentage of a group of corporations required or permitted  to
  be included in a combined report where one or more of such members are
  mutual fund service providers

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Paragraph 3 of subsection (f) of section 1462  of  the  tax
law,  as amended by section 11 of part FF-1 of chapter 57 of the laws of
2008, is amended to read as follows:
  (3) (i) In the case of a combined return, the tax shall be measured by
the ALLOCATED combined entire net income, ALLOCATED combined alternative
entire net income or ALLOCATED combined assets of all  the  corporations
included  in  the return, including any captive REIT or captive RIC. The
allocation percentage shall be computed based on  the  combined  factors
with respect to all the corporations included in the combined return. In
computing combined entire net income and combined alternative entire net
income  intercorporate  dividends  and  all  other intercorporate trans-
actions shall be eliminated and in computing combined assets intercorpo-
rate stockholdings and intercorporate bills, notes and accounts  receiv-
able   and  payable  and  other  intercorporate  indebtedness  shall  be
eliminated.
  (ii) In the case of a captive REIT required under this  subsection  to
be included in a combined return, "entire net income" means "real estate
investment trust taxable income" as defined in paragraph two of subdivi-
sion  (b)  of  section eight hundred fifty-seven (as modified by section
eight hundred fifty-eight) of the internal revenue code, plus the amount
taxable under paragraph  three  of  subdivision  (b)  of  section  eight
hundred  fifty-seven of that code, subject to the modifications required
by section fourteen hundred fifty-three of this article. In the case  of
a  captive  RIC  required  under  this  subsection  to  be included in a
combined return, "entire net income" means "investment  company  taxable
income"  as defined in paragraph two of subdivision (b) of section eight

              

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD08736-01-9

A. 4907                             2

hundred fifty-two (as modified by section eight hundred  fifty-five)  of
the internal revenue code, plus the amount taxable under paragraph three
of  subdivision  (b)  of  section  eight hundred fifty-two of that code,
subject  to  the  modifications  required  by  section  fourteen hundred
fifty-three of this article. However, the deduction under  the  internal
revenue  code  for  dividends paid by the captive REIT or captive RIC to
any member of the affiliated group that includes  the  corporation  that
directly  or  indirectly  owns over fifty percent of the voting stock of
the captive REIT or  captive  RIC  will  be  limited  to  the  following
percentages:  (A)  fifty percent for taxable years beginning on or after
January first, two thousand eight and before January first, two thousand
nine; (B) twenty-five percent for taxable years beginning  on  or  after
January  first, two thousand nine and before January first, two thousand
eleven; and (C) zero percent for taxable years  beginning  on  or  after
January  first,  two  thousand eleven. The term "affiliated group" means
"affiliated group" as defined in section fifteen  hundred  four  of  the
internal revenue code, but without regard to the exceptions provided for
in subsection (b) of section fifteen hundred four.
  (III)  IF  A  BANKING  CORPORATION  DESCRIBED  IN  PARAGRAPH  NINE  OF
SUBSECTION (A) OF SECTION FOURTEEN HUNDRED  FIFTY-TWO  OF  THIS  ARTICLE
THAT  SUBSTANTIALLY  PROVIDES MANAGEMENT, ADMINISTRATIVE OR DISTRIBUTION
SERVICES TO AN INVESTMENT COMPANY, AS SUCH TERMS ARE DEFINED IN SUBPARA-
GRAPH (G) OF PARAGRAPH TWO OF SUBSECTION (A) OF SECTION FOURTEEN HUNDRED
FIFTY-FOUR OF THIS ARTICLE, IS REQUIRED OR PERMITTED TO BE INCLUDED IN A
COMBINED RETURN WITH A BANKING CORPORATION OR  A  BANK  HOLDING  COMPANY
THAT  DOES  NOT  SUBSTANTIALLY  PROVIDE  MANAGEMENT,  ADMINISTRATIVE  OR
DISTRIBUTION SERVICES TO AN INVESTMENT COMPANY, THE  ALLOCATED  COMBINED
ENTIRE  NET  INCOME, ALLOCATED COMBINED ALTERNATIVE ENTIRE NET INCOME OR
ALLOCATED COMBINED ASSETS IN THE COMBINED RETURN SHALL  BE  COMPUTED  AS
FOLLOWS:
  (A)  THE  ENTIRE  NET  INCOME, ALTERNATIVE NET INCOME OR ASSETS OF ALL
SUCH BANKING CORPORATIONS INCLUDED IN THE COMBINED RETURN THAT  SUBSTAN-
TIALLY PROVIDE MANAGEMENT, ADMINISTRATIVE OR DISTRIBUTION SERVICES TO AN
INVESTMENT  COMPANY  SHALL  BE COMBINED AND MULTIPLIED BY THE ALLOCATION
PERCENTAGE FOR ALL SUCH  BANKING  CORPORATIONS  COMPUTED  BASED  ON  THE
COMBINED  FACTOR  OR  FACTORS  WITH  RESPECT  TO ALL SUCH BANKING CORPO-
RATIONS, AS DETERMINED PURSUANT TO PARAGRAPH ONE-A OF SUBSECTION (B)  OF
SECTION FOURTEEN HUNDRED FIFTY-FOUR OF THIS ARTICLE;
  (B)  THE  ENTIRE  NET  INCOME, ALTERNATIVE NET INCOME OR ASSETS OF ALL
OTHER BANKING CORPORATIONS INCLUDED IN  THE  COMBINED  RETURN  SHALL  BE
COMBINED  AND MULTIPLIED BY THE ALLOCATION PERCENTAGE FOR ALL SUCH BANK-
ING CORPORATIONS COMPUTED BASED ON THE COMBINED FACTORS WITH RESPECT  TO
ALL  SUCH  BANKING CORPORATIONS, AS DETERMINED PURSUANT TO PARAGRAPH ONE
OF SUBSECTION (B) OF SECTION FOURTEEN HUNDRED FIFTY-FOUR OF  THIS  ARTI-
CLE; AND
  (C) THE PRODUCT OF EACH GROUP SO OBTAINED SHALL BE ADDED TOGETHER.
  PROVIDED  FURTHER,  THAT  IF  THE ENTIRE NET INCOME OR ALTERNATIVE NET
INCOME OF EITHER GROUP IS A LOSS, THE  AMOUNT  OF  SUCH  LOSS  SHALL  BE
SUBTRACTED  FROM  THE OTHER GROUP'S ENTIRE NET INCOME OR ALTERNATIVE NET
INCOME, RESPECTIVELY, BEFORE ALLOCATION.
  S 2. This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2006; provided  that  the  amend-
ments  to  paragraph  3 of subsection (f) of section 1462 of the tax law
made by section one of this act shall not affect the expiration of  such
paragraph and shall expire and be deemed repealed therewith.