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
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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.