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

                                  5708

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                              May 28, 2009
                               ___________

Introduced  by  Sen. KRUEGER -- read twice and ordered printed, and when
  printed to be committed to the Committee on Investigations and Govern-
  ment Operations

AN ACT to amend the tax law,  in  relation  to  establishing  rules  for
  receipts from services provided by asset management corporations

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

  Section 1. Subparagraph 2 of paragraph b of subdivision 2  of  section
209-b of the tax law, as amended by section 3 of part K of chapter 63 of
the laws of 2000, is amended to read as follows:
  (2) services performed within the metropolitan commuter transportation
district,  provided, however, that (i) in the case of a taxpayer engaged
in the business of publishing newspapers or periodicals, receipts  aris-
ing  from  sales of advertising contained in such newspapers and period-
icals shall be deemed to arise from services performed within the metro-
politan  commuter  transportation  district  to  the  extent  that  such
newspapers  and periodicals are delivered to points within the metropol-
itan commuter transportation district, (ii) receipts from an  investment
company  from  the  sale  of  management, administration or distribution
services to such investment  company  shall  be  deemed  to  arise  from
services  performed  within  the  metropolitan  commuter  transportation
district to the extent set forth in subparagraph six of paragraph (a) of
subdivision three of section two hundred ten  of  this  chapter  (except
that  references  in such subparagraph six to the state shall be deemed,
for purposes of application to this clause,  to  be  references  to  the
metropolitan  commuter  transportation  district),  (iii) in the case of
taxpayers principally engaged in the activity of air freight  forwarding
acting as principal and like indirect air carriage receipts arising from
such  activity  shall arise from services performed within the metropol-
itan commuter transportation district as follows: one hundred percent of
such receipts if both the  pickup  and  delivery  associated  with  such

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD10388-03-9
              

S. 5708                             2

receipts  are  made in the metropolitan commuter transportation district
and fifty percent of such receipts if  either  the  pickup  or  delivery
associated  with  such  receipts  is  made  in the metropolitan commuter
transportation district, [and] (iv) in the case of a taxpayer which is a
registered  securities  or  commodities  broker  or dealer, the receipts
specified in subparagraph nine of paragraph (a) of subdivision three  of
section  two  hundred  ten of this article shall be deemed to arise from
services  performed  within  the  metropolitan  commuter  transportation
district  to the extent set forth in such subparagraph nine (except that
references in such subparagraph nine to the state shall be  deemed,  for
purposes  of  the  application  of  this clause, to be references to the
metropolitan commuter transportation district), AND  (V)  RECEIPTS  FROM
SERVICES  PROVIDED BY AN ASSET MANAGEMENT CORPORATION SHALL BE DEEMED TO
ARISE FROM SERVICES PERFORMED WITHIN THE METROPOLITAN COMMUTER TRANSPOR-
TATION DISTRICT TO THE EXTENT SET FORTH IN SUBPARAGRAPH SIX-A  OF  PARA-
GRAPH  (A) OF SUBDIVISION THREE OF SECTION TWO HUNDRED TEN OF THIS CHAP-
TER (EXCEPT THAT REFERENCES IN SUCH  SUBPARAGRAPH  SIX-A  TO  THE  STATE
SHALL  BE  DEEMED,  FOR  PURPOSES  OF  APPLICATION TO THIS CLAUSE, TO BE
REFERENCES TO THE METROPOLITAN COMMUTER TRANSPORTATION DISTRICT),
  S 2. Clause B of subparagraph 2 of paragraph a  of  subdivision  3  of
section 210 of the tax law, as separately amended by section 1 of part K
and  section  13 of part Y of chapter 63 of the laws of 2000, is amended
to read as follows:
  (B) services performed within the state, provided, however,  that  (i)
in  the case of a taxpayer engaged in the business of publishing newspa-
pers  or  periodicals,  receipts  arising  from  sales  of   advertising
contained  in  such  newspapers and periodicals shall be deemed to arise
from services performed within the state to the extent that such newspa-
pers and periodicals are delivered to  points  within  the  state,  (ii)
receipts from an investment company arising from the sale of management,
administration or distribution services to such investment company shall
be  deemed  to  arise  from  services  performed within the state to the
extent set forth in subparagraph six of this  paragraph,  (iii)  in  the
case  of  taxpayers  principally  engaged in the activity of air freight
forwarding acting as principal and like indirect air  carriage  receipts
arising  from  such  activity shall arise from services performed within
the state as follows: one hundred percent of such receipts if  both  the
pickup and delivery associated with such receipts are made in this state
and  fifty  percent  of  such  receipts if either the pickup or delivery
associated with such receipts is made in this state [and], (iv)  in  the
case  of  a  taxpayer  which  is  a registered securities or commodities
broker or dealer, the receipts specified in subparagraph  nine  of  this
paragraph  shall  be  deemed to arise from services performed within the
state to the extent set forth in such subparagraph nine, [and (iv)]  (V)
in  the case of receipts arising from the transportation or transmission
of gas through pipes, the portion  of  such  receipts  which  constitute
receipts  from  services performed within the state shall be the product
of (I) the total of such receipts and (II) a fraction, the numerator  of
which  is  the  taxpayer's transportation units within the state and the
denominator of which is the taxpayer's transportation units  within  and
without  the  state[.  A]  PROVIDED  THAT FOR PURPOSES OF THIS SECTION A
transportation unit is the transportation of one cubic foot of gas  over
a  distance  of one mile, AND (VI) RECEIPTS FROM SERVICES PROVIDED BY AN
ASSET MANAGEMENT CORPORATION SHALL BE  DEEMED  TO  ARISE  FROM  SERVICES
PERFORMED  WITHIN  THIS  STATE  TO  THE EXTENT SET FORTH IN SUBPARAGRAPH
SIX-A OF THIS PARAGRAPH,

S. 5708                             3

  S 3. Paragraph a of subdivision 3 of section 210 of  the  tax  law  is
amended by adding a new subparagraph 6-a to read as follows:
  (6-A)  RULES  FOR  RECEIPTS FROM SERVICES PROVIDED BY ASSET MANAGEMENT
CORPORATIONS.   (A) FOR PURPOSES OF SUBCLAUSE  (VI)  OF  CLAUSE  (B)  OF
SUBPARAGRAPH  TWO OF THIS PARAGRAPH, THE PORTION OF RECEIPTS RECEIVED BY
AN ASSET MANAGEMENT CORPORATION ARISING  FROM  THE  PROVISION  OF  ASSET
MANAGEMENT  SERVICES TO AN INDIVIDUAL, A REGULATED INVESTMENT COMPANY AS
DEFINED IN SECTION 851 OF THE INTERNAL REVENUE CODE, OR AN INSTITUTIONAL
INVESTOR HOLDING INVESTMENTS FOR THE BENEFIT OF OTHERS AS DETERMINED  IN
ACCORDANCE WITH CLAUSE (B) OF THIS SUBPARAGRAPH SHALL BE DEEMED TO ARISE
FROM SERVICES PERFORMED WITHIN THE STATE, SUCH PORTION REFERRED TO HERE-
IN AS THE NEW YORK PORTION.
  (B)  THE ENTIRE NET INCOME OF AN ASSET MANAGEMENT CORPORATION SHALL BE
APPORTIONED TO THIS STATE ON THE BASIS OF THE RATIO  OF  GROSS  RECEIPTS
FROM  ASSET  MANAGEMENT  SERVICES FROM SOURCES WITHIN THIS STATE FOR THE
INCOME YEAR EXPRESSED AS A PERCENTAGE OF ALL SUCH  GROSS  RECEIPTS  FROM
ASSET  MANAGEMENT  SERVICES  BOTH  WITHIN  AND WITHOUT THE STATE FOR THE
INCOME YEAR. THE SOURCE OF GROSS RECEIPTS FROM ASSET MANAGEMENT SERVICES
SHALL BE DETERMINED AS FOLLOWS:
  (A) IN THE CASE OF ASSET  MANAGEMENT  SERVICES  PROVIDED  DIRECTLY  OR
INDIRECTLY  TO  AN  INDIVIDUAL,  GROSS  RECEIPTS  WITH  RESPECT  TO SUCH
SERVICES SHALL BE SOURCED TO THE STATE OF THE INDIVIDUAL'S DOMICILE.
  (B) IN THE CASE OF ASSET  MANAGEMENT  SERVICES  PROVIDED  DIRECTLY  OR
INDIRECTLY  TO  AN  INSTITUTIONAL  INVESTOR  HOLDING INVESTMENTS FOR THE
BENEFIT OF OTHERS, SUCH AS A PENSION PLAN, RETIREMENT ACCOUNT OR POOL OF
INVESTMENTS, INCLUDING A FUND (OTHER THAN AN  INVESTMENT  COMPANY  UNDER
THE  INVESTMENT  COMPANY ACT OF 1940 (15 U.S.C. S 80A-1 ET SEQ.)), OR TO
AN INSTITUTIONAL INVESTOR ORGANIZED AS A PARTNERSHIP, S  CORPORATION,  A
DISREGARDED  ENTITY  UNDER  SECTION 7701 OF THE INTERNAL REVENUE CODE OR
ANY OTHER SIMILAR ENTITY ORGANIZED UNDER  FOREIGN  LAW,  GROSS  RECEIPTS
WITH  RESPECT TO SUCH SERVICES SHALL BE SOURCED ACCORDING TO THE FOLLOW-
ING RULES IN THE FOLLOWING ORDER:
  (I) IF INFORMATION REGARDING THE DOMICILE OF BENEFICIARIES, OWNERS  OR
MEMBERS IS AVAILABLE TO THE ASSET MANAGEMENT CORPORATION PROVIDING ASSET
MANAGEMENT  SERVICES  TO  A  PENSION PLAN, RETIREMENT ACCOUNT OR POOL OF
INVESTMENTS, INCLUDING A FUND, (OTHER THAN AN INVESTMENT  COMPANY  UNDER
THE  INVESTMENT  COMPANY ACT OF 1940 (15 U.S.C. S 80A-1 ET SEQ.)), OR TO
AN INSTITUTIONAL INVESTOR ORGANIZED AS A PARTNERSHIP, S  CORPORATION,  A
DISREGARDED  ENTITY  UNDER  SECTION 7701 OF THE INTERNAL REVENUE CODE OF
1986, OR ANY OTHER SIMILAR ENTITY ORGANIZED UNDER  FOREIGN  LAW  THROUGH
THE  EXERCISE  OF REASONABLE DILIGENCE IN ASCERTAINING SUCH INFORMATION,
GROSS RECEIPTS WITH RESPECT TO SUCH SERVICES SHALL  BE  SOURCED  TO  THE
DOMICILE OF SUCH BENEFICIARIES, OWNERS OR MEMBERS;
  (II) IF INFORMATION REGARDING THE DOMICILE OF BENEFICIARIES, OWNERS OR
MEMBERS  IS  NOT AVAILABLE TO THE ASSET MANAGEMENT CORPORATION PROVIDING
ASSET MANAGEMENT SERVICES TO A PENSION PLAN, RETIREMENT ACCOUNT OR  POOL
OF INVESTMENTS, INCLUDING A FUND (OTHER THAN AN INVESTMENT COMPANY UNDER
THE INVESTMENT COMPANY ACT OF 1940 (15 U.S.C. S80A-1 ET SEQ.)), OR TO AN
INSTITUTIONAL  INVESTOR  ORGANIZED  AS  A  PARTNERSHIP, S CORPORATION, A
DISREGARDED ENTITY UNDER SECTION 7701 OF THE INTERNAL  REVENUE  CODE  OF
1986,  OR  ANY  OTHER SIMILAR ENTITY ORGANIZED UNDER FOREIGN LAW THROUGH
THE EXERCISE OF REASONABLE DILIGENCE IN ASCERTAINING  SUCH  INFORMATION,
ANY REASONABLE ALTERNATIVE METHOD BASED ON INFORMATION READILY AVAILABLE
TO  THE ASSET MANAGEMENT CORPORATION MAY BE USED TO DETERMINE THE SOURCE
OF GROSS RECEIPTS WITH RESPECT TO SUCH  SERVICES.  BASED  ON  FACTS  AND
CIRCUMSTANCES  IN SPECIFIC CASES, REASONABLE ALTERNATIVE METHODS USED TO

S. 5708                             4

DETERMINE THE SOURCE OF GROSS RECEIPTS FROM  ASSET  MANAGEMENT  SERVICES
MAY  TAKE  INTO ACCOUNT THE LATEST POPULATION CENSUS DATA AVAILABLE FROM
THE UNITED STATES CENSUS BUREAU,  THE  DOMICILE  OF  THE  SPONSOR  OF  A
PENSION  PLAN OR RETIREMENT ACCOUNT OR AN ACCOUNT OR POOL OF INVESTMENTS
(OTHER THAN AN INVESTMENT COMPANY UNDER THE INVESTMENT  COMPANY  ACT  OF
1940  (15  U.S.C. S 80A-1 ET SEQ.)), OR THE DOMICILE OF AN INSTITUTIONAL
INVESTOR ORGANIZED AS A PARTNERSHIP, S CORPORATION, A DISREGARDED ENTITY
UNDER SECTION 7701 OF THE INTERNAL REVENUE CODE OF 1986,  OR  ANY  OTHER
SIMILAR ENTITY ORGANIZED UNDER FOREIGN LAW; OR
  (III)  IF  (I) THE DOMICILE OF BENEFICIARIES, OWNERS OR MEMBERS IS NOT
REASONABLY ASCERTAINABLE UNDER ITEM (I) OF SUBCLAUSE  (B);  OR  (II)  NO
REASONABLE  ALTERNATIVE  SOURCING  METHOD  EXISTS  UNDER  ITEM  (II)  OF
SUBCLAUSE (B), GROSS RECEIPTS WITH RESPECT TO  SUCH  SERVICES  SHALL  BE
SOURCED TO THE DOMICILE OF THE INSTITUTIONAL INVESTOR OR THE DOMICILE OF
THE  SPONSOR  OF  A  PENSION PLAN OR RETIREMENT ACCOUNT OR AN ACCOUNT OR
POOL OF INVESTMENTS, INCLUDING A FUND, OTHER THAN AN INVESTMENT  COMPANY
UNDER THE INVESTMENT COMPANY ACT OF 1940 (15 U.S.C. S 80A-1 ET SEQ.), TO
WHICH ASSET MANAGEMENT SERVICES ARE PROVIDED.
  (C)  IN  THE  CASE  OF  ASSET MANAGEMENT SERVICES PROVIDED DIRECTLY OR
INDIRECTLY TO AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT  OF
1940  (15  U.S.C.  S 80A-1 ET SEQ.), GROSS RECEIPTS WITH RESPECT TO SUCH
SERVICES SHALL BE SOURCED TO THE DOMICILE OF THE  SHAREHOLDERS  OF  SUCH
INVESTMENT  COMPANY  IN  ACCORDANCE  WITH  THE  FOLLOWING PROCEDURE: THE
PORTION OF THE GROSS RECEIPTS WITH RESPECT TO  SUCH  SERVICES  THAT  ARE
SOURCED  TO  THIS  STATE SHALL BE DETERMINED BY MULTIPLYING THE TOTAL OF
SUCH GROSS RECEIPTS BY A FRACTION, THE NUMERATOR OF WHICH IS THE AVERAGE
OF THE SUM OF THE BEGINNING OF YEAR AND  THE  END  OF  YEAR  BALANCE  OF
SHARES  OWNED  BY  THE INVESTMENT COMPANY SHAREHOLDERS DOMICILED IN THIS
STATE FOR THE INVESTMENT COMPANY'S TAXABLE YEAR FOR FEDERAL  INCOME  TAX
PURPOSES  AND  THE DENOMINATOR OF WHICH IS THE AVERAGE OF THE SUM OF THE
BEGINNING OF YEAR AND THE END OF YEAR BALANCE OF  SHARES  OWNED  BY  ALL
INVESTMENT  COMPANY  SHAREHOLDERS.  A SEPARATE COMPUTATION SHALL BE MADE
WITH RESPECT TO GROSS RECEIPTS FOR ASSET  MANAGEMENT  SERVICES  PROVIDED
DIRECTLY OR INDIRECTLY TO EACH INVESTMENT COMPANY.
  (D)  IN  THE  CASE  OF  ASSET MANAGEMENT SERVICES PROVIDED DIRECTLY OR
INDIRECTLY TO A PERSON OTHER THAN THOSE PERSONS DESCRIBED IN  SUBCLAUSES
(A) THROUGH (C) OF THIS CLAUSE, TO THE DOMICILE OF SUCH PERSON.
  (C)  (A) FOR PURPOSES OF THIS SUBPARAGRAPH, "ADMINISTRATION SERVICES,"
IN EACH CASE WITH RESPECT TO INVESTMENTS, MEANS THE DIRECT  OR  INDIRECT
PROVISION OF (I) CLERICAL, (II) ACCOUNTING, (III) BOOKKEEPING, (IV) DATA
PROCESSING,  (V)  INTERNAL  AUDITING, (VI) LEGAL AND TAX SERVICES, (VII)
REGULATORY COMPLIANCE, OPERATIONS  AND  RELATED  SERVICES,  (VIII)  RISK
ANALYTICS,  (IX)  TRADE PROCESSING, CLEARING AND EXECUTION SERVICES, (X)
TRANSFER AGENCY, AND (XI) CUSTODIAL SERVICES.
  (B) "ASSET MANAGEMENT CORPORATION" MEANS A  CORPORATION  THAT  (I)  IS
PRINCIPALLY  ENGAGED  IN  THE  PERFORMANCE OF ASSET MANAGEMENT SERVICES;
(II) MAKES AN ELECTION FOR EACH TAXABLE YEAR TO BE TREATED AS  AN  ASSET
MANAGEMENT   CORPORATION  BY  FILING  THE  APPROPRIATE  FORM  OF  RETURN
PRESCRIBED BY THE COMMISSIONER TO MAKE SUCH ELECTION; AND (III)  IS  NOT
OTHERWISE  A REGISTERED SECURITIES OR COMMODITIES BROKER OR DEALER UNDER
CLAUSE (A) OF SUBPARAGRAPH NINE OF THIS PARAGRAPH.
  (C) FOR PURPOSES OF THIS SUBPARAGRAPH,  "GROSS  RECEIPTS"  SHALL  MEAN
GROSS  RECEIPTS  REPORTED  BY  THE  CORPORATION FOR ITS TAXABLE YEAR FOR
PURPOSES OF THE FEDERAL INCOME TAX.
  (D) FOR PURPOSES OF THIS SUBPARAGRAPH, "ASSET MANAGEMENT SERVICES"  IN
EACH  CASE WITH RESPECT TO INVESTMENTS, INCLUDES, BUT IS NOT LIMITED TO,

S. 5708                             5

DIRECTLY  OR  INDIRECTLY  (I)  RENDERING  INVESTMENT  ADVICE,  INCLUDING
INVESTMENT  ANALYSIS,  (II)  MAKING  DETERMINATIONS AS TO WHEN SALES AND
PURCHASES ARE TO BE MADE, (III) SELLING OR  PURCHASING  OF  INVESTMENTS,
(IV)  RENDERING  ADMINISTRATION  SERVICES,  (V)  RENDERING  DISTRIBUTION
SERVICES, OR (VI) MANAGING INVESTMENTS PURSUANT TO CONTRACTS FOR SUB-AD-
VISORY SERVICES.
  (E) FOR PURPOSES OF THIS SUBPARAGRAPH, "DISTRIBUTION SERVICES" IN EACH
CASE WITH RESPECT TO INVESTMENTS,  INCLUDES,  BUT  IS  NOT  LIMITED  TO,
DIRECTLY OR INDIRECTLY (I) ADVERTISING, (II) SERVICING INVESTOR ACCOUNTS
(INCLUDING  REDEMPTIONS),  (III)  MARKETING  SHARES OR SELLING SHARES OF
CORPORATIONS OR BUSINESS TRUSTS REGISTERED AS INVESTMENT COMPANIES UNDER
THE INVESTMENT COMPANY ACT OF 1940 (15 U.S.C. S 80A-1 ET SEQ.), OR  (IV)
MARKETING  ASSET  MANAGEMENT  SERVICES (INCLUDING SELLING INTERESTS IN A
POOL OF INVESTMENTS, SUCH AS A FUND).
  (F) "DOMICILE", IN THE CASE OF AN INDIVIDUAL, SHALL HAVE  THE  MEANING
ASCRIBED  TO  IT  UNDER ARTICLE TWENTY-TWO OF THIS CHAPTER; AN ESTATE OR
TRUST IS DOMICILED IN THE STATE IF IT IS A RESIDENT ESTATE OR  TRUST  AS
DEFINED IN PARAGRAPH THREE OF SUBSECTION (B) OF SECTION SIX HUNDRED FIVE
OF  THIS  CHAPTER;  A  BUSINESS  ENTITY IS DOMICILED IN THE STATE IF THE
LOCATION OF THE ACTUAL SEAT OF MANAGEMENT OR CONTROL IS IN THE STATE. IT
SHALL BE PRESUMED THAT THE DOMICILE OF A SHAREHOLDER,  WITH  RESPECT  TO
ANY  MONTH,  IS  HIS,  HER  OR ITS MAILING ADDRESS ON THE RECORDS OF THE
INVESTMENT COMPANY AS OF THE LAST DAY OF SUCH MONTH; OR IN THE CASE OF A
CORPORATION OR A PARTNERSHIP, S CORPORATION, A DISREGARDED ENTITY  UNDER
SECTION  7701 OF THE INTERNAL REVENUE CODE OF 1986, OR ANY OTHER SIMILAR
ENTITY ORGANIZED UNDER FOREIGN LAW, ITS COMMERCIAL  DOMICILE;  PROVIDED,
HOWEVER,  DOMICILE  SHALL  BE  PRESUMED TO BE THE MAILING ADDRESS OF THE
BENEFICIARY OF A PENSION PLAN, OR THE OWNER OF AN ACCOUNT OR INTEREST IN
A POOL OF INVESTMENTS BASED ON  THE  RECORDS  OF  THE  SPONSOR  OF  SUCH
PENSION  PLAN, ACCOUNT OR POOL OF INVESTMENTS OR THE SHAREHOLDER'S MAIL-
ING ADDRESS ON THE RECORDS OF AN INVESTMENT COMPANY UNDER THE INVESTMENT
COMPANY ACT OF 1940 (15 U.S.C. S 80A-1 ET SEQ.) IF REASONABLY ASCERTAIN-
ABLE.
  (G) FOR PURPOSES OF THIS SUBPARAGRAPH, "SPONSOR" MEANS THE PERSON THAT
HAS CONTRACTED DIRECTLY WITH THE BENEFICIARIES  OF  A  PENSION  PLAN  OR
RETIREMENT  ACCOUNT OR THE OWNER OF ANY ACCOUNT OR INTEREST IN A POOL OF
INVESTMENTS TO ADMINISTER AND MANAGE  THE  PENSION  PLAN  OR  RETIREMENT
ACCOUNT, OTHER ACCOUNT OR POOL OF INVESTMENTS.
  S  4.  Subparagraphs  (H)  and  (I)  of paragraph 2 of subsection a of
section 1454 of the tax law, subparagraph (H) as relettered by section 2
of part AA of chapter 63 of the laws of 2000,  are  relettered  subpara-
graphs  (I)  and  (J),  and  a  new subparagraph (H) is added to read as
follows:
  (H) THE ENTIRE NET INCOME OF AN ASSET MANAGEMENT CORPORATION SHALL  BE
APPORTIONED  TO  THIS  STATE ON THE BASIS OF THE RATIO OF GROSS RECEIPTS
FROM ASSET MANAGEMENT SERVICES FROM SOURCES WITHIN THIS  STATE  FOR  THE
INCOME  YEAR  EXPRESSED  AS A PERCENTAGE OF ALL SUCH GROSS RECEIPTS FROM
ASSET MANAGEMENT SERVICES BOTH WITHIN AND  WITHOUT  THE  STATE  FOR  THE
INCOME YEAR. THE SOURCE OF GROSS RECEIPTS FROM ASSET MANAGEMENT SERVICES
SHALL BE DETERMINED AS FOLLOWS:
  (I)  IN  THE  CASE  OF  ASSET MANAGEMENT SERVICES PROVIDED DIRECTLY OR
INDIRECTLY TO  AN  INDIVIDUAL,  GROSS  RECEIPTS  WITH  RESPECT  TO  SUCH
SERVICES SHALL BE SOURCED TO THE STATE OF THE INDIVIDUAL'S DOMICILE.
  (II)  IN  THE  CASE  OF ASSET MANAGEMENT SERVICES PROVIDED DIRECTLY OR
INDIRECTLY TO AN INSTITUTIONAL  INVESTOR  HOLDING  INVESTMENTS  FOR  THE
BENEFIT OF OTHERS, SUCH AS A PENSION PLAN, RETIREMENT ACCOUNT OR POOL OF

S. 5708                             6

INVESTMENTS,  INCLUDING  A  FUND (OTHER THAN AN INVESTMENT COMPANY UNDER
THE INVESTMENT COMPANY ACT OF 1940 (15 U.S.C. S 80A-1 ET SEQ.)),  OR  TO
AN  INSTITUTIONAL  INVESTOR ORGANIZED AS A PARTNERSHIP, S CORPORATION, A
DISREGARDED  ENTITY  UNDER SECTION 7701 OF THE INTERNAL REVENUE CODE, OR
ANY OTHER SIMILAR ENTITY ORGANIZED UNDER  FOREIGN  LAW,  GROSS  RECEIPTS
WITH  RESPECT TO SUCH SERVICES SHALL BE SOURCED ACCORDING TO THE FOLLOW-
ING RULES IN THE FOLLOWING ORDER:
  (I) IF INFORMATION REGARDING THE DOMICILE OF BENEFICIARIES, OWNERS  OR
MEMBERS IS AVAILABLE TO THE ASSET MANAGEMENT CORPORATION PROVIDING ASSET
MANAGEMENT  SERVICES  TO  A  PENSION PLAN, RETIREMENT ACCOUNT OR POOL OF
INVESTMENTS, INCLUDING A FUND (OTHER THAN AN  INVESTMENT  COMPANY  UNDER
THE  INVESTMENT  COMPANY ACT OF 1940 (15 U.S.C. S 80A-1 ET SEQ.)), OR TO
AN INSTITUTIONAL INVESTOR ORGANIZED AS A PARTNERSHIP, S  CORPORATION,  A
DISREGARDED  ENTITY  UNDER  SECTION 7701 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED, AND THE REGULATIONS THEREUNDER, OR ANY  OTHER  SIMILAR
ENTITY  ORGANIZED  UNDER  FOREIGN LAW THROUGH THE EXERCISE OF REASONABLE
DILIGENCE IN ASCERTAINING SUCH INFORMATION, GROSS RECEIPTS WITH  RESPECT
TO SUCH SERVICES SHALL BE SOURCED TO THE DOMICILE OF SUCH BENEFICIARIES,
OWNERS OR MEMBERS;
  (II) IF INFORMATION REGARDING THE DOMICILE OF BENEFICIARIES, OWNERS OR
MEMBERS  IS  NOT AVAILABLE TO THE ASSET MANAGEMENT CORPORATION PROVIDING
ASSET MANAGEMENT SERVICES TO A PENSION PLAN, RETIREMENT ACCOUNT OR  POOL
OF INVESTMENTS, INCLUDING A FUND (OTHER THAN AN INVESTMENT COMPANY UNDER
THE  INVESTMENT  COMPANY ACT OF 1940 (15 U.S.C. S 80A-1 ET SEQ.)), OR TO
AN INSTITUTIONAL INVESTOR ORGANIZED AS A PARTNERSHIP, S  CORPORATION,  A
DISREGARDED  ENTITY  UNDER SECTION 7701 OF THE INTERNAL REVENUE CODE, OR
ANY OTHER SIMILAR ENTITY ORGANIZED UNDER FOREIGN LAW THROUGH  THE  EXER-
CISE  OF  REASONABLE  DILIGENCE  IN  ASCERTAINING  SUCH INFORMATION, ANY
REASONABLE ALTERNATIVE METHOD BASED ON INFORMATION READILY AVAILABLE  TO
THE  ASSET MANAGEMENT CORPORATION MAY BE USED TO DETERMINE THE SOURCE OF
GROSS RECEIPTS WITH RESPECT TO SUCH SERVICES. BASED ON FACTS AND CIRCUM-
STANCES IN SPECIFIC CASES, REASONABLE ALTERNATIVE METHODS USED TO DETER-
MINE THE SOURCE OF GROSS RECEIPTS FROM  ASSET  MANAGEMENT  SERVICES  MAY
TAKE  INTO  ACCOUNT THE LATEST POPULATION CENSUS DATA AVAILABLE FROM THE
UNITED STATES CENSUS BUREAU, THE DOMICILE OF THE SPONSOR  OF  A  PENSION
PLAN  OR  RETIREMENT ACCOUNT OR AN ACCOUNT OR POOL OF INVESTMENTS (OTHER
THAN AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940  (15
U.S.C.  S  80A-1 ET SEQ.)), OR THE DOMICILE OF AN INSTITUTIONAL INVESTOR
ORGANIZED AS A PARTNERSHIP, S CORPORATION, OR DISREGARDED  ENTITY  UNDER
SECTION  7701  OF THE INTERNAL REVENUE CODE, OR ANY OTHER SIMILAR ENTITY
ORGANIZED UNDER FOREIGN LAW; OR
  (III) IF (A) THE DOMICILE OF BENEFICIARIES, OWNERS OR MEMBERS  IS  NOT
ASCERTAINED UNDER SUBCLAUSE (I) OF CLAUSE (II) OF THIS SUBPARAGRAPH OR,
  (B)  NO  REASONABLE ALTERNATIVE SOURCING METHOD EXISTS UNDER SUBCLAUSE
(II) OF CLAUSE (II) OF THIS SUBPARAGRAPH, GROSS RECEIPTS WITH RESPECT TO
SUCH SERVICES SHALL BE SOURCED TO  THE  DOMICILE  OF  THE  INSTITUTIONAL
INVESTOR  OR THE DOMICILE OF THE SPONSOR OF A PENSION PLAN OR RETIREMENT
ACCOUNT OR AN ACCOUNT OR POOL OF INVESTMENTS, INCLUDING  A  FUND  (OTHER
THAN  AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940 (15
U.S.C. S 80A-1  ET  SEQ.)),  TO  WHICH  ASSET  MANAGEMENT  SERVICES  ARE
PROVIDED.
  (III)  IN  THE  CASE OF ASSET MANAGEMENT SERVICES PROVIDED DIRECTLY OR
INDIRECTLY TO AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT  OF
1940  (15  U.S.C.  S 80A-1 ET SEQ.), GROSS RECEIPTS WITH RESPECT TO SUCH
SERVICES SHALL BE SOURCED TO THE DOMICILE OF THE  SHAREHOLDERS  OF  SUCH
INVESTMENT  COMPANY  IN  ACCORDANCE  WITH  THE  FOLLOWING PROCEDURE: THE

S. 5708                             7

PORTION OF THE GROSS RECEIPTS WITH RESPECT TO  SUCH  SERVICES  THAT  ARE
SOURCED  TO  THIS  STATE SHALL BE DETERMINED BY MULTIPLYING THE TOTAL OF
SUCH GROSS RECEIPTS BY A FRACTION, THE NUMERATOR OF WHICH IS THE AVERAGE
OF  THE  SUM  OF  THE  BEGINNING  OF YEAR AND THE END OF YEAR BALANCE OF
SHARES OWNED BY THE INVESTMENT COMPANY SHAREHOLDERS  DOMICILED  IN  THIS
STATE  FOR  THE INVESTMENT COMPANY'S TAXABLE YEAR FOR FEDERAL INCOME TAX
PURPOSES AND THE DENOMINATOR OF WHICH IS THE AVERAGE OF THE SUM  OF  THE
BEGINNING  OF  YEAR  AND  THE END OF YEAR BALANCE OF SHARES OWNED BY ALL
INVESTMENT COMPANY SHAREHOLDERS. A SEPARATE COMPUTATION  SHALL  BE  MADE
WITH  RESPECT  TO  GROSS RECEIPTS FOR ASSET MANAGEMENT SERVICES PROVIDED
DIRECTLY OR INDIRECTLY TO EACH INVESTMENT COMPANY.
  (IV) IN THE CASE OF ASSET MANAGEMENT  SERVICES  PROVIDED  DIRECTLY  OR
INDIRECTLY TO A PERSON OTHER THAN THOSE PERSONS DESCRIBED IN CLAUSES (I)
THROUGH (III) OF THIS SUBPARAGRAPH, TO THE DOMICILE OF SUCH PERSON.
  (V)(I)  FOR  PURPOSES OF THIS SUBPARAGRAPH, "ADMINISTRATION SERVICES",
IN EACH CASE WITH RESPECT TO INVESTMENTS, MEANS THE DIRECT  OR  INDIRECT
PROVISION  OF  (A)  CLERICAL,  (B) ACCOUNTING, (C) BOOKKEEPING, (D) DATA
PROCESSING, (E) INTERNAL AUDITING, (F) LEGAL AND TAX SERVICES, (G) REGU-
LATORY COMPLIANCE, OPERATIONS AND RELATED SERVICES, (H) RISK  ANALYTICS,
(I)  TRADE  PROCESSING,  CLEARING  AND  EXECUTION SERVICES, (J) TRANSFER
AGENCY, AND (K) CUSTODIAL SERVICES.
  (II) "ASSET MANAGEMENT CORPORATION" MEANS A CORPORATION  THAT  (A)  IS
PRINCIPALLY ENGAGED IN THE PERFORMANCE OF ASSET MANAGEMENT SERVICES; (B)
MAKES  AN  ELECTION  FOR  EACH  TAXABLE  YEAR  TO BE TREATED AS AN ASSET
MANAGEMENT  CORPORATION  BY  FILING  THE  APPROPRIATE  FORM  OF   RETURN
PRESCRIBED  BY  THE  COMMISSIONER  TO MAKE SUCH ELECTION; AND (C) IS NOT
OTHERWISE A REGISTERED SECURITIES OR COMMODITIES BROKER OR DEALER PURSU-
ANT TO SECTION TWO HUNDRED TEN OF THIS CHAPTER.
  (III) FOR PURPOSES OF THIS SUBPARAGRAPH, "GROSS RECEIPTS"  SHALL  MEAN
GROSS  RECEIPTS  REPORTED  BY  THE  CORPORATION FOR ITS TAXABLE YEAR FOR
PURPOSES OF THE FEDERAL INCOME TAX.
  (IV) FOR PURPOSES OF THIS SUBPARAGRAPH, "ASSET  MANAGEMENT  SERVICES",
IN  EACH  CASE WITH RESPECT TO INVESTMENTS, INCLUDES, BUT IS NOT LIMITED
TO, DIRECTLY OR INDIRECTLY (A) RENDERING  INVESTMENT  ADVICE,  INCLUDING
INVESTMENT  ANALYSIS,  (B)  MAKING  DETERMINATIONS  AS TO WHEN SALES AND
PURCHASES ARE TO BE MADE, (C) SELLING OR PURCHASING OF INVESTMENTS,  (D)
RENDERING  ADMINISTRATION SERVICES, (E) RENDERING DISTRIBUTION SERVICES,
OR (F) MANAGING  INVESTMENTS  PURSUANT  TO  CONTRACTS  FOR  SUB-ADVISORY
SERVICES.
  (V)  FOR  PURPOSES  OF  THIS SUBPARAGRAPH, "DISTRIBUTION SERVICES", IN
EACH CASE WITH RESPECT TO INVESTMENTS, INCLUDES, BUT IS NOT LIMITED  TO,
DIRECTLY OR INDIRECTLY, (A) ADVERTISING, (B) SERVICING INVESTOR ACCOUNTS
(INCLUDING  REDEMPTIONS),  (C)  MARKETING  SHARES  OR  SELLING SHARES OF
CORPORATIONS OR BUSINESS TRUSTS REGISTERED AS INVESTMENT COMPANIES UNDER
THE INVESTMENT COMPANY ACT OF 1940 (15 U.S.C. S 80A-1 ET SEQ.),  OR  (D)
MARKETING  ASSET  MANAGEMENT  SERVICES (INCLUDING SELLING INTERESTS IN A
POOL OF INVESTMENTS, SUCH AS A FUND).
  (VI) "DOMICILE", IN THE CASE OF AN INDIVIDUAL, SHALL HAVE THE  MEANING
ASCRIBED  TO  IT  UNDER ARTICLE TWENTY-TWO OF THIS CHAPTER; AN ESTATE OR
TRUST IS DOMICILED IN THE STATE IF IT IS A RESIDENT ESTATE OR  TRUST  AS
DEFINED IN PARAGRAPH THREE OF SUBSECTION (B) OF SECTION SIX HUNDRED FIVE
OF  THIS  CHAPTER;  A  BUSINESS  ENTITY IS DOMICILED IN THE STATE IF THE
LOCATION OF THE ACTUAL SEAT OF MANAGEMENT OR CONTROL IS IN THE STATE. IT
SHALL BE PRESUMED THAT THE DOMICILE OF A SHAREHOLDER,  WITH  RESPECT  TO
ANY  MONTH,  IS  HIS,  HER  OR ITS MAILING ADDRESS ON THE RECORDS OF THE
INVESTMENT COMPANY AS OF THE LAST DAY OF SUCH MONTH; OR IN THE CASE OF A

S. 5708                             8

CORPORATION OR A PARTNERSHIP, S CORPORATION, A DISREGARDED ENTITY  UNDER
SECTION  7701  OF THE INTERNAL REVENUE CODE, OR ANY OTHER SIMILAR ENTITY
ORGANIZED UNDER FOREIGN LAW, ITS COMMERCIAL DOMICILE; PROVIDED, HOWEVER,
DOMICILE  SHALL BE PRESUMED TO BE THE MAILING ADDRESS OF THE BENEFICIARY
OF A PENSION PLAN, OR THE OWNER OF AN ACCOUNT OR INTEREST IN A  POOL  OF
INVESTMENTS  BASED  ON  THE RECORDS OF THE SPONSOR OF SUCH PENSION PLAN,
ACCOUNT OR POOL OF INVESTMENTS OR THE SHAREHOLDER'S MAILING  ADDRESS  ON
THE RECORDS OF AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF
1940 (15 U.S.C. S 80A-1 ET SEQ.).
  (VII)  FOR  PURPOSES  OF THIS SUBPARAGRAPH, "SPONSOR" MEANS THE PERSON
THAT HAS CONTRACTED DIRECTLY WITH THE BENEFICIARIES OF A PENSION PLAN OR
RETIREMENT ACCOUNT OR THE OWNER OF ANY ACCOUNT OR INTEREST IN A POOL  OF
INVESTMENTS  TO  ADMINISTER  AND  MANAGE  THE PENSION PLAN OR RETIREMENT
ACCOUNT, OTHER ACCOUNT OR POOL OF INVESTMENTS.
  S 5. Paragraph 1-a of subsection b of section 1454 of the tax law,  as
amended  by  section  1  of part A of chapter 63 of the laws of 2005, is
amended to read as follows:
  [1-a.] (1-A) Notwithstanding the provisions of paragraph one  of  this
subsection,  each  banking  corporation  described  in paragraph nine of
subsection (a) of section fourteen hundred fifty-two  of  this  article,
EXCEPT  FOR  A  BANKING  CORPORATION  THAT  SUBSTANTIALLY PROVIDES ASSET
MANAGEMENT SERVICES AS SUCH TERMS ARE DEFINED  IN  SUBPARAGRAPH  (H)  OF
PARAGRAPH  TWO  OF  SUBSECTION  (A)  OF THIS SECTION, subject to the tax
imposed by this article that substantially provides management, adminis-
trative or distribution services to an investment company, as such terms
are defined in subparagraph (G) of paragraph two of  subsection  (a)  of
this  section,  shall  determine  the  portion  of its entire net income
derived from business carried on within the state  by  multiplying  such
income by an income allocation percentage obtained as follows:
  S  6.  Paragraph  3 of subsection c of section 1454 of the tax law, as
added by chapter 161 of the laws of 2005, is amended to read as follows:
  (3) For taxable years beginning on or after January first,  two  thou-
sand  six,  each  banking  corporation  described  in  paragraph nine of
subsection (a) of section fourteen hundred fifty-two  of  this  article,
EXCEPT FOR A BANKING CORPORATION THAT IS AN ASSET MANAGEMENT CORPORATION
AS  DEFINED  IN  SUBPARAGRAPH  (H) OF PARAGRAPH TWO OF SUBSECTION (A) OF
THIS SECTION, subject to the tax imposed by this article  that  substan-
tially  provides  management, administrative or distribution services to
an investment company, as such terms are defined in subparagraph (G)  of
paragraph  two of subsection (a) of this section, AND, FOR TAXABLE YEARS
BEGINNING ON JANUARY FIRST, TWO THOUSAND NINE AND THEREAFTER, EACH ASSET
MANAGEMENT CORPORATION AS DEFINED IN SUBPARAGRAPH (H) OF  PARAGRAPH  TWO
OF  SUBSECTION  (A)  OF THIS SECTION, shall determine the portion of its
alternative entire net income derived from business  carried  on  within
the  state  by multiplying such income by the percentage ascertained for
the taxable year  under  paragraph  one-a  of  subsection  (b)  of  this
section,  except that in computing such percentage (A) for taxable years
beginning before January first, two  thousand  eight,  no  consideration
shall  be  given  to  the phrase "eighty percent of" in paragraph one of
subsection (a) of this section, (B) for taxable years  beginning  before
January first, two thousand eight, when an election has been made pursu-
ant  to  paragraph two of subsection (b) of this section (relating to an
international banking facility) the taxpayer shall  make  the  modifica-
tions  described  in such paragraph, and (C) for taxable years beginning
on or after January first, two thousand eight, when an election has been
made pursuant to paragraph two of subsection (b) of this section (relat-

S. 5708                             9

ing to an international banking facility) the taxpayer  shall  make  the
modifications described in clause (ii) of subparagraph (A) of such para-
graph.
  S 7. This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2009.