S T A T E   O F   N E W   Y O R K
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                                  5394

                       2013-2014 Regular Sessions

                          I N  A S S E M B L Y

                            February 25, 2013
                               ___________

Introduced by M. of A. KOLB, BUTLER, REILICH, KATZ -- Multi-Sponsored by
  --  M.  of  A.  BARCLAY, BLANKENBUSH, CERETTO, CROUCH, CURRAN, DUPREY,
  FINCH, FITZPATRICK, GIGLIO,  GOODELL,  GRAF,  HAWLEY,  JOHNS,  JORDAN,
  LOSQUADRO,  McKEVITT, McLAUGHLIN, MONTESANO, OAKS, PALMESANO, RABBITT,
  RAIA, SALADINO, TEDISCO, TENNEY --  read  once  and  referred  to  the
  Committee on Ways and Means

AN  ACT  to amend the general municipal law, in relation to establishing
  the New York state cornerstone program; and to repeal article 18-B  of
  such law relating thereto (Part A); to amend the general municipal law
  and  the  tax  law,  in  relation  to  establishing the New York state
  discovery program (Part B); and to amend the tax law, in  relation  to
  net income base and in relation to certain taxes (Part C)

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

  Section 1. This act enacts into law components of legislation relating
to the "New York state  cornerstone  program  and  the  New  York  state
discovery  program".  Each  component  is wholly contained within a Part
identified as Parts A through C. The effective date for each  particular
provision contained within such Part is set forth in the last section of
such Part. Any provision in any section contained within a Part, includ-
ing  the  effective date of the Part, which makes reference to a section
"of this act", when used in connection with that  particular  component,
shall  be  deemed  to mean and refer to the corresponding section of the
Part in which it is found. Section three of  this  act  sets  forth  the
general effective date of this act.
  S 1-a. Statement of legislative findings and declaration.  It is here-
by  found and declared that there exists within the state high unemploy-
ment, limited new  job  creation,  a  dependence  on  public  assistance
income,  insufficient  support for industrial and commercial businesses,
and unnecessarily high taxes.  These  severe  conditions  require  state
government  to  target  certain industries in order to stimulate private

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD06260-01-3
              

A. 5394                             2

investment, private business development and job creation. It should  be
the  public  policy  of the state to help promote the development of new
businesses, rather than deter them with punitive regulation  and  exces-
sive taxes. It is further found and declared that it is the public poli-
cy of the state to achieve these goals through the mutual cooperation of
all  levels  of  state  and local government, the business community and
academic institutions.

                                 PART A

  Section 1. Article 18-B of the general municipal law is REPEALED.
  S 2. The general municipal law is amended by adding a new article 18-B
to read as follows:
                               ARTICLE 18-B
                   NEW YORK STATE CORNERSTONE PROGRAM
SECTION 955. NEW YORK CORNERSTONE PROGRAM ESTABLISHED.
        956. RESPONSIBILITIES OF THE COMMISSIONER.
        957. CORNERSTONE DEVELOPMENT BOARD.
        958. REPORTING REQUIREMENTS.
  S 955. NEW YORK  CORNERSTONE  PROGRAM  ESTABLISHED.  THERE  IS  HEREBY
ESTABLISHED THE NEW YORK CORNERSTONE PROGRAM.
  S  956.  RESPONSIBILITIES  OF THE COMMISSIONER. 1. THE COMMISSIONER OF
ECONOMIC DEVELOPMENT SHALL, IN CONSULTATION WITH  THE  DIRECTOR  OF  THE
BUDGET,  THE COMMISSIONER OF LABOR, AND THE COMMISSIONER OF TAXATION AND
FINANCE, PROMULGATE RULES AND REGULATIONS,  WHICH,  NOTWITHSTANDING  ANY
PROVISIONS  TO  THE  CONTRARY IN THE STATE ADMINISTRATIVE PROCEDURE ACT,
MAY BE ADOPTED ON AN EMERGENCY BASIS, RELATING TO:
  (A) THE APPLICATION PROCESS;
  (B) DEFINING TYPES OF BUSINESSES ELIGIBLE, INCLUDING BUT  NOT  LIMITED
TO MANUFACTURING, HIGH-TECH, BIO-TECH, CLEAN-TECH AND AGRI-BUSINESS;
  (C) LIMITING BUSINESSES TO TEN YEARS OF PARTICIPATION;
  (D)  CERTIFICATION  BY  THE  COMMISSIONER  FOR ELIGIBILITY OF BUSINESS
ENTERPRISES FOR BENEFITS REFERRED  TO  IN  THIS  ARTICLE.  CRITERIA  FOR
CERTIFICATION SHALL INCLUDE, BUT NOT BE LIMITED TO:
  (I)  REQUIRING  A  BUSINESS TO HAVE BEEN OPERATIONAL IN NEW YORK STATE
FOR AT LEAST TEN CONSECUTIVE YEARS PRIOR TO APPLYING TO THE  CORNERSTONE
PROGRAM;
  (II)  REQUIRING  A BUSINESS TO SHOW PROOF THAT THEY WILL HAVE TO LOWER
EMPLOYMENT LEVELS WITHOUT CERTIFICATION IN THE PROGRAM;
  (III) REQUIRING A BUSINESS TO  COMMIT  TO  MAINTAINING  OR  INCREASING
CURRENT EMPLOYMENT LEVELS TO QUALIFY FOR TAX BENEFITS;
  (IV)  WHETHER  CERTIFICATION WILL HAVE THE UNDESIRED EFFECT OF CAUSING
INDIVIDUALS TO TRANSFER FROM EXISTING EMPLOYMENT WITH  ANOTHER  BUSINESS
ENTERPRISE  TO SIMILAR EMPLOYMENT WITH THE BUSINESS ENTERPRISE SO CERTI-
FIED, AND TRANSFERRING EXISTING EMPLOYMENT FROM ONE OR MORE OTHER  MUNI-
CIPALITIES, TOWNS OR VILLAGES IN THE STATE;
  (V)  WHETHER SUCH ENTERPRISE IS LIKELY TO ENHANCE THE ECONOMIC CLIMATE
OF THE STATE; AND
  (VI) WHETHER THE COMMISSIONER OF LABOR ESTABLISHES THAT SUCH  BUSINESS
ENTERPRISE, DURING THE TEN YEARS PRECEDING THE SUBMISSION OF AN APPLICA-
TION  FOR  CERTIFICATION,  HAS  ENGAGED  IN A SUBSTANTIAL VIOLATION OR A
PATTERN OF VIOLATIONS OF LAWS REGULATING UNEMPLOYMENT INSURANCE, WORKERS
COMPENSATION, PUBLIC WORK, CHILD LABOR,  EMPLOYMENT  OF  MINORITIES  AND
WOMEN, SAFETY AND HEALTH, OR OTHER LAWS FOR THE PROTECTION OF WORKERS AS
DETERMINED BY FINAL JUDGMENT OF A JUDICIAL OR ADMINISTRATIVE PROCEEDING.

A. 5394                             3

  2.  THE  COMMISSIONER  OF  ECONOMIC DEVELOPMENT SHALL, IN CONSULTATION
WITH THE DIRECTOR OF THE BUDGET, THE  COMMISSIONER  OF  LABOR,  AND  THE
COMMISSIONER OF TAXATION AND FINANCE, ESTABLISH A COST BENEFIT ANALYSIS.
  3.  THE  COMMISSIONER  OF  ECONOMIC DEVELOPMENT SHALL, IN CONSULTATION
WITH THE DIRECTOR OF THE BUDGET, THE  COMMISSIONER  OF  LABOR,  AND  THE
COMMISSIONER  OF  TAXATION  AND FINANCE, ESTABLISH A PROGRAM AND PROPOSE
LEGISLATION GRANTING TAX  EXEMPTIONS  PREVIOUSLY  APPLICABLE  TO  EMPIRE
ZONES  FOR  BUSINESS  ENTERPRISES ELIGIBLE UNDER THE CORNERSTONE PROGRAM
ESTABLISHED PURSUANT TO THIS ARTICLE, TO THE  GOVERNOR  AND  LEGISLATURE
WITHIN ONE HUNDRED EIGHTY DAYS FROM THE EFFECTIVE DATE OF THIS ARTICLE.
  S  957. CORNERSTONE DEVELOPMENT BOARD.  1. THE CORNERSTONE DEVELOPMENT
BOARD IS HEREBY CREATED.
  2. SUCH BOARD SHALL  CONSIST  OF  THE  COMMISSIONER  OF  TAXATION  AND
FINANCE,  THE  DIRECTOR OF THE BUDGET, THE COMMISSIONER OF LABOR AND TWO
MEMBERS TO BE APPOINTED BY THE GOVERNOR; ONE MEMBER TO BE  APPOINTED  BY
THE TEMPORARY PRESIDENT OF THE SENATE; ONE MEMBER TO BE APPOINTED BY THE
SPEAKER  OF  THE  ASSEMBLY;  ONE  MEMBER TO BE APPOINTED BY THE MINORITY
LEADER OF THE SENATE AND ONE MEMBER TO  BE  APPOINTED  BY  THE  MINORITY
LEADER OF THE ASSEMBLY.
  3.  THE  GOVERNOR  SHALL  DESIGNATE  FROM AMONG THE VOTING MEMBERS THE
CHAIR OF THE BOARD. EACH MEMBER OF THE BOARD SHALL BE ENTITLED TO DESIG-
NATE A REPRESENTATIVE TO ATTEND MEETINGS OF THE  BOARD  IN  HIS  OR  HER
PLACE,  AND  TO VOTE OR OTHERWISE ACT ON HIS OR HER BEHALF IN HIS OR HER
ABSENCE.
  4. NOTICE OF SUCH DESIGNATION SHALL BE FURNISHED  IN  WRITING  TO  THE
BOARD BY THE DESIGNATING MEMBER.
  5.  A  REPRESENTATIVE  SHALL  SERVE AT THE PLEASURE OF THE DESIGNATING
MEMBER.
  6. A REPRESENTATIVE SHALL NOT BE AUTHORIZED TO DELEGATE ANY OF HIS  OR
HER DUTIES OR FUNCTIONS TO ANY OTHER PERSON.
  S  958.  REPORTING  REQUIREMENTS.    1.  THE  DEPARTMENT  OF AUDIT AND
CONTROL, THE DEPARTMENT OF TAXATION AND FINANCE AND  THE  DEPARTMENT  OF
ECONOMIC  DEVELOPMENT  SHALL  PREPARE  REPORTS ON THE MANAGEMENT AND THE
ECONOMIC AND FISCAL IMPACT OF THE CORNERSTONE PROGRAM.
  2. THE ANALYSIS OF THE FISCAL AND ECONOMIC IMPACT OF THE PROGRAM SHALL
INCLUDE, BUT NOT BE LIMITED TO: A REVIEW OF THE COST  OF  PROVIDING  THE
TAX  BENEFITS  REFERRED  TO  IN  THIS  ARTICLE; PROGRESS OF THE PROGRAM;
NUMBER OF TAX CREDITS CLAIMED BY EACH CERTIFIED BUSINESS; NUMBER OF JOBS
CREATED AND/OR RETAINED BY  EACH  BUSINESS  AND  ALL  OTHER  INFORMATION
REQUESTED AND NOT PROHIBITED BY LAW.
  3.  SUCH REPORTS SHALL BE TRANSMITTED TO THE GOVERNOR AND THE LEGISLA-
TURE BY SEPTEMBER FIRST, TWO THOUSAND THIRTEEN AND EVERY YEAR THEREAFTER
AND SHALL BE POSTED ONLINE FOR FULL PUBLIC DISCLOSURE.
  S 3. This act shall take effect immediately; provided,  however,  that
any  rules and regulations necessary to carry out the provisions of this
act shall be promulgated before such effective date.

                                 PART B

  Section 1. This act shall be known and may be cited as the  "New  York
state discovery act".
  S  2.    The  general municipal law is amended by adding a new article
18-D to read as follows:
                               ARTICLE 18-D
                    NEW YORK STATE DISCOVERY PROGRAM
SECTION 972. NEW YORK STATE DISCOVERY PROGRAM.

A. 5394                             4

        973. JOB DEVELOPMENT FUND.
  S 972. NEW YORK STATE DISCOVERY PROGRAM. 1. THE NEW YORK STATE DISCOV-
ERY PROGRAM IS HEREBY ESTABLISHED.
  2.  THE COMMISSIONER OF ECONOMIC DEVELOPMENT SHALL, AFTER CONSULTATION
WITH THE DIRECTOR OF THE BUDGET, THE  COMMISSIONER  OF  LABOR,  AND  THE
COMMISSIONER  OF TAXATION AND FINANCE, PROMULGATE RULES AND REGULATIONS,
WHICH, NOTWITHSTANDING ANY PROVISIONS  TO  THE  CONTRARY  IN  THE  STATE
ADMINISTRATIVE  PROCEDURE  ACT,  MAY  BE  ADOPTED ON AN EMERGENCY BASIS,
RELATING TO:
  (A) THE APPLICATION PROCESS;
  (B) DEFINING TYPES OF BUSINESSES ELIGIBLE, INCLUDING BUT  NOT  LIMITED
TO MANUFACTURING, HIGH-TECH, BIO-TECH, CLEAN-TECH AND AGRI-BUSINESS;
  (C) LIMITING BUSINESSES TO TEN YEARS OF PARTICIPATION;
  (D)  CERTIFICATION  BY  THE COMMISSIONER OF ECONOMIC DEVELOPMENT AS TO
THE ELIGIBILITY OF BUSINESS ENTERPRISES FOR BENEFITS REFERRED TO IN THIS
SECTION, WHICH SHALL BE GOVERNED BY CRITERIA INCLUDING, BUT NOT  LIMITED
TO:
  (I)  REQUIRING  AN  ELIGIBLE  BUSINESS TO BE A START-UP BUSINESS, OR A
BUSINESS OPERATING IN THE STATE FOR TWO YEARS OR LESS;
  (II) A BUSINESS MUST OFFER INTERNSHIPS TO LOCAL HIGH SCHOOL  STUDENTS,
BOCES  STUDENTS AND COLLEGE STUDENTS PER A PLAN DEVELOPED BY THE COMMIS-
SIONER OF ECONOMIC DEVELOPMENT;
  (III) A BUSINESS MUST COMMIT TO INCREASING CURRENT  EMPLOYMENT  LEVELS
TO QUALIFY FOR TAX BENEFITS;
  (IV)  WHETHER  CERTIFICATION WILL HAVE THE UNDESIRED EFFECT OF CAUSING
INDIVIDUALS TO TRANSFER FROM EXISTING EMPLOYMENT WITH  ANOTHER  BUSINESS
ENTERPRISE  TO SIMILAR EMPLOYMENT WITH THE BUSINESS ENTERPRISE SO CERTI-
FIED, AND TRANSFERRING EXISTING EMPLOYMENT FROM ONE OR MORE OTHER  MUNI-
CIPALITIES, TOWNS OR VILLAGES IN THE STATE;
  (V)  WHETHER SUCH ENTERPRISE IS LIKELY TO ENHANCE THE ECONOMIC CLIMATE
OF THE STATE;
  (VI) WHETHER THE COMMISSIONER OF LABOR ESTABLISHES THAT SUCH  BUSINESS
ENTERPRISE, DURING THE TWO YEARS PRECEDING THE SUBMISSION OF AN APPLICA-
TION  FOR  CERTIFICATION,  HAS  ENGAGED  IN A SUBSTANTIAL VIOLATION OR A
PATTERN OF VIOLATIONS OF LAWS REGULATING UNEMPLOYMENT INSURANCE, WORKERS
COMPENSATION, PUBLIC WORK, CHILD LABOR,  EMPLOYMENT  OF  MINORITIES  AND
WOMEN, SAFETY AND HEALTH, OR OTHER LAWS FOR THE PROTECTION OF WORKERS AS
DETERMINED BY FINAL JUDGMENT OF A JUDICIAL OR ADMINISTRATIVE PROCEEDING;
AND
  (VII) WHETHER SUCH BUSINESS MEETS THE REQUIREMENTS OF THE COST BENEFIT
ANALYSIS AS ESTABLISHED BY THE COMMISSIONER OF ECONOMIC DEVELOPMENT.
  3. THE DEPARTMENT OF AUDIT AND CONTROL, THE DEPARTMENT OF TAXATION AND
FINANCE AND THE DEPARTMENT OF ECONOMIC DEVELOPMENT SHALL PREPARE REPORTS
ON  THE  MANAGEMENT  AND THE ECONOMIC AND FISCAL IMPACT OF THE DISCOVERY
PROGRAM. THE ANALYSIS OF THE FISCAL AND ECONOMIC IMPACT OF  THE  PROGRAM
SHALL  INCLUDE, BUT NOT BE LIMITED TO: A REVIEW OF THE COST OF PROVIDING
THE TAX BENEFITS REFERRED TO IN THIS ARTICLE; PROGRESS OF  THE  PROGRAM;
NUMBER OF TAX CREDITS CLAIMED BY EACH CERTIFIED BUSINESS; NUMBER OF JOBS
CREATED  BY  EACH  BUSINESS  AND ALL OTHER INFORMATION REQUESTED AND NOT
PROHIBITED BY LAW. SUCH REPORTS SHALL BE TRANSMITTED TO THE GOVERNOR AND
THE LEGISLATURE BY SEPTEMBER FIRST, TWO THOUSAND THIRTEEN AND EVERY YEAR
THEREAFTER AND SHALL BE POSTED ONLINE FOR FULL PUBLIC DISCLOSURE.
  4. THE DEPARTMENT OF ECONOMIC DEVELOPMENT SHALL PROVIDE GRANTS  OF  UP
TO  TWO  THOUSAND  DOLLARS  FOR  EVERY  INTERNSHIP  DEVELOPED UNDER THIS
PROGRAM, TO BE PAID FOR OUT OF  THE  JOB  DEVELOPMENT  FUND  ESTABLISHED
PURSUANT TO THIS ARTICLE. SUCH GRANT ALLOCATIONS SHALL BE DIVIDED EVENLY

A. 5394                             5

BETWEEN  THE  CERTIFIED  BUSINESS  AND  THE CORRESPONDING INSTITUTION OF
HIGHER EDUCATION TO COVER COSTS ASSOCIATED WITH THE DEVELOPMENT OF  SUCH
INTERNSHIPS.
  S  973. JOB DEVELOPMENT FUND. THERE IS HEREBY ESTABLISHED IN THE JOINT
CUSTODY OF THE COMMISSIONER OF TAXATION AND FINANCE AND THE STATE  COMP-
TROLLER A FUND TO BE KNOWN AS THE "JOB DEVELOPMENT FUND".
  2.  THE  FUND SHALL CONSIST OF MONIES APPROPRIATED FOR THE DIVISION OF
SCIENCE, TECHNOLOGY AND INNOVATION.
  3. MONEYS OF THE FUND SHALL BE EXPENDED FOR THE PURPOSES  OF  CARRYING
OUT  THE PROVISIONS OF SECTION NINE HUNDRED SEVENTY-TWO OF THIS ARTICLE.
MONEYS SHALL BE PAID OUT OF THE FUND ON THE AUDIT  AND  WARRANT  OF  THE
STATE COMPTROLLER ON VOUCHERS APPROVED BY THE DIVISION OF SCIENCE, TECH-
NOLOGY  AND  INNOVATION.  ANY  INTEREST  RECEIVED  BY THE COMPTROLLER ON
MONEYS ON DEPOSIT IN THE JOB DEVELOPMENT FUND SHALL BE RETAINED  IN  AND
BECOME PART OF SUCH FUND.
  S  3.  The  tax law is amended by adding a new section 15-a to read as
follows:
  S 15-A. DISCOVERY ZONE PROPERTY TAX CREDIT. FOR A BUSINESS  ENTERPRISE
WHICH  IS  FIRST CERTIFIED UNDER SECTION NINE HUNDRED SEVENTY-TWO OF THE
GENERAL MUNICIPAL LAW ON OR AFTER JULY FIRST, TWO THOUSAND THIRTEEN, THE
CREDIT SHALL BE FOR A PERIOD OF TEN YEARS AND SHALL  NOT  EXCEED  THIRTY
PERCENT  OF THE ELIGIBLE REAL PROPERTY TAXES PAID IN THE CURRENT TAXABLE
YEAR OF ELIGIBILITY.
  S 4. Section 210 of the tax law is amended by adding two new  subdivi-
sions 46 and 47 to read as follows:
  46.  DISCOVERY  INVESTMENT  CREDIT.  (A) A TAXPAYER SHALL BE ALLOWED A
CREDIT, TO BE COMPUTED AS HEREINAFTER PROVIDED, AGAINST THE TAX  IMPOSED
BY  THIS  ARTICLE  WHERE  THE  TAXPAYER  HAS  BEEN CERTIFIED PURSUANT TO
SECTION NINE HUNDRED SEVENTY-TWO OF THE  GENERAL  MUNICIPAL  LAW.    THE
AMOUNT OF SUCH CREDIT SHALL BE TWENTY PERCENT OF THE COST OR OTHER BASIS
FOR  FEDERAL INCOME TAX PURPOSES OF TANGIBLE PERSONAL PROPERTY AND OTHER
TANGIBLE PROPERTY, INCLUDING  BUILDINGS  AND  STRUCTURAL  COMPONENTS  OF
BUILDINGS,  DESCRIBED  IN PARAGRAPH (B) OF THIS SUBDIVISION, BUT ONLY IF
THE ACQUISITION, CONSTRUCTION, RECONSTRUCTION OR ERECTION OF SUCH  PROP-
ERTY  OCCURRED OR WAS COMMENCED ON OR AFTER THE DATE OF SUCH DESIGNATION
AND PRIOR TO THE EXPIRATION THEREOF. PROVIDED, HOWEVER, THAT IN THE CASE
OF AN ACQUISITION, CONSTRUCTION, RECONSTRUCTION OR  ERECTION  WHICH  WAS
COMMENCED  DURING  SUCH  PERIOD AND CONTINUED OR COMPLETED SUBSEQUENTLY,
THE CREDIT SHALL BE TWENTY PERCENT OF THE PORTION OF THE COST  OR  OTHER
BASIS FOR FEDERAL INCOME TAX PURPOSES ATTRIBUTABLE TO SUCH PERIOD, WHICH
PORTION  SHALL  BE  ASCERTAINED  BY  MULTIPLYING SUCH COST OR BASIS BY A
FRACTION THE NUMERATOR OF  WHICH  SHALL  BE  THE  EXPENDITURES  PAID  OR
INCURRED  DURING  SUCH  PERIOD  FOR SUCH PURPOSES AND THE DENOMINATOR OF
WHICH SHALL BE THE TOTAL OF ALL EXPENDITURES PAID OR INCURRED  FOR  SUCH
ACQUISITION, CONSTRUCTION, RECONSTRUCTION OR ERECTION.
  (B)  A  CREDIT SHALL BE ALLOWED UNDER THIS SUBDIVISION WITH RESPECT TO
TANGIBLE PERSONAL PROPERTY AND OTHER TANGIBLE PROPERTY, INCLUDING BUILD-
INGS AND STRUCTURAL COMPONENTS OF BUILDINGS WHICH: (1)  ARE  DEPRECIABLE
PURSUANT  TO  SECTION  ONE  HUNDRED  SIXTY-SEVEN OF THE INTERNAL REVENUE
CODE, (2) HAVE A USEFUL LIFE OF FOUR YEARS OR MORE, (3) ARE ACQUIRED  BY
PURCHASE  AS  DEFINED  IN  SECTION  ONE  HUNDRED SEVENTY-NINE (D) OF THE
INTERNAL REVENUE CODE, AND (4) ARE (I) PRINCIPALLY USED BY THE  TAXPAYER
IN  THE  PRODUCTION  OF  GOODS BY MANUFACTURING, PROCESSING, ASSEMBLING,
REFINING, MINING, EXTRACTING, FARMING, AGRICULTURE, HORTICULTURE, FLORI-
CULTURE, VITICULTURE OR COMMERCIAL FISHING, (II) INDUSTRIAL WASTE TREAT-
MENT FACILITIES OR AIR POLLUTION CONTROL FACILITIES USED IN THE  TAXPAY-

A. 5394                             6

ER'S  TRADE  OR  BUSINESS, (III) RESEARCH AND DEVELOPMENT PROPERTY, (IV)
PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S TRADE OR BUSI-
NESS AS A BROKER OR DEALER IN  CONNECTION  WITH  THE  PURCHASE  OR  SALE
(WHICH  SHALL INCLUDE BUT NOT BE LIMITED TO THE ISSUANCE, ENTERING INTO,
ASSUMPTION, OFFSET, ASSIGNMENT, TERMINATION,  OR  TRANSFER)  OF  STOCKS,
BONDS   OR   OTHER   SECURITIES  AS  DEFINED  IN  SECTION  FOUR  HUNDRED
SEVENTY-FIVE (C)(2) OF THE INTERNAL REVENUE CODE, OR OF  COMMODITIES  AS
DEFINED IN SECTION FOUR HUNDRED SEVENTY-FIVE (E) OF THE INTERNAL REVENUE
CODE,  OR  (V) PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S
TRADE OR BUSINESS OF PROVIDING INVESTMENT ADVISORY SERVICES FOR A  REGU-
LATED  INVESTMENT  COMPANY AS DEFINED IN SECTION EIGHT HUNDRED FIFTY-ONE
OF THE INTERNAL REVENUE CODE, OR LENDING, LOAN ARRANGEMENT OR LOAN ORIG-
INATION SERVICES TO CUSTOMERS IN CONNECTION WITH THE  PURCHASE  OR  SALE
(WHICH  SHALL INCLUDE BUT NOT BE LIMITED TO THE ISSUANCE, ENTERING INTO,
ASSUMPTION, OFFSET, ASSIGNMENT, TERMINATION, OR TRANSFER) OF  SECURITIES
AS  DEFINED  IN SECTION FOUR HUNDRED SEVENTY-FIVE (C)(2) OF THE INTERNAL
REVENUE CODE. FOR PURPOSES OF CLAUSES (IV) AND (V) OF THIS SUBPARAGRAPH,
PROPERTY PURCHASED BY A TAXPAYER AFFILIATED  WITH  A  REGULATED  BROKER,
DEALER  OR  REGISTERED INVESTMENT ADVISER IS ALLOWED A CREDIT UNDER THIS
SUBDIVISION IF THE PROPERTY IS USED BY ITS AFFILIATED REGULATED  BROKER,
DEALER OR REGISTERED INVESTMENT ADVISER IN ACCORDANCE WITH THIS SUBDIVI-
SION. FOR PURPOSES OF DETERMINING IF THE PROPERTY IS PRINCIPALLY USED IN
QUALIFYING  USES, THE USES BY THE TAXPAYER DESCRIBED IN CLAUSES (IV) AND
(V) OF THIS SUBPARAGRAPH MAY BE AGGREGATED. IN ADDITION, THE USES BY THE
TAXPAYER,  ITS  AFFILIATED  REGULATED  BROKER,  DEALER,  AND  REGISTERED
INVESTMENT  ADVISER  UNDER EITHER OR BOTH OF THOSE CLAUSES MAY BE AGGRE-
GATED. PROVIDED, HOWEVER, A TAXPAYER SHALL NOT  BE  ALLOWED  THE  CREDIT
PROVIDED  BY CLAUSES (IV) AND (V) OF THIS SUBPARAGRAPH UNLESS (I) EIGHTY
PERCENT OR MORE OF  THE  EMPLOYEES  PERFORMING  THE  ADMINISTRATIVE  AND
SUPPORT  FUNCTIONS  RESULTING  FROM OR RELATED TO THE QUALIFYING USES OF
SUCH EQUIPMENT ARE LOCATED IN THIS STATE, OR (II) THE AVERAGE NUMBER  OF
EMPLOYEES  THAT PERFORM THE ADMINISTRATIVE AND SUPPORT FUNCTIONS RESULT-
ING FROM OR RELATED TO THE QUALIFYING USES OF  SUCH  EQUIPMENT  AND  ARE
LOCATED  IN  THIS  STATE DURING THE TAXABLE YEAR FOR WHICH THE CREDIT IS
CLAIMED IS EQUAL TO OR GREATER THAN NINETY-FIVE PERCENT OF  THE  AVERAGE
NUMBER OF EMPLOYEES THAT PERFORM THESE FUNCTIONS AND ARE LOCATED IN THIS
STATE  DURING  THE  THIRTY-SIX MONTHS IMMEDIATELY PRECEDING THE YEAR FOR
WHICH THE CREDIT IS CLAIMED, OR (III) THE NUMBER OF EMPLOYEES LOCATED IN
THIS STATE DURING THE TAXABLE YEAR FOR WHICH THE CREDIT  IS  CLAIMED  IS
EQUAL  TO  OR  GREATER  THAN  NINETY  PERCENT OF THE NUMBER OF EMPLOYEES
LOCATED IN THIS STATE ON DECEMBER THIRTY-FIRST, NINETEEN  HUNDRED  NINE-
TY-EIGHT  OR,  IF THE TAXPAYER WAS NOT A CALENDAR YEAR TAXPAYER IN NINE-
TEEN HUNDRED NINETY-EIGHT, THE LAST DAY OF ITS FIRST TAXABLE YEAR ENDING
AFTER DECEMBER  THIRTY-FIRST,  NINETEEN  HUNDRED  NINETY-EIGHT.  IF  THE
TAXPAYER  BECOMES  SUBJECT  TO  TAX IN THIS STATE AFTER THE TAXABLE YEAR
BEGINNING IN NINETEEN HUNDRED NINETY-EIGHT, THEN  THE  TAXPAYER  IS  NOT
REQUIRED  TO  SATISFY  THE  EMPLOYMENT  TEST  PROVIDED  IN THE PRECEDING
SENTENCE OF THIS SUBPARAGRAPH FOR ITS FIRST TAXABLE YEAR.  FOR  PURPOSES
OF  ITEM  (III) OF THIS CLAUSE, THE EMPLOYMENT TEST WILL BE BASED ON THE
NUMBER OF EMPLOYEES LOCATED IN THIS STATE ON THE LAST DAY OF  THE  FIRST
TAXABLE  YEAR  THE TAXPAYER IS SUBJECT TO TAX IN THIS STATE. IF THE USES
OF THE PROPERTY MUST BE AGGREGATED TO DETERMINE WHETHER THE PROPERTY  IS
PRINCIPALLY  USED  IN  QUALIFYING USES, THEN EITHER EACH AFFILIATE USING
THE PROPERTY MUST SATISFY THIS EMPLOYMENT TEST OR THIS  EMPLOYMENT  TEST
MUST  BE  SATISFIED  THROUGH  THE  AGGREGATION  OF  THE EMPLOYEES OF THE
TAXPAYER,  ITS  AFFILIATED  REGULATED  BROKER,  DEALER,  AND  REGISTERED

A. 5394                             7

INVESTMENT ADVISER USING THE PROPERTY. FOR PURPOSES OF THIS SUBDIVISION,
THE  TERM  "GOODS"  SHALL  NOT INCLUDE ELECTRICITY. FOR PURPOSES OF THIS
PARAGRAPH, MANUFACTURING SHALL MEAN THE PROCESS OF WORKING RAW MATERIALS
INTO  WARES  SUITABLE FOR  USE OR WHICH GIVES NEW SHAPES, NEW QUALITY OR
NEW COMBINATION TO MATTER WHICH ALREADY HAS GONE THROUGH SOME ARTIFICIAL
PROCESS BY THE USE OF MACHINERY, TOOLS,  APPLIANCES  AND  OTHER  SIMILAR
EQUIPMENT.  PROPERTY  USED  IN  THE  PRODUCTION  OF  GOODS SHALL INCLUDE
MACHINERY, EQUIPMENT OR OTHER TANGIBLE  PROPERTY  WHICH  IS  PRINCIPALLY
USED  IN  THE  REPAIR AND SERVICE OF OTHER MACHINERY, EQUIPMENT OR OTHER
TANGIBLE PROPERTY USED PRINCIPALLY IN THE PRODUCTION OF GOODS AND  SHALL
INCLUDE ALL FACILITIES USED IN THE PRODUCTION OPERATION, INCLUDING STOR-
AGE  OF  MATERIAL  TO BE USED IN PRODUCTION AND OF THE PRODUCTS THAT ARE
PRODUCED. FOR PURPOSES OF THIS PARAGRAPH, THE  TERMS  "INDUSTRIAL  WASTE
TREATMENT  FACILITIES", "AIR POLLUTION CONTROL FACILITIES" AND "RESEARCH
AND DEVELOPMENT PROPERTY" SHALL HAVE THE MEANINGS  ASCRIBED  THERETO  BY
CLAUSES (II) AND (III), RESPECTIVELY, OF SUBPARAGRAPH FOUR OF THIS PARA-
GRAPH,  AND THE PROVISIONS OF SUBPARAGRAPH THREE OF THIS PARAGRAPH SHALL
APPLY.
  (C) A TAXPAYER SHALL NOT BE ALLOWED A CREDIT  UNDER  THIS  SUBDIVISION
WITH  RESPECT TO ANY TANGIBLE PERSONAL PROPERTY AND OTHER TANGIBLE PROP-
ERTY, INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS OF BUILDINGS,  WHICH
IT  LEASES  TO  ANY  OTHER PERSON OR CORPORATION EXCEPT WHERE A TAXPAYER
LEASES PROPERTY TO AN AFFILIATED REGULATED BROKER, DEALER, OR REGISTERED
INVESTMENT ADVISER THAT USES SUCH PROPERTY  IN  ACCORDANCE  WITH  CLAUSE
(IV)  OR  (V) OF SUBPARAGRAPH FOUR OF PARAGRAPH (B) OF THIS SUBDIVISION.
FOR PURPOSES OF THE PRECEDING SENTENCE, ANY  CONTRACT  OR  AGREEMENT  TO
LEASE  OR RENT OR FOR A LICENSE TO USE SUCH PROPERTY SHALL BE CONSIDERED
A LEASE. PROVIDED, HOWEVER, IN DETERMINING WHETHER A TAXPAYER  SHALL  BE
ALLOWED  A  CREDIT UNDER THIS SUBDIVISION WITH RESPECT TO SUCH PROPERTY,
ANY ELECTION  MADE  WITH  RESPECT  TO  SUCH  PROPERTY  PURSUANT  TO  THE
PROVISIONS  OF  PARAGRAPH EIGHT OF SUBSECTION (F) OF SECTION ONE HUNDRED
SIXTY-EIGHT OF THE INTERNAL REVENUE  CODE,  AS  SUCH  PARAGRAPH  WAS  IN
EFFECT  FOR  AGREEMENTS  ENTERED  INTO  PRIOR TO JANUARY FIRST, NINETEEN
HUNDRED EIGHTY-FOUR, SHALL BE DISREGARDED.
  (D) IF THE AMOUNT OF CREDIT ALLOWED UNDER  THIS  SUBDIVISION  FOR  ANY
TAXABLE  YEAR  SHALL EXCEED THE TAXPAYER'S TAX FOR SUCH YEAR, THE EXCESS
MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY  BE  DEDUCTED
FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS. ANY REFUND PAID PURSUANT
TO  THIS  PARAGRAPH  SHALL BE DEEMED TO BE A REFUND OF AN OVERPAYMENT OF
TAX AS PROVIDED IN SECTION  SIX  HUNDRED  EIGHTY-SIX  OF  THIS  CHAPTER,
PROVIDED, HOWEVER, THAT NO INTEREST SHALL BE PAID THEREON.
  47. DISCOVERY WAGE TAX CREDIT. (A) A TAXPAYER SHALL BE ALLOWED A CRED-
IT,  TO  BE COMPUTED AS HEREINAFTER PROVIDED, AGAINST THE TAX IMPOSED BY
THIS ARTICLE, WHERE THE TAXPAYER HAS BEEN CERTIFIED PURSUANT TO  SECTION
NINE  HUNDRED  SEVENTY-TWO  OF  THE GENERAL MUNICIPAL LAW. THE AMOUNT OF
SUCH CREDIT SHALL BE AS PRESCRIBED IN PARAGRAPH (C) OF THIS SUBDIVISION.
  (B) "DISCOVERY WAGES" MEANS WAGES PAID BY THE TAXPAYER  FOR  FULL-TIME
EMPLOYMENT  DURING A TAXABLE YEAR, PROVIDED THAT THOSE WAGES ARE PAID BY
A CERTIFIED BUSINESS AS DEFINED BY THE COMMISSIONER OF ECONOMIC DEVELOP-
MENT AS REQUIRED IN HIS OR HER RESPONSIBILITIES.
  (C) THE CREDIT PROVIDED IN THIS SUBDIVISION  SHALL  BE  EQUAL  TO  THE
PRODUCT  OF  THE  GROSS  WAGES  PAID  AND SIX AND EIGHTY-FIVE HUNDREDTHS
PERCENT FOR EACH NET NEW JOB CREATED DURING THE TAXABLE YEAR.
  (D) "NET NEW JOB" SHALL BE DEFINED AS EACH JOB THAT EXCEEDS THE  AVER-
AGE  NUMBER  OF  INDIVIDUALS  EMPLOYED  FULL-TIME BY THE TAXPAYER IN THE
PREVIOUS TAXABLE YEAR.

A. 5394                             8

  (E) IF THE AMOUNT OF THIS CREDIT AND CARRYOVERS OF SUCH CREDIT ALLOWED
UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL EXCEED THE  TAXPAYER'S
TAX  FOR  SUCH  YEAR,  THE  EXCESS, AS WELL AS ANY PART OF THE CREDIT OR
CARRYOVERS OF SUCH CREDIT, OR BOTH, WHICH MAY NOT BE DEDUCTED  FROM  THE
TAX OTHERWISE DUE BY REASON OF PARAGRAPH (C) OF THIS SUBDIVISION, MAY BE
CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY BE DEDUCTED FROM THE
TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  S  5.  Section  606  of  the  tax  law  is  amended  by adding two new
subsections (j-2) and (j-3) to read as follows:
  (J-2) DISCOVERY INVESTMENT CREDIT. (1) A TAXPAYER SHALL BE  ALLOWED  A
CREDIT,  TO BE COMPUTED AS HEREINAFTER PROVIDED, AGAINST THE TAX IMPOSED
BY THIS ARTICLE WHERE  THE  TAXPAYER  HAS  BEEN  CERTIFIED  PURSUANT  TO
SECTION  NINE  HUNDRED  SEVENTY-TWO  OF  THE  GENERAL MUNICIPAL LAW. THE
AMOUNT OF SUCH CREDIT SHALL BE TWENTY PERCENT OF THE COST OR OTHER BASIS
FOR FEDERAL INCOME TAX PURPOSES OF TANGIBLE PERSONAL PROPERTY AND  OTHER
TANGIBLE  PROPERTY,  INCLUDING  BUILDINGS  AND  STRUCTURAL COMPONENTS OF
BUILDINGS, DESCRIBED IN PARAGRAPH TWO OF THIS SUBSECTION,  BUT  ONLY  IF
THE  ACQUISITION, CONSTRUCTION, RECONSTRUCTION OR ERECTION OF SUCH PROP-
ERTY OCCURRED OR WAS COMMENCED ON OR AFTER THE DATE OF SUCH  DESIGNATION
AND PRIOR TO THE EXPIRATION THEREOF. PROVIDED, HOWEVER, THAT IN THE CASE
OF  AN  ACQUISITION,  CONSTRUCTION, RECONSTRUCTION OR ERECTION WHICH WAS
COMMENCED DURING SUCH PERIOD AND CONTINUED  OR  COMPLETED  SUBSEQUENTLY,
THE  CREDIT  SHALL BE TWENTY PERCENT OF THE PORTION OF THE COST OR OTHER
BASIS FOR FEDERAL INCOME TAX PURPOSES ATTRIBUTABLE TO SUCH PERIOD, WHICH
PORTION SHALL BE ASCERTAINED BY MULTIPLYING SUCH  COST  OR  BASIS  BY  A
FRACTION  THE  NUMERATOR  OF  WHICH  SHALL  BE  THE EXPENDITURES PAID OR
INCURRED DURING SUCH PERIOD FOR SUCH PURPOSES  AND  THE  DENOMINATOR  OF
WHICH  SHALL  BE THE TOTAL OF ALL EXPENDITURES PAID OR INCURRED FOR SUCH
ACQUISITION, CONSTRUCTION, RECONSTRUCTION OR ERECTION.
  (2) A CREDIT SHALL BE ALLOWED UNDER THIS SUBSECTION  WITH  RESPECT  TO
TANGIBLE PERSONAL PROPERTY AND OTHER TANGIBLE PROPERTY, INCLUDING BUILD-
INGS  AND  STRUCTURAL COMPONENTS OF BUILDINGS WHICH: (A) ARE DEPRECIABLE
PURSUANT TO SECTION ONE HUNDRED  SIXTY-SEVEN  OF  THE  INTERNAL  REVENUE
CODE,  (B) HAVE A USEFUL LIFE OF FOUR YEARS OR MORE, (C) ARE ACQUIRED BY
PURCHASE AS DEFINED IN SECTION  ONE  HUNDRED  SEVENTY-NINE  (D)  OF  THE
INTERNAL  REVENUE CODE, AND (D) ARE (I) PRINCIPALLY USED BY THE TAXPAYER
IN THE PRODUCTION OF GOODS  BY  MANUFACTURING,  PROCESSING,  ASSEMBLING,
REFINING, MINING, EXTRACTING, FARMING, AGRICULTURE, HORTICULTURE, FLORI-
CULTURE, VITICULTURE OR COMMERCIAL FISHING, (II) INDUSTRIAL WASTE TREAT-
MENT  FACILITIES OR AIR POLLUTION CONTROL FACILITIES USED IN THE TAXPAY-
ER'S TRADE OR BUSINESS, (III) RESEARCH AND  DEVELOPMENT  PROPERTY,  (IV)
PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S TRADE OR BUSI-
NESS  AS  A  BROKER  OR  DEALER  IN CONNECTION WITH THE PURCHASE OR SALE
(WHICH SHALL INCLUDE BUT NOT BE LIMITED TO THE ISSUANCE, ENTERING  INTO,
ASSUMPTION,  OFFSET,  ASSIGNMENT,  TERMINATION,  OR TRANSFER) OF STOCKS,
BONDS  OR  OTHER  SECURITIES  AS  DEFINED  IN   SECTION   FOUR   HUNDRED
SEVENTY-FIVE  (C)(2)  OF THE INTERNAL REVENUE CODE, OR OF COMMODITIES AS
DEFINED IN SECTION FOUR HUNDRED SEVENTY-FIVE (E) OF THE INTERNAL REVENUE
CODE, OR (V) PRINCIPALLY USED IN THE ORDINARY COURSE OF  THE  TAXPAYER'S
TRADE  OR  BUSINESS  OF PROVIDING INVESTMENT ADVISORY SERVICES FOR REGU-
LATED INVESTMENT COMPANY AS DEFINED IN SECTION EIGHT  HUNDRED  FIFTY-ONE
OF THE INTERNAL REVENUE CODE, OR LENDING, LOAN ARRANGEMENT OR LOAN ORIG-
INATION  SERVICES  TO  CUSTOMERS IN CONNECTION WITH THE PURCHASE OR SALE
(WHICH SHALL INCLUDE BUT NOT BE LIMITED TO THE ISSUANCE, ENTERING  INTO,
ASSUMPTION,  OFFSET, ASSIGNMENT, TERMINATION, OR TRANSFER) OF SECURITIES
AS DEFINED IN SECTION FOUR HUNDRED SEVENTY-FIVE(C)(2)  OF  THE  INTERNAL

A. 5394                             9

REVENUE CODE. FOR PURPOSES OF CLAUSES (IV) AND (V) OF THIS SUBPARAGRAPH,
PROPERTY  PURCHASED  BY  A  TAXPAYER AFFILIATED WITH A REGULATED BROKER,
DEALER OR REGISTERED INVESTMENT ADVISER IS ALLOWED A CREDIT  UNDER  THIS
SUBSECTION  IF  THE PROPERTY IS USED BY ITS AFFILIATED REGULATED BROKER,
DEALER  OR  REGISTERED  INVESTMENT  ADVISER  IN  ACCORDANCE  WITH   THIS
SUBSECTION.  FOR  PURPOSES OF DETERMINING IF THE PROPERTY IS PRINCIPALLY
USED IN QUALIFYING USES, THE USES BY THE TAXPAYER DESCRIBED  IN  CLAUSES
(IV)  AND  (V)  OF THIS SUBPARAGRAPH MAY BE AGGREGATED. IN ADDITION, THE
USES BY THE TAXPAYER,  ITS  AFFILIATED  REGULATED  BROKER,  DEALER,  AND
REGISTERED  INVESTMENT ADVISER UNDER EITHER OR BOTH OF THOSE CLAUSES MAY
BE AGGREGATED. PROVIDED, HOWEVER, A TAXPAYER SHALL NOT  BE  ALLOWED  THE
CREDIT  PROVIDED BY CLAUSES (IV) AND (V) OF THIS SUBPARAGRAPH UNLESS (I)
EIGHTY PERCENT OR MORE OF THE EMPLOYEES  PERFORMING  THE  ADMINISTRATIVE
AND  SUPPORT  FUNCTIONS RESULTING FROM OR RELATED TO THE QUALIFYING USES
OF SUCH EQUIPMENT ARE LOCATED IN THIS STATE, OR (II) THE AVERAGE  NUMBER
OF  EMPLOYEES  THAT  PERFORM  THE  ADMINISTRATIVE  AND SUPPORT FUNCTIONS
RESULTING FROM OR RELATED TO THE QUALIFYING USES OF SUCH  EQUIPMENT  AND
ARE  LOCATED  IN THIS STATE DURING THE TAXABLE YEAR FOR WHICH THE CREDIT
IS CLAIMED IS EQUAL TO OR GREATER THAN NINETY-FIVE PERCENT OF THE  AVER-
AGE  NUMBER OF EMPLOYEES THAT PERFORM THESE FUNCTIONS AND ARE LOCATED IN
THIS STATE DURING THE THIRTY-SIX MONTHS IMMEDIATELY PRECEDING  THE  YEAR
FOR  WHICH  THE  CREDIT  IS  CLAIMED,  OR  (III) THE NUMBER OF EMPLOYEES
LOCATED IN THIS STATE DURING THE TAXABLE YEAR FOR WHICH  THE  CREDIT  IS
CLAIMED  IS  EQUAL  TO  OR  GREATER THAN NINETY PERCENT OF THE NUMBER OF
EMPLOYEES LOCATED IN  THIS  STATE  ON  DECEMBER  THIRTY-FIRST,  NINETEEN
HUNDRED NINETY-EIGHT OR, IF THE TAXPAYER WAS NOT A CALENDAR YEAR TAXPAY-
ER  IN  NINETEEN HUNDRED NINETY-EIGHT, THE LAST DAY OF ITS FIRST TAXABLE
YEAR ENDING AFTER DECEMBER THIRTY-FIRST, NINETEEN HUNDRED  NINETY-EIGHT.
IF  THE  TAXPAYER BECOMES SUBJECT TO TAX IN THIS STATE AFTER THE TAXABLE
YEAR BEGINNING IN NINETEEN HUNDRED NINETY-EIGHT, THEN  THE  TAXPAYER  IS
NOT  REQUIRED  TO  SATISFY THE EMPLOYMENT TEST PROVIDED IN THE PRECEDING
SENTENCE OF THIS SUBPARAGRAPH FOR ITS FIRST TAXABLE YEAR.  FOR  PURPOSES
OF  ITEM  (III) OF THIS CLAUSE, THE EMPLOYMENT TEST WILL BE BASED ON THE
NUMBER OF EMPLOYEES LOCATED IN THIS STATE ON THE LAST DAY OF  THE  FIRST
TAXABLE  YEAR  THE TAXPAYER IS SUBJECT TO TAX IN THIS STATE. IF THE USES
OF THE PROPERTY MUST BE AGGREGATED TO DETERMINE WHETHER THE PROPERTY  IS
PRINCIPALLY  USED  IN  QUALIFYING USES, THEN EITHER EACH AFFILIATE USING
THE PROPERTY MUST SATISFY THIS EMPLOYMENT TEST OR THIS  EMPLOYMENT  TEST
MUST  BE  SATISFIED  THROUGH  THE  AGGREGATION  OF  THE EMPLOYEES OF THE
TAXPAYER,  ITS  AFFILIATED  REGULATED  BROKER,  DEALER,  AND  REGISTERED
INVESTMENT  ADVISOR USING THE PROPERTY. FOR PURPOSES OF THIS SUBSECTION,
THE TERM "GOODS" SHALL NOT INCLUDE ELECTRICITY.  FOR  PURPOSES  OF  THIS
PARAGRAPH, MANUFACTURING SHALL MEAN THE PROCESS OF WORKING RAW MATERIALS
INTO  WARES  SUITABLE  FOR USE OR WHICH GIVES NEW SHAPES, NEW QUALITY OR
NEW COMBINATION TO MATTER WHICH ALREADY HAS GONE THROUGH SOME ARTIFICIAL
PROCESS BY THE USE OF MACHINERY, TOOLS,  APPLIANCES  AND  OTHER  SIMILAR
EQUIPMENT.  PROPERTY  USED  IN  THE  PRODUCTION  OF  GOODS SHALL INCLUDE
MACHINERY, EQUIPMENT OR OTHER TANGIBLE  PROPERTY  WHICH  IS  PRINCIPALLY
USED  IN  THE  REPAIR AND SERVICE OF OTHER MACHINERY, EQUIPMENT OR OTHER
TANGIBLE PROPERTY USED PRINCIPALLY IN THE PRODUCTION OF GOODS AND  SHALL
INCLUDE ALL FACILITIES USED IN THE PRODUCTION OPERATION, INCLUDING STOR-
AGE  OF  MATERIAL  TO BE USED IN PRODUCTION AND OF THE PRODUCTS THAT ARE
PRODUCED. FOR PURPOSES OF THIS PARAGRAPH, THE  TERMS  "INDUSTRIAL  WASTE
TREATMENT  FACILITIES", "AIR POLLUTION CONTROL FACILITIES" AND "RESEARCH
AND DEVELOPMENT PROPERTY" SHALL HAVE THE MEANINGS  ASCRIBED  THERETO  BY

A. 5394                            10

CLAUSES  (II) AND (III), RESPECTIVELY, OF SUBPARAGRAPH (D) OF THIS PARA-
GRAPH, AND THE PROVISIONS OF SUBPARAGRAPH (C) OF THIS PARAGRAPH.
  (3)  A  TAXPAYER  SHALL  NOT BE ALLOWED A CREDIT UNDER THIS SUBSECTION
WITH RESPECT TO ANY TANGIBLE PERSONAL PROPERTY AND OTHER TANGIBLE  PROP-
ERTY,  INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS OF BUILDINGS, WHICH
IT LEASES TO ANY OTHER PERSON OR CORPORATION  EXCEPT  WHERE  A  TAXPAYER
LEASES PROPERTY TO AN AFFILIATED REGULATED BROKER, DEALER, OR REGISTERED
INVESTMENT  ADVISER  THAT  USES  SUCH PROPERTY IN ACCORDANCE WITH CLAUSE
(IV) OR (V) OF SUBPARAGRAPH (D) OF PARAGRAPH TWO OF THIS SUBSECTION. FOR
PURPOSES OF THE PRECEDING SENTENCE, ANY CONTRACT OR AGREEMENT  TO  LEASE
OR  RENT  OR  FOR  A  LICENSE TO USE SUCH PROPERTY SHALL BE CONSIDERED A
LEASE. PROVIDED, HOWEVER, IN DETERMINING WHETHER  A  TAXPAYER  SHALL  BE
ALLOWED  A  CREDIT  UNDER THIS SUBSECTION WITH RESPECT TO SUCH PROPERTY,
ANY ELECTION  MADE  WITH  RESPECT  TO  SUCH  PROPERTY  PURSUANT  TO  THE
PROVISIONS  OF  PARAGRAPH EIGHT OF SUBSECTION (F) OF SECTION ONE HUNDRED
SIXTY-EIGHT OF THE INTERNAL REVENUE  CODE,  AS  SUCH  PARAGRAPH  WAS  IN
EFFECT  FOR  AGREEMENTS  ENTERED  INTO  PRIOR TO JANUARY FIRST, NINETEEN
HUNDRED EIGHTY-FOUR, SHALL BE DISREGARDED.
  (4) IF THE AMOUNT OF CREDIT ALLOWED  UNDER  THIS  SUBSECTION  FOR  ANY
TAXABLE  YEAR  SHALL EXCEED THE TAXPAYER'S TAX FOR SUCH YEAR, THE EXCESS
MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY  BE  DEDUCTED
FROM  THE TAXPAYER'S TAX FOR SUCH YEAR OR  YEARS. ANY REFUND PAID PURSU-
ANT TO THIS PARAGRAPH SHALL BE DEEMED TO BE A REFUND OF  AN  OVERPAYMENT
OF  TAX  AS  PROVIDED IN SECTION SIX HUNDRED EIGHTY-SIX OF THIS CHAPTER,
PROVIDED, HOWEVER, THAT NO INTEREST SHALL BE PAID THEREON.
  (J-3) DISCOVERY WAGE TAX CREDIT. (1) A TAXPAYER  SHALL  BE  ALLOWED  A
CREDIT,  TO BE COMPUTED AS HEREINAFTER PROVIDED, AGAINST THE TAX IMPOSED
BY THIS ARTICLE, WHERE THE  TAXPAYER  HAS  BEEN  CERTIFIED  PURSUANT  TO
SECTION  NINE  HUNDRED  SEVENTY-TWO  OF  THE  GENERAL MUNICIPAL LAW. THE
AMOUNT OF SUCH CREDIT SHALL BE AS PRESCRIBED IN PARAGRAPH THREE OF  THIS
SUBSECTION.
  (2)  "DISCOVERY  WAGES" MEANS WAGES PAID BY THE TAXPAYER FOR FULL-TIME
EMPLOYMENT DURING A TAXABLE YEAR, PROVIDED THAT THOSE WAGES ARE PAID  BY
A CERTIFIED BUSINESS AS DEFINED BY THE COMMISSIONER OF ECONOMIC DEVELOP-
MENT AS REQUIRED IN HIS OR HER RESPONSIBILITIES.
  (3) THE CREDIT PROVIDED IN THIS SUBSECTION SHALL BE EQUAL TO THE PROD-
UCT  OF  THE GROSS WAGES PAID AND SIX AND EIGHTY-FIVE HUNDREDTHS PERCENT
FOR EACH NET NEW JOB CREATED DURING THE TAXABLE YEAR.
  (4) "NET NEW JOB" SHALL BE DEFINED AS EACH JOB THAT EXCEEDS THE  AVER-
AGE  NUMBER  OF  INDIVIDUALS  EMPLOYED  FULL-TIME BY THE TAXPAYER IN THE
PREVIOUS TAXABLE YEAR.
  (5) IF THE AMOUNT OF THIS CREDIT AND CARRYOVERS OF SUCH CREDIT ALLOWED
UNDER THIS SUBSECTION FOR ANY TAXABLE YEAR SHALL EXCEED  THE  TAXPAYER'S
TAX  FOR  SUCH  YEAR,  THE  EXCESS, AS WELL AS ANY PART OF THE CREDIT OR
CARRYOVERS OF SUCH CREDIT, OR BOTH, WHICH MAY NOT BE DEDUCTED  FROM  THE
TAX  OTHERWISE  DUE BY REASON OF PARAGRAPH THREE OF THIS SUBSECTION, MAY
BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY BE DEDUCTED  FROM
THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  S  6.  Section  1456  of  the  tax  law  is  amended by adding two new
subsections (z) and (aa) to read as follows:
  (Z) DISCOVERY INVESTMENT CREDIT. (1) A TAXPAYER  SHALL  BE  ALLOWED  A
CREDIT,  TO BE COMPUTED AS HEREINAFTER PROVIDED, AGAINST THE TAX IMPOSED
BY THIS ARTICLE WHERE  THE  TAXPAYER  HAS  BEEN  CERTIFIED  PURSUANT  TO
SECTION  NINE  HUNDRED  SEVENTY-TWO  OF  THE  GENERAL MUNICIPAL LAW. THE
AMOUNT OF SUCH CREDIT SHALL BE TWENTY PERCENT OF THE COST OR OTHER BASIS
FOR FEDERAL INCOME TAX PURPOSES OF TANGIBLE PERSONAL PROPERTY AND  OTHER

A. 5394                            11

TANGIBLE  PROPERTY,  INCLUDING  BUILDINGS  AND  STRUCTURAL COMPONENTS OF
BUILDINGS, DESCRIBED IN PARAGRAPH TWO OF THIS SUBSECTION,  BUT  ONLY  IF
THE  ACQUISITION, CONSTRUCTION, RECONSTRUCTION OR ERECTION OF SUCH PROP-
ERTY  OCCURRED OR WAS COMMENCED ON OR AFTER THE DATE OF SUCH DESIGNATION
AND PRIOR TO THE EXPIRATION THEREOF. PROVIDED, HOWEVER, THAT IN THE CASE
OF AN ACQUISITION, CONSTRUCTION, RECONSTRUCTION OR  ERECTION  WHICH  WAS
COMMENCED  DURING  SUCH  PERIOD AND CONTINUED OR COMPLETED SUBSEQUENTLY,
THE CREDIT SHALL BE TWENTY PERCENT OF THE PORTION OF THE COST  OR  OTHER
BASIS FOR FEDERAL INCOME TAX PURPOSES ATTRIBUTABLE TO SUCH PERIOD, WHICH
PORTION  SHALL  BE  ASCERTAINED  BY  MULTIPLYING SUCH COST OR BASIS BY A
FRACTION THE NUMERATOR OF  WHICH  SHALL  BE  THE  EXPENDITURES  PAID  OR
INCURRED  DURING  SUCH  PERIOD  FOR SUCH PURPOSES AND THE DENOMINATOR OF
WHICH SHALL BE THE TOTAL OF ALL EXPENDITURES PAID OR INCURRED  FOR  SUCH
ACQUISITION, CONSTRUCTION, RECONSTRUCTION OR ERECTION.
  (2)  A  CREDIT  SHALL BE ALLOWED UNDER THIS SUBSECTION WITH RESPECT TO
TANGIBLE PERSONAL PROPERTY AND OTHER TANGIBLE PROPERTY, INCLUDING BUILD-
INGS AND STRUCTURAL COMPONENTS OF BUILDINGS WHICH: (A)  ARE  DEPRECIABLE
PURSUANT  TO  SECTION  ONE  HUNDRED  SIXTY-SEVEN OF THE INTERNAL REVENUE
CODE, (B) HAVE A USEFUL LIFE OF FOUR YEARS OR MORE, (C) ARE ACQUIRED  BY
PURCHASE  AS  DEFINED  IN  SECTION  ONE  HUNDRED SEVENTY-NINE (D) OF THE
INTERNAL REVENUE CODE, AND (D) ARE (I) PRINCIPALLY USED BY THE  TAXPAYER
IN  THE  PRODUCTION  OF  GOODS BY MANUFACTURING, PROCESSING, ASSEMBLING,
REFINING, MINING, EXTRACTING, FARMING, AGRICULTURE, HORTICULTURE, FLORI-
CULTURE, VITICULTURE OR COMMERCIAL FISHING, (II) INDUSTRIAL WASTE TREAT-
MENT FACILITIES OR AIR POLLUTION CONTROL FACILITIES USED IN THE  TAXPAY-
ER'S  TRADE  OR  BUSINESS, (III) RESEARCH AND DEVELOPMENT PROPERTY, (IV)
PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S TRADE OR BUSI-
NESS AS A BROKER OR DEALER IN  CONNECTION  WITH  THE  PURCHASE  OR  SALE
(WHICH  SHALL INCLUDE BUT NOT BE LIMITED TO THE ISSUANCE, ENTERING INTO,
ASSUMPTION, OFFSET, ASSIGNMENT, TERMINATION,  OR  TRANSFER)  OF  STOCKS,
BONDS   OR   OTHER   SECURITIES  AS  DEFINED  IN  SECTION  FOUR  HUNDRED
SEVENTY-FIVE (C)(2) OF THE INTERNAL REVENUE CODE, OR OF  COMMODITIES  AS
DEFINED IN SECTION FOUR HUNDRED SEVENTY-FIVE (E) OF THE INTERNAL REVENUE
CODE,  OR  (V) PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S
TRADE OR BUSINESS OF PROVIDING INVESTMENT ADVISORY SERVICES FOR A  REGU-
LATED  INVESTMENT  COMPANY AS DEFINED IN SECTION EIGHT HUNDRED FIFTY-ONE
OF THE INTERNAL REVENUE CODE, OR LENDING, LOAN ARRANGEMENT OR LOAN ORIG-
INATION SERVICES TO CUSTOMERS IN CONNECTION WITH THE  PURCHASE  OR  SALE
(WHICH  SHALL INCLUDE BUT NOT BE LIMITED TO THE ISSUANCE, ENTERING INTO,
ASSUMPTION, OFFSET, ASSIGNMENT, TERMINATION, OR TRANSFER) OF  SECURITIES
AS  DEFINED  IN SECTION FOUR HUNDRED SEVENTY-FIVE (C)(2) OF THE INTERNAL
REVENUE CODE. FOR PURPOSES OF CLAUSES (IV) AND (V) OF THIS SUBPARAGRAPH,
PROPERTY PURCHASED BY A TAXPAYER AFFILIATED  WITH  A  REGULATED  BROKER,
DEALER  OR  REGISTERED INVESTMENT ADVISER IS ALLOWED A CREDIT UNDER THIS
SUBSECTION IF THE PROPERTY IS USED BY ITS AFFILIATED  REGULATED  BROKER,
DEALER   OR  REGISTERED  INVESTMENT  ADVISER  IN  ACCORDANCE  WITH  THIS
SUBSECTION. FOR PURPOSES OF DETERMINING IF THE PROPERTY  IS  PRINCIPALLY
USED  IN  QUALIFYING USES, THE USES BY THE TAXPAYER DESCRIBED IN CLAUSES
(IV) AND (V) OF THIS SUBPARAGRAPH MAY BE AGGREGATED.  IN  ADDITION,  THE
USES  BY  THE  TAXPAYER,  ITS  AFFILIATED  REGULATED BROKER, DEALER, AND
REGISTERED INVESTMENT ADVISER UNDER EITHER OR BOTH OF THOSE CLAUSES  MAY
BE  AGGREGATED.  PROVIDED,  HOWEVER, A TAXPAYER SHALL NOT BE ALLOWED THE
CREDIT PROVIDED BY CLAUSES (IV) AND (V) OF THIS SUBPARAGRAPH UNLESS  (I)
EIGHTY  PERCENT  OR  MORE OF THE EMPLOYEES PERFORMING THE ADMINISTRATIVE
AND SUPPORT FUNCTIONS RESULTING FROM OR RELATED TO THE  QUALIFYING  USES
OF  SUCH EQUIPMENT ARE LOCATED IN THIS STATE, OR (II) THE AVERAGE NUMBER

A. 5394                            12

OF EMPLOYEES THAT  PERFORM  THE  ADMINISTRATIVE  AND  SUPPORT  FUNCTIONS
RESULTING  FROM  OR RELATED TO THE QUALIFYING USES OF SUCH EQUIPMENT AND
ARE LOCATED IN THIS STATE DURING THE TAXABLE YEAR FOR WHICH  THE  CREDIT
IS  CLAIMED IS EQUAL TO OR GREATER THAN NINETY-FIVE PERCENT OF THE AVER-
AGE NUMBER OF EMPLOYEES THAT PERFORM THESE FUNCTIONS AND ARE LOCATED  IN
THIS  STATE  DURING THE THIRTY-SIX MONTHS IMMEDIATELY PRECEDING THE YEAR
FOR WHICH THE CREDIT IS  CLAIMED,  OR  (III)  THE  NUMBER  OF  EMPLOYEES
LOCATED  IN  THIS  STATE DURING THE TAXABLE YEAR FOR WHICH THE CREDIT IS
CLAIMED IS EQUAL TO OR GREATER THAN NINETY  PERCENT  OF  THE  NUMBER  OF
EMPLOYEES  LOCATED  IN  THIS  STATE  ON  DECEMBER THIRTY-FIRST, NINETEEN
HUNDRED NINETY-EIGHT OR, IF THE TAXPAYER WAS NOT A CALENDAR YEAR TAXPAY-
ER IN NINETEEN HUNDRED NINETY-EIGHT, THE LAST DAY OF ITS  FIRST  TAXABLE
YEAR  ENDING AFTER DECEMBER THIRTY-FIRST, NINETEEN HUNDRED NINETY-EIGHT.
IF THE TAXPAYER BECOMES SUBJECT TO TAX IN THIS STATE AFTER  THE  TAXABLE
YEAR  BEGINNING  IN  NINETEEN HUNDRED NINETY-EIGHT, THEN THE TAXPAYER IS
NOT REQUIRED TO SATISFY THE EMPLOYMENT TEST PROVIDED  IN  THE  PRECEDING
SENTENCE  OF  THIS SUBPARAGRAPH FOR ITS FIRST TAXABLE YEAR. FOR PURPOSES
OF ITEM (III) OF THIS CLAUSE, THE EMPLOYMENT TEST WILL BE BASED  ON  THE
NUMBER  OF  EMPLOYEES LOCATED IN THIS STATE ON THE LAST DAY OF THE FIRST
TAXABLE YEAR THE TAXPAYER IS SUBJECT TO TAX IN THIS STATE. IF  THE  USES
OF  THE PROPERTY MUST BE AGGREGATED TO DETERMINE WHETHER THE PROPERTY IS
PRINCIPALLY USED IN QUALIFYING USES, THEN EITHER  EACH  AFFILIATE  USING
THE  PROPERTY  MUST SATISFY THIS EMPLOYMENT TEST OR THIS EMPLOYMENT TEST
MUST BE SATISFIED THROUGH  THE  AGGREGATION  OF  THE  EMPLOYEES  OF  THE
TAXPAYER,  ITS  AFFILIATED  REGULATED  BROKER,  DEALER,  AND  REGISTERED
INVESTMENT ADVISER USING THE PROPERTY. FOR PURPOSES OF THIS  SUBSECTION,
THE  TERM  "GOODS"  SHALL  NOT INCLUDE ELECTRICITY. FOR PURPOSES OF THIS
PARAGRAPH, MANUFACTURING SHALL MEAN THE PROCESS OF WORKING RAW MATERIALS
INTO WARES SUITABLE FOR USE OR WHICH GIVES NEW SHAPES,  NEW  QUALITY  OR
NEW COMBINATION TO MATTER WHICH ALREADY HAS GONE THROUGH SOME ARTIFICIAL
PROCESS  BY  THE  USE  OF MACHINERY, TOOLS, APPLIANCES AND OTHER SIMILAR
EQUIPMENT. PROPERTY USED  IN  THE  PRODUCTION  OF  GOODS  SHALL  INCLUDE
MACHINERY,  EQUIPMENT  OR  OTHER  TANGIBLE PROPERTY WHICH IS PRINCIPALLY
USED IN THE REPAIR AND SERVICE OF OTHER MACHINERY,  EQUIPMENT  OR  OTHER
TANGIBLE  PROPERTY USED PRINCIPALLY IN THE PRODUCTION OF GOODS AND SHALL
INCLUDE ALL FACILITIES USED IN THE PRODUCTION OPERATION, INCLUDING STOR-
AGE OF MATERIAL TO BE USED IN PRODUCTION AND OF THE  PRODUCTS  THAT  ARE
PRODUCED.  FOR  PURPOSES  OF THIS PARAGRAPH, THE TERMS "INDUSTRIAL WASTE
TREATMENT  FACILITIES",  AND  "AIR  POLLUTION  CONTROL  FACILITIES"  AND
"RESEARCH  AND  DEVELOPMENT  PROPERTY"  SHALL HAVE THE MEANINGS ASCRIBED
THERETO BY CLAUSES (II) AND (III), RESPECTIVELY, OF SUBPARAGRAPH (D)  OF
THIS PARAGRAPH, AND THE PROVISIONS OF SUBPARAGRAPH (C) OF THIS PARAGRAPH
SHALL APPLY.
  (3)  A  TAXPAYER  SHALL  NOT BE ALLOWED A CREDIT UNDER THIS SUBSECTION
WITH RESPECT TO ANY TANGIBLE PERSONAL PROPERTY AND OTHER TANGIBLE  PROP-
ERTY,  INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS OF BUILDINGS, WHICH
IT LEASES TO ANY OTHER PERSON OR CORPORATION  EXCEPT  WHERE  A  TAXPAYER
LEASES PROPERTY TO AN AFFILIATED REGULATED BROKER, DEALER, OR REGISTERED
INVESTMENT  ADVISER  THAT  USES  SUCH PROPERTY IN ACCORDANCE WITH CLAUSE
(IV) OR (V) OF SUBPARAGRAPH (D) OF PARAGRAPH TWO OF THIS SUBSECTION. FOR
PURPOSES OF THE PRECEDING SENTENCE, ANY CONTRACT OR AGREEMENT  TO  LEASE
OR  RENT  OR  FOR  A  LICENSE TO USE SUCH PROPERTY SHALL BE CONSIDERED A
LEASE. PROVIDED, HOWEVER, IN DETERMINING WHETHER  A  TAXPAYER  SHALL  BE
ALLOWED  A  CREDIT  UNDER THIS SUBSECTION WITH RESPECT TO SUCH PROPERTY,
ANY ELECTION  MADE  WITH  RESPECT  TO  SUCH  PROPERTY  PURSUANT  TO  THE
PROVISIONS  OF  PARAGRAPH EIGHT OF SUBSECTION (F) OF SECTION ONE HUNDRED

A. 5394                            13

SIXTY-EIGHT OF THE INTERNAL REVENUE  CODE,  AS  SUCH  PARAGRAPH  WAS  IN
EFFECT  FOR  AGREEMENTS  ENTERED  INTO  PRIOR TO JANUARY FIRST, NINETEEN
HUNDRED EIGHTY-FOUR, SHALL BE DISREGARDED.
  (4)  IF  THE  AMOUNT  OF  CREDIT ALLOWED UNDER THIS SUBSECTION FOR ANY
TAXABLE YEAR SHALL EXCEED THE TAXPAYER'S TAX FOR SUCH YEAR,  THE  EXCESS
MAY  BE  CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY BE DEDUCTED
FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS. ANY REFUND PAID PURSUANT
TO THIS PARAGRAPH SHALL BE DEEMED TO BE A REFUND OF  AN  OVERPAYMENT  OF
TAX  AS  PROVIDED  IN  SECTION  SIX  HUNDRED EIGHTY-SIX OF THIS CHAPTER,
PROVIDED, HOWEVER, THAT NO INTEREST SHALL BE PAID THEREON.
  (AA) DISCOVERY WAGE TAX CREDIT. (1) A  TAXPAYER  SHALL  BE  ALLOWED  A
CREDIT,  TO BE COMPUTED AS HEREINAFTER PROVIDED, AGAINST THE TAX IMPOSED
BY THIS ARTICLE, WHERE THE  TAXPAYER  HAS  BEEN  CERTIFIED  PURSUANT  TO
SECTION  NINE  HUNDRED  SEVENTY-TWO  OF  THE  GENERAL MUNICIPAL LAW. THE
AMOUNT OF SUCH CREDIT SHALL BE AS PRESCRIBED IN PARAGRAPH THREE OF  THIS
SUBSECTION.
  (2)  "DISCOVERY  WAGES" MEANS WAGES PAID BY THE TAXPAYER FOR FULL-TIME
EMPLOYMENT DURING A TAXABLE YEAR, PROVIDED THAT THOSE WAGES ARE PAID  BY
A CERTIFIED BUSINESS AS DEFINED BY THE COMMISSIONER OF ECONOMIC DEVELOP-
MENT AS REQUIRED IN HIS OR HER RESPONSIBILITIES.
  (3) THE CREDIT PROVIDED IN THIS SUBSECTION SHALL BE EQUAL TO THE PROD-
UCT  OF  THE GROSS WAGES PAID AND SIX AND EIGHTY-FIVE HUNDREDTHS PERCENT
FOR EACH NET NEW JOB CREATED DURING THE TAXABLE YEAR.
  (4) "NET NEW JOB" SHALL BE DEFINED AS EACH JOB THAT EXCEEDS THE  AVER-
AGE  NUMBER  OF  INDIVIDUALS  EMPLOYED  FULL-TIME BY THE TAXPAYER IN THE
PREVIOUS TAXABLE YEAR.
  (5) IF THE AMOUNT OF THIS CREDIT AND CARRYOVERS OF SUCH CREDIT ALLOWED
UNDER THIS SUBSECTION FOR ANY TAXABLE YEAR SHALL EXCEED  THE  TAXPAYER'S
TAX  FOR  SUCH  YEAR,  THE  EXCESS, AS WELL AS ANY PART OF THE CREDIT OR
CARRYOVERS OF SUCH CREDIT, OR BOTH, WHICH MAY NOT BE DEDUCTED  FROM  THE
TAX  OTHERWISE  DUE BY REASON OF PARAGRAPH THREE OF THIS SUBSECTION, MAY
BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY BE DEDUCTED  FROM
THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  S 7. Section 1511 of the tax law is amended by adding two new subdivi-
sions (cc) and (dd) to read as follows:
  (CC)  DISCOVERY  INVESTMENT CREDIT.  (1) A TAXPAYER SHALL BE ALLOWED A
CREDIT, TO BE COMPUTED AS HEREINAFTER PROVIDED, AGAINST THE TAX  IMPOSED
BY  THIS  ARTICLE  WHERE  THE  TAXPAYER  HAS  BEEN CERTIFIED PURSUANT TO
SECTION NINE HUNDRED SEVENTY-TWO  OF  THE  GENERAL  MUNICIPAL  LAW.  THE
AMOUNT OF SUCH CREDIT SHALL BE TWENTY PERCENT OF THE COST OR OTHER BASIS
FOR  FEDERAL INCOME TAX PURPOSES OF TANGIBLE PERSONAL PROPERTY AND OTHER
TANGIBLE PROPERTY, INCLUDING  BUILDINGS  AND  STRUCTURAL  COMPONENTS  OF
BUILDINGS,  DESCRIBED  IN PARAGRAPH TWO OF THIS SUBDIVISION, BUT ONLY IF
THE ACQUISITION, CONSTRUCTION, RECONSTRUCTION OR ERECTION OF SUCH  PROP-
ERTY  OCCURRED OR WAS COMMENCED ON OR AFTER THE DATE OF SUCH DESIGNATION
AND PRIOR TO THE EXPIRATION THEREOF. PROVIDED, HOWEVER, THAT IN THE CASE
OF AN ACQUISITION, CONSTRUCTION, RECONSTRUCTION OR  ERECTION  WHICH  WAS
COMMENCED  DURING  SUCH  PERIOD AND CONTINUED OR COMPLETED SUBSEQUENTLY,
THE CREDIT SHALL BE TWENTY PERCENT OF THE PORTION OF THE COST  OR  OTHER
BASIS FOR FEDERAL INCOME TAX PURPOSES ATTRIBUTABLE TO SUCH PERIOD, WHICH
PORTION  SHALL  BE  ASCERTAINED  BY  MULTIPLYING SUCH COST OR BASIS BY A
FRACTION THE NUMERATOR OF  WHICH  SHALL  BE  THE  EXPENDITURES  PAID  OR
INCURRED  DURING  SUCH  PERIOD  FOR SUCH PURPOSES AND THE DENOMINATOR OF
WHICH SHALL BE THE TOTAL OF ALL EXPENDITURES PAID OR INCURRED  FOR  SUCH
ACQUISITION, CONSTRUCTION, RECONSTRUCTION OR ERECTION.

A. 5394                            14

  (2)  A  CREDIT SHALL BE ALLOWED UNDER THIS SUBDIVISION WITH RESPECT TO
TANGIBLE PERSONAL PROPERTY AND OTHER TANGIBLE PROPERTY, INCLUDING BUILD-
INGS AND STRUCTURAL COMPONENTS OF BUILDINGS WHICH: (A)  ARE  DEPRECIABLE
PURSUANT  TO  SECTION  ONE  HUNDRED  SIXTY-SEVEN OF THE INTERNAL REVENUE
CODE,  (B) HAVE A USEFUL LIFE OF FOUR YEARS OR MORE, (C) ARE ACQUIRED BY
PURCHASE AS DEFINED IN SECTION  ONE  HUNDRED  SEVENTY-NINE  (D)  OF  THE
INTERNAL  REVENUE CODE, AND (D) ARE (I) PRINCIPALLY USED BY THE TAXPAYER
IN THE PRODUCTION OF GOODS  BY  MANUFACTURING,  PROCESSING,  ASSEMBLING,
REFINING, MINING, EXTRACTING, FARMING, AGRICULTURE, HORTICULTURE, FLORI-
CULTURE, VITICULTURE OR COMMERCIAL FISHING, (II) INDUSTRIAL WASTE TREAT-
MENT  FACILITIES OR AIR POLLUTION CONTROL FACILITIES USED IN THE TAXPAY-
ER'S TRADE OR BUSINESS, (III) RESEARCH AND  DEVELOPMENT  PROPERTY,  (IV)
PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S TRADE OR BUSI-
NESS  AS  A  BROKER  OR  DEALER  IN CONNECTION WITH THE PURCHASE OR SALE
(WHICH SHALL INCLUDE BUT NOT BE LIMITED TO THE ISSUANCE, ENTERING  INTO,
ASSUMPTION,  OFFSET,  ASSIGNMENT,  TERMINATION,  OR TRANSFER) OF STOCKS,
BONDS  OR  OTHER  SECURITIES  AS  DEFINED  IN   SECTION   FOUR   HUNDRED
SEVENTY-FIVE(C)(2)  OF  THE  INTERNAL REVENUE CODE, OR OF COMMODITIES AS
DEFINED IN SECTION FOUR HUNDRED SEVENTY-FIVE (E) OF THE INTERNAL REVENUE
CODE, OR (V) PRINCIPALLY USED IN THE ORDINARY COURSE OF  THE  TAXPAYER'S
TRADE  OR BUSINESS OF PROVIDING INVESTMENT ADVISORY SERVICES FOR A REGU-
LATED INVESTMENT COMPANY AS DEFINED IN SECTION EIGHT  HUNDRED  FIFTY-ONE
OF THE INTERNAL REVENUE CODE, OR LENDING, LOAN ARRANGEMENT OR LOAN ORIG-
INATION  SERVICES  TO  CUSTOMERS IN CONNECTION WITH THE PURCHASE OR SALE
(WHICH SHALL INCLUDE BUT NOT BE LIMITED TO THE ISSUANCE, ENTERING  INTO,
ASSUMPTION,  OFFSET, ASSIGNMENT, TERMINATION, OR TRANSFER) OF SECURITIES
AS DEFINED IN SECTION FOUR HUNDRED SEVENTY-FIVE(C)(2)  OF  THE  INTERNAL
REVENUE CODE. FOR PURPOSES OF CLAUSES (IV) AND (V) OF THIS SUBPARAGRAPH,
PROPERTY  PURCHASED  BY  A  TAXPAYER AFFILIATED WITH A REGULATED BROKER,
DEALER OR REGISTERED INVESTMENT ADVISER IS ALLOWED A CREDIT  UNDER  THIS
SUBDIVISION  IF THE PROPERTY IS USED BY ITS AFFILIATED REGULATED BROKER,
DEALER OR REGISTERED INVESTMENT ADVISER IN ACCORDANCE WITH THIS SUBDIVI-
SION. FOR PURPOSES OF DETERMINING IF THE PROPERTY IS PRINCIPALLY USED IN
QUALIFYING USES, THE USES BY THE TAXPAYER DESCRIBED IN CLAUSES (IV)  AND
(V) OF THIS SUBPARAGRAPH MAY BE AGGREGATED. IN ADDITION, THE USES BY THE
TAXPAYER,  ITS  AFFILIATED  REGULATED  BROKER,  DEALER,  AND  REGISTERED
INVESTMENT ADVISER UNDER EITHER OR BOTH OF THOSE CLAUSES MAY  BE  AGGRE-
GATED.  PROVIDED,  HOWEVER,  A  TAXPAYER SHALL NOT BE ALLOWED THE CREDIT
PROVIDED BY CLAUSES (IV) AND (V) OF THIS SUBPARAGRAPH UNLESS (I)  EIGHTY
PERCENT  OR  MORE  OF  THE EMPLOYEES PERFORMING THE   ADMINISTRATIVE AND
SUPPORT FUNCTIONS RESULTING FROM OR RELATED TO THE  QUALIFYING  USES  OF
SUCH  EQUIPMENT ARE LOCATED IN THIS STATE, OR (II) THE AVERAGE NUMBER OF
EMPLOYEES THAT PERFORM THE ADMINISTRATIVE AND SUPPORT FUNCTIONS  RESULT-
ING  FROM  OR  RELATED  TO THE QUALIFYING USES OF SUCH EQUIPMENT AND ARE
LOCATED IN THIS STATE DURING THE TAXABLE YEAR FOR WHICH  THE  CREDIT  IS
CLAIMED  IS  EQUAL TO OR GREATER THAN NINETY-FIVE PERCENT OF THE AVERAGE
NUMBER OF EMPLOYEES THAT PERFORM THESE FUNCTIONS AND ARE LOCATED IN THIS
STATE DURING THE THIRTY-SIX MONTHS IMMEDIATELY PRECEDING  THE  YEAR  FOR
WHICH THE CREDIT IS CLAIMED, OR (III) THE NUMBER OF EMPLOYEES LOCATED IN
THIS  STATE  DURING  THE TAXABLE YEAR FOR WHICH THE CREDIT IS CLAIMED IS
EQUAL TO OR GREATER THAN NINETY  PERCENT  OF  THE  NUMBER  OF  EMPLOYEES
LOCATED  IN  THIS STATE ON DECEMBER THIRTY-FIRST, NINETEEN HUNDRED NINE-
TY-EIGHT OR, IF THE TAXPAYER WAS NOT A CALENDAR YEAR TAXPAYER  IN  NINE-
TEEN HUNDRED NINETY-EIGHT, THE LAST DAY OF ITS FIRST TAXABLE YEAR ENDING
AFTER  DECEMBER  THIRTY-FIRST,  NINETEEN  HUNDRED  NINETY-EIGHT.  IF THE
TAXPAYER BECOMES SUBJECT TO TAX IN THIS STATE  AFTER  THE  TAXABLE  YEAR

A. 5394                            15

BEGINNING  IN  NINETEEN  HUNDRED  NINETY-EIGHT, THEN THE TAXPAYER IS NOT
REQUIRED TO SATISFY  THE  EMPLOYMENT  TEST  PROVIDED  IN  THE  PRECEDING
SENTENCE  OF  THIS SUBPARAGRAPH FOR ITS FIRST TAXABLE YEAR. FOR PURPOSES
OF  ITEM  (III) OF THIS CLAUSE, THE EMPLOYMENT TEST WILL BE BASED ON THE
NUMBER OF EMPLOYEES LOCATED IN THIS STATE ON THE LAST DAY OF  THE  FIRST
TAXABLE  YEAR  THE TAXPAYER IS SUBJECT TO TAX IN THIS STATE. IF THE USES
OF THE PROPERTY MUST BE AGGREGATED TO DETERMINE WHETHER THE PROPERTY  IS
PRINCIPALLY  USED  IN  QUALIFYING USES, THEN EITHER EACH AFFILIATE USING
THE PROPERTY MUST SATISFY THIS EMPLOYMENT TEST OR THIS  EMPLOYMENT  TEST
MUST  BE  SATISFIED  THROUGH  THE  AGGREGATION  OF  THE EMPLOYEES OF THE
TAXPAYER,  ITS  AFFILIATED  REGULATED  BROKER,  DEALER,  AND  REGISTERED
INVESTMENT ADVISER USING THE PROPERTY. FOR PURPOSES OF THIS SUBDIVISION,
THE  TERM  "GOODS"  SHALL  NOT INCLUDE ELECTRICITY. FOR PURPOSES OF THIS
PARAGRAPH, MANUFACTURING SHALL MEAN THE PROCESS OF WORKING RAW MATERIALS
INTO WARES SUITABLE FOR USE OR WHICH GIVES NEW SHAPES,  NEW  QUALITY  OR
NEW COMBINATION TO MATTER WHICH ALREADY HAS GONE THROUGH SOME ARTIFICIAL
PROCESS  BY  THE  USE  OF MACHINERY, TOOLS, APPLIANCES AND OTHER SIMILAR
EQUIPMENT. PROPERTY USED  IN  THE  PRODUCTION  OF  GOODS  SHALL  INCLUDE
MACHINERY,  EQUIPMENT  OR  OTHER  TANGIBLE PROPERTY WHICH IS PRINCIPALLY
USED IN THE REPAIR AND SERVICE OF OTHER MACHINERY,  EQUIPMENT  OR  OTHER
TANGIBLE  PROPERTY USED PRINCIPALLY IN THE PRODUCTION OF GOODS AND SHALL
INCLUDE ALL FACILITIES USED IN THE PRODUCTION OPERATION, INCLUDING STOR-
AGE OF MATERIAL TO BE USED IN PRODUCTION AND OF THE  PRODUCTS  THAT  ARE
PRODUCED.  FOR  PURPOSES  OF THIS PARAGRAPH, THE TERMS "INDUSTRIAL WASTE
TREATMENT FACILITIES", "AIR POLLUTION CONTROL FACILITIES" AND  "RESEARCH
AND  DEVELOPMENT  PROPERTY"  SHALL HAVE THE MEANINGS ASCRIBED THERETO BY
CLAUSES (II) AND (III), RESPECTIVELY, OF SUBPARAGRAPH (D) OF THIS  PARA-
GRAPH,  AND  THE  PROVISIONS OF SUBPARAGRAPH (C) OF THIS PARAGRAPH SHALL
APPLY.
  (3) A TAXPAYER SHALL NOT BE ALLOWED A CREDIT  UNDER  THIS  SUBDIVISION
WITH  RESPECT TO ANY TANGIBLE PERSONAL PROPERTY AND OTHER TANGIBLE PROP-
ERTY, INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS OF BUILDINGS,  WHICH
IT  LEASES  TO  ANY  OTHER PERSON OR CORPORATION EXCEPT WHERE A TAXPAYER
LEASES PROPERTY TO AN AFFILIATED REGULATED BROKER, DEALER, OR REGISTERED
INVESTMENT ADVISER THAT USES SUCH PROPERTY  IN  ACCORDANCE  WITH  CLAUSE
(IV)  OR  (V)  OF SUBPARAGRAPH (D) OF PARAGRAPH TWO OF THIS SUBDIVISION.
FOR PURPOSES OF THE PRECEDING SENTENCE, ANY  CONTRACT  OR  AGREEMENT  TO
LEASE  OR RENT OR FOR A LICENSE TO USE SUCH PROPERTY SHALL BE CONSIDERED
A LEASE. PROVIDED, HOWEVER, IN DETERMINING WHETHER A TAXPAYER  SHALL  BE
ALLOWED  A  CREDIT UNDER THIS SUBDIVISION WITH RESPECT TO SUCH PROPERTY,
ANY ELECTION  MADE  WITH  RESPECT  TO  SUCH  PROPERTY  PURSUANT  TO  THE
PROVISIONS  OF  PARAGRAPH EIGHT OF SUBSECTION (F) OF SECTION ONE HUNDRED
SIXTY-EIGHT OF THE INTERNAL REVENUE  CODE,  AS  SUCH  PARAGRAPH  WAS  IN
EFFECT  FOR  AGREEMENTS  ENTERED  INTO  PRIOR TO JANUARY FIRST, NINETEEN
HUNDRED EIGHTY-FOUR, SHALL BE DISREGARDED.
  (4) IF THE AMOUNT OF CREDIT ALLOWED UNDER  THIS  SUBDIVISION  FOR  ANY
TAXABLE  YEAR  SHALL EXCEED THE TAXPAYER'S TAX FOR SUCH YEAR, THE EXCESS
MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY  BE  DEDUCTED
FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS. ANY REFUND PAID PURSUANT
TO  THIS  PARAGRAPH  SHALL BE DEEMED TO BE A REFUND OF AN OVERPAYMENT OF
TAX AS PROVIDED IN SECTION  SIX  HUNDRED  EIGHTY-SIX  OF  THIS  CHAPTER,
PROVIDED, HOWEVER, THAT NO INTEREST SHALL BE PAID THEREON.
  (DD)  DISCOVERY  WAGE  TAX  CREDIT.  (1) A TAXPAYER SHALL BE ALLOWED A
CREDIT, TO BE COMPUTED AS HEREINAFTER PROVIDED, AGAINST THE TAX  IMPOSED
BY  THIS  ARTICLE,  WHERE  THE  TAXPAYER  HAS BEEN CERTIFIED PURSUANT TO
SECTION NINE HUNDRED SEVENTY-TWO  OF  THE  GENERAL  MUNICIPAL  LAW.  THE

A. 5394                            16

AMOUNT  OF SUCH CREDIT SHALL BE AS PRESCRIBED IN PARAGRAPH THREE OF THIS
SUBDIVISION.
  (2)  "DISCOVERY  WAGES" MEANS WAGES PAID BY THE TAXPAYER FOR FULL-TIME
EMPLOYMENT DURING A TAXABLE YEAR, PROVIDED THAT THOSE WAGES ARE PAID  BY
A CERTIFIED BUSINESS AS DEFINED BY THE COMMISSIONER OF ECONOMIC DEVELOP-
MENT AS REQUIRED IN HIS OR HER RESPONSIBILITIES.
  (3)  THE  CREDIT  PROVIDED  IN  THIS SUBDIVISION SHALL BE EQUAL TO THE
PRODUCT OF THE GROSS WAGES  PAID  AND  SIX  AND  EIGHTY-FIVE  HUNDREDTHS
PERCENT FOR EACH NET NEW JOB CREATED DURING THE TAXABLE YEAR.
  (4)  "NET NEW JOB" SHALL BE DEFINED AS EACH JOB THAT EXCEEDS THE AVER-
AGE NUMBER OF INDIVIDUALS EMPLOYED FULL-TIME  BY  THE  TAXPAYER  IN  THE
PREVIOUS TAXABLE YEAR.
  (5) IF THE AMOUNT OF THIS CREDIT AND CARRYOVERS OF SUCH CREDIT ALLOWED
UNDER  THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL EXCEED THE TAXPAYER'S
TAX FOR SUCH YEAR, THE EXCESS, AS WELL AS ANY  PART  OF  THE  CREDIT  OR
CARRYOVERS  OF  SUCH CREDIT, OR BOTH, WHICH MAY NOT BE DEDUCTED FROM THE
TAX OTHERWISE DUE BY REASON OF PARAGRAPH THREE OF THIS SUBDIVISION,  MAY
BE  CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY BE DEDUCTED FROM
THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  S 8. This act shall take effect immediately; provided,  however,  that
any  rules and regulations necessary to carry out the provisions of this
act shall be promulgated by the  commissioner  of  economic  development
before such effective date.

                                 PART C

  Section  1.  The  opening paragraph and subparagraphs (iv) and (vi) of
paragraph (a) of subdivision 1 of section 210 of the tax law, the  open-
ing paragraph and subparagraph (iv) as amended by section 2 of part N of
chapter  60 of the laws of 2007, subparagraph (vi) as amended by section
1 of part C of chapter 56 of the laws of 2011, are amended  to  read  as
follows:
  For  taxable years beginning before July first, nineteen hundred nine-
ty-nine, the amount prescribed by this paragraph shall  be  computed  at
the  rate  of nine percent of the taxpayer's entire net income base. For
taxable years beginning after June thirtieth, nineteen  hundred  ninety-
nine  and before July first, two thousand, the amount prescribed by this
paragraph shall be computed at the rate of eight and one-half percent of
the taxpayer's entire net income base. For taxable years beginning after
June thirtieth, two thousand and before July first,  two  thousand  one,
the amount prescribed by this paragraph shall be computed at the rate of
eight  percent  of  the  taxpayer's  entire net income base. For taxable
years beginning after June thirtieth, two thousand one and before  Janu-
ary  first,  two thousand seven, the amount prescribed by this paragraph
shall be computed at the rate of  seven  and  one-half  percent  of  the
taxpayer's  entire  net income base. For taxable years beginning [on or]
after January first, two thousand seven AND BEFORE  JANUARY  FIRST,  TWO
THOUSAND  THIRTEEN,  the  amount  prescribed  by this paragraph shall be
computed at the rate of seven and one-tenth percent  of  the  taxpayer's
entire net income base.  FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY
FIRST,  TWO  THOUSAND  THIRTEEN, THE AMOUNT PRESCRIBED BY THIS PARAGRAPH
SHALL BE COMPUTED AT THE RATE  OF  SIX  AND  EIGHTY-FIVE  ONE  HUNDREDTH
PERCENT  OF THE TAXPAYER'S ENTIRE NET INCOME BASE. The taxpayer's entire
net income base shall mean the portion  of  the  taxpayer's  entire  net
income  allocated  within  the state as hereinafter provided, subject to
any modification required by paragraphs (d) and (e) of subdivision three

A. 5394                            17

of this section. However, in the case of a small business  taxpayer,  as
defined  in  paragraph (f) of this subdivision, the amount prescribed by
this paragraph shall be computed pursuant to subparagraph (iv)  of  this
paragraph  and in the case of a manufacturer, as defined in subparagraph
(vi) of this paragraph, the amount prescribed by this paragraph shall be
computed pursuant to subparagraph (vi) of this paragraph.
  (iv) for taxable years beginning [on  or]  after  January  first,  two
thousand  seven  AND BEFORE JANUARY FIRST, TWO THOUSAND THIRTEEN, if the
entire net income base is not more  than  two  hundred  ninety  thousand
dollars  the  amount shall be six and one-half percent of the entire net
income base; if the entire net income base  is  more  than  two  hundred
ninety  thousand  dollars  but  not  over  three hundred ninety thousand
dollars the amount shall be the  sum  of  (1)  eighteen  thousand  eight
hundred  fifty dollars, (2) seven and one-tenth percent of the excess of
the entire net income base over two hundred ninety thousand dollars  but
not  over three hundred ninety thousand dollars and (3) four and thirty-
five hundredths percent of the excess of the entire net income base over
three hundred fifty thousand dollars but not over three  hundred  ninety
thousand dollars. FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST,
TWO  THOUSAND  THIRTEEN,  IF  THE  ENTIRE  NET  INCOME IS NOT OVER THREE
HUNDRED NINETY THOUSAND DOLLARS THE AMOUNT SHALL BE SIX PERCENT  OF  THE
ENTIRE NET INCOME BASE;
  (vi)  for  taxable years beginning [on or] after January thirty-first,
two thousand seven, AND BEFORE JANUARY FIRST, TWO  THOUSAND  TWELVE  the
amount  prescribed by this paragraph for a taxpayer which is a qualified
New York manufacturer, shall be computed at the rate of six and one-half
(6.5) percent of the taxpayer's entire  net  income  base.  For  taxable
years  beginning  on  or  after  January  first, two thousand twelve and
before January  first,  two  thousand  [fifteen]  THIRTEEN,  the  amount
prescribed  by this paragraph for a taxpayer which is an eligible quali-
fied New York manufacturer shall be computed at the rate  of  three  and
one-quarter  (3.25)  percent  of  the taxpayer's entire net income base.
FOR TAXABLE YEARS BEGINNING ON AND AFTER  JANUARY  FIRST,  TWO  THOUSAND
THIRTEEN,  THE  AMOUNT PRESCRIBED BY THIS PARAGRAPH SHALL BE COMPUTED AT
THE RATE OF SIX PERCENT OF THE TAXPAYER'S ENTIRE NET  INCOME  BASE.  The
term  "manufacturer" shall mean a taxpayer which during the taxable year
is principally engaged in the  production  of  goods  by  manufacturing,
processing,  assembling, refining, mining, extracting, farming, agricul-
ture, horticulture, floriculture,  viticulture  or  commercial  fishing.
However,  the  generation  and distribution of electricity, the distrib-
ution of natural gas, and the production of steam  associated  with  the
generation  of  electricity  shall  not  be  qualifying activities for a
manufacturer under this subparagraph. Moreover, the combined group shall
be considered a "manufacturer" for purposes of this subparagraph only if
the combined group during the taxable year is principally engaged in the
activities set forth in this paragraph, or any  combination  thereof.  A
taxpayer  or  a  combined group shall be "principally engaged" in activ-
ities described above if, during  the  taxable  year,  more  than  fifty
percent of the gross receipts of the taxpayer or combined group, respec-
tively,  are  derived  from  receipts from the sale of goods produced by
such activities. In computing a combined group's gross receipts,  inter-
corporate  receipts  shall be eliminated. A "qualified New York manufac-
turer" is a manufacturer  which  has  property  in  New  York  which  is
described in clause (A) of subparagraph (i) of paragraph (b) of subdivi-
sion  twelve  of  this section and either (I) the adjusted basis of such
property for federal income tax purposes at the  close  of  the  taxable

A. 5394                            18

year  is  at  least  one  million  dollars  or  (II) all of its real and
personal property is located in New York. In addition, a "qualified  New
York  manufacturer"  means  a  taxpayer  which is defined as a qualified
emerging  technology  company  under paragraph (c) of subdivision one of
section thirty-one hundred two-e of the public authorities  law  regard-
less  of the ten million dollar limitation expressed in subparagraph one
of such paragraph (c). The commissioner shall establish  guidelines  and
criteria  that specify requirements by which a manufacturer may be clas-
sified as an eligible qualified  New  York  manufacturer.  Criteria  may
include but not be limited to factors such as regional unemployment, the
economic  impact  that  manufacturing  has on the surrounding community,
population decline within the region and median income within the region
in which the manufacturer is located. In establishing  these  guidelines
and criteria, the commissioner shall endeavor that the total annual cost
of the lower rates shall not exceed twenty-five million dollars.
  S  2.  Subsection  (a)  of  section 1455 of the tax law, as amended by
section 3 of part N of chapter 60 of the laws of  2007,  is  amended  to
read as follows:
  (a)  Basic  tax.  For  taxable  years beginning before July first, two
thousand, nine percent of the  taxpayer's  entire  net  income,  or  the
portion  thereof  allocated to this state, for the taxable year, or part
thereof. For taxable years beginning after June thirtieth, two  thousand
and  before  July first, two thousand one, eight and one-half percent of
the taxpayer's entire net income, or portion thereof allocated  to  this
state,  for  the taxable year, or part thereof. For taxable years begin-
ning after June thirtieth, two thousand one and before July  first,  two
thousand  two,  eight  percent  of  the taxpayer's entire net income, or
portion thereof allocated to this state, for the taxable year,  or  part
thereof.  For taxable years beginning after June thirtieth, two thousand
two and before January first, two thousand  seven,  seven  and  one-half
percent  of  the  taxpayer's entire net income, or portion thereof allo-
cated to this state, for the taxable year, or part thereof. For  taxable
years  beginning  on  [or  after] January first, two thousand seven, AND
BEFORE JANUARY FIRST, TWO THOUSAND THIRTEEN, seven and one-tenth percent
of the taxpayer's entire net income, or the portion thereof allocated to
this state, for the taxable year, or part  thereof.  FOR  TAXABLE  YEARS
BEGINNING  ON  OR  AFTER  JANUARY  FIRST, TWO THOUSAND THIRTEEN, SIX AND
EIGHTY-FIVE ONE HUNDREDTH PERCENT OF THE TAXPAYER'S ENTIRE  NET  INCOME,
OR  PORTION  THEREOF  ALLOCATED  TO THIS STATE, FOR THE TAXABLE YEAR, OR
PART THEREOF.
  S 3. Paragraph 1 of subdivision (a) of section 1502 of the tax law, as
amended by section 4 of part N of chapter 60 of the  laws  of  2007,  is
amended to read as follows:
  (1)  for taxable years beginning before July first, two thousand, nine
percent of the taxpayer's entire net income, or  portion  thereof  allo-
cated  within  this state, for the taxable year, or part thereof, except
that for taxable  years  beginning  prior  to  January  first,  nineteen
hundred  seventy-eight,  the rate shall be four and five-tenths percent;
for taxable years beginning  after  June  thirtieth,  two  thousand  and
before  July  first, two thousand one, eight and one-half percent of the
taxpayer's entire net income, or portion thereof allocated  within  this
state,  for  the taxable year, or part thereof; for taxable years begin-
ning after June thirtieth, two thousand one and before July  first,  two
thousand  two,  eight  percent  of  the taxpayer's entire net income, or
portion thereof allocated within this state, for the  taxable  year,  or
part  thereof;  for  taxable  years  beginning after June thirtieth, two

A. 5394                            19

thousand two and before January first, two  thousand  seven,  seven  and
one-half percent of the taxpayer's entire net income, or portion thereof
allocated  within  this  state,  for  the taxable year, or part thereof;
[and] for taxable years beginning [on or] after January first, two thou-
sand  seven  AND  BEFORE JANUARY FIRST, TWO THOUSAND THIRTEEN, seven and
one-tenth percent of the taxpayer's entire net income, or portion there-
of allocated within this state, for the taxable year, or  part  thereof;
AND  FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO THOUSAND
THIRTEEN, SIX AND EIGHTY-FIVE ONE HUNDREDTH PERCENT  OF  THE  TAXPAYER'S
ENTIRE  NET  INCOME, OR PORTION THEREOF ALLOCATED WITHIN THIS STATE, FOR
THE TAXABLE YEAR, OR PART THEREOF; or
  S 4. Subparagraph 1 of paragraph (b) of subdivision 1 of section 186-a
of the tax law, as amended by section 4 of part Y of chapter 63  of  the
laws of 2000, is amended to read as follows:
  (1)  two and five-tenths percent on and after January first, two thou-
sand through December thirty-first, two thousand, two and forty-five one
hundredths percent from January first, two thousand one through December
thirty-first, two thousand one, two and four-tenths percent from January
first, two thousand two through December thirty-first, two thousand two,
two and twenty-five one hundredths percent from January first, two thou-
sand three through December thirty-first, two thousand  three,  two  and
one  hundred twenty-five one thousandths percent from January first, two
thousand four through December thirty-first, two  thousand  four  [and],
two  percent  commencing  January  first,  two thousand five AND ONE AND
ONE-HALF PERCENT COMMENCING JANUARY FIRST,  TWO  THOUSAND  THIRTEEN  and
thereafter  of  that portion of its gross income derived from the trans-
portation, transmission or distribution of gas or electricity  by  means
of  conduits,  mains,  pipes,  wires,  lines or the like and (2) two and
one-tenth percent from January  first,  two  thousand  through  December
thirty-first, two thousand, two percent from January first, two thousand
one through December thirty-first, two thousand one, one and nine-tenths
percent  from  January  first, two thousand two through December thirty-
first, two thousand two, eighty-five one hundredths of one percent  from
January  first,  two  thousand  three through December thirty-first, two
thousand three, four-tenths of one percent from January first, two thou-
sand four through December thirty-first,  two  thousand  four  and  zero
percent  commencing January first, two thousand five of all of its other
gross income, is hereby imposed upon every utility not taxed under para-
graph (a) of this subdivision doing business  in  this  state  which  is
subject  to  the  supervision  of the state department of public service
which has a gross income for the year ending  December  thirty-first  in
excess of five hundred dollars, except motor carriers or brokers subject
to such supervision under the public service law; and
  S  5.  Paragraph (a) of subdivision 2 of section 186-e of the tax law,
as amended by section 4 of part S of chapter 85 of the laws of 2002,  is
amended to read as follows:
  (a)  There is hereby imposed an excise tax on the sale of telecommuni-
cation services by any person which is a provider  of  telecommunication
services,  to  be paid by such person, at the rate of three and one-half
percent prior to October first, nineteen hundred ninety-eight, three and
one-quarter percent from October first,  nineteen  hundred  ninety-eight
through  December  thirty-first, nineteen hundred ninety-nine, [and] two
and one-half percent [on and] after January first, two thousand FIVE AND
TWO PERCENT ON AND AFTER JANUARY FIRST, TWO THOUSAND THIRTEEN  of  gross
receipt  from: (1) any intrastate telecommunication services, except any
telecommunication services the gross receipt from which  is  subject  to

A. 5394                            20

tax  under  subparagraph  four of this paragraph; (2) any interstate and
international telecommunication  services  (other  than  interstate  and
international  private  telecommunication  services and any telecommuni-
cation  services  the  gross  receipt from which is subject to tax under
subparagraph four of this paragraph) which  originate  or  terminate  in
this state and which telecommunication services are charged to a service
address  in this state, regardless of where the amounts charged for such
services are billed or ultimately paid; (3) interstate and international
private telecommunication services, the gross receipt to which  the  tax
shall  apply  shall  be determined as prescribed in subdivision three of
this section, except any telecommunication services  the  gross  receipt
from  which is subject to tax under subparagraph four of this paragraph;
and (4) mobile telecommunications service provided  by  a  home  service
provider where the mobile telecommunications customer's place of primary
use is within this state.
  S  6.  Subparagraph 1 of paragraph (g) of subdivision 1 of section 210
of the tax law, as amended by section 4 of part AA-1 of  chapter  57  of
the laws of 2008, is amended to read as follows:
  (1)  General. The amount prescribed by this paragraph shall be, in the
case of each New York S corporation,  (i)  the  higher  of  the  amounts
prescribed in paragraphs (a) and (d) of this subdivision (other than the
amount  prescribed in the final clause of subparagraph one of that para-
graph (d)) (ii)  reduced  by  the  article  twenty-two  tax  equivalent;
provided,  however,  that  the  amount thus determined shall not be less
than the lowest of the amounts prescribed in subparagraph  one  of  that
paragraph  (d)  (applying  the  provisions of subparagraph three of that
paragraph  as  necessary).  Provided,   however,   notwithstanding   any
provision  of this paragraph, in taxable years beginning in two thousand
three and before two thousand eight, the amount prescribed by this para-
graph shall be the amount prescribed in subparagraph one of  that  para-
graph  (d)  (applying the provisions of subparagraph three of that para-
graph as necessary) and applying the calculation of that amount  in  the
case  of  a  termination  year as set forth in subparagraph four of this
paragraph as necessary. In taxable years beginning in two thousand eight
[and thereafter], the amount prescribed by this paragraph is the  amount
prescribed  in  subparagraph  four  of  that paragraph (d) (applying the
provisions of subparagraph three of that  paragraph  as  necessary)  and
applying  the  calculation  of  that amount in the case of a termination
year as set forth in subparagraph four of this paragraph  as  necessary.
PROVIDED,  FURTHER, AND NOTWITHSTANDING ANY PROVISION OF THIS PARAGRAPH,
IN TAXABLE YEARS BEGINNING ON  AND  AFTER  TWO  THOUSAND  THIRTEEN,  THE
AMOUNT PRESCRIBED BY THIS PARAGRAPH SHALL EQUAL ZERO, BUT THE PROVISIONS
OF  THIS  PARAGRAPH SHALL HAVE NO EFFECT ON THE AMOUNT PRESCRIBED BY THE
ARTICLE TWENTY-TWO TAX EQUIVALENT.
  S 7. This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2013, provided, however, that any
rules and regulations necessary to carry out the provisions of this  act
shall be promulgated before such effective date.
  S 2. Severability clause. If any clause, sentence, paragraph, subdivi-
sion,  section  or  part  of  this act shall be adjudged by any court of
competent jurisdiction to be invalid, such judgment  shall  not  affect,
impair,  or  invalidate  the remainder thereof, but shall be confined in
its operation to the clause, sentence, paragraph,  subdivision,  section
or part thereof directly involved in the controversy in which such judg-
ment shall have been rendered. It is hereby declared to be the intent of

A. 5394                            21

the  legislature  that  this  act  would  have been enacted even if such
invalid provisions had not been included herein.
  S  3.  This act shall take effect immediately, provided, however, that
the applicable effective date of Parts A through C of this act shall  be
as specifically set forth in the last section of such Parts.