senate Bill S6550

2013-2014 Legislative Session

Relates to New York state incubators and hotspots

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Archive: Last Bill Status - In Committee


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

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Apr 28, 2014 reported and committed to finance
Feb 04, 2014 referred to corporations, authorities and commissions

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Apr 28, 2014 - Corporations, Authorities and Commissions committee Vote

S6550
4
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committee
4
Aye
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Nay
2
Aye with Reservations
0
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Corporations, Authorities and Commissions Committee Vote: Apr 28, 2014

aye wr (2)

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S6550 - Bill Details

See Assembly Version of this Bill:
A9105
Current Committee:
Law Section:
New York State Urban Development Corporation Act
Laws Affected:
Amd §16-v, UDC Act; add §38-a, amd §§210, 606 & 208, Tax L; amd §66, Pub Serv L

S6550 - Bill Texts

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Relates to New York state incubators and innovation hotspots.

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BILL NUMBER:S6550

TITLE OF BILL: An act to amend the urban development corporation act,
the tax law and the public service law, in relation to New York state
incubators and hotspots

PURPOSE:

To increase job-creating tools available to incubators, hotspots, and
their clients.

SUMMARY OF PROVISIONS:

Section 1. Amends incubator law (16-v of the urban development
corporation act), to allow incubators and hotspots to certify
companies for the new tax credits and other items under the new 38-A
of tax law.

Section 2. New tax law section 38-A, NYS Incubator program tax
benefits Key provisions:

For incubator clients:

*Angel investment credit (non-refundable): 30% credit on a qualified
investment of $250,000 or less in a qualified entity that is an
incubator or hotspot client. Investment must 1) include at least
$25,000 in cash, 2) be in the form of an equity security, and 3)
cannot constitute acquisition of the eligible entity. The investor may
take the credit for three years at 1/3 per year with carry over
allowed for unused credits. A qualified entity is small company with
assets less than $10 million and 75% of operations and FTE personnel
in NYS. A qualified entity may receive up to $1 million in qualified
investments by qualified investors in any calendar year. The credit is
capped at $5 million in 2015, and $7 million in 2018, and is effective
January 1, 2015.

*R&D credit (refundable): Two credits for qualified emerging
technology companies (QETCs) that are Franchise or PIT taxpayers and
incubator or hotspot clients. Credits can be claimed for up to four
years, or while company is an incubator or hotspot client, whichever
period is shorter the R&D Property Credit-18% of qualified R&D
property (must also qualify under IRC section 41), and the R&D
technology expenditures credit-9% of qualified expenditures for
emerging technologies that qualify under IRC section 41 Also includes
costs associated with the preparation of patent applications, patent
application filing fees, patent research fees, patent examinations
fees, patent post allowance fees, patent maintenance fees, etc.
Credit is limited to $250,000 per year. The credit is capped at $5
million starting in January 1, 2015, increasing to $7 million in 2018.

*Accelerated depreciation. Provides a 100% depreciation in first year
of property acquired by a company that is a client of an incubator or
hotspot, or which is within two years after graduation, or bonus
federal depreciation.


*Procurement: allows the state to purchase goods and services from
incubator and hotspot client companies under the small business
provisions of State procurement law.

For incubators:

*RPT Exemption provides that incubators are to be considered as not
for profit tax exempt entities.

*Energy rate: Create an incubator energy rate equal to the incremental
cost of providing energy to incubators or hotspots.

EXISTING LAW:

16-v of the urban development corporation act crated the incubator and
hotspot law This bill adds new provisions and strengths.

JUSTIFICATION:

This bill will if enacted into law increase the ability of incubators
and hotspots to continue to create jobs and companies and wealth in
New York State, by opening up new avenues of financing, using the
state's powers of procurement to aid in company expansion, and by
reducing costs to incubators, thus reducing fiscal pressure and
allowing lower rents.

*Adding incentives for outside financing of companies through the
angel investor credit.

*Providing refundable R&D credits to qualified emerging technology
companies in incubators and hotspots during their startup periods.

*Allowing 100% depreciation, or any of the federal schedules for
depreciation (NYS currently only allows level depreciation) for
companies in an incubator or hotspot, and for two years after
graduation this should help companies graduating from incubators into
the community at a time when they will be buying equipment.

*Reducing fiscal pressures on incubators by assuring that they are
treated as not for profit educational entities, and establishing an
energy rate for them.

Incubators and hotspots are and have been doing the work of creating
jobs in New York State since they were first created in this state in
1957. This bill will enhance that effort.

FISCAL IMPLICATIONS:

To be determined.

EFFECTIVE DATE:

January 1, 2015

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

                                  6550

                            I N  S E N A T E

                            February 4, 2014
                               ___________

Introduced  by  Sens.  GOLDEN, GALLIVAN, GRIFFO, ROBACH, VALESKY -- read
  twice and ordered printed, and when printed to  be  committed  to  the
  Committee on Corporations, Authorities and Commissions

AN  ACT  to amend the urban development corporation act, the tax law and
  the public service law, in relation to New York state  incubators  and
  hotspots

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

  Section 1. Subdivision 8 of section 16-v of section 1 of  chapter  174
of  the laws of 1968 constituting the urban development corporation act,
as added by section 1 of part C of chapter 59 of the laws  of  2013,  is
amended to read as follows:
  8.  (A)  New York state innovation hot spots may certify clients which
meet the requirements of subdivision nine of this section  as  qualified
entities  eligible  for  New  York state innovation hot spot program tax
benefits pursuant to section thirty-eight  of  the  tax  law.  Under  no
circumstance  may  business  enterprises of incubators designated as New
York state incubators under paragraph (b) of  subdivision  one  of  this
section  be  eligible for tax benefits under section thirty-eight of the
tax law.
  (B) BUSINESS ENTERPRISES DESIGNATED AS NEW YORK STATE INCUBATORS UNDER
PARAGRAPH (B) OF SUBDIVISION ONE OF THIS SECTION OR AS  NEW  YORK  STATE
INNOVATION  HOT SPOTS MAY CERTIFY CLIENTS WHICH MEET THE REQUIREMENTS OF
QUALIFIED   ENTITIES   ELIGIBLE   FOR   TAX   BENEFITS   UNDER   SECTION
THIRTY-EIGHT-A  OF  THE TAX LAW.   SUCH CERTIFICATION AND ANY CHANGES IN
CERTIFICATION SHALL BE FILED WITH THE CORPORATION,  WHICH  SHALL  NOTIFY
THE DEPARTMENT OF TAXATION AND FINANCE. CERTIFICATIONS REGARDING INVEST-
MENTS  AND TAX CREDITS REQUIRED TO BE PROVIDED TO NEW YORK STATE INCUBA-
TORS UNDER SECTION THIRTY-EIGHT-A OF THE TAX LAW  SHALL  ALSO  BE  FILED
WITH  THE  CORPORATION.  A  QUALIFIED ENTITY SHALL SURRENDER ITS CERTIF-
ICATION IF IT LEAVES OR GRADUATES THE INCUBATOR PROGRAM OR IF IT IS SOLD
OR OTHERWISE DISPOSED OF, OR LEAVES THE STATE,  OR  IF  ITS  CERTIFICATE
OTHERWISE EXPIRES.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD13388-04-4

S. 6550                             2

  S  2.  The  tax law is amended by adding a new section 38-a to read as
follows:
  S  38-A.  NEW  YORK STATE INCUBATOR AND INNOVATION HOTSPOT PROGRAM TAX
BENEFITS. (A) A BUSINESS OR OWNER OF A BUSINESS IN THE CASE OF  A  BUSI-
NESS  TAXED AS A PARTNERSHIP OR NEW YORK S CORPORATION, THAT IS A QUALI-
FIED ENTITY AND MEETS THE REQUIREMENTS OF THIS SECTION, IS ELIGIBLE  FOR
THE TAX BENEFITS DESCRIBED IN THIS SECTION. AS USED IN THIS CHAPTER,
  (1) "NEW YORK STATE INCUBATOR" AND "NEW YORK STATE INNOVATION HOTSPOT"
HAVE  THE  SAME MEANING AS UNDER SECTION SIXTEEN-V OF THE NEW YORK STATE
URBAN DEVELOPMENT CORPORATION ACT.
  (2) "QUALIFIED ENTITY" MEANS A  BUSINESS  ENTERPRISE  THAT  MEETS  THE
APPLICABLE  REQUIREMENTS  OF THIS SECTION AND PARAGRAPHS (I) AND (II) OF
SUBDIVISION NINE OF SECTION SIXTEEN-V OF THE NEW YORK STATE URBAN DEVEL-
OPMENT CORPORATION ACT, AND INCLUDES A CORPORATION, A LIMITED  LIABILITY
CORPORATION,  PARTNERSHIP,  OR  OTHER  BUSINESS  ENTITY,  BUT NOT A SOLE
PROPRIETOR.
  (3) "RELATED PERSON" MEANS A "RELATED PERSON" AS SUCH TERM IS  DEFINED
IN  SUBDIVISION EIGHT OF SECTION FOUR HUNDRED THIRTY-ONE OF THE ECONOMIC
DEVELOPMENT LAW.
  (4) "AFFILIATES" MEANS THOSE ENTITIES THAT ARE  MEMBERS  OF  THE  SAME
AFFILIATED  GROUP  (AS  DEFINED  IN  SECTION FIFTEEN HUNDRED FOUR OF THE
INTERNAL REVENUE CODE) AS THE ENTITY.
  (5) "QUALIFIED EMERGING TECHNOLOGY COMPANY" HAS THE SAME MEANING AS IN
PARAGRAPH (C) OF SUBDIVISION ONE OF SECTION THIRTY-ONE HUNDRED TWO-E  OF
THE  PUBLIC  AUTHORITIES  LAW,  EXCEPT  THAT  IT ALSO HAS FEWER THAN ONE
HUNDRED EMPLOYEES OF WHOM AT LEAST SEVENTY-FIVE PERCENT ARE  LOCATED  IN
NEW  YORK  STATE, AND SHALL HAVE INVESTED RESEARCH AND DEVELOPMENT FUNDS
IN AN AMOUNT EQUAL TO SIX PERCENT OR MORE OF NET SALES DURING ITS  TAXA-
BLE YEAR.
  (B)  ANGEL  INVESTMENT  CREDIT.  (1)  A  QUALIFIED  INVESTOR THAT IS A
TAXPAYER UNDER ARTICLE TWENTY-TWO OF THIS CHAPTER  SHALL  BE  ALLOWED  A
CREDIT  AGAINST  SUCH  TAX  TO  BE COMPUTED AS HEREINAFTER PROVIDED. THE
AMOUNT OF THE CREDIT SHALL BE EQUAL TO THIRTY PERCENT OF EACH  QUALIFIED
INVESTMENT IN A QUALIFIED ENTITY MADE DURING THE TAXABLE YEAR.
  (I) A QUALIFIED INVESTMENT IS AN INVESTMENT OF TWO HUNDRED FIFTY THOU-
SAND DOLLARS OR LESS, INCLUDING AT LEAST TWENTY-FIVE THOUSAND DOLLARS IN
CASH  OR  CASH EQUIVALENT, COMPRISED OF EQUITY SECURITY IN COMMON STOCK,
PREFERRED STOCK, AN INTEREST  IN  A  PARTNERSHIP  OR  LIMITED  LIABILITY
COMPANY,  A  SECURITY THAT IS CONVERTIBLE INTO AN EQUITY SECURITY OR ANY
OTHER EQUITY SECURITY DETERMINED AS ELIGIBLE BY THE  COMMISSIONER  AFTER
CONSULTATION  WITH THE DEPARTMENT OF ECONOMIC DEVELOPMENT. AN INVESTMENT
WHICH COMPRISES ACQUISITION OR CONTROL OF THE ELIGIBLE ENTITY OR  ACQUI-
SITION  OF  THE ASSETS AND LIABILITIES OF SUCH ELIGIBLE ENTITY, OR WHICH
IS NOT REPORTED TO THE NEW YORK STATE INCUBATOR OF  WHICH  THE  ELIGIBLE
ENTITY  IS  A  CLIENT WITHIN SIXTY CALENDAR DAYS AFTER THE INVESTMENT IS
MADE WILL NOT BE DEEMED A QUALIFIED INVESTMENT.
  (II) A  QUALIFIED  INVESTOR,  INCLUDING  THE  AFFILIATES  AND  RELATED
PERSONS  OF  THE  QUALIFIED  INVESTOR, SHALL NOT HAVE OWNED OR POSSESSED
MORE THAN THIRTY PERCENT OF THE TOTAL VOTING POWER OF ALL EQUITY SECURI-
TIES OF THE QUALIFIED ENTITY PRIOR TO THE INVESTMENT.
  (III) A QUALIFIED ENTITY, IN ADDITION TO  REQUIREMENTS  SET  FORTH  BY
SUBDIVISION (A) OF THIS SECTION, MUST ALSO:
  A.  HAVE  ASSETS OF LESS THAN TEN MILLION DOLLARS, EXCLUSIVE OF QUALI-
FIED INVESTMENTS. AS USED IN THIS SUBPARAGRAPH, THE TERM  "ASSET"  MEANS
ANY  OWNED  PROPERTY  THAT  HAS  VALUE  INCLUDING FINANCIAL AND PHYSICAL
ASSETS, BUT NOT INTELLECTUAL PROPERTY;

S. 6550                             3

  B. CURRENTLY BE CERTIFIED AS A CLIENT OF A NEW YORK STATE INCUBATOR OR
NEW YORK STATE INNOVATION HOTSPOT, AND HAVE BEEN A CLIENT OF SUCH  INCU-
BATOR OR HOTSPOT FOR FOUR YEARS OR LESS;
  C.  MAINTAIN  AT LEAST SEVENTY-FIVE PERCENT OF ITS OPERATIONS AND FULL
TIME COMPENSATED PERSONNEL (IF ANY) IN THIS STATE.
  (2) A QUALIFIED ENTITY MAY RECEIVE UP TO ONE MILLION DOLLARS IN QUALI-
FIED INVESTMENTS BY QUALIFIED INVESTORS IN ANY CALENDAR YEAR.
  (3) A QUALIFIED INVESTOR MAY CLAIM ONE-THIRD OF THE  CREDIT  RESULTING
FROM  ITS  QUALIFIED  INVESTMENT  IN A TAXABLE YEAR FOR THREE SUCCESSIVE
YEARS. IF THE AMOUNT OF THE CREDIT AND CARRYOVERS OF SUCH CREDIT ALLOWED
UNDER THIS SECTION FOR ANY TAXABLE YEAR SHALL EXCEED THE TAXPAYER'S  TAX
FOR  SUCH  YEAR,  ANY  AMOUNT OF CREDIT OR CARRYOVERS OF SUCH CREDIT NOT
DEDUCTIBLE IN SUCH TAXABLE YEAR MAY BE CARRIED  OVER  TO  THE  FOLLOWING
YEAR OR YEARS AND MAY BE DEDUCTED FROM THE TAX FOR SUCH YEAR OR YEARS. A
QUALIFIED  INVESTOR SHALL CERTIFY TO THE COMMISSIONER THAT THE QUALIFIED
INVESTMENT WILL NOT BE SOLD, TRANSFERRED, TRADED, OR DISPOSED OF  DURING
THE THREE YEARS FOLLOWING THE YEAR IN WHICH THE CREDIT IS FIRST CLAIMED,
SEPARATE  FROM  ANY  SALE  OR  OTHER DISPOSITION OF THE ELIGIBLE ENTITY.
QUALIFIED INVESTORS SHALL INCLUDE A COPY OF THE CERTIFICATE OF ELIGIBIL-
ITY WITH THEIR TAX RETURN.
  (4) CREDIT RECAPTURE. IF A CERTIFICATE OF ELIGIBILITY  IS  REVOKED  OR
SURRENDERED  BECAUSE  THE  QUALIFIED ENTITY HAS BEEN SOLD, EXCHANGED, OR
TRANSFERRED, THE AMOUNT OF CREDIT  DESCRIBED  IN  THIS  SUBDIVISION  AND
CLAIMED  BY THE TAXPAYER PRIOR TO THAT REVOCATION SHALL BE ADDED BACK TO
TAX IN THE TAXABLE YEAR IN WHICH  ANY  SUCH  REVOCATION  BECOMES  FINAL.
THIS PROVISION SHALL NOT APPLY IN THE CASE OF A BANKRUPTCY.
  (5)  ALLOCATION OF CREDIT. THE AGGREGATE AMOUNT OF TAX CREDITS ALLOWED
UNDER THIS SUBDIVISION, IN ANY  CALENDAR  YEAR  SHALL  BE  FIVE  MILLION
DOLLARS  IN  TWO THOUSAND FIFTEEN, TWO THOUSAND SIXTEEN AND TWO THOUSAND
SEVENTEEN, AND SEVEN MILLION DOLLARS IN TWO THOUSAND EIGHTEEN AND THERE-
AFTER. SUCH AGGREGATE AMOUNT OF CREDITS SHALL BE  ALLOCATED  BASED  UPON
THE DATE OF FILING AN APPLICATION FOR ALLOCATION OF CREDIT. IF THE TOTAL
AMOUNT  OF  ALLOCATED CREDITS APPLIED FOR IN ANY PARTICULAR YEAR EXCEEDS
THE AGGREGATE AMOUNT OF TAX CREDITS ALLOWED FOR  SUCH  YEAR  UNDER  THIS
SECTION,  SUCH EXCESS SHALL BE TREATED AS HAVING BEEN APPLIED FOR ON THE
FIRST DAY OF THE SUBSEQUENT YEAR.
  (C) RESEARCH AND DEVELOPMENT CREDIT. (1) A QUALIFIED  ENTITY  THAT  IS
ALSO  A  QUALIFIED  EMERGING TECHNOLOGY COMPANY THAT IS A TAXPAYER UNDER
ARTICLE TWENTY-TWO OR ARTICLE NINE-A OF THIS CHAPTER AND IS A CLIENT  OF
A  NEW YORK STATE INCUBATOR OR A NEW YORK STATE INNOVATION HOTSPOT SHALL
BE ALLOWED CREDITS AGAINST  SUCH  TAX  TO  BE  COMPUTED  AS  HEREINAFTER
PROVIDED.
  (2)  THE  RESEARCH  AND  DEVELOPMENT PROPERTY CREDIT SHALL BE EIGHTEEN
PERCENT OF THE COST OR OTHER BASIS FOR FEDERAL INCOME  TAX  PURPOSES  OF
RESEARCH AND DEVELOPMENT PROPERTY ACQUIRED BY THE TAXPAYER AND PLACED IN
SERVICE  DURING  THE TAXABLE YEAR, PROVIDED THAT IT MEETS THE DEFINITION
OF CLAUSE (II) OF SUBPARAGRAPH (B) OF PARAGRAPH TWO OF SUBSECTION (A) OF
SECTION SIX HUNDRED SIX OF THIS CHAPTER AND WOULD QUALIFY FOR  A  CREDIT
UNDER  SECTION 41 OF THE INTERNAL REVENUE CODE.  SUCH PROPERTY SHALL NOT
INCLUDE LAND OR BUILDINGS. THE COSTS, EXPENSES  AND  OTHER  AMOUNTS  FOR
WHICH  A CREDIT IS ALLOWED AND CLAIMED UNDER THIS PARAGRAPH SHALL NOT BE
USED IN THE CALCULATION OF ANY OTHER CREDIT ALLOWED UNDER THIS ARTICLE.
  (3) THE RESEARCH AND DEVELOPMENT TECHNOLOGY EXPENDITURES CREDIT  SHALL
BE NINE PERCENT OF QUALIFIED RESEARCH AND DEVELOPMENT EXPENDITURES, PAID
OR INCURRED BY THE TAXPAYER IN THE TAXABLE YEAR IN EMERGING TECHNOLOGIES
DEFINED  BY  PARAGRAPH  (B)  OF  SUBDIVISION  ONE  OF SECTION THIRTY-ONE

S. 6550                             4

HUNDRED TWO-E OF THE PUBLIC AUTHORITIES LAW. FOR PURPOSES OF THIS  PARA-
GRAPH,  "QUALIFIED  RESEARCH  AND  DEVELOPMENT  EXPENDITURES"  MEANS THE
EXPENSES OF THE QUALIFIED ENTITY THAT ARE  QUALIFIED  RESEARCH  EXPENSES
UNDER   THE  FEDERAL  RESEARCH  AND  DEVELOPMENT  CREDIT  UNDER  SECTION
FORTY-ONE OF THE INTERNAL REVENUE CODE AND ARE  ATTRIBUTABLE  TO  ACTIV-
ITIES  CONDUCTED  IN  THE STATE. IF THE FEDERAL RESEARCH AND DEVELOPMENT
CREDIT HAS EXPIRED, THEN THE RESEARCH AND DEVELOPMENT EXPENDITURES SHALL
BE CALCULATED AS IF THE FEDERAL RESEARCH AND DEVELOPMENT  CREDIT  STRUC-
TURE AND DEFINITION IN EFFECT IN FEDERAL TAX YEAR TWO THOUSAND NINE WERE
STILL  IN  EFFECT.  SUCH QUALIFIED RESEARCH AND DEVELOPMENT EXPENDITURES
SHALL ALSO INCLUDE COSTS  ASSOCIATED  WITH  THE  PREPARATION  OF  PATENT
APPLICATIONS,  PATENT  APPLICATION  FILING  FEES,  PATENT RESEARCH FEES,
PATENT EXAMINATIONS FEES, PATENT POST ALLOWANCE FEES AND PATENT  MAINTE-
NANCE  FEES,  BUT NOT ADVERTISING OR PROMOTION THROUGH MEDIA OR EXPENSES
FOR LITIGATION OR THE CHALLENGE OF ANOTHER ENTITY'S INTELLECTUAL PROPER-
TY RIGHTS.
  (4) A QUALIFIED ENTITY MAY CLAIM CREDITS UNDER  THIS  SUBDIVISION  FOR
FOUR  CONSECUTIVE  TAXABLE  YEARS, OR FOR SO LONG AS IT IS A CLIENT OF A
NEW YORK STATE INCUBATOR OR A NEW YORK STATE INNOVATION HOTSPOT,  WHICH-
EVER  PERIOD  IS  SHORTER.  IN  NO  CASE  SHALL THE AMOUNT OF THE CREDIT
ALLOWED BY THIS SUBDIVISION TO A TAXPAYER EXCEED TWO HUNDRED FIFTY THOU-
SAND DOLLARS PER YEAR. IF THE TAXPAYER IS A PARTNER IN A PARTNERSHIP  OR
SHAREHOLDER  OF  A NEW YORK S CORPORATION, THEN THE LIMIT IMPOSED BY THE
PRECEDING SENTENCE SHALL BE APPLIED AT THE ENTITY  LEVEL,  SO  THAT  THE
AGGREGATE  CREDIT  ALLOWED  TO  ALL THE PARTNERS OR SHAREHOLDERS OF EACH
SUCH ENTITY IN THE TAXABLE YEAR DOES NOT EXCEED TWO HUNDRED FIFTY  THOU-
SAND DOLLARS. IF THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR
ANY  TAXABLE  YEAR  SHALL  EXCEED  THE TAXPAYER'S TAX FOR SUCH YEAR, THE
EXCESS SHALL BE TREATED AS AN OVERPAYMENT  OF  TAX  TO  BE  CREDITED  OR
REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION SIX HUNDRED EIGHT-
Y-SIX OF THIS CHAPTER, PROVIDED, HOWEVER, THAT NO INTEREST SHALL BE PAID
THEREON.
  (5)  CREDIT  RECAPTURE.  IF A CERTIFICATE OF ELIGIBILITY IS REVOKED OR
SURRENDERED BECAUSE THE QUALIFIED ENTITY HAS BEEN  SOLD,  EXCHANGED,  OR
TRANSFERRED,  THE  AMOUNT  OF  CREDIT  DESCRIBED IN THIS SUBDIVISION AND
CLAIMED BY THE TAXPAYER PRIOR TO THAT REVOCATION SHALL BE ADDED BACK  TO
TAX  IN  THE  TAXABLE  YEAR  IN WHICH ANY SUCH REVOCATION BECOMES FINAL.
THIS PROVISION SHALL NOT APPLY IN THE CASE OF A BANKRUPTCY.
  (6) ALLOCATION OF CREDIT. THE AGGREGATE AMOUNT OF TAX CREDITS  ALLOWED
UNDER  THIS  SECTION, IN ANY CALENDAR YEAR SHALL BE FIVE MILLION DOLLARS
IN TWO THOUSAND FIFTEEN, TWO THOUSAND SIXTEEN AND  TWO  THOUSAND  SEVEN-
TEEN, AND SEVEN MILLION DOLLARS IN TWO THOUSAND EIGHTEEN AND THEREAFTER.
SUCH  AGGREGATE AMOUNT OF CREDITS SHALL BE ALLOCATED BASED UPON THE DATE
OF FILING AN APPLICATION FOR ALLOCATION OF CREDIT. IF THE  TOTAL  AMOUNT
OF  ALLOCATED  CREDITS  APPLIED  FOR  IN ANY PARTICULAR YEAR EXCEEDS THE
AGGREGATE AMOUNT OF  TAX  CREDITS  ALLOWED  FOR  SUCH  YEAR  UNDER  THIS
SECTION,  SUCH EXCESS SHALL BE TREATED AS HAVING BEEN APPLIED FOR ON THE
FIRST DAY OF THE SUBSEQUENT YEAR.
  (7) CROSS-REFERENCES. FOR APPLICATION OF THE TAX BENEFITS PROVIDED FOR
IN THIS SUBDIVISION, SEE THE FOLLOWING PROVISIONS OF THIS CHAPTER:
  (I) ARTICLE 9-A, SECTION 210, SUBDIVISION 48.
  (II) ARTICLE 22, SECTION 606, SUBSECTION (BBB).
  S 3.  Subsections (yy) and (zz) of section 606  of  the  tax  law,  as
relettered  by section 5 of part H of chapter 1 of the laws of 2003, are
relettered subsections (yyy) and (zzz) and a  new  subsection  (bbb)  is
added to read as follows:

S. 6550                             5

  (BBB)  RESEARCH  AND DEVELOPMENT CREDIT. A TAXPAYER SHALL BE ALLOWED A
CREDIT, TO BE COMPUTED AS PROVIDED IN  SECTION  THIRTY-EIGHT-A  OF  THIS
CHAPTER,  AGAINST  THE TAX IMPOSED BY THIS ARTICLE. IF THE AMOUNT OF THE
CREDIT ALLOWED UNDER THIS SUBSECTION FOR ANY TAXABLE YEAR  SHALL  EXCEED
THE  TAXPAYER'S  TAX  FOR  SUCH  YEAR, THE EXCESS SHALL BE TREATED AS AN
OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED  IN  ACCORDANCE  WITH  THE
PROVISIONS  OF SECTION SIX HUNDRED EIGHTY-SIX OF THIS ARTICLE, PROVIDED,
HOWEVER, THAT NO INTEREST SHALL BE PAID THEREON.
  S 4. Section 210 of the tax law is amended by adding a new subdivision
48 to read as follows:
  48. RESEARCH AND DEVELOPMENT CREDIT. A TAXPAYER  SHALL  BE  ALLOWED  A
CREDIT,  TO  BE  COMPUTED  AS PROVIDED IN SECTION THIRTY-EIGHT-A OF THIS
CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE. IF THE AMOUNT  OF  THE
CREDIT  ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL EXCEED
THE TAXPAYER'S TAX FOR SUCH YEAR, THE EXCESS  SHALL  BE  TREATED  AS  AN
OVERPAYMENT  OF  TAX  TO  BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION TEN HUNDRED EIGHTY-SIX OF THIS CHAPTER,  PROVIDED,
HOWEVER, THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHT-
Y-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THER-
EON.
  S  5. Subparagraph (B) of paragraph 1 of subsection (i) of section 606
of the tax law is amended by adding a new clause  (xxxvii)  to  read  as
follows:

(XXXVII) RESEARCH AND                AMOUNT OF CREDIT
DEVELOPMENT  CREDIT                  UNDER SUBDIVISION
UNDER SUBSECTION (BBB)               FORTY-EIGHT OF
                                     SECTION TWO HUNDRED TEN
  S  6.  Paragraph (a) of subdivision 9 of section 208 of the tax law is
amended by adding a new subparagraph 19 to read as follows:
  (19) ANY OTHER PROVISION OF ANY OTHER LAW  TO  THE  CONTRARY  NOTWITH-
STANDING, FOR QUALIFIED PROPERTY AS DESCRIBED IN SECTION 167, 168 OR 179
OF  THE INTERNAL REVENUE CODE WHICH WAS ACQUIRED BY AN ENTITY DESIGNATED
AS A NEW YORK STATE INCUBATOR  OR  NEW  YORK  STATE  INNOVATION  HOTSPOT
PURSUANT  TO SECTION SIXTEEN-V OF THE URBAN DEVELOPMENT CORPORATION ACT,
OR BY A TAXPAYER WHICH IS CURRENTLY, OR WHICH WAS A TENANT IN OR  CLIENT
OF  SUCH  NEW  YORK  STATE INCUBATOR OR HOTSPOT BUT GRADUATED WITHIN THE
PREVIOUS TWO YEARS, THAT WAS PLACED IN SERVICE  DURING  A  TAXABLE  YEAR
BEGINNING  WITH A TAXABLE YEAR DURING WHICH THE TAXPAYER WAS A TENANT IN
OR CLIENT OF A NEW YORK STATE INCUBATOR OR HOTSPOT OR WITHIN  TWO  YEARS
OF GRADUATION THEREFROM AND ENDING ON THE FIFTH TAXABLE YEAR THEREAFTER,
THE  TAXPAYER  MAY  ELECT TO DEDUCT DEPRECIATION FOR SUCH PROPERTY IN AN
AMOUNT THAT IS EQUAL TO ONE HUNDRED PERCENT OF THE DEPRECIATION  OF  THE
QUALIFIED PROPERTY FOR THE TOTAL OF ITS USEFUL LIFE THAT WOULD OTHERWISE
BE  ALLOWED  PURSUANT  TO  SUCH  SECTION 167, 168 OR 179 OF THE INTERNAL
REVENUE CODE, PROVIDED THAT FOR ANY QUALIFIED PROPERTY  FOR  WHICH  SUCH
TAXPAYER  DOES NOT MAKE SUCH ELECTION, THE TAXPAYER SHALL BE ALLOWED THE
DEPRECIATION DEDUCTION ALLOWED PURSUANT TO SECTION 167, 168  OR  179  OF
THE  INTERNAL REVENUE CODE. A TAXPAYER WHO ELECTS TO DEDUCT DEPRECIATION
IN AN AMOUNT THAT IS EQUAL TO ONE HUNDRED PERCENT OF THE COST OF PROPER-
TY PLACED IN SERVICE DURING THE TAXABLE YEAR MAY  NOT  CLAIM  ANY  OTHER
DEDUCTION  ON  THE  COST OF SUCH PROPERTY. IF PROPERTY ON WHICH DEPRECI-
ATION HAS BEEN TAKEN IS DISPOSED OF PRIOR TO THE END OF ITS USEFUL LIFE,
THE TAXPAYER SHALL IN THE YEAR OF DISPOSITION ADD  BACK  THE  DIFFERENCE
BETWEEN  THE  DEPRECIATION TAKEN AND THE DEPRECIATION ALLOWABLE PURSUANT

S. 6550                             6

TO SECTION 167 OF THE INTERNAL REVENUE CODE FOR EACH YEAR OF THE REMAIN-
ING USEFUL LIFE OF THE PROPERTY.
  S  7. Paragraph (o) of subdivision 9 of section 208 of the tax law, as
added by section 3 of part O3 of chapter 62 of  the  laws  of  2003,  is
amended to read as follows:
  (o) For taxable years beginning after December thirty-first, two thou-
sand  two,  in the case of qualified property described in paragraph two
of subsection k of section 168 of the internal revenue code, other  than
qualified  resurgence  zone  property described in paragraph (q) of this
subdivision, and other than qualified New  York  Liberty  Zone  property
described  in  paragraph  two  of  subsection  b of section 1400L of the
internal revenue code (without regard to clause (i) of subparagraph  (C)
of  such paragraph), which was placed in service on or after June first,
two thousand three, AND OTHER THAN PROPERTY ACQUIRED BY A NEW YORK STATE
INCUBATOR OR NEW YORK STATE INNOVATION HOTSPOT  DESIGNATED  PURSUANT  TO
SECTION  SIXTEEN-V  OF  THE  URBAN  DEVELOPMENT CORPORATION ACT, OR BY A
TAXPAYER WHICH IS CURRENTLY, OR WHICH WAS A  CLIENT  OF  SUCH  NEW  YORK
STATE INCUBATOR OR HOTSPOT DURING A PERIOD OF FIVE TAXABLE YEARS, BEGIN-
NING  WITH THE FIRST TAXABLE YEAR DURING WHICH THE TAXPAYER WAS A TENANT
IN OR CLIENT OF SUCH NEW YORK STATE INCUBATOR OR  WITHIN  TWO  YEARS  OF
GRADUATION  THEREFROM,  a taxpayer shall be allowed with respect to such
property the depreciation deduction allowable under section 167  of  the
internal revenue code as such section would have applied to such proper-
ty had it been acquired by the taxpayer on September tenth, two thousand
one.
  S  8.  Section  16-v  of  section 1 of chapter 174 of the laws of 1968
constituting the urban development corporation act is amended by  adding
two new subdivisions 6-a and 6-b to read as follows:
  6-A.  PROCUREMENT.  A CLIENT OF A NEW YORK STATE INCUBATOR OR NEW YORK
STATE INNOVATION HOTSPOT DESIGNATED PURSUANT TO THIS  SECTION  SHALL  BE
DEEMED  A  SMALL BUSINESS CONCERN PURSUANT TO SUBDIVISION SIX OF SECTION
ONE HUNDRED SIXTY-THREE AND PARAGRAPH N OF SUBDIVISION  TWO  OF  SECTION
ONE  HUNDRED  SIXTY-ONE  OF THE STATE FINANCE LAW. THE CORPORATION SHALL
COLLABORATE WITH THE COMMISSIONER OF THE OFFICE OF GENERAL SERVICES, AND
THE COMMISSIONER OF THE DEPARTMENT OF ECONOMIC  DEVELOPMENT,  WHO  SHALL
USE  HIS OR HER MEMBERSHIP ON THE STATE PROCUREMENT COUNCIL, TO ADVANCE,
TARGET, AND DEVELOP PROCUREMENT PROGRAMS FOR THE  PURCHASE  OF  SERVICES
AND COMMODITIES, INCLUDING TECHNOLOGIES OR COMMODITIES THAT ARE RECYCLED
OR  REMANUFACTURED,  TOWARD  CLIENTS  OF  NEW YORK STATE INCUBATORS. THE
CORPORATION SHALL ADDITIONALLY, THROUGH MEMBERSHIP ON THE STATE PROCURE-
MENT COUNCIL AND COLLABORATION WITH THE CORPORATION OF GENERAL  SERVICES
AND OTHER STATE AGENCIES, DEVELOP OPPORTUNITIES FOR TEAMING ON CONTRACTS
BETWEEN  SMALL  BUSINESS  CONCERNS  WHICH  ARE CLIENTS OF NEW YORK STATE
INCUBATORS OR NEW YORK STATE  INNOVATION  HOTSPOTS  AND  OTHER  BUSINESS
ENTITIES  WHICH  MAY  PROVIDE  RESOURCES  OR  CREDIT  NECESSARY  FOR THE
SUCCESSFUL COMPLETION OF CONTRACT  REQUIREMENTS  FOR  SUCH  COMMODITIES,
SERVICES, OR TECHNOLOGIES BY SUCH SMALL BUSINESS CONCERNS.
  6-B. INCUBATORS AS EDUCATIONAL ENTITIES. REAL PROPERTY OWNED OR LEASED
BY A NEW YORK STATE INCUBATOR OR NEW YORK STATE INNOVATION HOTSPOT WHICH
IS  A  NONPROFIT  ORGANIZATION  HAVING  TAX  EXEMPT STATUS UNDER SECTION
501(C)(3) OF THE INTERNAL REVENUE CODE, OR WHICH IS  A  NEW  YORK  STATE
INCUBATOR  OR NEW YORK STATE INNOVATION HOTSPOT OWNED AND SPONSORED BY A
NONPROFIT ORGANIZATION HAVING SUCH TAX EXEMPT STATUS, OR WHICH IS AFFIL-
IATED WITH A COLLEGE CHARTERED BY THE REGENTS OF THE STATE OF  NEW  YORK
OR  A  COLLEGE INCORPORATED BY SPECIAL ACT OF THE LEGISLATURE, AND WHICH
IS USED FOR THE PURPOSES DESCRIBED IN THIS SECTION OF TRAINING,  EDUCAT-

S. 6550                             7

ING,  MENTORING,  AND DEVELOPING CLIENT ENTREPRENEURS AND BUSINESS ENTI-
TIES, WHICH ARE THE CRITERIA FOR DESIGNATION OF A PROGRAM AS A NEW  YORK
STATE INCUBATOR OR NEW YORK STATE INNOVATION HOTSPOT, SHALL BE DEEMED TO
BE  PROPERTY  OF AN EDUCATIONAL CORPORATION FOR PURPOSES OF SECTION FOUR
HUNDRED TWENTY-A OF THE REAL PROPERTY TAX LAW, INCLUDING ANY CLASSROOMS,
CONFERENCE ROOMS, LABORATORY, MEETING SPACE, ADMINISTRATION AREA, KITCH-
EN AREA, PARKING, STORAGE, OR OTHER AREA  WHICH  IS  USED  PRIMARILY  TO
PROVIDE DIRECT AND INDIRECT SERVICES TO RESIDENT CLIENTS OF SUCH FACILI-
TY,  AND  INCLUDING  SPACE  FOR  RESIDENT  CLIENTS OFFICES PURSUANT TO A
LICENSE OR LEASE BETWEEN SUCH INCUBATOR AND RESIDENT  CLIENTS,  NOTWITH-
STANDING  THAT  SUCH RESIDENT CLIENTS MAY, OR MAY NOT BE, NOT-FOR-PROFIT
ORGANIZATIONS. ANY PORTION OF SUCH REAL  PROPERTY  WHICH  IS  LEASED  OR
LICENSED  TO  AN  INDIVIDUAL  OR BUSINESS ENTITY WHICH IS NOT A RESIDENT
CLIENT OF THE NEW YORK STATE INCUBATOR  OR  NEW  YORK  STATE  INNOVATION
HOTSPOT  OR  THE PROGRAM DESCRIBED IN THIS SUBDIVISION WHICH IS ELIGIBLE
TO RECEIVE OR IS RECEIVING  STABILIZATION  GRANTS,  OR  WHICH  DOES  NOT
OTHERWISE  MEET  THE  REQUIREMENTS  OF  SUBDIVISION  ONE OF SECTION FOUR
HUNDRED TWENTY-A OF THE REAL PROPERTY TAX LAW, SHALL BE SUBJECT  TO  THE
PROVISIONS  OF  SUBDIVISION  TWO OF SECTION FOUR HUNDRED TWENTY-A OF THE
REAL PROPERTY TAX LAW.
  S 9. Subdivision 12-c of section 66 of  the  public  service  law,  as
added  by  chapter  686  of  the laws of 1986, and as further amended by
section 15 of part GG of chapter 63 of the laws of 2000, is  amended  to
read as follows:
  12-c.  Notwithstanding any other provision of law, upon application of
a gas or electric  corporation,  the  commission  shall  authorize  such
corporation  to  charge  a  special empire zone rate equal to the incre-
mental cost of providing service to customers certified as eligible  for
such  rate  pursuant to article eighteen-B of the general municipal law,
OR AN INCUBATOR RATE EQUAL TO THE INCREMENTAL COST OF PROVIDING  SERVICE
TO  CUSTOMERS  TO THOSE ENTITIES DESIGNATED AS NEW YORK STATE INCUBATORS
OR NEW YORK STATE INNOVATION HOTSPOTS PURSUANT TO SECTION  SIXTEEN-V  OF
THE  URBAN DEVELOPMENT CORPORATION ACT, AND TO CLIENTS OF SUCH INCUBATOR
PROGRAMS AND FOR TWO SUCCESSIVE CALENDAR YEARS  AFTER  THEY  SHALL  HAVE
GRADUATED FROM SUCH INCUBATOR PROGRAMS, SUCH CLIENTS TO BE DESIGNATED BY
THE INCUBATORS.
  S 10. This act shall take effect January 1, 2015.

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