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SECTION 208
Definitions
Tax (TAX) CHAPTER 60, ARTICLE 9-A
§ 208. Definitions. As used in this article:

1. The term "corporation" includes (a) an association within the
meaning of paragraph three of subsection (a) of section seventy-seven
hundred one of the internal revenue code (including a limited liability
company), (b) a joint-stock company or association, (c) a publicly
traded partnership treated as a corporation for purposes of the internal
revenue code pursuant to section seventy-seven hundred four thereof and
(d) any business conducted by a trustee or trustees wherein interest or
ownership is evidenced by certificate or other written instrument.
"DISC" and "former DISC" mean any corporation which meets the
requirements of subsection (a) of section nine hundred ninety-two of the
internal revenue code.

1-A. The term "New York S corporation" means, with respect to any
taxable year, a corporation subject to tax under this article for which
an election is in effect pursuant to subsection (a) of section six
hundred sixty of this chapter for such year, any such year shall be
denominated a "New York S year", and such election shall be denominated
a "New York S election". The term "New York C corporation" means, with
respect to any taxable year, a corporation subject to tax under this
article which is not a New York S corporation, and any such year shall
be denominated a "New York C year". The term "termination year" means
any taxable year of a corporation during which the New York S election
terminates on a day other than the first day of such year. The portion
of the taxable year ending before the first day for which such
termination is effective shall be denominated the "S short year", and
the portion of such year beginning on such first day shall be
denominated the "C short year". The term "New York S termination year"
means any termination year which is not also an S termination year for
federal purposes.

1-B. The term "QSSS" means a corporation which is a qualified
subchapter S subsidiary as defined in subparagraph (B) of paragraph
three of subsection (b) of section thirteen hundred sixty-one of the
internal revenue code. The term "exempt QSSS" means a QSSS exempt from
tax under this article as provided in paragraph (k) of subdivision nine
of this section, or a QSSS described in subclause (i) of clause (B) of
subparagraph two of paragraph (k) of subdivision nine of this section,
wherein the parent corporation of the QSSS is subject to tax under this
article, and the assets, liabilities, income and deductions of the QSSS
are treated as the assets, liabilities, income and deductions of the
parent corporation. Where a QSSS is an exempt QSSS, then for all
purposes under this article:

(a) the assets, liabilities, income, deductions, property, payroll,
receipts, capital, credits, and all other tax attributes and elements of
economic activity of the QSSS shall be deemed to be those of the parent
corporation,

(b) the stocks, bonds and other securities issued by, and any
indebtedness from, the QSSS shall not be investment or business capital
of the parent corporation,

(c) transactions between the parent corporation and the QSSS,
including the payment of interest and dividends, shall not be taken into
account, and

(d) general executive officers of the QSSS shall be deemed to be
general executive officers of the parent corporation.

2. The term "taxpayer" means any corporation subject to tax under this
article.

3. The term "subsidiary" means a corporation of which over fifty
percent of the number of shares of stock entitling the holders thereof
to vote for the election of directors or trustees is owned by the
taxpayer.

4. The term "stock" means an interest in a corporation that is treated
as equity for federal income tax purposes.

5. (a) The term "investment capital" means investments in stocks that
(i) satisfy the definition of a capital asset under section 1221 of the
internal revenue code at all times the taxpayer owned such stock during
the taxable year, (ii) are held by the taxpayer for investment for more
than one year, (iii) the dispositions of which are, or would be, treated
by the taxpayer as generating long-term capital gains or losses under
the internal revenue code, (iv) for stocks acquired on or after January
first, two thousand fifteen, at any time after the close of the day in
which they are acquired, have never been held for sale to customers in
the regular course of business, and (v) before the close of the day on
which the stock was acquired, are clearly identified in the taxpayer's
records as stock held for investment in the same manner as required
under section 1236(a)(1) of the internal revenue code for the stock of a
dealer in securities to be eligible for capital gain treatment (whether
or not the taxpayer is a dealer of securities subject to section 1236),
provided, however, that for stock acquired prior to October first, two
thousand fifteen that was not subject to section 1236(a) of the internal
revenue code, such identification in the taxpayer's records must occur
before October first, two thousand fifteen. Stock in a corporation that
is conducting a unitary business with the taxpayer, stock in a
corporation that is included in a combined report with the taxpayer
pursuant to the commonly owned group election in subdivision three of
section two hundred ten-C of this article, and stock issued by the
taxpayer shall not constitute investment capital. For purposes of this
subdivision, if the taxpayer owns or controls, directly or indirectly,
less than twenty percent of the voting power of the stock of a
corporation, that corporation will be presumed to be conducting a
business that is not unitary with the business of the taxpayer.

(b) There shall be deducted from investment capital any liabilities
which are directly or indirectly attributable to investment capital. If
the amount of those liabilities exceeds the amount of investment
capital, the amount of investment capital will be zero.

(c) Investment capital shall not include any such investments the
income from which is excluded from entire net income pursuant to the
provisions of paragraph (c-1) of subdivision nine of this section, and
that investment capital shall be computed without regard to liabilities
directly or indirectly attributable to such investments, but only if air
carriers organized in the United States and operating in the foreign
country or countries in which the taxpayer has its major base of
operations and in which it is organized, resident or headquartered (if
not in the same country as its major base of operations) are not subject
to any tax based on or measured by capital imposed by such foreign
country or countries or any political subdivision thereof, or if taxed,
are provided an exemption, equivalent to that provided for herein, from
any tax based on or measured by capital imposed by such foreign country
or countries and from any such tax imposed by any political subdivision
thereof.

(d) If a taxpayer acquires stock that is a capital asset under section
1221 of the internal revenue code during the taxable year and owns that
stock on the last day of the taxable year, it will be presumed, solely
for purposes of determining whether that stock should be classified as
investment capital after it is acquired, that the taxpayer held that
stock for more than one year. However, if the taxpayer does not in fact
own that stock at the time it actually files its original report for the
taxable year in which it acquired the stock, then the presumption in the
preceding sentence shall not apply and the actual period of time during
which the taxpayer owned the stock shall be used to determine whether
the stock should be classified as investment capital after it is
acquired. If the taxpayer relies on the presumption in the first
sentence of this paragraph but does not own the stock for more than one
year, the taxpayer must increase its total business capital in the
immediately succeeding taxable year by the amount included in investment
capital for that stock, net of any liabilities attributable to that
stock computed as provided in paragraph (b) of this subdivision and must
increase its business income in the immediately succeeding taxable year
by the amount of income and net gains (but not less than zero) from that
stock included in investment income, less any interest deductions
directly or indirectly attributable to that stock, as provided in
subdivision six of this section.

(e) When income or gain from a debt obligation or other security
cannot be apportioned to the state using the apportionment factor
determined under section two hundred ten-A of this article as a result
of United States constitutional principles, the debt obligation or other
security will be included in investment capital.

6. (a) (i) The term "investment income" means income, including
capital gains in excess of capital losses, from investment capital, to
the extent included in computing entire net income, less, in the
discretion of the commissioner, any interest deductions allowable in
computing entire net income which are directly or indirectly
attributable to investment capital or investment income, provided,
however, that in no case shall investment income exceed entire net
income. (ii) If the amount of interest deductions subtracted under
subparagraph (i) of this paragraph exceeds investment income, the excess
of such amount over investment income must be added back to entire net
income. (iii) If the taxpayer's investment income determined without
regard to the interest deductions subtracted under subparagraph (i) of
this paragraph comprises more than eight percent of the taxpayer's
entire net income, investment income determined without regard to such
interest deductions cannot exceed eight percent of the taxpayer's entire
net income.

(b) In lieu of subtracting from investment income the amount of those
interest deductions, the taxpayer may make a revocable election to
reduce its total investment income, determined after applying the
limitation in subparagraph (iii) of paragraph (a) of this subdivision,
by forty percent. If the taxpayer makes this election, the taxpayer must
also make the elections provided for in paragraphs (b) and (c) of
subdivision six-a of this section. If the taxpayer subsequently revokes
this election, the taxpayer must revoke the elections provided for in
paragraphs (b) and (c) of subdivision six-a of this section. A taxpayer
that does not make this election because it has no investment capital
will not be precluded from making those other elections.

(c) Investment income shall not include any amount treated as
dividends pursuant to section seventy-eight of the internal revenue
code.

6-a. (a) The term "other exempt income" means the sum of exempt CFC
income and exempt unitary corporation dividends.

(b) "Exempt CFC income" means (i) except to the extent described in
subparagraph (ii) of this paragraph, the income required to be included
in the taxpayer's federal gross income pursuant to subsection (a) of
section 951 of the internal revenue code, received from a corporation
that is conducting a unitary business with the taxpayer but is not
included in a combined report with the taxpayer, (ii) such income
required to be included in the taxpayer's federal gross income pursuant
to subsection (a) of such section 951 of the internal revenue code by
reason of subsection (a) of section 965 of the internal revenue code, as
adjusted by subsection (b) of section 965 of the internal revenue code,
and without regard to subsection (c) of such section, received from a
corporation that is not included in a combined report with the taxpayer,
and (iii) ninety-five percent of the income required to be included in
the taxpayer's federal gross income pursuant to subsection (a) of
section 951A of the internal revenue code, without regard to the
deduction under section 250 of the internal revenue code, received from
a corporation that is not included in a combined report with the
taxpayer, less, (iv) in the discretion of the commissioner, any interest
deductions directly or indirectly attributable to that income. In lieu
of subtracting from its exempt CFC income the amount of those interest
deductions, the taxpayer may make a revocable election to reduce its
total exempt CFC income by forty percent. If the taxpayer makes this
election, the taxpayer must also make the elections provided for in
paragraph (b) of subdivision six of this section and paragraph (c) of
this subdivision. If the taxpayer subsequently revokes this election,
the taxpayer must revoke the elections provided for in paragraph (b) of
subdivision six of this section and paragraph (c) of this subdivision. A
taxpayer which does not make this election because it has no exempt CFC
income will not be precluded from making those other elections. The
income described in subparagraphs (ii) and (iii) of this paragraph shall
not constitute investment income. The income described in subparagraph
(iii) of this paragraph shall not constitute exempt unitary corporation
dividends.

(c) "Exempt unitary corporation dividends" means those dividends from
a corporation that is conducting a unitary business with the taxpayer
but is not included in a combined report with the taxpayer, less, in the
discretion of the commissioner, any interest deductions directly or
indirectly attributable to such income. Other than dividend income
received from corporations that are taxable under a franchise tax
imposed by article nine or article thirty-three of this chapter or would
be taxable under a franchise tax imposed by article nine or article
thirty-three of this chapter if subject to tax, in lieu of subtracting
from this dividend income those interest deductions, the taxpayer may
make a revocable election to reduce the total amount of this dividend
income by forty percent. If the taxpayer makes this election, the
taxpayer must also make the elections provided for in paragraph (b) of
subdivision six of this section and paragraph (b) of this subdivision.
If the taxpayer subsequently revokes this election, the taxpayer must
also revoke the elections provided for in paragraph (b) of subdivision
six of this section and paragraph (b) of this subdivision. A taxpayer
which does not make this election because it has not received any exempt
unitary corporation dividends or is precluded from making this election
for dividends received from corporations taxable under a franchise tax
imposed by article nine or article thirty-three of this chapter or would
be taxable under a franchise tax imposed by article nine or article
thirty-three of this chapter if subject to tax will not be precluded
from making those other elections.

(d) If the taxpayer attributes interest deductions to other exempt
income and the amount subtracted exceeds other exempt income, the excess
of the interest deductions over other exempt income must be added back
to entire net income. In no case shall other exempt income exceed entire
net income.

(e) Other exempt income shall not include any amount treated as
dividends pursuant to section seventy-eight of the internal revenue
code.

7. (a) The term "business capital" means all assets, other than
investment capital and stock issued by the taxpayer, less liabilities
not deducted from investment capital. Business capital shall include
only those assets the income, loss or expense of which are properly
reflected (or would have been properly reflected if not fully
depreciated or expensed or depreciated or expensed to a nominal amount)
in the computation of entire net income for the taxable year.

(b) Provided, however, "business capital" shall not include assets to
the extent employed for the purpose of generating income which is
excluded from entire net income pursuant to the provisions of paragraph
(c-1) of subdivision nine of this section and shall be computed without
regard to liabilities directly or indirectly attributable to such
assets, but only if air carriers organized in the United States and
operating in the foreign country or countries in which the taxpayer has
its major base of operations and in which it is organized, resident or
headquartered (if not in the same country as its major base of
operations) are not subject to any tax based on or measured by capital
imposed by such foreign country or countries or any political
subdivision thereof, or if taxed, are provided an exemption, equivalent
to that provided for herein, from any tax based on or measured by
capital imposed by such foreign country or countries and from any such
tax imposed by any political subdivision thereof.

8. The term "business income" means entire net income minus investment
income and other exempt income. In no event shall the sum of investment
income and other exempt income exceed entire net income. If the taxpayer
makes the election provided for in subparagraph one of paragraph (a) of
subdivision five of section two hundred ten-A of this article, then all
income from qualified financial instruments shall constitute business
income.

8-A. Provided, however, that with respect to a DISC or a former DISC,
the following provisions shall apply:

(a) investments in the stocks, bonds or other securities of a DISC or
any indebtedness from a DISC shall not be treated as investment capital
under subdivision five of this section,

(b) any amounts deemed distributed from a DISC or a former DISC which
are taxable as dividends pursuant to subsection (b) of section nine
hundred ninety-five of the internal revenue code of nineteen hundred
fifty-four shall be treated as business income, except any such amounts
from a former DISC attributable to amounts includible in a taxpayer's
entire net income for a prior taxable year under subparagraph (B) of
paragraph (i) of subdivision nine of this section shall be excluded from
entire net income,

(c) any gain recognized for federal income tax purposes on the
disposition of stock in a DISC, and any gain recognized on the
disposition of stock in a former DISC, includible in gross income as a
dividend pursuant to subsection (c) of section nine hundred ninety-five
of the internal revenue code of nineteen hundred fifty-four, shall be
treated as business income, and

(d) except as provided in paragraph (i) of subdivision nine of this
section, any actual distribution from a DISC or a former DISC shall be
treated as business income except an actual distribution which for
federal income tax purposes is treated as made out of "other earnings
and profits" under section nine hundred ninety-six of the internal
revenue code of nineteen hundred fifty-four, in which case such actual
distribution shall be treated as investment income under this article.

9. The term "entire net income" means total net income from all
sources, which shall be presumably the same as the entire taxable
income, which, except as hereinafter provided in this subdivision,

(i) the taxpayer is required to report to the United States treasury
department, or

(ii) the taxpayer would have been required to report to the United
States treasury department if it had not made an election under
subchapter s of chapter one of the internal revenue code, or

(iii) the taxpayer, in the case of a corporation which is exempt from
federal income tax (other than the tax on unrelated business taxable
income imposed under section 511 of the internal revenue code) but which
is subject to tax under this article, would have been required to report
to the United States treasury department but for such exemption, or

(iv) in the case of an alien corporation that under any provision of
the internal revenue code is not treated as a "domestic corporation" as
defined in section seven thousand seven hundred one of such code is
effectively connected with the conduct of a trade or business within the
United States as determined under section 882 of the Internal Revenue
Code.

(a) Entire net income shall not include:

(3) bona fide gifts,

(4) income and deductions with respect to amounts received from school
districts and from corporations and associations, organized and operated
exclusively for religious, charitable or educational purposes, no part
of the net earnings of which inures to the benefit of any private
shareholder or individual, for the operation of school buses,

(5) (i) any refund or credit of a tax imposed under this article,
article twenty-three, or former article thirty-two of this chapter, for
which tax no exclusion or deduction was allowed in determining the
taxpayer's entire net income under this article, article twenty-three,
or former article thirty-two of this chapter for any prior year, or (ii)
any refund or credit of a tax imposed under sections one hundred
eighty-three, one hundred eighty-three-a, one hundred eighty-four or one
hundred eighty-four-a of this chapter;

(6) any amount treated as dividends pursuant to section seventy-eight
of the internal revenue code to the extent that such dividends are not
deducted under section two hundred fifty of such code;

(7) that portion of wages and salaries paid or incurred for the
taxable year for which a deduction is not allowed pursuant to the
provisions of section two hundred eighty-C of the internal revenue code.

(9) for taxable years beginning after December thirty-first, nineteen
hundred eighty-one, except with respect to property which is a qualified
mass commuting vehicle described in subparagraph (D) of paragraph eight
of subsection (f) of section one hundred sixty-eight of the internal
revenue code (relating to qualified mass commuting vehicles) and
property of a taxpayer principally engaged in the conduct of aviation
(other than air freight forwarders acting as principal and like indirect
air carriers) which is placed in service before taxable years beginning
in nineteen hundred eighty-nine, any amount which is included in the
taxpayer's federal taxable income solely as a result of an election made
pursuant to the provisions of such paragraph eight as it was in effect
for agreements entered into prior to January first, nineteen hundred
eighty-four;

(10) for taxable years beginning after December thirty-first, nineteen
hundred eighty-one, except with respect to property which is a qualified
mass commuting vehicle described in subparagraph (D) of paragraph eight
of subsection (f) of section one hundred sixty-eight of the internal
revenue code (relating to qualified mass commuting vehicles) and
property of a taxpayer principally engaged in the conduct of aviation
(other than air freight forwarders acting as principal and like indirect
air carriers) which is placed in service before taxable years beginning
in nineteen hundred eighty-nine, any amount which the taxpayer could
have excluded from federal taxable income had it not made the election
provided for in such paragraph eight as it was in effect for agreements
entered into prior to January first, nineteen hundred eighty-four;

(11) the amount deductible pursuant to paragraph (j) of this
subdivision; and

(12) upon the disposition of property to which paragraph (j) of this
subdivision applies, the amount, if any, by which the aggregate of the
amounts described in subparagraph ten of paragraph (b) of this
subdivision attributable to such property exceeds the aggregate of the
amounts described in paragraph (j) of this subdivision attributable to
such property; and

(14) The amount deductible pursuant to paragraph (l) of this
subdivision.

(16) In the case of a taxpayer subject to the modification provided by
subparagraph sixteen of paragraph (b) of this subdivision, the amount
required to be recaptured pursuant to subsection (d) of section 179 of
the internal revenue code with respect to property upon which such
modification was based.

(17) for taxable years beginning after December thirty-first, two
thousand two, the amount deductible pursuant to paragraph (n-1) of this
subdivision.

(18) the amount of income or gain included in federal taxable income
of a taxpayer that is a partner in a qualified entity or is a qualified
entity that is located both within and without a New York state
innovation hot spot, to the extent that the income or gain is
attributable to the operations of a qualified entity at or as part of
the New York state innovation hot spot as provided in section
thirty-eight of this chapter.

(19) the amount computed pursuant to paragraph (r), (s) or (t) of this
subdivision, but only the amount determined pursuant to one of such
paragraphs.

(20) Any amount excepted, for purposes of subsection (a) of section
one hundred eighteen of the internal revenue code, from the term
"contribution to the capital of the taxpayer" by paragraph two of
subsection (b) of section one hundred eighteen of the internal revenue
code.

(21) The amount of any gain added back to determine entire net income
in a previous taxable year pursuant to subparagraph twenty-seven of
paragraph (b) of subdivision nine of this section that is included in
federal gross income for the taxable year.

(22) Grants received pursuant to the COVID-19 pandemic small business
recovery grant program, established in section 16-ff of the New York
state urban development corporation act, to the extent includable in
federal taxable income.

(23) The amount of any federal deduction disallowed pursuant to
section 280E of the internal revenue code related to the production and
distribution of adult-use cannabis products, as defined by article
twenty-C of this chapter, not used as the basis for any other tax
deduction, exemption, or credit and not otherwise required to be added
back by paragraph (b) of this subdivision in computing entire net
income.

(b) Entire net income shall be determined without the exclusion,
deduction or credit of:

(1) in the case of an alien corporation that under any provision of
the internal revenue code is not treated as a "domestic corporation" as
defined in section seven thousand seven hundred one of such code, (i)
any part of any income from dividends or interest on any kind of stock,
securities or indebtedness, but only if such income is treated as
effectively connected with the conduct of a trade or business in the
United States pursuant to section 864 of the internal revenue code, (ii)
any income exempt from federal taxable income under any treaty
obligation of the United States, but only if such income would be
treated as effectively connected in absence of such exemption provided
that such treaty obligation does not preclude the taxation of such
income by a state, or (iii) any income which would be treated as
effectively connected if such income were not excluded from gross income
pursuant to subsection (a) of section 103 of the internal revenue code;

(2) any part of any income from dividends or interest on any kind of
stock, securities or indebtedness,

(3) taxes on or measured by profits or income paid or accrued to the
United States or any of its possessions, territories or commonwealths,
including taxes in lieu of any of the foregoing taxes otherwise
generally imposed by any possession, territory or commonwealth of the
United States,

(3-a) taxes on or measured by profits or income, or which include
profits or income as a measure, paid or accrued to any other state of
the United States, or any political subdivision thereof, or to the
District of Columbia, including taxes expressly in lieu of any of the
foregoing taxes otherwise generally imposed by any other state of the
United States, or any political subdivision thereof, or the District of
Columbia;

(4) taxes imposed under this article and article thirty-two as in
effect on December thirty-first, two thousand fourteen and sections one
hundred eighty-three, one hundred eighty-three-a, one hundred
eighty-four and one hundred eighty-four-a of this chapter,

(4-a)(A) in those instances where a credit for the special additional
mortgage recording tax credit is allowed under subdivision nine of
section two hundred ten-B of this article, the amount allowed as an
exclusion or deduction for the special additional mortgage recording tax
imposed by subdivision one-a of section two hundred fifty-three of this
chapter in determining the entire taxable income which the taxpayer is
required to report to the United States treasury department, and (B)
unless the credit allowed pursuant to subdivision nine of section two
hundred ten-B of this article is reflected in the computation of the
gain or loss so as to result in an increase in such gain or decrease of
such loss, for federal income tax purposes, from the sale or other
disposition of the property with respect to which the special additional
mortgage recording tax imposed pursuant to subdivision one-a of section
two hundred fifty-three of this chapter was paid, the amount of the
special additional mortgage recording tax imposed by subdivision one-a
of section two hundred fifty-three of this chapter which was paid and
which is reflected in the computation of the basis of the property so as
to result in a decrease in such gain or increase in such loss for
federal income tax purposes from the sale or other disposition of the
property with respect to which such tax was paid.

(6) any amount allowed as a deduction for the taxable year under
section 172 of the internal revenue code, including carryovers of
deductions from prior taxable years.

(8) for taxable years beginning after December thirty-first, nineteen
hundred eighty-one, except with respect to property which is a qualified
mass commuting vehicle described in subparagraph (D) of paragraph eight
of subsection (f) of section one hundred sixty-eight of the internal
revenue code (relating to qualified mass commuting vehicles) and
property of a taxpayer principally engaged in the conduct of aviation
(other than air freight forwarders acting as principal and like indirect
air carriers) which is placed in service before taxable years beginning
in nineteen hundred eighty-nine, any amount which the taxpayer claimed
as a deduction in computing its federal taxable income solely as a
result of an election made pursuant to the provisions of such paragraph
eight as it was in effect for agreements entered into prior to January
first, nineteen hundred eighty-four;

(9) for taxable years beginning after December thirty-first, nineteen
hundred eighty-one, except with respect to property which is a qualified
mass commuting vehicle described in subparagraph (D) of paragraph eight
of subsection (f) of section one hundred sixty-eight of the internal
revenue code (relating to qualified mass commuting vehicles) and
property of a taxpayer principally engaged in the conduct of aviation
(other than air freight forwarders acting as principal and like indirect
air carriers) which is placed in service before taxable years beginning
in nineteen hundred eighty-nine, any amount which the taxpayer would
have been required to include in the computation of its federal taxable
income had it not made the election permitted pursuant to such paragraph
eight as it was in effect for agreements entered into prior to January
first, nineteen hundred eighty-four;

(10) in the case of property placed in service in taxable years
beginning before nineteen hundred ninety-four, for taxable years
beginning after December thirty-first, nineteen hundred eighty-one,
except with respect to property subject to the provisions of section two
hundred eighty-F of the internal revenue code, property subject to the
provisions of section one hundred sixty-eight of the internal revenue
code which is placed in service in this state in taxable years beginning
after December thirty-first, nineteen hundred eighty-four and property
of a taxpayer principally engaged in the conduct of aviation (other than
air freight forwarders acting as principal and like indirect air
carriers) which is placed in service before taxable years beginning in
nineteen hundred eighty-nine, the amount allowable as a deduction
determined under section one hundred sixty-eight of the internal revenue
code;

(11) upon the disposition of property to which paragraph (j) of this
subdivision applies, the amount, if any, by which the aggregate of the
amounts described in such paragraph (j) attributable to such property
exceeds the aggregate of the amounts described in subparagraph ten of
this paragraph attributable to such property.

(15) Real property taxes paid on qualified agricultural property and
deducted in determining federal taxable income, to the extent of the
amount of the agricultural property tax credit allowed under subdivision
eleven of section two hundred ten-B of this article.

(16) In the case of a taxpayer which is not an eligible farmer as
defined in paragraph (b) of subdivision eleven of section two hundred
ten-B of this article, the amount of any deduction claimed pursuant to
section 179 of the internal revenue code with respect to a sport utility
vehicle which is not a passenger automobile as defined in paragraph 5 of
subsection (d) of section 280F of the internal revenue code.

(17) for taxable years beginning after December thirty-first, two
thousand 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, the amount allowable as a deduction under
section 167 of the internal revenue code.

(18) Premiums paid for environmental remediation insurance, as defined
in section twenty-three of this chapter, and deducted in determining
federal taxable income, to the extent of the amount of the environmental
remediation insurance credit allowed under such section twenty-three and
subdivision nineteen of section two hundred ten-B of this article.

(19) The amount of any deduction allowed pursuant to section one
hundred ninety-nine of the internal revenue code.

(20) The amount of any federal deduction for taxes imposed under
article twenty-three of this chapter.

(20-a) The amount of any federal deduction for the excise tax on
telecommunication services to the extent such taxes are used as the
basis of the calculation of the tax-free NY area excise tax on
telecommunication services credit allowed under subdivision forty-four
of section two hundred ten-B of this article.

(21) The amount of any federal deduction for real property taxes to
the extent such taxes are used as the basis of the calculation of the
real property tax credit for manufacturers allowed under subdivision
forty-three of section two hundred ten-B of this article.

(22) the amount of any deduction for charitable contributions allowed
under section one hundred seventy of the internal revenue code to the
extent such contributions are used as the basis of the calculation of
the farm donations to food pantries credit under subdivision fifty-two
of section two hundred ten-B of this article.

(23) The amount of any federal deduction allowed pursuant to
subsection (c) of section 965 of the internal revenue code.

(24) The amount of any federal deduction allowed pursuant to section
250(a)(1)(A) of the internal revenue code.

(25) The amount of any federal deduction allowed pursuant to section
250(a)(1)(B)(i) of the internal revenue code.

(26) For taxable years beginning in two thousand nineteen and two
thousand twenty, the amount of the increase in the federal interest
deduction allowed pursuant to section 163(j)(10)(A)(i) of the internal
revenue code.

(27) The amount of any gain excluded from federal gross income for the
taxable year by subparagraph (A) of paragraph (1) of subsection (a) of
section 1400Z-2 of the internal revenue code.

(c-1)(1) Notwithstanding any other provision of this article, in the
case of a taxpayer which is a foreign air carrier holding a foreign air
carrier permit issued by the United States department of transportation
pursuant to section four hundred two of the federal aviation act of
nineteen hundred fifty-eight, as amended, and which is qualified under
subparagraph two of this paragraph, entire net income shall not include,
and shall be computed without the deduction of, amounts directly or
indirectly attributable to, (i) any income derived from the
international operation of aircraft as described in and subject to the
provisions of section eight hundred eighty-three of the internal revenue
code, (ii) income without the United States which is derived from the
operation of aircraft, and (iii) income without the United States which
is of a type described in subdivision (a) of section eight hundred
eighty-one of the internal revenue code except that it is derived from
sources without the United States. Entire net income shall include
income described in clauses (i), (ii) and (iii) of this subparagraph in
the case of taxpayers not described in the previous sentence.

(2) A taxpayer is qualified under this subparagraph if air carriers
organized in the United States and operating in the foreign country or
countries in which the taxpayer has its major base of operations and in
which it is organized, resident or headquartered (if not in the same
country as its major base of operations) are not subject to any income
tax or other tax based on or measured by income or receipts imposed by
such foreign country or countries or any political subdivision thereof,
or if so subject to such tax, are provided an exemption from such tax
equivalent to that provided for herein.

(c-2) Adjustments by qualified public utilities. (1) In the case of a
taxpayer which is a qualified public utility, entire net income shall be
computed with the adjustments set forth in this paragraph.

(2) Definitions. (A) Qualified public utility. The term "qualified
public utility" means a taxpayer which: (i) on December thirty-first,
nineteen hundred ninety-nine, was subject to the ratemaking supervision
of the state department of public service, and (ii) for the year ending
on December thirty-first, nineteen hundred ninety-nine, was subject to
tax under former section one hundred eighty-six of this chapter.

(B) Transition property. The term "transition property" means property
placed in service by the taxpayer before January first, two thousand,
for which a depreciation deduction is allowed under section one hundred
sixty-seven of the internal revenue code.

(3) Federal depreciation disallowed. With respect to transition
property, the deduction for federal income tax purposes for depreciation
shall not be allowed.

(4) New York depreciation. With respect to transition property, a
deduction shall be allowed for the depreciation expense shown on the
books and records of the taxpayer for the taxable year and determined in
accordance with generally accepted accounting principles.

(5) Regulatory assets. A deduction shall be allowed for amounts
recognized as expense on the books and records of the taxpayer for the
taxable year, which amounts were recognized as expense for federal
income tax purposes in a taxable year ending on or before December
thirty-first, nineteen hundred ninety-nine, where: (A) such amounts
represent expenditures which, when made, were charged to a deferred
debit account or similar asset account on the books and records of the
taxpayer, and where (B) the recognition of expense on the books and
records of the taxpayer is matched by revenue stemming from a procedure
or adjustment allowing the recovery of such expenditures, and where (C)
such revenue is recognized for federal income tax purposes in the
taxable year.

(6) Basis for gain or loss. (A) Recognition transactions. (i) General
rule - book basis. Except as provided in subclause (ii) of this clause,
where transition property is sold or otherwise disposed of in the
taxable year in a transaction of the type requiring recognition of gain
or loss for federal income tax purposes, the basis for determining the
amount of such gain or loss under this article shall be the cost of the
property less the accumulated depreciation on the property determined on
the books and records of the taxpayer in accordance with generally
accepted accounting principles.

(ii) Qualified gain - New York basis. Where a sale or disposition
described in subclause (i) of this clause results in recognition of gain
for federal income tax purposes, and where either (I) such recognition
occurs in a taxable year ending after nineteen hundred ninety-nine and
before two thousand ten, or (II) such recognition is with respect to a
nuclear electric generating facility, the basis for determining the
amount of such gain under this article shall be the cost of the property
less the aggregate of the New York depreciation deductions on the
property determined under subparagraph four of this paragraph.

(iii) No conversion of gain to loss. In the event that the basis
determined under subclause (ii) of this clause results in determination
of a loss on the sale or disposition of the property, no gain or loss
shall be recognized under this article with respect to such sale or
disposition.

(B) Nonrecognition transactions. (i) Carryover basis. (I) where
transition property is disposed of ("original disposition") in a
transaction of a type requiring deferral of recognition of gain or loss
for federal income tax purposes, and where (II) there is a subsequent
recognition of gain or loss for federal income tax purposes ("clause B
gain or loss"), the amount of which is determined by reference, in whole
or in part, to the basis of such transition property ("underlying
transition property"), then (III) the amount of such clause B gain or
loss under this article shall be adjusted as provided in subclause (ii)
or (iii) of this clause.

(ii) General rule - book basis adjustment. Except as provided in
subclause (iii) of this clause, the amount of clause B gain shall be
reduced, or the amount of clause B loss increased, by the amount by
which the book basis of the underlying transition property on the date
of original disposition (determined using the provisions of subclause
(i) of clause (A) of this subparagraph) exceeds the federal income tax
basis of such property on such date.

(iii) Qualified gain - New York basis adjustment. Where clause B gain
either (I) occurs in a taxable year ending after nineteen hundred
ninety-nine and before two thousand ten, or (II) is with respect to a
nuclear electric generating facility, the amount of such gain under this
article shall be reduced, but not below zero, by the amount by which the
New York basis of the underlying transition property on the date of
original disposition (determined using the provisions of subclause (ii)
of clause (A) of this subparagraph) exceeds the federal income tax basis
of such property on such date.

(iv) Application to replacement property and transferee taxpayers.
This clause shall apply whether the clause B gain or loss: (I) is with
respect to either transition property or depreciable property the basis
of which is determined by reference to transition property, or (II) is
recognized by either a qualified public utility or by a taxpayer which
is a transferee of transition property (whether or not such transferee
is a qualified public utility, notwithstanding subparagraph one of this
paragraph).

(c-3) Depreciation adjustments by qualified power producers and
pipeline companies. (1) In the case of a qualified taxpayer, entire net
income shall be computed with the depreciation adjustments set forth in
this paragraph.

(2) Definitions. (A) Qualified taxpayer. The term "qualified taxpayer"
means a qualified power producer or a qualified pipeline.

(B) Qualified power producer. The term "qualified power producer"
means a taxpayer which: (i) on December thirty-first, nineteen hundred
ninety-nine, was not subject to the ratemaking supervision of the state
department of public service, and (ii) for the year ending on December
thirty-first, nineteen hundred ninety-nine, was subject to tax under
former section one hundred eighty-six of this chapter on account of its
being principally engaged in the business of supplying electricity.

(C) Qualified pipeline. The term "qualified pipeline" means a taxpayer
which: (i) on December thirty-first, nineteen hundred ninety-nine, was
subject to the ratemaking supervision of either the federal energy
regulatory commission or the state department of public service, and
(ii) for the year ending on December thirty-first, nineteen hundred
ninety-nine, was subject to tax under sections one hundred eighty-three
and one hundred eighty-four of this chapter on account of its being
principally engaged in the business of pipeline transmission.

(D) Transition property. The term "transition property" means property
placed in service by a qualified taxpayer before January first, two
thousand, for which a depreciation deduction is allowed under section
one hundred sixty-seven of the internal revenue code.

(3) Federal depreciation disallowed. With respect to transition
property, the deduction for federal income tax purposes for depreciation
shall not be allowed.

(4) New York depreciation. With respect to transition property, a
deduction shall be allowed for the depreciation expense computed as
provided in this subparagraph. (A) All transition property shown on the
books and records of the taxpayer on January first, two thousand shall
be treated as a single asset placed in service on such date. The New
York basis for purposes of computing the depreciation deduction on such
single asset shall be the net book value of such transition property
determined on the first day of the federal taxable year ending in two
thousand (or on the date any such property is placed in service, if
later) adjusted as provided in clause (B) of this subparagraph.

(B) If transition property is sold or otherwise disposed of, the New
York basis of the single asset shall be reduced on the date of such sale
or disposition by the amount of the adjusted federal tax basis of such
property on such date.

(C) The New York depreciation deduction allowed for any taxable year
with respect to such single asset shall be computed using the
straight-line method, a twenty-year life, and a salvage value of zero.

(D) For purposes of this subparagraph, the term "net book value" means
cost reduced by accumulated depreciation shown on the books and records
of the taxpayer and determined, in the case of a qualified power
producer, in accordance with generally accepted accounting principles;
and in the case of a qualified pipeline, in accordance with the
taxpayer's regulatory reports filed with the federal energy regulatory
commission or state department of public service.

(d) The commissioner may, whenever necessary in order properly to
reflect the entire net income of any taxpayer, determine the year or
period in which any item of income or deduction shall be included,
without regard to the method of accounting employed by the taxpayer.

(e) The entire net income of any bridge commission created by act of
congress to construct a bridge across an international boundary means
its gross income less the expense of maintaining and operating its
properties, the annual interest upon its bonds and other obligations,
and the annual charge for the retirement of such bonds or obligations at
maturity.

(h) If the period covered by a report under this article is other than
the period covered by the report to the United States treasury
department,

(1) except as provided in subparagraph two hereof, entire net income
shall be determined by multiplying the taxable income reported to such
department (as adjusted pursuant to the provisions of this article) by
the number of calendar months or major parts thereof covered by the
report under this article and dividing by the number of calendar months
or major parts thereof covered by the report to such department. If it
shall appear that such method of determining entire net income does not
properly reflect the taxpayer's income during the period covered by the
report under this article, the commissioner shall be authorized in its
discretion to determine such entire net income solely on the basis of
the taxpayer's income during the period covered by its report under this
article.

(2) In the case of a New York S termination year, an equal portion of
entire net income shall be assigned to each day of such year. The
portion of such entire net income thereby assigned to the S short year
and the C short year shall be included in the respective reports for the
S short year and the C short year under this article. However, where
paragraph three of subsection (s) of section six hundred twelve of this
chapter applies, the portion of such entire net income assigned to the S
short year and the C short year shall be determined under normal tax
accounting rules.

(i) With respect to a DISC which during any taxable year or reporting
year (1) received more than five percent of its gross sales from the
sale of inventory or other property which it purchased from its
stockholders, (2) received more than five percent of its gross rentals
from the rental of property which it purchased or rented from its
stockholders or (3) received more than five percent of its total
receipts other than sales and rentals from its stockholders, the
following provisions shall apply.

(A) For any taxable year in which sub-paragraph (B) of this paragraph
is in effect and not rendered invalid, a DISC meeting the above test
shall be exempt from all taxes imposed by this article.

(B) Supplemental to the provisions of subdivision five of section two
hundred eleven of this article, any taxpayer required to compute a tax
under this article, which during the taxable year being reported was a
stockholder in any DISC meeting the test prescribed in this paragraph,
shall for any taxable year ending after December thirty-first, nineteen
hundred seventy-one adjust each item of its receipts, expenses, assets
and liabilities, as otherwise computed under this article, by adding
thereto its attributable share of each such DISC's receipts, expenses,
assets and liabilities as reportable by each such DISC to the United
States Treasury Department for its annual reporting period ending during
the current taxable year of such taxpayer; provided, however, (1) that
all transactions between the taxpayer and each such DISC shall be
eliminated from the taxpayer's adjusted receipts, expenses, assets and
liabilities; (2) that the taxpayer's entire net income as otherwise
computed under this section, shall be reduced by subtracting the amount
of the deemed distribution of current income, if any, from each such
DISC already included in the entire net income of such taxpayer by
virtue of having been included in its entire taxable income for that
taxable year as reported to the United States Treasury Department; and
(3) that in the event this paragraph should be rendered invalid, all
DISC's and their stockholders taxable hereunder shall be taxed instead
under the remaining portions of this article.

(j) in the case of property placed in service in taxable years
beginning before nineteen hundred ninety-four, for taxable years
beginning after December thirty-first, nineteen hundred eighty-one,
except with respect to property subject to the provisions of section two
hundred eighty-F of the internal revenue code and property subject to
the provisions of section one hundred sixty-eight of the internal
revenue code which is placed in service in this state in taxable years
beginning after December thirty-first, nineteen hundred eighty-four, and
provided a deduction has not been excluded from entire net income
pursuant to subparagraph eight of paragraph (b) of this subdivision, a
taxpayer shall be allowed with respect to property which is subject to
the provisions of section one hundred sixty-eight of the internal
revenue code the depreciation deduction allowable under section one
hundred sixty-seven of the internal revenue code as such section would
have applied to property placed in service on December thirty-first,
nineteen hundred eighty. This paragraph shall not apply to property of a
taxpayer principally engaged in the conduct of aviation (other than air
freight forwarders acting as principal and like indirect air carriers)
which is placed in service before taxable years beginning in nineteen
hundred eighty-nine.

(k) QSSS. (1) New York S corporation. In the case of a New York S
corporation which is the parent of a qualified subchapter S subsidiary
(QSSS) with respect to a taxable year:

(A) where the QSSS is not an excluded corporation,

(i) in determining the entire net income of such parent corporation,
all assets, liabilities, income and deductions of the QSSS shall be
treated as assets, liabilities, income and deductions of the parent
corporation, and

(ii) the QSSS shall be exempt from all taxes imposed by this article,
and

(B) where the QSSS is an excluded corporation, the entire net income
of the parent corporation shall be determined as if the federal QSSS
election had not been made.

(2) New York C corporation. In the case of a New York C corporation
which is the parent of a QSSS with respect to a taxable year:

(A) where the QSSS is a taxpayer,

(i) in determining the entire net income of such parent corporation,
all assets, liabilities, income and deductions of the QSSS shall be
treated as assets, liabilities, income and deductions of the parent
corporation, and

(ii) the QSSS shall be exempt from all taxes imposed by this article,
and

(B) where the QSSS is not a taxpayer,

(i) if the QSSS is not an excluded corporation, the parent corporation
may make a QSSS inclusion election to include all assets, liabilities,
income and deductions of the QSSS as assets, liabilities, income and
deductions of the parent corporation, and

(ii) in the absence of such election, or where the QSSS is an excluded
corporation, the entire net income of the parent corporation shall be
determined as if the federal QSSS election had not been made.

(3) Non-New York S corporation not excluded. In the case of an S
corporation which is not a taxpayer and not an excluded corporation, and
which is the parent of a QSSS which is a taxpayer, the shareholders of
the parent corporation shall be entitled to make the New York S election
under subsection (a) of section six hundred sixty of this chapter.

(A) For any taxable year for which such election is in effect, the
parent corporation shall be subject to tax under this article as a New
York S corporation, and the provisions of clause (A) of subparagraph one
of this paragraph shall apply.

(B) For any taxable year for which such election is not in effect, the
QSSS shall be a New York C corporation, and the entire net income of the
QSSS shall be determined as if the federal QSSS election had not been
made. For purposes of such determination, the taxable year of the parent
corporation shall constitute the taxable year of the QSSS, excluding,
however, any portion of such year during which the QSSS is not a
taxpayer.

(4) S corporation excluded. In the case of an S corporation which is
an excluded corporation and which is the parent of a QSSS which is a
taxpayer, the QSSS shall be a New York C corporation and the provisions
of clause (B) of subparagraph three of this paragraph shall apply.

(5) Excluded corporation. The term "excluded corporation" means a
corporation subject to tax under sections one hundred eighty-three
through one hundred eighty-six, inclusive, or article thirty-three of
this chapter, or a foreign corporation not taxable by this state which,
if it were taxable, would be subject to tax under any of such sections
or article.

(6) Taxpayer. For purposes of this paragraph, the term "taxpayer"
means a parent corporation or QSSS subject to tax under this article,
determined without regard to the provisions of this paragraph.

(7) QSSS inclusion election. The election under subclause (i) of
clause (B) of subparagraph two of this paragraph shall be effective for
the taxable year for which made and for all succeeding taxable years of
the corporation until such election is terminated. An election or
termination shall be made on such form and in such manner as the
commissioner may prescribe by regulation or instruction.

(l) Emerging technology investment deferral. In the case of any sale
of a qualified emerging technologies investment held for more than
thirty-six months and with respect to which the taxpayer elects the
application of this paragraph, gain from such sale shall be recognized
only to the extent that the amount realized on such sale exceeds the
cost of any qualified emerging technologies investment purchased by the
taxpayer during the three hundred sixty-five-day period beginning on the
date of such sale, reduced by any portion of such cost previously taken
into account under this paragraph. For purposes of this paragraph the
following shall apply:

(1) A qualified investment is stock of a corporation or an interest,
other than as a creditor, in a partnership or limited liability company
that was acquired by the taxpayer as provided in Internal Revenue Code §
1202(c)(1)(B), except that the reference to the term "stock" in such
section shall be read as "investment," or by the taxpayer from a person
who had acquired such stock or interest in such a manner.

(2) A qualified emerging technology investment is a qualified
investment, that was held by the taxpayer for at least thirty-six
months, in a company defined in paragraph (c) of subdivision one of
section thirty-one hundred two-e of the public authorities law or an
investment in a partnership or limited liability company that is taxed
as a partnership to the extent that such partnership or limited
liability company invests in qualified emerging technology companies.

(3) For purposes of determining whether the nonrecognition of gain
under this subsection applies to a qualified emerging technologies
investment that is sold, the taxpayer's holding period for such
investment and the qualified emerging technologies investment that is
purchased shall be determined without regard to Internal Revenue Code §
1223.

(m) Amounts deferred. The amount deferred under paragraph (l) of this
subdivision shall be added to entire net income when the reinvestment in
the New York qualified emerging technology company which qualified a
taxpayer for such deferral is sold.

(n-1) For taxable years beginning after December thirty-first, two
thousand 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, 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
property had it been acquired by the taxpayer on September tenth, two
thousand one.

(o) Related members expense add back. (1) Definitions. (A) Related
member. "Related member" means a related person as defined in
subparagraph (c) of paragraph three of subsection (b) of section four
hundred sixty-five of the internal revenue code, except that "fifty
percent" shall be substituted for "ten percent".

(B) Effective rate of tax. "Effective rate of tax" means, as to any
state or U.S. possession, the maximum statutory rate of tax imposed by
the state or possession on or measured by a related member's net income
multiplied by the apportionment percentage, if any, applicable to the
related member under the laws of said jurisdiction. For purposes of this
definition, the effective rate of tax as to any state or U.S. possession
is zero where the related member's net income tax liability in said
jurisdiction is reported on a combined or consolidated return including
both the taxpayer and the related member where the reported transactions
between the taxpayer and the related member are eliminated or offset.
Also, for purposes of this definition, when computing the effective rate
of tax for a jurisdiction in which a related member's net income is
eliminated or offset by a credit or similar adjustment that is dependent
upon the related member either maintaining or managing intangible
property or collecting interest income in that jurisdiction, the maximum
statutory rate of tax imposed by said jurisdiction shall be decreased to
reflect the statutory rate of tax that applies to the related member as
effectively reduced by such credit or similar adjustment.

(C) Royalty payments. Royalty payments are payments directly connected
to the acquisition, use, maintenance or management, ownership, sale,
exchange, or any other disposition of licenses, trademarks, copyrights,
trade names, trade dress, service marks, mask works, trade secrets,
patents and any other similar types of intangible assets as determined
by the commissioner, and include amounts allowable as interest
deductions under section one hundred sixty-three of the internal revenue
code to the extent such amounts are directly or indirectly for, related
to or in connection with the acquisition, use, maintenance or
management, ownership, sale, exchange or disposition of such intangible
assets.

(D) Valid Business Purpose. A valid business purpose is one or more
business purposes, other than the avoidance or reduction of taxation,
which alone or in combination constitute the primary motivation for some
business activity or transaction, which activity or transaction changes
in a meaningful way, apart from tax effects, the economic position of
the taxpayer. The economic position of the taxpayer includes an increase
in the market share of the taxpayer, or the entry by the taxpayer into
new business markets.

(2) Royalty expense add backs. (A) Except where a taxpayer is included
in a combined report with a related member pursuant to section two
hundred ten-C of this article, for the purpose of computing entire net
income or other applicable taxable basis, a taxpayer must add back
royalty payments directly or indirectly paid, accrued, or incurred in
connection with one or more direct or indirect transactions with one or
more related members during the taxable year to the extent deductible in
calculating federal taxable income.

(B) Exceptions. (i) The adjustment required in this paragraph shall
not apply to the portion of the royalty payment that the taxpayer
establishes, by clear and convincing evidence of the type and in the
form specified by the commissioner, meets all of the following
requirements: (I) the related member was subject to tax in this state or
another state or possession of the United States or a foreign nation or
some combination thereof on a tax base that included the royalty payment
paid, accrued or incurred by the taxpayer; (II) the related member
during the same taxable year directly or indirectly paid, accrued or
incurred such portion to a person that is not a related member; and
(III) the transaction giving rise to the royalty payment between the
taxpayer and the related member was undertaken for a valid business
purpose.

(ii) The adjustment required in this paragraph shall not apply if the
taxpayer establishes, by clear and convincing evidence of the type and
in the form specified by the commissioner, that: (I) the related member
was subject to tax on or measured by its net income in this state or
another state or possession of the United States or some combination
thereof; (II) the tax base for said tax included the royalty payment
paid, accrued or incurred by the taxpayer; and (III) the aggregate
effective rate of tax applied to the related member in those
jurisdictions is no less than eighty percent of the statutory rate of
tax that applied to the taxpayer under section two hundred ten of this
article for the taxable year.

(iii) The adjustment required in this paragraph shall not apply if the
taxpayer establishes, by clear and convincing evidence of the type and
in the form specified by the commissioner, that: (I) the royalty payment
was paid, accrued or incurred to a related member organized under the
laws of a country other than the United States; (II) the related
member's income from the transaction was subject to a comprehensive
income tax treaty between such country and the United States; (III) the
related member was subject to tax in a foreign nation on a tax base that
included the royalty payment paid, accrued or incurred by the taxpayer;
(IV) the related member's income from the transaction was taxed in such
country at an effective rate of tax at least equal to that imposed by
this state; and (V) the royalty payment was paid, accrued or incurred
pursuant to a transaction that was undertaken for a valid business
purpose and using terms that reflect an arm's length relationship.

(iv) The adjustment required in this paragraph shall not apply if the
taxpayer and the commissioner agree in writing to the application or use
of alternative adjustments or computations. The commissioner may, in his
or her discretion, agree to the application or use of alternative
adjustments or computations when he or she concludes that in the absence
of such agreement the income of the taxpayer would not be properly
reflected.

(p) For taxable years beginning after December thirty-first, two
thousand two, upon the disposition of property to which paragraph (n-1)
of this subdivision applies, the amount of any gain or loss includible
in entire net income shall be adjusted to reflect the inclusions and
exclusions from entire net income pursuant to subparagraph seventeen of
paragraph (a) and subparagraph seventeen of paragraph (b) of this
subdivision attributable to such property.

(q) For purposes of paragraphs (n-1) and (p) of this subdivision,
qualified resurgence zone property shall mean qualified property
described in paragraph two of subsection k of section 168 of the
internal revenue code substantially all of the use of which is in the
resurgence zone, as defined below, and is in the active conduct of a
trade or business by the taxpayer in such zone, and the original use of
which in the resurgence zone commences with the taxpayer after December
thirty-first, two thousand two. The resurgence zone shall mean the area
of New York county bounded on the south by a line running from the
intersection of the Hudson River with the Holland Tunnel, and running
thence east to Canal Street, then running along the centerline of Canal
Street to the intersection of the Bowery and Canal Street, running
thence in a southeasterly direction diagonally across Manhattan Bridge
Plaza, to the Manhattan Bridge and thence along the centerline of the
Manhattan Bridge to the point where the centerline of the Manhattan
Bridge would intersect with the easterly bank of the East River, and
bounded on the north by a line running from the intersection of the
Hudson River with the Holland Tunnel and running thence north along West
Avenue to the intersection of Clarkson Street then running east along
the centerline of Clarkson Street to the intersection of Washington
Avenue, then running south along the centerline of Washington Avenue to
the intersection of West Houston Street, then east along the centerline
of West Houston Street, then at the intersection of the Avenue of the
Americas continuing east along the centerline of East Houston Street to
the easterly bank of the East River.

(r) Subtraction modification for qualified residential loan
portfolios. (1)(A) A taxpayer that is either a thrift institution as
defined in subparagraph three of this paragraph or a qualified community
bank as defined in subparagraph two of paragraph (s) of this subdivision
and maintains a qualified residential loan portfolio as defined in
subparagraph two of this paragraph shall be allowed as a deduction in
computing entire net income the amount, if any, by which (i) thirty-two
percent of its entire net income determined without regard to this
paragraph exceeds (ii) the amounts deducted by the taxpayer pursuant to
sections 166 and 585 of the Internal Revenue Code less any amounts
included in federal taxable income as a result of a recovery of a loan.

(B)(i) If the taxpayer is in a combined report under section two
hundred ten-C of this article, this deduction will be computed on a
combined basis. In that instance, the entire net income of the combined
reporting group for purposes of this paragraph shall be multiplied by a
fraction, the numerator of which is the average total assets of all the
thrift institutions and qualified community banks included in the
combined report and the denominator of which is the average total assets
of all the corporations included in the combined report.

(ii) Measurement of assets. For purposes of this paragraph: (I) Total
assets are those assets that are properly reflected on a balance sheet,
computed in the same manner as is required by the banking regulator of
the taxpayers included in the combined return. In addition, total assets
includes leased real property that is not properly reflected on a
balance sheet.

(II) Assets will only be included if the income or expenses of which
are properly reflected (or would have been properly reflected if not
fully depreciated or expensed, or depreciated or expensed to a nominal
amount) in the computation of the combined group's entire net income for
the taxable year. Assets will not include deferred tax assets and
intangible assets identified as "goodwill".

(III) Tangible real and personal property, such as buildings, land,
machinery, and equipment shall be valued at cost. Leased real property
that is not properly reflected on a balance sheet will be valued at the
annual lease payment multiplied by eight. Intangible property, such as
loans and investments, shall be valued at book value exclusive of
reserves.

(IV) Intercorporate stockholdings and bills, notes and accounts
receivable, and other intercorporate indebtedness between the
corporations included in the combined report shall be eliminated.

(V) Average assets are computed using the assets measured on the first
day of the taxable year, and on the last day of each subsequent quarter
of the taxable year or month or day during the taxable year.

(2) Qualified residential loan portfolio. (A) A taxpayer maintains a
qualified residential loan portfolio if at least sixty percent of the
amount of the total assets at the close of the taxable year of the
thrift institution or qualified community bank consists of the assets
described in items (i) through (xii) of this clause, with the
application of the rule in item (xiii). If the taxpayer is a member of a
combined group, the determination of whether there is a qualified
residential loan portfolio will be made by aggregating the assets of the
thrift institutions and qualified community banks that are members of
the combined group.

Assets:

(i) cash, which includes cash and cash equivalents including cash
items in the process of collection, deposit with other financial
institutions, including corporate credit unions, balances with federal
reserve banks and federal home loan banks, federal funds sold, and cash
and cash equivalents on hand. Cash shall not include any balances
serving as collateral for securities lending transactions;

(ii) obligations of the United States or of a state or political
subdivision thereof, and stock or obligations of a corporation which is
an instrumentality or a government sponsored enterprise of the United
States or of a state or political subdivision thereof;

(iii) loans secured by a deposit or share of a member;

(iv) loans secured by an interest in real property which is (or from
the proceeds of the loan, will become) residential real property or real
property used primarily for church purposes, loans made for the
improvement of residential real property or real property used primarily
for church purposes, provided that for purposes of this item,
residential real property shall include single or multi-family
dwellings, facilities in residential developments dedicated to public
use or property used on a nonprofit basis for residents, and mobile
homes not used on a transient basis;

(v) property acquired through the liquidation of defaulted loans
described in item (iv) of this clause;

(vi) any regular or residual interest in a REMIC, as such term is
defined in section 860D of the internal revenue code, but only in the
proportion which the assets of such REMIC consist of property described
in any of the preceding items of this clause, except that if ninety-five
percent or more of the assets of such REMIC are assets described in
items (i) through (v) of this clause, the entire interest in the REMIC
shall qualify;

(vii) any mortgage-backed security which represents ownership of a
fractional undivided interest in a trust, the assets of which consist
primarily of mortgage loans, provided that the real property which
serves as security for the loans is (or from the proceeds of the loan,
will become) the type of property described in item (iv) of this clause
and any collateralized mortgage obligation, the security for which
consists primarily of mortgage loans that maintain as security the type
of property described in item (iv) of this clause;

(viii) certificates of deposit in, or obligations of, a corporation
organized under a state law which specifically authorizes such
corporation to insure the deposits or share accounts of member
associations;

(ix) loans secured by an interest in educational, health, or welfare
institutions or facilities, including structures designed or used
primarily for residential purposes for students, residents, and persons
under care, employees, or members of the staff of such institutions or
facilities;

(x) loans made for the payment of expenses of college or university
education or vocational training;

(xi) property used by the taxpayer in support of business which
consists principally of acquiring the savings of the public and
investing in loans; and

(xii) loans for which the taxpayer is the creditor and which are
wholly secured by loans described in item (iv) of this clause.

(xiii) The value of accrued interest receivable and any loss-sharing
commitment or other loan guaranty by a governmental agency will be
considered part of the basis in the loans to which the accrued interest
or loss protection applies.

(B) At the election of the taxpayer, the percentage specified in
clause (A) of this subparagraph shall be applied on the basis of the
average assets outstanding during the taxable year, in lieu of the close
of the taxable year. The taxpayer can elect to compute an average using
the assets measured on the first day of the taxable year and on the last
day of each subsequent quarter, or month or day during the taxable year.
This election may be made annually.

(C) For purposes of item (iv) of clause (A) of this subparagraph, if a
multifamily structure securing a loan is used in part for nonresidential
use purposes, the entire loan is deemed a residential real property loan
if the planned residential use exceeds eighty percent of the property's
planned use (measured, at the taxpayer's election, by using square
footage or gross rental revenue, and determined as of the time the loan
is made).

(D) For purposes of item (iv) of clause (A) of this subparagraph,
loans made to finance the acquisition or development of land shall be
deemed to be loans secured by an interest in residential real property
if there is a reasonable assurance that the property will become
residential real property within a period of three years from the date
of acquisition of such land; but this sentence shall not apply for any
taxable year unless, within such three year period, such land becomes
residential real property. For purposes of determining whether any
interest in a REMIC qualifies under item (vi) of clause (A) of this
subparagraph, any regular interest in another REMIC held by such REMIC
shall be treated as a loan described in a preceding item under
principles similar to the principle of such item (vi), except that is
such REMICs are part of a tiered structure, they shall be treated as one
REMIC for purposes of such item (vi).

(3) For purposes of this paragraph, a "thrift institution" is a
savings bank, a savings and loan association, or other savings
institution chartered and supervised as such under federal or state law.

(s) Subtraction modification for community banks and small thrifts.
(1) A taxpayer that is a qualified community bank as defined in
subparagraph two of this paragraph or a small thrift institution as
defined in subparagraph two-a of this paragraph shall be allowed a
deduction in computing entire net income equal to the amount computed
under subparagraph three of this paragraph.

(2) To be a qualified community bank, a taxpayer must satisfy the
following conditions.

(A) It is a bank or trust company organized under or subject to the
provisions of article three of the banking law or a comparable provision
of the laws of another state, or a national banking association.

(B) The average value during the taxable year of the assets of the
taxpayer, or, if the taxpayer is included in a combined report, the
assets of the combined reporting group of the taxpayer under section two
hundred ten-C of this article, must not exceed eight billion dollars.

(2-a) To be a small thrift institution, a taxpayer must satisfy the
following conditions.

(A) It is a savings bank, a savings and loan association, or other
savings institution chartered and supervised as such under federal or
state law.

(B) The average value during the taxable year of the assets of the
taxpayer, or, if the taxpayer is included in a combined report, the
assets of the combined reporting group of the taxpayer under section two
hundred ten-C of this article, must not exceed eight billion dollars.

(3)(A) The subtraction modification shall be computed as follows:

(i) Multiply the taxpayer's net interest income from loans during the
taxable year by a fraction, the numerator of which is the gross interest
income during the taxable year from qualifying loans and the denominator
of which is the gross interest income during the taxable year from all
loans.

(ii) Multiply the amount determined in clause (i) by fifty percent.
This product is the amount of the deduction allowed under this
paragraph.

(B)(i) Net interest income from loans shall mean gross interest income
from loans less gross interest expense from loans. Gross interest
expense from loans is determined by multiplying gross interest expense
by a fraction, the numerator of which is the average total value of
loans owned by the thrift institution or community bank during the
taxable year and the denominator of which is the average total assets of
the thrift institution or community bank during the taxable year.

(ii) Measurement of assets. (I) Total assets are those assets that are
properly reflected on a balance sheet, computed in the same manner as is
required by the banking regulator of the taxpayers included in the
combined return. In addition, total assets includes leased real property
that is not properly reflected on a balance sheet.

(II) Assets will only be included if the income or expenses of which
are properly reflected (or would have been properly reflected if not
fully depreciated or expensed, or depreciated or expensed to a nominal
amount) in the computation of the taxpayer's entire net income for the
taxable year. Assets will not include deferred tax assets and intangible
assets identified as "goodwill".

(III) Tangible real and personal property, such as buildings, land,
machinery, and equipment shall be valued at cost. Leased real property
that is not properly reflected on that balance sheet will be valued at
the annual lease payment multiplied by eight. Intangible property, such
as loans and investments, shall be valued at book value exclusive of
reserves.

(IV) Average assets are computed using the assets measured on the
first day of the taxable year, and on the last day of each subsequent
quarter of the taxable year or month or day during the taxable year.

(C) A qualifying loan is a loan that meets the conditions specified in
subclause (i) of this clause and subclause (ii) of this clause.

(i) The loan is originated by the qualified community bank or small
thrift institution or purchased by the qualified community bank or small
thrift institution immediately after its origination in connection with
a commitment to purchase made by the bank or thrift institution prior to
the loan's origination.

(ii) The loan is a small business loan or a residential mortgage loan,
the principal amount of which loan is five million dollars or less, and
either the borrower is located in this state as determined under section
two hundred ten-A of this article and the loan is not secured by real
property, or the loan is secured by real property located in New York.

(iii) A loan that meets the definition of a qualifying loan in a prior
taxable year (including years prior to the effective date of this
paragraph) remains a qualifying loan in taxable years during and after
which such loan is acquired by another corporation in the taxpayer's
combined reporting group under section two hundred ten-C of this
article.

(t) A small thrift institution or a qualified community bank, as
defined in paragraph (s) of this subdivision, that maintained a captive
REIT on April first, two thousand fourteen shall utilize a REIT
subtraction equal to one hundred sixty percent of the dividends paid
deductions allowed to that captive REIT for the taxable year for federal
income tax purposes and shall not be allowed to utilize the subtraction
modification for qualified residential loan portfolios under paragraph
(r) of this subdivision or the subtraction modification for community
banks and small thrifts under paragraph (s) of this subdivision in any
tax year in which such thrift institution or community bank maintains
that captive REIT.

10. The term "calendar year" means a period of twelve calendar months
(or any shorter period beginning on the date the taxpayer becomes
subject to the tax imposed by this article) ending on the thirty-first
day of December, provided the taxpayer keeps its books on the basis of
such period or on the basis of any period ending on any day other than
the last day of a calendar month, or provided the taxpayer does not keep
books, and includes, in case the taxpayer changes the period on the
basis of which it keeps its books from a fiscal year to a calendar year,
the period from the close of its last old fiscal year up to and
including the following December thirty-first. The term "fiscal year"
means a period of twelve calendar months (or any shorter period
beginning on the date the taxpayer becomes subject to the tax imposed by
this article) ending on the last day of any month other than December,
provided the taxpayer keeps its books on the basis of such period, and
includes, in case the taxpayer changes the period on the basis of which
it keeps it books from a calendar year to a fiscal year or from one
fiscal year to another fiscal year, the period from the close of its
last old calendar or fiscal year up to the date designated as the close
of its new fiscal year.

11. The term "tangible personal property" means corporeal personal
property, such as machinery, tools, implements, goods, wares and
merchandise, and does not mean money, deposits in banks, shares of
stock, bonds, notes, credits or evidences of an interest in property and
evidences of debt.

12. The term elected or appointed officer shall include the chairman,
president, vice-president, secretary, assistant secretary, treasurer,
assistant treasurer, comptroller, and also any other officer,
irrespective of his title, who is charged with and performs any of the
regular functions of any such officer, unless the total compensation of
such officer is derived exclusively from the receipt of commissions. A
director shall be considered an elected or appointed officer only if he
performs duties ordinarily performed by an officer.