NYC Laws & Codes
Part 1 - TAX ON STATE BANKS, TRUST COMPANIES, FINANCIAL CORPORATIONS AND SAVINGS AND LOAN ASSOCIATIONS¶
Section 11-611¶
Section 11-611
§ 11-611 Definitions. When used in this part:
1. The term "financial corporation" means every corporation doing a
banking business as defined in this section, other than a national
banking association, a trust company all of the capital stock of which
is owned by not less than twenty savings banks organized under a law of
this state, or a corporation taxable under subchapter two of this
chapter, and shall include the mortgage facilities corporation created
by chapter five hundred sixty-four of the laws of nineteen hundred
fifty-six and any corporation eighty percent or more of whose voting
stock is beneficially owned by a corporation or corporations subject to
article three or article three-a of the banking law or a national
banking association or associations, provided the corporation whose
voting stock is so owned is principally engaged in business which might
be lawfully conducted by a corporation subject to article three of the
banking law or a national banking association.
2. The word "paid", for the purpose of the deductions and credits
under this part, means "paid or accrued" or "paid or incurred," and the
terms "paid or incurred" and "paid or accrued" shall be construed
according to the method of accounting upon the basis of which the net
income is computed, under this part. The term "received," for the
purpose of the computation of net income under this part means "received
or accrued" and the term "received or accrued" shall be construed
according to the method of accounting upon the basis of which the net
income is computed under this part.
3. The word "dividend" means any distribution made by a corporation to
its shareholders or members, out of its earnings or profits, whether in
cash, or in property other than stock of the corporation.
4. The words "doing a banking business" means doing such business as a
corporation may be created to do under articles three, five, five-a, and
six of the banking law, or doing any business which a corporation is
authorized by such articles to do.
5. The words "foreign banker doing a banking business" in the city,
include every foreign corporation doing a banking business in the city,
except a national banking association.
6. The words "savings and loan association" mean every corporation
doing such business as a corporation may be created to do under article
ten of the banking law, including every federal savings and loan
association organized under authority of the United States.
Section 11-612¶
Section 11-612
§ 11-612 Tax based on net income; imposition; minimum tax; new
incorporations; dissolution; consolidations; mergers, etc.
1. For the privilege of doing business in the city:
(a) Every bank and savings and loan association organized under the
authority of this state;
(b) Every trust company incorporated, organized or formed under, by or
pursuant to a law of the state, other than a trust company all of the
stock of which is owned by not less than twenty savings banks organized
under a law of the state, and every domestic corporation authorized to
do a trust company's business solely or in connection with any other
business, under a general or special law of the state;
(c) Every other domestic financial corporation;
(d) Every incorporated foreign banker doing a banking business and
every other foreign financial corporation; and
(e) Every federal savings and loan association located within the
city, shall annually pay a tax at the rate of four and one-half per
centum except that for the years nineteen hundred seventy-one and those
following, the rate shall be five and sixty-three one hundredths per
centum, to be computed as provided in this part, upon the basis of its
net income for each calendar year, beginning with the calendar year
nineteen hundred sixty-six, next preceding the date when such tax
becomes due, if the taxpayer is required to file a declaration of
estimated tax and to make payments on account of such estimated tax as
provided by section 11-636 of this subchapter, upon the basis of its net
income for the calendar year with respect to which such declaration is
required to be filed.
2. Every such corporation for the privilege of doing business in the
city and every federal savings and loan association located in the city
shall be subject to a minimum tax of not less than ten dollars and not
less than one mill except that for the years nineteen hundred
seventy-one and those following such minimum tax shall be not less than
twelve and one-half dollars and not less than one and one-quarter mills
upon each dollar of such a part of its issued capital stock on the last
day of the calendar year preceding that in which such tax becomes due,
at its face value, as the gross income of such corporation derived from
business carried on within the city during such calendar year, bears to
its gross income derived from all business, both within and without the
city, during said year, but if such a corporation has stock without par
value, such stock shall be taken at its actual or market value, and not
less than five dollars per share, as may be determined by the
commissioner of finance; except that a savings bank and savings and loan
association shall be subject to a minimum tax of not less than an amount
equal to two per centum of the amount of interest or dividends credited
by it to depositors or shareholders during the calendar year preceding
that in which such tax becomes due except that for the years nineteen
hundred seventy-one and those following such minimum tax shall be not
less than twelve and one-half dollars and not less than an amount equal
to two and one-half per centum of the amount of interest or dividends
credited by it to depositors or shareholders during the calendar year
preceding that in which such tax becomes due, provided that, in
determining such amount each interest or dividend credit to a depositor
or shareholder shall be deemed to be the interest or dividend actually
credited or the interest or dividend which would have been credited if
it had been computed and credited at the rate of two per centum per
annum whichever is less and except also that in the case of a trust
company or savings bank incorporated in the calendar year preceding that
in which its first return under this part shall be due and after the
thirtieth day of June in such year, the minimum tax, computed as in this
subdivision provided, shall be reduced one-twelfth for each month, or
major portion thereof, subsequent to said thirtieth day of June during
which such trust company or savings bank did not exercise the privilege
of doing business in the city.
3. For the privilege of doing business in the city, every such
domestic corporation, except trust companies and savings banks, shall be
subject to a tax for the calendar year in which its organization
certificate is filed, and, for the privilege of doing business in the
city, every such foreign corporation shall be subject to a tax for the
calendar year in which it first does business in the city, and, every
federal savings and loan association located within the city shall be
subject to a tax for the calendar year in which it first becomes located
within the city, computed in the same manner and at the same rate as the
minimum tax under subdivision two of this section, except that the
income forming the basis for proration shall be the income for such
calendar year, and the issued capital stock shall be taken as of the
last day of such calendar year; provided, however, that the tax so
computed shall be reduced one-twelfth for each month, or major portion
thereof, in such calendar year, during which such corporation was not
doing business in the city, or, if a federal savings and loan
association, was not located in the city, and in no event shall the tax
be less than ten dollars except that for the year nineteen hundred
seventy-one and those following, in no event shall the tax be less than
twelve and one-half dollars.
4. For the privilege of doing business in the city, every such trust
company and savings bank which shall become incorporated between the
thirty-first day of December and the succeeding first day of July, shall
be subject to a tax for such period, computed in the same manner and at
the same rate as the minimum tax under subdivision two of this section,
except that the income forming the basis for proration shall be the
income for such period; and the issued capital stock, or interest
credited to depositors of a savings bank, shall be taken as of the last
day of such period; provided, however, that the tax so computed shall be
reduced one-half and an additional one-twelfth for each month, or major
portion thereof, in such period, during which such trust company or
savings bank was not doing business in the city, and in no event shall
the tax be less than ten dollars except that for the year nineteen
hundred seventy-one and those following, in no event shall the tax be
less than twelve and one-half dollars.
5. For the privilege of doing business in the city, every such
corporation, except trust companies and savings banks, which shall be
dissolved between the thirty-first day of December and the succeeding
second day of September, and shall not become merged or consolidated
with another corporation taxable under this part and, every such foreign
corporation which shall cease to do business in the city during the same
period, and every federal savings and loan association which ceases to
be located in the city during the same period, and shall not become
merged or consolidated with another corporation taxable under this part,
shall pay a tax for the period from the thirty-first day of December up
to the time of dissolution, ceasing to do business in the city, or
ceasing to be located in the city, as the case may be, equal to that
which would have been payable had it not been dissolved, ceased to do
business in the city, or ceased to be located in the city, except that
such tax shall be reduced one-third and an additional one-twelfth for
each month, or major portion thereof, prior to such succeeding second
day of September, during which such corporation was not doing business
in the city, or was not located in the city, and in no event shall the
tax be less than ten dollars except that for the year nineteen hundred
seventy-one and those following, in no event shall the tax be less than
twelve and one-half dollars. If such dissolution or cessation occurs
beteween the fifteenth day of March and the second day of September, and
if such corporation shall have filed its return on or before the
fifteenth day of March as required by section 11-633 of this subchapter,
it may file a claim for refund as provided in section 11-678 of this
chapter, showing any reduction in tax to which it may be entitled as
provided in the preceding sentence; and if it shall be made to appear
that the amount of tax due is less than the amount as computed on the
basis of the original return, the commissioner of finance shall adjust
the computation of tax accordingly. If the amount of tax as so adjusted
shall be less than the amount theretofore paid, the excess shall be
refunded by the commissioner of finance as provided in subdivision one
of section 11-677 of this chapter.
6. Every such trust company and savings bank, which shall be
dissolved, and shall not become merged or consolidated with another
corporation taxable under this part, shall, if dissolution takes place
between the thirtieth day of June and the succeeding first day of
January, be subject to a tax, for that part of such period in which it
had been doing business, computed in the same manner and at the same
rate as the minimum tax under subdivision two of this section, except
that the income forming the basis for proration shall be the income for
the calendar year in which such dissolution occurs; and the issued
capital stock, or interest credited to depositors of a savings bank,
shall be taken as of the date of dissolution; provided, however, that
the tax so computed shall be reduced one-half and an additional
one-twelfth for each month, or major portion thereof, between the date
of dissolution and the succeeding first day of January. If dissolution
occurs between the thirty-first day of December and the succeeding
sixteenth day of March, such trust company and savings bank shall be
subject to the same tax that would have been due from it on or before
the fifteenth day of March had it not been dissolved, except that such
tax shall be reduced one-twelfth for each month, or major portion
thereof, from the date of dissolution to the succeeding first day of
July, and shall be for the period beginning on the preceding first day
of July and ending on the date of dissolution. In no event shall the tax
under this subdivision be less than ten dollars except that for the year
nineteen hundred seventy-one and those following, in no event shall the
tax under this subdivision be less than twelve and one-half dollars.
7. In the case of a consolidation or merger of taxpayers, or in case a
national bank taxable under part two of this subchapter shall be
consolidated or merged with a taxpayer under this part, or in case of a
series of such transactions, there shall be added to the net income of
the taxpayer resulting from such consolidations or mergers the net
income of the taxpayers which are consolidated or merged for the period
for which the taxpayer resulting from such consolidation or merger is
required to render any return under this part, and if such resulting
taxpayer is a savings bank or savings and loan association, there shall
be added to the interest or dividends credited by it to depositors or
shareholders the amount of interest or dividends credited to depositors
or shareholders during such period by the taxpayers which are
consolidated or merged, except that net income, interest or dividends
shall not be included if they have already been used as the basis for a
tax under this part, and the tax payable on filing such return shall be
based upon the entire net income reported therein or upon the entire
amount of interest or dividends so reported, as the case may be. The
acquisition by a taxpayer, directly or indirectly, of the assets or
franchises of another taxpayer or national bank shall be deemed a merger
for the purposes of this section.
8. The tax imposed by this part shall be for the calendar year next
preceding the year in which it becomes due; except that with respect to
corporations subject to a tax imposed under subdivision three, four,
five or six of this section, the tax shall be for the period therein
specified, and except that with respect to corporations required to file
a declaration of estimated tax and to make payments on account of such
estimated tax as provided by section 11-636 of this subchapter, all
payments of tax within a calendar year, whether computed on the basis of
net income for the current calendar year or on the basis of net income
for the preceding calendar year, shall be for the calendar year in which
the payments are required to be made.
9. In the event that it shall be finally determined by a court of
competent jurisdiction that the taxes imposed on national banking
associations by part two of this subchapter are unconstitutional or
invalid for the reason that they are not in conformity with the
provisions of section fifty-two hundred nineteen of the United States
revised statutes, then, in lieu of the taxes imposed by the provisions
of this part, every corporation that otherwise would have been subject
to tax under this part shall be subject to the tax imposed under
subchapter two as of July thirteenth, nineteen hundred sixty-six, and
all of the provisions of subchapter two, unless clearly inappropriate,
shall be applicable except subdivision four of section 11-603 of this
chapter; and, in such event, any payments made, reports or returns filed
or any act of the commissioner of finance or of a taxpayer purportedly
under this subchapter shall be treated as though made, filed or done
pursuant to subchapter two.
10. Cross reference. For years for which tax is imposed, see section
11-613 of this part.
Section 11-613¶
Section 11-613
§ 11-613 Years for which imposed. 1. The tax imposed by section 11-612
of this part is imposed for each calendar year included within the
period beginning January first, nineteen hundred sixty-six and ending
December thirty-first, nineteen hundred seventy-two.
2. Cross reference. For tax imposed for years or periods subsequent to
nineteen hundred seventy-two, see part four of this subchapter.
Section 11-614¶
Section 11-614
§ 11-614 Ascertainment of gain or loss. 1. For the purpose of
ascertaining the gain derived or loss sustained from the sale or other
disposition of property, real, personal or mixed, the basis shall be the
cost thereof, or the inventoried value if the inventory is made in
accordance with section 11-617 of this part.
2. Notwithstanding subdivision one of this section, with respect to
gain derived from the sale or other disposition of any property acquired
prior to January first, nineteen hundred sixty-six, except stock in
trade of the taxpayer or other property of a kind which would properly
be included in the inventory of the taxpayer if on hand at the close of
the taxable year, or property held by the taxpayer primarily for sale to
customers in the ordinary course of its trade or business, and accounts
or notes receivable acquired in the ordinary course of trade or business
from the sale of such stock in trade or property, or for services
rendered, net income shall not include:
(a) That portion of the gain included in determining net income
pursuant to subdivision one of this section with respect to each such
property, which exceeds:
(b) The amount of gain that would be included in determining net
income pursuant to subdivision one of this section with respect to each
such property if the basis of such property on the date of sale or other
disposition were equal to its fair market value on January first,
nineteen hundred sixty-six, plus or minus all adjustments to basis made
with respect to each such property in computing net income for periods
on or after January first, nineteen hundred sixty-six provided that the
total adjustment to net income provided by this subdivision shall not
exceed the amount of the taxpayer's net gain from the sale or other
disposition of all such property, as determined pursuant to subdivision
one of this section.
3. In the case of any bond, with respect to which a deduction for
amortizable bond premium is allowable under subdivision nine of section
11-621 of this part, the basis for determining gain or loss shall be
reduced by the total amount of such deductions so allowable.
Section 11-615¶
Section 11-615
§ 11-615 Exchange of property. Upon the sale or exchange of property
the entire amount of the gain or loss, determined under section 11-614
of this part, shall be recognized, except as hereinafter provided in
this section:
1. No gain or loss shall be recognized if common stock in a
corporation is exchanged solely for common stock in the same
corporation, or if preferred stock in a corporation is exchanged solely
for preferred stock in the same corporation;
2. No gain or loss shall be recognized if stock or securities in a
corporation a party to a reorganization are, in pursuance of the plan or
reorganization, exchanged solely for stock or securities in such
corporation or in another corporation a party to the reorganization;
3. No gain or loss shall be recognized if a taxpayer, a party to a
reorganization, exchanges property, in pursuance of the plan of
reorganization, solely for stock or securities in another corporation a
party to the reorganization; and
4. No gain or loss shall be recognized if property is transferred to a
corporation by a taxpayer solely in exchange for stock or securities in
such corporation, and immediately after the exchange such taxpayer is in
control of the corporation; but in the case of an exchange by a taxpayer
and one or more other corporations or persons this subdivision shall
apply only if the amount of the stock and securities received by each is
substantially in proportion to its interest in the property prior to the
exchange.
5. If property (as a result of its destruction in whole or in part,
theft or seizure, or an exercise of the power of requisition or
condemnation, or the threat of imminence thereof) is compulsorily or
involuntarily converted into property similar or related in service or
use to the property so converted, or into money which is forthwith in
good faith, under regulations prescribed by the commissioner of finance,
expended in the acquisition of other property similar or related in
service or use to the property so converted, or in the acquisition of
control of a corporation owning such other property, or in the
establishment of a replacement fund, no gain or loss shall be
recognized. If any part of the money is not so expended, the gain, if
any, shall be recognized, but in an amount not in excess of the money
which is not so expended.
6. If there is distributed, in pursuance of a plan of reorganization,
to a taxpayer shareholder in a corporation a party to the
reorganization, stock or securities in such corporation or in another
corporation a party to the reorganization, without the surrender by such
taxpayer shareholder of stock or securities in such a corporation, no
gain to the distributee from the receipt of such stock or securities
shall be recognized.
7. If an exchange would be within the provisions of subdivision one,
two, or four of this section if it were not for the fact that the
property received in exchange consists not only of property permitted by
such subdivision to be received without the recognition of gain, but
also of other property or money, then the gain, if any, to the recipient
shall be recognized, but in an amount not in excess of the sum of such
money and the fair market value of such other property.
8. If an exchange would be within the provisions of subdivision three
of this section if it were not for the fact that the property received
in exchange consists not only of stock or securities permitted by such
subdivision to be received without the recognition of gain, but also of
other property or money, then:
(a) If the taxpayer receiving such other property or money distributes
it in pursuance of the plan of reorganization, no gain to the taxpayer
shall be recognized from the exchange, but
(b) If the taxpayer receiving such other property or money does not
distribute it in pursuance of the plan of reorganization, the gain, if
any, to the taxpayer shall be recognized, but in an amount not in excess
of the sum of such money and the fair market value of such other
property so received, which is not so distributed.
9. If an exchange would be within the provisions of subdivision one,
two, three, or four of this section if it were not for the fact that the
property received in exchange consists not only of property permitted by
such subdivision to be received without the recognition of gain or loss,
but also of other property or money, then no loss from the exchange
shall be recognized.
10. As used in this section:
The term "reorganization" means (a) a merger or consolidation
(including the acquisition by one corporation of at least a majority of
the voting stock and at least a majority of the total number of shares
of all other classes of stock of another corporation, or substantially
all the properties of another corporation), or (b) a transfer by a
corporation of all or a part of its assets to another corporation if
immediately after the transfer the transferor or its stockholders or
both are in control of the corporation to which the assets are
transferred, or (c) a recapitalization, or (d) a mere change in
identity, form or place of organization, however effected;
The term "a party to a reorganization" includes a corporation
resulting from a reorganization and includes both corporations in the
case of an acquisition by one corporation of at least a majority of the
voting stock and at least a majority of the total number of shares of
all other classes of stock of another corporation; and
The term "control" means the ownership of at least eighty per centum
of the voting stock and at least eighty per centum of the total number
of shares of all other classes of stock of the corporation.
11. No gain or loss shall be recognized upon the receipt by a taxpayer
of property distributed in complete liquidation of a corporation. For
the purposes of this subdivision a distribution shall be considered to
be in complete liquidation only if:
(a) the taxpayer receiving such property was, on the date of the
adoption of the plan of liquidation, and has continued to be at all
times until the receipt of the property, the owner of stock (in such
corporation) possessing at least eighty per centum of the total combined
voting power of all classes of stock entitled to vote and the owner of
at least eighty per centum of the total number of shares of all other
classes of stock (except non-voting stock which is limited and preferred
as to dividends), and was at no time on or after the date of the
adoption of the plan of liquidation and until the receipt of the
property the owner of a greater percentage of any class of stock than
the percentage of such class owned at the time of the receipt of the
property; and either:
(b) the distribution is by such corporation in complete cancellation
or redemption of all its stock, and the transfer of all the property
occurs within the base year; in such case the adoption by the
shareholders of the resolution under which is authorized the
distribution of all the assets of the corporation in complete
cancellation or redemption of all its stock, shall be considered an
adoption of a plan of liquidation, even though no time for the
completion of the transfer of the property is specified on such
resolution; or
(c) such distribution is one of a series of distributions by such
corporation in complete cancellation or redemption of all its stock in
accordance with a plan of liquidation under which the transfer of all
the property under the liquidation is to be completed within three years
from the close of the year during which is made the first of the series
of distributions under the plan, except that if such transfer is not
completed within such period, or if the taxpayer does not continue
qualified under paragraph (a) until the completion of such transfer, no
distribution under the plan shall be considered a distribution in
complete liquidation.
If such transfer of all the property does not occur within the year,
the commissioner of finance may require of the taxpayer such bond, or
waiver of the statute of limitations on assessment and collection, or
both, as the commissioner may deem necessary to insure, if the transfer
of the property is not completed within such three year period, or if
the taxpayer does not continue qualified under paragraph (a) until the
completion of such transfer, the assessment and collection of all taxes
then imposed under this part for such year or subsequent years, to the
extent attributable to property so received. A distribution otherwise
constituing a distribution in complete liquidation within the meaning of
this paragraph shall not be considered as not constituting such a
distribution merely because it does not constitute a distribution or
liquidation within the meaning of the corporate law under which the
distribution is made; and for the purposes of this paragraph a transfer
of property of such corporation to the taxpayer shall not be considered
as not constituting a distribution (or one of a series of distributions)
in complete cancellation or redemption of all the stock of such
corporation, merely because the carrying out of the plan involves: (1)
the transfer under the plan to the taxpayer by such corporation of
property, not attributable to shares owned by the taxpayer, upon an
exchange described in subdivision three of this section, and (2) the
complete cancellation or redemption under the plan, as a result of
exchanges described in subdivision two of this section, of the shares
not owned by the taxpayers.
Section 11-616¶
Section 11-616
§ 11-616 Exchange of property when no gain or loss is realized. When
property is exchanged for other property and no gain or loss is realized
under the provisions of the preceding section, the property received
shall be treated as taking the place of the property exchanged therefor.
Where no gain or loss is realized under the provisions of subdivision
eleven of the preceding section, the basis of the property received
shall be the same as it would be in the hands of the transferor
determined in accordance with the provisions of section 11-614 of this
part.
Section 11-617¶
Section 11-617
§ 11-617 Inventory. Whenever in the opinion of the commissioner of
finance the use of inventories is necessary in order clearly to
determine the income of any taxpayer, inventory shall be taken by such
taxpayer upon such basis as the commissioner of finance may prescribe,
conforming as nearly as may be to the best accounting practice in the
banking business most clearly reflecting the income.
Section 11-618¶
Section 11-618
§ 11-618 Net income defined. The term "net income" means the gross
income of a taxpayer less the deductions allowed by this part.
Section 11-619¶
Section 11-619
§ 11-619 Computation of net income. The net income shall be computed
in accordance with the method of accounting regularly employed in
keeping the books of such taxpayer; but if no such method of accounting
has been so employed, or if the method employed does not clearly reflect
the income, the computation shall be made upon such basis and in such
manner as in the opinion of the commissioner of finance does clearly
reflect the income. In determining net income, war losses, taxation of
property recovered, and basis of property shall be treated in
substantially the same manner as such losses, recoveries and basis are
treated under the applicable provisions of section thirteen hundred
thirty-one of the internal revenue code.
Section 11-620¶
Section 11-620
§ 11-620 Gross income defined. 1. The term "gross income" includes
gains, profits and income derived from the business, of whatever kind
and in whatever form paid, including gains, profits or income from
dealings in property, whether real or personal, or gains, profits or
income received as compensation for services, as interest, rents,
commissions, brokerage or other fees, or otherwise in carrying on such
business, including all dividends received on stocks and all interest
received from federal, state, municipal or other bonds.
2. If the gross income of a taxpayer is derived from business carried
on both within and without the city, "gross income" means that
proportion thereof which is derived from business carried on within the
city, to be allocated and determined on the basis of separate accounting
for each office or branch or, at the election of the taxpayer, under
rules and regulations prescribed by the commissioner of finance.
3. "Gross income" of a savings bank shall include the amount received
by it in any taxable year as a distribution in liquidation of the mutual
savings bank fund.
Section 11-621¶
Section 11-621
§ 11-621 Deductions. In computing net income there shall be allowed as
deductions:
1. All the ordinary and necessary expenses paid or incurred during the
year in carrying on business, including a reasonable allowance for
salaries or other compensation for personal services actually rendered,
and including rentals or other payments required to be made as a
condition to the continued use or possession for business purposes of
property to which the taxpayer has not taken or is not taking title or
in which such taxpayer has no equity.
2. All interest paid or accrued during the year on indebtedness.
3. Taxes, other than taxes on income or profits paid or accrued within
the year, imposed, first, by the authority of the United States, or of
any of its possessions, or, second, by the authority of any state, or
territory, or any county, school district, municipality, or other taxing
subdivisions of any state or territory, not including those assessed
against local benefits of a kind tending to increase the value of the
property assessed, or, third, by the authority of any foreign
government.
4. Losses sustained during the year and not compensated for by
insurance or otherwise, if incurred in business; unless in order to
clearly reflect the income the losses should in the opinion of the
commissioner of finance be accounted for as of a different period. No
deduction shall be allowed for any loss claimed to have been sustained
in any sale or other disposition of shares of stock or securities where
it appears that within thirty days before or after the date such sale or
other disposition the taxpayer has acquired substantially identical
property, and the property so acquired is held by the taxpayer for any
period after such sale or other disposition, unless such claim is made
with respect to a transaction made in the ordinary course of business.
If such acquisition is to the extent of part only of substantially
identical property, only a proportionate part of the loss shall be
disallowed.
5. Debts ascertained to be worthless and charged off within the year;
or in the discretion of the commissioner of finance a reasonable
addition to a reserve for bad debts. When satisfied that a debt is
recoverable only in part, the commissioner of finance may allow such
debt to be charged off in part.
6. A reasonable allowance for the exhaustion, wear and tear of
property used in business, including a reasonable allowance for
obsolescence. In the case of any such property acquired before January
first, nineteen hundred sixty-six, the amount of such deduction shall be
equal to the deduction properly taken for such property in reporting the
tax due pursuant to article nine-b of the tax law. With respect to
property such as described in subdivision twelve of this section, this
deduction may be computed and allowed as provided therein.
7. If the gross income be derived from business carried on within and
without the city, the deductions allowed by this section shall be
allocated and determined on the basis of separate accounting for each
office or branch or, at the election of the taxpayer, under rules and
regulations to be prescribed by the commissioner of finance.
8. In the case of any taxpayer who establishes or maintains a pension
trust to provide for the payment of reasonable pensions to its
employees, there shall be allowed as a deduction (in addition to the
contributions to such trust during the taxable year to cover the pension
liability accruing during the year, allowed as a deduction under
subdivision one of this section) a reasonable amount transferred or paid
into such trust during the taxable year in excess of such contributions,
but only if such amount (a) has not theretofore been allowable as a
deduction, and (b) is apportioned in equal parts over a period of ten
consecutive years beginning with the year in which the transfer or
payment is made or, under regulations of the commissioner of finance,
covers not more than one-tenth of the total pension liability with
respect to services rendered prior to such taxable year; provided that
said deduction shall be allowable only with respect to a taxable year
(whether the year of the transfer or payment or a subsequent year) of
the taxpayer ending within or with a taxable year of the trust with
respect to which the trust, by reason of its purposes or activities, is
exempt from federal income tax.
9. The amount of the amortizable bond premium on a bond for the year
shall be allowed as a deduction as hereinafter provided. In computing
such deduction: (a) the amount of the bond premium shall be determined
with reference to the amount of the basis (for determining loss on sale
or exchange) of such bond, and with reference to the amount payable on
maturity or on earlier call date, with adjustments proper to reflect
unamortized bond premium with respect to the bond, for the period prior
to July thirteenth, nineteen hundred sixty-six with respect to the
taxpayer with respect to such bond, and (b) the amortizable bond premium
of the year shall be the amount of the bond premium attributable to such
year. The determination required in the preceding sentence shall be made
in accordance with the method of amortizing bond premium regularly
employed by the holder of such bond, if such method is reasonable, and
in all other cases in accordance with regulations of the commissioner of
finance prescribing reasonable methods of amortizing bond premium. This
subdivision shall apply only if the taxpayer shall so elect, in
accordance with regulations of the commissioner of finance, and such
election shall be made separately with respect to (1) bonds, the
interest of which is wholly taxable, and (2) bonds, the interest of
which is wholly or partially tax exempt, for purposes of the income tax
imposed by chapter one of the internal revenue code. If such election is
made with respect to any bond of the taxpayer described in clauses one
or two hereof, it shall also apply to all bonds in the same class held
by the taxpayer at the beginning of the first year to which the election
applies and to all such bonds thereafter acquired by it and shall be
binding for all subsequent years with respect to all such bonds of the
taxpayer, unless upon the application by the taxpayer, the commissioner
of finance permits the taxpayer, subject to such conditions as the
commissioner of finance deems necessary, to revoke such election. As
used in this subdivision the term "bond" means any bond, debenture, note
or certificate or other evidence of indebtedness, issued by any
corporation and bearing interest (including any like obligation issued
by a government or political subdivision thereof), with interest coupons
or in registered form, but does not include any such obligation which
constitutes stock in trade of the taxpayer or any such obligation of a
kind which would properly be included in the inventory of the taxpayer
if on hand at the close of the year, or any such obligation held by the
taxpayer primarily for sale to customers in the ordinary course of its
trade or business.
10. In the case of a savings bank and savings and loan association,
amounts paid or credited to depositors or holders of accounts as
interest or dividends on their deposits or withdrawable accounts, if
such amounts are withdrawable on demand subject only to customary notice
of intention to withdraw.
11. A savings bank and savings and loan association may deduct in any
taxable year the amount of the repayment of any loan or advance from the
mutual savings bank fund in computing its net income and the amount of
interest or dividends subject to the minimum tax under subdivision three
of section 11-612 of this part.
12. (a) At the election of the taxpayer there shall be deducted from
gross income, or if gross income is derived from business carried on
within and without this city, from the portion thereof allocated within
the city, depreciation with respect to any property such as described in
paragraph (b) of this subdivision, not exceeding twice the depreciation
allowed with respect to the same property for federal income tax
purposes.
(b) Such deduction shall be allowed only with respect to tangible
property which is depreciable pursuant to section one hundred
sixty-seven of the internal revenue code, having a situs in this city
and used in the taxpayer's business, (i) constructed, reconstructed or
erected after December thirty-first, nineteen hundred sixty-five,
pursuant to a contract which was on or before December thirty-first,
nineteen hundred sixty-seven, and at all times thereafter, binding on
the taxpayer or, property, the physical construction, reconstruction or
erection of which began on or before December thirty-first, nineteen
hundred sixty-seven or which began after such date pursuant to an order
placed on or before December thirty-first, nineteen hundred sixty-seven,
and then only with respect to that portion of the basis thereof which is
properly attributable to such construction, reconstruction or erection
after December thirty-first, nineteen hundred sixty-five, or (ii)
acquired after December thirty-first, nineteen hundred sixty-five,
pursuant to a contract which was, on or before December thirty-first,
nineteen hundred sixty-seven, and at all times thereafter, binding on
the taxpayer or pursuant to an order placed on or before December
thirty-first, nineteen hundred sixty-seven, by purchase as defined in
section one hundred seventy-nine (d) of the internal revenue code, if
the original use of such property commenced with the taxpayer, commenced
in this city and commenced after December thirty-first, nineteen hundred
sixty-five, or (iii) acquired, constructed, reconstructed or erected
subsequent to December thirty-first, nineteen hundred sixty-seven, if
such acquisition, construction, reconstruction or erection is pursuant
to a plan of the taxpayer which was in existence December thirty-first,
nineteen hundred sixty-seven and not thereafter substantially modified,
and such acquisition, construction, reconstruction or erection would
qualify under the rules in paragraph four, five or six of subsection (h)
of section forty-eight of the internal revenue code provided all
references in such paragraphs four, five and six to the dates October
nine, nineteen hundred sixty-six and October ten, nineteen hundred
sixty-six shall be read as December thirty-first, nineteen hundred
sixty-seven. A taxpayer shall be allowed a deduction under clause (i),
(ii) or (iii) of this paragraph only if the tangible property shall be
delivered or the construction, reconstruction or erection shall be
completed on or before December thirty-first, nineteen hundred
sixty-nine, except in the case of tangible property which is acquired,
constructed, reconstructed or erected pursuant to a contract which was,
on or before December thirty-first, nineteen hundred sixty-seven, and at
all times thereafter, binding on the taxpayer. Provided, however, for
any taxable year beginning on or after January first, nineteen hundred
sixty-eight, a taxpayer shall not be allowed a deduction under paragraph
(a) hereof with respect to tangible personal property leased by it to
any other person or corporation. For purposes of the preceding sentence,
any contract or agreement to lease or rent or for a license to use such
property shall be considered a lease. With respect to property which the
taxpayer uses itself for purposes other than leasing for part of a
taxable year and leases for a part of a taxable year, the taxpayer shall
be allowed a deduction under paragraph (a) in proportion to the part of
the year it uses such property.
(c) If the deduction allowable for any taxable year pursuant to this
subdivision exceeds the taxpayer's net income computed without the
allowance of such deduction and without the allowance of any deduction
pursuant to subdivision six of this section with references to the same
property, the excess may be carried over to the following taxable year
or years and may be deducted in computing net income for such year or
years.
(d) In any taxable year when property is sold or otherwise disposed
of, with respect to which a deduction has been allowed pursuant to this
subdivision, the gain or loss thereon shall be computed by adjusting the
basis of such property to reflect the deductions so allowed, and if the
taxpayer's gross income is derived from business carried on both within
and without the city, shall be allocated within the city. Provided,
however, that no loss shall be recognized for the purposes of this
paragraph with respect to a sale or other disposition of property to a
person whose acquisition thereof is not a purchase as defined in section
one hundred seventy-nine (d) of the internal revenue code.
Section 11-622¶
Section 11-622
§ 11-622 Items not deductible. In computing net income no deduction
shall in any case be allowed in respect of:
(a) Any amount paid out for new buildings or for permanent
improvements or betterments made to increase the value of any property.
(b) Any amount expended in restoring property or in making good the
exhaustion thereof for which an allowance is or has been made.