NYC Laws & Codes
Part 2 - TAX ON NATIONAL BANKING ASSOCIATIONS AND PRODUCTION CREDIT ASSOCIATIONS¶
Section 11-623¶
Section 11-623
§ 11-623 Imposition of tax. 1. Pursuant to the authority conferred by
section fifty-two hundred nineteen of the United States revised statutes
and in conformity with the provisions contained in subdivision c of
clause one of such section, every national banking association organized
under authority of the United States and located within the city, shall
annually pay a tax, measured by its net income, to be computed, as
provided in this part, at the rate of four and one-half per centum
except that for the year nineteen hundred seventy-one and those
following the rate shall be five and sixty-three one hundredths per
centum, upon the basis of its net income for the calendar year next
preceding the date when such tax becomes due. Such tax shall be for the
calendar year next preceding the year in which it becomes due; except
that with respect to national banking associations required to file a
declaration of estimated tax and to make payments on account of such
estimated tax in accordance with the provisions of 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. If,
however, such a national banking association 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 a
corporation taxable under part one of this subchapter, it shall pay a
tax for the period from the thirty-first day of December up to the time
of dissolution equal to that which would have been payable had it not
been dissolved, except that such tax shall be reduced by 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 so dissolved. If such dissolution occurs between 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 sections 11-630 and 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.
2. In the event that the taxes imposed by this part shall be finally
determined to be unconstitutional or invalid for the reason that they do
not conform 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 national banking association and
every production credit association 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.
3. Cross reference. For years for which tax is imposed, see section
11-624 of this part.
Section 11-624¶
Section 11-624
§ 11-624 Years for which imposed. 1. The tax imposed by section 11-623
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 11-625¶
Section 11-625
§ 11-625 Ascertainment of gain or loss; exchange of property. 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 11-626 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, if any, 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. Upon the sale or exchange of property the amount of the gain or
loss shall be determined in the manner prescribed by section 11-615 of
this subchapter and the basis of such property shall be determined in
the manner prescribed by section 11-616 of this subchapter.
4. In the case of any bond, with respect to which a deduction for
amortizable bond premium is allowable under paragraph (i) of subdivision
one of section 11-629 of this part, the basis for determining gain or
loss shall be reduced by the total amount of such deductions so
allowable.
Section 11-626¶
Section 11-626
§ 11-626 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 and most clearly reflecting the income.
Section 11-627¶
Section 11-627
§ 11-627 Net income defined; computation. The term "net income" means
the gross income of a taxpayer less the deductions allowed by this part.
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 11-628¶
Section 11-628
§ 11-628 Gross income defined. 1. The term "gross income" includes
gains, profit 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 such an association 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.
Section 11-629¶
Section 11-629
§ 11-629 Deductions. 1. In computing net income there shall be allowed
as deductions:
(a) 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;
(b) All interest paid or accrued during the year on indebtedness;
(c) 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;
(d) 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 of 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;
(e) 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;
(f) 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-c of the tax law. With respect to
property such as described in paragraph (j) of this subdivision, this
deduction may be computed and allowed as provided therein;
(g) 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;
(h) 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 years, to cover the
pension liability accruing during the year, allowed as a deduction under
paragraph (a) of this subdivision) a reasonable amount transferred or
paid into such trust during the taxable year in excess of such
contributions, but only if such amount: (1) has not theretofore been
allowable as a deduction, and (2) is apportioned in equal parts over a
period of ten consecutive years beginning with the year in which the
transfer of payment is made; 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;
(i) 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 determinations 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
paragraph 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 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 paragraph, 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; and
(j) (1) 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
subparagraph (2) of this paragraph, not exceeding twice the depreciation
allowed with respect to the same property for federal income tax
purposes.
(2) 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 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 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.
(3) 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 paragraph (f) of this section with reference 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.
(4) In any taxable year when property is sold or otherwise disposed
of, with respect to which a deduction has been allowed pursuant to this
paragraph, 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.
2. 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 or in making good the exhaustion
thereof for which an allowance is or has been made.
Section 11-630¶
Section 11-630
§ 11-630 Administration; procedure; provisions of law applicable. For
the purpose of carrying into effect the provisions of this part, and
except as otherwise provided in this part, income shall be computed,
gain or loss ascertained, deductions made, apportionments and
allocations determined, at the same time and subject to the same
limitations and conditions, in so far as practicable, as is provided by
part one of this subchapter in relation to the tax imposed by such part.
Section 11-631¶
Section 11-631
§ 11-631 Tax on production credit associations. Pursuant to the
authority conferred by the federal farm credit act of nineteen hundred
thirty-three, every production credit association organized under the
authority of the United States and located within the city after the
stock held in it by the federal production credit corporation has been
retired shall annually pay a tax measured by its net income, which shall
be computed in the same manner as the tax imposed upon national banking
associations by section 11-623 and shall be subject to the provisions of
sections 11-624 to 11-630 inclusive.
Section 11-632¶
Section 11-632
§ 11-632 Applicability of part three. 1. This part shall be applicable
only to the taxes imposed by parts one and two of this subchapter.
2. Cross reference. For years for which parts one and two of this
subchapter impose a tax, see sections 11-613 and 11-624 of this
subchapter.