§ 10-02 Allocation of Income.
RCNY § 10-02
(Administrative Code §§ 11-620(2), 11-621(7), 11-628(2) and 11-629(1)(g)) (a) The New York City Financial Corporation Tax, Subchapter 3 of Chapter 6 of Title 11, New York City Administrative Code, is imposed upon that proportion of net income which is derived from business carried on within New York City. A corporation or association which maintains an office or place of business within the City, and not elsewhere, is taxable on all of its net income. A corporation or association which is doing business or carries on its business through offices or branches maintained both within the City and without the City must allocate its net income as provided in these regulations.
(b)Definitions. "Doing Business" and "Business Carried On." A corporation or association is regarded as "doing business" or "carrying on business" within or without the City when it occupies, has or maintains an office, agency or branch where its functions are systematically and regularly carried on. In order to require an allocation of the income from business carried on within or without New York City, it is not necessary that the branch or agency maintained within or without the City conduct all functions of the banking business of the corporation or association. It is sufficient if the branch or office conducts some of the functions which the corporation or association is authorized to exercise regularly and with a fair measure of permanency and continuity.
(c)Allocation where business is carried on both within and without the City.
(1)A corporation or association doing business or carrying on business both within and without the City which keeps accounts of the gross income and deductions of each office or branch, which, in the opinion of the Commissioner of Finance, accurately reflect the income from business carried on within the City of each office or branch, may report as its net income subject to tax the net income derived from the offices or branches maintained within the City. In all cases, however, the taxpayer must report the gross and net income of the corporation or association from all business carried on within and without New York City.
(2)Where the corporation or association (other than an alien banking corporation or association) does not keep accounts of the gross income and deductions of each branch or agency so as to reflect accurately the net income from business carried on within the City, or the corporation or association elects to allocate and determine gross income and deductions under rules and regulations prescribed by the Commissioner of Finance (See: §§ 11-620(2), 11-628(2), 11-621(7) and 11-629(i)(g) of the Administrative Code), an allocation of gross income and deductions shall be made by a net income allocation formula as determined under subdivision (d) of this section.
(3)A corporation or association which elects to allocate income and deductions by such net income allocation formula must use the formula in filing returns for all subsequent years to the year of adoption of the formula, unless the Commissioner of Finance consents to a change from the formula. Application for permission to change from use of the allocation formula shall be made at least 30 days prior to the close of the year the income of which is to measure the tax to be paid under the changed method.
(4)If it shall appear to the Commissioner of Finance that the net income from New York City is not fairly and equitably reflected under the provisions of paragraphs (1) or (2), the Commissioner of Finance, in his discretion, may approve some other method which will more accurately reflect income within New York City. Application for permission to use an alternative method must be made, as provided in paragraph (3) above.
(5)An alien banking corporation or association not reporting on the basis of separate accounting must allocate income and deductions in the same manner as for New York State franchise tax purposes, or by such other method approved by the Commissioner of Finance.
(d)Computation of net income allocation percentage.
(ii)The deduction for debts ascertained to be worthless and charged off within the year or a reasonable addition to a reserve for bad debts shall be the amount determined for New York State franchise tax purposes under 9-B or 9-C of the Tax Law.
(e)Computation of the payroll factor.
(f)Computation of the property factor.
(g)Computation of the operating receipts factor.
(iii)Rentals from property situated in New York City.
(iv)Service charges directly allocable to the New York City office or branch handling the account.
(v)Fees and commissions for services performed in New York City or by New York City offices or branches, or allocable to New York City offices or branches.
(i)Where loans are directly administered from and by an office or branch, the interest from such loans is receipts allocable to New York City if the office or branch is situated in the City.
(6)Receipts factor – fees and commissions. Fees and commissions are allocable to the office or branch that produced the income.
(h)Computation of the deposits factor.
