§ 11-21 General.
RCNY § 11-21
(a)Under Subchapter 2 of Chapter 6 of Title 11 of the Administrative Code, every corporation is treated as a holding corporation to the extent that it holds investments in subsidiaries, as an investment trust to the extent that it holds other securities, and as a business corporation to the extent that it is engaged in ordinary business. In the case of every such corporation, Subchapter 2 of Chapter 6 of Title 11 of the Administrative Code defines and treats differently (1) its subsidiary capital (capital invested in subsidiaries) and the income therefrom; (2) its investment capital and investment income (See 19 RCNY § 11-36 "Investment Capital" and 19 RCNY § 11-69 "Investment Income"); and (3) its business capital and business income (all capital other than subsidiary capital and investment capital, and all income other than investment income and income from subsidiary capital). However, for the sake of simplicity, the law gives some corporations which are predominantly business corporations an election to be taxed entirely as business corporations, and some corporations which predominantly hold investments in securities, an election to be taxed entirely as investment trusts.
(b)The taxpayer's "entire net income," or the portion thereof allocated to New York City, is the primary measure for the computation of the tax under Subchapter 2 of Chapter 6 of Title 11. In computing entire net income, all income from subsidiary capital (which does not include any recovery in respect of any war loss) and one-half of all dividends from nonsubsidiary corporations are excluded. The rate of the tax measured by entire net income is five and one-half percent for taxable years beginning before January 1, 1971, and six and seven-tenths percent for taxable years beginning on or after such date.
(c)Subchapter 2 of Chapter 6 of Title 11 also provides for three alternative bases for measuring the tax: (1) the tax on capital, measured by the value of assets (exclusive of subsidiary capital); (2) the tax measured by entire net income plus compensation paid to officers and certain stockholders; and (3) the fixed minimum tax of $25. In every case, the corporation is required to pay the tax measured by its entire net income, or one of the three alternative taxes, whichever is greatest. However, a real estate investment trust, as defined in subdivision 7 of § 11-603 of the Administrative Code, shall be subject only to the tax measured by its entire net income or the minimum tax of $25, whichever is greater. In addition, every corporation having any subsidiary capital is required to pay a tax measured thereby at the rate of one-half mill.
