§ 3-04 Allocation.
RCNY § 3-04
(a)General.
(1)General rules for allocation. (Administrative Code, § 11-642) (i) (A) The banking corporation tax law provides for distinct allocations of entire net income, alternative entire net income and taxable assets. Entire net income is defined in 19 RCNY § 3-03(b)(2). Alternative entire net income is defined in 19 RCNY § 3-03(d)(1)(ii). Taxable assets are defined in 19 RCNY § 3-03(e)(2). A corporation subject to the banking corporation tax which has entire net income derived from business carried on both within and without New York City shall determine the portion of its entire net income which is derived from business carried on within New York City pursuant to 19 RCNY § 3-04(b). A corporation subject to the banking corporation tax which has alternative entire net income derived from business carried on both within and without New York City shall determine the portion of its alternative entire net income which is derived from business carried on within New York City pursuant to 19 RCNY § 3-04(c). A corporation subject to the banking corporation tax which has taxable assets derived from business carried on both within and without New York City shall determine the portion of its taxable assets derived from business carried on within New York City pursuant to 19 RCNY § 3-04(d). Except as provided in subparagraph (B) of this paragraph, a corporation subject to the banking corporation tax which does not have entire net income, alternative entire net income or taxable assets derived from business carried on without New York City must allocate such entire net income, alternative entire net income or taxable assets 100 percent to New York City. (B) A taxpayer which has established an IBF as defined in 19 RCNY § 3-01(b)(16) may, in lieu of modifying its entire net income by deducting therefrom the adjusted eligible net income of the IBF (in the case of a loss, such loss must be added to entire net income) elect on an annual basis, pursuant to 19 RCNY § 3-04(b)(3)(iii), to reflect the results of its IBF operations in its entire net income allocation percentage and its alternative entire net income allocation percentage. When the taxpayer makes such election, such taxpayer is entitled to allocate its entire net income and alternative entire net income within and without New York City pursuant to 19 RCNY § 3-04(b) and (c), respectively.
(ii)When a corporation subject to the banking corporation tax carries on business within and without New York City for only part of the taxable year, it allocates entire net income, alternative entire net income or taxable assets within and without New York City for only that part of the taxable year during which it carries on such business within and without New York City. For allocation of entire net income for a short period, see 19 RCNY § 3-04(h)(1). For allocation of alternative entire net income for a short period, see 19 RCNY § 3-04(h)(2). For allocation of taxable assets for a short period, see 19 RCNY § 3-04(h)(3).
(iii)For purposes of this Part, the phrase "business carried on" means "doing business" as defined in 19 RCNY § 3-01(b)(7), provided the income or expenses from such business are required to be included in the computation of the taxpayer's alternative entire net income.
(2)Allocation on combined returns. (Administrative Code, § 11-646(f)) In the case of combined returns, allocation of entire net income, alternative entire net income and taxable assets is made on the basis of combined accounts from which all intercorporate transactions between corporations included in the combined return are eliminated. All corporations included in a combined return must make the same IBF election pursuant to 19 RCNY § 3-04(b)(3).
(b)Allocation of entire net income.
(iv)If it appears that the entire net income allocation percentage computed on the basis of all or any of the payroll, receipts or deposits factors does not properly reflect the activity, business or income of the taxpayer in New York City, the Commissioner of Finance may adjust the entire net income allocation percentage as set forth in 19 RCNY § 3-04(h)(4).
(v)For computation of the entire net income allocation percentage when a taxpayer is subject to tax for a period less than its taxable period for Federal income tax purposes, see 19 RCNY § 3-04(h)(1) – Allocation of entire net income for a short period.
(2-a)Income allocation percentage where an allocation factor is missing for taxable years beginning in 2009 and thereafter but before 2018.
(i)In the event that any of the percentages to be determined under paragraphs (1), (2) or (3) of subdivision (a) of § 11-642 of the Administrative Code cannot be determined because the taxpayer has either no payroll, or no receipts, or no deposits within or without the City, then the computation to be made under paragraph (1-a) of subdivision (b) of § 11-642 of the Administrative Code (applicable to taxable years beginning in 2009 and thereafter but before 2018) shall be made by taking the sum of the products that are determined under such paragraph (1-a) for the factors that are present, and dividing that sum by the sum of the weight factors that apply to each of the present factors in the calculation made under such paragraph (1-a). This amount is then rounded to four decimal places. (An allocation factor is not missing merely because its numerator is zero, but it is missing if both its numerator and its denominator are zero.) (ii) Weight factor defined. For purposes of this paragraph, "weight factor" is the percentage used in the allocation computation in paragraph (1-a) of subdivision (b) of § 11-642 of the Administrative Code, by which the percentage derived from subdivision (a) of § 11-642 of the Administrative Code is multiplied in such allocation computation. For example, in clause (i) of subparagraph (A) of paragraph (1-a) of subdivision (b) of § 11-642 of the Administrative Code, the weight factor is 18%; in clause (i) of subparagraph (I) of paragraph (1-a) of subdivision (b) of § 11-642 of the Administrative Code, the weight factor is 2%.
(4)Allocation of entire net income on combined returns. (Administrative Code, § 11-646(f)) In the case of combined returns, the factors comprising the entire net income allocation percentage are computed as though the corporations included in the return were one corporation. Intercorporate dividends and all other intercorporate transactions, including intercorporate receipts between the corporations included in the combined return, are eliminated. If one corporation included in the combined return makes the IBF election pursuant to 19 RCNY § 3-04(b)(3), all corporations included in the combined return must make the same election. As to when combined returns will be required or permitted, see 19 RCNY § 3-05(b).
(c)Allocation of alternative entire net income.
(3)IBF alternative entire net income allocation rules. (Administrative Code, § 11-642) A taxpayer which has established an IBF, as described in 19 RCNY § 3-03(c), and which has elected to use the IBF formula allocation method pursuant to 19 RCNY § 3-04(b)(3) must make the same election for purposes of allocating alternative entire net income by the alternative entire net income allocation percentage. If, pursuant to 19 RCNY § 3-04(b)(3), a taxpayer utilizes the IBF modification, the taxpayer must utilize the IBF modification for purposes of computing alternative entire net income and the alternative entire net income allocation percentage.
(d)Allocation of taxable assets.
(e)Payroll factor.
(f)Receipts factor.
(5)Income from trading activities and investment activities. (Administrative Code, § 11-642) (i) Income from trading activities and investment activities shall be allocated to New York City, if the greater portion of income producing activity relating to such trading and investment activities occurred within New York City. When determining the income from trading and investment activities, the taxpayer must net the gains with the losses from such activities that are included in the computation of Federal taxable income. A net loss is deemed to be zero.
(7)Receipts for services performed. (Administrative Code, § 11-642) (i) Receipts for services performed by the taxpayer's employees regularly connected with or working out of a New York City office of the taxpayer are allocated to New York City if such services are performed within New York City.
(8)Receipts of royalties. (Administrative Code, § 11-642) Receipts of royalties from the use of patents, copyrights and trademarks are allocated to New York City if the taxpayer's actual seat of management or control is located in New York City. Royalties include all amounts received by the taxpayer for the use of patents, copyrights or trademarks, whether or not such patents, copyrights or trademarks were issued to the tax- payer.
(9)Other business receipts. (Administrative Code, § 11-642) (i) Income from securities used to maintain reserves against deposits to meet Federal and state reserve requirements shall be allocated to New York City based upon the ratio that total deposits in New York City bears to total deposits everywhere. (See: 19 RCNY § 3-04(g)(2) for definition of deposit.) (ii) All other business receipts earned by the taxpayer in New York City are allocated to New York City.
(10)Receipts factor on combined returns. The receipts factor on a combined return is computed as though the corporations included in the return were one corporation. All intercorporate receipts between the corporations included in the combined return are eliminated in computing the combined receipts factor. As to when combined returns will be required or permitted, see 19 RCNY § 3-05(b).
(g)Deposits factor.
(h)Other rules.
