§ 30-09 Apportionment of Reduction.
RCNY § 30-09
To determine the percentage reduction of base rent at a particular premises to which the taxpayer has relocated where the taxpayer has more than one such premises, the taxpayer must first calculate the total number of eligible aggregate employment shares pursuant to 19 RCNY § 30-01 "Aggregate employment shares" (1). The eligible aggregate employment shares must then be apportioned between the premises so that for each particular premises the apportioned eligible aggregate employment shares is in the same proportion to total eligible aggregate employment shares as the maximum number of eligible aggregate employment shares for that particular premises pursuant to the limitations delineated in 19 RCNY § 30-01 "Aggregate employment shares" (1)(ii)(A) and (1)(ii)(B) is to the sum of the maximum number of eligible aggregate employment shares for all premises to which the taxpayer has relocated pursuant to these limitations. Example: Y, a company with 1,000 employees outside the eligible area in the base year, has relocated to two eligible premises denoted PI and P2. The columns below headed P1 and P2 indicate the number of aggregate employment shares in each premises in the designated year. The column headed NE shows aggregate employment shares in the eligible area which are not in eligible premises. The column headed TA shows total aggregate employment shares in the eligible area. The base year is the taxable year preceding the taxable year of the relocation. Year P1 P2 NE TA Base Year 10 0 90 100 1 85 65 50 200 2 85 65 50 200 3 85 65 50 200 4 85 65 50 200 5 100 55 60 215 The following computation illustrates the percentage base rent deduction for Year 5: Step (1) – Compute eligible aggregate employment shares for Year 5 (basic computation – see: 19 RCNY § 30-01 "Aggregate employment shares" (1)(i). Eligible aggregate employment shares (subject to limitations) equals 115 (215 aggregate employment shares in the eligible area in the tax year less 100 aggregate employment shares in the eligible area in the taxable year preceding the taxable year of relocation). Step (2) – Premises Limitations (See: 19 RCNY § 30-01 "Aggregate employment shares" (1)(iii)) Determine the lesser of Limitations 1 and 2 specified in 19 RCNY § 30-01 "Aggregate employment shares" (1)(ii) for each premises. Eligible aggregate employment shares cannot exceed the sum of the limitations so determined for all premises (See: 19 RCNY § 30-01 "Aggregate employment shares (1)(iii)). For P1, Limitation 2 is the lesser limitation. For P2, Limitation 1 is the lesser limitation. The computation is as follows: P1 85 aggregate employment shares (highest number in first 4 years) less 10 shares (number at premises in year prior to relocation) = 75 P2 55 aggregate employment shares (number in year 5), less 0 shares (number at premises in year prior to relocation) = 55 Sum of the limitations for P1 and P2 = 130 Since this sum is greater than the 115 shares determined in the basic computation (Step 1), it does not reduce the number of eligible aggregate employment shares. However, it is used for the apportionment of the eligible aggregate employment shares. Step (3) – Limitation 3 19 RCNY § 30-01 "Aggregate employment shares" (1)(ii)(c). Limitation 3 equals 2,000 shares and is, therefore, not applicable. Step (4) – Apportionment The 115 eligible aggregate employment shares are apportioned to the two premises in the same ratio as the maximum number of eligible aggregate employment shares for each premises bears to the sum of the maximum number of such shares for all premises. Thus, the number of shares apportioned to P1 is computed as follows: 75/130 × 115 = 66.35 shares. The number of shares apportioned to P2 is computed as follows: 55/130 × 115 = 48.65 shares. Step (5) – The percentage reductions are then computed as follows (See: § 30-04): P1 66.35 eligible aggregate employment shares in the eligible premises divided by 85 aggregate employment shares yields a percentage reduction of 78.06%. (Note – the denominator would have been 100, the number of aggregate employment shares in the premises in the tax year in question, except that it is limited here by the highest number of such shares in the year of relocation and the three succeeding tax years.) P2 48.65 eligible aggregate employment shares divided by 55 aggregate employment shares yields a percentage reduction of 88.45%. Step (6) – Apply percentage reduction computed in step 4 to base rent for each eligible premises.
