N.Y. Comp. Codes R. & Regs. Tit. 20 §§ 1-2.8

Current through Register Vol. 46, No. 36, September 4, 2024

Section 1-2.8 - Foreign corporation - deriving receipts

Tax Law, section 209(1)

(a) A foreign corporation that derives receipts from any activity in New York State is subject to tax. For purposes of this section, "New York receipts" means New York receipts as computed under this Subchapter.

(b) A corporation derives receipts from activity in New York State if its New York receipts equal or exceed $1 million.

(c) A corporation derives receipts from activity in New York State if:

(1) the corporation is part of a unitary group that meets the ownership test under section 210-C and Subpart 6-2 of this Subchapter,

(2) it has New York receipts of at least $10,000, and

(3) the total New York receipts of all the members of the unitary group that each have at least $10,000 of New York receipts is at least $1 million of such receipts.

(d) A corporation derives receipts from activity in New York State if:

(1) the corporation is a general partner of a partnership and its New York receipts, if any, when combined with the New York receipts of the partnership, total at least $1 million; or

(2) the corporation is a limited partner of a partnership, other than a portfolio investment partnership, and its New York receipts, if any, when combined with the New York receipts of the partnership, total at least $1 million, provided that the limited partner is engaged, directly or indirectly, in the participation in or the domination or control of all or any portion of the business activities or affairs of the partnership; or

(3) the corporation is a member of a limited liability company that is treated as a partnership for tax purposes, other than a limited liability company that is treated as a portfolio investment partnership, the operating agreement of which does not impose limitations on the corporate member's participation in the management of the limited liability company either equivalent to or more stringent than the limitations on the participation in the control of the business of a limited partnership imposed on limited partners under article 8-A of the New York Partnership Law, and its New York receipts, if any, when combined with the New York receipts of the limited liability company, total at least $1 million; or

(4) the corporation is a member of a limited liability company that is treated as a partnership for tax purposes, other than a limited liability company that is treated as a portfolio investment partnership, the operating agreement of which imposes limitations on the corporate member's participation in the management of the limited liability company either equivalent to or more stringent than the limitations on the participation in the control of the business of a limited partnership imposed on limited partners under article 8-A of the New York Partnership Law, and its New York receipts, if any, when combined with the New York receipts of the limited liability company, total at least $1 million, provided that the member is engaged, directly or indirectly, in the participation in or the domination or control of all or any portion of the business activities or affairs of the limited liability company.

(e) For purposes of determining whether a corporation is deriving receipts from activity in New York State, a corporation's New York receipts will include such receipts from activities described in Public Law 86-272, and further described in section 1-2.10 of this Subpart.

(f) A corporation that is part of a unitary group will not be considered when determining if the standards specified in this paragraph are met if it cannot be included in a combined report under section 210-C(2)(c) and section 6-2.6 of this Subchapter.

(g) For purposes of subdivision (d) of this section, for a corporation that is a partner in one or more partnerships, and for a corporation that is a member of one or more limited liability companies treated as a partnership for tax purposes, the corporation's New York receipts include its distributive share of any New York receipts of each such partnership or limited liability company.

(h) In determining the amount of a corporation's New York receipts, merchant discount fees received by a corporation for processing credit card transactions are included in its New York receipts.

(i) A corporation will not be deemed to be deriving receipts from activity in New York State if the only New York receipts are:

(1) interest income and net gains received by a corporation from securities issued by government agencies, including but not limited to securities issued by the government national mortgage association, the Federal national mortgage association, the Federal home loan mortgage corporation, and the small business administration;

(2) interest income from Federal funds; or

(3) interest paid to the corporation directly by a federal reserve bank on reserves maintained with the federal reserve.

(j)

(1) The receipts thresholds of this subdivision are subject to adjustment by the commissioner based on an annual year-end review of the Consumer Price Index by the department, as follows:

(2) In December of each year, the commissioner will calculate the average Consumer Price index for the preceding twelve months and will use that average to determine the cumulative percentage change in the Consumer Price Index.

(3) If the Consumer Price Index has changed by 10% or more from the Consumer Price Index ascertained at the time of and used by the commissioner for the purpose of making the previous adjustment in the receipts thresholds, then the commissioner will adjust the receipts thresholds as provided in clause (c) of this subparagraph. Any adjustments will apply to taxable years beginning on or after January 1 next succeeding the announcement of the adjustment. When the commissioner has adjusted the receipts thresholds as provided for in this subdivision, any reference to $1 million or $10,000 in this Part is deemed to be a reference to the receipts thresholds as adjusted.

(4) For purposes of this subdivision, the term "Consumer Price Index" means the Consumer Price Index for all urban consumers, or the CPI-U.

(k)

(1) A foreign corporation deriving receipts from activity in New York State is deemed to be deriving receipts for all of its taxable year or part of its taxable year from the date in such taxable year of its first receipt derived from activity in New York State.

(2) A foreign corporation deriving receipts from activity in New York State, if also deriving receipts in the subsequent taxable year, is deemed to be deriving receipts from the beginning of the subsequent taxable year.

N.Y. Comp. Codes R. & Regs. Tit. 20 §§ 1-2.8

Adopted New York State Register December 27, 2023/Volume XLV, Issue 52, eff. 12/27/2023