N.Y. Comp. Codes R. & Regs. Tit. 20 §§ 3-3.1

Current through Register Vol. 46, No. 45, November 2, 2024

Section 3-3.1 - Definition of entire net income (ENI)

(Tax Law, section 208(9))

(a)

(1) Entire net income means total net income from all sources. The starting point for the computation of ENI is Federal taxable income, which generally means taxable income as defined in IRC section 63 ("taxable income"). After determining the amount of Federal taxable income, it must be adjusted by the addition and subtraction modifications as required by the provisions of section 208(9) and, to the extent necessary, further described in this Subpart.

(2) "Federal taxable income" is presumed to be the same as

(i) the taxable income the taxpayer is required to report to the Internal Revenue Service; or

(ii) the taxable income that the taxpayer would have been required to report to the Internal Revenue Service, if it had not made an election under Subchapter S of Chapter One of the IRC; or

(iii) the taxable income that the taxpayer, in the case of a corporation that is exempt from Federal income tax (other than the tax on unrelated business taxable income imposed under IRC section 511) but is subject to tax under article 9-A, would have been required to report to the Internal Revenue Service but for such exemption; or

(iv) the income, gain, or loss that is effectively connected with the conduct of a trade or business within the United States, as determined under IRC section 882, in the case of an alien corporation that under any provision of the IRC is not treated as a domestic corporation as defined in IRC section 7701.

(v) For purposes of computing ENI, federal taxable income must be determined without taking into account the minimum amount of taxable income specified in IRC section 860E.

(3) The amount of any specific exemption or credit allowed in any law of the United States imposing any tax on or measured by the income of corporations is not allowed in computing ENI. The income actually reported or the income actually determined for Federal income tax purposes is not necessarily the same as the taxable income that was required to be reported for Federal income tax purposes under the provisions of the IRC. Generally, the determination of the Internal Revenue Service as to Federal taxable income is followed, but it is not binding on the commissioner or the taxpayer.

(b) Each corporation included in a Federal consolidated group must compute its Federal taxable income for purposes of article 9-A as if such corporation had computed its Federal taxable income on a separate basis for Federal income tax purposes. Provided, however, in the case of a member of a selling consolidated group, as defined in IRC section 338(h)(10), with respect to which an election under such section 338(h)(10) has been made, Federal taxable income shall not include any gain or loss on the sale or exchange of stock of a target corporation that is not recognized by virtue of such election, but only if such member files on a combined report with such target corporation for the period including the acquisition date, as such term is defined in IRC section 338(h)(2).

(c) Combined reports. In computing combined entire net income, the combined group will generally be treated as a single corporation. All intercorporate dividends must be eliminated (except dividends from a DISC or a former DISC not exempt from tax under article 9-A or dividends from a captive REIT included in the combined report if the group is utilizing the subtraction modification in section 208(9)(t). In addition, all other intercorporate transactions must be deferred in a manner similar to the United States treasury regulations relating to intercompany transactions under IRC section 1502. In computing combined ENI, contributions should be deducted and intercorporate profits should be treated in a manner similar to US treasury regulations for consolidation purposes.

(d) ENI may be affected by a net capital loss carried from another taxable year for Federal income tax purposes pursuant to IRC section 1212. (For the rules for calculating a capital loss and a capital loss carry back and carry forward for New York purposes, see Subpart 3-7 of this Part).

N.Y. Comp. Codes R. & Regs. Tit. 20 §§ 3-3.1

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