N.Y. Comp. Codes R. & Regs. Tit. 20 §§ 3-7.5

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

Section 3-7.5 - Application of New York net capital losses

(a) Except as otherwise provided in this Subpart, the amount of New York net business capital loss and the amount of New York net investment capital loss must be carried back to each of the 3 taxable years immediately preceding the taxable year of each such loss and, to the extent that any capital loss remains, must be carried forward to the 5 taxable years immediately succeeding the taxable year of each such loss, but only to the extent that the amount of New York net business capital loss or New York net investment capital loss does not increase or produce a net operating loss for New York State purposes. New York net business capital loss must be carried back or forward in accordance with this Subpart to offset only New York business capital gains in other taxable years, for New York State purposes. New York net investment capital loss must be carried back and forward in accordance with this Subpart to offset only New York investment capital gains in other taxable years, for New York State purposes.

(b) A New York net business capital loss or New York net investment capital loss cannot be carried back to a taxable year beginning before January 1, 2015.

(c) Except as provided in subdivision (b) of this section, a New York net business capital loss or New York net investment capital loss is carried first to the earliest of the 3 taxable years immediately preceding the tax year in which the loss was sustained. If such net capital loss is not entirely used in that tax year, the remaining amount is then carried to the second taxable year preceding the loss year, and any amount thereafter remaining is carried to the first taxable year immediately preceding the tax year in which the net capital loss was sustained. Any unused amount after the application of the carryback rules is then carried forward to the first 5 taxable years immediately succeeding the loss year. Such net capital loss is carried forward first to the taxable year immediately following the loss year and then to the next immediately succeeding taxable year or years until the loss is used up or the fifth taxable year following the loss year, whichever comes first. Any unused capital loss carryforward is forfeited after the fifth taxable year following the loss year.

(d) For purposes of determining the number of tax years to which a capital loss may be carried back or forward, the following years are counted:

(1) a New York filing year;

(2) a New York non-filing year;

(3) a New York S filing year;

(4) a non-captive REIT filing year;

(5) a non-captive RIC filing year; and

(6) a non-combinable captive insurance filing year.

(e) A corporation that reports as part of a consolidated group for Federal income tax purposes but on a separate basis for purposes of article 9-A must compute its New York net business capital loss and New York net investment capital loss as if it is filing separately for Federal income tax purposes. This requires such corporation, when computing its Federal taxable income as if it had filed its Federal tax return on a separate basis, to also compute its Federal net capital gain or loss as if it had filed separately for Federal income tax purposes. The corporation then computes its New York net investment capital gain or loss and New York net business capital gain or loss in accordance with this Subpart.

(f) In computing its tax bases, a New York State combined group is generally treated as a single corporation subject to the same Federal income tax limitations that would apply if such corporation had filed for such taxable year on a consolidated Federal income tax return with the members of the combined group. When applying this rule to the computation of combined business income, Federal taxable income must be computed as if all the corporations in the combined group had filed a Federal consolidated return including such group members. When the New York State combined group is comprised of corporations different than those that filed on the same Federal consolidated return, a re-computation of Federal taxable income is required and, as a result, a re-computation of Federal net capital gain or loss is required as if the Federal net capital gain or loss was computed by a Federal consolidated group comprised of the same members as the New York State combined group. A New York State combined group must then, for the purpose of computing its New York combined business income, compute its New York net business capital loss and New York net investment capital loss, pursuant to this Subpart, as if all the corporations included in the combined group are a single corporation.

N.Y. Comp. Codes R. & Regs. Tit. 20 §§ 3-7.5

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