N.Y. Comp. Codes R. & Regs. tit. 20 § 3-8.2

Current through Register Vol. 46, No. 25, June 18, 2024

Section 3-8.2 - Computation of the unabsorbed net operating loss (UNOL)

(a) The "unabsorbed net operating loss" (UNOL) means the unabsorbed portion of net operating loss (NOL) as calculated under section 208(9)(f) or section 1453(k-1) as such sections were in effect on December 31, 2014, that was not deductible in previous taxable years (including the base year) and was eligible for carryover on the last day of the base year, including any NOL sustained by the corporation during the base year. The computation of such UNOL is subject to the rules in subdivisions (b) through (e) of this section.

(b) To compute the UNOL, the rules in paragraphs (1) and (2) of this subdivision must be followed.

(1) Federal and New York State NOLs available for carryover. A corporation must first compute its Federal and New York State NOLs available for carryover, from taxable years beginning before January 1, 2015, as of the last day of such corporation's base year (Federal and New York State NOLs available for carryover), by applying the following rules:

(i) NOLs are carried back and carried forward to taxable years beginning before January 1, 2015, and included in the determination of deductible NOLs, as well as remaining NOLs available for carryover, subject to NOL deduction limitations, as set forth in either section 208(9)(f) and Subpart 3-8 of this Part or section 1453(k-1), whichever is applicable as such provisions were in effect and applicable on December 31, 2014. NOLs available for carryover do not include any NOLs that were deductible in a taxable year beginning prior to January 1, 2015, regardless of whether or not the corporation actually deducted the NOL. However, if the amount of NOL actually deducted in any taxable year is greater than the amount deductible, the NOL available for carryover is reduced by the excess amount deducted. When computing the amount of NOLs available for carryover, New York State NOLs must be applied against ENI to reduce ENI to zero or the greatest extent possible, regardless of the tax base on which the franchise tax was actually paid.

(ii) If the carryforward period for an NOL, as determined in subparagraph (i) of this paragraph, ends prior to, or on, the last day of the corporation's base year, no portion of such NOL is included in the NOLs available for carryover.

(2) Eligible NOL carryover amounts. After computing its Federal and New York State NOLs available for carryover, the corporation must then compute its Federal and New York State carryover amounts as of the last day of the corporation's base year (its eligible NOL carryover amounts), to be used in the computation of the UNOL, by applying the following rules and limitations in subparagraphs (i) through (v) of this paragraph.

(i) A corporation's Federal and New York State NOLs available for carryover are included in the eligible Federal and New York State NOL carryover amount, respectively, only when there is both a Federal and New York State NOL sustained in the same taxable year and available for carryover as of the last day of the corporation's base year.

(ii) A corporation's Federal NOL sustained in a separate return limitation year (SRLY) beginning before January 1, 2015, and any corresponding New York State NOL, that was not deductible in taxable years beginning before January 1, 2015, and that was available for carryover as of the last day of the corporation's base year, is included in its entirety in the eligible Federal and New York State NOL carryover amount, respectively, subject to the rules in this section.

(iii) If, under IRC section 381, a corporation, in a taxable year beginning prior to January 1, 2015, succeeded to the tax attributes, including Federal NOL carryovers, of another corporation, and the acquiring or successor corporation also succeeded to the New York State NOL carryovers of the acquired or predecessor corporation, then any such Federal and New York State NOLs that were not deductible by the acquiring or successor corporation in taxable years beginning before January 1, 2015, and that were available for carryover as of the last day of the corporation's base year, are included in their entirety in the eligible Federal and New York State NOL carryover amounts, respectively, subject to the rules in this section.

(iv) A corporation's Federal NOLs subject to the limitations imposed by IRC section 382 as a result of an ownership change (pre-change losses) that were not deductible in taxable years beginning before January 1, 2015, and that were available for carryover as of the last day of the corporation's base year, are included in the eligible Federal NOL carryover amount, subject to the rules in this section, but only to the extent that such pre-change losses, in the aggregate, that relate to such ownership change, do not exceed the amount computed as follows:

(a) the applicable annual IRC section 382 limitation for a post-change year for such ownership change, multiplied by 20; less

(b) any such pre-change losses that were deductible in taxable years beginning before January 1, 2015. Such amount shall be computed separately for each ownership change.

(v) In the case of a corporation operating on a cooperative basis under IRC section 1381 that is taxable under article 9-A or article 32 for its base year, the corporation's Federal patronage and non-patronage source NOLs, and the corporation's New York State patronage and non-patronage source NOLs, respectively, that were not deductible in taxable years beginning before January 1, 2015, and that were available for carryover as of the last day of the corporation's base year, are combined and included in the eligible Federal and New York State NOL carryover amount, respectively, subject to the rules in this section.

(c)

(1) After applying all other rules and limitations in this section to compute the eligible Federal and New York State NOL carryover amount, respectively, whichever of the two eligible NOL carryover amounts (Federal or New York State) is the lesser amount is the corporation's UNOL.

(2) When subparagraph (v) of paragraph (2) of subdivision (b) of this section applies, for purposes of applying the limitation under paragraph (1) of this subdivision to eligible Federal and New York State NOL carryover amounts to compute a corporation's UNOL, a corporation's eligible Federal NOL carryover amount arising from Federal NOLs subject to IRC section 382 limitations is used to apply such limitation to any corresponding eligible New York State NOL carryover amount, and a corporation's eligible Federal NOL carryover amount arising from Federal NOLs not subject to IRC section 382 limitations is used to apply such limitation to any corresponding eligible New York State NOL carryover amount. The corporation's UNOL is then the sum of the following amounts:

(i) the lesser of the eligible Federal or New York State NOL carryover amounts arising from Federal NOLs subject to IRC section 382 limitations; and

(ii) the lesser of the eligible Federal or New York State NOL carryover amounts arising from Federal NOLs not subject to IRC section 382 limitations.

(d) In computing the UNOL of a corporation that was included in a combined report for the base year, the UNOL of the base year combined group first is computed in accordance with subdivisions (a) through (c) of this section, substituting combined group for corporation. Each corporation included in the base year combined group then must compute its own UNOL for its base year, by multiplying the base year combined group's UNOL by a percentage that represents that base year combined group member's contribution of losses to the base year combined group's UNOL. Such percentage is calculated by:

(1) dividing the total New York State NOLs of the corporation by the total New York State NOLs of all members of the combined group having such New York State NOLs (to the extent such New York State NOLs are included in the eligible New York State NOL carryover amount of the base year combined group in accordance with this section); and

(2) multiplying the result by one hundred.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 3-8.2

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