N.Y. Comp. Codes R. & Regs. tit. 20 § 3-8.7

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

Section 3-8.7 - Computation of the PNOLC subtraction

(a) PNOLC subtraction available for use.

(1) In the case of a corporation that is not a member of a combined group, its PNOLC subtraction available for use in its first 2015 taxable year is equal to its tax period PNOLC subtraction allotment (as described in subdivision (b) of this section) for such taxable year. The amount of PNOLC subtraction available for use in any taxable year following the corporation's first 2015 taxable year is equal to its tax period PNOLC subtraction allotment for the taxable year plus any unused PNOLC subtraction carryforward.

(2) In the case of a combined group, the PNOLC subtraction available for use in its first 2015 taxable year is the sum of the tax period PNOLC subtraction allotments for such taxable year of all members of the combined group. The amount of PNOLC subtraction available for use by a combined group in any taxable year following its first 2015 taxable year is the sum of the tax period PNOLC subtraction allotments for each such taxable year of all members of the combined group plus the sum of any unused PNOLC subtraction carryforwards of all members of the combined group.

(b) Tax period PNOLC subtraction allotment.

(1) A corporation's tax period PNOLC subtraction allotment is the percentage of its PNOLC subtraction pool that may be claimed in a taxable year as provided in paragraph (2). If a corporation cannot utilize the entire tax period PNOLC subtraction allotment in a taxable year, the unused portion for that taxable year is considered an unused PNOLC subtraction carryforward.

(2) Tax period PNOLC subtraction allotment methods.

(i) 100% allotment method for small business taxpayers. A small business taxpayer's tax period PNOLC subtraction allotment for its first 2015 taxable year is equal to 100% of its PNOLC subtraction pool. A small business taxpayer has no tax period PNOLC subtraction allotment after the first 2015 taxable year, but any unused portion of its 2015 PNOLC subtraction allotment is considered an unused PNOLC subtraction carryforward, eligible to be utilized without any allotment limitations.

(ii) 10% allotment method. For any corporation that is not a small business taxpayer or electing the 50% method in section 210(1)(a)(viii)(B)(2)(IV), the tax period PNOLC subtraction allotment is equal to 10% of its PNOLC subtraction pool in each of its first ten taxable years after the base year. There is no tax period PNOLC subtraction allotment after the tenth taxable year. Unused portions of each allotment are considered PNOLC subtraction carryforwards. Taxpayers with unused PNOLC subtraction carryforwards are eligible to use them in future periods without regard to the 10% allotment limitation.

(3) Combined groups. In the case of a combined group, each member of the group:

(i) shall compute its own tax period PNOLC subtraction allotment using the allotment method determined by its designated agent in the group's first 2015 taxable year if it was included in the combined report in the group's first 2015 taxable year; or

(ii) compute its own tax period PNOLC subtraction allotment determined by the method used in the member's first 2015 taxable year if the member was not included in a combined report in that year. The combined group's tax period PNOLC subtraction allotment in a taxable year is the sum of the tax period PNOLC subtraction allotments for all members of the combined group for the taxable year.

(c) PNOLC subtraction.

(1) For all corporations not electing the 50% allotment method, the amount of PNOLC subtraction in a given taxable year is the lesser of:

(i) the applicable PNOLC subtraction allotment plus available PNOLC subtraction carryforwards (the PNOLC subtraction available for use); or

(ii) The amount required to reduce the tax on total business income prior to the deduction of a PNOLC subtraction and net operating losses to the higher of the tax on the capital base or the fixed dollar minimum tax (the maximum amount of PNOLC subtraction to be deducted).

(2) For corporations not electing the 50% allotment method, a PNOLC subtraction may be claimed for no longer than 20 taxable years or the taxable year beginning on or after January 1, 2035 but before January 1, 2036, whichever comes first.

(d) Maximum amount of the PNOLC subtraction to be deducted.

(1) In the case of a corporation that is not a member of a combined group, the maximum amount of the PNOLC subtraction to be deducted in a taxable year is computed as follows:

(i) multiply the business income tax rate for the taxable year by the apportioned business income before the PNOLC subtraction and the net operating loss deduction for the taxable year;

(ii) subtract from the amount computed in subparagraph (i) of this paragraph, the greater of the capital base tax or the fixed dollar minimum tax for the taxable year; and

(iii) divide the result in subparagraph (ii) of this paragraph by the taxpayer's business income tax rate for the taxable year.

(2) In the case of a combined report, the maximum amount of PNOLC subtraction to be deducted in a taxable year is computed as follows:

(i) multiply the business income tax rate for the taxable year by the combined apportioned business income before the PNOLC subtraction and the net operating loss deduction for the taxable year;

(ii) subtract from the amount computed in subparagraph (i) of this paragraph, the greater of the combined capital base tax or the fixed dollar minimum tax attributable to the designated agent for the taxable year; and

(iii) divide the result in subparagraph (ii) of this paragraph by the combined group's business income tax rate for the taxable year.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 3-8.7

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