N.Y. Comp. Codes R. & Regs. tit. 20 § 50.1

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

Section 50.1 - General

(a) By section 270 of the Tax Law, a tax is imposed upon transactions with reference to:

(1) shares of stock;

(2) certificates of stock;

(3) certificates of rights to stock;

(4) certificates of interest in property or accumulations;

(5) certificates of interest in business conducted by a trustee or trustees;

(6) certificates of deposit representing any of the foregoing. The tax applies to such shares or certificates in any domestic or foreign corporation, company, association, or business conducted by a trustee or trustees.

(b) The tax is imposed on (1) sales, (2) agreements to sell, (3) memoranda of sales, (4) deliveries, and (5) transfers, of the shares and certificates described above, including transfers of record ownership on the books of the corporation or other entity issuing the shares or certificates involved.

(c) Definitions.

(1) As used in this Subchapter, the terms shares and certificates mean and include:

(i) shares of stock, whether or not represented by certificates, including shares subscribed for by an accommodation incorporator;

(ii) temporary or interim certificates;

(iii) certificates representing the interest of a subscriber for stock, although further payment must be made;

(iv) voting trust certificates;

(v) certificates of stock in a dissolved corporation.

(2) As used in this Subchapter, the term dealer in securities means any person, firm, company, association or corporation engaged in the making or negotiating of sales, agreements to sell, deliveries or transfers of shares or certificates taxable under article 12 of the Tax Law, or conducting or transacting a stock brokerage business.

(3) Unless otherwise indicated, the term commissioner means the Commissioner of Taxation and Finance.

(4) Unless otherwise indicated, the term department means the Department of Taxation and Finance.

(d) Computation of tax. The tax imposed by article 12 of the Tax Law is to be computed at the statutory rates (see sections 270[2] and 270-e of the Tax Law) on the total number of shares involved in each transaction. The amount of tax so computed is to be rounded to the nearest one cent.

(e) An agreement of the type known as a "call" constitutes an agreement to sell, and is subject to tax when given. It is immaterial whether the option thereby given is actually exercised, but, if exercised, no tax is payable on the sale, delivery or transfer made pursuant to the "call," provided that the tax has been paid on the "call" itself. In such a case, the seller may submit to the transfer agent a certification signed by the seller stating the number of shares transferred, the name of the transferee, that the transfer was made pursuant to a "call" and that the applicable tax was paid upon such "call," which remains in the seller's possession. The tax payable on a "call," as described in this subdivision, is computed based on the price for which the shares subject to the " call" will be transferred pursuant to such "call," and not based on the price of the "call" itself.

(f) It is not necessary that a transaction involve a sale to be taxable; a delivery or transfer of shares or certificates as a gift is taxable.

(g) The tax imposed by article 12 of the Tax Law does not apply to the original issuance of stock. Thus, the transfer of shares pursuant to an agreement of the type known as a "warrant" is not taxable if the shares transferred represent an original issuance of stock by the corporation making the "warrant." However, the transfer of treasury stock by a corporation (whether or not transferred pursuant to a "warrant") does not qualify as an original issuance of stock and is thus a taxable transfer.

(h) Transfer of shares of stock in a cooperative housing corporation. At the time of the initial formation of a cooperative housing corporation, the transfer to the initial unit purchasers of shares related to specific cooperative units, and the transfer to the sponsor of the cooperative conversion of the remaining shares, representing the unsold units in the cooperative, are exempt from tax, as these transfers represent an original issuance of stock by the cooperative housing corporation. However, subsequent transfers by the initial unit purchasers of their cooperative shares and transfers by the cooperative sponsor to additional unit purchasers of the remaining unsold shares in the cooperative are not exempt from tax.

(i) The following are examples of taxable transactions:

(1) The transfer of stock by gift.

(2) The transfer of stock from a partnership to a member thereof or from a member to a partnership.

(3) The purchase, redemption or other reacquisition by a corporation of its own shares of stock (except where such shares are cancelled on reacquisition pursuant to the provisions of section 515 of the Business Corporation Law, or such shares are cancelled by an appropriate amendment to the corporation's certificate of incorporation or by action by the board of directors of such corporation within one year of the date of reacquisition) and transfers of its own stock by the corporation.

(4) The distribution of stock in one corporation owned by another to stockholders of the latter.

(5) The transfer of stock of a corporation to be merged, to the merging corporation, prior to the actual merger and as a condition precedent to the merger.

(6) The transfer of stock to or by trustees, including the transfer into or out of a voting trust, investment trust or other trust.

(7) The transfer of stock from an individual to himself as trustee.

(8) The transfer of stock by an executor or administrator, whether to trustees, legatees, or other persons.

(9) The transfer of stock from tenants in common to themselves as individuals or to one of them.

(10) The transfer of stock standing in the name of two individuals to themselves as joint tenants with right of survivorship.

(11) The transfer of stock held by joint tenants to either one or the other of the parties while both are alive.

(12) The delivery of a certificate by the transferor, or his agent, to the transferee, or his agent.

(13) The transfer of stock by or to an ambassador or consul representing a foreign country.

(j) The following are examples of transactions not subject to tax:

(1) A transfer on the books of the corporation into a new name, made merely because the stockholder has changed his or its name, where no actual change of ownership occurs.

(2) The surrender of a single certificate for reissuance to the same stockholder of several certificates representing, in the aggregate, the same number of shares.

(3) The surrender of a number of certificates of reissuance, to the same stockholder, of a single certificate for the same number of shares.

(4) The transfer of a fraction of a share of stock or a certificate representing the right to receive less than one share of stock.

(5) The surrender of preferred stock certificates in exchange for common stock certificates issued to the same stockholder and vice versa, when made necessary by a change in capital structure.

(6) The mere registration in the State of New York, by a registrar, of a transfer already made by the corporation or its transfer agent outside this State.

(7) The mere execution of an assignment within the State (whether by endorsing the certificate in blank or otherwise) where all other acts connected with the transfer are done outside the State.

(8) The transfer of stock from a trustee of a continuing trust to a successor trustee appointed under power reserved in the deed of trust.

(9) The transfer of stock by a trustee to a successor trustee in a case where the first trustee, acting under a deed of trust which empowers him to appoint a cotrustee, appoints such cotrustee and then resigns, leaving the cotrustee as the sole trustee.

(10) The transfer of stock held in a testamentary trust from the original trustees to a substitute trustee appointed by the court and the surviving member of the original trustees.

(11) The surrender of stock of a merged corporation in exchange for stock of a merging corporation at the time and as part of a statutory merger.

(12) The surrender of stock of a consolidating corporation in exchange for stock in the resulting corporation in the case of the consolidation of two or more corporations.

(13) The transfer of stock in the names of two joint tenants with right of survivorship to the name of the survivor after the death of the other joint tenant.

(k)

(1) Any certification required pursuant to this Subchapter relating to the delivery or transfer of a certificate or certificates may be impressed by rubber stamp on such certificate or certificates or on the required memorandum of sale. As an alternative to the use of a rubber stamp, such certifications may be pre-printed on or attached to such certificate or certificates or required memorandum of sale. In the case of a transfer through a system for the central handling of securities (see section 53.2 of this Title) certifications pursuant to this Subchapter may be stamped or preprinted on the depositor's instructions to such system or its nominee and on the system's or its nominee's instructions to the transfer agent, issuing corporation or trustee issuing certificates subject to tax under article 12 of the Tax Law.

(2) If the registration of the transfer with respect to which a certification relates was effected pursuant to instruction on magnetic or punched tape, discs, cards or other media, or by wire or wireless transmission, such certification may be inserted in such instruction as prescribed by section 51.2 of this Title.

(l) Rebates. Any tax paid pursuant to article 12 of the Tax Law may be fully rebated pursuant to the provisions of section 280-a of such article 12. See Part 52 of this Title for more information regarding the payment of tax and the rebate thereof.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 50.1