N.Y. Comp. Codes R. & Regs. tit. 20 § 105.10

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

Section 105.10 - Accounting methods

Tax Law, § 605(a)(3)

(a)General.

(1) A taxpayer must employ the same method of accounting in determining such taxpayer's New York taxable income as such taxpayer uses for Federal income tax purposes.

(2) The term method of accounting refers not only to the overall method of accounting (such as cash or accrual), but also to the accounting treatment of particular items of income, gain, loss or deduction (such as depreciation and research and expenditures).

(b)Absence of method of accounting for Federal income tax purposes.

(1) Where a taxpayer does not have a method of accounting for Federal income tax purposes, such taxpayer must compute New York taxable income on the accounting basis regularly used in keeping such taxpayer's books if such books clearly reflect income.

(2) A method of accounting which consistently applies generally accepted accounting principles in a particular trade or business, in accordance with recognized conditions or practices, will ordinarily be regarded as clearly reflecting income, provided all items of income, gain, loss and deduction are treated consistently from year to year.

(3) A taxpayer may compute such taxpayer's New York taxable income under any method of accounting which is permissible for Federal income tax purposes, e.g. cash, accrual, installment or long-term contract basis, or any combination thereof which clearly reflects income. See section 446 of the Internal Revenue Code and its applicable regulations.

(4) If the method used by the taxpayer does not clearly reflect such taxpayer's income, the computation of New York taxable income will be made in a manner which, in the opinion of the Department of Taxation and Finance, clearly reflects such taxpayer's income.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 105.10