N.Y. Comp. Codes R. & Regs. tit. 20 § 261.12

Current through Register Vol. 46, No. 51, December 18, 2024

Section 261.12 - Change other than from accrual to installment method of accounting

Tax Law, § 5(d)(2) of § 1340(c); Codes and Ordinances of the City of Yonkers, § 92-102(d)(2)

(a) If a nonresident taxpayer's method of accounting is changed, other than from an accrual to an installment method, there must be taken into account, in computing net earnings for the taxable year of the change, those adjustments pertaining to inventories, accounts receivable, accounts payable, etc., which are determined to be necessary to prevent amounts from being duplicated or omitted. If the change has occurred by reason of a change in such taxpayer's Federal method of accounting, such adjustments will generally be reflected in such taxpayer's Federal net earnings from self-employment and therefore in such taxpayer's City of Yonkers net earnings from self-employment for the year of the change. The year of the change is the taxable year for which the taxable earnings of the taxpayer are computed under a method of accounting different from that used for the preceding year.

(b) The adjustments necessitated by reason of such change in accounting method may result in an amount of City of Yonkers earnings tax for the year of the change in excess of the City of Yonkers earnings tax which would have been determined had there not been such change in the method of accounting. In such event, the additional City of Yonkers earnings tax shall not be greater than if such adjustments were ratably allocated and included for the taxable year of the change and the preceding taxable years beginning after 1983, not in excess of two, during which the taxpayer used the method of accounting from which the change was made.

(c) The nonresident taxpayer must submit a statement with the City of Yonkers earnings tax return for the year of the change, setting forth the following information and calculations:

(1) each adjustment necessitated by the change;

(2) the net amount of the adjustments. This means the consolidation of the adjustments (whether the amounts thereof represent increases or decreases in items of income or deductions) arising with respect to balances in various accounts at the beginning of the taxable year of the change. Where the change in the method of accounting occurs by reason of a Federal change, this net amount must be the same for the City of Yonkers earnings tax purposes as it is for Federal income tax purposes;

(3) the City of Yonkers earnings tax for the taxable year of the change with the net amount of adjustments included in the computation of City of Yonkers earnings;

(4) the City of Yonkers earnings tax for the taxable year of the change computed as if the net amount of such adjustments were not included in the computation of City of Yonkers earnings;

(5) the additional City of Yonkers earnings tax, if any, incurred solely by reason of the net amount of adjustments included in City of Yonkers net earnings, computed by subtracting paragraph (4) of this subdivision from paragraph (3) of this subdivision;

(6) the allocation of the net amount of adjustments (paragraph [2] of this subdivision) to the taxable year of change and the preceding taxable year or years, not in excess of two, during which the taxpayer used the method of accounting from which the change is made. The amount to be allocated to each such year is determined by dividing the net amount of adjustments into as many equal parts as there are taxable years involved (either two taxable years or three taxable years, including the taxable year of the change);

(7) the City of Yonkers net earnings for the year of the change and for the preceding year or two years, as the case may be, computed both (i) without any amount of the net adjustments and (ii) with the addition of the appropriate share of the net adjustments as determined under paragraph (6) of this subdivision;

(8) the additional City of Yonkers earnings tax which would result for each of the above taxable years by the addition to the City of Yonkers net earnings in each such year of the appropriate share of the net adjustments; and

(9) the total amount of such additional City of Yonkers earnings tax for the years involved.

(d) If the amount described in paragraph (c)(9) of this section exceeds the amount described in paragraph (c)(5) of this section, the nonresident taxpayer must compute such taxpayer's City of Yonkers earnings tax for the year of the change without a ratable allocation of the net adjustments to any preceding year or years. If the amount described in paragraph (c)(5) exceeds the amount described in paragraph (c)(9) the amount of the excess must be subtracted from the City of Yonkers earnings tax for the year of the change as determined under paragraph (c)(3) of this section. The result is the amount of City of Yonkers earnings tax due for the taxable year of the change.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 261.12