New York State Tax Rulings
Free plain-English summaries of state tax letter rulings and advisory opinions issued in New York, with full citations and the original source on every page.
No New York rulings match these filters
Try a different search term or clear the filters.
When a PSC-mandated restructuring forces a utility to transfer its generating assets to a subsidiary and auction them, are the proceeds and distributions taxable under sections 186 and 186-a?
Largely not taxable under section 186. Because the New York Public Service Commission's Competitive Opportunities order forced NYSEG to restructure and auction its generating assets, the asset transfe…
Does a corporation's section 1452(d) election to stay taxable under Article 9-A survive its purchase by a bank holding company and later mergers and business transfers into it?
Yes. A corporation (B) that made the section 1452(d) grandfather election to remain under Article 9-A keeps that election after a bank holding company buys all its stock and after the three proposed s…
May a subsidiary's unused investment tax credit carryover survive after its parent is bought by an unrelated corporation and the subsidiary is later merged into the acquirer?
Yes. When Miles bought all the stock of Diagnostics, the 'target corporation' under section 208.15 was Diagnostics, not its subsidiary Instruments -- so Instruments' unused investment tax credit carry…
How are a natural-gas limited partnership and its corporate general and limited partners taxed under sections 186, 186-a, and Article 9-A?
The partnership itself is not subject to Article 9-A or section 186, but as a 'person' selling gas consumed in New York and not PSC-supervised, it is a second-class utility taxable under section 186-a…
For the Article 9-A receipts factor, is part of a company's commission income allocable outside New York when the income-generating telemarketing is performed by an out-of-state subcontractor?
Yes. The taxpayer earns commissions when an out-of-state independent telemarketing company it hires gets a telephone company's customers to subscribe to a new service. For the receipts factor, receipt…
When a utility buys its publicly traded parent's stock from a third party and keeps it, is that a constructive dividend to the parent subject to the section 186 excess dividends tax?
No. When Consolidated Edison directly purchases the publicly traded common stock of its parent (CEI) on the open market and continues to hold it, there is no distribution of property to shareholders. …
Is a prior-period accounting adjustment that reduces a subsidiary's retained earnings (to correct a tax-expense booking error) a 'dividend paid' for the section 183 capital-stock tax?
No. The section 183 capital-stock tax is computed in part on the value of stock 'on which dividends are paid' at 6% or more. A proposed prior-period adjustment that debits retained earnings and credit…
Is an out-of-state electronic health-claims clearinghouse subject to New York franchise tax when it installs equipment and trains customers here, and which of its fees and equipment are subject to sales or use tax?
On franchise tax: once the company acquires New York customers and sends employees in to install computer hardware/software and train customer staff, it is doing business and has property in New York,…
How do section 186, section 186-a, and the real estate transfer tax apply to LILCO's restructuring -- under threat of condemnation by LIPA -- including asset exchanges, redemption distributions, and transfers to disregarded LLCs?
Because LILCO is restructuring under threat of condemnation by the Long Island Power Authority (LIPA), the gas-and-generation asset exchange is not 'receipts from the employment of capital' and is not…
Does a public warehouse that stores and ships customers' inventory provide 'fulfillment services,' and do its out-of-state customers get New York franchise tax or sales tax nexus by using it?
Yes, and the customers get no nexus. Distribution Unlimited's public-warehousing activities -- storing manufacturers' and distributors' inventory and shipping it by common carrier on the owner's instr…
Can the distortion requirement for filing a combined report be satisfied by substantial intercorporate transactions among two or more corporations, and does one member's lack of federal income preclude a distortion finding?
Yes. The distortion requirement for a combined report (20 NYCRR 6-2.3) is presumed met when there are substantial intercorporate transactions -- which can exist among two or more corporations, and may…
Is a corporation that holds bare record title to real property as nominee, and was later dissolved by proclamation, subject to Article 9-A -- for the years it was incorporated, after dissolution, or both?
Two periods, two answers. A corporation that was incorporated and held record title to New York real property in a corporate capacity is subject to the Article 9-A franchise tax under section 209.1 fo…
Is a federal S corporation that is a corporate member of an LLC doing business in New York subject to the Article 9-A franchise tax, and is it taxed as a C corporation?
Yes, with the tax computed as a C corporation. An LLC treated as a partnership for federal income tax is a partnership for New York; its corporate members are corporate partners. If the S corporation'…
How is a Public Service Commission-regulated reseller of telephone service taxed under Article 9 before and after the 1995 telecommunications tax changes?
A Public Service Commission-regulated reseller principally engaged in telephone service is taxed under section 183 of Article 9 (so it is outside Article 9-A under section 209.4). Before January 1, 19…
Is an unincorporated residential condominium association whose only revenue is common-charge assessments subject to the New York Article 9-A franchise tax?
Yes. An unincorporated residential condominium association -- owning no property, issuing no stock, with no profit motive and only common-charge assessment revenue -- is generally an association taxab…
On a New York combined report, are a securities dealer's sales sourced to New York if they are made through a New York office of an affiliate in the same combined group?
Yes. On a combined report the receipts factor is computed as though the combined group were one corporation, with intercorporate receipts eliminated (20 NYCRR 4-4.7, 4-1.2). So a securities dealer's (…
Is a 21-unit residential condominium whose only revenues are common charges and interest subject to the Article 9-A franchise tax for tax years 1991 through 1995?
Yes. A residential condominium -- even a small one with only common-charge and interest income and no commercial or recreational facilities -- is generally an association taxable as a corporation unde…
Is a residential condominium association that files federal Form 1120-H subject to the New York Article 9-A franchise tax for tax years 1991 through 1995?
Yes. A residential condominium association is generally classified as an association taxable as a corporation under IRC section 7701(a)(3), so it meets the New York definition of corporation in Tax La…
Are companies that provide enhanced fax services (formatting, merging, and broadcasting documents) taxed as telephone/transmission companies, telecommunications providers, or utilities, or under Article 9-A?
They are taxed under Article 9-A, not as a telephone or transmission business. Enhanced fax services -- merging and formatting a customer's data, broadcasting it to many recipients at once, and report…
Is a newly formed LLC that buys the assets of a former Article 9-A taxpayer a new business eligible for the refundable economic development zone investment tax credit?
Yes, on the assumed facts. An LLC treated as a corporation federally is a corporation for New York and is a new business under Tax Law section 210.12(j) -- and so eligible for the refundable economic …
How are affiliated companies providing telephone answering services, paging airtime, and equipment rentals taxed under the franchise, telecommunications excise, and sales taxes?
A telephone answering service company is a general business taxed under Article 9-A, not as a telephone business. A paging common carrier is principally engaged in a telephone business taxed under sec…
Can the distortion requirement for filing a New York combined report be met when one of the corporations is a Subchapter T cooperative that generally reports no federal taxable income?
It is not precluded. The distortion requirement for a New York combined report (20 NYCRR 6-2.3) is presumed when there are substantial intercorporate transactions, and the fact that one member is a Su…
Is an out-of-state wine wholesaler exempt from the New York Article 9-A franchise tax under Public Law 86-272 when its only New York presence is a home-based sales manager who solicits orders?
Yes. Public Law 86-272 (and 20 NYCRR 1-3.4(b)(9)) exempts an out-of-state seller of tangible personal property from the Article 9-A franchise tax if its New York activities are limited to soliciting o…
When a corporation sells products to an LLC it owns that is taxed as a partnership, how are those sales treated in the receipts factor of the corporate member?
The corporate member must exclude, from both the numerator and denominator of its receipts factor, the portion of its sales to the LLC that is in effect also reflected in its distributive share of the…
Is a court-ordered liquidation fund taxed like a qualified settlement fund subject to New York franchise tax, State income tax, or New York City income tax?
No. A court-ordered liquidation fund that only holds proceeds, pays creditors, distributes to beneficiaries, and makes short-term investments is not conducting a business, so it is not a corporation u…
Does a non-bank Article 9-A taxpayer keep its Article 9-A status when it contributes its assets to a partnership, and how do tiered-partnership items flow to it?
It keeps its Article 9-A status. Because the SBIC was never a banking corporation under section 1452(a)(9), it is simply an Article 9-A taxpayer and the section 1452(d) grandfather election does not e…
Does a tax-free restructuring of the corporate partners of a partnership that owns investment-tax-credit property trigger recapture of the credit?
No. Investment tax credit is recaptured under Tax Law section 210.12(g) only if the qualified property is disposed of or ceases to be in qualified use. A tax-free section 351 contribution and tax-free…
Does a manufacturer's backhauling -- using its delivery trucks to pick up products and unrelated goods in New York for return to its home state -- exceed Public Law 86-272 and create franchise-tax nexus?
Yes. Delivering products into New York by the company's own trucks is protected solicitation, but using those trucks to pick up nonconforming products, trim, and scrap (post-delivery backhauling) exce…
Does a manufacturer otherwise protected by Public Law 86-272 lose its exemption by conducting three small one-day product-fitting training seminars a year in New York?
No. A manufacturer whose New York sales reps stay within solicitation is protected by Public Law 86-272. Conducting three one-day seminars a year to train retailers on fitting its products is technica…
Does a foreign corporation that only displays goods at two five-day trade shows a year in New York, without taking orders or selling, become subject to the Article 9-A franchise tax?
No. Coming into New York only to display goods at two five-day trade shows a year (10 days total), without taking orders or making sales and without otherwise doing business, owning property, or maint…
How is a New York corporation and its shareholders taxed when the shareholders of a federal S corporation make a section 338(h)(10) election on a sale of the company's stock?
The target corporation (X) is subject to Article 9-A whether or not it is a New York S corporation, and the section 338(h)(10) deemed asset sale is reflected in its franchise tax. X files two short-pe…
Is a long-established out-of-state manufacturer a new business eligible for the refundable EDZ investment tax credit when it acquires a New York Article 9-A taxpayer it was not previously affiliated with?
Yes. A corporation is a new business under Tax Law section 210.12(j) -- and so eligible for the refundable economic development zone investment tax credit -- unless it is over-50% owned by an existing…
Is a court-created qualified settlement fund that only invests and distributes funds subject to the New York franchise tax or personal income tax?
No. A qualified settlement fund under IRC section 468B that only holds, invests, and distributes funds is not conducting a business, so it is not a corporation subject to the Article 9-A franchise tax…
Is an out-of-state corporation that owns a limited partnership interest in a partnership doing business in New York subject to New York franchise tax?
Yes. Under 20 NYCRR 1-3.2(a)(6) a foreign corporation is treated as doing business in New York if it is a limited partner in a partnership (other than a portfolio investment partnership) that does bus…
How are an out-of-state natural-gas marketer's sales to New York end-users taxed under the Article 9 utility taxes, Article 9-A, and the sales tax, when title passes outside New York and the marketer arranges transportation as the customer's agent?
A natural-gas marketer deriving more than 50% of its receipts from gas sales is classified under Article 9: it is subject to the section 186 gross-earnings tax (so not Article 9-A, per section 209.4) …
Does a tax-free restructuring of a partnership's corporate partners (a section 351 transfer plus section 368(a)(1)(A) mergers) trigger recapture of the investment tax credit?
No. Investment tax credit is recaptured under Tax Law section 210.12(g) only if qualified property is disposed of or ceases to be in qualified use. A tax-free section 351 contribution and tax-free sec…
On a combined report, are a securities dealer's sales sourced to New York based on the selling activity of an affiliate in the same combined group?
Yes. On a combined report under Article 9-A the receipts factor is computed as though the corporations in the group were one corporation, with intercorporate receipts eliminated (20 NYCRR 4-1.2, 4-4.7…
Is a corporation dissolved by proclamation that held title to New York real estate subject to franchise tax, and for what period?
It depends on whether it kept doing business. A corporation dissolved by proclamation is subject to Article 9-A franchise tax only while it actually conducts business; one that merely holds record tit…
Is an unincorporated residential condominium association subject to Article 9-A franchise tax, and how does electing federal homeowners-association status affect its income?
Yes. An unincorporated residential condominium association whose only revenue is common charges and interest income is an 'association' taxable as a corporation under IRC section 7701(a)(3) and Tax La…
Are a moving company's charges for packing/unpacking and its sales of packing materials part of a transportation business under Article 9, sections 183 and 184?
It depends on whether the activity is tied to transporting the goods. A moving company is taxed under Article 9 (sections 183/184) instead of Article 9-A only if more than 50% of its receipts come fro…
Is a group self-insurance workers' compensation trust taxed as an insurance company under Article 33, or under another article of the Tax Law?
Under Article 9-A, not Article 33 or the personal income tax. Because the trust is not licensed by the Superintendent of Insurance and is not regulated under the Insurance Law, it is not 'doing an ins…
Is a single-member New York LLC subject to New York tax, and does owning it make a foreign corporate sole member taxable in New York?
New York follows the LLC's federal classification. A single-member LLC that is disregarded for federal income tax (the default under the check-the-box rules) is treated as a branch or division of its …
Are industrial development agency bonds investment capital, is their interest investment income, and are they governmental securities for the investment allocation percentage?
Yes. Bonds issued by the New York City Industrial Development Agency -- a governmental instrumentality (public benefit corporation) under Article 18-A of the General Municipal Law -- are investment ca…
Does a foreign corporation that enters New York only to meet with a prospective accountant, banker, lawyer, or underwriter become subject to the Article 9-A franchise tax?
No. A foreign corporation (XYZ) that enters New York for the limited purpose of meeting with an accountant, banker, lawyer, or securities underwriter it might engage -- and does nothing else in the St…
How are a utility's tolling fees for burning marketers' gas to produce the marketers' electricity, and the marketers' imported gas, taxed under sections 186, 186-a, 189 and the sales tax?
Marketers that import out-of-state gas into Con Edison's system to be burned into their own electricity are section 189 gas importers, and Con Edison -- the public utility delivering the gas -- must c…
Is a sewage-works corporation taxed under Article 9 (sections 183/184, 186, or 186-a) or under Article 9-A?
Under Article 9-A. A sewage-works corporation organized under the Transportation Corporations Law and not regulated by the Public Service Commission is not principally engaged in a transportation or t…
When a gas marketer sells natural gas to New York end-users with title passing outside New York, are its receipts taxed under sections 186, 186-a, 189, or the sales/use tax?
It turns on where the sale occurs, which depends on where title, possession, and risk of loss pass -- a factual question. Under this agreement, title, risk of loss, and transportation responsibility p…
After a corporation claims the investment tax credit and spins the property off to an LLC in a tax-free section 721 exchange, who keeps the credit and is it recaptured?
The corporate taxpayer that claimed the credit keeps it, with no recapture. A film company bought qualifying ITC equipment, claimed the credit in the first qualified-use year, then contributed the vid…
Is an LLC taxed as a partnership a 'portfolio investment partnership,' and is a foreign corporate member subject to Article 9-A by reason of its membership?
New York follows the LLC's federal classification, so an LLC taxed as a partnership is a partnership for New York tax. An LLC that meets the IRC section 851(b)(2) gross-income requirement and is not a…
Is a natural-gas broker LLC that never takes title to the gas subject to the section 186 or 186-a gas/utility taxes?
No. A natural-gas broker that never takes title, possession, control, or risk of loss of the gas -- it only matches producers with end-users, states in its agreements that it is a broker, reports only…
Are the corporate partners of a natural-gas storage partnership taxed under Article 9 or Article 9-A, and is the partnership subject to section 186-a on its storage and incidental gas-sale receipts?
The corporate partners are taxed under Article 9-A, and the partnership's storage receipts are not section 186-a gross operating income (but its incidental gas sales are). A gas-storage partnership th…
For a multi-tier chain of controlled foreign corporations, does a company's share of a lower-tier CFC's Subpart F income keep the character (subsidiary capital vs. investment income) of the company's OWNERSHIP IN THAT LOWER-TIER CFC, or does it instead take on the character of the company's ownership in the FIRST-TIER CFC through which the income is deemed distributed?
The company's pro-rata share of Subpart F income from ANY tier of controlled foreign corporation -- first-tier or lower -- is deemed a dividend paid up the chain and takes on the character of the taxp…
Does a corporation that was dissolved decades ago and holds no assets owe New York franchise tax just for signing a deed to fix a title defect from its original 1967 liquidation?
No. Signing a corrective deed solely to fill a gap in the chain of title, with no other activity and no assets, is not "conducting business" — the dissolved corporation owes no franchise tax for any y…
Does an unincorporated condominium association organized under New York's condominium law owe Article 9-A corporation franchise tax if it earns income beyond just common charges, like a laundry room concession?
Yes. A condominium association that earns income from a laundry room concession and storage charges — not just common-charge assessments — is providing a medium for conducting business and sharing gai…
If a parent holding company spins off its New York lending business into a new New York subsidiary, keeps a bank account and books here, but is otherwise run entirely from Japan, does the parent still owe New York corporate franchise tax?
No. Once the parent withdraws its authorization to do business in New York, becomes a purely passive investment holding company managed entirely from Japan, and confines its remaining New York contact…
Can an S corporation carry forward research and development tax credits it earned during a year when it wasn't subject to Article 9-A tax, to a later year after it becomes a regular C corporation again?
No. A research and development tax credit computed for a year when the corporation was an S corporation — and therefore not subject to Article 9-A tax at all — cannot be carried forward to a later yea…
Is a nonprofit professional corporation exempt from New York corporate franchise tax if it holds federal 501(c)(3) tax-exempt status but was required by state law to issue stock?
No. New York's nonprofit franchise-tax exemption applies only to corporations that have no stock or shares at all — a stock corporation stays taxable under Article 9-A even if it operates strictly on …
Does a New York corporation qualify for New York's reduced 'small business taxpayer' franchise tax rates if it is wholly owned by a foreign (non-U.S.) parent whose own income and capital exceed the small business thresholds?
Yes. Because the foreign parent is not an "includible corporation" in a federal affiliated group, the New York subsidiary is tested on its own numbers, not combined with its foreign parent — so it qua…
When a corporation had a federal S election in effect (but no New York S election) during its loss years, how is its New York net operating loss carryforward computed for a later year when it's a regular C corporation?
The New York NOL carryforward is limited to the amount that would have been allowed under IRC § 172 as if the corporation had never made the federal S election during the loss years — recomputing the …
When a company sells stone and gravel and also delivers it to customers, which parts of its revenue count as "transportation" for deciding whether it's taxed as a transportation corporation under Article 9 instead of a general business corporation under Article 9-A?
Delivery/hauling charges count as transportation revenue (Article 9) in all three billing setups — pure delivery fees, separately stated delivery charges, and the delivery-attributable portion of a lu…
Browse New York rulings by topic
These are official tax letter rulings and advisory opinions issued by New York's revenue authority in response to questions from specific taxpayers about how the tax law applies to their facts. A ruling is binding on the department only for the taxpayer who requested it and cannot be relied on by anyone else, but it is strong evidence of how the state reads the law. Every ruling above has a plain-English question and short answer, plus a link to the full original source.