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.
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New York Advisory Opinion TSB-A-20(3)C: Does New York follow the federal IRC section 338(h)(10) treatment of a stock sale and a pre-sale asset distribution when computing Article 9-A entire net income?
Yes. If a stock sale and a pre-sale distribution of assets conform to IRC section 338(h)(10), New York follows the federal tax treatment for Article 9-A entire net income, because entire net income st…
New York Advisory Opinion TSB-A-20(1)C: Does being 'formed for' a telephone business decide Article 9 vs Article 9-A status, and does deriving more than 50% of receipts from non-Article-9 activities make a corporation an Article 9-A filer?
What a corporation was 'formed for' is not dispositive; Article 9 vs Article 9-A status turns on what it is principally engaged in, and a corporation deriving more than 50% of its aggregate gross rece…
For a combined-group member in START-UP NY, must income from a previously conducted line of business be disregarded for the tax elimination credit even if earned out of state, and do employees lose their wage exemption if the business faces proportional recovery?
Yes to both protections. The subsidiary must disregard income from a line of business it previously conducted when computing its tax factor for the Tax-free NY area tax elimination credit, even if tha…
New York Advisory Opinion TSB-A-16(6)C: Is an out-of-state real-estate brokerage with no New York office, whose employee worked 26 days in New York on two 2014 sales, doing business and subject to Article 9-A franchise tax?
Yes. A Washington real-estate brokerage with no New York office, whose Connecticut-based employee spent 26 days in New York visiting properties and meeting sellers on two 2014 sales for which it earne…
New York Advisory Opinion TSB-A-16(1)C: May a corporate partner aggregate the activities and employees of two majority-owned broker-dealer partnerships to meet the Investment Tax Credit's 'principally used' and employment tests?
Yes. Using the aggregate method, a corporate partner deemed a registered broker-dealer through disregarded SMLLCs may combine the qualifying uses and employees of its two majority-owned partnerships t…
New York Advisory Opinion TSB-A-15(5)C: If an alien (Swiss) holding company's disregarded Delaware LLC opens a New York office but only invests in securities for its own account, is the company subject to New York's Article 9-A franchise tax?
No. An alien corporation whose disregarded LLC merely opens a New York office but limits its activity to investing in securities for its own account within IRC section 864(b)(2) is not doing business …
New York Advisory Opinion TSB-A-15(4)C: Can a qualified New York manufacturer claim the real property tax credit for real property taxes it pays under a lease from a related party?
No. A qualified New York manufacturer cannot claim the real property tax credit for real property taxes it pays under a lease, because the credit covers leased-property taxes only when the property is…
New York Advisory Opinion TSB-A-15(2)C: Is a corporation dissolved by proclamation that merely holds title to land as an inactive nominee still subject to Article 9-A franchise tax after dissolution?
The corporation was subject to Article 9-A franchise tax from its incorporation through its dissolution by proclamation, but not after dissolution, because afterward it merely held title to land as an…
New York Advisory Opinion TSB-A-14(1)C: Do purchased patents, prototypes and know-how qualify for the QETC facilities, operations and training credit as research and development property or as qualified research expenses?
Purchased patents, trade secrets and know-how are intangible and do not qualify as research and development property for the QETC credit; only tangible prototypes and designs used in research and deve…
New York Advisory Opinion TSB-A-13(11)C: Are a broker-dealer's 'matched principal transactions' principal transactions whose income may be sourced using the production-credit allocation method?
Yes. Through its disregarded registered broker-dealer SMLLCs, the petitioner is a principal, and matched principal transactions in which it bears a risk of loss on the price spread are principal trans…
New York Advisory Opinion TSB-A-13(10)C: For the brownfield redevelopment tax credit, can a buyer claim the site-preparation credit after five years, and how is the tangible-property credit allocated for property partly on and off a qualified site?
No site-preparation credit is allowed because more than five years passed since the certificate of completion; the tangible-property credit runs up to ten years after the COC year, and property partly…
New York Advisory Opinion TSB-A-13(6)C: Was an out-of-state remote seller whose employees made limited-purpose trips to New York (inspirational shopping, trade shows, vendor meetings) doing business and subject to Article 9-A franchise tax?
No. On the stated facts, the out-of-state catalog and Internet seller was not doing business in New York, because its employees' limited-purpose trips for 'inspirational shopping,' attending trade sho…
New York Advisory Opinion TSB-A-13(4)C: Is an out-of-state company whose New York independent contractors hold consigned inventory and make sales and deliveries subject to franchise tax, or is it protected by the fulfillment-services exclusion or Public Law 86-272?
Yes. The out-of-state company is subject to franchise tax, because consigned inventory it still owns in New York gives it nexus, and neither the fulfillment-services exclusion nor Public Law 86-272 pr…
New York Advisory Opinion TSB-A-13(3)C: Does a U.S. bank holding company stay taxed under Article 9-A (rather than Article 32) after a reorganization and the sale of its banking subsidiary, under the Gramm-Leach-Bliley transition rules?
Yes. Holdco continues to be taxed under Article 9-A. A bank holding company that first registered and elected financial-holding-company status after January 1, 2000 cannot be forced into Article 32 co…
New York Advisory Opinion TSB-A-12(4)C / 12(7)S: Does a not-for-profit electricity Independent System Operator become subject to corporate franchise tax or lose its sales-tax exempt status by adopting a central counterparty structure under FERC orders?
No. A not-for-profit Independent System Operator that adopts a central counterparty structure -- becoming a party to all transactions in the electricity markets it administers under FERC orders -- doe…
New York Advisory Opinion TSB-A-12(1)C / 12(2)S: Is a cash payment-processing service subject to sales tax, and does using it make merchants vendors or give them New York franchise-tax nexus?
No on both. A cash payment-processing service that lets customers pay online purchases or bills with cash at a local store is not an enumerated taxable service, so it is not subject to sales and use t…
New York Advisory Opinion TSB-A-11(10)C: Is an out-of-state seller of tangible gifts protected from corporate franchise tax by Public Law 86-272 when some orders are filled by unaffiliated New York third-party vendors?
No, it is not subject to franchise tax. A North Carolina company that sells only tangible gifts and awards into New York -- some shipped by unaffiliated New York third-party vendors it never takes tit…
New York Advisory Opinion TSB-A-11(5)C: Could a foreign corporation that is a general partner (with an indirect interest in a New York LLC) make the foreign corporate limited-partner separate-accounting election?
No. The foreign corporation could not make the limited-partner separate-accounting election, because it was not subject to New York tax solely as a result of the limited-partner provision (20 NYCRR 1-…
New York Advisory Opinion TSB-A-11(2)C: Is an electronic OTC commodities and derivatives market operator a banking corporation under Article 32, and does pass-through income from an affiliated partnership make a corporate partner one?
No. An electronic over-the-counter commodities and derivatives market operator is not a banking corporation under Article 32, because its trading, confirmation, and data fees are not a banking busines…
New York Advisory Opinion TSB-A-10(8)C: Does a foreign equipment seller owe Article 9-A tax, and if installation/training push it past PL 86-272, is it taxed only on those receipts?
It depends, and there is no partial exemption. A foreign corporation that only solicits orders for testing equipment (approved and shipped from outside New York) is protected by Public Law 86-272 and …
New York Advisory Opinion TSB-A-10(7)C: Must a New York not-for-profit corporation that has no IRS 501 determination still file and pay Article 9-A franchise tax?
Not necessarily. A New York not-for-profit corporation with no stock or shares, operated on a nonprofit basis with no earnings inuring to members, can qualify for the Article 9-A franchise-tax exempti…
New York Advisory Opinion TSB-A-10(2)C: Does an out-of-state RV maker (Jayco) owe Article 9-A franchise tax when it only solicits New York sales and uses independent dealers for warranty repairs?
Mostly no, but it depends on the facts. An out-of-state recreational-vehicle manufacturer whose only New York activity is soliciting orders (approved out of state) and whose authorized dealers perform…
New York Advisory Opinion TSB-A-10(1)C: Are distributions from a charitable remainder unitrust to its corporate beneficiary business income or investment income under Article 9-A?
They are business income. A corporation that receives distributions from a charitable remainder unitrust it set up is taxed on those distributions as Article 9-A business income, not investment income…
New York Advisory Opinion TSB-A-09(14)C: How are royalty receipts from licensing intellectual property allocated to New York for the Article 9-A business allocation percentage?
To where the licensee sells the products. Royalty receipts from licensing copyrighted and non-copyrighted intellectual property are allocated to New York based on where the activity that generates the…
New York Advisory Opinion TSB-A-09(8)C: How are a website operator's online advertising fees and medical 'risk participation' fees sourced to New York for the Article 9-A business allocation percentage?
By where the audience is and where the service is performed. A website operator's advertising receipts are sourced to New York based on where the audience views/reads the ads (the same audience-based …
New York Advisory Opinion TSB-A-09(5)C: How are a social network's online advertising receipts (CPC and CPM) allocated to New York for the Article 9-A business allocation percentage?
By where the audience is. A website operator's online advertising receipts are allocated to New York based on the New York audience, not where its servers or staff sit. Cost-per-click (CPC) receipts a…
New York Advisory Opinion TSB-A-09(4)C: Is a corporation dissolved by proclamation that merely holds New York real property as a nominee still subject to Article 9-A franchise tax?
No, not after dissolution. A corporation dissolved by proclamation that merely remains the record title holder of New York real property as a nominee for others, and is otherwise completely inactive, …
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…
Does a bank subsidiary's section 1452(d) election to be taxed under Article 9-A survive the merger of another bank subsidiary into it, with the electing company as the survivor?
Yes. Barclays Business Credit made the one-time section 1452(d) election to keep being taxed under Article 9-A rather than the Article 32 bank tax. Merging another bank subsidiary (BZWSI) into it, wit…
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…
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…
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…
Does a bank subsidiary's section 1452(d) election to stay under Article 9-A survive (1) the acquisition of its parent bank by another bank, and (2) an expansion of the subsidiary's line of business?
No. ESB (later renamed Associates) timely made the one-time section 1452(d) election to keep being taxed under Article 9-A instead of the Article 32 bank franchise tax. The 1986 acquisition of its par…
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 the affiliate that actually holds New York City IDA industrial development bonds, are the bonds (1) investment capital under section 208.5, (2) producing investment income under section 208.6, and (3) governmental securities for the Article 9-A investment allocation percentage?
Yes to all three. Smith Barney Holdings is the wholly-owned subsidiary that actually holds the New York City IDA bonds issued for the Travelers TGI Project. As in the companion opinion to its parent, …
Are New York City IDA industrial development bonds (1) investment capital under section 208.5, (2) generating investment income under section 208.6, and (3) governmental securities for the Article 9-A investment allocation percentage?
Yes to all three. New York City Industrial Development Agency bonds -- the IDA being a governmental instrumentality (a public benefit corporation under Article 18-A of the General Municipal Law) -- ar…
Is a New York corporation subject to Article 9-A franchise tax after it discontinued all active business and was later dissolved by proclamation, when it merely holds record title to real property as nominee for others?
Two periods. For the years it was incorporated -- from 1963 until it was dissolved by proclamation on September 29, 1982 -- the corporation is subject to the Article 9-A franchise tax under section 20…
Is a New York investment-advisory subsidiary of a foreign 'bank' that is principally engaged in investment management (not deposits/lending) taxable under Article 32 as a banking corporation, or under Article 9-A?
Article 9-A. A corporation is a banking corporation under section 1452(a)(9) only if its foreign parent is itself a banking corporation -- and a corporation is 'doing a banking business' only if it is…
When an out-of-state seller ships tangible personal property to a New York customer by common carrier, when are the receipts allocated to New York for the Article 9-A receipts factor across eight shipping/risk/payment scenarios?
It depends on the seller's connection to the shipment. Receipts from sales of tangible personal property are allocated to New York where the goods are shipped to points in New York. In Scenario 1 -- w…
Do a foreign commodity trader's New York activities -- soliciting orders plus maintaining coffee-bean inventory in a New York public warehouse for sale to customers -- subject it to Article 9-A tax, or are they protected as minimal property/Public Law 86-272?
Yes, it is taxable. International Coffee solicits orders in New York and, when it takes delivery on coffee-bean futures, holds the physical beans in a New York public warehouse for sale to its custome…
Does a building used to sort, repack and cold-store imported flower bulbs for resale qualify for the Article 9-A investment tax credit as property principally used in the production of goods by processing?
No. The investment tax credit under section 210.12 requires the property to be principally used in the production of goods by manufacturing, processing, assembling, refining, horticulture, etc. K. Van…
When a combined report is filed, is the 'principally engaged in the business of lending funds' test (for whether a corporate debt instrument is investment capital) applied to the individual lending member or to the combined group?
Per individual member. The exclusion that keeps a debt instrument out of investment capital (when the holder is principally engaged in lending funds and the obligor received those funds) turns on the …
How does a non-bank credit card processor taxed under Article 9-A source its credit card processing revenues for the receipts factor -- by where the services are performed, or by the Article 32 credit-card rules (merchant location, etc.)?
By where the services are performed. Peach Tree is a non-bank credit card processor taxed under Article 9-A, not the Article 32 bank tax. Its processing revenues (discount, authorization, transaction,…
Is a federal section 468B 'qualified settlement fund' that holds cash and Treasury Bills subject to New York State franchise tax (Article 9-A) or New York State/City personal income tax (Article 22/30)?
Neither. The Steinhardt-Caxton Consolidated Settlement Fund is a federal section 468B qualified settlement fund holding only cash and U.S. Treasury Bills. It is not subject to Article 9-A franchise ta…
Is a natural gas broker that never takes title, possession, control or risk of the gas subject to the section 186/186-a utility taxes, or to the Article 9-A franchise tax?
Article 9-A. The corporation brokers natural gas between producers and end-users but never takes title to, possession of, control of, or risk of loss on the gas; its agreements identify it as a broker…
For a marketing company whose execution work is done by subcontractors, are receipts for services performed in New York (including by subcontractors) New York receipts, and how is a lump-sum fee covering work in and out of New York allocated?
Yes, and by relative value or time. Receipts from services performed in New York are 100% New York receipts whether the services are performed by the taxpayer's employees, agents or subcontractors. So…
Is a rate-regulated carrier of handicapped passengers in wheelchair vans classed as a 'taxicab' or an 'omnibus' for sections 183 and 184, and is it therefore taxed under Article 9-A?
It is an omnibus, and is taxed under Article 9-A. We Care carries handicapped passengers in wheelchair vans under a DOT certificate of public convenience and necessity, at rates set with the Departmen…
Does a New York sales office that only signs up new clients generate receipts from services performed in New York for the Article 9-A receipts factor, when all the investment consulting is performed elsewhere?
No, if it only signs up clients. Insight Management's income comes from performing its investment consulting (and related financial transactions), not from the mere signing up of clients. So if its Ne…
Does an inactive corporation that was dissolved by proclamation, but still holds bare legal title to New York real property as a nominee, owe Article 9-A franchise tax?
It depends on the period. W.R.H.R.E. Corp. was formed in 1973 only to hold bare legal title to a Port Washington property so a lender could take a mortgage; it never did business, kept no books, had n…
Is a paper recycler that grades, separates, fluffs, bales, and packs scrap paper for the repulping industry a manufacturer or processor whose equipment qualifies for the Article 9-A investment tax credit?
Yes. Empire Recycling's paper division grades, separates, fluffs, bales, and packs scrap paper into fifteen graded products meeting exacting mill specifications for the repulping industry. That proces…
When the buyer controls the shipment and picks the goods up at the seller's New York factory, are those sales New York receipts, and can factory roof, window, and shipping-dock repairs qualify for the investment tax credit?
Yes to New York receipts. Flexovit's customer contracts its own common carrier, controls it, arranges pickup at Flexovit's New York factory, sets the out-of-state destination, and pays the freight -- …
Is a federally chartered Farm Credit System leasing corporation, an instrumentality of the United States, exempt from New York franchise tax under Articles 9-A and 32?
Yes. Farm Credit Leasing Services Corporation is a federally chartered body corporate and instrumentality of the United States, organized by Farm Credit System banks under 12 USC 2211 to provide leasi…
Does a voluntarily dissolved corporation that, by oversight, still held record title to real property but was completely inactive owe Article 9-A franchise tax for the years after dissolution?
No. Holver Realty Corporation was voluntarily dissolved on January 25, 1980, with the Tax Department's consent, and has been completely inactive since -- conducting no business. By oversight, a deed t…
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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.