New York Codes, Rules and Regulations
Title 20 - DEPARTMENT OF TAXATION AND FINANCE
Chapter I - Franchise and Certain Business Taxes
Subchapter A - Business Corporation Franchise Tax
Part 4 - APPORTIONMENT
Subpart 4-2 - SPECIFIC APPORTIONMENT RULES
Section 4-2.10 - Net income from commodities

Universal Citation: 20 NY Comp Codes Rules and Regs § 4-2.10

Current through Register Vol. 47, No. 12, March 26, 2025

(Tax Law, section 210-A(5)(a)(2)(I))

(a)

(1) The amount of net income (not less than zero) from all commodities included in New York receipts or everywhere receipts is determined separately for sales of all commodities actually delivered and sales of commodities where delivery does not actually occur.
(i) The amount of net income (not less than zero) included in New York receipts from sales of commodities actually delivered is the product of such net income (not less than zero) and a fraction, the numerator of which is the amount of gross receipts from sales of all commodities actually delivered to points within New York State and the denominator of which is the amount of all gross receipts from sales of commodities actually delivered.

(ii) The amount of net income (not less than zero) included in New York receipts from commodities where delivery does not actually occur is the product of such net income (not less than zero) and a fraction, the numerator of which is the amount of gains from sales of commodities where delivery does not actually occur to purchasers located in the state and the denominator of which is the amount of gains from all sales of commodities where delivery does not actually occur. 100% of net income (not less than zero) from sales of commodities actually delivered is included in everywhere receipts. 100% of net income (not less than zero) from sales of commodities where delivery does not actually occur is included in everywhere receipts.

(2) Net income (not less than zero) is determined by subtracting the cost to acquire or produce all commodities from the gross proceeds from the sale of commodities, provided the result cannot be less than zero. The cost to acquire or produce all commodities includes the purchase price of commodities and all transaction costs associated with the acquisition or production of the commodities.

(3) Example.

Corporation A, a separate article 9-A filer, makes sales of commodities where the commodities are actually delivered and sales of commodities where delivery does not actually occur.

Sales of commodities actually delivered.

Corporation A has receipts from sales of commodities where the commodities are actually delivered broken down as follows:

* $200 of gross receipts from gold sold to purchasers in states other than New York State, but delivered to New York State;

* $700 of gross receipts from gold sold to purchasers located in New York State, but delivered to states other than New York State;

* $100 of gross receipts from silver sold to purchasers located in New York State, but delivered to states other than New York State; and

* $1,000 of gross receipts from electricity sold to purchasers located in

New York State and delivered to points within New York.

Corporation A incurred the following costs to acquire or produce the commodities where the commodities are actually delivered:

* $715 for gold;

* $85 for silver; and

* $400 for electricity.

Corporation A uses the sourcing rule contained in section 210-A(5)(a)(2)(I) and this section to determine the amount of net income (not less than zero) to include in its New York receipts or everywhere receipts.

Corporation A first determines the amount of gross receipts from sales of commodities where the commodities are actually delivered, which is $2,000 ($200 plus $700 plus $100 plus $1,000). Next, Corporation A determines the total cost it incurred to acquire or produce such commodities, which is $1,200 ($715 plus $85 plus $400). The result is Corporation A has $800 of net income from sales of commodities that are actually delivered.

The amount of net income from the sales of commodities actually delivered that is included in New York receipts is the net income from such sales multiplied by a fraction, the numerator of which is the amount of gross receipts from sales of commodities actually delivered to points within New York State and the denominator of which is the amount of gross receipts from sales of commodities actually delivered. Corporation A multiplies its net income of $800 by 60% ($1,200/$2,000), and the product is $480, which Corporation A must include in its New York receipts. All $800 of net income from sales of commodities actually delivered is included in everywhere receipts.

Sales of commodities where delivery does not actually occur. Corporation A has gains and losses from sales of commodities that are not actually delivered in the following amounts:

* $100 of gains from gold sold to purchasers located in New York State;

* ($200) of losses from gold sold to purchasers located in New York State;

* $500 of gains from gold sold to purchasers located in states other than New York State;

* $ 400 of gains from corn sold to purchasers located in states other than New York State; and

* ($300) of losses from corn sold to purchasers located in states other than New York State.

Corporation A first determines the amount of net income from sales of commodities that are not actually delivered, which is $500 ($100 - $200 + $500 + $400 - $300). Next, it determines the amount of gains from such sales, which is $1,000 ($100 - $0 + $500 + $400 - $0).

The amount of net income to be included in New York from the sales of commodities that are not actually delivered is determined by multiplying such net income by a fraction, the numerator of which is the amount of gains from sales to purchasers located within New York State of commodities that are not actually delivered and the denominator of which is the amount of gains from sales within and without New York of commodities that are not actually delivered. Corporation A multiplies its $500 of net income by 10% ($100/$1,000). The result is $50 included in New York receipts. All $500 of net income is included in everywhere receipts.

Total sales of commodities.

Corporation A includes $530 ($480 + $50) of net income from commodities in its New York receipts and $1,300 ($800 + $500) of net income from commodities in its everywhere receipts.

(b)

(1) In the case of a combined report, the amount of net income (not less than zero) of the combined group from commodities included in the combined group's New York receipts or everywhere receipts is determined separately for sales of commodities actually delivered and sales of commodities where delivery does not actually occur.
(i) The amount of net income (not less than zero) for all members of the combined group included in the combined group's New York receipts from sales of commodities actually delivered is the product of such net income (not less than zero) and a fraction, the numerator of which is the amount of gross receipts from sales of all commodities actually delivered to points within New York State for all members of the combined group and the denominator of which is the amount of all gross receipts from sales of commodities that are actually delivered for all members of the combined group.

(ii) The amount of net income (not less than zero) for all members of the combined group included in the combined group's New York receipts from commodities where delivery does not actually occur is the product of such net income (not less than zero) and a fraction, the numerator of which is the amount of gains for all members of the combined group from sales of commodities where delivery does not actually occur to purchasers located in New York State, and the denominator of which is the amount of gains for all members of the combined group from all sales of commodities where delivery does not actually occur. 100% of net income (not less than zero) from sales of commodities for all m embers of the combined group where delivery does not actually occur is included in the combined group's everywhere receipts.

(2) Net income (not less than zero) is determined by subtracting the cost to acquire or produce all commodities from the gross proceeds from the sale of commodities, provided the result cannot be less than zero. The cost to acquire or produce all commodities is the amount paid to purchase or produce the commodity. The cost to acquire or produce all commodities includes the purchase price of commodities and all transaction costs associated with the purchase of the commodities.

(c) For purposes of this section, the term commodity has the same meaning as in subparagraphs (A), (B), and (C) of IRC section 475(e)(2).

(d) For rules pertaining to sales of tangible personal property that is not traded as a commodity, see section 4-2.1 of this Subpart.

Disclaimer: These regulations may not be the most recent version. New York may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.