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 9 - SPECIAL ENTITIES
Subpart 9-1 - QUALIFIED NEW YORK MANUFACTURERS
Section 9-1.3 - Contract manufacturing
Universal Citation: 20 NY Comp Codes Rules and Regs ยง 9-1.3
Current through Register Vol. 46, No. 12, March 20, 2024
(a) For purposes of this section, a corporation that contracts out its production activities is referred to as "the contracting company". The entity to whom the production activities are contracted is referred to as "the production company".
(b)
(1) In determining if the contracting company
is a qualified New York manufacturer, it may include the assets and employees
used in the production activities in that determination only if the contracting
company owns the assets being used by the production company in the production
activities and only its employees operate or use those assets.
(2) Receipts earned by the contracting
company from the sale of goods produced by the production company on behalf of
the contracting company are not receipts from the sale of goods produced by
manufacturing activities and, thus, would not be included in the numerator of
the fraction used in the computation of the principally engaged test.
(c)
(1) In determining if a production company is
a qualified New York manufacturer, it may include the assets and employees used
in the production activities in that determination only if the production
company owns the assets being used and only its employees operate or use those
assets.
(2) Receipts paid by the
contracting company to the production company for the manufacture of the goods
produced by the production company on behalf of the contracting company are not
receipts from the sale of goods produced by manufacturing activities unless the
production company in fact is selling those goods (that is transferring title
to those goods) to the contracting company. The receipts received by the
production company from the contracting company would be included in the
numerator of the fraction used in the computation of the principally engaged
test only if the receipts are from the sale of goods as described in the
previous sentence.
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