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 9-5 - DOMESTIC INTERNATIONAL SALES CORPORATIONS (DISCs)
Section 9-5.4 - Rules for treatment of earnings and profits
Universal Citation: 20 NY Comp Codes Rules and Regs ยง 9-5.4
Current through Register Vol. 46, No. 12, March 20, 2024
(a) The earnings and profits of a DISC or of a former DISC are deemed to be divided into the following three categories:
(1) accumulated DISC income, which includes
the earnings and profits of the corporation that have been deferred from
taxation, as defined in 26
CFR 1.996-3(b);
(2) previously taxed income, which includes
the earnings and profits of the DISC that have been previously taxed by reason
of having been deemed distributed, as defined in
26 CFR
1.996-3 ( c); and
(3) other earnings and profits, which
includes the earnings and profits of the DISC that were derived by the
corporation in taxable years when it was not qualified as a DISC, as defined in
26 CFR
1.996-3 ( d).
(b) Any actual distribution to a stockholder that is made out of the earnings and profits of a DISC or a former DISC shall be treated as made in the following order:
(1) first, out of previously taxed income, as
described in paragraph (2) of subdivision (a) of this section;
(2) second, out of accumulated DISC income,
as described in paragraph (1) of subdivision (a) of this section; and
(3) third, out of other earnings and profits,
as described in paragraph (3) of subdivision (a) of this section.
(c) If for any taxable year a DISC, or a former DISC, incurs a deficit in earnings and profits, such deficit shall be charged in the following order:
(1)
first, to other earnings and profits, as described in paragraph (3) of
subdivision (a) of this section;
(2) second, to accumulated DISC income, as
described in paragraph (1) of subdivision (a) of this section; and
(3) third, to previously taxed income, as
described in paragraph (2) of subdivision (a) of this section.
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