New York Codes, Rules and Regulations
Title 20 - DEPARTMENT OF TAXATION AND FINANCE
Chapter I - Franchise and Certain Business Taxes
Subchapter C - Franchise Taxes On Insurance Corporations
Part 32 - COMBINED RETURNS
Section 32.4 - Substantial intercorporate transactions receipts and expenditures tests

Universal Citation: 20 NY Comp Codes Rules and Regs ยง 32.4

Current through Register Vol. 46, No. 12, March 20, 2024

(a) Subject to subdivision (b) of this section, the substantial intercorporate transactions requirement based on a corporation?s receipts or expenditures is met where:

(1) during the taxable years, 50 percent or more of a corporation's receipts includable in the computation of entire net income (excluding nonrecurring receipts) are from a related corporation or a group of related corporations;

(2) during the taxable year, 50 percent or more of a corporation's expenditures includable in the computation of entire net income (ENI), including expenditures for inventory, but excluding nonrecurring expenditures, are to a related corporation or a group of related corporations; or

(3) during the taxable year:
(i) 50 percent or more of a corporation's expenditures includable in the computation of ENI (excluding nonrecurring expenditures) directly or indirectly benefit a related corporation or a group of related corporations; or

(ii) a corporation's expenditures includable in the computation of ENI (excluding nonrecurring expenditures) directly or indirectly benefitting a related corporation or a group of related corporations are equal to 50 percent or more of the sum of such expenditures and the expenditures (excluding nonrecurring expenditures) of the beneficiary corporation or corporations.

(b) If, in a particular taxable year, a corporation's intercorporate receipts or expenditures described in paragraph (1), (2) or (3) of subdivision (a) of this section, are between 45 percent and 55 percent of the total of the corporation's receipts or expenditures, as the case may be, then the test will be satisfied only if the corporation's receipts or expenditures, as the case may be, from one or more related corporations during the taxable year and the prior two taxable years in aggregate equals or exceeds 50 percent of its total receipts or expenditures, as the case may be, during the taxable year and the prior two taxable years in aggregate. If the corporation or one or more of the related corporations involved in the intercorporate transactions did not exist for all of the two prior taxable years, then the 50 percent measure for each corporation will be computed using the number of months that it existed.

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