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 32.6 - Combined group composition
Current through Register Vol. 46, No. 12, March 20, 2024
The following steps should be used to determine whether a combined return is required and, if so, which corporations are included in that combined return:
(a) Step 1. Every taxpayer must identify all of the corporations to which it is related, regardless of the franchise tax imposed by the Tax Law the corporation is subject to (or would be taxable under if subject to tax). Where one or more of the related corporations are taxpayers, identify all of the corporations related to these taxpayers. Do this until all related corporations have been identified. If a taxpayer has no related corporations, it must file on a separate basis. This constitutes the step 1 group of related corporations.
(b) Step 2. Identify all of the related corporations that have substantial intercorporate transactions with a taxpayer identified in step 1. These related corporations and the taxpayer with which they have substantial intercorporate transactions constitute the step 2 tentative combined group.
(c) Step 3. Add to the step 2 tentative combined group every related corporation that has substantial intercorporate transactions with any corporation identified in step 2. This constitutes the step 3 tentative combined group.
(d) Step 4. Add to the step 3 tentative combined group every related corporation that has substantial intercorporate transactions with any corporation identified in step 3. Repeat this process until it adds no more corporations to the group. This constitutes the step 4 tentative combined group.
(e) Step 5. Identify each related corporation not in the step 4 tentative combined group that has substantial intercorporate transactions with another related corporation not in the step 4 tentative combined group. Compare all such groups and combine into one group those with common members (unattached related group). There may be more than one unattached related group.
(f) Step 6. If there are substantial intercorporate transactions between any one corporation in an unattached related group and the step 4 tentative combined group, then all corporations in that unattached related group are included in the combined group. Do this for each unattached related group. As unattached related groups are included in the combined group, do this analysis between the expanded group and each unattached related group. The resulting group is the step 6 tentative combined group.
(g) Step 7. If there are substantial intercorporate transactions between any one corporation in the step 6 tentative combined group and an unattached related group, then all corporations in the unattached related group are included in the combined group. Do this for each unattached related group. As unattached related groups are included in the combined group, do this analysis between the expanded group and each unattached related group. The resulting group is the step 7 tentative combined group.
(h) Step 8. Add to the step 7 tentative combined group each related corporation that has substantial intercorporate transactions with the step 7 tentative combined group.
(i) Step 9. Repeat the process set forth in steps 4, 6, 7, and 8 until no more corporations can be added to the tentative combined group.
(j) Step 10. Eliminate from the tentative combined group those corporations that are formed under the laws of another country (alien corporations), that are taxable under another franchise tax imposed by the Tax Law (or would be taxable under another franchise tax if subject to tax), or that are subject to the tax imposed by section 1502-a or section 1502-b. Also eliminate any captive REIT or captive RIC as defined in subdivisions 9 and 10 of section 2, respectively, that is required to be included in a combined return under section 210-C. If two or more corporations are eliminated, it is possible that they will constitute a combined group if they have substantial intercorporate transactions.
