New York Codes, Rules and Regulations
Title 20 - DEPARTMENT OF TAXATION AND FINANCE
Chapter I - Franchise and Certain Business Taxes
Subchapter E - Franchise Tax On Transportation And Transmission Corporations
Part 41 - Allocation Of Gross Earnings By Telephone And Telegraph Corporations From Transmission Services
Section 41.1 - General

(a) A telephone or telegraph corporation shall include in its computation of gross earnings all gross operating revenues derived from intrastate transmission services and that portion of gross operating revenues from interstate and foreign transmission services attributable to New York State.

(b) If the books of the taxpayer, kept in accordance with regulatory requirements, reflect the amount of gross operating revenues from interstate and foreign transmission services attributable to New York State, the taxpayer must allocate such gross operating revenues to New York State in accordance with the allocation used for regulatory purposes (see section 41.2 of this Part - Allocation by accounting).

(c) If the books of the taxpayer, with respect to a particular item or items of gross operating revenues from interstate and foreign transmission services, do not reflect the amount of gross operating revenues from interstate and foreign transmission services attributable to New York State, then such item or items shall be allocated by the allocation by formula method (see section 41.3 of this Part - Allocation by formula).

(d) The term gross earnings of telephone or telegraph corporations from transmission services means gross operating revenues from New York State intrastate transmission services and the portion of gross operating revenues from interstate and/or foreign transmission attributable to New York State. For example, gross operating revenues of telephone corporation from transmission services include all operating revenues, such as Local Service Revenues (including subscribers' station revenues, public telephone revenues, service station, local private line services, and other local service revenues), Toll Service Revenues (including message tolls, wide area toll services, toll private line services and other toll revenues) and Miscellaneous Revenues (such as telegraph commissions, directory advertising and sales, rent revenues, revenues from general services and licenses and other operating revenues not provided for elsewhere).

(e) Where the Commissioner of Taxation and Finance decides that the allocation percentage computed on the basis of the factors or methods prescribed in this Subpart does not fairly and equitably reflect gross earnings of the taxpayer from all sources within New York State, the commissioner shall use other methods of allocation or apportionment which fairly and equitably reflect gross earnings from all sources within New York State. Thus, where such factors or methods work hardship or do not do justice either to the taxpayer or to the State, this provision authorizes the commissioner to use other methods to reflect more accurately business activity in New York. Also, the commissioner may, in order to properly reflect gross earnings, determine the taxable year or period in which any item of gross earnings shall be included without regard to the method of accounting employed by the taxpayer.