Current through Register Vol. 46, No. 12, March 20, 2024
(a) By section
270 of
the Tax Law, a tax is imposed upon transactions with reference to:
(1) shares of stock;
(2) certificates of stock;
(3) certificates of rights to stock;
(4) certificates of interest in
property or accumulations;
(5)
certificates of interest in business conducted by a trustee or trustees;
(6) certificates of deposit
representing any of the foregoing. The tax applies to such shares or
certificates in any domestic or foreign corporation, company, association, or
business conducted by a trustee or trustees.
(b) The tax is imposed on (1) sales, (2)
agreements to sell, (3) memoranda of sales, (4) deliveries, and (5) transfers,
of the shares and certificates described above, including transfers of record
ownership on the books of the corporation or other entity issuing the shares or
certificates involved.
(c)
Definitions.
(1) As used in this Subchapter,
the terms shares and certificates mean and include:
(i) shares of stock, whether or not
represented by certificates, including shares subscribed for by an
accommodation incorporator;
(ii)
temporary or interim certificates;
(iii) certificates representing the interest
of a subscriber for stock, although further payment must be made;
(iv) voting trust certificates;
(v) certificates of stock in a dissolved
corporation.
(2) As used
in this Subchapter, the term dealer in securities means any person, firm,
company, association or corporation engaged in the making or negotiating of
sales, agreements to sell, deliveries or transfers of shares or certificates
taxable under article 12 of the Tax Law, or conducting or transacting a stock
brokerage business.
(3) Unless
otherwise indicated, the term commissioner means the Commissioner of Taxation
and Finance.
(4) Unless otherwise
indicated, the term department means the Department of Taxation and
Finance.
(d) Computation
of tax. The tax imposed by article 12 of the Tax Law is to be computed at the
statutory rates (see sections 270[2] and 270-e of the Tax Law) on the total
number of shares involved in each transaction. The amount of tax so computed is
to be rounded to the nearest one cent.
(e) An agreement of the type known as a
"call" constitutes an agreement to sell, and is subject to tax when given. It
is immaterial whether the option thereby given is actually exercised, but, if
exercised, no tax is payable on the sale, delivery or transfer made pursuant to
the "call," provided that the tax has been paid on the "call" itself. In such a
case, the seller may submit to the transfer agent a certification signed by the
seller stating the number of shares transferred, the name of the transferee,
that the transfer was made pursuant to a "call" and that the applicable tax was
paid upon such "call," which remains in the seller's possession. The tax
payable on a "call," as described in this subdivision, is computed based on the
price for which the shares subject to the " call" will be transferred pursuant
to such "call," and not based on the price of the "call" itself.
(f) It is not necessary that a transaction
involve a sale to be taxable; a delivery or transfer of shares or certificates
as a gift is taxable.
(g) The tax
imposed by article 12 of the Tax Law does not apply to the original issuance of
stock. Thus, the transfer of shares pursuant to an agreement of the type known
as a "warrant" is not taxable if the shares transferred represent an original
issuance of stock by the corporation making the "warrant." However, the
transfer of treasury stock by a corporation (whether or not transferred
pursuant to a "warrant") does not qualify as an original issuance of stock and
is thus a taxable transfer.
(h)
Transfer of shares of stock in a cooperative housing corporation. At the time
of the initial formation of a cooperative housing corporation, the transfer to
the initial unit purchasers of shares related to specific cooperative units,
and the transfer to the sponsor of the cooperative conversion of the remaining
shares, representing the unsold units in the cooperative, are exempt from tax,
as these transfers represent an original issuance of stock by the cooperative
housing corporation. However, subsequent transfers by the initial unit
purchasers of their cooperative shares and transfers by the cooperative sponsor
to additional unit purchasers of the remaining unsold shares in the cooperative
are not exempt from tax.
(i) The
following are examples of taxable transactions:
(1) The transfer of stock by gift.
(2) The transfer of stock from a partnership
to a member thereof or from a member to a partnership.
(3) The purchase, redemption or other
reacquisition by a corporation of its own shares of stock (except where such
shares are cancelled on reacquisition pursuant to the provisions of section
515 of the Business Corporation Law, or such
shares are cancelled by an appropriate amendment to the corporation's
certificate of incorporation or by action by the board of directors of such
corporation within one year of the date of reacquisition) and transfers of its
own stock by the corporation.
(4)
The distribution of stock in one corporation owned by another to stockholders
of the latter.
(5) The transfer of
stock of a corporation to be merged, to the merging corporation, prior to the
actual merger and as a condition precedent to the merger.
(6) The transfer of stock to or by trustees,
including the transfer into or out of a voting trust, investment trust or other
trust.
(7) The transfer of stock
from an individual to himself as trustee.
(8) The transfer of stock by an executor or
administrator, whether to trustees, legatees, or other persons.
(9) The transfer of stock from tenants in
common to themselves as individuals or to one of them.
(10) The transfer of stock standing in the
name of two individuals to themselves as joint tenants with right of
survivorship.
(11) The transfer of
stock held by joint tenants to either one or the other of the parties while
both are alive.
(12) The delivery
of a certificate by the transferor, or his agent, to the transferee, or his
agent.
(13) The transfer of stock
by or to an ambassador or consul representing a foreign country.
(j) The following are examples of
transactions not subject to tax:
(1) A
transfer on the books of the corporation into a new name, made merely because
the stockholder has changed his or its name, where no actual change of
ownership occurs.
(2) The surrender
of a single certificate for reissuance to the same stockholder of several
certificates representing, in the aggregate, the same number of
shares.
(3) The surrender of a
number of certificates of reissuance, to the same stockholder, of a single
certificate for the same number of shares.
(4) The transfer of a fraction of a share of
stock or a certificate representing the right to receive less than one share of
stock.
(5) The surrender of
preferred stock certificates in exchange for common stock certificates issued
to the same stockholder and vice versa, when made necessary by a change in
capital structure.
(6) The mere
registration in the State of New York, by a registrar, of a transfer already
made by the corporation or its transfer agent outside this State.
(7) The mere execution of an assignment
within the State (whether by endorsing the certificate in blank or otherwise)
where all other acts connected with the transfer are done outside the
State.
(8) The transfer of stock
from a trustee of a continuing trust to a successor trustee appointed under
power reserved in the deed of trust.
(9) The transfer of stock by a trustee to a
successor trustee in a case where the first trustee, acting under a deed of
trust which empowers him to appoint a cotrustee, appoints such cotrustee and
then resigns, leaving the cotrustee as the sole trustee.
(10) The transfer of stock held in a
testamentary trust from the original trustees to a substitute trustee appointed
by the court and the surviving member of the original trustees.
(11) The surrender of stock of a merged
corporation in exchange for stock of a merging corporation at the time and as
part of a statutory merger.
(12)
The surrender of stock of a consolidating corporation in exchange for stock in
the resulting corporation in the case of the consolidation of two or more
corporations.
(13) The transfer of
stock in the names of two joint tenants with right of survivorship to the name
of the survivor after the death of the other joint tenant.
(k)
(1) Any
certification required pursuant to this Subchapter relating to the delivery or
transfer of a certificate or certificates may be impressed by rubber stamp on
such certificate or certificates or on the required memorandum of sale. As an
alternative to the use of a rubber stamp, such certifications may be
pre-printed on or attached to such certificate or certificates or required
memorandum of sale. In the case of a transfer through a system for the central
handling of securities (see section
53.2
of this Title) certifications pursuant to this Subchapter may be stamped or
preprinted on the depositor's instructions to such system or its nominee and on
the system's or its nominee's instructions to the transfer agent, issuing
corporation or trustee issuing certificates subject to tax under article 12 of
the Tax Law.
(2) If the
registration of the transfer with respect to which a certification relates was
effected pursuant to instruction on magnetic or punched tape, discs, cards or
other media, or by wire or wireless transmission, such certification may be
inserted in such instruction as prescribed by section
51.2
of this Title.
(l)
Rebates. Any tax paid pursuant to article 12 of the Tax Law may be fully
rebated pursuant to the provisions of section 280-a of such article 12. See
Part 52 of this Title for more information regarding the payment of tax and the
rebate thereof.