S T A T E   O F   N E W   Y O R K
       ________________________________________________________________________
           S. 6359                                                  A. 8559
                             S E N A T E - A S S E M B L Y
                                   January 21, 2014
                                      ___________
       IN  SENATE -- A BUDGET BILL, submitted by the Governor pursuant to arti-
         cle seven of the Constitution -- read twice and ordered  printed,  and
         when printed to be committed to the Committee on Finance
       IN  ASSEMBLY  --  A  BUDGET  BILL, submitted by the Governor pursuant to
         article seven of the Constitution -- read once  and  referred  to  the
         Committee on Ways and Means
       AN ACT to amend the tax law, the general municipal law, the urban devel-
         opment  corporation  act,  the  business  corporation law, the general
         associations law, and the administrative code of the city of New York,
         in relation to reforming taxation of  business  corporations;  and  to
         repeal various provisions of the tax law relating thereto (Part A); to
         amend  the real property tax law, in relation to the STAR registration
         program (Part B); to amend chapter 540 of the laws of  1992,  amending
         the real property tax law relating to oil and gas charges, in relation
         to  the  effective date of such chapter (Part C); to amend the racing,
         pari-mutuel wagering and  breeding  law,  in  relation  to  increasing
         racing  regulatory fees (Part D); to amend the tax law, in relation to
         modifying the signature requirement on e-filed returns prepared by tax
         professionals (Part E);  to  amend  the  real  property  tax  law,  in
         relation  to cost of living adjustments for Enhanced STAR (Part F); to
         amend part I of chapter 58 of the laws of 2006, relating to  providing
         an enhanced earned income tax credit, in relation to the effectiveness
         thereof  (Part  G);  to  amend the general obligations law and the tax
         law, in relation to authorizing electronic tax clearances for  profes-
         sional  and  business  licenses (Part H); to amend the tax law and the
         administrative code of the city of New York,  in  relation  to  taxing
         residents  who  are grantors of exempt resident trusts that qualify as
         non-grantor incomplete gift trusts on the income from such trusts  and
         taxing  residents  who  are beneficiaries of all other exempt resident
         trusts or nonresident  trusts  on  the  distributions  of  accumulated
         income  that  they receive from such trusts (Part I); to amend the tax
         law and the administrative code of the city of New York,  in  relation
         to  eliminating  the  personal  income  tax add-on minimum tax; and to
         repeal certain provisions of such laws relating thereto (Part  J);  to
         amend the tax law, in relation to adding an enhanced real property tax
         circuit  breaker;  and  to  repeal  paragraph  14 of subsection (e) of
        EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                             [ ] is old law to be omitted.
                                                                  LBD12674-01-4
       S. 6359                             2                            A. 8559
         section 606 of the tax law, relating to certain reports (Part  K);  to
         amend  the  tax  law,  in  relation  to providing a credit for renters
         against the personal income tax (Part L); to amend  the  tax  law,  in
         relation  to  the  prepayment  element of the family tax relief credit
         (Part M); to amend  the  tax  law,  in  relation  to  eliminating  the
         personal income tax filing requirement for residents having no liabil-
         ity  because income does not exceed the New York standard deduction if
         they do not file a federal income tax return (Part N);  to  amend  the
         tax  law,  in  relation  to  extending  the  empire  state  commercial
         production tax credit (Part O); to amend the public  housing  law,  in
         relation  to  extending  the  credit against income tax for persons or
         entities investing in low-income housing (Part P); to amend the  envi-
         ronmental conservation law, the tax law and the general municipal law,
         in relation to eligibility for participation in the brownfield cleanup
         program,  and  assignment of the brownfield redevelopment tax credits;
         to amend part H of chapter 1 of the laws of 2003, amending the tax law
         relating to brownfield redevelopment tax  credits,  remediated  brown-
         field  credit for real property taxes for qualified sites and environ-
         mental remediation insurance credits, in relation to tax  credits  for
         certain  sites;  to  amend  the  environmental  conservation  law,  in
         relation to hazardous waste generator fees and  taxes;  to  amend  the
         environmental  conservation  law,  the  public authorities law and the
         state finance  law,  in  relation  to  the  environmental  restoration
         program; and to repeal certain provisions of the environmental conser-
         vation law and the tax law relating thereto (Part Q); to amend the tax
         law,  in relation to reforming the investment tax credit, reducing the
         tax rate for upstate manufacturers and providing a tax credit for real
         property taxes to New York manufacturers; to amend the economic devel-
         opment law, in relation to the excelsior investment tax credit; and to
         repeal certain provisions of the tax law  relating  to  the  financial
         services  investment tax credit (Part R); to amend the economic devel-
         opment law, the tax law, the transportation  law,  the  administrative
         code  of the city of New York and the New York state urban development
         corporation act, in relation to repealing the franchise tax  on  farm-
         ers',  fruit growers', and other like agricultural corporations organ-
         ized and operated on a co-operative basis; and to repeal  section  185
         of  the tax law relating to franchise tax on farmers', fruit growers',
         and other like agricultural corporations organized and operated  on  a
         co-operative  basis;  to  repeal  sections 187-j, 187-k, 187-l, 187-m,
         187-q, 187-r and 187-s of the tax law relating to certain tax credits;
         to repeal paragraph 1 of subdivision (h) of section 15, paragraph 1 of
         subdivision (g) of section 31, and certain other provisions of the tax
         law, in relation to making conforming changes (Part S); to  amend  the
         tax  law, in relation to providing a credit for excise tax on telecom-
         munication services for businesses located in tax-free NY areas  (Part
         T);  to amend the tax law, in relation to reducing the number of hours
         of part-time work needed by employees for employer  qualification  for
         the  New  York  youth works tax credit; and to amend the labor law, in
         relation to the New York youth works tax credit  (Part  U);  to  amend
         chapter  109  of  the laws of 2006 amending the tax law and other laws
         relating to providing  exemptions,  reimbursements  and  credits  from
         various  taxes for certain alternative fuels, in relation to extending
         the alternative fuels tax exemptions for two years (Part V); to  amend
         chapter  63  of  the laws of 2000, amending the tax law and other laws
         relating to modifying the distribution of funds from the motor vehicle
         fuel excise tax and the  vehicle  and  traffic  law,  in  relation  to
       S. 6359                             3                            A. 8559
         simplifying the methodology for distribution of motor vehicle receipts
         (Part  W);  to  amend  the  tax law, in relation to the estate tax; to
         repeal section 2 of chapter 1013 of the laws of 1962, amending the tax
         law relating to imposing a tax on the transfer of estates of decedents
         dying  on or after April first, nineteen hundred sixty-three, relating
         to an appendix of applicable internal revenue code provisions, and  to
         repeal  article  26-B of the tax law, relating to the generation skip-
         ping transfer tax (Part X); to amend the tax law and  chapter  912  of
         the  laws  of  1920 relating to the regulation of boxing, sparring and
         wrestling matches, in relation to making technical corrections  there-
         to; to repeal article 19 of the tax law relating to boxing and wrestl-
         ing  exhibitions tax; and to repeal section 1820 of the tax law relat-
         ing to establishing misdemeanors for certain violations of article  19
         of such law (Part Y); to amend the tax law, in relation to vendor fees
         paid  to  vendor  tracks  (Part  Z);  to amend the racing, pari-mutuel
         wagering and breeding law,  in  relation  to  licenses  for  simulcast
         facilities,  sums  relating  to  track simulcast, simulcast of out-of-
         state thoroughbred races, simulcasting of races  run  by  out-of-state
         harness  tracks  and  distributions of wagers; to amend chapter 281 of
         the laws of 1994 amending the racing, pari-mutuel wagering and  breed-
         ing law and other laws relating to simulcasting and chapter 346 of the
         laws  of  1990  amending the racing, pari-mutuel wagering and breeding
         law and other laws relating to  simulcasting  and  the  imposition  of
         certain  taxes,  in  relation to extending certain provisions thereof;
         and to amend the racing, pari-mutuel wagering  and  breeding  law,  in
         relation  to  extending certain provisions thereof (Part AA); to amend
         the tax law, in relation to capital awards to vendor tracks (Part BB);
         to amend the tax law, the banking law, the public authorities law, and
         the administrative code of the city of New York, in  relation  to  the
         stock  transfer  tax, and to repeal certain provisions of the tax law,
         the state finance law and the administrative code of the city  of  New
         York  relating thereto (Part CC); to amend the tax law, in relation to
         conforming the due dates for the metropolitan commuter  transportation
         mobility  tax  for taxpayers with income from self-employment with the
         due dates for the personal income tax (Part DD); to  amend  the  state
         finance  law,  the upstate New York gaming economic development act of
         2013 and the tax law, in relation to  moneys  appropriated  or  trans-
         ferred from the commercial gaming revenue fund (Part EE); and to amend
         the  tax  law,  the  education law, the general municipal law, and the
         real property tax law, in relation to a real property tax freeze (Part
         FF)
         THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
       BLY, DO ENACT AS FOLLOWS:
    1    Section  1.  This  act enacts into law major components of legislation
    2  which are necessary to implement the state fiscal plan for the 2014-2015
    3  state fiscal year. Each component is  wholly  contained  within  a  Part
    4  identified as Parts A through FF. The effective date for each particular
    5  provision contained within such Part is set forth in the last section of
    6  such Part. Any provision in any section contained within a Part, includ-
    7  ing the effective date of the Part, which makes a reference to a section
    8  "of  this  act", when used in connection with that particular component,
    9  shall be deemed to mean and refer to the corresponding  section  of  the
       S. 6359                             4                            A. 8559
    1  Part  in  which  it  is  found. Section three of this act sets forth the
    2  general effective date of this act.
    3                                   PART A
    4    Section 1. Article 32 of the tax law is REPEALED.
    5    S 2. Section 180 of the tax law is REPEALED.
    6    S 3. Section 181 of the tax law is REPEALED.
    7    S  4.  Section 208 of the tax law, as added by chapter 415 of the laws
    8  of 1944, subdivision 1 as amended by chapter 576 of the  laws  of  1994,
    9  subdivision  1-A as amended by chapter 166 of the laws of 1991, subdivi-
   10  sion 1-B as added by section 45 of part A and paragraph (k) of  subdivi-
   11  sion  9  as  added by section 46 of part A of chapter 389 of the laws of
   12  1997, subdivision 3, the opening paragraph, subparagraphs 6  and  11  of
   13  paragraph (b), and the opening paragraph of paragraph (g) of subdivision
   14  9  as  amended and subdivision 8-B and subparagraph 3-a of paragraph (b)
   15  of subdivision 9 as added by chapter 817 of the laws of  1987,  subdivi-
   16  sion  4  as  amended by section 1, subdivision 6 as amended by section 2
   17  and subparagraph 2 of paragraph (a)  of  subdivision  9  as  amended  by
   18  section  7  of part M of chapter 407 of the laws of 1999, subdivisions 5
   19  and 7, paragraph (a) of subdivision 8-B, subparagraph  10  of  paragraph
   20  (b)  and  paragraph  (j)  of  subdivision 9 as amended, paragraph (d) of
   21  subdivision 8-B and paragraph (c-1) of subdivision 9 as added and  para-
   22  graphs  (e)  and  (f) of subdivision 8-B as relettered by chapter 170 of
   23  the laws of 1994, subdivisions 8 and 10 as amended by chapter 133 of the
   24  laws of 1945, subdivision 8-A as added and subparagraph 1  of  paragraph
   25  (a)  of  subdivision  9  as  amended by chapter 778 of the laws of 1972,
   26  paragraph (b) of subdivision 8-A and paragraph (i) of subdivision  9  as
   27  amended  by chapter 779 of the laws of 1972, subdivision 9 as amended by
   28  chapter 713 of the laws of 1961,  paragraph  (a)  of  subdivision  9  as
   29  amended by chapter 203 of the laws of 1962, subparagraphs 5, 9 and 10 of
   30  paragraph  (a) and subparagraphs 8 and 9 of paragraph (b) of subdivision
   31  9 as amended by chapter 61 of the laws of  1989  and  paragraph  (f)  of
   32  subdivision  9  as separately amended by sections 278 and 347 of chapter
   33  61 of the laws of 1989, clause (i) of subparagraph 5 of paragraph (a) of
   34  subdivision 9 as amended by section 2 and subparagraph 20  of  paragraph
   35  (b)  of  subdivision  9 as added by section 3 of part C of chapter 25 of
   36  the laws of 2009, subparagraph 6 of paragraph (a) of  subdivision  9  as
   37  added  by  chapter  895 of the laws of 1975 and as renumbered by chapter
   38  613 of the laws of 1976, subparagraph 7 of paragraph (a) of  subdivision
   39  9  as  added  by chapter 33 of the laws of 1978, subparagraph 8 of para-
   40  graph (a) and subparagraph 7  of  paragraph  (b)  of  subdivision  9  as
   41  amended by chapter 639 of the laws of 1986, subparagraph 11 of paragraph
   42  (a) of subdivision 9 as added by chapter 15 of the laws of 1983, subpar-
   43  agraph  12  of  paragraph  (a),  subparagraph  4-a  of paragraph (b) and
   44  subparagraph 2 of paragraph (h) of subdivision 9 as amended and subpara-
   45  graph 13 of paragraph (a) of subdivision 9 as added by  chapter  760  of
   46  the  laws  of 1992, subparagraph 14 of paragraph (a) of subdivision 9 as
   47  added by section 101 and paragraphs (l) and  (m)  of  subdivision  9  as
   48  added  by  section  102  of  part  A  of chapter 56 of the laws of 1998,
   49  subparagraph 15 of paragraph (a) of subdivision 9 as amended by  section
   50  1 of part ZZ of chapter 63 of the laws of 2003, subparagraph 16 of para-
   51  graph  (a)  of  subdivision 9 as added by section 1 of part K3, subpara-
   52  graph 16 of paragraph (b) of subdivision 9 as added by section 2 of part
   53  K3, subparagraph 17 of paragraph  (b)  of  subdivision  9  as  added  by
   54  section  2  of part O3, and paragraphs (o), (p) and (q) of subdivision 9
       S. 6359                             5                            A. 8559
    1  as added by section 3 of part O3 of chapter 62  of  the  laws  of  2003,
    2  subparagraph  18 of paragraph (a) of subdivision 9 as added by section 3
    3  of part C and paragraph (o) of subdivision 9 as amended by section 2  of
    4  part  E  of  chapter 59 of the laws of 2013, subparagraph 3 of paragraph
    5  (b) of subdivision 9 as amended by chapter 895  of  the  laws  of  1975,
    6  subparagraph  4  of paragraph (b) and subparagraph 4 of paragraph (f) of
    7  subdivision 9 as amended by chapter 190 of the laws  of  1990,  subpara-
    8  graph  15  of  paragraph (b) of subdivision 9 as added by chapter 309 of
    9  the laws of 1996, subparagraph 18 of paragraph (b) of subdivision  9  as
   10  added by section 21 of part H of chapter 1 of the laws of 2003, subpara-
   11  graph 19 of paragraph (b) of subdivision 9 as added by section 1 of part
   12  HH1  of  chapter  57  of the laws of 2008, paragraphs (c-2) and (c-3) of
   13  subdivision 9 as added by section 10 of part Y of chapter 63 of the laws
   14  of 2000, paragraph (g) of subdivision 9 as added by chapter 178  of  the
   15  laws  of  1965, subparagraph 1 and clauses (B) and (C) of subparagraph 3
   16  of paragraph (g) of subdivision 9 as amended by chapter 613 of the  laws
   17  of  1976, clause (A) of subparagraph 1 of paragraph (g) of subdivision 9
   18  as separately amended by chapters 675 and  836  of  the  laws  of  1977,
   19  clause  (B)  of  subparagraph 1, clause (A) of subparagraph 2 and clause
   20  (A) of subparagraph 3 of paragraph (g) of subdivision 9  as  amended  by
   21  chapter  675 of the laws of 1977, item 1 of clause (B) of subparagraph 1
   22  of paragraph (g) of subdivision 9 as amended by chapter 972 of the  laws
   23  of  1984, clause (B) of subparagraph 2 of paragraph (g) of subdivision 9
   24  as amended by chapter 365 of the laws of 1979, clause  (C)  of  subpara-
   25  graph  2 of paragraph (g) of subdivision 9 as amended by chapter 1005 of
   26  the laws of 1970, paragraph (h) of subdivision 9 as amended  by  chapter
   27  606  of  the  laws  of  1984, paragraph (n) of subdivision 9 as added by
   28  section 1 of part O of chapter 85 of the laws of 2002, subdivision 12 as
   29  added by chapter 828 of the laws of 1977, subdivisions 13, 14, and 15 as
   30  added by section 1 of LBD number 74021-03-4 and subdivision 19 as  added
   31  by chapter 681 of the laws of 1997, is amended to read as follows:
   32    S 208. Definitions. As used in this article:
   33    1. The term "corporation" includes (a) an association within the mean-
   34  ing  of  paragraph  three  of  subsection  (a)  of section seventy-seven
   35  hundred one of the internal revenue code (including a limited  liability
   36  company), (b) a joint-stock company or association, (c) a publicly trad-
   37  ed  partnership  treated  as  a corporation for purposes of the internal
   38  revenue code pursuant to section seventy-seven hundred four thereof  and
   39  (d)  any business conducted by a trustee or trustees wherein interest or
   40  ownership is evidenced  by  certificate  or  other  written  instrument.
   41  "DISC"  and  "former DISC" mean any corporation which meets the require-
   42  ments of subsection (a) of section nine hundred ninety-two of the inter-
   43  nal revenue code[;].
   44    1-A. The term "New York S corporation"  means,  with  respect  to  any
   45  taxable  year, a corporation subject to tax under this article for which
   46  an election is in effect pursuant  to  subsection  (a)  of  section  six
   47  hundred  sixty  of  this  chapter  for such year, any such year shall be
   48  denominated a "New York S year", and such election shall be  denominated
   49  a  "New  York S election". The term "New York C corporation" means, with
   50  respect to any taxable year, a corporation subject  to  tax  under  this
   51  article  which  is not a New York S corporation, and any such year shall
   52  be denominated a "New York C year". The term  "termination  year"  means
   53  any  taxable  year of a corporation during which the New York S election
   54  terminates on a day other than the first day of such year.  The  portion
   55  of  the  taxable  year ending before the first day for which such termi-
   56  nation is effective shall be denominated the "S  short  year",  and  the
       S. 6359                             6                            A. 8559
    1  portion  of  such  year beginning on such first day shall be denominated
    2  the "C short year". The term "New York S  termination  year"  means  any
    3  termination  year  which  is  not also an S termination year for federal
    4  purposes.
    5    1-B. The term "QSSS" means a corporation which is a qualified subchap-
    6  ter  S  subsidiary  as defined in subparagraph (B) of paragraph three of
    7  subsection (b) of section thirteen hundred  sixty-one  of  the  internal
    8  revenue  code. The term "exempt QSSS" means a QSSS exempt from tax under
    9  this article as provided in paragraph (k) of subdivision  nine  of  this
   10  section,  or a QSSS described in subclause (i) of clause (B) of subpara-
   11  graph two of paragraph (k) of subdivision nine of this section,  wherein
   12  the parent corporation of the QSSS is subject to tax under this article,
   13  and  the  assets,  liabilities,  income  and  deductions of the QSSS are
   14  treated as the assets, liabilities, income and deductions of the  parent
   15  corporation. Where a QSSS is an exempt QSSS, then for all purposes under
   16  this article:
   17    (a)  the  assets,  liabilities, income, deductions, property, payroll,
   18  receipts, capital, credits, and all other tax attributes and elements of
   19  economic activity of the QSSS shall be deemed to be those of the  parent
   20  corporation,
   21    (b)  the stocks, bonds and other securities issued by, and any indebt-
   22  edness from, the QSSS shall not be [subsidiary,] investment or  business
   23  capital of the parent corporation,
   24    (c)  transactions between the parent corporation and the QSSS, includ-
   25  ing the payment of interest and  dividends,  shall  not  be  taken  into
   26  account, and
   27    (d)  general  executive  officers  of  the  QSSS shall be deemed to be
   28  general executive officers of the parent corporation.
   29    2. The term "taxpayer" means any corporation subject to tax under this
   30  article[;].
   31    3. The term "subsidiary" means  a  corporation  of  which  over  fifty
   32  percent  of  the number of shares of stock entitling the holders thereof
   33  to vote for the election of  directors  or  trustees  is  owned  by  the
   34  taxpayer[;].
   35    4.  The  term  ["subsidiary capital" means investments in the stock of
   36  subsidiaries  and  any  indebtedness  from  subsidiaries,  exclusive  of
   37  accounts receivable acquired in the ordinary course of trade or business
   38  for  services  rendered or for sales of property held primarily for sale
   39  to customers, whether or not evidenced by written instrument,  on  which
   40  interest  is  not claimed and deducted by the subsidiary for purposes of
   41  taxation under article nine-A, thirty-two or thirty-three of this  chap-
   42  ter,  provided,  however,  that,  in the discretion of the commissioner,
   43  there shall be deducted from subsidiary capital  any  liabilities  which
   44  are  directly  or indirectly attributable to subsidiary capital] "STOCK"
   45  MEANS A DIRECT INTEREST IN A CORPORATION THAT IS TREATED AS  EQUITY  FOR
   46  FEDERAL INCOME TAX PURPOSES.
   47    5.  (A)  The  term  "investment capital" means investments in stocks[,
   48  bonds and other securities, corporate and governmental,] THAT  ARE  HELD
   49  BY  THE  TAXPAYER  FOR MORE THAN SIX CONSECUTIVE MONTHS BUT ARE not held
   50  for sale to customers in the regular course of business,  [exclusive  of
   51  subsidiary  capital] OR, IF THE TAXPAYER MAKES THE ELECTION PROVIDED FOR
   52  IN SUBPARAGRAPH ONE OF PARAGRAPH (A) OF SUBDIVISION FIVE OF SECTION  TWO
   53  HUNDRED  TEN-A  OF THIS ARTICLE, ARE NOT QUALIFIED FINANCIAL INSTRUMENTS
   54  AS DESCRIBED IN SUBDIVISION FIVE OF SECTION TWO HUNDRED  TEN-A  OF  THIS
   55  ARTICLE.  STOCK  IN  A CORPORATION THAT IS CONDUCTING A UNITARY BUSINESS
   56  WITH THE TAXPAYER, STOCK IN A CORPORATION THAT IS INCLUDED IN A COMBINED
       S. 6359                             7                            A. 8559
    1  REPORT WITH THE TAXPAYER PURSUANT TO THE COMMONLY OWNED  GROUP  ELECTION
    2  IN  SUBDIVISION  FIVE  OF SECTION TWO HUNDRED TEN-C OF THIS ARTICLE, and
    3  stock  issued  by  the  taxpayer[,  provided,  however,  that,  in   the
    4  discretion  of  the commissioner, there] SHALL NOT CONSTITUTE INVESTMENT
    5  CAPITAL. FOR PURPOSES OF THIS  SUBDIVISION,  IF  THE  TAXPAYER  OWNS  OR
    6  CONTROLS,  DIRECTLY OR INDIRECTLY, LESS THAN TWENTY PERCENT OF THE STOCK
    7  OF A CORPORATION THAT ENTITLES THE  HOLDERS  THEREOF  TO  VOTE  FOR  THE
    8  ELECTION OF TRUSTEES  OR DIRECTORS, THAT CORPORATION WILL BE PRESUMED TO
    9  BE  CONDUCTING  A  BUSINESS THAT IS NOT UNITARY WITH THE BUSINESS OF THE
   10  TAXPAYER.
   11    (B) THERE shall be deducted from investment  capital  any  liabilities
   12  which  are  directly  or indirectly attributable to investment capital[;
   13  and provided, further, that investment]. IF THE AMOUNT OF THOSE  LIABIL-
   14  ITIES EXCEEDS THE AMOUNT OF INVESTMENT CAPITAL, THE AMOUNT OF INVESTMENT
   15  CAPITAL WILL BE ZERO.
   16    (C)  INVESTMENT  capital  shall  not  include any such investments the
   17  income from which is excluded from entire net  income  pursuant  to  the
   18  provisions  of  paragraph (c-1) of subdivision nine of this section, and
   19  that investment capital shall be computed without regard to  liabilities
   20  directly or indirectly attributable to such investments, but only if air
   21  carriers  organized  in  the  United States and operating in the foreign
   22  country or countries in which the taxpayer has its major base  of  oper-
   23  ations  and  in which it is organized, resident or headquartered (if not
   24  in the same country as its major base of operations) are not subject  to
   25  any  tax based on or measured by capital imposed by such foreign country
   26  or countries or any political subdivision  thereof,  or  if  taxed,  are
   27  provided  an exemption, equivalent to that provided for herein, from any
   28  tax based on or measured by capital imposed by such foreign  country  or
   29  countries  and  from  any  such tax imposed by any political subdivision
   30  thereof[;].
   31    (D) IF A TAXPAYER ACQUIRES STOCK DURING THE SECOND HALF OF ITS TAXABLE
   32  YEAR AND OWNS THAT STOCK ON THE LAST DAY OF THE TAXABLE YEAR, IT WILL BE
   33  PRESUMED THAT THE TAXPAYER HELD THAT STOCK FOR MORE THAN SIX CONSECUTIVE
   34  MONTHS DURING THE TAXABLE YEAR. HOWEVER, IF THE  TAXPAYER  DOES  NOT  IN
   35  FACT  HOLD THAT STOCK FOR MORE THAN SIX CONSECUTIVE MONTHS, THE TAXPAYER
   36  MUST INCREASE ITS TOTAL BUSINESS CAPITAL IN THE  IMMEDIATELY  SUCCEEDING
   37  TAXABLE  YEAR  BY  THE  AMOUNT  INCLUDED  IN INVESTMENT CAPITAL FOR THAT
   38  STOCK, NET OF ANY LIABILITIES ATTRIBUTABLE TO  THAT  STOCK  COMPUTED  AS
   39  PROVIDED IN PARAGRAPH (B) OF THIS SUBDIVISION.
   40    (E)  WHEN  INCOME  OR  GAIN  FROM  A DEBT OBLIGATION OR OTHER SECURITY
   41  CANNOT BE  APPORTIONED  TO  THE  STATE  USING  THE  BUSINESS  ALLOCATION
   42  PERCENTAGE  AS  A RESULT OF UNITED STATES CONSTITUTIONAL PRINCIPLES, THE
   43  DEBT OBLIGATION OR OTHER SECURITY WILL BE INCLUDED IN  INVESTMENT  CAPI-
   44  TAL.
   45    6.  (A)  The  term "investment income" means income, including capital
   46  gains in excess of capital  losses,  from  investment  capital,  to  the
   47  extent  included  in  computing  entire  net  income, less, [(a)] in the
   48  discretion of the commissioner, any  INTEREST  deductions  allowable  in
   49  computing  entire  net income which are directly or indirectly attribut-
   50  able to investment capital or investment income[, and (b)  such  portion
   51  of  any  net  operating loss deduction allowable in computing entire net
   52  income, as the investment income, before such deduction, bears to entire
   53  net income, before such deduction,] provided, however, that in  no  case
   54  shall  investment  income  exceed  entire net income[;]. IF THE TAXPAYER
   55  ATTRIBUTES INTEREST DEDUCTIONS  TO  INVESTMENT  INCOME  AND  THE  AMOUNT
   56  SUBTRACTED  EXCEEDS  INVESTMENT  INCOME,  THE  EXCESS  OF  THE  INTEREST
       S. 6359                             8                            A. 8559
    1  DEDUCTIONS OVER INVESTMENT INCOME MUST  BE  ADDED  BACK  TO  ENTIRE  NET
    2  INCOME.
    3    (B)  IN LIEU OF SUBTRACTING FROM INVESTMENT INCOME THE AMOUNT OF THOSE
    4  INTEREST DEDUCTIONS, THE TAXPAYER MAY ELECT TO REDUCE ITS TOTAL  INVEST-
    5  MENT  INCOME  BY FORTY PERCENT. IF THE TAXPAYER MAKES THIS ELECTION, THE
    6  TAXPAYER MUST ALSO MAKE THE ELECTIONS PROVIDED FOR IN PARAGRAPHS (B) AND
    7  (C) OF SUBDIVISION SIX-A OF THIS SECTION. A TAXPAYER WHICH DOES NOT MAKE
    8  THIS ELECTION BECAUSE IT HAS NO INVESTMENT CAPITAL WILL NOT BE PRECLUDED
    9  FROM MAKING THOSE OTHER ELECTIONS.
   10    6-A. (A) THE TERM "OTHER  EXEMPT  INCOME"  MEANS  THE  SUM  OF  EXEMPT
   11  SUBPART F INCOME AND EXEMPT UNITARY CORPORATION DIVIDENDS.
   12    (B)  "EXEMPT SUBPART F INCOME" MEANS THE INCOME, AS DEFINED IN SECTION
   13  952 OF THE INTERNAL REVENUE CODE, RECEIVED FROM A  CORPORATION  THAT  IS
   14  CONDUCTING A UNITARY BUSINESS WITH THE TAXPAYER BUT IS NOT INCLUDED IN A
   15  COMBINED  REPORT  WITH  THE  TAXPAYER,  LESS,  IN  THE DISCRETION OF THE
   16  COMMISSIONER, ANY INTEREST DEDUCTIONS DIRECTLY OR  INDIRECTLY  ATTRIBUT-
   17  ABLE  TO  THAT INCOME.  IN LIEU OF SUBTRACTING FROM ITS EXEMPT SUBPART F
   18  INCOME THE AMOUNT OF THOSE INTEREST DEDUCTIONS, THE TAXPAYER  MAY  ELECT
   19  TO  REDUCE  ITS  TOTAL  EXEMPT SUBPART F INCOME BY FORTY PERCENT. IF THE
   20  TAXPAYER MAKES THIS ELECTION, THE TAXPAYER MUST ALSO MAKE THE  ELECTIONS
   21  PROVIDED  FOR  IN  PARAGRAPH  (B) OF SUBDIVISION SIX OF THIS SECTION AND
   22  PARAGRAPH (C) OF THIS SUBDIVISION.  A TAXPAYER WHICH DOES NOT MAKE  THIS
   23  ELECTION BECAUSE IT HAS NO EXEMPT SUBPART F INCOME WILL NOT BE PRECLUDED
   24  FROM MAKING THOSE OTHER ELECTIONS.
   25    (C)  "EXEMPT UNITARY CORPORATION DIVIDENDS" MEANS THOSE DIVIDENDS FROM
   26  A CORPORATION THAT IS CONDUCTING A UNITARY BUSINESS  WITH  THE  TAXPAYER
   27  BUT IS NOT INCLUDED IN A COMBINED REPORT WITH THE TAXPAYER, LESS, IN THE
   28  DISCRETION  OF  THE  COMMISSIONER,  ANY  INTEREST DEDUCTIONS DIRECTLY OR
   29  INDIRECTLY ATTRIBUTABLE TO SUCH INCOME.   IN LIEU  OF  SUBTRACTING  FROM
   30  THIS  DIVIDEND  INCOME THOSE INTEREST DEDUCTIONS, THE TAXPAYER MAY ELECT
   31  TO REDUCE THE TOTAL AMOUNT OF THIS DIVIDEND INCOME BY FORTY PERCENT.  IF
   32  THE  TAXPAYER  MAKES  THIS  ELECTION,  THE  TAXPAYER  MUST ALSO MAKE THE
   33  ELECTIONS PROVIDED FOR IN PARAGRAPH  (B)  OF  SUBDIVISION  SIX  OF  THIS
   34  SECTION AND PARAGRAPH (B) OF THIS SUBDIVISION. A TAXPAYER WHICH DOES NOT
   35  MAKE THIS ELECTION BECAUSE IT HAS NOT RECEIVED ANY EXEMPT UNITARY CORPO-
   36  RATION   DIVIDENDS  WILL  NOT  BE  PRECLUDED  FROM  MAKING  THOSE  OTHER
   37  ELECTIONS.
   38    (D) IF THE TAXPAYER ATTRIBUTES INTEREST  DEDUCTIONS  TO  OTHER  EXEMPT
   39  INCOME AND THE AMOUNT SUBTRACTED EXCEEDS OTHER EXEMPT INCOME, THE EXCESS
   40  OF  THE  INTEREST DEDUCTIONS OVER OTHER EXEMPT INCOME MUST BE ADDED BACK
   41  TO ENTIRE NET INCOME. IN NO CASE SHALL OTHER EXEMPT INCOME EXCEED ENTIRE
   42  NET INCOME.
   43    7. (a) The term  "business  capital"  means  all  assets,  other  than
   44  [subsidiary capital,] investment capital and stock issued by the taxpay-
   45  er,  less liabilities not deducted from [subsidiary or] investment capi-
   46  tal [except that cash on hand and on deposit shall be treated as invest-
   47  ment capital  or  as  business  capital  as  the  taxpayer  may  elect].
   48  BUSINESS  CAPITAL  SHALL INCLUDE ONLY THOSE ASSETS THE INCOME OR EXPENSE
   49  OF WHICH ARE PROPERLY REFLECTED (OR WOULD HAVE BEEN  PROPERLY  REFLECTED
   50  IF  NOT  FULLY  DEPRECIATED  OR EXPENSED OR DEPRECIATED OR EXPENSED TO A
   51  NOMINAL AMOUNT) IN THE COMPUTATION OF ENTIRE NET INCOME FOR THE  TAXABLE
   52  YEAR.
   53    (b)  Provided, however, "business capital" shall not include assets to
   54  the extent employed for  the  purpose  of  generating  income  which  is
   55  excluded  from entire net income pursuant to the provisions of paragraph
   56  (c-1) of subdivision nine of this section and shall be computed  without
       S. 6359                             9                            A. 8559
    1  regard  to  liabilities  directly  or  indirectly  attributable  to such
    2  assets, but only if air carriers organized  in  the  United  States  and
    3  operating  in the foreign country or countries in which the taxpayer has
    4  its  major  base of operations and in which it is organized, resident or
    5  headquartered (if not in the same country as its  major  base  of  oper-
    6  ations)  are  not  subject  to  any  tax based on or measured by capital
    7  imposed by such foreign country or countries or any  political  subdivi-
    8  sion thereof, or if taxed, are provided an exemption, equivalent to that
    9  provided  for  herein,  from  any  tax  based  on or measured by capital
   10  imposed by such foreign country or  countries  and  from  any  such  tax
   11  imposed by any political subdivision thereof[;].
   12    8. The term "business income" means entire net income minus investment
   13  income[;]  AND OTHER EXEMPT INCOME. IN NO EVENT SHALL THE SUM OF INVEST-
   14  MENT INCOME AND OTHER EXEMPT INCOME EXCEED ENTIRE  NET  INCOME.  IF  THE
   15  TAXPAYER  MAKES  THE  ELECTION PROVIDED FOR IN SUBPARAGRAPH ONE OF PARA-
   16  GRAPH (A) OF SUBDIVISION FIVE OF SECTION TWO HUNDRED TEN-A OF THIS ARTI-
   17  CLE, THEN ALL INCOME FROM QUALIFIED FINANCIAL INSTRUMENTS SHALL  CONSTI-
   18  TUTE BUSINESS INCOME.
   19    8-A.  Provided, however, that with respect to a DISC or a former DISC,
   20  the following provisions shall apply:
   21    (a) investments in the stocks, bonds or other securities of a DISC  or
   22  any  indebtedness from a DISC shall not be treated as [either subsidiary
   23  capital or] investment capital under [subdivisions four or]  SUBDIVISION
   24  five of this section,
   25    (b)  any amounts deemed distributed from a DISC or a former DISC which
   26  are taxable as dividends pursuant to  subsection  (b)  of  section  nine
   27  hundred  ninety-five  of  the  internal revenue code of nineteen hundred
   28  fifty-four shall be treated as business income, except any such  amounts
   29  from  a  former  DISC attributable to amounts includible in a taxpayer's
   30  entire net income for a prior taxable year  under  subparagraph  (B)  of
   31  paragraph (i) of subdivision nine of this section shall be excluded from
   32  entire net income,
   33    (c)  any gain recognized for federal income tax purposes on the dispo-
   34  sition of stock in a DISC, and any gain recognized on the disposition of
   35  stock in a former DISC, includible in gross income as a dividend  pursu-
   36  ant  to subsection (c) of section nine hundred ninety-five of the inter-
   37  nal revenue code of nineteen hundred fifty-four,  shall  be  treated  as
   38  business income, and
   39    (d)  except  as  provided in paragraph (i) of subdivision nine of this
   40  section, any actual distribution from a DISC or a former DISC  shall  be
   41  treated  as  business  income  except  an  actual distribution which for
   42  federal income tax purposes is treated as made out  of  "other  earnings
   43  and  profits"  under  section  nine  hundred  ninety-six of the internal
   44  revenue code of nineteen hundred fifty-four, in which case  such  actual
   45  distribution  shall  be treated as [either subsidiary income or] invest-
   46  ment income under this article.
   47    [8-B. (a) The term "minimum taxable income" shall mean the entire  net
   48  income of the taxpayer for the taxable year:
   49    (1) increased by the amount of the federal items of tax preference set
   50  forth  in  section  fifty-seven  of  the internal revenue code (with the
   51  modifications set forth in paragraph (b)  of  this  subdivision),  which
   52  items  of  tax preference shall have the same meaning and be computed in
   53  the same manner as under section fifty-seven  of  the  internal  revenue
   54  code,
   55    (2) determined with the federal adjustments described in paragraph (c)
   56  of  this  subdivision, which adjustments shall have the same meaning and
       S. 6359                            10                            A. 8559
    1  be computed in the same manner as under sections  fifty-six  and  fifty-
    2  eight of the internal revenue code,
    3    (3)  increased  by  the net operating loss deduction otherwise allowed
    4  under paragraph (f) of subdivision nine of this section, and
    5    (4) reduced, for taxable years beginning after nineteen hundred  nine-
    6  ty-three, by the alternative net operating loss deduction, as defined in
    7  paragraph (d) of this subdivision.
    8    (b)  The federal items of tax preference referred to hereinabove shall
    9  be modified by deducting "tax-exempt interest" and "accelerated depreci-
   10  ation or amortization on certain property placed in service before Janu-
   11  ary  1,  1987",  as  determined  under  paragraphs  five  and  seven  of
   12  subsection (a) of section fifty-seven of the internal revenue code.
   13    (c) The adjustments referred to hereinabove shall be:
   14    (1) "Depreciation" as determined under paragraph one of subsection (a)
   15  of  section fifty-six of the internal revenue code. For purposes of this
   16  subparagraph, the depreciation item  of  adjustment  provided  for  here
   17  shall  not include any amount attributable to property for which the tax
   18  benefits of the accelerated cost recovery system are not available under
   19  this article by reason of subparagraph ten of paragraph (b) of  subdivi-
   20  sion nine of this section;
   21    (2)  "Mining  exploration  and  development costs" as determined under
   22  paragraph two of subsection (a) of section  fifty-six  of  the  internal
   23  revenue code;
   24    (3)  "Treatment  of  certain  long-term contracts" as determined under
   25  paragraph three of subsection (a) of section fifty-six of  the  internal
   26  revenue code;
   27    (4)  "Installment sales of certain property" as determined under para-
   28  graph six of subsection (a) of section fifty-six of the internal revenue
   29  code;
   30    (5) "Circulation expenditures of personal holding companies" as deter-
   31  mined under subparagraph (C) of  paragraph  two  of  subsection  (b)  of
   32  section fifty-six of the internal revenue code;
   33    (6)  "Merchant  marine capital construction funds" as determined under
   34  paragraph two of subsection (c) of section  fifty-six  of  the  internal
   35  revenue code;
   36    (7)  "Disallowance  of  passive  activity  loss"  as  determined under
   37  subsection (b) of section fifty-eight of the internal revenue code; and
   38    (8) "Adjusted basis", as it appears in paragraph seven  of  subsection
   39  (a)  of  section  fifty-six  of  the  internal revenue code, but without
   40  taking  into  account  the  references  therein  to  paragraph  five  of
   41  subsection (a) of section fifty-six of the internal revenue code.
   42    (d)  The term "alternative net operating loss deduction" means the net
   43  operating loss deduction allowed for the taxable  year  under  paragraph
   44  (f) of subdivision nine of this section, except as provided herein.
   45    (1)(A)  The  net  operating loss for any year beginning after nineteen
   46  hundred eighty-nine which is  included  in  determining  such  deduction
   47  shall be determined with the adjustments provided in subparagraph two of
   48  paragraph  (a) of this subdivision, and shall be reduced by the items of
   49  tax preference determined under subparagraph one  of  paragraph  (a)  of
   50  this  subdivision,  attributable to such year. An item of tax preference
   51  shall be taken into account only to the extent such item  increased  the
   52  amount  of  the  net operating loss for the taxable year under paragraph
   53  (f) of subdivision nine of this section.
   54    (B) In the case of loss years beginning before nineteen hundred  nine-
   55  ty,  the  amount  of the net operating loss which may be carried over to
   56  taxable years beginning after  nineteen  hundred  eighty-nine  shall  be
       S. 6359                            11                            A. 8559
    1  equal  to an amount which may be carried from the loss year to the first
    2  taxable year of the taxpayer beginning after  nineteen  hundred  eighty-
    3  nine.
    4    (2)  In  determining  the amount of such deduction, loss carryforwards
    5  and carrybacks shall, subject to the provisions of subparagraph five  of
    6  paragraph  (f)  of  subdivision nine of this section, be computed in the
    7  manner set forth in paragraph two  of  subsection  (b)  of  section  one
    8  hundred  seventy-two  of the internal revenue code, except that, for the
    9  reference therein to taxable income,  there  shall  be  substituted  the
   10  phrase  "ninety  percent  of  minimum  taxable income determined without
   11  regard to the alternative net operating loss deduction".
   12    (3) The amount of such deduction shall not exceed  ninety  percent  of
   13  minimum  taxable  income  determined  without  regard to such deduction,
   14  provided, however, the term "ninety percent" shall be  read  as  "forty-
   15  five  percent"  with  respect  to  taxable  years  beginning in nineteen
   16  hundred ninety-four.
   17    (e) The tax commission may, whenever necessary in  order  to  properly
   18  reflect  the  minimum taxable income of any taxpayer, determine the year
   19  or period in which any item of income or deduction  shall  be  included,
   20  without regard to the method of accounting employed by the taxpayer.
   21    (f) If the period covered by a report under this article is other than
   22  the  period  covered by the report to the United States treasury depart-
   23  ment, the minimum taxable income shall be appropriately modified  pursu-
   24  ant to regulations promulgated by the tax commission.]
   25    9. The term "entire net income" means total net income from all sourc-
   26  es,  which  shall  be  presumably  the same as the entire taxable income
   27  [(but not alternative minimum taxable income)], WHICH, EXCEPT AS HEREIN-
   28  AFTER PROVIDED IN THIS SUBDIVISION,
   29    (i) [which] the taxpayer is required to report to  the  United  States
   30  treasury department, or
   31    (ii)  [which]  the  taxpayer would have been required to report to the
   32  United States treasury department if it had not made an  election  under
   33  subchapter s of chapter one of the internal revenue code, or
   34    (iii)  [which]  the  taxpayer,  in  the case of a corporation which is
   35  exempt from federal income tax (other than the tax on unrelated business
   36  taxable income imposed under section 511 of the internal  revenue  code)
   37  but which is subject to tax under this article, would have been required
   38  to  report  to  the  United  States  treasury  department  but  for such
   39  exemption, [except as hereinafter provided, and subject to any modifica-
   40  tion required by paragraphs (d) and (e) of subdivision three of  section
   41  two hundred ten of this article] OR
   42    (IV)  IN THE CASE OF A CORPORATION ORGANIZED UNDER THE LAWS OF A COUN-
   43  TRY OTHER THAN THE UNITED STATES,  IS  EFFECTIVELY  CONNECTED  WITH  THE
   44  CONDUCT  OF  A  TRADE OR BUSINESS WITHIN THE UNITED STATES AS DETERMINED
   45  UNDER SECTION 882 OF THE INTERNAL REVENUE CODE,
   46    (a) Entire net income shall not include:
   47    [(1) income, gains and losses from subsidiary  capital  which  do  not
   48  include  the  amount of a recovery in respect of any war loss except for
   49  such amounts from a former DISC which are  treated  as  business  income
   50  under subdivision eight-A of this section,
   51    (2)  fifty  percent of dividends (A) other than from subsidiaries, and
   52  (B) other than amounts treated  as  business  income  under  subdivision
   53  eight-A  of  this  section,  on  shares  of  stock  which conform to the
   54  requirements of subsection (c) of section two hundred forty-six  of  the
   55  internal revenue code.]
   56    (3) bona fide gifts,
       S. 6359                            12                            A. 8559
    1    (4) income and deductions with respect to amounts received from school
    2  districts and from corporations and associations, organized and operated
    3  exclusively  for  religious, charitable or educational purposes, no part
    4  of the net earnings of which inures to the benefit of any private share-
    5  holder or individual, for the operation of school buses,
    6    (5)  (i)  any  refund  or  credit of a tax imposed under this article,
    7  article twenty-three, or FORMER article thirty-two of this chapter,  for
    8  which  tax  no  exclusion  or  deduction  was allowed in determining the
    9  taxpayer's entire net income under this article,  article  twenty-three,
   10  or  FORMER article thirty-two of this chapter for any prior year, (ii) a
   11  refund or credit of general corporation tax allowed by subdivision elev-
   12  en of section 11-604 of the administrative code of the city of New York,
   13  or (iii) any refund or credit  of  a  tax  imposed  under  sections  one
   14  hundred  eighty-three,  one  hundred eighty-three-a, one hundred eighty-
   15  four or one hundred eighty-four-a of this chapter, and
   16    (6) any amount treated as dividends pursuant to section  seventy-eight
   17  of the internal revenue code and not [otherwise deductible under subpar-
   18  agraphs  one  and  two of this paragraph] TREATED AS OTHER EXEMPT INCOME
   19  UNDER SUBDIVISION SIX-A OF THIS SECTION;
   20    (7) that portion of wages and salaries paid or incurred for the  taxa-
   21  ble year for which a deduction is not allowed pursuant to the provisions
   22  of section two hundred eighty-C of the internal revenue code.
   23    [(8)  in the case of a taxpayer who is separately or as a partner of a
   24  partnership doing an insurance business as a  member  of  the  New  York
   25  insurance  exchange described in section six thousand two hundred one of
   26  the insurance law, any item of income, gain, loss or deduction  of  such
   27  business  which  is  the  taxpayer's  distributive or pro rata share for
   28  federal income tax purposes or which the taxpayer is  required  to  take
   29  into account separately for federal income tax purposes.]
   30    (9)  for taxable years beginning after December thirty-first, nineteen
   31  hundred eighty-one, except with respect to property which is a qualified
   32  mass commuting vehicle described in subparagraph (D) of paragraph  eight
   33  of  subsection  (f)  of  section one hundred sixty-eight of the internal
   34  revenue code (relating to qualified mass commuting vehicles) and proper-
   35  ty of a taxpayer principally engaged in the conduct of  aviation  (other
   36  than  air  freight  forwarders acting as principal and like indirect air
   37  carriers) which is placed in service before taxable years  beginning  in
   38  nineteen  hundred  eighty-nine,  any  amount  which  is  included in the
   39  taxpayer's federal taxable income solely as a result of an election made
   40  pursuant to the provisions of such paragraph eight as it was  in  effect
   41  for  agreements  entered  into  prior to January first, nineteen hundred
   42  eighty-four;
   43    (10) for taxable years beginning after December thirty-first, nineteen
   44  hundred eighty-one, except with respect to property which is a qualified
   45  mass commuting vehicle described in subparagraph (D) of paragraph  eight
   46  of  subsection  (f)  of  section one hundred sixty-eight of the internal
   47  revenue code (relating to qualified mass commuting vehicles) and proper-
   48  ty of a taxpayer principally engaged in the conduct of  aviation  (other
   49  than  air  freight  forwarders acting as principal and like indirect air
   50  carriers) which is placed in service before taxable years  beginning  in
   51  nineteen  hundred  eighty-nine, any amount which the taxpayer could have
   52  excluded from federal taxable  income  had  it  not  made  the  election
   53  provided  for in such paragraph eight as it was in effect for agreements
   54  entered into prior to January first, nineteen hundred eighty-four;
   55    (11) the amount deductible pursuant to paragraph (j) of this  subdivi-
   56  sion; and
       S. 6359                            13                            A. 8559
    1    (12)  upon  the disposition of property to which paragraph (j) of this
    2  subdivision applies, the amount, if any, by which the aggregate  of  the
    3  amounts  described in subparagraph ten of paragraph (b) of this subdivi-
    4  sion attributable to such property exceeds the aggregate of the  amounts
    5  described  in  paragraph  (j)  of  this subdivision attributable to such
    6  property; and
    7    [(13) if the added tax provided for in either (i)  former  subdivision
    8  two  of section one hundred eighty-two of this chapter (relating to real
    9  estate corporations) or (ii) former subdivision  one-a  of  section  two
   10  hundred  nine of this chapter (relating to real estate corporations) has
   11  been imposed upon the taxpayer,  any  income  which  has  been  used  in
   12  computing such tax.]
   13    (14)  The  amount  deductible  pursuant to paragraph [(l)] (I) of this
   14  subsection.
   15    [(15) In the case of an attorney-in-fact,  with  respect  to  which  a
   16  mutual  insurance  company,  which  is  an  interinsurer or a reciprocal
   17  insurer and is subject to tax under subdivision (a) of  section  fifteen
   18  hundred  ten  of  this chapter, has made the election provided for under
   19  section eight hundred thirty-five  of  the  Internal  Revenue  Code,  an
   20  amount  equal  to the excess, if any, of the amounts paid or incurred by
   21  such interinsurer or reciprocal insurer  in  the  taxable  year  to  the
   22  attorney-in-fact  over  the  deduction  allowed  to such interinsurer or
   23  reciprocal insurer with respect to amounts paid or incurred in the taxa-
   24  ble year to the attorney-in-fact under subsection (b)  of  such  section
   25  eight hundred thirty-five of the Internal Revenue Code.]
   26    (16) In the case of a taxpayer subject to the modification provided by
   27  subparagraph  sixteen  of  paragraph (b) of this subdivision, the amount
   28  required to be recaptured pursuant to subsection (d) of section  179  of
   29  the  internal  revenue  code  with  respect  to property upon which such
   30  modification was based.
   31    (17) FOR TAXABLE YEARS  BEGINNING  AFTER  DECEMBER  THIRTY-FIRST,  TWO
   32  THOUSAND  TWO, THE AMOUNT DEDUCTIBLE PURSUANT TO PARAGRAPH (N-1) OF THIS
   33  SUBDIVISION.
   34    (18) the amount of income or gain included in federal  taxable  income
   35  of  a taxpayer that is a partner in a qualified entity or is a qualified
   36  entity that is located both within and without a New  York  state  inno-
   37  vation  hot  spot, to the extent that the income or gain is attributable
   38  to the operations of a qualified entity at or as part of  the  New  York
   39  state  innovation  hot  spot as provided in section thirty-eight of this
   40  chapter.
   41    (19) THE AMOUNT COMPUTED PURSUANT TO PARAGRAPH  (R)  OR  (S)  OF  THIS
   42  SUBDIVISION, BUT NOT BOTH SUCH AMOUNTS.
   43    (b)  Entire  net  income  shall  be  determined without the exclusion,
   44  deduction or credit of:
   45    (1) [the amount of any specific exemption or credit allowed in any law
   46  of the United States imposing any tax on or measured by  the  income  of
   47  corporations,] IN THE CASE OF A CORPORATION ORGANIZED UNDER THE LAW OF A
   48  COUNTRY  OTHER THAN THE UNITED STATES, EXCEPT AS TREATED AS OTHER EXEMPT
   49  INCOME UNDER SUBDIVISION SIX-A OF THIS SECTION,  (I)  ANY  PART  OF  ANY
   50  INCOME  FROM  DIVIDENDS  OR INTEREST ON ANY KIND OF STOCK, SECURITIES OR
   51  INDEBTEDNESS,  BUT  ONLY  IF  SUCH  INCOME  IS  TREATED  AS  EFFECTIVELY
   52  CONNECTED  WITH  THE CONDUCT OF A TRADE OR BUSINESS IN THE UNITED STATES
   53  PURSUANT TO SECTION 864 OF THE INTERNAL REVENUE CODE,  (II)  ANY  INCOME
   54  EXEMPT  FROM  FEDERAL  TAXABLE INCOME UNDER ANY TREATY OBLIGATION OF THE
   55  UNITED STATES, BUT ONLY IF SUCH INCOME WOULD BE TREATED  AS  EFFECTIVELY
   56  CONNECTED  IN  ABSENCE OF SUCH EXEMPTION PROVIDED THAT SUCH TREATY OBLI-
       S. 6359                            14                            A. 8559
    1  GATION DOES NOT PRECLUDE THE TAXATION OF SUCH  INCOME  BY  A  STATE,  OR
    2  (III) ANY INCOME WHICH WOULD BE TREATED AS EFFECTIVELY CONNECTED IF SUCH
    3  INCOME WERE NOT EXCLUDED FROM GROSS INCOME PURSUANT TO SUBSECTION (A) OF
    4  SECTION 103 OF THE INTERNAL REVENUE CODE;
    5    (2)  any  part of any income from dividends or interest on any kind of
    6  stock, securities or indebtedness, [except as provided  in  clauses  (1)
    7  and  (2)  of  paragraph (a) hereof] TREATED AS OTHER EXEMPT INCOME UNDER
    8  SUBDIVISION SIX-A OF THIS SECTION,
    9    (3) taxes on or measured by profits or income paid or accrued  to  the
   10  United States, any of its possessions or to any foreign country, includ-
   11  ing  taxes  in  lieu  of  any of the foregoing taxes otherwise generally
   12  imposed by any foreign country  or  by  any  possession  of  the  United
   13  States,
   14    (3-a)  taxes  on  or  measured  by profits or income, or which include
   15  profits or income as a measure, paid or accrued to any  other  state  of
   16  the  United  States,  or  any  political  subdivision thereof, or to the
   17  District of Columbia, including taxes expressly in lieu of  any  of  the
   18  foregoing  taxes  otherwise  generally imposed by any other state of the
   19  United States, or any political subdivision thereof, or the District  of
   20  Columbia;
   21    (4)  taxes  imposed  under  this  article and article thirty-two AS IN
   22  EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN and sections  one
   23  hundred  eighty-three,  one  hundred eighty-three-a, one hundred eighty-
   24  four and one hundred eighty-four-a of this chapter,
   25    (4-a)(A) [the entire amount allowable as an exclusion or deduction for
   26  stock transfer taxes imposed by article twelve of this chapter in deter-
   27  mining the entire taxable income  which  the  taxpayer  is  required  to
   28  report  to  the United States treasury department but only to the extent
   29  that such taxes are incurred and paid  in  market  making  transactions,
   30  (B)]  in those instances where a credit for the special additional mort-
   31  gage recording tax credit is allowed under [paragraph (a)  of]  subdivi-
   32  sion  [seventeen]  NINE of section two hundred [ten] TEN-B of this arti-
   33  cle, the amount allowed as an exclusion or  deduction  for  the  special
   34  additional  mortgage  recording  tax  imposed  by  subdivision  one-a of
   35  section two hundred fifty-three  of  this  chapter  in  determining  the
   36  entire  taxable  income  which the taxpayer is required to report to the
   37  United States treasury department,  and  [(C)]  (B)  unless  the  credit
   38  allowed  pursuant to subdivision [seventeen] NINE of section two hundred
   39  [ten] TEN-B of this article is reflected in the computation of the  gain
   40  or  loss so as to result in an increase in such gain or decrease of such
   41  loss, for federal income tax purposes, from the sale or  other  disposi-
   42  tion  of the property with respect to which the special additional mort-
   43  gage recording tax imposed pursuant to subdivision one-a of section  two
   44  hundred  fifty-three of this chapter was paid, the amount of the special
   45  additional mortgage  recording  tax  imposed  by  subdivision  one-a  of
   46  section two hundred fifty-three of this chapter which was paid and which
   47  is  reflected  in  the computation of the basis of the property so as to
   48  result in a decrease in such gain or increase in such loss  for  federal
   49  income  tax  purposes from the sale or other disposition of the property
   50  with respect to which such tax was paid.
   51    (6) [in the discretion of the tax commission, any amount  of  interest
   52  directly  or  indirectly  and  any  other  amount directly or indirectly
   53  attributable as a carrying charge or otherwise to subsidiary capital  or
   54  to  income,  gains or losses from subsidiary capital] ANY AMOUNT ALLOWED
   55  AS A DEDUCTION FOR THE TAXABLE YEAR UNDER SECTION 172  OF  THE  INTERNAL
       S. 6359                            15                            A. 8559
    1  REVENUE  CODE,  INCLUDING  CARRYOVERS  OF  DEDUCTIONS FROM PRIOR TAXABLE
    2  YEARS.
    3    [(7)  in the case of a taxpayer who is separately or as a partner of a
    4  partnership doing an insurance business as a  member  of  the  New  York
    5  insurance  exchange described in section six thousand two hundred one of
    6  the insurance law, such taxpayer's distributive or pro rata share of the
    7  allocated entire  net  income  of  such  business  as  determined  under
    8  sections fifteen hundred three and fifteen hundred four of this chapter,
    9  provided  however,  in  the  event such allocated entire net income is a
   10  loss, such taxpayer's distributive or pro rata share of such loss  shall
   11  not  be  subtracted  from federal taxable income in computing entire net
   12  income under this subdivision.]
   13    (8) for taxable years beginning after December thirty-first,  nineteen
   14  hundred eighty-one, except with respect to property which is a qualified
   15  mass  commuting vehicle described in subparagraph (D) of paragraph eight
   16  of subsection (f) of section one hundred  sixty-eight  of  the  internal
   17  revenue code (relating to qualified mass commuting vehicles) and proper-
   18  ty  of  a taxpayer principally engaged in the conduct of aviation (other
   19  than air freight forwarders acting as principal and  like  indirect  air
   20  carriers)  which  is placed in service before taxable years beginning in
   21  nineteen hundred eighty-nine, any amount which the taxpayer claimed as a
   22  deduction in computing its federal taxable income solely as a result  of
   23  an  election  made pursuant to the provisions of such paragraph eight as
   24  it was in effect for agreements entered into  prior  to  January  first,
   25  nineteen hundred eighty-four;
   26    (9)  for taxable years beginning after December thirty-first, nineteen
   27  hundred eighty-one, except with respect to property which is a qualified
   28  mass commuting vehicle described in subparagraph (D) of paragraph  eight
   29  of  subsection  (f)  of  section one hundred sixty-eight of the internal
   30  revenue code (relating to qualified mass commuting vehicles) and proper-
   31  ty of a taxpayer principally engaged in the conduct of  aviation  (other
   32  than  air  freight  forwarders acting as principal and like indirect air
   33  carriers) which is placed in service before taxable years  beginning  in
   34  nineteen  hundred  eighty-nine, any amount which the taxpayer would have
   35  been required to include in  the  computation  of  its  federal  taxable
   36  income had it not made the election permitted pursuant to such paragraph
   37  eight  as  it was in effect for agreements entered into prior to January
   38  first, nineteen hundred eighty-four;
   39    (10) in the case of property placed in service in taxable years begin-
   40  ning before nineteen hundred ninety-four, for  taxable  years  beginning
   41  after  December  thirty-first,  nineteen hundred eighty-one, except with
   42  respect to property subject to the provisions  of  section  two  hundred
   43  eighty-F   of  the  internal  revenue  code,  property  subject  to  the
   44  provisions of section one hundred sixty-eight of  the  internal  revenue
   45  code which is placed in service in this state in taxable years beginning
   46  after  December  thirty-first, nineteen hundred eighty-four and property
   47  of a taxpayer principally engaged in the conduct of aviation (other than
   48  air freight forwarders acting as principal and like indirect air  carri-
   49  ers)  which is placed in service before taxable years beginning in nine-
   50  teen  hundred  [eight-nine]  EIGHTY-NINE,  the  amount  allowable  as  a
   51  deduction determined under section one hundred sixty-eight of the inter-
   52  nal revenue code;
   53    (11)  upon  the disposition of property to which paragraph (j) of this
   54  subdivision applies, the amount, if any, by which the aggregate  of  the
   55  amounts  described  in  such paragraph (j) attributable to such property
       S. 6359                            16                            A. 8559
    1  exceeds the aggregate of the amounts described in  subparagraph  ten  of
    2  this paragraph attributable to such property.
    3    (15)  Real  property taxes paid on qualified agricultural property and
    4  deducted in determining federal taxable income, to  the  extent  of  the
    5  amount of the agricultural property tax credit allowed under subdivision
    6  [twenty-two] ELEVEN of section two hundred [ten] TEN-B of this article.
    7    (16)  In  the  case  of  a taxpayer which is not an eligible farmer as
    8  defined in paragraph (b) of subdivision [twenty-two] ELEVEN  of  section
    9  two  hundred  [ten]  TEN-B  of this article, the amount of any deduction
   10  claimed pursuant to section  179  of  the  internal  revenue  code  with
   11  respect  to  a sport utility vehicle which is not a passenger automobile
   12  as defined in paragraph 5 of subsection  (d)  of  section  280F  of  the
   13  internal revenue code.
   14    (17)  for  taxable  years  beginning  after December thirty-first, two
   15  thousand two, in the case of qualified property described  in  paragraph
   16  two  of  subsection k of section 168 of the internal revenue code, other
   17  than qualified resurgence zone property described in  paragraph  (q)  of
   18  this subdivision, and other than qualified New York Liberty Zone proper-
   19  ty  described  in  paragraph two of subsection b of section 1400L of the
   20  internal revenue code (without regard to clause (i) of subparagraph  (C)
   21  of  such paragraph), which was placed in service on or after June first,
   22  two thousand three, the amount allowable as a  deduction  under  section
   23  167 of the internal revenue code.
   24    (18) Premiums paid for environmental remediation insurance, as defined
   25  in  section  twenty-three  of  this chapter, and deducted in determining
   26  federal taxable income, to the extent of the amount of the environmental
   27  remediation insurance credit allowed under such section twenty-three and
   28  subdivision [thirty-five] NINETEEN of section two hundred [ten] TEN-B of
   29  this article.
   30    (19) The amount of any  deduction  allowed  pursuant  to  section  one
   31  hundred ninety-nine of the internal revenue code.
   32    (20) The amount of any federal deduction for taxes imposed under arti-
   33  cle twenty-three of this chapter.
   34    [(c)  Entire  net  income  shall include income within and without the
   35  United States;]
   36    (c-1)(1) Notwithstanding any other provision of this article,  in  the
   37  case  of a taxpayer which is a foreign air carrier holding a foreign air
   38  carrier permit issued by the United States department of  transportation
   39  pursuant  to  section  four  hundred  two of the federal aviation act of
   40  nineteen hundred fifty-eight, as amended, and which is  qualified  under
   41  subparagraph two of this paragraph, entire net income shall not include,
   42  and  shall  be  computed  without  the deduction of, amounts directly or
   43  indirectly attributable to, (i) any income  derived  from  the  interna-
   44  tional  operation  of  aircraft  as  described  in  and  subject  to the
   45  provisions of section eight hundred eighty-three of the internal revenue
   46  code, (ii) income without the United States which is  derived  from  the
   47  operation  of aircraft, and (iii) income without the United States which
   48  is of a type described in  subdivision  (a)  of  section  eight  hundred
   49  eighty-one  of  the internal revenue code except that it is derived from
   50  sources without the United  States.  Entire  net  income  shall  include
   51  income  described in clauses (i), (ii) and (iii) of this subparagraph in
   52  the case of taxpayers not described in the previous sentence.
   53    (2) A taxpayer is qualified under this subparagraph  if  air  carriers
   54  organized  in  the United States and operating in the foreign country or
   55  countries in which the taxpayer has its major base of operations and  in
   56  which  it  is  organized,  resident or headquartered (if not in the same
       S. 6359                            17                            A. 8559
    1  country as its major base of operations) are not subject to  any  income
    2  tax  or  other tax based on or measured by income or receipts imposed by
    3  such foreign country or countries or any political subdivision  thereof,
    4  or  if  so  subject to such tax, are provided an exemption from such tax
    5  equivalent to that provided for herein.
    6    (c-2) Adjustments by qualified public utilities. (1) In the case of  a
    7  taxpayer which is a qualified public utility, entire net income shall be
    8  computed with the adjustments set forth in this paragraph.
    9    (2)  Definitions.  (A)  Qualified  public utility. The term "qualified
   10  public utility" means a taxpayer which: (i)  on  December  thirty-first,
   11  nineteen  hundred ninety-nine, was subject to the ratemaking supervision
   12  of the state department of public service, and (ii) for the year  ending
   13  on  December  thirty-first, nineteen hundred ninety-nine, was subject to
   14  tax under former section one hundred eighty-six of this chapter.
   15    (B) Transition property. The term "transition property" means property
   16  placed in service by the taxpayer before January  first,  two  thousand,
   17  for  which a depreciation deduction is allowed under section one hundred
   18  sixty-seven of the internal revenue code.
   19    (3) Federal depreciation disallowed. With respect to transition  prop-
   20  erty,  the  deduction  for  federal income tax purposes for depreciation
   21  shall not be allowed.
   22    (4) New York depreciation. With  respect  to  transition  property,  a
   23  deduction  shall  be  allowed  for the depreciation expense shown on the
   24  books and records of the taxpayer for the taxable year and determined in
   25  accordance with generally accepted accounting principles.
   26    (5) Regulatory assets. A deduction shall be allowed for amounts recog-
   27  nized as expense on the books and records of the taxpayer for the  taxa-
   28  ble  year,  which  amounts were recognized as expense for federal income
   29  tax purposes in a taxable year ending  on  or  before  December  thirty-
   30  first,  nineteen  hundred ninety-nine, where: (A) such amounts represent
   31  expenditures which, when made, were charged to a deferred debit  account
   32  or  similar  asset account on the books and records of the taxpayer, and
   33  where (B) the recognition of expense on the books  and  records  of  the
   34  taxpayer  is  matched by revenue stemming from a procedure or adjustment
   35  allowing the recovery of such expenditures, and where (C)  such  revenue
   36  is recognized for federal income tax purposes in the taxable year.
   37    (6)  Basis for gain or loss. (A) Recognition transactions. (i) General
   38  rule - book basis. Except as provided in subclause (ii) of this  clause,
   39  where  transition property is sold or otherwise disposed of in the taxa-
   40  ble year in a transaction of the type requiring recognition of  gain  or
   41  loss  for  federal  income  tax  purposes, the basis for determining the
   42  amount of such gain or loss under this article shall be the cost of  the
   43  property less the accumulated depreciation on the property determined on
   44  the  books  and  records  of  the  taxpayer in accordance with generally
   45  accepted accounting principles.
   46    (ii) Qualified gain - New York basis.  Where  a  sale  or  disposition
   47  described in subclause (i) of this clause results in recognition of gain
   48  for  federal  income tax purposes, and where either (I) such recognition
   49  occurs in a taxable year ending after nineteen hundred  ninety-nine  and
   50  before  two  thousand ten, or (II) such recognition is with respect to a
   51  nuclear electric generating facility,  the  basis  for  determining  the
   52  amount of such gain under this article shall be the cost of the property
   53  less  the aggregate of the New York depreciation deductions on the prop-
   54  erty determined under subparagraph four of this paragraph.
   55    (iii) No conversion of gain to loss.  In  the  event  that  the  basis
   56  determined  under subclause (ii) of this clause results in determination
       S. 6359                            18                            A. 8559
    1  of a loss on the sale or disposition of the property, no  gain  or  loss
    2  shall  be  recognized  under  this  article with respect to such sale or
    3  disposition.
    4    (B)  Nonrecognition transactions. (i) Carryover basis. (I) where tran-
    5  sition property is disposed of ("original disposition") in a transaction
    6  of a type requiring deferral of recognition of gain or loss for  federal
    7  income tax purposes, and where (II) there is a subsequent recognition of
    8  gain  or loss for federal income tax purposes ("clause B gain or loss"),
    9  the amount of which is determined by reference, in whole or in part,  to
   10  the  basis  of  such transition property ("underlying transition proper-
   11  ty"), then (III) the amount of such clause B gain  or  loss  under  this
   12  article shall be adjusted as provided in subclause (ii) or (iii) of this
   13  clause.
   14    (ii)  General  rule  -  book  basis  adjustment. Except as provided in
   15  subclause (iii) of this clause, the amount of clause  B  gain  shall  be
   16  reduced,  or  the  amount  of  clause B loss increased, by the amount by
   17  which the book basis of the underlying transition property on  the  date
   18  of  original  disposition  (determined using the provisions of subclause
   19  (i) of clause (A) of this subparagraph) exceeds the federal  income  tax
   20  basis of such property on such date.
   21    (iii)  Qualified gain - New York basis adjustment. Where clause B gain
   22  either (I) occurs in a taxable year ending after nineteen hundred  nine-
   23  ty-nine and before two thousand ten, or (II) is with respect to a nucle-
   24  ar  electric  generating  facility,  the  amount of such gain under this
   25  article shall be reduced, but not below zero, by the amount by which the
   26  New York basis of the underlying transition  property  on  the  date  of
   27  original  disposition (determined using the provisions of subclause (ii)
   28  of clause (A) of this subparagraph) exceeds the federal income tax basis
   29  of such property on such date.
   30    (iv) Application to replacement  property  and  transferee  taxpayers.
   31  This  clause  shall apply whether the clause B gain or loss: (I) is with
   32  respect to either transition property or depreciable property the  basis
   33  of  which  is determined by reference to transition property, or (II) is
   34  recognized by either a qualified public utility or by a  taxpayer  which
   35  is  a  transferee of transition property (whether or not such transferee
   36  is a qualified public utility, notwithstanding subparagraph one of  this
   37  paragraph).
   38    (c-3)  Depreciation adjustments by qualified power producers and pipe-
   39  line companies. (1) In the case of  a  qualified  taxpayer,  entire  net
   40  income  shall be computed with the depreciation adjustments set forth in
   41  this paragraph.
   42    (2) Definitions. (A) Qualified taxpayer. The term "qualified taxpayer"
   43  means a qualified power producer or a qualified pipeline.
   44    (B) Qualified power producer.  The  term  "qualified  power  producer"
   45  means  a  taxpayer which: (i) on December thirty-first, nineteen hundred
   46  ninety-nine, was not subject to the ratemaking supervision of the  state
   47  department  of  public service, and (ii) for the year ending on December
   48  thirty-first, nineteen hundred ninety-nine, was  subject  to  tax  under
   49  former  section one hundred eighty-six of this chapter on account of its
   50  being principally engaged in the business of supplying electricity.
   51    (C) Qualified pipeline. The term "qualified pipeline" means a taxpayer
   52  which: (i) on December thirty-first, nineteen hundred  ninety-nine,  was
   53  subject to the ratemaking supervision of either the federal energy regu-
   54  latory  commission  or  the state department of public service, and (ii)
   55  for the year ending on December thirty-first, nineteen  hundred  ninety-
   56  nine, was subject to tax under sections one hundred eighty-three and one
       S. 6359                            19                            A. 8559
    1  hundred  eighty-four of this chapter on account of its being principally
    2  engaged in the business of pipeline transmission.
    3    (D) Transition property. The term "transition property" means property
    4  placed  in  service  by  a  qualified taxpayer before January first, two
    5  thousand, for which a depreciation deduction is  allowed  under  section
    6  one hundred sixty-seven of the internal revenue code.
    7    (3)  Federal depreciation disallowed. With respect to transition prop-
    8  erty, the deduction for federal income  tax  purposes  for  depreciation
    9  shall not be allowed.
   10    (4)  New  York  depreciation.  With  respect to transition property, a
   11  deduction shall be allowed for  the  depreciation  expense  computed  as
   12  provided  in this subparagraph. (A) All transition property shown on the
   13  books and records of the taxpayer on January first, two  thousand  shall
   14  be  treated  as  a  single asset placed in service on such date. The New
   15  York basis for purposes of computing the depreciation deduction on  such
   16  single  asset  shall  be  the net book value of such transition property
   17  determined on the first day of the federal taxable year  ending  in  two
   18  thousand  (or  on  the  date  any such property is placed in service, if
   19  later) adjusted as provided in clause (B) of this subparagraph.
   20    (B) If transition property is sold or otherwise disposed of,  the  New
   21  York basis of the single asset shall be reduced on the date of such sale
   22  or  disposition  by the amount of the adjusted federal tax basis of such
   23  property on such date.
   24    (C) The New York depreciation deduction allowed for any  taxable  year
   25  with  respect to such single asset shall be computed using the straight-
   26  line method, a twenty-year life, and a salvage value of zero.
   27    (D) For purposes of this subparagraph, the term "net book value" means
   28  cost reduced by accumulated depreciation shown on the books and  records
   29  of the taxpayer and determined, in the case of a qualified power produc-
   30  er,  in accordance with generally accepted accounting principles; and in
   31  the case of a qualified pipeline,  in  accordance  with  the  taxpayer's
   32  regulatory  reports  filed with the federal energy regulatory commission
   33  or state department of public service.
   34    (d) The [tax commission] COMMISSIONER may, whenever necessary in order
   35  properly to reflect the entire net income of any taxpayer, determine the
   36  year or period in which  any  item  of  income  or  deduction  shall  be
   37  included,  without  regard  to  the method of accounting employed by the
   38  taxpayer[;].
   39    (e) The entire net income of any bridge commission created by  act  of
   40  congress  to  construct  a bridge across an international boundary means
   41  its gross income less the expense of maintaining and operating its prop-
   42  erties, the annual interest upon its bonds and  other  obligations,  and
   43  the  annual  charge  for  the retirement of such bonds or obligations at
   44  maturity[;].
   45    [(f) A net operating loss deduction shall be allowed  which  shall  be
   46  presumably  the  same  as the net operating loss deduction allowed under
   47  section one hundred seventy-two of the internal revenue code,  or  which
   48  would  have  been allowed if the taxpayer had not made an election under
   49  subchapter s of chapter one of the internal revenue code, except that in
   50  every instance where such deduction is allowed under this article:
   51    (1) any net operating loss  included  in  determining  such  deduction
   52  shall  be  adjusted to reflect the inclusions and exclusions from entire
   53  net income required by paragraphs (a), (b) and (g) hereof,
   54    (2) such deduction shall not include any net operating loss  sustained
   55  during  any  taxable  year  beginning  prior  to January first, nineteen
       S. 6359                            20                            A. 8559
    1  hundred sixty-one, or during any taxable year in which the taxpayer  was
    2  not subject to the tax imposed by this article,
    3    (3) such deduction shall not exceed the deduction for the taxable year
    4  allowed  under  section  one hundred seventy-two of the internal revenue
    5  code, or the deduction for  the  taxable  year  which  would  have  been
    6  allowed  if  the taxpayer had not made an election under subchapter s of
    7  chapter one of the internal revenue code,
    8    (4) in the case of a New York S corporation, such deduction shall  not
    9  include  any  net  operating  loss sustained during a New York C year or
   10  during a New York S year beginning prior to nineteen hundred ninety, and
   11  in the case of a New  York  C  corporation,  such  deduction  shall  not
   12  include  any  net  operating  loss  sustained  during a New York S year,
   13  provided, however, a New York S year shall be treated as a taxable  year
   14  for  purposes  of determining the number of taxable years to which a net
   15  operating loss may be carried back or carried forward, and
   16    (5) the net operating loss deduction allowed under section one hundred
   17  seventy-two of the internal revenue code  shall  for  purposes  of  this
   18  paragraph  be  determined  as  if  the  taxpayer  had elected under such
   19  section to relinquish the entire carryback period with  respect  to  net
   20  operating  losses, except with respect to the first ten thousand dollars
   21  of each of such losses, sustained during taxable years ending after June
   22  thirtieth, nineteen hundred eighty-nine.
   23    (g) For taxable years commencing  prior  to  January  first,  nineteen
   24  hundred eighty-seven, at the election of the taxpayer, a deduction shall
   25  be allowed for expenditures paid or incurred during the taxable year for
   26  the  construction,  reconstruction,  erection  or  improvement of either
   27  industrial waste treatment facilities or air pollution  control  facili-
   28  ties,  or,  with  respect to taxable years beginning on or after January
   29  first, nineteen hundred seventy-seven and before January first, nineteen
   30  hundred eighty-one, industrial waste treatment controlled process facil-
   31  ities or air pollution controlled process facilities.
   32    (1) (A) (1) The term "industrial  waste  treatment  facilities"  shall
   33  mean  facilities  for  the treatment, neutralization or stabilization of
   34  industrial waste and other wastes (as the terms "industrial  waste"  and
   35  "other  wastes"  are  defined  in  section  17-0105 of the environmental
   36  conservation law) from a point immediately preceding the point  of  such
   37  treatment,  neutralization  or  stabilization  to the point of disposal,
   38  including the necessary pumping and transmitting facilities.
   39    (2) The term "industrial waste treatment controlled process  facility"
   40  shall mean such portion of the cost of an industrial production facility
   41  designed  for  the  purpose  of  obviating the need for industrial waste
   42  treatment facilities as defined in item one  of  this  clause  as  shall
   43  exceed the cost of an industrial production facility of equal production
   44  capacity  which  if constructed would require industrial waste treatment
   45  facilities to meet emission standards in compliance with the  provisions
   46  of the environmental conservation law and the codes, rules, regulations,
   47  permits  or orders issued pursuant thereto but only to the extent of the
   48  cost of such industrial waste treatment facilities.
   49    (B) (1) The term "air pollution control facilities" shall mean facili-
   50  ties which remove, reduce, or render less noxious air contaminants emit-
   51  ted from an air contamination source (as the terms "air contaminant" and
   52  "air contamination source" are defined in section 19-0107 of  the  envi-
   53  ronmental conservation law) from a point immediately preceding the point
   54  of  such  removal,  reduction  or rendering to the point of discharge of
   55  air, meeting emission standards as  established  by  the  department  of
   56  environmental  conservation, but excluding such facilities installed for
       S. 6359                            21                            A. 8559
    1  the primary purpose of salvaging materials which are usable in the manu-
    2  facturing process or are marketable and excluding those facilities which
    3  rely for their efficacy on dilution, dispersion or assimilation  of  air
    4  contaminants  in the ambient air after emission. Such term shall further
    5  include flue gas desulfurization equipment and attendant sludge disposal
    6  facilities, fluidized bed boilers, precombustion coal  cleaning  facili-
    7  ties  or  other  facilities that conform with this subdivision and which
    8  comply with the provisions of the state acid deposition control act  set
    9  forth  in  title nine of article nineteen of the environmental conserva-
   10  tion law.
   11    (2) The term "air pollution controlled process  facility"  shall  mean
   12  such  portion  of the cost of an industrial production facility designed
   13  for the purpose of obviating the need for air pollution control  facili-
   14  ties  as  defined in item one of this clause as shall exceed the cost of
   15  an industrial production facility of equal productive capacity which  if
   16  constructed  would  require  air  pollution  control facilities to inert
   17  emission standards as established pursuant to  title  three  of  article
   18  nineteen of the environmental conservation law but only to the extent of
   19  the cost of such air pollution control facilities.
   20    (2) However, such deduction shall be allowed only
   21    (A)  with  respect to tangible property which is depreciable, pursuant
   22  to section one hundred sixty-seven of the internal revenue code,  having
   23  a  situs in this state and used in the taxpayer's trade or business, the
   24  construction, reconstruction, erection or improvement of which,  in  the
   25  case  of industrial waste treatment facilities, is initiated on or after
   26  January first, nineteen hundred sixty-five or which, in the case of  air
   27  pollution  control  facilities,  is initiated on or after January first,
   28  nineteen hundred sixty-six, or which in the  case  of  industrial  waste
   29  treatment  controlled  process  facilities  or  air pollution controlled
   30  process facilities is initiated on and  after  January  first,  nineteen
   31  hundred seventy-seven, and
   32    (B) on condition that such facilities have been certified by the state
   33  commissioner  of  environmental conservation or his designated represen-
   34  tative, pursuant to section 19-0309 of  the  environmental  conservation
   35  law,  as  complying  with  applicable  provisions  of  the environmental
   36  conservation law, the public health law, the  state  sanitary  code  and
   37  codes,  rules,  regulations,  permits or orders issued pursuant thereto,
   38  and
   39    (C) on condition that entire net income for the taxable year  and  all
   40  succeeding  taxable  years  be  computed without any deductions for such
   41  expenditures or for depreciation or amortization of  the  same  property
   42  other  than  the deductions allowed by this paragraph (g), except to the
   43  extent that the basis of the property may  be  attributable  to  factors
   44  other than such expenditures, or in case a deduction is allowable pursu-
   45  ant to this paragraph for only a part of such expenditures, on condition
   46  that  any  deduction  allowed  for  federal income tax purposes for such
   47  expenditures or for depreciation or amortization of the same property be
   48  proportionately reduced in computing entire net income for  the  taxable
   49  year and all succeeding taxable years, and
   50    (D)  where  the  election provided for in paragraph (d) of subdivision
   51  three of section two hundred ten of this chapter has not been  exercised
   52  in respect to the same property.
   53    (3)  (A)  If  expenditures in respect to an industrial waste treatment
   54  facility, an air pollution control facility, an industrial waste  treat-
   55  ment  controlled process facility or an air pollution controlled process
   56  facility have been deducted as provided herein and if within  ten  years
       S. 6359                            22                            A. 8559
    1  from  the  end  of  the taxable year in which such deduction was allowed
    2  such property or any part thereof is used for  the  primary  purpose  of
    3  salvaging materials which are usable in the manufacturing process or are
    4  marketable,  the  taxpayer shall report such change of use in its report
    5  for the first taxable year during which it occurs, and the  tax  commis-
    6  sion  may  recompute  the  tax  for  the  year  or  years for which such
    7  deduction was allowed and any  carryback  or  carryover  year,  and  may
    8  assess  any  additional tax resulting from such recomputation within the
    9  time fixed by paragraph nine of subsection (c) of  section  ten  hundred
   10  eighty-three of this chapter.
   11    (B) If a deduction is allowed as herein provided for expenditures paid
   12  or  incurred during any taxable year on the basis of a temporary certif-
   13  icate of compliance issued pursuant to  the  environmental  conservation
   14  law  and  if  the  taxpayer  fails  to obtain a permanent certificate of
   15  compliance upon completion of the facilities with respect to which  such
   16  temporary certificate was issued, the taxpayer shall report such failure
   17  in  its  report  for  the  taxable year during which such facilities are
   18  completed, and the tax commission may recompute the tax for the year  or
   19  years  for  which such deduction was allowed and any carryback or carry-
   20  over year, and may assess any additional  tax  resulting  from  in  such
   21  recomputation  within the time fixed by paragraph nine of subsection (c)
   22  of section ten hundred eighty-three.
   23    (C) If a deduction is allowed as herein provided for expenditures paid
   24  or incurred during any taxable year  in  respect  to  an  air  pollution
   25  control  facility  on  the  basis  of a certificate of compliance issued
   26  pursuant to the environmental conservation law and  the  certificate  is
   27  revoked pursuant to subdivision three of section 19-0309 of the environ-
   28  mental  conservation  law,  the tax commission may recompute the tax for
   29  the year or years for which the facility is not or was not in compliance
   30  with the applicable provisions of the  environmental  conservation  law,
   31  the  state sanitary code or codes, rules, regulations, permits or orders
   32  promulgated pursuant thereto, and for which a deduction was allowed,  as
   33  well  as for any carryback or carryover year to which such deduction was
   34  carried, and may assess any additional tax resulting from such  recompu-
   35  tation  within  the  time  fixed  by paragraph nine of subsection (c) of
   36  section ten hundred eighty-three.
   37    (4) In any taxable year when property is sold  or  otherwise  disposed
   38  of,  with respect to which a deduction has been allowed pursuant to this
   39  paragraph, such deduction shall be  disregarded  in  computing  gain  or
   40  loss,  and  the  gain  or  loss on the sale or other disposition of such
   41  property shall be the gain or loss  entering  into  the  computation  of
   42  entire  taxable  income  which the taxpayer is required to report to the
   43  United States treasury department for such taxable year.]
   44    (h) If the period covered by a report under this article is other than
   45  the period covered by the report to the United States  treasury  depart-
   46  ment,
   47    (1)  except  as provided in subparagraph two hereof, entire net income
   48  shall be determined by multiplying the taxable income reported  to  such
   49  department  (as  adjusted pursuant to the provisions of this article) by
   50  the number of calendar months or major  parts  thereof  covered  by  the
   51  report  under this article and dividing by the number of calendar months
   52  or major parts thereof covered by the report to such department.  If  it
   53  shall  appear that such method of determining entire net income does not
   54  properly reflect the taxpayer's income during the period covered by  the
   55  report  under  this  article, the [tax commission] COMMISSIONER shall be
   56  authorized in its discretion to determine such entire net income  solely
       S. 6359                            23                            A. 8559
    1  on  the  basis of the taxpayer's income during the period covered by its
    2  report under this article[;].
    3    (2)  [in]  IN  the  case  of  a  New York S termination year, an equal
    4  portion of entire net income shall be assigned to each day of such year.
    5  The portion of such entire net income thereby assigned to  the  S  short
    6  year  and  the  C short year shall be included in the respective reports
    7  for the S short year and the C short year under this  article.  However,
    8  where paragraph three of subsection (s) of section six hundred twelve of
    9  this  chapter applies, the portion of such entire net income assigned to
   10  the S short year and the C short year shall be determined  under  normal
   11  tax accounting rules.
   12    (i)  With respect to a DISC which during any taxable year or reporting
   13  year (1) received more than five percent of its  gross  sales  from  the
   14  sale  of  inventory or other property which it purchased from its stock-
   15  holders, (2) received more than five percent of its gross  rentals  from
   16  the  rental of property which it purchased or rented from its stockhold-
   17  ers or (3) received more than five percent of its total  receipts  other
   18  than  sales  and rentals from its stockholders, the following provisions
   19  shall apply.
   20    (A) For any taxable year in which sub-paragraph (B) of this  paragraph
   21  is  in  effect  and  not rendered invalid, a DISC meeting the above test
   22  shall be exempt from all taxes imposed by this article.
   23    (B) Supplemental to the provisions of subdivision five of section  two
   24  hundred  eleven  of this article, any taxpayer required to compute a tax
   25  under this article, which during the taxable year being reported  was  a
   26  stockholder  in  any DISC meeting the test prescribed in this paragraph,
   27  shall for any taxable year ending after December thirty-first,  nineteen
   28  hundred  seventy-one  adjust each item of its receipts, expenses, assets
   29  and liabilities, as otherwise computed under  this  article,  by  adding
   30  thereto  its  attributable share of each such DISC's receipts, expenses,
   31  assets and liabilities as reportable by each such  DISC  to  the  United
   32  States Treasury Department for its annual reporting period ending during
   33  the  current  taxable year of such taxpayer; provided, however, (1) that
   34  all transactions between the taxpayer and each such DISC shall be elimi-
   35  nated from  the  taxpayer's  adjusted  receipts,  expenses,  assets  and
   36  liabilities;  (2)  that  the  taxpayer's  entire net income as otherwise
   37  computed under this section, shall be reduced by subtracting the  amount
   38  of  the  deemed  distribution  of current income, if any, from each such
   39  DISC already included in the entire  net  income  of  such  taxpayer  by
   40  virtue  of  having  been  included in its entire taxable income for that
   41  taxable year as reported to the United States Treasury  Department;  and
   42  (3)  that  in  the  event this paragraph should be rendered invalid, all
   43  DISC's and their stockholders taxable hereunder shall be  taxed  instead
   44  under the remaining portions of this article.
   45    (j)  in the case of property placed in service in taxable years begin-
   46  ning before nineteen hundred ninety-four, for  taxable  years  beginning
   47  after  December  thirty-first,  nineteen hundred eighty-one, except with
   48  respect to property subject to the provisions  of  section  two  hundred
   49  eighty-F  of  the  internal  revenue  code  and  property subject to the
   50  provisions of section one hundred sixty-eight of  the  internal  revenue
   51  code which is placed in service in this state in taxable years beginning
   52  after  December thirty-first, nineteen hundred eighty-four, and provided
   53  a deduction has not been excluded from entire  net  income  pursuant  to
   54  subparagraph  eight  of  paragraph  (b)  of this subdivision, a taxpayer
   55  shall be allowed with respect  to  property  which  is  subject  to  the
   56  provisions  of  section  one hundred sixty-eight of the internal revenue
       S. 6359                            24                            A. 8559
    1  code the depreciation deduction  allowable  under  section  one  hundred
    2  sixty-seven  of  the  internal  revenue  code as such section would have
    3  applied to property placed in service on December thirty-first, nineteen
    4  hundred eighty. This paragraph shall not apply to property of a taxpayer
    5  principally  engaged  in the conduct of aviation (other than air freight
    6  forwarders acting as principal and like indirect air carriers) which  is
    7  placed  in  service  before  taxable years beginning in nineteen hundred
    8  eighty-nine.
    9    (k) QSSS. (1) New York S corporation. In the case  of  a  New  York  S
   10  corporation  which  is the parent of a qualified subchapter S subsidiary
   11  (QSSS) with respect to a taxable year:
   12    (A) where the QSSS is not an excluded corporation,
   13    (i) in determining the entire net income of such  parent  corporation,
   14  all  assets,  liabilities,  income  and  deductions of the QSSS shall be
   15  treated as assets, liabilities, income  and  deductions  of  the  parent
   16  corporation, and
   17    (ii)  the QSSS shall be exempt from all taxes imposed by this article,
   18  and
   19    (B) where the QSSS is an excluded corporation, the entire  net  income
   20  of  the  parent  corporation  shall be determined as if the federal QSSS
   21  election had not been made.
   22    (2) New York C corporation. In the case of a New  York  C  corporation
   23  which is the parent of a QSSS with respect to a taxable year:
   24    (A) where the QSSS is a taxpayer,
   25    (i)  in  determining the entire net income of such parent corporation,
   26  all assets, liabilities, income and deductions  of  the  QSSS  shall  be
   27  treated  as  assets,  liabilities,  income  and deductions of the parent
   28  corporation, and
   29    (ii) the QSSS shall be exempt from all taxes imposed by this  article,
   30  and
   31    (B) where the QSSS is not a taxpayer,
   32    (i) if the QSSS is not an excluded corporation, the parent corporation
   33  may  make  a QSSS inclusion election to include all assets, liabilities,
   34  income and deductions of the QSSS as  assets,  liabilities,  income  and
   35  deductions of the parent corporation, and
   36    (ii) in the absence of such election, or where the QSSS is an excluded
   37  corporation,  the  entire  net income of the parent corporation shall be
   38  determined as if the federal QSSS election had not been made.
   39    (3) Non-New York S corporation not excluded.  In  the  case  of  an  S
   40  corporation which is not a taxpayer and not an excluded corporation, and
   41  which  is  the parent of a QSSS which is a taxpayer, the shareholders of
   42  the parent corporation shall be entitled to make the New York S election
   43  under subsection (a) of section six hundred sixty of this chapter.
   44    (A) For any taxable year for which such election  is  in  effect,  the
   45  parent  corporation  shall be subject to tax under this article as a New
   46  York S corporation, and the provisions of clause (A) of subparagraph one
   47  of this paragraph shall apply.
   48    (B) For any taxable year for which such election is not in effect, the
   49  QSSS shall be a New York C corporation, and the entire net income of the
   50  QSSS shall be determined as if the federal QSSS election  had  not  been
   51  made. For purposes of such determination, the taxable year of the parent
   52  corporation  shall  constitute  the taxable year of the QSSS, excluding,
   53  however, any portion of such year during which the QSSS is not a taxpay-
   54  er.
   55    (4) S corporation excluded. In the case of an S corporation  which  is
   56  an  excluded  corporation  and  which is the parent of a QSSS which is a
       S. 6359                            25                            A. 8559
    1  taxpayer, the QSSS shall be a New York C corporation and the  provisions
    2  of clause (B) of subparagraph three of this paragraph shall apply.
    3    (5)  Excluded  corporation.  The  term  "excluded corporation" means a
    4  corporation subject to  tax  under  sections  one  hundred  eighty-three
    5  through  one  hundred  eighty-six, inclusive, or article [thirty-two or]
    6  thirty-three of this chapter, or a foreign corporation  not  taxable  by
    7  this  state which, if it were taxable, would be subject to tax under any
    8  of such sections or [articles] ARTICLE.
    9    (6) Taxpayer. For purposes of  this  paragraph,  the  term  "taxpayer"
   10  means  a  parent  corporation or QSSS subject to tax under this article,
   11  determined without regard to the provisions of this paragraph.
   12    (7) QSSS inclusion election.  The  election  under  subclause  (i)  of
   13  clause  (B) of subparagraph two of this paragraph shall be effective for
   14  the taxable year for which made and for all succeeding taxable years  of
   15  the corporation until such election is terminated. An election or termi-
   16  nation shall be made on such form and in such manner as the commissioner
   17  may prescribe by regulation or instruction.
   18    (l)  Emerging  technology investment deferral. In the case of any sale
   19  of a qualified emerging technologies investment held for more than thir-
   20  ty-six months and with respect to which the taxpayer elects the applica-
   21  tion of this paragraph, gain from such sale shall be recognized only  to
   22  the extent that the amount realized on such sale exceeds the cost of any
   23  qualified  emerging  technologies  investment  purchased by the taxpayer
   24  during the three hundred sixty-five-day period beginning on the date  of
   25  such  sale,  reduced  by  any portion of such cost previously taken into
   26  account under this paragraph. For purposes of this paragraph the follow-
   27  ing shall apply:
   28    (1) A qualified investment is stock of a corporation or  an  interest,
   29  other  than as a creditor, in a partnership or limited liability company
   30  that was acquired by the taxpayer as provided in Internal Revenue Code S
   31  1202(c)(1)(B), except that the reference to the  term  "stock"  in  such
   32  section  shall be read as "investment," or by the taxpayer from a person
   33  who had acquired such stock or interest in such a manner.
   34    (2) A qualified emerging technology investment is a qualified  invest-
   35  ment, that was held by the taxpayer for at least thirty-six months, in a
   36  company  defined  in paragraph (c) of subdivision one of section thirty-
   37  one hundred two-e of the public authorities law or an  investment  in  a
   38  partnership  or limited liability company that is taxed as a partnership
   39  to the extent that such partnership or limited liability company invests
   40  in qualified emerging technology companies.
   41    (3) For purposes of determining whether  the  nonrecognition  of  gain
   42  under  this  subsection  applies  to  a  qualified emerging technologies
   43  investment that is sold, the taxpayer's holding period for such  invest-
   44  ment   and  the  qualified  emerging  technologies  investment  that  is
   45  purchased shall be determined without regard to Internal Revenue Code  S
   46  1223.
   47    (m)  Amounts deferred. The amount deferred under paragraph (l) of this
   48  subdivision shall be added to entire net income when the reinvestment in
   49  the New York qualified emerging technology  company  which  qualified  a
   50  taxpayer for such deferral is sold.
   51    [(n) Qualified gas transportation contracts.
   52    (1) Any tax paid under this article allocable to receipts attributable
   53  to  a  "qualified  gas  transportation contract" shall be deemed to have
   54  been paid under article nine of this chapter for all purposes of law for
   55  taxable years commencing  on  or  after  January  first,  two  thousand,
       S. 6359                            26                            A. 8559
    1  computed as hereinafter provided, if all of the following conditions are
    2  met:
    3    (i)  For  periods  ending  prior  to  January first, two thousand, the
    4  taxpayer paid the franchise tax due under section  one  hundred  eighty-
    5  four of this chapter.
    6    (ii)  For  the  taxable  year,  all  of the receipts from the pipeline
    7  transportation of natural gas attributable to the taxpayer and  included
    8  in  the  taxpayer's entire net income (without regard to this paragraph)
    9  are solely from the transportation of natural gas for wholesale  custom-
   10  ers and commercial retail customers.
   11    (iii)  The  taxpayer's  franchise tax liability under this article for
   12  the taxable year (computed without regard to this paragraph)  is  deter-
   13  mined  under paragraph (a) of subdivision one of section two hundred ten
   14  of this article, and such tax liability (without regard  to  this  para-
   15  graph)  is  greater  than the liability the taxpayer would have incurred
   16  under sections one hundred eighty-three and one hundred  eighty-four  of
   17  this  chapter  (as such sections existed on December thirty-first, nine-
   18  teen hundred ninety-nine) based on the same taxable period.
   19    (iv) The taxpayer is  a  party  to  a  "qualified  gas  transportation
   20  contract," as defined herein.
   21    (2)  The provisions of this paragraph shall apply only for the taxable
   22  years during which such qualified gas transportation contract is in full
   23  force and effect, and shall apply only to the receipts of  the  taxpayer
   24  less  any  expenses of the taxpayer (but not less than zero), during the
   25  taxable year, to the extent included in entire  net  income,  which  are
   26  attributable   to  any  such  qualified  gas  transportation  contracts.
   27  Provided, further, in any event, the  characterization  hereunder  shall
   28  expire  and be of no further force and effect for taxable years commenc-
   29  ing on or after January first, two thousand fifteen.
   30    (3) The term "qualified gas  transportation  contract"  shall  mean  a
   31  service  agreement for the transportation of natural gas for an end-user
   32  which is a qualified cogeneration facility with a rated capacity of  one
   33  thousand  megawatts  or  more, which (i) was entered into before January
   34  first, two thousand, and was in full force and effect and binding on the
   35  parties thereto as of such date, (ii) as originally executed, was for  a
   36  term of at least twenty years, and (iii) the terms of which prohibit the
   37  pass-through  to  such  customer of the franchise tax imposed under this
   38  article, while allowing the recovery of the gross earnings  tax  imposed
   39  under  section one hundred eighty-four of this chapter. A contract shall
   40  not qualify as a qualified gas transportation contract if there is:  (i)
   41  any  renewal  or  extension of an otherwise qualified gas transportation
   42  contract occurring on or after January first, two thousand, or (ii)  any
   43  material amendment to, or supplementation of, an otherwise qualified gas
   44  transportation  contract on or after such date. Such renewal, extension,
   45  or material amendment or supplementation shall have the same  force  and
   46  effect  of terminating the characterization hereunder as if the qualify-
   47  ing contract had expired by its own terms.
   48    (o)] (N-1) For taxable years beginning  after  December  thirty-first,
   49  two  thousand  two, in the case of qualified property described in para-
   50  graph two of subsection k of section 168 of the internal  revenue  code,
   51  other than qualified resurgence zone property described in paragraph (q)
   52  of  this  subdivision,  and  other  than qualified New York Liberty Zone
   53  property described in paragraph two of subsection b of section 1400L  of
   54  the  internal revenue code (without regard to clause (i) of subparagraph
   55  (C) of such paragraph), which was placed in service  on  or  after  June
   56  first,  two  thousand three, a taxpayer shall be allowed with respect to
       S. 6359                            27                            A. 8559
    1  such property the depreciation deduction allowable under section 167  of
    2  the  internal  revenue  code  as such section would have applied to such
    3  property had it been acquired by the taxpayer on  September  tenth,  two
    4  thousand one.
    5    (o)  Related  members  expense  add back. (1) Definitions. (A) Related
    6  member. "Related member" means a related person as defined  in  subpara-
    7  graph  (c)  of paragraph three of subsection (b) of section four hundred
    8  sixty-five of the internal revenue code,  except  that  "fifty  percent"
    9  shall be substituted for "ten percent".
   10    (B)  Effective  rate  of tax. "Effective rate of tax" means, as to any
   11  state or U.S. possession, the maximum statutory rate of tax  imposed  by
   12  the  state or possession on or measured by a related member's net income
   13  multiplied by the apportionment percentage, if any,  applicable  to  the
   14  related member under the laws of said jurisdiction. For purposes of this
   15  definition, the effective rate of tax as to any state or U.S. possession
   16  is  zero  where  the  related  member's net income tax liability in said
   17  jurisdiction is reported on a combined or consolidated return  including
   18  both the taxpayer and the related member where the reported transactions
   19  between  the  taxpayer  and the related member are eliminated or offset.
   20  Also, for purposes of this definition, when computing the effective rate
   21  of tax for a jurisdiction in which a  related  member's  net  income  is
   22  eliminated or offset by a credit or similar adjustment that is dependent
   23  upon  the related member either maintaining or managing intangible prop-
   24  erty or collecting interest income in  that  jurisdiction,  the  maximum
   25  statutory rate of tax imposed by said jurisdiction shall be decreased to
   26  reflect  the statutory rate of tax that applies to the related member as
   27  effectively reduced by such credit or similar adjustment.
   28    (C) Royalty payments. Royalty payments are payments directly connected
   29  to the acquisition, use, maintenance  or  management,  ownership,  sale,
   30  exchange,  or any other disposition of licenses, trademarks, copyrights,
   31  trade names, trade dress, service  marks,  mask  works,  trade  secrets,
   32  patents  and  any other similar types of intangible assets as determined
   33  by  the  commissioner,  and  include  amounts  allowable   as   interest
   34  deductions under section one hundred sixty-three of the internal revenue
   35  code  to the extent such amounts are directly or indirectly for, related
   36  to or in connection with the acquisition, use,  maintenance  or  manage-
   37  ment,  ownership,  sale,  exchange  or  disposition  of  such intangible
   38  assets.
   39    (D) Valid Business Purpose. A valid business purpose is  one  or  more
   40  business  purposes,  other  than the avoidance or reduction of taxation,
   41  which alone or in combination constitute the primary motivation for some
   42  business activity or transaction, which activity or transaction  changes
   43  in  a  meaningful  way, apart from tax effects, the economic position of
   44  the taxpayer. The economic position of the taxpayer includes an increase
   45  in the market share of the taxpayer, or the entry by the  taxpayer  into
   46  new business markets.
   47    (2) Royalty expense add backs. (A) Except where a taxpayer is included
   48  in  a combined report with a related member pursuant to subdivision four
   49  of section two hundred eleven  of  this  article,  for  the  purpose  of
   50  computing entire net income or other applicable taxable basis, a taxpay-
   51  er  must add back royalty payments directly or indirectly paid, accrued,
   52  or incurred in connection with one or more  direct  or  indirect  trans-
   53  actions  with one or more related members during the taxable year to the
   54  extent deductible in calculating federal taxable income.
   55    (B) Exceptions. (i) The adjustment required in  this  paragraph  shall
   56  not apply to the portion of the royalty payment that the taxpayer estab-
       S. 6359                            28                            A. 8559
    1  lishes,  by  clear  and  convincing evidence of the type and in the form
    2  specified by the commissioner, meets all of the following  requirements:
    3  (I) the related member was subject to tax in this state or another state
    4  or  possession of the United States or a foreign nation or some combina-
    5  tion thereof on a tax base  that  included  the  royalty  payment  paid,
    6  accrued  or incurred by the taxpayer; (II) the related member during the
    7  same taxable year directly or indirectly paid, accrued or incurred  such
    8  portion  to  a person that is not a related member; and (III) the trans-
    9  action giving rise to the royalty payment between the taxpayer  and  the
   10  related member was undertaken for a valid business purpose.
   11    (ii)  The adjustment required in this paragraph shall not apply if the
   12  taxpayer establishes, by clear and convincing evidence of the  type  and
   13  in  the form specified by the commissioner, that: (I) the related member
   14  was subject to tax on or measured by its net income  in  this  state  or
   15  another  state  or  possession  of the United States or some combination
   16  thereof; (II) the tax base for said tax  included  the  royalty  payment
   17  paid,  accrued  or  incurred  by  the  taxpayer; and (III) the aggregate
   18  effective rate of tax applied to the related member in  those  jurisdic-
   19  tions  is  no less than eighty percent of the statutory rate of tax that
   20  applied to the taxpayer under section two hundred ten  of  this  article
   21  for the taxable year.
   22    (iii)  [The  adjustment  required in this paragraph shall not apply if
   23  the taxpayer establishes, by clear and convincing evidence of  the  type
   24  and  in  the  form  specified by the commissioner, that: (I) the royalty
   25  payment was paid, accrued or incurred  to  a  related  member  organized
   26  under  the  laws  of  a  country  other than the United States; (II) the
   27  related member's income from the transaction was subject to a comprehen-
   28  sive income tax treaty between such country and the United States; (III)
   29  the related member was subject to tax in a foreign nation on a tax  base
   30  that  included  the  royalty  payment  paid,  accrued or incurred by the
   31  taxpayer; (IV) the related member's  income  from  the  transaction  was
   32  taxed in such country at an effective rate of tax at least equal to that
   33  imposed  by this state; and (V) the royalty payment was paid, accrued or
   34  incurred pursuant to a transaction that was undertaken for a valid busi-
   35  ness purpose and using terms that reflect an arm's length relationship.
   36    (iv)] The adjustment required in this paragraph shall not apply if the
   37  taxpayer and the commissioner agree in writing to the application or use
   38  of alternative adjustments or computations. The commissioner may, in his
   39  or her discretion, agree  to  the  application  or  use  of  alternative
   40  adjustments or computations when he or she concludes that in the absence
   41  of  such  agreement  the  income  of  the taxpayer would not be properly
   42  reflected.
   43    (p) For taxable years beginning after December thirty-first, two thou-
   44  sand two, upon the disposition of  property  to  which  paragraph  [(o)]
   45  (N-1) of this subdivision applies, the amount of any gain or loss inclu-
   46  dible  in  entire net income shall be adjusted to reflect the inclusions
   47  and exclusions from entire net income pursuant to subparagraph seventeen
   48  of paragraph (a) and subparagraph seventeen of  paragraph  (b)  of  this
   49  subdivision attributable to such property.
   50    (q)  For  purposes  of paragraphs [(o)] (N-1) and (p) of this subdivi-
   51  sion, qualified resurgence zone property shall mean  qualified  property
   52  described  in paragraph two of subsection k of section 168 of the inter-
   53  nal revenue code substantially all of the use of which is in the  resur-
   54  gence zone, as defined below, and is in the active conduct of a trade or
   55  business  by the taxpayer in such zone, and the original use of which in
   56  the resurgence zone commences with the taxpayer after  December  thirty-
       S. 6359                            29                            A. 8559
    1  first,  two thousand two. The resurgence zone shall mean the area of New
    2  York county bounded on the south by a line running from the intersection
    3  of the Hudson River with the Holland Tunnel, and running thence east  to
    4  Canal  Street,  then running along the centerline of Canal Street to the
    5  intersection of the Bowery and Canal Street, running thence in a  south-
    6  easterly  direction  diagonally  across  Manhattan  Bridge Plaza, to the
    7  Manhattan Bridge and thence along the centerline of the Manhattan Bridge
    8  to the point where the centerline of the Manhattan Bridge  would  inter-
    9  sect  with the easterly bank of the East River, and bounded on the north
   10  by a line running from the intersection of the  Hudson  River  with  the
   11  Holland  Tunnel and running thence north along West Avenue to the inter-
   12  section of Clarkson Street then running east  along  the  centerline  of
   13  Clarkson  Street  to the intersection of Washington Avenue, then running
   14  south along the centerline of Washington Avenue to the  intersection  of
   15  West  Houston  Street,  then  east  along the centerline of West Houston
   16  Street, then at the intersection of the Avenue of the Americas  continu-
   17  ing  east  along  the  centerline of East Houston Street to the easterly
   18  bank of the East River.
   19    (R) SUBTRACTION MODIFICATION FOR QUALIFIED  RESIDENTIAL  LOAN  PORTFO-
   20  LIOS.  (1)(A)  A TAXPAYER THAT IS EITHER A THRIFT INSTITUTION AS DEFINED
   21  IN SUBPARAGRAPH THREE OF THIS PARAGRAPH OR A QUALIFIED COMMUNITY BANK AS
   22  DEFINED IN SUBPARAGRAPH TWO OF PARAGRAPH (S)  OF  THIS  SUBDIVISION  AND
   23  MAINTAINS  A QUALIFIED RESIDENTIAL LOAN PORTFOLIO AS DEFINED IN SUBPARA-
   24  GRAPH TWO OF THIS PARAGRAPH SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING
   25  ENTIRE NET INCOME THE AMOUNT, IF ANY, BY WHICH (I) THIRTY-TWO PERCENT OF
   26  ITS ENTIRE NET  INCOME  DETERMINED  WITHOUT  REGARD  TO  THIS  PARAGRAPH
   27  EXCEEDS  (II)  THE AMOUNTS DEDUCTED BY THE TAXPAYER PURSUANT TO SECTIONS
   28  166 AND 585 OF THE INTERNAL REVENUE CODE LESS ANY  AMOUNTS  INCLUDED  IN
   29  FEDERAL TAXABLE INCOME AS A RESULT OF A RECOVERY OF A LOAN.
   30    (B)(I) IF THE TAXPAYER IS IN A COMBINED REPORT, THIS DEDUCTION WILL BE
   31  COMPUTED ON A COMBINED BASIS. IN THAT INSTANCE, THE ENTIRE NET INCOME OF
   32  THE COMBINED GROUP FOR PURPOSES OF THIS PARAGRAPH SHALL BE MULTIPLIED BY
   33  A  FRACTION,  THE  NUMERATOR OF WHICH IS THE AVERAGE TOTAL ASSETS OF ALL
   34  THE THRIFT INSTITUTIONS OR QUALIFIED COMMUNITY  BANKS  INCLUDED  IN  THE
   35  COMBINED REPORT AND THE DENOMINATOR OF WHICH IS THE AVERAGE TOTAL ASSETS
   36  OF ALL THE CORPORATIONS INCLUDED IN THE COMBINED REPORT.
   37    (II)  MEASUREMENT  OF  ASSETS  FOR  PURPOSES OF THIS CLAUSE. (I) TOTAL
   38  ASSETS ARE THOSE ASSETS THAT ARE PROPERLY REFLECTED ON A BALANCE  SHEET,
   39  COMPUTED  IN  THE SAME MANNER AS IS REQUIRED BY THE BANKING REGULATOR OF
   40  THE TAXPAYERS INCLUDED IN THE COMBINED RETURN.
   41    (II) ASSETS WILL ONLY BE INCLUDED IF THE INCOME OR EXPENSES  OF  WHICH
   42  ARE  PROPERLY  REFLECTED  (OR  WOULD HAVE BEEN PROPERLY REFLECTED IF NOT
   43  FULLY DEPRECIATED OR EXPENSED, OR DEPRECIATED OR EXPENSED TO  A  NOMINAL
   44  AMOUNT) IN THE COMPUTATION OF THE COMBINED GROUP'S ENTIRE NET INCOME FOR
   45  THE TAXABLE YEAR. ASSETS WILL NOT INCLUDE DEFERRED TAX ASSETS AND INTAN-
   46  GIBLE ASSETS IDENTIFIED AS "GOODWILL".
   47    (III)  TANGIBLE  REAL  AND PERSONAL PROPERTY, SUCH AS BUILDINGS, LAND,
   48  MACHINERY, AND EQUIPMENT SHALL BE VALUED AT COST.  INTANGIBLE  PROPERTY,
   49  SUCH AS LOANS AND INVESTMENTS, SHALL BE VALUED AT BOOK VALUE.
   50    (IV)  INTERCORPORATE  STOCKHOLDINGS  AND  BILLS,  NOTES  AND  ACCOUNTS
   51  RECEIVABLE, AND OTHER INTERCORPORATE  INDEBTEDNESS  BETWEEN  THE  CORPO-
   52  RATIONS INCLUDED IN THE COMBINED REPORT SHALL BE ELIMINATED.
   53    (V) AVERAGE ASSETS ARE COMPUTED USING THE ASSETS MEASURED ON THE FIRST
   54  DAY  OF THE TAXABLE YEAR, AND ON THE LAST DAY OF EACH SUBSEQUENT QUARTER
   55  OF THE TAXABLE YEAR.
       S. 6359                            30                            A. 8559
    1    (2) QUALIFIED RESIDENTIAL LOAN PORTFOLIO. (A) A TAXPAYER  MAINTAINS  A
    2  QUALIFIED  RESIDENTIAL  LOAN  PORTFOLIO IF AT LEAST SIXTY PERCENT OF THE
    3  AMOUNT OF THE TOTAL ASSETS AT THE CLOSE  OF  THE  TAXABLE  YEAR  OF  THE
    4  THRIFT  INSTITUTION  OR  QUALIFIED COMMUNITY BANK CONSISTS OF THE ASSETS
    5  DESCRIBED  IN  ITEMS (I) THROUGH (XII) OF THIS CLAUSE, WITH THE APPLICA-
    6  TION OF THE RULE IN ITEM (XIII). IF  THE  TAXPAYER  IS  A  MEMBER  OF  A
    7  COMBINED  GROUP, THE DETERMINATION OF WHETHER THERE IS A QUALIFIED RESI-
    8  DENTIAL LOAN PORTFOLIO WILL BE MADE BY AGGREGATING  THE  ASSETS  OF  THE
    9  THRIFT INSTITUTIONS OR QUALIFIED COMMUNITY BANKS THAT ARE MEMBERS OF THE
   10  COMBINED GROUP.
   11    ASSETS:
   12    (I) CASH;
   13    (II)  OBLIGATIONS  OF  THE  UNITED  STATES  OR OF A STATE OR POLITICAL
   14  SUBDIVISION THEREOF, AND STOCK OR OBLIGATIONS OF A CORPORATION WHICH  IS
   15  AN  INSTRUMENTALITY  OR  A GOVERNMENT SPONSORED ENTERPRISE OF THE UNITED
   16  STATES OR OF A STATE OR POLITICAL SUBDIVISION THEREOF;
   17    (III) LOANS SECURED BY A DEPOSIT OR SHARE OF A MEMBER;
   18    (IV) LOANS SECURED BY AN INTEREST IN REAL PROPERTY WHICH IS  (OR  FROM
   19  THE PROCEEDS OF THE LOAN, WILL BECOME) RESIDENTIAL REAL PROPERTY OR REAL
   20  PROPERTY USED PRIMARILY FOR CHURCH PURPOSES, LOANS MADE FOR THE IMPROVE-
   21  MENT  OF  RESIDENTIAL  REAL PROPERTY OR REAL PROPERTY USED PRIMARILY FOR
   22  CHURCH PURPOSES, PROVIDED THAT FOR PURPOSES OF  THIS  ITEM,  RESIDENTIAL
   23  REAL PROPERTY SHALL INCLUDE SINGLE OR MULTI-FAMILY DWELLINGS, FACILITIES
   24  IN  RESIDENTIAL DEVELOPMENTS DEDICATED TO PUBLIC USE OR PROPERTY USED ON
   25  A NONPROFIT BASIS FOR RESIDENTS, AND MOBILE HOMES NOT USED  ON  A  TRAN-
   26  SIENT BASIS;
   27    (V)  PROPERTY  ACQUIRED  THROUGH  THE  LIQUIDATION  OF DEFAULTED LOANS
   28  DESCRIBED IN ITEM (IV) OF THIS CLAUSE;
   29    (VI) ANY REGULAR OR RESIDUAL INTEREST IN A  REMIC,  AS  SUCH  TERM  IS
   30  DEFINED  IN  SECTION  860D OF THE INTERNAL REVENUE CODE, BUT ONLY IN THE
   31  PROPORTION WHICH THE ASSETS OF SUCH REMIC CONSIST OF PROPERTY  DESCRIBED
   32  IN ANY OF THE PRECEDING ITEMS OF THIS CLAUSE, EXCEPT THAT IF NINETY-FIVE
   33  PERCENT  OR  MORE  OF  THE  ASSETS OF SUCH REMIC ARE ASSETS DESCRIBED IN
   34  ITEMS (I) THROUGH (V) OF THIS CLAUSE, THE ENTIRE INTEREST IN  THE  REMIC
   35  SHALL QUALIFY;
   36    (VII)  ANY  MORTGAGE-BACKED  SECURITY  WHICH REPRESENTS OWNERSHIP OF A
   37  FRACTIONAL UNDIVIDED INTEREST IN A TRUST, THE ASSETS  OF  WHICH  CONSIST
   38  PRIMARILY  OF  MORTGAGE  LOANS,  PROVIDED  THAT  THE REAL PROPERTY WHICH
   39  SERVES AS SECURITY FOR THE LOANS IS (OR FROM THE PROCEEDS OF  THE  LOAN,
   40  WILL  BECOME) THE TYPE OF PROPERTY DESCRIBED IN ITEM (IV) OF THIS CLAUSE
   41  AND ANY COLLATERALIZED  MORTGAGE  OBLIGATION,  THE  SECURITY  FOR  WHICH
   42  CONSISTS  PRIMARILY OF MORTGAGE LOANS THAT MAINTAIN AS SECURITY THE TYPE
   43  OF PROPERTY DESCRIBED IN ITEM (IV) OF THIS CLAUSE;
   44    (VIII) CERTIFICATES OF DEPOSIT IN, OR OBLIGATIONS  OF,  A  CORPORATION
   45  ORGANIZED  UNDER  A  STATE LAW WHICH SPECIFICALLY AUTHORIZES SUCH CORPO-
   46  RATION TO INSURE THE DEPOSITS OR SHARE ACCOUNTS OF MEMBER ASSOCIATIONS;
   47    (IX) LOANS SECURED BY AN INTEREST IN EDUCATIONAL, HEALTH,  OR  WELFARE
   48  INSTITUTIONS OR FACILITIES, INCLUDING STRUCTURES DESIGNED OR USED PRIMA-
   49  RILY FOR RESIDENTIAL PURPOSES FOR STUDENTS, RESIDENTS, AND PERSONS UNDER
   50  CARE, EMPLOYEES, OR MEMBERS OF THE STAFF OF SUCH INSTITUTIONS OR FACILI-
   51  TIES;
   52    (X)  LOANS  MADE  FOR THE PAYMENT OF EXPENSES OF COLLEGE OR UNIVERSITY
   53  EDUCATION OR VOCATIONAL TRAINING;
   54    (XI) PROPERTY USED BY  THE  TAXPAYER  IN  SUPPORT  OF  BUSINESS  WHICH
   55  CONSISTS  PRINCIPALLY OF ACQUIRING THE SAVINGS OF THE PUBLIC AND INVEST-
   56  ING IN LOANS; AND
       S. 6359                            31                            A. 8559
    1    (XII) LOANS FOR WHICH THE TAXPAYER IS THE CREDITOR AND WHICH ARE WHOL-
    2  LY SECURED BY LOANS DESCRIBED IN ITEM (IV) OF THIS CLAUSE.
    3    (XIII)  THE  VALUE OF ACCRUED INTEREST RECEIVABLE AND ANY LOSS-SHARING
    4  COMMITMENT OR OTHER LOAN GUARANTY  BY  A  GOVERNMENTAL  AGENCY  WILL  BE
    5  CONSIDERED  PART OF THE BASIS IN THE LOANS TO WHICH THE ACCRUED INTEREST
    6  OR LOSS PROTECTION APPLIES.
    7    (B) AT THE ELECTION OF  THE  TAXPAYER,  THE  PERCENTAGE  SPECIFIED  IN
    8  CLAUSE  (A)  OF  THIS  SUBPARAGRAPH SHALL BE APPLIED ON THE BASIS OF THE
    9  AVERAGE ASSETS OUTSTANDING DURING THE TAXABLE YEAR, IN LIEU OF THE CLOSE
   10  OF THE TAXABLE YEAR. THE TAXPAYER CAN ELECT TO COMPUTE AN AVERAGE  USING
   11  THE ASSETS MEASURED ON THE FIRST DAY OF THE TAXABLE YEAR AND ON THE LAST
   12  DAY OF EACH SUBSEQUENT QUARTER, OR MONTH OR DAY DURING THE TAXABLE YEAR.
   13  THIS ELECTION MAY BE MADE ANNUALLY.
   14    (C)  FOR  PURPOSES  OF  THIS  COMPUTATION, THE DEFINITION OF ASSETS IN
   15  CLAUSE (B) OF SUBPARAGRAPH ONE OF THIS PARAGRAPH APPLIES.
   16    (D) FOR PURPOSES OF ITEM (IV) OF CLAUSE (A) OF THIS SUBPARAGRAPH, IF A
   17  MULTIFAMILY STRUCTURE SECURING A LOAN IS USED IN PART FOR NONRESIDENTIAL
   18  USE PURPOSES, THE ENTIRE LOAN IS DEEMED A RESIDENTIAL REAL PROPERTY LOAN
   19  IF THE PLANNED RESIDENTIAL USE EXCEEDS EIGHTY PERCENT OF THE  PROPERTY'S
   20  PLANNED  USE  (MEASURED,  AT  THE  TAXPAYER'S  ELECTION, BY USING SQUARE
   21  FOOTAGE OR GROSS RENTAL REVENUE, AND DETERMINED AS OF THE TIME THE  LOAN
   22  IS MADE).
   23    (E)  FOR  PURPOSES  OF  ITEM  (IV) OF CLAUSE (A) OF THIS SUBPARAGRAPH,
   24  LOANS MADE TO FINANCE THE ACQUISITION OR DEVELOPMENT OF  LAND  SHALL  BE
   25  DEEMED  TO  BE LOANS SECURED BY AN INTEREST IN RESIDENTIAL REAL PROPERTY
   26  IF THERE IS A REASONABLE ASSURANCE THAT THE PROPERTY WILL  BECOME  RESI-
   27  DENTIAL  REAL  PROPERTY  WITHIN A PERIOD OF THREE YEARS FROM THE DATE OF
   28  ACQUISITION OF SUCH LAND; BUT THIS SENTENCE  SHALL  NOT  APPLY  FOR  ANY
   29  TAXABLE  YEAR  UNLESS,  WITHIN SUCH THREE YEAR PERIOD, SUCH LAND BECOMES
   30  RESIDENTIAL REAL PROPERTY.  FOR  PURPOSES  OF  DETERMINING  WHETHER  ANY
   31  INTEREST  IN  A  REMIC  QUALIFIES  UNDER ITEM (VI) OF CLAUSE (A) OF THIS
   32  SUBPARAGRAPH, ANY REGULAR INTEREST IN ANOTHER REMIC HELD BY  SUCH  REMIC
   33  SHALL  BE  TREATED AS A LOAN DESCRIBED IN A PRECEDING ITEM UNDER PRINCI-
   34  PLES SIMILAR TO THE PRINCIPLE OF SUCH ITEM (VI),  EXCEPT  THAT  IS  SUCH
   35  REMICS  ARE  PART  OF  A  TIERED STRUCTURE, THEY SHALL BE TREATED AS ONE
   36  REMIC FOR PURPOSES OF SUCH ITEM (VI).
   37    (3) FOR PURPOSES OF  THIS  PARAGRAPH,  A  "THRIFT  INSTITUTION"  IS  A
   38  SAVINGS  BANK, A SAVINGS AND LOAN ASSOCIATION, OR OTHER SAVINGS INSTITU-
   39  TION CHARTERED AND SUPERVISED AS SUCH UNDER FEDERAL OR STATE LAW.
   40    (S) SUBTRACTION MODIFICATION FOR COMMUNITY BANKS. (1) A TAXPAYER  THAT
   41  IS  A  QUALIFIED  COMMUNITY  BANK AS DEFINED IN SUBPARAGRAPH TWO OF THIS
   42  PARAGRAPH OR A THRIFT INSTITUTION AS DEFINED IN  SUBPARAGRAPH  THREE  OF
   43  PARAGRAPH  (R)  OF  THIS  SUBDIVISION  SHALL  BE  ALLOWED A DEDUCTION IN
   44  COMPUTING ENTIRE NET INCOME EQUAL TO THE AMOUNT COMPUTED UNDER  SUBPARA-
   45  GRAPH THREE OF THIS PARAGRAPH.
   46    (2)  TO  BE  A  QUALIFIED  COMMUNITY BANK, A TAXPAYER MUST SATISFY THE
   47  FOLLOWING CONDITIONS.
   48    (A) IT IS A BANK OR TRUST COMPANY ORGANIZED UNDER OR  SUBJECT  TO  THE
   49  PROVISIONS OF ARTICLE THREE OF THE BANKING LAW OR A COMPARABLE PROVISION
   50  OF THE LAWS OF ANOTHER STATE, OR A NATIONAL BANKING ASSOCIATION.
   51    (B)  THE  AVERAGE  VALUE  DURING THE TAXABLE YEAR OF THE ASSETS OF THE
   52  TAXPAYER, OR THE ASSETS OF THE AFFILIATED GROUP OF  THE  TAXPAYER,  MUST
   53  NOT  EXCEED  EIGHT  BILLION  DOLLARS.  FOR  PURPOSES OF THIS CLAUSE, THE
   54  AFFILIATED GROUP OF THE TAXPAYER INCLUDES ANY CORPORATION THAT MEETS THE
   55  OWNERSHIP REQUIREMENTS TO BE INCLUDED IN A COMBINED REPORT SPECIFIED  IN
       S. 6359                            32                            A. 8559
    1  PARAGRAPH  (A)  OF  SUBDIVISION TWO OF SECTION TWO HUNDRED TEN-C OF THIS
    2  ARTICLE.
    3    (3)(A) THE SUBTRACTION MODIFICATION SHALL BE COMPUTED AS FOLLOWS:
    4    (I)  MULTIPLY THE TAXPAYER'S NET INTEREST INCOME FROM LOANS DURING THE
    5  TAXABLE YEAR BY A FRACTION, THE NUMERATOR OF WHICH IS THE GROSS INTEREST
    6  INCOME DURING THE TAXABLE YEAR FROM QUALIFYING LOANS AND THE DENOMINATOR
    7  OF WHICH IS THE GROSS INTEREST INCOME DURING THE TAXABLE YEAR  FROM  ALL
    8  LOANS.
    9    (II)  MULTIPLY  THE  AMOUNT DETERMINED IN CLAUSE (I) BY FORTY PERCENT.
   10  THIS PRODUCT IS THE AMOUNT OF THE DEDUCTION  ALLOWED  UNDER  THIS  PARA-
   11  GRAPH.
   12    (B)(I) NET INTEREST INCOME FROM LOANS SHALL MEAN GROSS INTEREST INCOME
   13  FROM  LOANS  LESS  GROSS  INTEREST  EXPENSE  FROM  LOANS. GROSS INTEREST
   14  EXPENSE FROM LOANS IS DETERMINED BY MULTIPLYING GROSS  INTEREST  EXPENSE
   15  BY  A  FRACTION,  THE  NUMERATOR  OF WHICH IS THE AVERAGE TOTAL VALUE OF
   16  LOANS OWNED BY THE THRIFT INSTITUTION OR COMMUNITY BANK DURING THE TAXA-
   17  BLE YEAR AND THE DENOMINATOR OF WHICH IS THE AVERAGE TOTAL ASSETS OF THE
   18  THRIFT INSTITUTION OR COMMUNITY BANK DURING THE TAXABLE YEAR.
   19    (II) MEASUREMENT OF ASSETS FOR PURPOSES  OF  THIS  CLAUSE.  (I)  TOTAL
   20  ASSETS  ARE THOSE ASSETS THAT ARE PROPERLY REFLECTED ON A BALANCE SHEET,
   21  COMPUTED IN THE SAME MANNER AS IS REQUIRED BY THE BANKING  REGULATOR  OF
   22  THE TAXPAYERS INCLUDED IN THE COMBINED RETURN.
   23    (II)  ASSETS  WILL ONLY BE INCLUDED IF THE INCOME OR EXPENSES OF WHICH
   24  ARE PROPERLY REFLECTED (OR WOULD HAVE BEEN  PROPERLY  REFLECTED  IF  NOT
   25  FULLY  DEPRECIATED  OR EXPENSED, OR DEPRECIATED OR EXPENSED TO A NOMINAL
   26  AMOUNT) IN THE COMPUTATION OF THE TAXPAYER'S ENTIRE NET INCOME  FOR  THE
   27  TAXABLE YEAR. ASSETS WILL NOT INCLUDE DEFERRED TAX ASSETS AND INTANGIBLE
   28  ASSETS IDENTIFIED AS "GOODWILL".
   29    (III)  TANGIBLE  REAL  AND PERSONAL PROPERTY, SUCH AS BUILDINGS, LAND,
   30  MACHINERY, AND EQUIPMENT SHALL BE VALUED AT COST.  INTANGIBLE  PROPERTY,
   31  SUCH AS LOANS AND INVESTMENTS, SHALL BE VALUED AT BOOK VALUE.
   32    (IV)  AVERAGE  ASSETS  ARE  COMPUTED  USING THE ASSETS MEASURED ON THE
   33  FIRST DAY OF THE TAXABLE YEAR, AND ON THE LAST DAY  OF  EACH  SUBSEQUENT
   34  QUARTER OF THE TAXABLE YEAR.
   35    (C) A QUALIFYING LOAN IS A LOAN THAT MEETS THE CONDITIONS SPECIFIED IN
   36  SUBCLAUSE (I) OF THIS CLAUSE AND SUBCLAUSE (II) OF THIS CLAUSE.
   37    (I)  THE  LOAN  IS  ORIGINATED OR PURCHASED BY THE QUALIFIED COMMUNITY
   38  BANK  OR  THRIFT  INSTITUTION  IMMEDIATELY  AFTER  ITS  ORIGINATION   IN
   39  CONNECTION  WITH  A COMMITMENT TO PURCHASE MADE BY THE BANK PRIOR TO THE
   40  LOAN'S ORIGINATION.
   41    (II) THE LOAN IS A SMALL BUSINESS LOAN, THE PRINCIPAL  AMOUNT  OF  THE
   42  LOAN  IS  ONE  MILLION  DOLLARS  OR  LESS,  WHERE EITHER THE BORROWER IS
   43  LOCATED IN THIS STATE AS DETERMINED UNDER SECTION TWO HUNDRED  TEN-A  OF
   44  THIS ARTICLE AND THE LOAN IS NOT SECURED BY REAL PROPERTY LOCATED IN NEW
   45  YORK, OR THE LOAN IS SECURED BY REAL PROPERTY LOCATED IN NEW YORK.
   46    10.  The term "calendar year" means a period of twelve calendar months
   47  (or any shorter period  beginning  on  the  date  the  taxpayer  becomes
   48  subject  to  the tax imposed by this article) ending on the thirty-first
   49  day of December, provided the taxpayer keeps its books on the  basis  of
   50  such  period  or on the basis of any period ending on any day other than
   51  the last day of a calendar month, or provided the taxpayer does not keep
   52  books, and includes, in case the taxpayer  changes  the  period  on  the
   53  basis of which it keeps its books from a fiscal year to a calendar year,
   54  the  period from the close of its last old fiscal year up to and includ-
   55  ing the following December thirty-first. The term "fiscal year" means  a
   56  period of twelve calendar months (or any shorter period beginning on the
       S. 6359                            33                            A. 8559
    1  date  the  taxpayer  becomes subject to the tax imposed by this article)
    2  ending on the last day of any month other than  December,  provided  the
    3  taxpayer  keeps  its books on the basis of such period, and includes, in
    4  case  the  taxpayer changes the period on the basis of which it keeps it
    5  books from a calendar year to a fiscal year or from one fiscal  year  to
    6  another  fiscal year, the period from the close of its last old calendar
    7  or fiscal year up to the date designated as the close of its new  fiscal
    8  year.
    9    11.  The  term  "tangible  personal property" means corporeal personal
   10  property,  such  as  machinery,  tools,  implements,  goods,  wares  and
   11  merchandise,  and  does  not  mean  money,  deposits in banks, shares of
   12  stock, bonds, notes, credits or evidences of an interest in property and
   13  evidences of debt.
   14    12. The term elected or appointed officer shall include the  chairman,
   15  president,  vice-president,  secretary,  assistant secretary, treasurer,
   16  assistant treasurer, comptroller, and also any other officer,  irrespec-
   17  tive  of  his title, who is charged with and performs any of the regular
   18  functions of any such officer, unless the  total  compensation  of  such
   19  officer is derived exclusively from the receipt of commissions. A direc-
   20  tor  shall  be  considered  an  elected  or appointed officer only if he
   21  performs duties ordinarily performed by an officer.
   22    13. The term "manufacturer" means a taxpayer or,  in  the  case  of  a
   23  combined  report,  a  combined  group, that, during the taxable year, is
   24  principally engaged in manufacturing. A taxpayer or a combined group  is
   25  principally  engaged  in manufacturing if more than fifty percent of the
   26  gross receipts of the taxpayer  or  the  combined  group,  respectively,
   27  during  the  taxable year are derived from the sale of goods produced by
   28  manufacturing. In computing a combined group's gross receipts, intercor-
   29  porate receipts shall be eliminated. In computing gross receipts  for  a
   30  taxpayer that is a partner in partnership, inter-entity receipts between
   31  the taxpayer and such partnership shall be eliminated.
   32    14.  (a)  The  term  "manufacturing"  means the process of working raw
   33  materials into wares suitable for use or which  gives  new  shapes,  new
   34  quality  or  new  combinations  to matter which already has gone through
   35  some artificial process by the use of machinery, tools,  appliances  and
   36  other similar equipment.
   37    (b)  Notwithstanding  the definition of manufacturing in paragraph (a)
   38  of this subdivision:
   39    (i) The generation and distribution of electricity, the extraction and
   40  distribution of natural gas, and the production of steam associated with
   41  the generation of electricity does not constitute manufacturing.
   42    (ii) The creation, production or reproduction of  a  film,  television
   43  show or commercial does not constitute manufacturing.
   44    (iii)  The  blending of two or more fuels does not constitute manufac-
   45  turing.
   46    (iv) The mass production of food  products  for  wholesale  commercial
   47  distribution and sale constitutes manufacturing.
   48    15.  The  term  "qualified New York manufacturer" means a manufacturer
   49  that has property in the state that is used in manufacturing and  either
   50  the  fair market value of that property at the close of the taxable year
   51  is at least ten million dollars or all of its real and personal property
   52  is located in New York. A taxpayer or, in the case of a combined report,
   53  a combined group, that does not  satisfy  the  criteria  in  subdivision
   54  thirteen of this section may be a qualified New York manufacturer if the
   55  taxpayer  or the combined group employs during the taxable year at least
   56  two thousand five hundred employees in manufacturing in New York and the
       S. 6359                            34                            A. 8559
    1  taxpayer or the combined group has property in the state used  in  manu-
    2  facturing,  the  adjusted basis of which for federal income tax purposes
    3  at the close of the  taxable  year  is  at  least  one  hundred  million
    4  dollars.
    5    [19.  The  term "fulfillment services" shall mean any of the following
    6  services performed by an entity on its premises on behalf of a  purchas-
    7  er:
    8    (a)  the  acceptance  of  orders electronically or by mail, telephone,
    9  telefax or internet;
   10    (b) responses to consumer correspondence or  inquiries  electronically
   11  or by mail, telephone, telefax or internet;
   12    (c) billing and collection activities; or
   13    (d)  the  shipment of orders from an inventory of products offered for
   14  sale by the purchaser.]
   15    S 5. Subdivisions 1, 2, 4, 5, 6, 7 and 8 of section  209  of  the  tax
   16  law, subdivisions 1 and 6 as amended by chapter 817 of the laws of 1987,
   17  subdivision  2 as amended by chapter 75 of the laws of 1998, subdivision
   18  4 as amended by section 27 of LBD number 74024-03-4, subdivisions 5  and
   19  7  as  amended  by  section  2 of part FF-1 of chapter 57 of the laws of
   20  2008, and subdivision 8 as added by section 1 of part O of chapter 61 of
   21  the laws of 2006, are amended to read as follows:
   22    1. (A) For the privilege of exercising its corporate franchise, or  of
   23  doing business, or of employing capital, or of owning or leasing proper-
   24  ty in this state in a corporate or organized capacity, or of maintaining
   25  an  office  in this state, OR OF DERIVING RECEIPTS FROM ACTIVITY IN THIS
   26  STATE, for all or any part of each of  its  fiscal  or  calendar  years,
   27  every  domestic or foreign corporation, except corporations specified in
   28  subdivision four of this section, shall annually pay  a  franchise  tax,
   29  upon  the  basis  of its [entire net] BUSINESS income base, or upon such
   30  other basis as may be  applicable  as  hereinafter  provided,  for  such
   31  fiscal  or  calendar  year  or  part thereof, on a report which shall be
   32  filed, except as hereinafter provided, on or before the fifteenth day of
   33  March next succeeding the close of each such year, or, in the case of  a
   34  corporation  which reports on the basis of a fiscal year, within two and
   35  one-half months after the close of such fiscal year, and shall  be  paid
   36  as hereinafter provided.
   37    (B)  A CORPORATION IS DERIVING RECEIPTS FROM ACTIVITY IN THIS STATE IF
   38  IT HAS RECEIPTS WITHIN THIS STATE OF ONE MILLION DOLLARS OR MORE IN  THE
   39  TAXABLE  YEAR.  FOR  PURPOSES OF THIS SECTION, THE TERM "RECEIPTS" MEANS
   40  THE RECEIPTS THAT ARE SUBJECT TO THE APPORTIONMENT RULES  SET  FORTH  IN
   41  SECTION TWO HUNDRED TEN-A OF THIS ARTICLE, AND THE TERM "RECEIPTS WITHIN
   42  THIS  STATE"  MEANS THE RECEIPTS INCLUDED IN THE NUMERATOR OF THE APPOR-
   43  TIONMENT FACTOR DETERMINED UNDER SECTION TWO HUNDRED TEN-A OF THIS ARTI-
   44  CLE.
   45    (C) A CORPORATION IS DOING BUSINESS IN THIS STATE IF (I) IT HAS ISSUED
   46  CREDIT CARDS TO ONE THOUSAND  OR  MORE  CUSTOMERS  WHO  HAVE  A  MAILING
   47  ADDRESS  WITHIN  THIS STATE AS OF THE LAST DAY OF ITS TAXABLE YEAR, (II)
   48  IT HAS MERCHANT CUSTOMER CONTRACTS WITH MERCHANTS AND THE  TOTAL  NUMBER
   49  OF  LOCATIONS  COVERED  BY  THOSE  CONTRACTS EQUALS ONE THOUSAND OR MORE
   50  LOCATIONS IN THIS STATE TO WHOM THE CORPORATION  REMITTED  PAYMENTS  FOR
   51  CREDIT  CARD  TRANSACTIONS  DURING THE TAXABLE YEAR, OR (III) THE SUM OF
   52  THE NUMBER OF CUSTOMERS DESCRIBED IN SUBPARAGRAPH (I) OF THIS  PARAGRAPH
   53  PLUS  THE  NUMBER  OF  LOCATIONS  COVERED  BY ITS CONTRACTS DESCRIBED IN
   54  SUBPARAGRAPH (II) OF THIS PARAGRAPH EQUALS ONE THOUSAND OR  MORE.    FOR
   55  PURPOSES  OF THIS PARAGRAPH, RECEIPTS FROM PROCESSING CREDIT CARD TRANS-
   56  ACTIONS FOR MERCHANTS INCLUDE MERCHANT DISCOUNT  FEES  RECEIVED  BY  THE
       S. 6359                            35                            A. 8559
    1  CORPORATION.  AS USED IN THIS PARAGRAPH, THE TERM "CREDIT CARD" INCLUDES
    2  BANK, CREDIT, TRAVEL AND ENTERTAINMENT CARDS.
    3    (D)(I)  A  CORPORATION WITH LESS THAN ONE MILLION DOLLARS BUT AT LEAST
    4  TEN THOUSAND DOLLARS OF RECEIPTS WITHIN THIS STATE  IN  A  TAXABLE  YEAR
    5  THAT  IS  PART  OF  A COMBINED REPORTING GROUP IS DERIVING RECEIPTS FROM
    6  ACTIVITY IN THIS STATE IF THE RECEIPTS WITHIN THIS STATE OF THE  MEMBERS
    7  OF  THE COMBINED REPORTING GROUP THAT HAVE AT LEAST TEN THOUSAND DOLLARS
    8  OF RECEIPTS WITHIN THIS STATE IN THE AGGREGATE MEET  THE  THRESHOLD  SET
    9  FORTH IN PARAGRAPH (B) OF THIS SUBDIVISION.
   10    (II)  A CORPORATION THAT DOES NOT MEET ANY OF THE THRESHOLDS SET FORTH
   11  IN PARAGRAPH (C) OF THIS SUBDIVISION BUT HAS AT LEAST TEN CUSTOMERS,  OR
   12  LOCATIONS,  OR CUSTOMERS AND LOCATIONS, AS DESCRIBED IN PARAGRAPH (C) OF
   13  THIS SUBDIVISION, AND IS PART OF A COMBINED  REPORTING  GROUP  IS  DOING
   14  BUSINESS IN THIS STATE IF THE NUMBER OF CUSTOMERS, LOCATIONS, OR CUSTOM-
   15  ERS  AND  LOCATIONS,  WITHIN  THIS  STATE OF THE MEMBERS OF THE COMBINED
   16  REPORTING GROUP THAT HAVE AT LEAST TEN CUSTOMERS, LOCATIONS, OR  CUSTOM-
   17  ERS  AND  LOCATIONS, WITHIN THIS STATE IN THE AGGREGATE MEETS ANY OF THE
   18  THRESHOLDS SET FORTH IN PARAGRAPH (C) OF THIS SUBDIVISION.
   19    (E) AT THE END OF EACH YEAR, THE COMMISSIONER SHALL REVIEW THE CUMULA-
   20  TIVE PERCENTAGE CHANGE IN THE CONSUMER  PRICE  INDEX.  THE  COMMISSIONER
   21  SHALL ADJUST THE RECEIPT THRESHOLDS SET FORTH IN THIS SUBDIVISION IF THE
   22  CONSUMER  PRICE  INDEX  HAS CHANGED BY TEN PERCENT OR MORE SINCE JANUARY
   23  FIRST, TWO THOUSAND FIFTEEN, OR SINCE THE DATE THAT THE THRESHOLDS  WERE
   24  LAST  ADJUSTED  UNDER THIS SUBDIVISION. THE THRESHOLDS SHALL BE ADJUSTED
   25  TO REFLECT THAT CUMULATIVE  PERCENTAGE  CHANGE  IN  THE  CONSUMER  PRICE
   26  INDEX. THE ADJUSTED THRESHOLDS SHALL BE ROUNDED TO THE NEAREST ONE THOU-
   27  SAND  DOLLARS.  AS  USED IN THIS PARAGRAPH, "CONSUMER PRICE INDEX" MEANS
   28  THE CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS (CPI-U) AVAILABLE  FORM
   29  THE BUREAU OF LABOR STATISTICS OF THE UNITED STATES DEPARTMENT OF LABOR.
   30  ANY  ADJUSTMENT  SHALL APPLY TO TAX PERIODS THAT BEGIN AFTER THE ADJUST-
   31  MENT IS MADE.
   32    2. A foreign corporation shall not be deemed  to  be  doing  business,
   33  employing  capital, owning or leasing property, or maintaining an office
   34  in this state, OR DERIVING RECEIPTS FROM ACTIVITY IN THIS STATE, for the
   35  purposes of this article, by reason  of  (a)  the  maintenance  of  cash
   36  balances  with banks or trust companies in this state, or (b) the owner-
   37  ship of shares of stock or securities kept in this state, if kept  in  a
   38  safe  deposit  box,  safe,  vault  or  other  receptacle  rented for the
   39  purpose, or if pledged as collateral security, or if deposited with  one
   40  or more banks or trust companies, or brokers who are members of a recog-
   41  nized  security exchange, in safekeeping or custody accounts, or (c) the
   42  taking of any action by any such bank or trust company or broker,  which
   43  is  incidental  to  the rendering of safekeeping or custodian service to
   44  such corporation, or (d) the maintenance of an office in this  state  by
   45  one or more officers or directors of the corporation who are not employ-
   46  ees  of  the corporation if the corporation otherwise is not doing busi-
   47  ness in this state, and does not employ capital or own or lease property
   48  in this state, or (e) the keeping of books or records of  a  corporation
   49  in this state if such books or records are not kept by employees of such
   50  corporation  and such corporation does not otherwise do business, employ
   51  capital, own or lease property or maintain an office in this  state,  or
   52  (f)  [the  use  of fulfillment services of a person other than an affil-
   53  iated person and the ownership of property stored  on  the  premises  of
   54  such  person  in conjunction with such services, or (g)] any combination
   55  of the foregoing activities. [For purposes of this subdivision,  persons
   56  are  affiliated  persons  with  respect  to each other where one of such
       S. 6359                            36                            A. 8559
    1  persons has an ownership interest of more  than  five  percent,  whether
    2  direct or indirect, in the other, or where an ownership interest of more
    3  than  five  percent, whether direct or indirect, is held in each of such
    4  persons  by  another  person  or  by  a group of other persons which are
    5  affiliated persons with respect to each other. The term "person" in  the
    6  preceding  sentence  and in paragraph (f) of this subdivision shall have
    7  the meaning ascribed  thereto  by  subdivision  (a)  of  section  eleven
    8  hundred one of this chapter.]
    9    4.  Corporations liable to tax under sections one hundred eighty-three
   10  to one hundred  eighty-four-a,  inclusive,  corporations  taxable  under
   11  [articles  thirty-two  and]  ARTICLE  thirty-three  of this chapter, any
   12  trust company organized under a law of this state all of  the  stock  of
   13  which  is  owned by not less than twenty savings banks organized under a
   14  law of this state, [bank holding companies filing a combined  return  in
   15  accordance  with subsection (f) of section fourteen hundred sixty-two of
   16  this chapter,] a captive REIT or a captive RIC filing a combined  return
   17  under  [either  subsection (f) of section fourteen hundred sixty-two or]
   18  subdivision (f) of section fifteen hundred fifteen of this chapter,  and
   19  housing  companies organized and operating pursuant to the provisions of
   20  article two or article five of the private housing finance law and hous-
   21  ing development fund companies organized pursuant to the  provisions  of
   22  article  eleven  of the private housing finance law shall not be subject
   23  to tax under this article.
   24    5. For any taxable year of a real estate investment trust  as  defined
   25  in section eight hundred fifty-six of the internal revenue code in which
   26  such  trust  is  subject  to federal income taxation under section eight
   27  hundred fifty-seven of such code, such trust shall be subject to  a  tax
   28  computed under either paragraph (a) [, (c)] or (d) of subdivision one of
   29  section  two  hundred  ten  of  this  chapter,  whichever  is [greatest]
   30  GREATER, and shall not be subject to any tax under  article  [thirty-two
   31  or  article]  thirty-three  of  this  chapter  except for a captive REIT
   32  required to file a combined return under  [subdivision  (f)  of  section
   33  fourteen  hundred  sixty-two  or]  subdivision  (f)  of  section fifteen
   34  hundred fifteen of this chapter. In the  case  of  such  a  real  estate
   35  investment  trust, including a captive REIT as defined in section two of
   36  this chapter, the term "entire net income" means "real estate investment
   37  trust taxable income" as defined in paragraph two of subdivision (b)  of
   38  section  eight hundred fifty-seven (as modified by section eight hundred
   39  fifty-eight) of the internal revenue code plus the amount taxable  under
   40  paragraph  three of subdivision (b) of section eight hundred fifty-seven
   41  of such code, subject to the [modification]  MODIFICATIONS  required  by
   42  subdivision  nine  of  section two hundred eight of this article [(other
   43  than the modification required by  subparagraph  two  of  paragraph  (a)
   44  thereof)  including the modifications required by paragraphs (d) and (e)
   45  of subdivision three of section two hundred ten of this article].
   46    6. For any taxable year of a DISC, not exempt from tax under paragraph
   47  (i) of subdivision nine of section two hundred eight  of  this  article,
   48  the  taxes  imposed by subdivision one of this section shall be computed
   49  only under either paragraph (b) or (d) of subdivision one of section two
   50  hundred ten of this chapter, whichever is greater[, and paragraph (e) of
   51  such subdivision].
   52    7. For any taxable year, beginning on or after January first, nineteen
   53  hundred eighty of a regulated investment company, as defined in  section
   54  eight  hundred  fifty-one  of  the  internal revenue code, in which such
   55  company is subject  to  federal  income  taxation  under  section  eight
   56  hundred  fifty-two  of such code, such company shall be subject to a tax
       S. 6359                            37                            A. 8559
    1  computed under either paragraph (a)[, (c)] or (d) of subdivision one  of
    2  section  two  hundred  ten  of  this  chapter,  whichever  is [greatest]
    3  GREATER, and shall not be subject to any tax under  article  [thirty-two
    4  or  article]  thirty-three  of  this  chapter  except  for a captive RIC
    5  required to file a combined return under  [subdivision  (f)  of  section
    6  fourteen  hundred  sixty-two  or]  subdivision  (f)  of  section fifteen
    7  hundred fifteen of this chapter. In the case of such a regulated invest-
    8  ment company, including a captive RIC as defined in section two of  this
    9  chapter,  the term "entire net income" means "investment company taxable
   10  income" as defined in paragraph two of subdivision (b) of section  eight
   11  hundred  fifty-two,  as modified by section eight hundred fifty-five, of
   12  the internal revenue code plus the amount taxable under paragraph  three
   13  of  subdivision  (b)  of  section  eight  hundred fifty-two of such code
   14  subject to the [modification] MODIFICATIONS required by subdivision nine
   15  of section two hundred eight of this chapter[, other than the  modifica-
   16  tion  required by subparagraph two of paragraph (a) and by paragraph (f)
   17  thereof, including the modification required by paragraphs (d)  and  (e)
   18  of subdivision three of section two hundred ten of this chapter].
   19    8. For any taxable year beginning on or after January first, two thou-
   20  sand  six,  a  corporation  that  is no longer doing business, employing
   21  capital, or owning or leasing property, OR DERIVING RECEIPTS FROM ACTIV-
   22  ITY in this state in a corporate or organized capacity that has filed  a
   23  final  tax return with the department for the last tax year it was doing
   24  business and has no outstanding tax liability for such final tax  return
   25  or  any  tax  return  for prior tax years shall be exempt from all taxes
   26  imposed by paragraph (d) of subdivision one of section two  hundred  ten
   27  of  this  article for tax years following the last year such corporation
   28  was doing business.
   29    S 6. Section 209-A of the tax law is REPEALED.
   30    S 7. The section heading and subdivision 1 of section 209-B of the tax
   31  law, the section heading as amended by chapter 11 of the  laws  of  1983
   32  and subdivision 1 as amended by section 4 of part A of chapter 59 of the
   33  laws of 2013, are amended to read as follows:
   34    [Temporary  metropolitan]  METROPOLITAN  transportation  business  tax
   35  surcharge.  1. (A) For the privilege of exercising its  corporate  fran-
   36  chise,  or  of  doing business, or of employing capital, or of owning or
   37  leasing property in a corporate or organized capacity, or of maintaining
   38  an office, OR OF DERIVING RECEIPTS FROM  ACTIVITY  in  the  metropolitan
   39  commuter  transportation  district,  for  all or any part of its taxable
   40  year, there is hereby imposed on every corporation,  other  than  a  New
   41  York  S  corporation,  subject  to tax under section two hundred nine of
   42  this article, or any receiver, referee, trustee, assignee or other fidu-
   43  ciary, or any officer or agent appointed by any court, who conducts  the
   44  business  of  any such corporation, [for the taxable years commencing on
   45  or after January first, nineteen hundred eighty-two  but  ending  before
   46  December thirty-first, two thousand eighteen,] a tax surcharge, in addi-
   47  tion to the tax imposed under section two hundred nine of this article[,
   48  to  be  computed  at  the rate of eighteen]. SUCH SURCHARGE SHALL BE THE
   49  PRODUCT OF TWENTY-FOUR AND ONE-HALF percent of  the  tax  imposed  under
   50  such section two hundred nine for such taxable years or any part of such
   51  taxable  years  [ending  before  December thirty-first, nineteen hundred
   52  eighty-three after the deduction  of  any  credits  otherwise  allowable
   53  under  this  article,  and  at  the rate of seventeen percent of the tax
   54  imposed under such section for such taxable years or any  part  of  such
   55  taxable years ending on or after December thirty-first, nineteen hundred
   56  eighty-three after] BEFORE the deduction of any credits otherwise allow-
       S. 6359                            38                            A. 8559
    1  able  under  this  article; provided, however, that such [rates] RATE of
    2  tax surcharge shall be applied only to that portion of the  tax  imposed
    3  under  section  two  hundred  nine  of  this  article [after] BEFORE the
    4  deduction of any credits otherwise allowable under this article which is
    5  attributable  to  the taxpayer's business activity carried on within the
    6  metropolitan commuter transportation district;  and  provided,  further,
    7  [that  the  tax  surcharge  imposed by this section shall not be imposed
    8  upon any taxpayer for more than four hundred thirty-two months. Provided
    9  however, that for taxable years commencing on or after July first, nine-
   10  teen hundred ninety-eight, such surcharge shall be calculated as if  the
   11  tax  imposed  under section two hundred ten of this article were imposed
   12  under the law in effect for taxable years commencing on  or  after  July
   13  first,  nineteen  hundred  ninety-seven  and before July first, nineteen
   14  hundred ninety-eight. Provided however, that for taxable years  commenc-
   15  ing  on or after January first, two thousand seven, such surcharge shall
   16  be calculated using the highest of the tax  bases  imposed  pursuant  to
   17  paragraphs  (a),  (b),  (c)  or  (d)  of  subdivision one of section two
   18  hundred ten of this article and the amount imposed under  paragraph  (e)
   19  of  subdivision  one  of  such  section two hundred ten, for the taxable
   20  year; and, provided further that, if such highest amount is the tax base
   21  imposed under paragraph (a), (b) or (c) of such  subdivision,  then  the
   22  surcharge  shall  be  computed as if the tax rates and limitations under
   23  such paragraph were the tax rates and limitations under  such  paragraph
   24  in  effect for taxable years commencing on or after July first, nineteen
   25  hundred ninety-seven and before July  first,  nineteen  hundred  ninety-
   26  eight]  THE  SURCHARGE  COMPUTED  ON  A  COMBINED REPORT SHALL INCLUDE A
   27  SURCHARGE ON THE FIXED  DOLLAR  MINIMUM  TAX  FOR  EACH  MEMBER  OF  THE
   28  COMBINED GROUP SUBJECT TO THE SURCHARGE UNDER THIS SUBDIVISION.
   29    (B)  A CORPORATION IS DERIVING RECEIPTS FROM ACTIVITY IN THE METROPOL-
   30  ITAN COMMUTER TRANSPORTATION DISTRICT IF  IT  HAS  RECEIPTS  WITHIN  THE
   31  METROPOLITAN  COMMUTER TRANSPORTATION DISTRICT OF ONE MILLION DOLLARS OR
   32  MORE IN  A  TAXABLE  YEAR.  FOR  PURPOSES  OF  THIS  SECTION,  THE  TERM
   33  "RECEIPTS"  MEANS  THE  RECEIPTS  THAT  ARE SUBJECT TO THE APPORTIONMENT
   34  RULES SET FORTH IN SECTION TWO HUNDRED TEN-A OF THIS  ARTICLE,  AND  THE
   35  TERM "RECEIPTS WITHIN THE METROPOLITAN COMMUTER TRANSPORTATION DISTRICT"
   36  MEANS THE RECEIPTS INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FACTOR
   37  DETERMINED UNDER SUBDIVISION TWO OF THIS SECTION.
   38    (C)  A  CORPORATION  IS  DOING  BUSINESS  IN THE METROPOLITAN COMMUTER
   39  TRANSPORTATION DISTRICT IF (I) IT HAS ISSUED CREDIT CARDS TO  ONE  THOU-
   40  SAND  OR  MORE CUSTOMERS WHO HAVE A MAILING ADDRESS WITHIN THE METROPOL-
   41  ITAN COMMUTER TRANSPORTATION DISTRICT AS OF THE LAST DAY OF ITS  TAXABLE
   42  YEAR,  (II)  IT  HAS  MERCHANT CUSTOMER CONTRACTS WITH MERCHANTS AND THE
   43  TOTAL NUMBER OF LOCATIONS COVERED BY THOSE CONTRACTS EQUALS ONE THOUSAND
   44  OR MORE LOCATIONS IN THE METROPOLITAN COMMUTER  TRANSPORTATION  DISTRICT
   45  TO  WHOM  THE CORPORATION REMITTED PAYMENTS FOR CREDIT CARD TRANSACTIONS
   46  DURING THE TAXABLE YEAR, OR (III) THE SUM OF  THE  NUMBER  OF  CUSTOMERS
   47  DESCRIBED  IN  SUBPARAGRAPH  (I)  OF  THIS  PARAGRAPH PLUS THE NUMBER OF
   48  LOCATIONS COVERED BY ITS CONTRACTS DESCRIBED  IN  SUBPARAGRAPH  (II)  OF
   49  THIS  PARAGRAPH  EQUALS ONE THOUSAND OR MORE. FOR PURPOSES OF THIS PARA-
   50  GRAPH, RECEIPTS FROM PROCESSING CREDIT CARD TRANSACTIONS  FOR  MERCHANTS
   51  INCLUDE  MERCHANT  DISCOUNT FEES RECEIVED BY THE CORPORATION. AS USED IN
   52  THIS PARAGRAPH, THE TERM "CREDIT CARD" INCLUDES BANK, CREDIT, TRAVEL AND
   53  ENTERTAINMENT CARDS.
   54    (D)(I) A CORPORATION WITH LESS THAN ONE MILLION DOLLARS BUT  AT  LEAST
   55  TEN THOUSAND DOLLARS OF RECEIPTS WITHIN THE METROPOLITAN COMMUTER TRANS-
   56  PORTATION  DISTRICT IN A TAXABLE YEAR THAT IS PART OF A COMBINED REPORT-
       S. 6359                            39                            A. 8559
    1  ING GROUP IS DERIVING RECEIPTS FROM ACTIVITY IN THE METROPOLITAN  COMMU-
    2  TER  TRANSPORTATION  DISTRICT  IF  THE  RECEIPTS WITHIN THE METROPOLITAN
    3  COMMUTER TRANSPORTATION DISTRICT OF THE MEMBERS OF THE UNITARY  BUSINESS
    4  GROUP  THAT  HAVE  AT  LEAST TEN THOUSAND DOLLARS OF RECEIPTS WITHIN THE
    5  METROPOLITAN COMMUTER TRANSPORTATION DISTRICT IN THE AGGREGATE MEET  THE
    6  THRESHOLD SET FORTH IN PARAGRAPH (B) OF THIS SUBDIVISION.
    7    (II)  A CORPORATION THAT DOES NOT MEET ANY OF THE THRESHOLDS SET FORTH
    8  IN PARAGRAPH (C) OF THIS SUBDIVISION BUT HAS AT LEAST TEN CUSTOMERS,  OR
    9  LOCATIONS,  OR  CUSTOMERS  AND LOCATIONS, AS DESCRIBED IN PARAGRAPH (C),
   10  AND IS PART OF A COMBINED REPORTING  GROUP  IS  DOING  BUSINESS  IN  THE
   11  METROPOLITAN  COMMUTER  TRANSPORTATION DISTRICT IF THE NUMBER OF CUSTOM-
   12  ERS, LOCATIONS, OR CUSTOMERS  AND  LOCATIONS,  WITHIN  THE  METROPOLITAN
   13  COMMUTER  TRANSPORTATION DISTRICT OF THE MEMBERS OF THE UNITARY BUSINESS
   14  GROUP THAT HAVE AT LEAST TEN  CUSTOMERS,  LOCATIONS,  OR  CUSTOMERS  AND
   15  LOCATIONS,  WITHIN  THE METROPOLITAN COMMUTER TRANSPORTATION DISTRICT IN
   16  THE AGGREGATE MEETS ANY OF THE THRESHOLDS SET FORTH IN PARAGRAPH (C)  OF
   17  THIS SUBDIVISION.
   18    (E) AT THE END OF EACH YEAR, THE COMMISSIONER SHALL REVIEW THE CUMULA-
   19  TIVE  PERCENTAGE  CHANGE  IN  THE CONSUMER PRICE INDEX. THE COMMISSIONER
   20  SHALL ADJUST THE RECEIPT THRESHOLDS SET FORTH IN THIS SUBDIVISION IF THE
   21  CONSUMER PRICE INDEX HAS CHANGED BY TEN PERCENT OR  MORE  SINCE  JANUARY
   22  FIRST,  TWO THOUSAND FIFTEEN, OR SINCE THE DATE THAT THE THRESHOLDS WERE
   23  LAST ADJUSTED UNDER THIS SUBDIVISION. THE THRESHOLDS SHALL  BE  ADJUSTED
   24  TO  REFLECT  THAT  CUMULATIVE  PERCENTAGE  CHANGE  IN THE CONSUMER PRICE
   25  INDEX. THE ADJUSTED THRESHOLDS SHALL BE ROUNDED TO THE NEAREST ONE THOU-
   26  SAND DOLLARS. AS USED IN THIS PARAGRAPH, "CONSUMER  PRICE  INDEX"  MEANS
   27  THE  CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS (CPI-U) AVAILABLE FROM
   28  THE BUREAU OF LABOR STATISTICS OF THE UNITED STATES DEPARTMENT OF LABOR.
   29  ANY ADJUSTMENT SHALL APPLY TO TAX PERIODS THAT BEGIN AFTER  THE  ADJUST-
   30  MENT IS MADE.
   31    S  8.  The  opening paragraph of subdivision 2 of section 209-B of the
   32  tax law, as amended by chapter 11 of the laws of  1983,  is  amended  to
   33  read as follows:
   34    The  portion of the taxpayer's business activity carried on within the
   35  metropolitan commuter transportation district shall  be  determined  [by
   36  multiplying the tax imposed under section two hundred nine of this arti-
   37  cle by a percentage to be determined as follows:] PURSUANT TO THE METHOD
   38  PRESCRIBED  IN SECTION TWO HUNDRED TEN-A OF THIS ARTICLE EXCEPT THAT THE
   39  REFERENCES TO "WITHIN THE STATE" SHALL REFER TO WITHIN THE  METROPOLITAN
   40  COMMUTER  TRANSPORTATION  DISTRICT AND REFERENCES TO "WITHIN AND WITHOUT
   41  THE STATE" SHALL REFER TO WITHIN THE STATE.
   42    S 9. Paragraphs (a), (b), (c) and (d)  of  subdivision  2  of  section
   43  209-B of the tax law are REPEALED.
   44    S  10.  Subdivisions  2-a  and 2-b of section 209-B of the tax law are
   45  REPEALED.
   46    S 11. Subdivisions 3 and 5 of section 209-B of the tax  law,  subdivi-
   47  sion 3 as amended by chapter 11 of the laws of 1983 and subdivision 5 as
   48  amended  by  chapter  166  of  the  laws of 1991, are amended to read as
   49  follows:
   50    3. A corporation shall not be deemed to be doing  business,  employing
   51  capital, owning or leasing property, or maintaining an office, OR DERIV-
   52  ING  RECEIPTS  FROM ACTIVITY in the metropolitan commuter transportation
   53  district, for the purposes of this section, by reason of (a) the mainte-
   54  nance of cash balances with banks or trust companies in the metropolitan
   55  commuter transportation district, or (b)  the  ownership  of  shares  of
   56  stock  or  securities  kept  in the metropolitan commuter transportation
       S. 6359                            40                            A. 8559
    1  district, if kept in a safe deposit box, safe, vault or other receptacle
    2  rented for the purpose, or if pledged  as  collateral  security,  or  if
    3  deposited  with one or more banks or trust companies, or brokers who are
    4  members  of  a  recognized  security exchange, in safekeeping or custody
    5  accounts, or (c) the taking of any action by  any  such  bank  or  trust
    6  company  or  broker, which is incidental to the rendering of safekeeping
    7  or custodian service to such corporation, or (d) the maintenance  of  an
    8  office  in  the  metropolitan commuter transportation district by one or
    9  more officers or directors of the corporation who are not  employees  of
   10  the  corporation  if  the corporation otherwise is not doing business in
   11  the metropolitan commuter transportation district, and does  not  employ
   12  capital  or own or lease property in the metropolitan commuter transpor-
   13  tation district, or (e) the keeping of books or records of a corporation
   14  in the metropolitan commuter transportation district if  such  books  or
   15  records  are  not  kept by employees of such corporation and such corpo-
   16  ration does not otherwise do business,  employ  capital,  own  or  lease
   17  property  or maintain an office in the metropolitan commuter transporta-
   18  tion district, or (f) any combination of the foregoing activities.
   19    5. The provisions concerning  reports  under  [section]  SECTIONS  TWO
   20  HUNDRED  TEN-C  AND  two  hundred  eleven  shall  be  applicable to this
   21  section, except that for purposes of  an  automatic  extension  for  six
   22  months  for  filing  a report covering the tax surcharge imposed by this
   23  section, such automatic extension shall be allowed only  if  a  taxpayer
   24  files with the commissioner an application for extension in such form as
   25  said  commissioner may prescribe by regulation and pays on or before the
   26  date of such filing in addition to any other amounts required under this
   27  article, either ninety percent of the entire tax surcharge  required  to
   28  be  paid  under this section for the applicable period, or not less than
   29  the tax surcharge shown on the taxpayer's return for the preceding taxa-
   30  ble year, if such preceding taxable year was a taxable  year  of  twelve
   31  months;  provided,  however,  that in no event shall such amount be less
   32  than the product of the following three amounts: (1) the  tax  surcharge
   33  rate  in effect for the taxable year pursuant to subdivision one of this
   34  section, (2) the fixed dollar minimum applicable  to  such  taxpayer  as
   35  determined under paragraph (d) of subdivision one of section two hundred
   36  ten  of this chapter for the taxable year, and (3) the percentage deter-
   37  mined under subdivision two of this section for  the  preceding  taxable
   38  year,  unless  the taxpayer was not subject to the tax surcharge imposed
   39  pursuant to this section with respect to such year, in which  case  such
   40  percentage  shall be deemed to be one hundred percent. The tax surcharge
   41  imposed by this section shall be payable to the commissioner in full  at
   42  the  time  the report is required to be filed, and such tax surcharge or
   43  the balance thereof, imposed on any taxpayer which  ceases  to  exercise
   44  its franchise or be subject to the tax surcharge imposed by this section
   45  shall  be payable to the commissioner at the time the report is required
   46  to be filed, provided such tax surcharge of a domestic corporation which
   47  continues to possess its franchise shall be subject to adjustment as the
   48  circumstances may require; all other tax surcharges of any such  taxpay-
   49  er,  which  pursuant  to  the foregoing provisions of this section would
   50  otherwise be payable subsequent to the time such report is  required  to
   51  be  filed,  shall  nevertheless  be  payable  at  such  time. All of the
   52  provisions of this article presently applicable are  applicable  to  the
   53  tax surcharge imposed by this section.
   54    S 12. Subdivision 1 of section 210 of the tax law, as added by chapter
   55  817  of  the laws of 1987, the opening paragraph as amended by section 1
   56  of part D and paragraph (g) as amended by section 2 of part A of chapter
       S. 6359                            41                            A. 8559
    1  63 of the laws of 2000, paragraph (a) as amended by  section 2 of part N
    2  of chapter 60 of the laws of 2007, subparagraphs 2 and  3  of  paragraph
    3  (b) as amended by section 17 of LBD number 74021-03-4, subparagraph (ii)
    4  of paragraph (c) as amended by section 2 of part C and subparagraph 5 of
    5  paragraph  (d) as added by section 3 of part C of chapter 56 of the laws
    6  of 2011, subparagraphs (vi) and (vii) of paragraph  (a)  as  amended  by
    7  section 16 of LBD number 74021-03-4, subparagraph (iii) of paragraph (c)
    8  as  added by section 3 of part Z, and subparagraph 6 of paragraph (d) as
    9  added by section 4 of part Z of chapter 59 of the laws  of  2013,  para-
   10  graph  (b)  as amended by section 1 of part GG1, subparagraph 3 of para-
   11  graph (d) as amended by section 3 of part AA1, subparagraph 4  of  para-
   12  graph  (d)  as  added  by  section  2  of part AA1 and subparagraph 1 of
   13  paragraph (g) as amended by section 4 of part AA1 of chapter 57  of  the
   14  laws  of  2008,  paragraph  (c)  as  amended by section 10 of part A and
   15  subparagraph 1 of paragraph (d) as amended by section 12 of  part  A  of
   16  chapter  56 of the laws of 1998, paragraph (d) as amended by chapter 760
   17  of the laws of 1992, paragraph (e) as amended by section 1 of part P  of
   18  chapter  407  of the laws of 1999, paragraph (f) as amended by section 2
   19  of part E of chapter 61 of the laws of 2005 and paragraph (h)  as  added
   20  by section 20 of LBD number 74021-03-4, is amended to read as follows:
   21    1.  The  tax imposed by subdivision one of section two hundred nine of
   22  this chapter shall be: (A) in the case of each taxpayer other than a New
   23  York S corporation or a qualified homeowners association,  the  [sum  of
   24  (1) the] highest of the amounts prescribed in paragraphs (a), (b), [(c)]
   25  and  (d) of this subdivision [and (2) the amount prescribed in paragraph
   26  (e) of this subdivision], (B) in the case of  each  New  York  S  corpo-
   27  ration,  the  amount  prescribed in paragraph [(g)] (D) of this subdivi-
   28  sion, and (C) in the case of a  qualified  homeowners  association,  the
   29  [sum  of (1) the] highest of the amounts prescribed in paragraphs (a)[,]
   30  AND (b) [and (c)] of this subdivision [and (2) the amount prescribed  in
   31  paragraph  (e) of this subdivision]. For purposes of this paragraph, the
   32  term "qualified homeowners association" means a homeowners  association,
   33  as  such term is defined in subsection (c) of section five hundred twen-
   34  ty-eight of the internal revenue code without regard to subparagraph (E)
   35  of paragraph one of such subsection (relating to elections to  be  taxed
   36  pursuant  to  such section), which has no homeowners association taxable
   37  income, as such term is defined  in  subsection  (d)  of  such  section.
   38  Provided,  however, that in the case of a small business taxpayer (other
   39  than a New York S corporation) as  defined  in  paragraph  (f)  of  this
   40  subdivision, FOR TAXABLE YEARS BEGINNING BEFORE JANUARY FIRST, TWO THOU-
   41  SAND  SIXTEEN,  if the amount prescribed in such paragraph (b) is higher
   42  than the amount prescribed in such paragraph (a) solely by reason of the
   43  application of the rate applicable to  small  business  taxpayers,  then
   44  with  respect  to  such  taxpayer  the  tax  referred to in the previous
   45  sentence shall be [the sum of (1) the highest]  HIGHER  of  the  amounts
   46  prescribed in paragraphs (a)[, (c)] and (d) of this subdivision [and (2)
   47  the amount prescribed in paragraph (e) of this subdivision].
   48    (a)  [Entire  net]  BUSINESS income base. [For taxable years beginning
   49  before July first, nineteen hundred ninety-nine, the  amount  prescribed
   50  by  this  paragraph shall be computed at the rate of nine percent of the
   51  taxpayer's entire net income base. For  taxable  years  beginning  after
   52  June  thirtieth, nineteen hundred ninety-nine and before July first, two
   53  thousand, the amount prescribed by this paragraph shall be  computed  at
   54  the  rate  of  eight  and  one-half percent of the taxpayer's entire net
   55  income base. For taxable years beginning after June thirtieth, two thou-
   56  sand and before July first, two thousand one, the amount  prescribed  by
       S. 6359                            42                            A. 8559
    1  this  paragraph  shall  be  computed at the rate of eight percent of the
    2  taxpayer's entire net income base. For  taxable  years  beginning  after
    3  June  thirtieth, two thousand one and before January first, two thousand
    4  seven,  the amount prescribed by this paragraph shall be computed at the
    5  rate of seven and one-half percent of the taxpayer's entire  net  income
    6  base.]  For  taxable years beginning [on or after] BEFORE January first,
    7  two thousand [seven] SIXTEEN, the amount prescribed  by  this  paragraph
    8  shall  be  computed  at  the  rate of seven and one-tenth percent of the
    9  taxpayer's [entire net] BUSINESS income base. FOR TAXABLE  YEARS  BEGIN-
   10  NING  ON  OR  AFTER  JANUARY  FIRST,  TWO  THOUSAND  SIXTEEN, THE AMOUNT
   11  PRESCRIBED BY THIS PARAGRAPH SHALL BE SIX AND ONE-HALF  PERCENT  OF  THE
   12  TAXPAYER'S  BUSINESS  INCOME  BASE. The taxpayer's [entire net] BUSINESS
   13  income base shall mean the portion of the taxpayer's [entire net]  BUSI-
   14  NESS income allocated within the state as hereinafter provided[, subject
   15  to  any  modification  required by paragraphs (d) and (e) of subdivision
   16  three of this section]. However, in the case of a small business taxpay-
   17  er, as  defined  in  paragraph  (f)  of  this  subdivision,  the  amount
   18  prescribed  by this paragraph shall be computed pursuant to subparagraph
   19  (iv) of this paragraph and in the case of a manufacturer, as defined  in
   20  subparagraph (vi) of this paragraph, the amount prescribed by this para-
   21  graph shall be computed pursuant to subparagraph (vi) of this paragraph.
   22    [(i)  if the entire net income base is not more than two hundred thou-
   23  sand dollars, (1) for taxable years beginning before July  first,  nine-
   24  teen  hundred  ninety-nine,  the  amount  shall  be eight percent of the
   25  entire net income base; (2) for taxable years beginning after June thir-
   26  tieth, nineteen hundred ninety-nine and before July first, two  thousand
   27  three,  the amount shall be seven and one-half percent of the entire net
   28  income base; and (3) for taxable years beginning after  June  thirtieth,
   29  two  thousand  three  and  before  January first, two thousand five, the
   30  amount shall be 6.85 percent of the entire net income base;
   31    (ii) if the entire net income base is more than two  hundred  thousand
   32  dollars  but not over two hundred ninety thousand dollars, (1) for taxa-
   33  ble years beginning before July first, nineteen hundred ninety-nine, the
   34  amount shall be the sum  of  (a)  sixteen  thousand  dollars,  (b)  nine
   35  percent  of  the  excess  of the entire net income base over two hundred
   36  thousand dollars and (c) five percent of the excess of  the  entire  net
   37  income  base  over  two  hundred fifty thousand dollars; (2) for taxable
   38  years beginning after June thirtieth, nineteen hundred  ninety-nine  and
   39  before  July  first,  two  thousand,  the amount shall be the sum of (a)
   40  fifteen thousand dollars, (b) eight and one-half percent of  the  excess
   41  of  the entire net income base over two hundred thousand dollars and (c)
   42  five percent of the excess of  the  entire  net  income  base  over  two
   43  hundred  fifty  thousand  dollars; (3) for taxable years beginning after
   44  June thirtieth, two thousand and before July first,  two  thousand  one,
   45  the  amount  shall be the sum of (a) fifteen thousand dollars, (b) eight
   46  percent of the excess of the entire net income  base  over  two  hundred
   47  thousand  dollars  and (c) two and one-half percent of the excess of the
   48  entire net income base over two hundred fifty thousand dollars; (4)  for
   49  taxable  years  beginning  after  June  thirtieth,  two thousand one and
   50  before July first, two thousand three, the amount  shall  be  seven  and
   51  one-half  percent  of  the  entire  net income base; and (5) for taxable
   52  years beginning after June thirtieth,  two  thousand  three  and  before
   53  January  first,  two  thousand  five, the amount shall be the sum of (a)
   54  thirteen thousand seven hundred dollars, (b) 7.5 percent of  the  excess
   55  of  the entire net income base over two hundred thousand dollars and (c)
       S. 6359                            43                            A. 8559
    1  3.25 percent of the excess of  the  entire  net  income  base  over  two
    2  hundred fifty thousand dollars;
    3    (iii) for taxable years beginning on or after January first, two thou-
    4  sand  five  and  ending before January first, two thousand seven, if the
    5  entire net income base is not more  than  two  hundred  ninety  thousand
    6  dollars  the  amount shall be six and one-half percent of the entire net
    7  income base; if the entire net income base  is  more  than  two  hundred
    8  ninety  thousand  dollars  but  not  over  three hundred ninety thousand
    9  dollars the amount shall be the  sum  of  (1)  eighteen  thousand  eight
   10  hundred  fifty  dollars, (2) seven and one-half percent of the excess of
   11  the entire net income base over two hundred ninety thousand dollars  but
   12  not  over  three  hundred ninety thousand dollars and (3) seven and one-
   13  quarter percent of the excess of the entire net income base  over  three
   14  hundred  fifty  thousand dollars but not over three hundred ninety thou-
   15  sand dollars;]
   16    (iv) for taxable years beginning [on or after] BEFORE  January  first,
   17  two  thousand  [seven] SIXTEEN, if the [entire net] BUSINESS income base
   18  is not more than two hundred ninety thousand dollars the amount shall be
   19  six and one-half percent of the [entire net] BUSINESS  income  base;  if
   20  the  [entire  net]  BUSINESS income base is more than two hundred ninety
   21  thousand dollars but not over three hundred ninety thousand dollars  the
   22  amount  shall  be  the  sum of (1) eighteen thousand eight hundred fifty
   23  dollars, (2) seven and one-tenth percent of the excess  of  the  [entire
   24  net]  BUSINESS  income base over two hundred ninety thousand dollars but
   25  not over three hundred ninety thousand dollars and (3) four and  thirty-
   26  five  hundredths  percent  of  the  excess  of the [entire net] BUSINESS
   27  income base over three hundred fifty thousand dollars but not over three
   28  hundred ninety thousand dollars;
   29    (v) if the taxable period to which [subparagraphs  (i),  (ii),  (iii),
   30  and]  SUBPARAGRAPH  (iv)  of this paragraph [apply] APPLIES is less than
   31  twelve months, the amount prescribed by this paragraph shall be computed
   32  as follows:
   33    (A) Multiply the [entire net] BUSINESS income base for  such  taxpayer
   34  by twelve;
   35    (B)  Divide  the result obtained in (A) by the number of months in the
   36  taxable year;
   37    (C) Compute an amount pursuant to [subparagraphs (i) and (ii)] SUBPAR-
   38  AGRAPH (IV) as if the result obtained in (B) were the taxpayer's [entire
   39  net] BUSINESS income base;
   40    (D) Multiply the result obtained in (C) by the number of months in the
   41  taxpayer's taxable year;
   42    (E) Divide the result obtained in (D) by twelve.
   43    (vi) except as otherwise provided in this subparagraph or subparagraph
   44  (vii) of this paragraph, for taxable years beginning on or after January
   45  thirty-first, two thousand seven, the amount prescribed  by  this  para-
   46  graph  for  a  taxpayer  which  is a qualified New York manufacturer, as
   47  defined in subdivision fifteen of section  two  hundred  eight  of  this
   48  article, shall be computed at the rate of six and one-half (6.5) percent
   49  of  the taxpayer's [entire net] BUSINESS income base. [For taxable years
   50  beginning on or after January first,  two  thousand  twelve  and  before
   51  January first, two thousand fifteen, the amount prescribed by this para-
   52  graph for a taxpayer which is an eligible qualified New York manufactur-
   53  er shall be computed at the rate of three and one-quarter (3.25) percent
   54  of the taxpayer's entire net income base.  The commissioner shall estab-
   55  lish  guidelines  and  criteria  that  specify  requirements  by which a
   56  manufacturer may  be  classified  as  an  eligible  qualified  New  York
       S. 6359                            44                            A. 8559
    1  manufacturer. Criteria may include but not be limited to factors such as
    2  regional unemployment, the economic impact that manufacturing has on the
    3  surrounding  community,  population decline within the region and median
    4  income within the region in which the manufacturer is located. In estab-
    5  lishing  these  guidelines and criteria, the commissioner shall endeavor
    6  that the total annual cost of the lower rates shall not  exceed  twenty-
    7  five million dollars.]
    8    For  a  qualified  New  York  manufacturer,  as defined in subdivision
    9  fifteen of section two hundred eight of this article, the rate at  which
   10  the  tax  is  computed in effect for taxable years beginning on or after
   11  January first, two thousand thirteen and before January first, two thou-
   12  sand fourteen for qualified New York manufacturers shall be  reduced  by
   13  nine  and  two-tenths  percent  for taxable years commencing on or after
   14  January first, two thousand fourteen and before January first, two thou-
   15  sand fifteen, twelve and three-tenths percent for taxable years commenc-
   16  ing on or after January first, two thousand fifteen and  before  January
   17  first, two thousand sixteen, fifteen and four-tenths percent for taxable
   18  years  commencing  on  or  after January first, two thousand sixteen and
   19  before January first, two thousand eighteen, and twenty-five percent for
   20  taxable years beginning on or after January first,  two  thousand  eigh-
   21  teen.
   22    (vii)  For a qualified New York manufacturer that has an apportionment
   23  factor for purposes of  the  metropolitan  transportation  business  tax
   24  surcharge  computed  pursuant  to subdivision two of section two hundred
   25  nine-B of this article equal to zero for the taxable  year,  the  amount
   26  prescribed  by  this  paragraph  for taxable years beginning on or after
   27  January first, two thousand fourteen shall be computed at  the  rate  of
   28  zero percent of the taxpayer's entire net income base.
   29    (VIII)  IN  COMPUTING  THE  BUSINESS INCOME BASE, A NET OPERATING LOSS
   30  DEDUCTION SHALL BE ALLOWED. A NET OPERATING LOSS DEDUCTION IS THE AMOUNT
   31  OF NET OPERATING LOSS OR LOSSES FROM ONE OR MORE TAXABLE YEARS THAT  ARE
   32  CARRIED FORWARD TO A PARTICULAR INCOME YEAR. A NET OPERATING LOSS IS THE
   33  AMOUNT  OF  A BUSINESS LOSS INCURRED IN A PARTICULAR TAX YEAR MULTIPLIED
   34  BY THE APPORTIONMENT FACTOR FOR THAT YEAR AS  DETERMINED  UNDER  SECTION
   35  TWO  HUNDRED  TEN-A OF THIS ARTICLE. THE MAXIMUM NET OPERATING DEDUCTION
   36  THAT IS ALLOWED IN A TAXABLE YEAR IS THE AMOUNT THAT REDUCES THE TAXPAY-
   37  ER'S TAX ON ALLOCATED BUSINESS INCOME TO THE HIGHER OF THE  TAX  ON  THE
   38  CAPITAL  BASE  OR  THE FIXED DOLLAR MINIMUM. SUCH DEDUCTION AND LOSS ARE
   39  DETERMINED IN ACCORDANCE WITH THE FOLLOWING:
   40    (1) SUCH NET OPERATING LOSS DEDUCTION IS NOT  LIMITED  TO  THE  AMOUNT
   41  ALLOWED  UNDER  SECTION  ONE HUNDRED SEVENTY-TWO OF THE INTERNAL REVENUE
   42  CODE OR THE AMOUNT THAT WOULD HAVE BEEN ALLOWED IF THE TAXPAYER HAD  NOT
   43  MADE  AN  ELECTION  UNDER  SUBCHAPTER  S  OF CHAPTER ONE OF THE INTERNAL
   44  REVENUE CODE.
   45    (2) SUCH NET OPERATING LOSS DEDUCTION SHALL NOT INCLUDE ANY NET  OPER-
   46  ATING  LOSS  INCURRED DURING ANY TAXABLE YEAR BEGINNING PRIOR TO JANUARY
   47  FIRST, TWO THOUSAND FIFTEEN, OR DURING ANY TAXABLE  YEAR  IN  WHICH  THE
   48  TAXPAYER WAS NOT SUBJECT TO THE TAX IMPOSED BY THIS ARTICLE.
   49    (3) A TAXPAYER THAT FILES AS PART OF A FEDERAL CONSOLIDATED RETURN BUT
   50  ON  A  SEPARATE  BASIS  FOR  PURPOSES  OF  THIS ARTICLE MUST COMPUTE ITS
   51  DEDUCTION AND LOSS AS IF IT WERE FILING ON A SEPARATE BASIS FOR  FEDERAL
   52  INCOME TAX PURPOSES.
   53    (4) A NET OPERATING LOSS MUST BE CARRIED FORWARD TO EACH OF THE TWENTY
   54  TAXABLE  YEARS  FOLLOWING  THE TAXABLE YEAR OF THE LOSS. NO CARRYBACK OF
   55  THE NET OPERATING LOSS IS ALLOWED. A TAXPAYER MUST APPLY BOTH  OF  THESE
   56  LIMITATIONS IN COMPUTING SUCH NET OPERATING LOSS DEDUCTION.
       S. 6359                            45                            A. 8559
    1    (5)  SUCH NET OPERATING LOSS DEDUCTION SHALL NOT INCLUDE ANY NET OPER-
    2  ATING LOSS INCURRED DURING A NEW YORK S YEAR; PROVIDED, HOWEVER,  A  NEW
    3  YORK  S YEAR MUST BE TREATED AS A TAXABLE YEAR FOR PURPOSES OF DETERMIN-
    4  ING THE NUMBER OF TAXABLE YEARS TO WHICH A NET  OPERATING  LOSS  MAY  BE
    5  CARRIED FORWARD.
    6    (6)  WHERE  THERE  ARE  TWO OR MORE ALLOCATED NET OPERATING LOSSES, OR
    7  PORTIONS THEREOF, CARRIED FORWARD TO BE DEDUCTED IN ONE  PARTICULAR  TAX
    8  YEAR  FROM  ALLOCATED  BUSINESS  INCOME,  THE  EARLIEST  ALLOCATED  LOSS
    9  INCURRED MUST BE APPLIED FIRST.
   10    (b) Capital base. (1) The [amount prescribed  by  this  paragraph  for
   11  taxable  years  beginning before January first, two thousand eight shall
   12  be computed at .178 percent for each  dollar  of  the  taxpayer's  total
   13  business and investment capital, or the portion thereof allocated within
   14  the  state  as  hereinafter  provided. For taxable years beginning on or
   15  after January first, two thousand eight, the] amount prescribed by  this
   16  paragraph  shall  be  computed  at .15  percent  for  each dollar of the
   17  taxpayer's total business [and investment] capital, or the portion ther-
   18  eof allocated within the state as hereinafter provided. However, in  the
   19  case  of  a  cooperative  housing corporation as defined in the internal
   20  revenue code, the applicable rate shall be .04 percent.    In  no  event
   21  shall the amount prescribed by this paragraph exceed three hundred fifty
   22  thousand  dollars for qualified New York manufacturers and for all other
   23  taxpayers [ten] FIVE million dollars [for taxable years beginning on  or
   24  after  January  first,  two thousand eight but before January first, two
   25  thousand eleven and one million dollars for taxable years  beginning  on
   26  or after January first, two thousand eleven].
   27    (2)  For  a qualified New York manufacturer, as defined in subdivision
   28  fifteen of section two hundred eight of this article, the rate at  which
   29  the  tax  is  computed in effect for taxable years beginning on or after
   30  January first, two thousand thirteen and before January first, two thou-
   31  sand fourteen shall be reduced by nine and two-tenths percent for  taxa-
   32  ble  years  commencing  on or after January first, two thousand fourteen
   33  and before January first, two thousand fifteen, twelve and  three-tenths
   34  percent  for  taxable  years  commencing  on or after January first, two
   35  thousand fifteen and before January first, two thousand sixteen, fifteen
   36  and four-tenths percent for taxable years commencing on or after January
   37  first, two thousand sixteen and before January first, two thousand eigh-
   38  teen, and twenty-five percent for taxable years beginning  on  or  after
   39  January first, two thousand eighteen.
   40    [(c)  Minimum  taxable  income  bases. (i) For taxable years beginning
   41  after nineteen hundred eighty-six and before  nineteen  hundred  eighty-
   42  nine,  the  amount prescribed by this paragraph shall be computed at the
   43  rate of three  and  one-half  percent  of  the  taxpayer's  pre-nineteen
   44  hundred  ninety minimum taxable income base. For taxable years beginning
   45  in nineteen hundred eighty-nine, the amount prescribed by this paragraph
   46  shall be computed at the rate of five percent  of  the  taxpayer's  pre-
   47  nineteen  hundred ninety minimum taxable income base. A "taxpayer's pre-
   48  nineteen hundred ninety minimum taxable  income  base"  shall  mean  the
   49  portion  of  the taxpayer's entire net income allocated within the state
   50  as hereinafter provided, subject to any modification required  by  para-
   51  graphs (d) and (e) of subdivision three of this section;
   52    (ii)  (A)  For  taxable years beginning on or after January first, two
   53  thousand seven,  the  amount  prescribed  by  this  paragraph  shall  be
   54  computed at the rate of one and one-half percent of the taxpayer's mini-
   55  mum  taxable  income  base. The "taxpayer's minimum taxable income base"
   56  shall mean the portion of the taxpayer's minimum  taxable  income  allo-
       S. 6359                            46                            A. 8559
    1  cated within the state as hereinafter provided, subject to any modifica-
    2  tions  required  by  paragraphs (d) and (e) of subdivision three of this
    3  section.
    4    (B)  For  taxable years beginning on or after January first, two thou-
    5  sand twelve and before January first, two thousand fifteen,  the  amount
    6  prescribed by this paragraph for an eligible qualified New York manufac-
    7  turer  shall  be  computed  at the rate of seventy-five hundredths (.75)
    8  percent of the taxpayer's minimum taxable income base. For  purposes  of
    9  this  clause,  the term "eligible qualified New York manufacturer" shall
   10  have the same meaning as in subparagraph (vi) of paragraph (a)  of  this
   11  subdivision.
   12    (iii)  For  a  qualified New York manufacturer, as defined in subpara-
   13  graph (vi) of paragraph (a) of this subdivision, the rate at  which  the
   14  tax  is computed in effect for taxable years beginning on or after Janu-
   15  ary first, two thousand thirteen and before January first, two  thousand
   16  fourteen  for  qualified New York manufacturers shall be reduced by nine
   17  and two-tenths percent for taxable years commencing on or after  January
   18  first,  two  thousand  fourteen  and  before January first, two thousand
   19  fifteen, twelve and three-tenths percent for taxable years commencing on
   20  or after January first, two thousand fifteen and before  January  first,
   21  two  thousand sixteen, fifteen and four-tenths percent for taxable years
   22  commencing on or after January first, two thousand  sixteen  and  before
   23  January  first, two thousand eighteen, and twenty-five percent for taxa-
   24  ble years beginning on or after January first, two thousand eighteen.]
   25    (d) Fixed dollar minimum. (1) The [amount prescribed by this paragraph
   26  shall be for a taxpayer which during the taxable year has:
   27    (A) a gross payroll of six million two hundred fifty thousand  dollars
   28  or more, one thousand five hundred dollars;
   29    (B)  a  gross payroll of less than six million two hundred fifty thou-
   30  sand dollars but more than one million dollars, four hundred twenty-five
   31  dollars;
   32    (C) a gross payroll of no more than one million dollars but more  than
   33  five hundred thousand dollars, three hundred twenty-five dollars;
   34    (D)  a gross payroll of no more than five hundred thousand dollars but
   35  more than two hundred fifty thousand dollars,  two  hundred  twenty-five
   36  dollars;
   37    (E)  a  gross  payroll  of  two hundred fifty thousand dollars or less
   38  (except as prescribed in clause (F) of this subparagraph),  one  hundred
   39  dollars;
   40    (F)  a  gross  payroll  of  one  thousand  dollars or less, with total
   41  receipts within and without this state of one thousand dollars or  less,
   42  and the average value of the assets of which are one thousand dollars or
   43  less, eight hundred dollars.
   44    (2) For purposes of this paragraph:
   45    (A)  gross  payroll shall be the same as the total wages, salaries and
   46  other personal service compensation of  all  the  taxpayer's  employees,
   47  within and without this state, as defined in subparagraph three of para-
   48  graph  (a)  of  subdivision  three  of this section, except that general
   49  executive officers shall not be excluded.
   50    (B) total receipts shall be the same as receipts  within  and  without
   51  this  state  as defined in subparagraph two of paragraph (a) of subdivi-
   52  sion three of this section.
   53    (C) average value of the assets shall be the  same  as  prescribed  by
   54  subdivision two of this section without reduction for liabilities.
   55    (3)  If  the  taxable  year  is  less  than  twelve months, the amount
   56  prescribed by this paragraph shall be reduced by twenty-five percent  if
       S. 6359                            47                            A. 8559
    1  the  period  for  which  the taxpayer is subject to tax is more than six
    2  months but not more than nine months and by fifty percent if the  period
    3  for  which  the  taxpayer is subject to tax is not more than six months.
    4  Provided,  however,  that in determining the amount of gross payroll and
    5  total receipts for purposes of subparagraph one of this paragraph, where
    6  the taxable year is less than twelve months, the amount of each shall be
    7  determined by dividing the amount of each with respect  to  the  taxable
    8  year  by  the  number of months in such taxable year and multiplying the
    9  result by twelve. If the taxable year is less than  twelve  months,  the
   10  amount  of  New  York receipts for purposes of subparagraph four of this
   11  paragraph is determined by dividing the amount of the receipts  for  the
   12  taxable year by the number of months in the taxable year and multiplying
   13  the result by twelve.
   14    (4)  Notwithstanding  subparagraphs one and two of this paragraph, for
   15  taxable years beginning on or after January first, two  thousand  eight,
   16  the]  amount  prescribed  by  this paragraph for New York S corporations
   17  will be determined in accordance with the following table:
   18  If New York receipts are:                The fixed dollar minimum tax is:
   19   not more than $100,000                               $   25
   20   more than $100,000 but not over $250,000             $   50
   21   more than $250,000 but not over $500,000             $  175
   22   more than $500,000 but not over $1,000,000           $  300
   23   more than $1,000,000 but not over $5,000,000         $1,000
   24   more than $5,000,000 but not over $25,000,000        $3,000
   25   Over $25,000,000                                     $4,500
   26  Otherwise the amount prescribed by this paragraph will be determined  in
   27  accordance with the following table:
   28  PROVIDED  FURTHER,  THE AMOUNT PRESCRIBED BY THIS PARAGRAPH FOR A QUALI-
   29  FIED NEW YORK MANUFACTURER, AS DEFINED IN SUBDIVISION FIFTEEN OF SECTION
   30  TWO HUNDRED EIGHT OF THIS ARTICLE, WILL BE DETERMINED IN ACCORDANCE WITH
   31  THE FOLLOWING TABLES:
   32  FOR TAX YEARS BEGINNING ON OR AFTER JANUARY 1, 2014 AND  BEFORE  JANUARY
   33  1, 2015:
   34  IF NEW YORK RECEIPTS ARE:                THE FIXED DOLLAR MINIMUM TAX IS:
   35   NOT MORE THAN $100,000                               $   23
   36   MORE THAN $100,000 BUT NOT OVER $250,000             $   68
   37   MORE THAN $250,000 BUT NOT OVER $500,000             $  159
   38   MORE THAN $500,000 BUT NOT OVER $1,000,000           $  454
   39   MORE THAN $1,000,000 BUT NOT OVER $5,000,000         $1,362
   40   MORE THAN $5,000,000 BUT NOT OVER $25,000,000        $3,178
   41   OVER $25,000,000                                     $4,500
   42  FOR  TAX  YEARS BEGINNING ON OR AFTER JANUARY 1, 2015 AND BEFORE JANUARY
   43  1, 2016:
   44  IF NEW YORK RECEIPTS ARE:                THE FIXED DOLLAR MINIMUM TAX IS:
   45   NOT MORE THAN $100,000                               $   22
   46   MORE THAN $100,000 BUT NOT OVER $250,000             $   66
   47   MORE THAN $250,000 BUT NOT OVER $500,000             $  153
   48   MORE THAN $500,000 BUT NOT OVER $1,000,000           $  439
   49   MORE THAN $1,000,000 BUT NOT OVER $5,000,000         $1,316
   50   MORE THAN $5,000,000 BUT NOT OVER $25,000,000        $3,070
   51   OVER $25,000,000                                     $4,385
       S. 6359                            48                            A. 8559
    1  FOR TAX YEARS BEGINNING ON OR AFTER JANUARY 1, 2016 AND  BEFORE  JANUARY
    2  1, 2018:
    3  IF NEW YORK RECEIPTS ARE:                THE FIXED DOLLAR MINIMUM TAX IS:
    4   NOT MORE THAN $100,000                               $   21
    5   MORE THAN $100,000 BUT NOT OVER $250,000             $   63
    6   MORE THAN $250,000 BUT NOT OVER $500,000             $  148
    7   MORE THAN $500,000 BUT NOT OVER $1,000,000           $  423
    8   MORE THAN $1,000,000 BUT NOT OVER $5,000,000         $1,269
    9   MORE THAN $5,000,000 BUT NOT OVER $25,000,000        $2,961
   10   OVER $25,000,000                                     $4,230
   11  FOR TAX YEARS BEGINNING ON OR AFTER JANUARY 1, 2018:
   12  IF NEW YORK RECEIPTS ARE:                THE FIXED DOLLAR MINIMUM TAX IS:
   13   NOT MORE THAN $100,000                               $   19
   14   MORE THAN $100,000 BUT NOT OVER $250,000             $   56
   15   MORE THAN $250,000 BUT NOT OVER $500,000             $  131
   16   MORE THAN $500,000 BUT NOT OVER $1,000,000           $  375
   17   MORE THAN $1,000,000 BUT NOT OVER $5,000,000         $1,125
   18   MORE THAN $5,000,000 BUT NOT OVER $25,000,000        $2,625
   19   OVER $25,000,000                                     $3,750
   20  OTHERWISE  THE AMOUNT PRESCRIBED BY THIS PARAGRAPH WILL BE DETERMINED IN
   21  ACCORDANCE WITH THE FOLLOWING TABLE:
   22  If New York receipts are:                The fixed dollar minimum tax is:
   23   not more than $100,000                               $   25
   24   more than $100,000 but not over $250,000             $   75
   25   more than $250,000 but not over $500,000             $  175
   26   more than $500,000 but not over $1,000,000           $  500
   27   more than $1,000,000 but not over $5,000,000         $1,500
   28   more than $5,000,000 but not over $25,000,000        $3,500
   29   [Over] $25,000,000 BUT NOT OVER $50,000,000          $5,000
   30   MORE THAN $50,000,000 BUT NOT OVER $100,000,000      $10,000
   31   MORE THAN $100,000,000 BUT NOT OVER $250,000,000     $20,000
   32   MORE THAN $250,000,000 BUT NOT OVER $500,000,000     50,000
   33   MORE THAN $500,000,000 BUT NOT OVER $1,000,000,000   $100,000
   34   OVER $1,000,000,000                                  $200,000
   35  For purposes of this paragraph,  New  York  receipts  are  the  receipts
   36  [computed in accordance with subparagraph two of paragraph (a) of subdi-
   37  vision  three  of  this]  INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT
   38  FACTOR DETERMINED UNDER section TWO HUNDRED TEN-A for the taxable year.
   39    (2) IF THE TAXABLE YEAR IS LESS THAN TWELVE MONTHS, THE AMOUNT OF  NEW
   40  YORK  RECEIPTS  IS DETERMINED BY DIVIDING THE AMOUNT OF THE RECEIPTS FOR
   41  THE TAXABLE YEAR BY THE NUMBER OF MONTHS IN THE TAXABLE YEAR AND  MULTI-
   42  PLYING  THE RESULT BY TWELVE. IN THE CASE OF A TERMINATION YEAR OF A NEW
   43  YORK S CORPORATION, THE SUM OF THE TAX COMPUTED UNDER THIS PARAGRAPH FOR
   44  THE S SHORT YEAR AND FOR THE C SHORT YEAR SHALL NOT  BE  LESS  THAN  THE
   45  AMOUNT  COMPUTED  UNDER  THIS PARAGRAPH AS IF THE CORPORATION WERE A NEW
   46  YORK C CORPORATION FOR THE ENTIRE TAXABLE YEAR.
   47    [(5) For taxable years beginning on or after January first, two  thou-
   48  sand  twelve and before January first, two thousand fifteen, the amounts
   49  prescribed in subparagraphs one and four of this paragraph as the  fixed
   50  dollar minimum tax for an eligible qualified New York manufacturer shall
       S. 6359                            49                            A. 8559
    1  be  one-half  of the amounts stated in those subparagraphs. For purposes
    2  of this subparagraph, the term "eligible qualified New York  manufactur-
    3  er" shall have the same meaning as in subparagraph (vi) of paragraph (a)
    4  of this subdivision.
    5    (6)  For a qualified New York manufacturer, as defined in subparagraph
    6  (vi) of paragraph (a) of this subdivision,  the  amounts  prescribed  in
    7  subparagraphs one and four of this paragraph in effect for taxable years
    8  beginning  on  or  after January first, two thousand thirteen and before
    9  January first, two thousand fourteen for qualified New York  manufactur-
   10  ers  shall  be  reduced by nine and two-tenths percent for taxable years
   11  commencing on or after January first, two thousand fourteen  and  before
   12  January first, two thousand fifteen, twelve and three-tenths percent for
   13  taxable years commencing on or after January first, two thousand fifteen
   14  and  before January first, two thousand sixteen, fifteen and four-tenths
   15  percent for taxable years commencing on  or  after  January  first,  two
   16  thousand  sixteen  and  before January first, two thousand eighteen, and
   17  twenty-five percent for taxable years  beginning  on  or  after  January
   18  first, two thousand eighteen.
   19    (e)  Subsidiary  capital base. (1) The amount prescribed by this para-
   20  graph shall be computed at the rate of nine-tenths of a  mill  for  each
   21  dollar  of  the  portion  of the taxpayer's subsidiary capital allocated
   22  within the state as hereinafter provided.
   23    (2) For purposes of this paragraph,  the  amount  of  such  subsidiary
   24  capital,  prior  to  allocation,  shall  be  reduced  by  the applicable
   25  percentage of the taxpayer's (i) investments in the stock  of,  and  any
   26  indebtedness from, subsidiaries subject to tax under section one hundred
   27  eighty-six  of this chapter (but only to the extent such indebtedness is
   28  included in subsidiary capital), and (ii) investments in the  stock  of,
   29  and  any  indebtedness  from,  subsidiaries subject to tax under article
   30  thirty-two or thirty-three of this chapter (but only to the extent  such
   31  indebtedness  is included in subsidiary capital). For purposes of clause
   32  (i) of this subparagraph, the  applicable  percentage  shall  be  thirty
   33  percent  for  taxable  years  beginning in two thousand, and one hundred
   34  percent for taxable years beginning after two thousand. For purposes  of
   35  clause (ii) of this subparagraph, the applicable percentage shall be one
   36  hundred percent for taxable years beginning after nineteen hundred nine-
   37  ty-nine.]
   38    (f)  For  purposes of this section, the term "small business taxpayer"
   39  shall mean a taxpayer (i) which has an entire net  income  of  not  more
   40  than  three  hundred  ninety thousand dollars for the taxable year; (ii)
   41  [which constitutes a small business as defined in section 1244(c)(3)  of
   42  internal revenue code (without regard to the second sentence of subpara-
   43  graph (A) thereof) as of the last day of the taxable year] THE AGGREGATE
   44  AMOUNT  OF  MONEY  AND  OTHER  PROPERTY  RECEIVED BY THE CORPORATION FOR
   45  STOCK, AS A CONTRIBUTION TO CAPITAL, AND AS PAID-IN  SURPLUS,  DOES  NOT
   46  EXCEED  ONE  MILLION DOLLARS; [and] (iii) which is not part of an affil-
   47  iated group, as defined in section 1504 of the  internal  revenue  code,
   48  unless  such  group,  if  it  had filed a report under this article on a
   49  combined basis, would have itself qualified as a "small business taxpay-
   50  er" pursuant to this subdivision; AND (IV) WHICH HAS AN  AVERAGE  NUMBER
   51  OF INDIVIDUALS, EXCLUDING GENERAL EXECUTIVE OFFICERS, EMPLOYED FULL-TIME
   52  IN  THE  STATE  DURING THE TAXABLE YEAR OF ONE HUNDRED OR FEWER.  If the
   53  taxable period to which subparagraph (i) of this  paragraph  applies  is
   54  less than twelve months, entire net income under such subparagraph shall
   55  be  placed  on  an  annual basis by multiplying the entire net income by
   56  twelve and dividing the result by the number of months  in  the  period.
       S. 6359                            50                            A. 8559
    1  FOR  PURPOSES  OF  SUBPARAGRAPH (II) OF THIS PARAGRAPH, THE AMOUNT TAKEN
    2  INTO ACCOUNT WITH RESPECT TO ANY PROPERTY OTHER THAN MONEY SHALL BE  THE
    3  AMOUNT  EQUAL  TO THE ADJUSTED BASIS TO THE CORPORATION OF SUCH PROPERTY
    4  FOR DETERMINING GAIN, REDUCED BY ANY LIABILITY TO WHICH THE PROPERTY WAS
    5  SUBJECT OR WHICH WAS ASSUMED BY THE CORPORATION. THE DETERMINATION UNDER
    6  THE  PRECEDING  SENTENCE  SHALL  BE MADE AS OF THE TIME THE PROPERTY WAS
    7  RECEIVED BY THE CORPORATION. FOR PURPOSES OF SUBPARAGRAPH (III) OF  THIS
    8  SECTION,  "AVERAGE  NUMBER  OF  INDIVIDUALS, EXCLUDING GENERAL EXECUTIVE
    9  OFFICERS, EMPLOYED FULL-TIME" SHALL  BE  COMPUTED  BY  ASCERTAINING  THE
   10  NUMBER  OF SUCH INDIVIDUALS EMPLOYED BY THE TAXPAYER ON THE THIRTY-FIRST
   11  DAY OF MARCH, THE THIRTIETH DAY OF JUNE, THE THIRTIETH DAY OF  SEPTEMBER
   12  AND  THE  THIRTY-FIRST DAY OF DECEMBER DURING EACH TAXABLE YEAR OR OTHER
   13  APPLICABLE PERIOD, BY ADDING TOGETHER THE  NUMBER  OF  SUCH  INDIVIDUALS
   14  ASCERTAINED  ON  EACH  OF SUCH DATES AND DIVIDING THE SUM SO OBTAINED BY
   15  THE NUMBER OF SUCH DATES OCCURRING WITHIN SUCH  TAXABLE  YEAR  OR  OTHER
   16  APPLICABLE PERIOD. AN INDIVIDUAL EMPLOYED FULL-TIME MEANS AN EMPLOYEE IN
   17  A  JOB CONSISTING OF AT LEAST THIRTY-FIVE HOURS PER WEEK, OR TWO OR MORE
   18  EMPLOYEES WHO ARE IN JOBS THAT TOGETHER CONSTITUTE THE EQUIVALENT  OF  A
   19  JOB   AT  LEAST  THIRTY-FIVE  HOURS  PER  WEEK  (FULL-TIME  EQUIVALENT).
   20  FULL-TIME EQUIVALENT EMPLOYEES IN THE STATE INCLUDES ALL EMPLOYEES REGU-
   21  LARLY CONNECTED WITH OR WORKING OUT OF AN OFFICE OR PLACE OF BUSINESS OF
   22  THE TAXPAYER WITHIN THE STATE.
   23    (g) New York S corporations.  (1) General. The  amount  prescribed  by
   24  this  paragraph  shall  be,  in the case of each New York S corporation,
   25  [(i) the higher of the amounts prescribed in paragraphs (a) and  (d)  of
   26  this  subdivision  (other than the amount prescribed in the final clause
   27  of subparagraph one of that paragraph (d)) (ii) reduced by  the  article
   28  twenty-two  tax  equivalent;  provided,  however,  that  the amount thus
   29  determined shall not be less than the lowest of the  amounts  prescribed
   30  in  subparagraph  one  of that paragraph (d) (applying the provisions of
   31  subparagraph three of that paragraph as necessary).  Provided,  however,
   32  notwithstanding any provision of this paragraph, in taxable years begin-
   33  ning  in  two  thousand  three and before two thousand eight, the amount
   34  prescribed by this paragraph shall be the amount prescribed in  subpara-
   35  graph one of that paragraph (d) (applying the provisions of subparagraph
   36  three  of  that  paragraph as necessary) and applying the calculation of
   37  that amount in the case of a termination year as set forth  in  subpara-
   38  graph four of this paragraph as necessary. In taxable years beginning in
   39  two  thousand  eight and thereafter, the amount prescribed by this para-
   40  graph is] the amount prescribed in subparagraph four of  that  paragraph
   41  (d) [(applying the provisions of subparagraph three of that paragraph as
   42  necessary)] and applying the calculation of that amount in the case of a
   43  termination  year as set forth in subparagraph four of this paragraph as
   44  necessary.
   45    (2) [Article twenty-two tax equivalent. For  taxable  years  beginning
   46  before  July first, nineteen hundred ninety-nine, the article twenty-two
   47  tax equivalent is the amount computed under paragraph (a) of this subdi-
   48  vision by substituting for the rate therein the rate of  7.875  percent.
   49  For taxable years beginning after June thirtieth, nineteen hundred nine-
   50  ty-nine  and before July first, two thousand, the article twenty-two tax
   51  equivalent is the amount computed under paragraph (a) of  this  subdivi-
   52  sion by substituting for the rate therein the rate of 7.525 percent. For
   53  taxable  years  beginning  after June thirtieth, two thousand and before
   54  July first, two thousand one, the article twenty-two tax  equivalent  is
   55  the  amount  computed under paragraph (a) of this subdivision by substi-
   56  tuting for the rate therein the rate of 7.175 percent. For taxable years
       S. 6359                            51                            A. 8559
    1  beginning after June thirtieth, two thousand one and before July  first,
    2  two  thousand three, the article twenty-two tax equivalent is the amount
    3  computed under paragraph (a) of this subdivision by substituting for the
    4  rate therein the rate of 6.85 percent. For taxable years beginning after
    5  June  thirtieth,  two  thousand three, the article twenty-two tax equiv-
    6  alent is the amount computed under paragraph (a) of this subdivision  by
    7  substituting for the rate therein the rate of 7.1425 percent.
    8    (3)  Small  business  taxpayers.  Notwithstanding  the  provisions  of
    9  subparagraphs one and two of this paragraph, in the case of a New York S
   10  corporation which is a small business taxpayer, as defined in  paragraph
   11  (f) of this subdivision, the following provisions shall apply:
   12    (A)  For  taxable  years beginning before July first, nineteen hundred
   13  ninety-nine,  the  article  twenty-two  tax  equivalent  is  the  amount
   14  computed under paragraph (a) of this subdivision by substituting for the
   15  rate therein the rate of 7.875 percent.
   16    (B) For taxable years beginning after June thirtieth, nineteen hundred
   17  ninety-nine  and  before  July  first,  two  thousand  three, the amount
   18  computed under paragraph (a) of this  subdivision,  as  referred  to  in
   19  subparagraph  one  of  this paragraph, shall be computed by substituting
   20  for the rate therein the rate of 7.5 percent, and the article twenty-two
   21  tax equivalent under paragraph (a) of this subdivision shall be computed
   22  as follows:
   23    (i) if the entire net income base is not more than two  hundred  thou-
   24  sand  dollars,  the  article  twenty-two  tax  equivalent  is the amount
   25  computed under paragraph (a) of this subdivision by substituting for the
   26  rate therein the rate of 7.45 percent;
   27    (ii) if the entire net income base is more than two  hundred  thousand
   28  dollars  but  not  over two hundred ninety thousand dollars, the article
   29  twenty-two tax equivalent shall be computed as the sum of  (I)  fourteen
   30  thousand  nine  hundred  dollars,  (II)  six  and eighty-five hundredths
   31  percent of the first fifty thousand dollars in excess of the entire  net
   32  income  base  over  two  hundred  thousand  dollars, and (III) three and
   33  eighty-five hundredths percent of the excess, if any, of the entire  net
   34  income base over two hundred fifty thousand dollars.
   35    (C)  For  taxable  years  beginning after June thirtieth, two thousand
   36  three, the amount computed under paragraph (a) of this  subdivision,  as
   37  referred  to in subparagraph one of this paragraph, shall be computed by
   38  substituting for the rate therein the rate of 7.5 percent, and the arti-
   39  cle twenty-two tax equivalent under paragraph (a)  of  this  subdivision
   40  shall be computed as follows:
   41    (i)  if  the entire net income base is not more than two hundred thou-
   42  sand dollars, the  article  twenty-two  tax  equivalent  is  the  amount
   43  computed under paragraph (a) of this subdivision by substituting for the
   44  rate therein the rate of 7.4725 percent;
   45    (ii)  if  the entire net income base is more than two hundred thousand
   46  dollars but not over two hundred ninety thousand  dollars,  the  article
   47  twenty-two  tax  equivalent shall be computed as the sum of (I) fourteen
   48  thousand nine hundred forty-five dollars, (II)  7.1425  percent  of  the
   49  first  fifty  thousand  dollars  in excess of the entire net income base
   50  over two hundred thousand dollars,  and  (III)  5.4925  percent  of  the
   51  excess,  if  any,  of  the entire net income base over two hundred fifty
   52  thousand dollars.
   53    (4)] Termination year. In the case of a termination year, [the tax for
   54  the S short year shall be computed under this paragraph  without  regard
   55  to  the  fixed  dollar  minimum  tax prescribed in paragraph (d) of this
   56  subdivision, and the tax for the C short year shall  be  computed  under
       S. 6359                            52                            A. 8559
    1  the  opening  paragraph  of this subdivision without regard to the fixed
    2  dollar minimum tax prescribed under such paragraph (d), but in no  event
    3  shall]  the  sum  of  the tax for the S short year and the tax for the C
    4  short  year  SHALL  NOT  be less than the fixed dollar minimum tax under
    5  paragraph (d) of this subdivision computed as if the corporation were  a
    6  New York C corporation for the entire taxable year.
    7    [(h)  For  purposes  of  determining whether a taxpayer is an eligible
    8  qualified New  York  manufacturer  for  purposes  of  the  tax  benefits
    9  provided  in  subparagraph  (vi)  of  paragraph (a) of this subdivision,
   10  subparagraph (ii) of paragraph (c) of this subdivision, and subparagraph
   11  five of paragraph (d) of this subdivision, a taxpayer shall utilize  the
   12  law,  guidelines  and  criteria  in effect on December thirty-first, two
   13  thousand thirteen.]
   14    S 13. Subdivision 1-c of section 210 of the tax  law,  as  amended  by
   15  chapter  1043  of  the laws of 1981, the opening paragraph and paragraph
   16  (a) as amended by chapter 817 of the laws of 1987, and paragraph (b)  as
   17  amended  by  section  12 of part Y of chapter 63 of the laws of 2000, is
   18  amended to read as follows:
   19    1-c. The computations specified in paragraph (b) of subdivision one of
   20  this section shall not apply to the first two taxable years of a taxpay-
   21  er which, for one or both such years, is a small  business  [concern.  A
   22  small business concern:
   23    (a) is  a taxpayer which is a small business corporation as defined in
   24  paragraph three of subsection (c) of section twelve  hundred  forty-four
   25  of  the  internal revenue code (without regard to the second sentence of
   26  subparagraph (A) thereof) as of the last day of the taxable year,
   27    (b) is not a corporation over fifty percent of the number of shares of
   28  stock of which entitling the holders thereof to vote for the election of
   29  directors or trustees is owned by a taxpayer which (1) is subject to tax
   30  under this article; section one hundred eighty-three, one hundred eight-
   31  y-four or one hundred eighty-five of article nine; article thirty-two or
   32  thirty-three of this chapter, and (2) does not qualify as a small  busi-
   33  ness  corporation  as  defined  in  paragraph three of subsection (c) of
   34  section twelve hundred forty-four of the internal revenue code  (without
   35  regard  to  the  second  sentence of subparagraph (A) thereof) as of the
   36  last day of its taxable year ending within or with the taxable  year  of
   37  the taxpayer,
   38    (c)  is  not a corporation which is substantially similar in operation
   39  and in ownership to a business entity (or entities) taxable,  or  previ-
   40  ously taxable, under this article; section one hundred eighty-three, one
   41  hundred  eighty-four,  one hundred eighty-five or one hundred eighty-six
   42  of article nine; article thirty-two or  thirty-three  of  this  chapter;
   43  article twenty-three of this chapter or which would have been subject to
   44  tax  under  such  article twenty-three (as such article was in effect on
   45  January first, nineteen hundred eighty) or the  income  (or  losses)  of
   46  which  is  (or was) includable under article twenty-two of this chapter,
   47  and
   48    (d) at least ninety percent of the assets of such corporation  (valued
   49  at  original  cost)  were  located and employed in this state during the
   50  taxable year and eighty percent of the employees of such corporation (as
   51  ascertained within the meaning and intent of subparagraph three of para-
   52  graph (a)  of  subdivision  three  of  this  section)  were  principally
   53  employed  in  this state during the taxable year] TAXPAYER AS DEFINED IN
   54  PARAGRAPH (F) OF SUBDIVISION ONE OF THIS SECTION.
   55    S 14. Subdivision 2 of section 210 of the tax law, as amended by chap-
   56  ter 760 of the laws of 1992, is amended to read as follows:
       S. 6359                            53                            A. 8559
    1    2. The amount of [subsidiary capital,] investment capital and business
    2  capital shall each be determined by taking  the  average  value  of  the
    3  assets  included therein (less liabilities deductible therefrom pursuant
    4  to the provisions of subdivisions [four,] five and seven of section  two
    5  hundred eight), and, if the period covered by the report is other than a
    6  period  of  twelve  calendar  months,  by  multiplying such value by the
    7  number of calendar months or major parts thereof included in such  peri-
    8  od,  and  dividing  the product thus obtained by twelve. For purposes of
    9  this subdivision, real  property  and  marketable  securities  shall  be
   10  valued  at  fair  market  value and the value of personal property other
   11  than marketable securities shall be the value thereof shown on the books
   12  and records of  the  taxpayer  in  accordance  with  generally  accepted
   13  accounting principles.
   14    S  15.  Subdivisions 3, 3-a, 4, 5, 6, 7, 8, 9, 10, 11, 12, 12-A, 12-B,
   15  12-C, 12-D, 12-E, 12-F, 12-G, 13, 14, 15, 16, 17, 18, 19, 20, 21,  21-a,
   16  22,  23,  23-a,  24, 25, 25-a, 26, 26-a, 27, 28, 30, 31, 32, 33, 34, 35,
   17  36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, subdivision 48 as  added
   18  by  section  3  of  LBD number 74039-02-4 and subdivision 48 as added by
   19  section 2 of LBD number 74021-03-4 of section 210 of  the  tax  law  are
   20  REPEALED.
   21    S  16. The tax law is amended by adding a new section 210-A to read as
   22  follows:
   23    S 210-A. APPORTIONMENT. 1. GENERAL. BUSINESS INCOME AND CAPITAL  SHALL
   24  BE  APPORTIONED  TO  THE  STATE  BY  THE APPORTIONMENT FACTOR DETERMINED
   25  PURSUANT TO THIS SECTION. THE APPORTIONMENT FACTOR IS A FRACTION, DETER-
   26  MINED BY INCLUDING ONLY THOSE RECEIPTS, NET INCOME, NET GAINS, AND OTHER
   27  ITEMS DESCRIBED IN THIS SECTION THAT ARE INCLUDED IN THE COMPUTATION  OF
   28  THE  TAXPAYER'S  BUSINESS INCOME FOR THE TAXABLE YEAR.  THE NUMERATOR OF
   29  THE APPORTIONMENT FRACTION SHALL BE EQUAL TO THE SUM OF ALL THE  AMOUNTS
   30  REQUIRED  TO  BE INCLUDED IN THE NUMERATOR PURSUANT TO THE PROVISIONS OF
   31  THIS SECTION AND THE DENOMINATOR OF THE APPORTIONMENT FRACTION SHALL  BE
   32  EQUAL  TO  THE  SUM  OF  ALL  THE AMOUNTS REQUIRED TO BE INCLUDED IN THE
   33  DENOMINATOR PURSUANT TO THE PROVISIONS OF THIS SECTION.
   34    2. SALES OF TANGIBLE PERSONAL PROPERTY AND ELECTRICITY.  (A)  RECEIPTS
   35  FROM  SALES  OF  TANGIBLE  PERSONAL PROPERTY WHERE SHIPMENTS ARE MADE TO
   36  POINTS WITHIN THE STATE OR THE DESTINATION OF THE PROPERTY IS A POINT IN
   37  THE STATE SHALL BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT  FRAC-
   38  TION.  RECEIPTS FROM SALES OF TANGIBLE PERSONAL PROPERTY WHERE SHIPMENTS
   39  ARE MADE TO POINTS WITHIN AND WITHOUT THE STATE OR  THE  DESTINATION  IS
   40  WITHIN AND WITHOUT THE STATE SHALL BE INCLUDED IN THE DENOMINATOR OF THE
   41  APPORTIONMENT FRACTION.
   42    (B)  RECEIPTS FROM SALES OF ELECTRICITY DELIVERED TO POINTS WITHIN THE
   43  STATE SHALL BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT  FRACTION.
   44  RECEIPTS  FROM SALES OF ELECTRICITY DELIVERED TO POINTS WITHIN AND WITH-
   45  OUT THE STATE SHALL BE INCLUDED IN THE DENOMINATOR OF THE  APPORTIONMENT
   46  FRACTION.
   47    (C)  RECEIPTS FROM SALES OF TANGIBLE PERSONAL PROPERTY AND ELECTRICITY
   48  THAT ARE TRADED AS COMMODITIES AS DESCRIBED IN SECTION 475 OF THE INTER-
   49  NAL REVENUE CODE ARE INCLUDED IN THE APPORTIONMENT FRACTION  IN  ACCORD-
   50  ANCE WITH CLAUSE (I) OF SUBPARAGRAPH TWO OF PARAGRAPH (A) OF SUBDIVISION
   51  FIVE OF THIS SECTION.
   52    3. RENTALS AND ROYALTIES. (A) RECEIPTS FROM RENTALS OF REAL AND TANGI-
   53  BLE  PERSONAL  PROPERTY  LOCATED  WITHIN  THE  STATE ARE INCLUDED IN THE
   54  NUMERATOR OF THE APPORTIONMENT FRACTION. RECEIPTS FROM RENTALS  OF  REAL
   55  AND  TANGIBLE  PERSONAL  PROPERTY  LOCATED  WITHIN AND WITHOUT THE STATE
   56  SHALL BE INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
       S. 6359                            54                            A. 8559
    1    (B) RECEIPTS OF ROYALTIES FROM THE USE  OF  PATENTS,  COPYRIGHTS,  AND
    2  SIMILAR  INTANGIBLE  PERSONAL  PROPERTY WITHIN THE STATE ARE INCLUDED IN
    3  THE NUMERATOR OF THE APPORTIONMENT FRACTION. RECEIPTS OF ROYALTIES  FROM
    4  THE USE OF PATENTS, COPYRIGHTS, TRADEMARKS AND SIMILAR INTANGIBLES WITH-
    5  IN  AND  WITHOUT THE STATE ARE INCLUDED IN THE DENOMINATOR OF THE APPOR-
    6  TIONMENT FRACTION.
    7    (C) RECEIPTS FROM THE SALES OF RIGHTS  FOR  CLOSED-CIRCUIT  AND  CABLE
    8  TELEVISION  TRANSMISSIONS  OF AN EVENT (OTHER THAN EVENTS OCCURRING ON A
    9  REGULARLY SCHEDULED BASIS) TAKING PLACE WITHIN THE STATE AS A RESULT  OF
   10  THE  RENDITION OF SERVICES BY EMPLOYEES OF THE CORPORATION, AS ATHLETES,
   11  ENTERTAINERS OR PERFORMING ARTISTS ARE INCLUDED IN THE NUMERATOR OF  THE
   12  APPORTIONMENT FRACTION TO THE EXTENT THAT SUCH RECEIPTS ARE ATTRIBUTABLE
   13  TO  SUCH  TRANSMISSIONS RECEIVED OR EXHIBITED WITHIN THE STATE. RECEIPTS
   14  FROM ALL SALES OF RIGHTS FOR CLOSED-CIRCUIT AND CABLE TELEVISION  TRANS-
   15  MISSIONS  OF  AN EVENT ARE INCLUDED IN THE DENOMINATOR OF THE APPORTION-
   16  MENT FRACTION.
   17    4. DIGITAL PRODUCTS. (A) FOR PURPOSES OF DETERMINING THE APPORTIONMENT
   18  FRACTION UNDER THIS SECTION, THE TERM "DIGITAL PRODUCT" MEANS ANY  PROP-
   19  ERTY OR SERVICE, OR COMBINATION THEREOF, OF WHATEVER NATURE DELIVERED TO
   20  THE PURCHASER THROUGH THE USE OF WIRE, CABLE, FIBER-OPTIC, LASER, MICRO-
   21  WAVE,  RADIO WAVE, SATELLITE OR SIMILAR SUCCESSOR MEDIA, OR ANY COMBINA-
   22  TION THEREOF. DIGITAL PRODUCT INCLUDES, BUT IS NOT LIMITED TO, AN  AUDIO
   23  WORK,  AUDIOVISUAL  WORK,  VISUAL  WORK,  BOOK OR LITERARY WORK, GRAPHIC
   24  WORK, GAME, INFORMATION OR ENTERTAINMENT  SERVICE,  STORAGE  OF  DIGITAL
   25  PRODUCTS  AND  COMPUTER  SOFTWARE  BY WHATEVER MEANS DELIVERED. THE TERM
   26  "DELIVERED TO" INCLUDES FURNISHED OR  PROVIDED  TO  OR  ACCESSED  BY.  A
   27  DIGITAL  PRODUCT  DOES NOT INCLUDE LEGAL, MEDICAL, ACCOUNTING, ARCHITEC-
   28  TURAL, RESEARCH, ANALYTICAL, ENGINEERING OR CONSULTING SERVICES PROVIDED
   29  BY THE TAXPAYER.
   30    (B) RECEIPTS FROM THE SALE OF, LICENCE TO USE, OR GRANTING  OF  REMOTE
   31  ACCESS TO DIGITAL PRODUCTS WITHIN THE STATE, DETERMINED ACCORDING TO THE
   32  HIERARCHY  OF  METHODS  SET  FORTH  IN SUBPARAGRAPHS ONE THROUGH FOUR OF
   33  PARAGRAPH (C) OF THIS SUBDIVISION, SHALL BE INCLUDED IN THE NUMERATOR OF
   34  THE APPORTIONMENT FRACTION. RECEIPTS FROM THE SALE OF, LICENSE  TO  USE,
   35  OR  GRANTING OF REMOTE ACCESS TO DIGITAL PRODUCTS WITHIN AND WITHOUT THE
   36  STATE SHALL BE INCLUDED IN THE DENOMINATOR OF  THE  APPORTIONMENT  FRAC-
   37  TION.  THE  TAXPAYER  MUST  EXERCISE  DUE  DILIGENCE  UNDER  EACH METHOD
   38  DESCRIBED IN PARAGRAPH (C) OF THIS SUBDIVISION BEFORE REJECTING  IT  AND
   39  PROCEEDING  TO  THE  NEXT  METHOD IN THE HIERARCHY. IF THE RECEIPT FOR A
   40  DIGITAL PRODUCT IS COMPRISED OF A COMBINATION OF PROPERTY AND  SERVICES,
   41  IT  CANNOT  BE  DIVIDED INTO SEPARATE COMPONENTS AND IS CONSIDERED TO BE
   42  ONE RECEIPT REGARDLESS OF WHETHER IT IS SEPARATELY  STATED  FOR  BILLING
   43  PURPOSES. THE ENTIRE RECEIPT MUST BE ALLOCATED BY THIS HIERARCHY.
   44    (C)  HIERARCHY  OF  SOURCING  METHODS. (1) DELIVERY DESTINATION OF THE
   45  DIGITAL PRODUCT. A DIGITAL PRODUCT IS DEEMED DELIVERED WITHIN THE  STATE
   46  IF THE LOCATION FROM WHICH THE PURCHASER OR ITS AUTHORIZED USER ACCESSES
   47  OR  USES  THE DIGITAL PRODUCT IS IN THE STATE. DESTINATION MAY BE DEMON-
   48  STRATED BY INTERNET PROTOCOL ADDRESS OR OTHER SIMILAR OR SUCCESSOR INDI-
   49  CATOR, THE GEOGRAPHIC LOCATION OF THE EQUIPMENT  TO  WHICH  THE  DIGITAL
   50  PRODUCT  IS  DELIVERED OR FROM WHICH THE DIGITAL PRODUCT IS ACCESSED, OR
   51  THE DELIVERY DESTINATION INDICATED ON  A  BILL  OF  LADING  OR  PURCHASE
   52  INVOICE.  A  DIGITAL  PRODUCT  ACCESSED  OR USED BY THE PURCHASER OR ITS
   53  AUTHORIZED USER DURING THE TAXPAYER'S TAXABLE YEAR IN MULTIPLE LOCATIONS
   54  IS DELIVERED WITHIN THE STATE TO THE EXTENT THAT THE DIGITAL PRODUCT  IS
   55  ACCESSED OR USED IN THE STATE;
   56    (2) BILLING ADDRESS OF THE PURCHASER;
       S. 6359                            55                            A. 8559
    1    (3)  ZIP  CODE  OR  OTHER  GEOGRAPHIC  INDICATOR  OF  THE  PURCHASER'S
    2  LOCATION; OR
    3    (4) THE APPORTIONMENT FRACTION DETERMINED PURSUANT TO THIS SUBDIVISION
    4  FOR  THE  PRECEDING TAXABLE YEAR, OR, IF THE TAXPAYER WAS NOT SUBJECT TO
    5  TAX IN THE PRECEDING TAXABLE YEAR, THEN THE  APPORTIONMENT  FRACTION  IN
    6  THE  CURRENT TAXABLE YEAR FOR THOSE DIGITAL PRODUCTS THAT CAN BE SOURCED
    7  USING THE HIERARCHY OF SOURCING METHODS  IN  SUBPARAGRAPHS  ONE  THROUGH
    8  THREE OF THIS SUBDIVISION.
    9    5.  FINANCIAL  TRANSACTIONS.  (A)  FINANCIAL  INSTRUMENTS. A FINANCIAL
   10  INSTRUMENT IS A "QUALIFIED FINANCIAL INSTRUMENT"  IF  IT  IS  MARKED  TO
   11  MARKET  UNDER  SECTION 475 OR SECTION 1256 OF THE INTERNAL REVENUE CODE,
   12  PROVIDED THAT LOANS SECURED BY REAL  PROPERTY  SHALL  NOT  BE  QUALIFIED
   13  FINANCIAL  INSTRUMENTS. A FINANCIAL INSTRUMENT IS A "NONQUALIFIED FINAN-
   14  CIAL INSTRUMENT" IF IT IS NOT A QUALIFIED FINANCIAL INSTRUMENT.
   15    (1) FIXED PERCENTAGE METHOD FOR QUALIFIED  FINANCIAL  INSTRUMENTS.  IN
   16  DETERMINING  THE  INCLUSION  OF  RECEIPTS  AND  NET GAINS FROM QUALIFIED
   17  FINANCIAL INSTRUMENTS IN THE APPORTIONMENT FRACTION, TAXPAYERS MAY ELECT
   18  TO USE THE FIXED PERCENTAGE METHOD DESCRIBED IN  THIS  SUBPARAGRAPH  FOR
   19  QUALIFIED FINANCIAL INSTRUMENTS. THE ELECTION IS IRREVOCABLE, APPLIES TO
   20  ALL QUALIFIED FINANCIAL INSTRUMENTS, AND MUST BE MADE ON AN ANNUAL BASIS
   21  ON  THE TAXPAYER'S ORIGINAL, TIMELY FILED RETURN. IF THE TAXPAYER ELECTS
   22  THE FIXED PERCENTAGE METHOD, THEN ALL INCOME, GAIN OR LOSS, FROM  QUALI-
   23  FIED FINANCIAL INSTRUMENTS CONSTITUTES BUSINESS INCOME, GAIN OR LOSS. IF
   24  THE  TAXPAYER  DOES  NOT  ELECT TO USE THE FIXED PERCENTAGE METHOD, THEN
   25  RECEIPTS AND NET GAINS ARE INCLUDED IN  THE  APPORTIONMENT  FRACTION  IN
   26  ACCORDANCE  WITH  THE CUSTOMER SOURCING METHOD DESCRIBED IN SUBPARAGRAPH
   27  TWO OF THIS PARAGRAPH. UNDER THE FIXED PERCENTAGE METHOD, EIGHT  PERCENT
   28  OF  ALL NET INCOME (NOT LESS THAN ZERO) FROM QUALIFIED FINANCIAL INSTRU-
   29  MENTS IS INCLUDED IN THE NUMERATOR OF THE  APPORTIONMENT  FRACTION.  ALL
   30  NET  INCOME (NOT LESS THAN ZERO) FROM QUALIFIED FINANCIAL INSTRUMENTS IS
   31  INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
   32    (2) CUSTOMER SOURCING METHOD. RECEIPTS AND NET  GAINS  FROM  QUALIFIED
   33  FINANCIAL  INSTRUMENTS, IN CASES WHERE THE TAXPAYER DID NOT ELECT TO USE
   34  THE FIXED PERCENTAGE METHOD DESCRIBED IN SUBPARAGRAPH ONE OF THIS  PARA-
   35  GRAPH,  AND  FROM NONQUALIFIED FINANCIAL INSTRUMENTS ARE INCLUDED IN THE
   36  APPORTIONMENT  FRACTION  IN  ACCORDANCE  WITH  THIS  SUBPARAGRAPH.   FOR
   37  PURPOSES OF THIS PARAGRAPH, AN INDIVIDUAL IS DEEMED TO BE LOCATED IN THE
   38  STATE  IF  HIS OR HER BILLING ADDRESS IS IN THE STATE. A BUSINESS ENTITY
   39  IS DEEMED TO BE LOCATED IN THE  STATE  IF  ITS  COMMERCIAL  DOMICILE  IS
   40  LOCATED IN THE STATE.
   41    (A)  LOANS.  (I)  RECEIPTS CONSTITUTING INTEREST FROM LOANS SECURED BY
   42  REAL PROPERTY LOCATED WITHIN THE STATE SHALL BE INCLUDED IN THE  NUMERA-
   43  TOR  OF  THE APPORTIONMENT FRACTION. RECEIPTS CONSTITUTING INTEREST FROM
   44  LOANS SECURED BY REAL PROPERTY LOCATED  WITHIN  AND  WITHOUT  THE  STATE
   45  SHALL BE INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
   46    (II)  RECEIPTS  CONSTITUTING  INTEREST  FROM LOANS NOT SECURED BY REAL
   47  PROPERTY SHALL BE INCLUDED IN THE NUMERATOR OF THE  APPORTIONMENT  FRAC-
   48  TION  IF  THE  BORROWER  IS  LOCATED IN THE STATE. RECEIPTS CONSTITUTING
   49  INTEREST FROM LOANS NOT SECURED BY REAL PROPERTY, WHETHER  THE  BORROWER
   50  IS LOCATED WITHIN OR WITHOUT THE STATE, SHALL BE INCLUDED IN THE DENOMI-
   51  NATOR OF THE APPORTIONMENT FRACTION.
   52    (III)  NET  GAINS  (NOT LESS THAN ZERO) FROM SALES OF LOANS SECURED BY
   53  REAL PROPERTY ARE INCLUDED IN THE NUMERATOR OF THE  APPORTIONMENT  FRAC-
   54  TION  AS  PROVIDED  IN  THIS SUBCLAUSE. THE AMOUNT OF NET GAINS FROM THE
   55  SALE OF LOANS SECURED BY REAL PROPERTY INCLUDED IN THE NUMERATOR OF  THE
   56  APPORTIONMENT  FRACTION  IS DETERMINED BY MULTIPLYING THE NET GAINS BY A
       S. 6359                            56                            A. 8559
    1  FRACTION THE NUMERATOR OF WHICH IS THE AMOUNT  OF  GROSS  PROCEEDS  FROM
    2  SALES OF LOANS SECURED BY REAL PROPERTY LOCATED WITHIN THE STATE AND THE
    3  DENOMINATOR  OF  WHICH IS THE GROSS PROCEEDS FROM SALES OF LOANS SECURED
    4  BY  REAL  PROPERTY WITHIN AND WITHOUT THE STATE. GROSS PROCEEDS SHALL BE
    5  DETERMINED AFTER THE DEDUCTION OF ANY COST INCURRED TO ACQUIRE THE LOANS
    6  BUT SHALL NOT BE LESS THAN ZERO. NET GAINS (NOT  LESS  THAN  ZERO)  FROM
    7  SALES OF LOANS SECURED BY REAL PROPERTY WITHIN AND WITHOUT THE STATE ARE
    8  INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
    9    (IV) NET GAINS (NOT LESS THAN ZERO) FROM SALES OF LOANS NOT SECURED BY
   10  REAL  PROPERTY  ARE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRAC-
   11  TION AS PROVIDED IN THIS SUBCLAUSE. THE AMOUNT OF  NET  GAINS  FROM  THE
   12  SALE  OF LOANS NOT SECURED BY REAL PROPERTY INCLUDED IN THE NUMERATOR OF
   13  THE APPORTIONMENT FRACTION IS DETERMINED BY MULTIPLYING THE NET GAINS BY
   14  A FRACTION, THE NUMERATOR OF WHICH IS THE AMOUNT OF GROSS PROCEEDS  FROM
   15  SALES OF LOANS NOT SECURED BY REAL PROPERTY TO PURCHASERS LOCATED WITHIN
   16  THE  STATE  AND THE DENOMINATOR OF WHICH IS THE AMOUNT OF GROSS RECEIPTS
   17  FROM SALES OF LOANS NOT SECURED BY REAL PROPERTY TO  PURCHASERS  LOCATED
   18  WITHIN  AND  WITHOUT THE STATE. GROSS PROCEEDS SHALL BE DETERMINED AFTER
   19  THE DEDUCTION OF ANY COST INCURRED TO ACQUIRE THE LOANS BUT SHALL NOT BE
   20  LESS THAN ZERO.  NET GAINS (NOT LESS THAN ZERO) FROM SALES OF LOANS  NOT
   21  SECURED  BY  REAL PROPERTY ARE INCLUDED IN THE DENOMINATOR OF THE APPOR-
   22  TIONMENT FRACTION.
   23    (B) FEDERAL, STATE, AND MUNICIPAL DEBT. RECEIPTS CONSTITUTING INTEREST
   24  AND NET GAINS FROM SALES  OF  DEBT  INSTRUMENTS  ISSUED  BY  THE  UNITED
   25  STATES,  ANY  STATE,  OR  POLITICAL  SUBDIVISION OF A STATE SHALL NOT BE
   26  INCLUDED IN  THE  NUMERATOR  OF  THE  APPORTIONMENT  FRACTION.  RECEIPTS
   27  CONSTITUTING  INTEREST  AND NET GAINS (NOT LESS THAN ZERO) FROM SALES OF
   28  DEBT INSTRUMENTS ISSUED BY THE UNITED STATES AND THE STATE OF  NEW  YORK
   29  OR  ITS  POLITICAL  SUBDIVISIONS SHALL BE INCLUDED IN THE DENOMINATOR OF
   30  THE APPORTIONMENT FRACTION. FIFTY PERCENT OF THE  RECEIPTS  CONSTITUTING
   31  INTEREST  AND  NET GAINS (NOT LESS THAN ZERO) FROM SALES OF DEBT INSTRU-
   32  MENTS ISSUED BY OTHER STATES OR THEIR POLITICAL  SUBDIVISIONS  SHALL  BE
   33  INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
   34    (C) ASSET BACKED SECURITIES. EIGHT PERCENT OF THE INTEREST INCOME FROM
   35  ASSET  BACKED  SECURITIES, INCLUDING SECURITIES ISSUED BY THE GOVERNMENT
   36  NATIONAL MORTGAGE ASSOCIATION  (GNMA),  THE  FEDERAL  NATIONAL  MORTGAGE
   37  ASSOCIATION  (FNMA),  OR  THE  FEDERAL  HOME  LOAN  MORTGAGE CORPORATION
   38  (FHLMC), THE SMALL BUSINESS ADMINISTRATION OR  OTHER  GOVERNMENT  AGENCY
   39  SHALL  BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION. EIGHT
   40  PERCENT OF THE NET GAINS (NOT LESS THAN ZERO) FROM SALES OF ASSET BACKED
   41  SECURITIES ISSUED BY GNMA, FNMA, OR FHLMC, THE SMALL  BUSINESS  ADMINIS-
   42  TRATION OR OTHER GOVERNMENT AGENCY AND SALES OF OTHER ASSET BACKED SECU-
   43  RITIES THAT ARE SOLD THROUGH A REGISTERED SECURITIES BROKER OR DEALER OR
   44  THROUGH  A  LICENSED  EXCHANGE SHALL BE INCLUDED IN THE NUMERATOR OF THE
   45  APPORTIONMENT FRACTION. THE AMOUNT OF NET GAINS  (NOT  LESS  THAN  ZERO)
   46  FROM SALES OF OTHER ASSET BACKED SECURITIES INCLUDED IN THE NUMERATOR OF
   47  THE  APPORTIONMENT  FRACTION IS DETERMINED BY MULTIPLYING SUCH NET GAINS
   48  BY A FRACTION, THE NUMERATOR OF WHICH IS THE AMOUNT  OF  GROSS  PROCEEDS
   49  FROM  SUCH  SALES TO PURCHASERS LOCATED IN THE STATE AND THE DENOMINATOR
   50  OF WHICH IS THE AMOUNT OF GROSS PROCEEDS FROM SUCH SALES  TO  PURCHASERS
   51  LOCATED  WITHIN  AND  WITHOUT  THE STATE. RECEIPTS CONSTITUTING INTEREST
   52  FROM ASSET BACKED SECURITIES AND NET GAINS (NOT  LESS  THAN  ZERO)  FROM
   53  SALES  OF ASSET BACKED SECURITIES ARE INCLUDED IN THE DENOMINATOR OF THE
   54  APPORTIONMENT FRACTION. GROSS PROCEEDS SHALL  BE  DETERMINED  AFTER  THE
   55  DEDUCTION  OF  ANY  COST TO ACQUIRE THE SECURITIES BUT SHALL NOT BE LESS
   56  THAN ZERO.
       S. 6359                            57                            A. 8559
    1    (D) CORPORATE BONDS. RECEIPTS  CONSTITUTING  INTEREST  FROM  CORPORATE
    2  BONDS ARE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION IF THE
    3  COMMERCIAL  DOMICILE  OF THE ISSUING CORPORATION IS IN THE STATE.  EIGHT
    4  PERCENT OF THE NET GAINS (NOT LESS THAN ZERO) FROM  SALES  OF  CORPORATE
    5  BONDS SOLD THROUGH A REGISTERED SECURITIES BROKER OR DEALER OR THROUGH A
    6  LICENSED  EXCHANGE  IS  INCLUDED  IN  THE NUMERATOR OF THE APPORTIONMENT
    7  FRACTION. THE AMOUNT OF NET GAINS (NOT LESS THAN ZERO) FROM OTHER  SALES
    8  OF  CORPORATE BONDS INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRAC-
    9  TION IS DETERMINED BY MULTIPLYING SUCH NET  GAINS  BY  A  FRACTION,  THE
   10  NUMERATOR  OF  WHICH  IS THE AMOUNT OF GROSS PROCEEDS FROM SUCH SALES TO
   11  PURCHASERS LOCATED IN THE STATE AND THE  DENOMINATOR  OF  WHICH  IS  THE
   12  AMOUNT  OF  GROSS  PROCEEDS  FROM SALES TO PURCHASERS LOCATED WITHIN AND
   13  WITHOUT THE STATE. RECEIPTS CONSTITUTING INTEREST FROM CORPORATE  BONDS,
   14  WHETHER THE ISSUING CORPORATION'S COMMERCIAL DOMICILE IS WITHIN OR WITH-
   15  OUT  THE  STATE, AND NET GAINS (NOT LESS THAN ZERO) FROM SALES OF CORPO-
   16  RATE BONDS TO PURCHASERS WITHIN AND WITHOUT THE STATE  ARE  INCLUDED  IN
   17  THE  DENOMINATOR  OF THE APPORTIONMENT FRACTION. GROSS PROCEEDS SHALL BE
   18  DETERMINED AFTER THE DEDUCTION OF ANY COST  TO  ACQUIRE  THE  BONDS  BUT
   19  SHALL NOT BE LESS THAN ZERO.
   20    (E) REVERSE REPURCHASE AGREEMENTS AND SECURITIES BORROWING AGREEMENTS.
   21  EIGHT  PERCENT  OF NET INTEREST INCOME (NOT LESS THAN ZERO) FROM REVERSE
   22  REPURCHASE AGREEMENTS  AND  SECURITIES  BORROWING  AGREEMENTS  SHALL  BE
   23  INCLUDED  IN  THE  NUMERATOR OF THE APPORTIONMENT FRACTION. NET INTEREST
   24  INCOME (NOT LESS THAN ZERO) FROM REVERSE REPURCHASE AGREEMENTS AND SECU-
   25  RITIES BORROWING AGREEMENTS IS INCLUDED IN THE DENOMINATOR OF THE APPOR-
   26  TIONMENT FRACTION. NET INTEREST INCOME FROM  REVERSE  REPURCHASE  AGREE-
   27  MENTS  AND SECURITIES BORROWING AGREEMENTS IS DETERMINED FOR PURPOSES OF
   28  THIS SUBDIVISION AFTER THE DEDUCTION OF THE INTEREST  EXPENSE  FROM  THE
   29  TAXPAYER'S  REPURCHASE  AGREEMENTS AND SECURITIES LENDING AGREEMENTS BUT
   30  CANNOT BE LESS THAN ZERO. FOR  THIS  CALCULATION,  THE  AMOUNT  OF  SUCH
   31  INTEREST  EXPENSE IS THE INTEREST EXPENSE ASSOCIATED WITH THE SUM OF THE
   32  VALUE  OF  THE  TAXPAYER'S  REPURCHASE  AGREEMENTS  WHERE  IT   IS   THE
   33  SELLER/BORROWER  PLUS THE VALUE OF THE TAXPAYER'S AND SECURITIES LENDING
   34  AGREEMENTS WHERE IT IS THE  SECURITIES  LENDER,  PROVIDED  SUCH  SUM  IS
   35  LIMITED  TO  THE  SUM  OF THE VALUE OF THE TAXPAYER'S REVERSE REPURCHASE
   36  AGREEMENTS WHERE IT IS THE SELLER/BORROWER AND THE VALUE OF THE  TAXPAY-
   37  ER'S SECURITIES BORROWING AGREEMENTS.
   38    (F)  FEDERAL  FUNDS.  EIGHT PERCENT OF THE NET INTEREST (NOT LESS THAN
   39  ZERO) FROM FEDERAL FUNDS IS INCLUDED IN THE NUMERATOR OF THE  APPORTION-
   40  MENT  FRACTION. THE NET INTEREST (NOT LESS THAN ZERO) FROM FEDERAL FUNDS
   41  IS INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION. NET INTER-
   42  EST FROM FEDERAL FUNDS IS DETERMINED AFTER DEDUCTION OF INTEREST EXPENSE
   43  FROM FEDERAL FUNDS.
   44    (G) DIVIDENDS AND NET GAINS FROM SALES OF STOCK OR PARTNERSHIP  INTER-
   45  ESTS. DIVIDENDS FROM STOCK, NET GAINS (NOT LESS THAN ZERO) FROM SALES OF
   46  STOCK  AND  NET  GAINS (NOT LESS THAN ZERO) FROM THE SALE OF PARTNERSHIP
   47  INTERESTS ARE NOT INCLUDED IN EITHER THE NUMERATOR OR DENOMINATOR OF THE
   48  APPORTIONMENT FRACTION UNLESS THE COMMISSIONER  DETERMINES  PURSUANT  TO
   49  SUBDIVISION  ELEVEN OF THIS SECTION THAT INCLUSION OF SUCH DIVIDENDS AND
   50  NET GAINS (NOT LESS THAN ZERO) IS  NECESSARY  TO  PROPERLY  REFLECT  THE
   51  BUSINESS INCOME OR CAPITAL OF THE TAXPAYER.
   52    (H)  OTHER  FINANCIAL  INSTRUMENTS. (I) RECEIPTS CONSTITUTING INTEREST
   53  FROM OTHER FINANCIAL INSTRUMENTS SHALL BE INCLUDED IN THE  NUMERATOR  OF
   54  THE  APPORTIONMENT  FRACTION  IF  THE  PAYOR  IS  LOCATED  IN THE STATE.
   55  RECEIPTS CONSTITUTING INTEREST FROM OTHER FINANCIAL INSTRUMENTS, WHETHER
       S. 6359                            58                            A. 8559
    1  THE PAYOR IS WITHIN OR WITHOUT THE STATE, ARE INCLUDED IN THE  DENOMINA-
    2  TOR OF THE APPORTIONMENT FRACTION.
    3    (II)  NET  GAINS  (NOT  LESS  THAN ZERO) FROM SALES OF OTHER FINANCIAL
    4  INSTRUMENTS AND OTHER INCOME (NOT LESS THAN ZERO) FROM  OTHER  FINANCIAL
    5  INSTRUMENTS  WHERE  THE  PURCHASER  OR PAYOR IS LOCATED IN THE STATE ARE
    6  INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION, PROVIDED  THAT,
    7  IF THE PURCHASER OR PAYOR IS A REGISTERED SECURITIES BROKER OR DEALER OR
    8  THE  TRANSACTION IS MADE THROUGH A LICENSED EXCHANGE, THEN EIGHT PERCENT
    9  OF THE NET GAINS (NOT LESS THAN ZERO) OR OTHER  INCOME  (NOT  LESS  THAN
   10  ZERO)  IS  INCLUDED  IN THE NUMERATOR OF THE APPORTIONMENT FRACTION. NET
   11  GAINS (NOT LESS THAN ZERO) FROM SALES OF OTHER FINANCIAL INSTRUMENTS AND
   12  OTHER INCOME (NOT LESS THAN ZERO) FROM OTHER FINANCIAL  INSTRUMENTS  ARE
   13  INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
   14    (I)  PHYSICAL  COMMODITIES. NET INCOME (NOT LESS THAN ZERO) FROM SALES
   15  OF PHYSICAL COMMODITIES ARE INCLUDED IN THE NUMERATOR OF THE  APPORTION-
   16  MENT FRACTION AS PROVIDED IN THIS SUBPARAGRAPH. THE AMOUNT OF NET INCOME
   17  FROM  SALES  OF  PHYSICAL  COMMODITIES  INCLUDED IN THE NUMERATOR OF THE
   18  APPORTIONMENT FRACTION IS DETERMINED BY MULTIPLYING THE NET INCOME  FROM
   19  SALES  OF  PHYSICAL COMMODITIES BY A FRACTION, THE NUMERATOR OF WHICH IS
   20  THE AMOUNT OF RECEIPTS  FROM  SALES  OF  PHYSICAL  COMMODITIES  ACTUALLY
   21  DELIVERED  TO POINTS WITHIN THE STATE OR, IF THERE IS NO ACTUAL DELIVERY
   22  OF THE PHYSICAL COMMODITY, SOLD TO CUSTOMERS LOCATED IN THE  STATE,  AND
   23  THE  DENOMINATOR  OF WHICH IS THE AMOUNT OF RECEIPTS FROM SALES OF PHYS-
   24  ICAL COMMODITIES ACTUALLY DELIVERED TO POINTS  WITHIN  AND  WITHOUT  THE
   25  STATE  OR  SOLD  TO  CUSTOMERS LOCATED WITHIN AND WITHOUT THE STATE. NET
   26  INCOME (NOT LESS THAT  ZERO)  FROM  SALES  OF  PHYSICAL  COMMODITIES  IS
   27  INCLUDED  IN  THE  DENOMINATOR OF THE APPORTIONMENT FRACTION. NET INCOME
   28  (NOT LESS THAN ZERO) FROM SALES OF PHYSICAL  COMMODITIES  IS  DETERMINED
   29  AFTER  THE  DEDUCTION  OF  THE  COST  TO ACQUIRE OR PRODUCE THE PHYSICAL
   30  COMMODITIES.
   31    (B) OTHER RECEIPTS FROM BROKER OR  DEALER  ACTIVITIES.  RECEIPTS  FROM
   32  SECURITIES  OR COMMODITIES BROKER OR DEALER ACTIVITIES DESCRIBED IN THIS
   33  PARAGRAPH SHALL BE DEEMED TO BE GENERATED WITHIN THE STATE AS  DESCRIBED
   34  IN SUBPARAGRAPHS ONE THROUGH EIGHT OF THIS PARAGRAPH. RECEIPTS FROM SUCH
   35  ACTIVITIES GENERATED WITHIN THE STATE SHALL BE INCLUDED IN THE NUMERATOR
   36  OF  THE  APPORTIONMENT FRACTION. RECEIPTS FROM SUCH ACTIVITIES GENERATED
   37  WITHIN AND WITHOUT THE STATE SHALL BE INCLUDED IN THE DENOMINATOR OF THE
   38  APPORTIONMENT FRACTION. FOR THE PURPOSES OF  THIS  PARAGRAPH,  THE  TERM
   39  "SECURITIES"  SHALL HAVE THE SAME MEANING AS IN SECTION 475(C)(2) OF THE
   40  INTERNAL REVENUE CODE AND THE TERM "COMMODITIES"  SHALL  HAVE  THE  SAME
   41  MEANING AS IN SECTION 475(E)(2) OF THE INTERNAL REVENUE CODE.
   42    (1)  RECEIPTS  CONSTITUTING  BROKERAGE  COMMISSIONS  DERIVED  FROM THE
   43  EXECUTION OF SECURITIES OR COMMODITIES PURCHASE OR SALES ORDERS FOR  THE
   44  ACCOUNTS  OF  CUSTOMERS SHALL BE DEEMED TO BE GENERATED WITHIN THE STATE
   45  IF THE MAILING ADDRESS IN THE RECORDS OF THE TAXPAYER  OF  THE  CUSTOMER
   46  WHO IS RESPONSIBLE FOR PAYING SUCH COMMISSIONS IS WITHIN THE STATE.
   47    (2)  RECEIPTS CONSTITUTING MARGIN INTEREST EARNED ON BEHALF OF BROKER-
   48  AGE ACCOUNTS SHALL BE DEEMED TO BE GENERATED WITHIN  THE  STATE  IF  THE
   49  MAILING  ADDRESS  IN  THE RECORDS OF THE TAXPAYER OF THE CUSTOMER WHO IS
   50  RESPONSIBLE FOR PAYING SUCH MARGIN INTEREST IS WITHIN THE STATE.
   51    (3)(A) RECEIPTS CONSTITUTING FEES EARNED BY THE TAXPAYER FOR  ADVISORY
   52  SERVICES TO A CUSTOMER IN CONNECTION WITH THE UNDERWRITING OF SECURITIES
   53  FOR  SUCH CUSTOMER (SUCH CUSTOMER BEING THE ENTITY THAT IS CONTEMPLATING
   54  ISSUING OR IS ISSUING SECURITIES) OR FEES EARNED  BY  THE  TAXPAYER  FOR
   55  MANAGING  AN  UNDERWRITING  SHALL  BE  DEEMED TO BE GENERATED WITHIN THE
       S. 6359                            59                            A. 8559
    1  STATE IF THE MAILING ADDRESS IN THE RECORDS  OF  THE  TAXPAYER  OF  SUCH
    2  CUSTOMER WHO IS RESPONSIBLE FOR PAYING SUCH FEES IS WITHIN THE STATE.
    3    (B)  RECEIPTS  CONSTITUTING  THE  PRIMARY SPREAD OF SELLING CONCESSION
    4  FROM UNDERWRITTEN SECURITIES SHALL BE DEEMED TO BE GENERATED WITHIN  THE
    5  STATE TO THE EXTENT THE CUSTOMER IS LOCATED IN THE STATE.
    6    (C)  THE  TERM "PRIMARY SPREAD" MEANS THE DIFFERENCE BETWEEN THE PRICE
    7  PAID BY THE TAXPAYER TO THE ISSUER OF THE SECURITIES BEING MARKETED  AND
    8  THE  PRICE RECEIVED FROM THE SUBSEQUENT SALE OF THE UNDERWRITTEN SECURI-
    9  TIES AT THE INITIAL PUBLIC OFFERING PRICE, LESS ANY  SELLING  CONCESSION
   10  AND ANY FEES PAID TO THE TAXPAYER FOR ADVISORY SERVICES OR ANY MANAGER'S
   11  FEES,  IF  SUCH  FEES ARE NOT PAID BY THE CUSTOMER TO THE TAXPAYER SEPA-
   12  RATELY. THE TERM "PUBLIC OFFERING PRICE" MEANS THE PRICE AGREED UPON  BY
   13  THE TAXPAYER AND THE ISSUER AT WHICH THE SECURITIES ARE TO BE OFFERED TO
   14  THE  PUBLIC.  THE TERM "SELLING CONCESSION" MEANS THE AMOUNT PAID TO THE
   15  TAXPAYER FOR PARTICIPATING IN THE UNDERWRITING OF A SECURITY  WHERE  THE
   16  TAXPAYER IS NOT THE LEAD UNDERWRITER.
   17    (4)  RECEIPTS CONSTITUTING ACCOUNT MAINTENANCE FEES SHALL BE DEEMED TO
   18  BE GENERATED WITHIN THE STATE IF THE MAILING ADDRESS IN  THE  RECORD  OF
   19  THE  TAXPAYER OF THE CUSTOMER WHO IS RESPONSIBLE FOR PAYING SUCH ACCOUNT
   20  MAINTENANCE FEES IS WITHIN THE STATE.
   21    (5) RECEIPTS CONSTITUTING FEES FOR MANAGEMENT  OR  ADVISORY  SERVICES,
   22  INCLUDING  FEES  FOR ADVISORY SERVICES IN RELATION TO MERGER OR ACQUISI-
   23  TION ACTIVITIES, BUT EXCLUDING FEES PAID FOR SERVICES DESCRIBED IN PARA-
   24  GRAPH (D) OF THIS SUBDIVISION, SHALL BE DEEMED TO  BE  GENERATED  WITHIN
   25  THE  STATE  IF THE MAILING ADDRESS IN THE RECORDS OF THE TAXPAYER OF THE
   26  CUSTOMER WHO IS RESPONSIBLE FOR PAYING SUCH FEES IS WITHIN THE STATE.
   27    (6) RECEIPTS CONSTITUTING INTEREST EARNED BY THE TAXPAYER ON LOANS AND
   28  ADVANCES MADE BY THE TAXPAYER  TO  A  CORPORATION  AFFILIATED  WITH  THE
   29  TAXPAYER  BUT  WITH  WHICH  THE TAXPAYER IS NOT PERMITTED OR REQUIRED TO
   30  FILE A COMBINED REPORT PURSUANT TO SECTION TWO  HUNDRED  TEN-C  OF  THIS
   31  ARTICLE  SHALL BE DEEMED TO ARISE FROM SERVICES PERFORMED AT THE PRINCI-
   32  PAL PLACE OF BUSINESS OF SUCH AFFILIATED CORPORATION.
   33    (7) IF THE TAXPAYER RECEIVES ANY OF THE RECEIPTS ENUMERATED IN SUBPAR-
   34  AGRAPHS ONE THROUGH FOUR OF THIS PARAGRAPH AS A RESULT OF  A  SECURITIES
   35  CORRESPONDENT  RELATIONSHIP  SUCH  TAXPAYER  HAS  WITH ANOTHER BROKER OR
   36  DEALER WITH THE TAXPAYER ACTING IN THIS  RELATIONSHIP  AS  THE  CLEARING
   37  FIRM,  SUCH RECEIPTS SHALL BE DEEMED TO BE GENERATED WITHIN THE STATE TO
   38  EXTENT SET FORTH IN EACH OF  SUCH  SUBPARAGRAPHS.  THE  AMOUNT  OF  SUCH
   39  RECEIPTS SHALL EXCLUDE THE AMOUNT THE TAXPAYER IS REQUIRED TO PAY TO THE
   40  CORRESPONDENT  FIRM FOR SUCH CORRESPONDENT RELATIONSHIP. IF THE TAXPAYER
   41  RECEIVES ANY OF THE RECEIPTS ENUMERATED  IN  SUBPARAGRAPHS  ONE  THROUGH
   42  FOUR  OF  THIS  PARAGRAPH  AS  AS  RESULT  OF A SECURITIES CORRESPONDENT
   43  RELATIONSHIP SUCH TAXPAYER HAS WITH ANOTHER BROKER OR  DEALER  WITH  THE
   44  TAXPAYER  ACTING  IN  THIS  RELATIONSHIP  AS  THE INTRODUCING FIRM, SUCH
   45  RECEIPTS SHALL BE DEEMED TO BE GENERATED WITHIN THE STATE TO THE  EXTENT
   46  SET FORTH IN EACH OF SUCH SUBPARAGRAPHS.
   47    (8) IF, FOR PURPOSES OF SUBPARAGRAPHS ONE, TWO, CLAUSE (A) OF SUBPARA-
   48  GRAPH THREE, FOUR, OR FIVE OF THIS PARAGRAPH THE TAXPAYER IS UNABLE FROM
   49  ITS  RECORDS  TO  DETERMINE  THE  MAILING ADDRESS OF THE CUSTOMER, EIGHT
   50  PERCENT OF THE RECEIPTS IS INCLUDED IN THE NUMERATOR OF  THE  APPORTION-
   51  MENT FRACTION.
   52    (C)  RECEIPTS FROM CREDIT CARD AND SIMILAR ACTIVITIES. RECEIPTS RELAT-
   53  ING TO THE  BANK,  CREDIT,  TRAVEL  AND  ENTERTAINMENT  CARD  ACTIVITIES
   54  DESCRIBED  IN  THIS PARAGRAPH SHALL BE DEEMED TO BE GENERATED WITHIN THE
   55  STATE AS DESCRIBED IN SUBPARAGRAPHS ONE THROUGH THREE OF THIS PARAGRAPH.
   56  RECEIPTS FROM SUCH  ACTIVITIES  GENERATED  WITHIN  THE  STATE  SHALL  BE
       S. 6359                            60                            A. 8559
    1  INCLUDED  IN THE NUMERATOR OF THE APPORTIONMENT FRACTION.  RECEIPTS FROM
    2  SUCH ACTIVITIES GENERATED WITHIN AND WITHOUT THE STATE SHALL BE INCLUDED
    3  IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
    4    (1)  RECEIPTS  CONSTITUTING  INTEREST,  AND  FEES AND PENALTIES IN THE
    5  NATURE OF INTEREST, FROM BANK, CREDIT,  TRAVEL  AND  ENTERTAINMENT  CARD
    6  RECEIVABLES  SHALL  BE  DEEMED  TO  BE GENERATED WITHIN THE STATE IF THE
    7  MAILING ADDRESS OF THE CARD HOLDER IN THE RECORDS OF THE TAXPAYER IS  IN
    8  THE STATE;
    9    (2)  RECEIPTS  FROM  SERVICE CHARGES AND FEES FROM SUCH CARDS SHALL BE
   10  DEEMED TO BE GENERATED WITHIN THE STATE IF THE MAILING  ADDRESS  OF  THE
   11  CARD HOLDER IN THE RECORDS OF THE TAXPAYER IS IN THE STATE; AND
   12    (3)  RECEIPTS  FROM MERCHANT DISCOUNTS SHALL BE DEEMED TO BE GENERATED
   13  WITHIN THE STATE IF THE MERCHANT IS LOCATED WITHIN  THE  STATE.  IN  THE
   14  CASE  OF  A  MERCHANT  WITH  LOCATIONS  BOTH WITHIN AND WITHOUT NEW YORK
   15  STATE, ONLY RECEIPTS FROM MERCHANT DISCOUNTS ATTRIBUTABLE TO SALES  MADE
   16  FROM LOCATIONS WITHIN NEW YORK STATE ARE ALLOCATED TO NEW YORK STATE. IT
   17  SHALL  BE  PRESUMED  THAT THE LOCATION OF THE MERCHANT IS THE ADDRESS OF
   18  THE MERCHANT SHOWN ON THE INVOICE  SUBMITTED  BY  THE  MERCHANT  TO  THE
   19  TAXPAYER.
   20    (D)  RECEIPTS FROM CERTAIN SERVICES TO INVESTMENT COMPANIES.  RECEIPTS
   21  RECEIVED FROM AN INVESTMENT COMPANY ARISING FROM THE SALE OF MANAGEMENT,
   22  ADMINISTRATION OR DISTRIBUTION SERVICES TO SUCH INVESTMENT  COMPANY  ARE
   23  INCLUDED  IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.  THE PORTION
   24  OF SUCH RECEIPTS INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION
   25  (SUCH PORTION REFERRED TO HEREIN AS  THE  NEW  YORK  PORTION)  SHALL  BE
   26  DETERMINED AS PROVIDED IN THIS PARAGRAPH.
   27    (1)  THE  NEW  YORK  PORTION SHALL BE THE PRODUCT OF THE TOTAL OF SUCH
   28  RECEIPTS FROM THE SALE OF SUCH SERVICES AND A FRACTION. THE NUMERATOR OF
   29  THAT FRACTION IS THE SUM OF THE MONTHLY PERCENTAGES (AS DEFINED  HEREIN-
   30  AFTER)  DETERMINED  FOR  EACH  MONTH OF THE INVESTMENT COMPANY'S TAXABLE
   31  YEAR FOR FEDERAL INCOME TAX PURPOSES WHICH TAXABLE YEAR ENDS WITHIN  THE
   32  TAXABLE  YEAR  OF THE TAXPAYER (BUT EXCLUDING ANY MONTH DURING WHICH THE
   33  INVESTMENT COMPANY HAD NO OUTSTANDING SHARES).  THE  MONTHLY  PERCENTAGE
   34  FOR  EACH  SUCH  MONTH IS DETERMINED BY DIVIDING THE NUMBER OF SHARES IN
   35  THE INVESTMENT COMPANY THAT ARE OWNED ON THE LAST DAY OF  THE  MONTH  BY
   36  SHAREHOLDERS  THAT  ARE  DOMICILED  IN  THE STATE BY THE TOTAL NUMBER OF
   37  SHARES IN THE INVESTMENT COMPANY OUTSTANDING ON THAT DATE.  THE  DENOMI-
   38  NATOR OF THE FRACTION IS THE NUMBER OF SUCH MONTHLY PERCENTAGES.
   39    (2)(A)  FOR PURPOSES OF THIS PARAGRAPH, AN INDIVIDUAL, ESTATE OR TRUST
   40  IS DEEMED TO BE LOCATED IN THE STATE IF HIS, HER OR ITS MAILING  ADDRESS
   41  ON  THE  RECORDS  OF  THE INVESTMENT COMPANY IS IN THE STATE. A BUSINESS
   42  ENTITY IS DEEMED TO BE LOCATED IN THE STATE IF ITS  COMMERCIAL  DOMICILE
   43  IS LOCATED IN THE STATE.
   44    (B)  FOR  PURPOSES  OF  THIS  PARAGRAPH, THE TERM "INVESTMENT COMPANY"
   45  MEANS A REGULATED INVESTMENT COMPANY, AS DEFINED IN SECTION 851  OF  THE
   46  INTERNAL REVENUE CODE, AND A PARTNERSHIP TO WHICH SECTION 7704(A) OF THE
   47  INTERNAL  REVENUE  CODE APPLIES (BY VIRTUE OF SECTION 7704(C)(3) OF SUCH
   48  CODE) AND THAT MEETS THE REQUIREMENTS OF SECTION 851(B)  OF  SUCH  CODE.
   49  THE  PRECEDING SENTENCE SHALL BE APPLIED TO THE TAXABLE YEAR FOR FEDERAL
   50  INCOME TAX PURPOSES OF THE BUSINESS ENTITY THAT IS ASSERTED  TO  CONSTI-
   51  TUTE  AN  INVESTMENT  COMPANY  THAT  ENDS WITHIN THE TAXABLE YEAR OF THE
   52  TAXPAYER.
   53    (C) FOR PURPOSES OF THIS PARAGRAPH THE TERM "RECEIPTS FROM AN  INVEST-
   54  MENT  COMPANY"  INCLUDES  AMOUNTS  RECEIVED  DIRECTLY FROM AN INVESTMENT
   55  COMPANY AS WELL AS  AMOUNTS  RECEIVED  FROM  THE  SHAREHOLDERS  IN  SUCH
   56  INVESTMENT COMPANY, IN THEIR CAPACITY AS SUCH.
       S. 6359                            61                            A. 8559
    1    (D)  FOR  PURPOSES  OF  THIS PARAGRAPH, THE TERM "MANAGEMENT SERVICES"
    2  MEANS THE RENDERING OF  INVESTMENT  ADVICE  TO  AN  INVESTMENT  COMPANY,
    3  MAKING  DETERMINATIONS  AS TO WHEN SALES AND PURCHASES OF SECURITIES ARE
    4  TO BE MADE ON BEHALF  OF  AN  INVESTMENT  COMPANY,  OR  THE  SELLING  OR
    5  PURCHASING  OF  SECURITIES CONSTITUTING ASSETS OF AN INVESTMENT COMPANY,
    6  AND RELATED ACTIVITIES, BUT ONLY WHERE SUCH ACTIVITY OR  ACTIVITIES  ARE
    7  PERFORMED  PURSUANT  TO  A  CONTRACT WITH THE INVESTMENT COMPANY ENTERED
    8  INTO PURSUANT TO SECTION 15(A) OF THE FEDERAL INVESTMENT COMPANY ACT  OF
    9  NINETEEN HUNDRED FORTY, AS AMENDED.
   10    (E)  FOR  PURPOSES OF THIS PARAGRAPH, THE TERM "DISTRIBUTION SERVICES"
   11  MEANS THE SERVICES OF ADVERTISING, SERVICING INVESTOR ACCOUNTS  (INCLUD-
   12  ING  REDEMPTIONS),  MARKETING  SHARES OR SELLING SHARES OF AN INVESTMENT
   13  COMPANY, BUT, IN THE CASE OF ADVERTISING,  SERVICING  INVESTOR  ACCOUNTS
   14  (INCLUDING  REDEMPTIONS) OR MARKETING SHARES, ONLY WHERE SUCH SERVICE IS
   15  PERFORMED BY A PERSON WHO IS (OR WAS, IN THE CASE OF A CLOSED END COMPA-
   16  NY) ALSO ENGAGED IN THE SERVICE OF SELLING SUCH SHARES. IN THE  CASE  OF
   17  AN  OPEN  END  COMPANY, SUCH SERVICE OF SELLING SHARES MUST BE PERFORMED
   18  PURSUANT TO A CONTRACT ENTERED INTO PURSUANT TO  SECTION  15(B)  OF  THE
   19  FEDERAL INVESTMENT COMPANY ACT OF NINETEEN HUNDRED FORTY, AS AMENDED.
   20    (F) FOR PURPOSES OF THIS PARAGRAPH, THE TERM "ADMINISTRATION SERVICES"
   21  INCLUDES  CLERICAL,  ACCOUNTING,  BOOKKEEPING, DATA PROCESSING, INTERNAL
   22  AUDITING, LEGAL AND TAX SERVICES PERFORMED FOR AN INVESTMENT COMPANY BUT
   23  ONLY IF THE PROVIDER OF SUCH SERVICE OR SERVICES DURING THE TAXABLE YEAR
   24  IN WHICH SUCH SERVICE OR SERVICES ARE  SOLD  ALSO  SELLS  MANAGEMENT  OR
   25  DISTRIBUTION SERVICES, AS DEFINED HEREINABOVE, TO SUCH INVESTMENT COMPA-
   26  NY.
   27    (E) FOR PURPOSES OF THIS SUBDIVISION, A TAXPAYER SHALL USE THE FOLLOW-
   28  ING HIERARCHY TO DETERMINE THE COMMERCIAL DOMICILE OF A BUSINESS ENTITY,
   29  BASED  ON THE INFORMATION KNOWN TO THE TAXPAYER: (I) THE LOCATION OF THE
   30  TREASURY FUNCTION OF THE BUSINESS ENTITY; (II) THE  SEAT  OF  MANAGEMENT
   31  AND CONTROL OF THE BUSINESS ENTITY; AND (III) THE BILLING ADDRESS OF THE
   32  BUSINESS  ENTITY  IN THE TAXPAYER'S RECORDS.  THE TAXPAYER MUST EXERCISE
   33  DUE DILIGENCE BEFORE REJECTING A METHOD IN THIS HIERARCHY AND PROCEEDING
   34  TO THE NEXT METHOD.
   35    (F) FOR PURPOSES OF THIS SUBDIVISION, THE TERM "REGISTERED  SECURITIES
   36  BROKER  OR  DEALER"  MEANS  A BROKER OR DEALER REGISTERED AS SUCH BY THE
   37  SECURITIES AND EXCHANGE COMMISSION OR THE  COMMODITIES  FUTURES  TRADING
   38  COMMISSION, AND SHALL INCLUDE AN OTC DERIVATIVES DEALER AS DEFINED UNDER
   39  REGULATIONS  OF THE SECURITIES AND EXCHANGE COMMISSION AT TITLE 17, PART
   40  240,  SECTION  3B-12  OF  THE  CODE  OF  FEDERAL  REGULATIONS  (17   CFR
   41  240.3B-12).
   42    6.  RECEIPTS  FROM  RAILROAD  AND TRUCKING BUSINESS. RECEIPTS FROM THE
   43  CONDUCT OF A RAILROAD BUSINESS (INCLUDING SURFACE RAILROAD,  WHETHER  OR
   44  NOT OPERATED BY STEAM, SUBWAY RAILROAD, ELEVATED RAILROAD, PALACE CAR OR
   45  SLEEPING CAR BUSINESS) OR A TRUCKING BUSINESS ARE INCLUDED IN THE NUMER-
   46  ATOR  OF  THE  APPORTIONMENT FRACTION AS FOLLOWS. THE AMOUNT OF RECEIPTS
   47  FROM THE CONDUCT OF A RAILROAD BUSINESS OR A TRUCKING BUSINESS  INCLUDED
   48  IN  THE  NUMERATOR OF THE APPORTIONMENT FRACTION IS DETERMINED BY MULTI-
   49  PLYING THE AMOUNT OF RECEIPTS FROM SUCH  BUSINESS  BY  A  FRACTION,  THE
   50  NUMERATOR OF WHICH IS THE MILES IN SUCH BUSINESS WITHIN THE STATE DURING
   51  THE PERIOD COVERED BY THE TAXPAYER'S REPORT AND THE DENOMINATOR OF WHICH
   52  IS  THE  MILES IN SUCH BUSINESS WITHIN AND WITHOUT THE STATE DURING SUCH
   53  PERIOD.  RECEIPTS FROM THE CONDUCT OF THE RAILROAD BUSINESS OR A  TRUCK-
   54  ING  BUSINESS ARE INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRAC-
   55  TION.
       S. 6359                            62                            A. 8559
    1    7. RECEIPTS  FROM  AVIATION  SERVICES.  (A)  AIR  FREIGHT  FORWARDING.
    2  RECEIPTS  OF  A  TAXPAYER  FROM  THE  ACTIVITY OF AIR FREIGHT FORWARDING
    3  ACTING AS PRINCIPAL AND LIKE INDIRECT AIR CARRIER RECEIPTS ARISING  FROM
    4  SUCH  ACTIVITY  SHALL  BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT
    5  FRACTION  AS  FOLLOWS:  ONE HUNDRED PERCENT OF SUCH RECEIPTS IF BOTH THE
    6  PICKUP AND DELIVERY ASSOCIATED WITH SUCH RECEIPTS ARE MADE IN THE  STATE
    7  AND  FIFTY  PERCENT  OF  SUCH  RECEIPTS IF EITHER THE PICKUP OR DELIVERY
    8  ASSOCIATED WITH SUCH RECEIPTS IS MADE IN THIS  STATE.    SUCH  RECEIPTS,
    9  WHETHER THE PICKUP OR DELIVERY ASSOCIATED WITH THE RECEIPTS IS WITHIN OR
   10  WITHOUT  THE  STATE,  SHALL BE INCLUDED IN THE DENOMINATOR OF THE APPOR-
   11  TIONMENT FRACTION.
   12    (B) OTHER AVIATION SERVICES. (1)(A)  THE  PORTION  OF  RECEIPTS  OF  A
   13  TAXPAYER  FROM AVIATION SERVICES (OTHER THAN SERVICES DESCRIBED IN PARA-
   14  GRAPH (A) OF THIS SUBDIVISION) TO BE INCLUDED IN THE  NUMERATOR  OF  THE
   15  APPORTIONMENT  FRACTION  SHALL BE DETERMINED BY MULTIPLYING ITS RECEIPTS
   16  FROM SUCH AVIATION SERVICES BY A PERCENTAGE WHICH IS EQUAL TO THE ARITH-
   17  METIC AVERAGE OF THE FOLLOWING THREE PERCENTAGES:
   18    (I) THE  PERCENTAGE  DETERMINED  BY  DIVIDING  SIXTY  PERCENT  OF  THE
   19  AIRCRAFT  ARRIVALS  AND  DEPARTURES  WITHIN  THIS  STATE BY THE TAXPAYER
   20  DURING THE PERIOD COVERED BY ITS REPORT BY THE TOTAL  AIRCRAFT  ARRIVALS
   21  AND  DEPARTURES  WITHIN  AND  WITHOUT  THIS  STATE  DURING  SUCH PERIOD;
   22  PROVIDED, HOWEVER, ARRIVALS AND DEPARTURES  SOLELY  FOR  MAINTENANCE  OR
   23  REPAIR,  REFUELING  (WHERE  NO  DEBARKATION  OR  EMBARKATION  OF TRAFFIC
   24  OCCURS), ARRIVALS AND DEPARTURES OF FERRY AND PERSONNEL TRAINING FLIGHTS
   25  OR ARRIVALS AND DEPARTURES IN THE EVENT OF  EMERGENCY  SITUATIONS  SHALL
   26  NOT  BE  INCLUDED  IN  COMPUTING  SUCH ARRIVAL AND DEPARTURE PERCENTAGE;
   27  PROVIDED, FURTHER, THE COMMISSIONER MAY ALSO EXEMPT FROM SUCH PERCENTAGE
   28  AIRCRAFT ARRIVALS AND DEPARTURES OF ALL  NON-REVENUE  FLIGHTS  INCLUDING
   29  FLIGHTS  INVOLVING THE TRANSPORTATION OF OFFICERS OR EMPLOYEES RECEIVING
   30  AIR TRANSPORTATION TO PERFORM MAINTENANCE OR REPAIR  SERVICES  OR  WHERE
   31  SUCH  OFFICERS OR EMPLOYEES ARE TRANSPORTED IN CONJUNCTION WITH AN EMER-
   32  GENCY SITUATION OR THE INVESTIGATION OF AN AIR DISASTER (OTHER THAN ON A
   33  SCHEDULED FLIGHT); PROVIDED, HOWEVER, THAT ARRIVALS  AND  DEPARTURES  OF
   34  FLIGHTS TRANSPORTING OFFICERS AND EMPLOYEES RECEIVING AIR TRANSPORTATION
   35  FOR PURPOSES OTHER THAN SPECIFIED ABOVE (WITHOUT REGARD TO REMUNERATION)
   36  SHALL BE INCLUDED IN COMPUTING SUCH ARRIVAL AND DEPARTURE PERCENTAGE;
   37    (II) THE PERCENTAGE DETERMINED BY DIVIDING SIXTY PERCENT OF THE REVEN-
   38  UE  TONS  HANDLED  BY  THE TAXPAYER AT AIRPORTS WITHIN THIS STATE DURING
   39  SUCH PERIOD BY THE TOTAL REVENUE TONS HANDLED BY IT AT  AIRPORTS  WITHIN
   40  AND WITHOUT THIS STATE DURING SUCH PERIOD; AND
   41    (III)  THE  PERCENTAGE  DETERMINED  BY  DIVIDING  SIXTY PERCENT OF THE
   42  TAXPAYER'S ORIGINATING REVENUE WITHIN THIS STATE FOR SUCH PERIOD BY  ITS
   43  TOTAL ORIGINATING REVENUE WITHIN AND WITHOUT THIS STATE FOR SUCH PERIOD.
   44    (B)  AS  USED HEREIN THE TERM "AIRCRAFT ARRIVALS AND DEPARTURES" MEANS
   45  THE NUMBER OF LANDINGS AND TAKEOFFS OF THE AIRCRAFT OF THE TAXPAYER  AND
   46  THE NUMBER OF AIR PICKUPS AND DELIVERIES BY THE AIRCRAFT OF SUCH TAXPAY-
   47  ER;  THE  TERM  "ORIGINATING REVENUE" MEANS REVENUE TO THE TAXPAYER FROM
   48  THE TRANSPORTATION OR REVENUE  PASSENGERS  AND  REVENUE  PROPERTY  FIRST
   49  RECEIVED  BY THE TAXPAYER EITHER AS ORIGINATING OR CONNECTING TRAFFIC AT
   50  AIRPORTS; AND THE  TERM  "REVENUE  TONS  HANDLED"  BY  THE  TAXPAYER  AT
   51  AIRPORTS  MEANS THE WEIGHT IN TONS OF REVENUE PASSENGERS (AT TWO HUNDRED
   52  POUNDS PER PASSENGER) AND REVENUE CARGO FIRST RECEIVED EITHER AS  ORIGI-
   53  NATING  OR  CONNECTING  TRAFFIC OR FINALLY DISCHARGED BY THE TAXPAYER AT
   54  AIRPORTS;
       S. 6359                            63                            A. 8559
    1    (2) ALL SUCH RECEIPTS OF A TAXPAYER FROM AVIATION  SERVICES  DESCRIBED
    2  IN  THIS  PARAGRAPH ARE INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT
    3  FRACTION.
    4    8. RECEIPTS FROM SALES OF ADVERTISING. (A) THE AMOUNT OF RECEIPTS FROM
    5  SALES OF ADVERTISING IN NEWSPAPERS OR PERIODICALS INCLUDED IN THE NUMER-
    6  ATOR  OF  THE  APPORTIONMENT  FRACTION  IS DETERMINED BY MULTIPLYING THE
    7  TOTAL OF SUCH RECEIPTS BY A FRACTION, THE  NUMERATOR  OF  WHICH  IS  THE
    8  NUMBER  OF  NEWSPAPERS  AND  PERIODICALS  DELIVERED TO POINTS WITHIN THE
    9  STATE AND THE DENOMINATOR OF WHICH IS THE NUMBER OF NEWSPAPERS AND PERI-
   10  ODICALS DELIVERED TO POINTS WITHIN AND WITHOUT THE STATE. THE  TOTAL  OF
   11  SUCH  RECEIPTS FROM SALES OF ADVERTISING IN NEWSPAPERS OR PERIODICALS IS
   12  INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
   13    (B) THE AMOUNT OF RECEIPTS FROM SALES OF ADVERTISING ON TELEVISION  OR
   14  RADIO  INCLUDED IN THE APPORTIONMENT FRACTION IS DETERMINED BY MULTIPLY-
   15  ING THE TOTAL OF SUCH RECEIPTS BY A FRACTION, THE NUMERATOR OF WHICH  IS
   16  THE  NUMBER OF VIEWERS OR LISTENERS WITHIN THE STATE AND THE DENOMINATOR
   17  OF WHICH IS THE NUMBER OF VIEWERS OR LISTENERS WITHIN  AND  WITHOUT  THE
   18  STATE.  THE  TOTAL  OF  SUCH RECEIPTS FROM SALES OF ADVERTISING ON TELE-
   19  VISION AND RADIO IS INCLUDED IN THE  DENOMINATOR  OF  THE  APPORTIONMENT
   20  FRACTION.
   21    (C)  THE AMOUNT OF RECEIPTS FROM SALES OF ADVERTISING NOT DESCRIBED IN
   22  PARAGRAPH (A) OR (B) OF THIS SUBDIVISION THAT IS FURNISHED, PROVIDED  OR
   23  DELIVERED  TO,  OR ACCESSED BY THE VIEWER OR LISTENER THROUGH THE USE OF
   24  WIRE, CABLE, FIBER-OPTIC, LASER, MICROWAVE,  RADIO  WAVE,  SATELLITE  OR
   25  SIMILAR  SUCCESSOR  MEDIA  OR  ANY  COMBINATION THEREOF, INCLUDED IN THE
   26  NUMERATOR OF THE APPORTIONMENT FRACTION IS DETERMINED BY MULTIPLYING THE
   27  TOTAL OF SUCH RECEIPTS BY A FRACTION, THE  NUMERATOR  OF  WHICH  IS  THE
   28  NUMBER  OF  VIEWERS OR LISTENERS WITHIN THE STATE AND THE DENOMINATOR OF
   29  WHICH IS THE NUMBER OF VIEWERS  OR  LISTENERS  WITHIN  AND  WITHOUT  THE
   30  STATE. THE TOTAL OF SUCH RECEIPTS FROM SALES OF ADVERTISING DESCRIBED IN
   31  THIS PARAGRAPH IS INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRAC-
   32  TION.
   33    9.  RECEIPTS FROM TRANSPORTATION OR TRANSMISSION OF GAS THROUGH PIPES.
   34  RECEIPTS FROM THE TRANSPORTATION OR TRANSMISSION OF  GAS  THROUGH  PIPES
   35  ARE  INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION AS FOLLOWS.
   36  THE AMOUNT OF RECEIPTS FROM THE TRANSPORTATION OR  TRANSMISSION  OF  GAS
   37  THROUGH PIPES INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION IS
   38  DETERMINED  BY  MULTIPLYING THE TOTAL AMOUNT OF SUCH RECEIPTS BY A FRAC-
   39  TION, THE NUMERATOR OF WHICH  IS  THE  TAXPAYER'S  TRANSPORTATION  UNITS
   40  WITHIN  THE  STATE AND THE DENOMINATOR OF WHICH IS THE TAXPAYER'S TRANS-
   41  PORTATION UNITS WITHIN AND WITHOUT THE STATE. A TRANSPORTATION  UNIT  IS
   42  THE TRANSPORTATION OF ONE CUBIC FOOT OF GAS OVER A DISTANCE OF ONE MILE.
   43  THE  TOTAL AMOUNT OF RECEIPTS FROM THE TRANSPORTATION OR TRANSMISSION OF
   44  GAS THROUGH PIPES IS INCLUDED IN THE DENOMINATOR  OF  THE  APPORTIONMENT
   45  FRACTION.
   46    10.  (A)  RECEIPTS  FROM  OTHER  SERVICES AND OTHER BUSINESS RECEIPTS.
   47  RECEIPTS FROM SERVICES NOT ADDRESSED IN SUBDIVISIONS ONE THROUGH NINE OF
   48  THIS SECTION AND OTHER BUSINESS RECEIPTS NOT ADDRESSED IN SUCH  SUBDIVI-
   49  SIONS  SHALL  BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION
   50  IF THE LOCATION OF THE CUSTOMER IS WITHIN THE STATE. SUCH RECEIPTS  FROM
   51  CUSTOMERS  WITHIN  AND WITHOUT THE STATE ARE INCLUDED IN THE DENOMINATOR
   52  OF THE APPORTIONMENT FRACTION. WHETHER THE RECEIPTS ARE INCLUDED IN  THE
   53  NUMERATOR  OF  THE APPORTIONMENT FRACTION IS DETERMINED ACCORDING TO THE
   54  HIERARCHY OF METHOD SET FORTH IN PARAGRAPH (B) OF THIS SUBDIVISION.  THE
   55  TAXPAYER  MUST  EXERCISE  DUE  DILIGENCE  UNDER EACH METHOD DESCRIBED IN
       S. 6359                            64                            A. 8559
    1  PARAGRAPH (B) BEFORE REJECTING IT AND PROCEEDING TO THE NEXT  METHOD  IN
    2  THE HIERARCHY.
    3    (B)  HIERARCHY  OF  METHODS.  (1)  DELIVERY  DESTINATION. RECEIPTS FOR
    4  SERVICES PERFORMED FOR A CUSTOMER'S PARTICULAR LOCATION, SUCH AS WHERE A
    5  DELIVERY IS MADE TO THAT LOCATION, AS MAY BE  INDICATED  ON  A  BILL  OF
    6  LADING OR PURCHASE INVOICE, ARE SOURCED TO THAT LOCATION.
    7    (2) BILLING ADDRESS OF THE CUSTOMER.
    8    (3) ZIP CODE OR OTHER GEOGRAPHIC INDICATOR OF THE CUSTOMER'S LOCATION.
    9    (4)  PERCENTAGE OF THE TAXPAYER'S RECEIPTS WITHIN THE STATE DETERMINED
   10  PURSUANT TO THIS SUBDIVISION FOR THE PRECEDING TAXABLE YEAR OR,  IF  THE
   11  TAXPAYER  WAS NOT SUBJECT TO TAX IN THE PRECEDING TAXABLE YEAR, THEN THE
   12  PERCENTAGE OF THE TAXPAYER'S RECEIPTS WITHIN THE STATE  IN  THE  CURRENT
   13  TAXABLE YEAR DETERMINED PURSUANT TO THIS SUBDIVISION.
   14    11.  IF  IT  SHALL  APPEAR  TO THE COMMISSIONER THAT THE APPORTIONMENT
   15  FRACTION DETERMINED PURSUANT TO THIS SECTION DOES NOT RESULT IN A PROPER
   16  REFLECTION OF THE TAXPAYER'S  BUSINESS  INCOME  OR  CAPITAL  WITHIN  THE
   17  STATE, THE COMMISSIONER IS AUTHORIZED IN HIS OR HER DISCRETION TO ADJUST
   18  IT BY (A) EXCLUDING ONE OR MORE ITEMS IN SUCH DETERMINATION, (B) INCLUD-
   19  ING  ONE  OR  MORE  OTHER  ITEMS IN SUCH DETERMINATION, OR (C) ANY OTHER
   20  SIMILAR OR DIFFERENT METHOD CALCULATED  TO  EFFECT  A  FAIR  AND  PROPER
   21  APPORTIONMENT  OF  THE BUSINESS INCOME AND CAPITAL REASONABLY ATTRIBUTED
   22  TO THE STATE.
   23    S 17. The tax law is amended by adding a new section 210-B to read  as
   24  follows:
   25    S 210-B. CREDITS. 1. INVESTMENT TAX CREDIT (ITC). (A) A TAXPAYER SHALL
   26  BE ALLOWED A CREDIT, TO BE COMPUTED AS HEREINAFTER PROVIDED, AGAINST THE
   27  TAX  IMPOSED  BY  THIS  ARTICLE.  THE  AMOUNT OF THE CREDIT SHALL BE THE
   28  PERCENT PROVIDED FOR HEREINBELOW OF  THE  INVESTMENT  CREDIT  BASE.  THE
   29  INVESTMENT CREDIT BASE IS THE COST OR OTHER BASIS FOR FEDERAL INCOME TAX
   30  PURPOSES  OF  TANGIBLE  PERSONAL  PROPERTY  AND OTHER TANGIBLE PROPERTY,
   31  INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS OF BUILDINGS, DESCRIBED IN
   32  PARAGRAPH (B) OF THIS SUBDIVISION, LESS THE AMOUNT OF  THE  NONQUALIFIED
   33  NONRECOURSE  FINANCING  WITH RESPECT TO SUCH PROPERTY TO THE EXTENT SUCH
   34  FINANCING WOULD BE EXCLUDIBLE FROM THE CREDIT BASE PURSUANT  TO  SECTION
   35  46(C)(8) OF THE INTERNAL REVENUE CODE (TREATING SUCH PROPERTY AS SECTION
   36  THIRTY-EIGHT  PROPERTY IRRESPECTIVE OF WHETHER OR NOT IT IN FACT CONSTI-
   37  TUTES SECTION THIRTY-EIGHT PROPERTY). IF, AT THE CLOSE OF A TAXABLE YEAR
   38  FOLLOWING THE TAXABLE YEAR IN WHICH SUCH PROPERTY WAS PLACED IN SERVICE,
   39  THERE IS A NET  DECREASE  IN  THE  AMOUNT  OF  NONQUALIFIED  NONRECOURSE
   40  FINANCING  WITH  RESPECT  TO  SUCH  PROPERTY, SUCH NET DECREASE SHALL BE
   41  TREATED AS IF IT WERE THE COST OR OTHER BASIS OF PROPERTY  DESCRIBED  IN
   42  PARAGRAPH  (B)  OF THIS SUBDIVISION ACQUIRED, CONSTRUCTED, RECONSTRUCTED
   43  OR ERECTED DURING THE YEAR OF THE DECREASE IN THE AMOUNT OF NONQUALIFIED
   44  NONRECOURSE FINANCING. IN THE CASE OF A COMBINED REPORT THE TERM INVEST-
   45  MENT CREDIT BASE SHALL MEAN THE SUM OF THE  INVESTMENT  CREDIT  BASE  OF
   46  EACH  CORPORATION  INCLUDED ON SUCH REPORT. THE PERCENTAGE TO BE USED TO
   47  COMPUTE THE CREDIT ALLOWED PURSUANT TO THIS SUBDIVISION  SHALL  BE  FIVE
   48  PERCENT WITH RESPECT TO THE FIRST THREE HUNDRED FIFTY MILLION DOLLARS OF
   49  THE INVESTMENT CREDIT BASE, AND FOUR PERCENT WITH RESPECT TO THE INVEST-
   50  MENT  CREDIT  BASE  IN  EXCESS  OF  THREE HUNDRED FIFTY MILLION DOLLARS,
   51  EXCEPT IN THE CASE OF RESEARCH AND DEVELOPMENT PROPERTY AT THE OPTION OF
   52  THE TAXPAYER THE APPLICABLE PERCENTAGE SHALL BE NINE.
   53    (B) QUALIFYING PROPERTY. (I) A CREDIT  SHALL  BE  ALLOWED  UNDER  THIS
   54  SUBDIVISION  TO  A QUALIFIED NEW YORK MANUFACTURER, A QUALIFIED NEW YORK
   55  AGRICULTURAL BUSINESS OR A  QUALIFIED  NEW  YORK  MINING  BUSINESS  WITH
   56  RESPECT  TO  TANGIBLE  PERSONAL  PROPERTY  AND  OTHER  TANGIBLE PROPERTY
       S. 6359                            65                            A. 8559
    1  INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS OF  BUILDINGS,  WHICH  (A)
    2  ARE  DEPRECIABLE  PURSUANT  TO  SECTION  ONE  HUNDRED SIXTY-SEVEN OF THE
    3  INTERNAL REVENUE CODE, (B) HAVE A USEFUL LIFE OF FOUR YEARS OR MORE, (C)
    4  ARE  ACQUIRED BY PURCHASE AS DEFINED IN SECTION ONE HUNDRED SEVENTY-NINE
    5  (D) OF THE INTERNAL REVENUE CODE,  (D)  HAVE  NOT  BEEN  PREVIOUSLY  THE
    6  SUBJECT  OF  AN  INVESTMENT  TAX CREDIT OR EMPIRE ZONE INVESTMENT CREDIT
    7  ALLOWED TO ANOTHER TAXPAYER, (E) HAVE A SITUS IN THIS STATE AND (F)  ARE
    8  PRINCIPALLY  USED BY THE TAXPAYER IN THE PRODUCTION OF GOODS FOR SALE OR
    9  ARE RESEARCH AND DEVELOPMENT PROPERTY.
   10    (II) FOR PURPOSES OF THIS PARAGRAPH, THE FOLLOWING  DEFINITIONS  SHALL
   11  APPLY:
   12    (A)  PROPERTY  USED  IN THE PRODUCTION OF GOODS FOR SALE SHALL INCLUDE
   13  MACHINERY, EQUIPMENT OR OTHER TANGIBLE  PROPERTY  WHICH  IS  PRINCIPALLY
   14  USED  IN  THE  REPAIR AND SERVICE OF OTHER MACHINERY, EQUIPMENT OR OTHER
   15  TANGIBLE PROPERTY USED PRINCIPALLY IN THE PRODUCTION OF GOODS  FOR  SALE
   16  AND  SHALL  INCLUDE  ALL  FACILITIES  USED  IN  THE PRODUCTION OPERATION
   17  INCLUDING STORAGE OF MATERIAL TO  BE  USED  IN  PRODUCTION  AND  OF  THE
   18  PRODUCTS THAT ARE PRODUCED.
   19    (B)  RESEARCH  AND  DEVELOPMENT  PROPERTY SHALL MEAN PROPERTY WHICH IS
   20  USED FOR PURPOSES OF RESEARCH AND DEVELOPMENT  IN  THE  EXPERIMENTAL  OR
   21  LABORATORY SENSE. SUCH PURPOSES SHALL NOT BE DEEMED TO INCLUDE THE ORDI-
   22  NARY TESTING OR INSPECTION OF MATERIALS OR PRODUCTS FOR QUALITY CONTROL,
   23  EFFICIENCY  SURVEYS,  MANAGEMENT STUDIES, CONSUMER SURVEYS, ADVERTISING,
   24  PROMOTIONS, OR RESEARCH IN CONNECTION WITH LITERARY, HISTORICAL OR SIMI-
   25  LAR PROJECTS.
   26    (C) A QUALIFIED NEW YORK AGRICULTURAL BUSINESS SHALL MEAN  A  TAXPAYER
   27  OR COMBINED GROUP PRINCIPALLY ENGAGED IN FARMING, AGRICULTURE, HORTICUL-
   28  TURE,  FLORICULTURE,  VITICULTURE  OR COMMERCIAL FISHING IN THE STATE. A
   29  TAXPAYER OR A COMBINED GROUP IS PRINCIPALLY ENGAGED IN FARMING, AGRICUL-
   30  TURE, HORTICULTURE, FLORICULTURE, VITICULTURE OR COMMERCIAL  FISHING  IN
   31  THE  STATE  IF  MORE  THAN  FIFTY  PERCENT  OF THE GROSS RECEIPTS OF THE
   32  TAXPAYER OR THE COMBINED GROUP, RESPECTIVELY, DURING  THE  TAXABLE  YEAR
   33  ARE  DERIVED  FROM  THE  SALE OF GOODS PRODUCED BY ANY OF THE ACTIVITIES
   34  SPECIFIED IN THIS SENTENCE THAT ARE CONDUCTED IN NEW YORK. IN  COMPUTING
   35  A  COMBINED  GROUP'S  GROSS  RECEIPTS,  INTERCORPORATE RECEIPTS SHALL BE
   36  ELIMINATED. IN COMPUTING GROSS RECEIPTS FOR A TAXPAYER THAT IS A PARTNER
   37  IN PARTNERSHIP, INTER-ENTITY RECEIPTS  BETWEEN  THE  TAXPAYER  AND  SUCH
   38  PARTNERSHIP SHALL BE ELIMINATED.
   39    (D)  A  QUALIFIED  NEW  YORK  MINING BUSINESS SHALL MEAN A TAXPAYER OR
   40  COMBINED GROUP PRINCIPALLY ENGAGED IN MINING IN THE STATE. A TAXPAYER OR
   41  COMBINED GROUP IS PRINCIPALLY ENGAGED IN MINING IN  THE  STATE  IF  MORE
   42  THAN FIFTY PERCENT OF THE GROSS RECEIPTS OF THE TAXPAYER OR THE COMBINED
   43  GROUP,  RESPECTIVELY,  DURING THE TAXABLE YEAR ARE DERIVED FROM THE SALE
   44  OF GOODS PRODUCED BY MINING ACTIVITIES THAT ARE CONDUCTED IN THE  STATE.
   45  IN  COMPUTING A COMBINED GROUP'S GROSS RECEIPTS, INTERCORPORATE RECEIPTS
   46  SHALL BE ELIMINATED. IN COMPUTING GROSS RECEIPTS FOR A TAXPAYER THAT  IS
   47  A PARTNER IN PARTNERSHIP, INTER-ENTITY RECEIPTS BETWEEN THE TAXPAYER AND
   48  SUCH PARTNERSHIP SHALL BE ELIMINATED.
   49    (III)  IN  ORDER  TO PROPERLY ADMINISTER THE CREDIT AUTHORIZED BY THIS
   50  SUBDIVISION, THE DEPARTMENT MAY DISCLOSE INFORMATION ABOUT THE ALLOWANCE
   51  TO ANOTHER TAXPAYER OF AN  INVESTMENT  TAX  CREDIT  OR  AN  EMPIRE  ZONE
   52  INVESTMENT  TAX CREDIT UNDER THIS CHAPTER WITH RESPECT TO THE SAME PROP-
   53  ERTY.
   54    (C) NONQUALIFYING PROPERTY. A TAXPAYER SHALL NOT BE ALLOWED  A  CREDIT
   55  UNDER  THIS  SUBDIVISION  WITH RESPECT TO TANGIBLE PERSONAL PROPERTY AND
   56  OTHER TANGIBLE PROPERTY, INCLUDING BUILDINGS AND  STRUCTURAL  COMPONENTS
       S. 6359                            66                            A. 8559
    1  OF  BUILDINGS,  WHICH  IT LEASES TO ANY OTHER PERSON OR CORPORATION. FOR
    2  PURPOSES OF THE PRECEDING SENTENCE, ANY CONTRACT OR AGREEMENT  TO  LEASE
    3  OR  RENT  OR  FOR  A  LICENSE TO USE SUCH PROPERTY SHALL BE CONSIDERED A
    4  LEASE.    PROVIDED,  HOWEVER, IN DETERMINING WHETHER A TAXPAYER SHALL BE
    5  ALLOWED A CREDIT UNDER THIS SUBDIVISION WITH RESPECT TO  SUCH  PROPERTY,
    6  ANY  ELECTION  MADE  WITH  RESPECT  TO  SUCH  PROPERTY  PURSUANT  TO THE
    7  PROVISIONS OF PARAGRAPH EIGHT OF SUBSECTION (F) OF SECTION  ONE  HUNDRED
    8  SIXTY-EIGHT  OF  THE  INTERNAL  REVENUE  CODE,  AS SUCH PARAGRAPH WAS IN
    9  EFFECT FOR AGREEMENTS ENTERED INTO  PRIOR  TO  JANUARY  FIRST,  NINETEEN
   10  HUNDRED EIGHTY-FOUR, SHALL BE DISREGARDED.
   11    (D)  CARRYOVER.  EXCEPT  AS  OTHERWISE PROVIDED IN THIS PARAGRAPH, THE
   12  CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY  TAXABLE  YEAR  SHALL  NOT
   13  REDUCE  THE  TAX DUE FOR SUCH YEAR TO LESS THAN THE FIXED DOLLAR MINIMUM
   14  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION  ONE  OF  SECTION  TWO
   15  HUNDRED  TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CREDIT ALLOWABLE
   16  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR  REDUCES  THE  TAX  TO  SUCH
   17  AMOUNT,  ANY AMOUNT OF CREDIT ALLOWED FOR A TAXABLE YEAR AND NOT DEDUCT-
   18  IBLE IN SUCH YEAR MAY BE CARRIED OVER TO THE FIFTEEN TAXABLE YEARS  NEXT
   19  FOLLOWING  SUCH TAXABLE YEAR AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX
   20  FOR SUCH YEAR OR YEARS. IN LIEU OF SUCH  CARRYOVER,  ANY  SUCH  TAXPAYER
   21  WHICH  QUALIFIES  AS A NEW BUSINESS UNDER PARAGRAPH (F) OF THIS SUBDIVI-
   22  SION MAY ELECT TO TREAT THE AMOUNT OF SUCH CARRYOVER AS  AN  OVERPAYMENT
   23  OF  TAX  TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF
   24  SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER, PROVIDED, HOWEVER,  THE
   25  PROVISIONS  OF  SUBSECTION  (C)  OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
   26  THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
   27    (E) RECAPTURE. (I) WITH  RESPECT  TO  PROPERTY  WHICH  IS  DEPRECIABLE
   28  PURSUANT TO SECTION ONE HUNDRED SIXTY-SEVEN OF THE INTERNAL REVENUE CODE
   29  BUT  IS NOT SUBJECT TO THE PROVISIONS OF SECTION ONE HUNDRED SIXTY-EIGHT
   30  OF SUCH CODE AND WHICH IS DISPOSED OF OR CEASES TO BE IN  QUALIFIED  USE
   31  PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT IS TO BE TAKEN,
   32  THE  AMOUNT  OF  THE CREDIT SHALL BE THAT PORTION OF THE CREDIT PROVIDED
   33  FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH THE  MONTHS  OF
   34  QUALIFIED  USE  BEAR  TO THE MONTHS OF USEFUL LIFE. IF PROPERTY ON WHICH
   35  CREDIT HAS BEEN TAKEN IS DISPOSED OF OR CEASES TO BE  IN  QUALIFIED  USE
   36  PRIOR  TO  THE END OF ITS USEFUL LIFE, THE DIFFERENCE BETWEEN THE CREDIT
   37  TAKEN AND THE CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED  BACK  IN  THE
   38  YEAR  OF DISPOSITION. PROVIDED, HOWEVER, IF SUCH PROPERTY IS DISPOSED OF
   39  OR CEASES TO BE IN QUALIFIED USE AFTER IT HAS BEEN IN QUALIFIED USE  FOR
   40  MORE  THAN  TWELVE  CONSECUTIVE  YEARS, IT SHALL NOT BE NECESSARY TO ADD
   41  BACK THE CREDIT AS PROVIDED IN THIS SUBPARAGRAPH. THE AMOUNT  OF  CREDIT
   42  ALLOWED  FOR  ACTUAL USE SHALL BE DETERMINED BY MULTIPLYING THE ORIGINAL
   43  CREDIT BY THE RATIO WHICH THE MONTHS OF QUALIFIED USE BEAR TO THE MONTHS
   44  OF USEFUL LIFE. FOR PURPOSES OF THIS PARAGRAPH, USEFUL LIFE OF  PROPERTY
   45  SHALL  BE  THE  SAME AS THE TAXPAYER USES FOR DEPRECIATION PURPOSES WHEN
   46  COMPUTING HIS FEDERAL INCOME TAX LIABILITY.
   47    (II) EXCEPT WITH RESPECT TO THAT PROPERTY TO WHICH PARAGRAPH  (IV)  OF
   48  THIS  SUBDIVISION  APPLIES,  WITH  RESPECT  TO  THREE-YEAR  PROPERTY, AS
   49  DEFINED IN SUBSECTION (E) OF SECTION  ONE  HUNDRED  SIXTY-EIGHT  OF  THE
   50  INTERNAL REVENUE CODE, WHICH IS DISPOSED OF OR CEASES TO BE IN QUALIFIED
   51  USE  PRIOR  TO  THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT IS TO BE
   52  TAKEN, THE AMOUNT OF THE CREDIT ALLOWED SHALL BE  THAT  PORTION  OF  THE
   53  CREDIT PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH
   54  THE  MONTHS  OF  QUALIFIED  USE BEAR TO THIRTY-SIX. IF PROPERTY ON WHICH
   55  CREDIT HAS BEEN TAKEN IS DISPOSED OF OR CEASES TO BE  IN  QUALIFIED  USE
   56  PRIOR TO THE END OF THIRTY-SIX MONTHS, THE DIFFERENCE BETWEEN THE CREDIT
       S. 6359                            67                            A. 8559
    1  TAKEN  AND  THE  CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE
    2  YEAR OF DISPOSITION. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL  USE  SHALL
    3  BE  DETERMINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE RATIO WHICH THE
    4  MONTHS OF QUALIFIED USE BEAR TO THIRTY-SIX.
    5    (III)  EXCEPT WITH RESPECT TO THAT PROPERTY TO WHICH PARAGRAPH (IV) OF
    6  THIS SUBDIVISION APPLIES,  WITH  RESPECT  TO  PROPERTY  SUBJECT  TO  THE
    7  PROVISIONS  OF  SECTION  ONE HUNDRED SIXTY-EIGHT OF THE INTERNAL REVENUE
    8  CODE, OTHER THAN THREE-YEAR PROPERTY AS DEFINED  IN  SUBSECTION  (E)  OF
    9  SUCH  SECTION  ONE HUNDRED SIXTY-EIGHT WHICH IS DISPOSED OF OR CEASES TO
   10  BE IN QUALIFIED USE PRIOR TO THE END OF THE TAXABLE YEAR  IN  WHICH  THE
   11  CREDIT IS TO BE TAKEN, THE AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF
   12  THE  CREDIT  PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO
   13  WHICH THE MONTHS OF QUALIFIED USE BEAR TO SIXTY.  IF PROPERTY  ON  WHICH
   14  CREDIT  HAS  BEEN  TAKEN IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE
   15  PRIOR TO THE END OF SIXTY MONTHS,  THE  DIFFERENCE  BETWEEN  THE  CREDIT
   16  TAKEN  AND  THE  CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE
   17  YEAR OF DISPOSITION. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL  USE  SHALL
   18  BE  DETERMINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE RATIO WHICH THE
   19  MONTHS OF QUALIFIED USE BEAR TO SIXTY.
   20    (IV) WITH RESPECT TO ANY PROPERTY TO WHICH SECTION ONE HUNDRED  SIXTY-
   21  EIGHT  OF  THE  INTERNAL  REVENUE CODE APPLIES, WHICH IS A BUILDING OR A
   22  STRUCTURAL COMPONENT OF A BUILDING AND WHICH IS DISPOSED OF OR CEASES TO
   23  BE IN QUALIFIED USE PRIOR TO THE END OF THE TAXABLE YEAR  IN  WHICH  THE
   24  CREDIT IS TO BE TAKEN, THE AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF
   25  THE  CREDIT  PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO
   26  WHICH THE MONTHS OF QUALIFIED USE BEAR TO THE  TOTAL  NUMBER  OF  MONTHS
   27  OVER  WHICH THE TAXPAYER CHOOSES TO DEDUCT THE PROPERTY UNDER THE INTER-
   28  NAL REVENUE CODE. IF PROPERTY ON WHICH CREDIT HAS BEEN TAKEN IS DISPOSED
   29  OF OR CEASES TO BE IN QUALIFIED USE PRIOR TO THE END OF THE PERIOD  OVER
   30  WHICH  THE  TAXPAYER  CHOOSES  TO DEDUCT THE PROPERTY UNDER THE INTERNAL
   31  REVENUE CODE, THE DIFFERENCE BETWEEN THE CREDIT  TAKEN  AND  THE  CREDIT
   32  ALLOWED  FOR  ACTUAL  USE MUST BE ADDED BACK IN THE YEAR OF DISPOSITION.
   33  PROVIDED, HOWEVER, IF SUCH PROPERTY IS DISPOSED OF OR CEASES  TO  BE  IN
   34  QUALIFIED  USE  AFTER  IT HAS BEEN IN QUALIFIED USE FOR MORE THAN TWELVE
   35  CONSECUTIVE YEARS, IT SHALL NOT BE NECESSARY TO ADD BACK THE  CREDIT  AS
   36  PROVIDED  IN  THIS SUBPARAGRAPH. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL
   37  USE SHALL BE DETERMINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE  RATIO
   38  WHICH  THE  MONTHS  OF  QUALIFIED USE BEAR TO THE TOTAL NUMBER OF MONTHS
   39  OVER WHICH THE TAXPAYER CHOOSES TO DEDUCT THE PROPERTY UNDER THE  INTER-
   40  NAL REVENUE CODE.
   41    (V) FOR PURPOSES OF THIS PARAGRAPH, PROPERTY (I) WHICH IS DESCRIBED IN
   42  SUBPARAGRAPH  (II),  (III)  OR (IV) OF THIS PARAGRAPH, AND (II) WHICH IS
   43  SUBJECT TO SUBPARAGRAPH ELEVEN OF PARAGRAPH (A) OF SUBDIVISION NINE  AND
   44  SUBPARAGRAPH  TEN  OF  PARAGRAPH  (B) OF SUBDIVISION NINE OF SECTION TWO
   45  HUNDRED EIGHT OF THIS ARTICLE, SHALL BE TREATED  AS  PROPERTY  WHICH  IS
   46  DEPRECIABLE  PURSUANT TO SECTION ONE HUNDRED SIXTY-SEVEN OF THE INTERNAL
   47  REVENUE CODE BUT IS NOT SUBJECT TO SECTION ONE  HUNDRED  SIXTY-EIGHT  OF
   48  SUCH CODE.
   49    (VI)  FOR  EACH  TAXABLE  YEAR,  THE  AMOUNT REQUIRED TO BE ADDED BACK
   50  PURSUANT TO THIS PARAGRAPH SHALL BE AUGMENTED BY AN AMOUNT EQUAL TO  THE
   51  PRODUCT  OF  SUCH  AMOUNT AND THE UNDERPAYMENT RATE OF INTEREST (WITHOUT
   52  REGARD TO COMPOUNDING), SET BY THE COMMISSIONER PURSUANT  TO  SUBSECTION
   53  (E) OF SECTION ONE THOUSAND NINETY-SIX, IN EFFECT ON THE LAST DAY OF THE
   54  TAXABLE YEAR.
   55    (VII) IF, AS OF THE CLOSE OF THE TAXABLE YEAR, THERE IS A NET INCREASE
   56  WITH  RESPECT  TO THE TAXPAYER IN THE AMOUNT OF NONQUALIFIED NONRECOURSE
       S. 6359                            68                            A. 8559
    1  FINANCING (WITHIN THE MEANING OF SECTION 46(C)(8) OF THE INTERNAL REVEN-
    2  UE CODE) WITH RESPECT TO ANY PROPERTY WITH RESPECT TO WHICH  THE  CREDIT
    3  UNDER  THIS  SUBDIVISION  WAS LIMITED BASED ON ATTRIBUTABLE NONQUALIFIED
    4  NONRECOURSE  FINANCING,  THEN  AN  AMOUNT  EQUAL TO THE DECREASE IN SUCH
    5  CREDIT WHICH WOULD HAVE RESULTED FROM REDUCING, BY THE  AMOUNT  OF  SUCH
    6  NET INCREASE, THE COST OR OTHER BASIS TAKEN INTO ACCOUNT WITH RESPECT TO
    7  SUCH  PROPERTY  MUST  BE  ADDED BACK IN SUCH TAXABLE YEAR. THE AMOUNT OF
    8  NONQUALIFIED NONRECOURSE FINANCING SHALL NOT BE TREATED AS INCREASED  BY
    9  REASON  OF  A  TRANSFER OF (OR AGREEMENT TO TRANSFER) ANY EVIDENCE OF AN
   10  INDEBTEDNESS IF SUCH TRANSFER OCCURS (OR SUCH AGREEMENT IS ENTERED INTO)
   11  MORE THAN ONE YEAR AFTER THE DATE SUCH INDEBTEDNESS WAS INCURRED.
   12    (VIII)(A) WHERE PROPERTY WITH RESPECT TO WHICH CREDIT HAS BEEN ALLOWED
   13  UNDER THIS SUBDIVISION IS DISPOSED OF BY TRANSFER TO THE TAXPAYER  IN  A
   14  QUALIFIED  TRANSACTION,  AND SUCH DISPOSITION REQUIRES, PURSUANT TO THIS
   15  PARAGRAPH (WITHOUT REGARD TO THIS  SUBPARAGRAPH)  THAT  SUCH  CREDIT  BE
   16  DECREASED (WHERE THE DISPOSITION OCCURS IN THE TAXABLE YEAR IN WHICH THE
   17  PROPERTY  IS  PLACED  IN SERVICE BY THE TRANSFEROR) OR THAT A PORTION OF
   18  SUCH CREDIT BE ADDED BACK BY THE TRANSFEROR, THEN CLAUSE (B)  OR  CLAUSE
   19  (C) OF THIS SUBPARAGRAPH SHALL APPLY.
   20    (B) IF THE TAXPAYER AND THE TRANSFEROR JOINTLY ELECT, AT SUCH TIME AND
   21  IN  SUCH  MANNER  AS THE COMMISSIONER MAY PRESCRIBE, THE FOLLOWING SHALL
   22  APPLY:
   23    (I) SUCH PORTION SHALL NOT  BE  REQUIRED  TO  BE  ADDED  BACK  BY  THE
   24  TRANSFEROR,
   25    (II) THE AMOUNT OF UNUSED CREDIT SHALL NOT BE DEDUCTED FROM TAX OTHER-
   26  WISE  DUE BY THE TRANSFEROR ON ANY RETURN (INCLUDING AN AMENDED RETURN),
   27  AND SHALL NOT BE SO DEDUCTED AS PART OF  ANY  AUDIT  ADJUSTMENT  OR  ANY
   28  OTHER DETERMINATION, AND
   29    (III)  THE  AMOUNT  OF  UNUSED CREDIT SHALL BE TREATED AS AN AMOUNT OF
   30  CREDIT OF THE TAXPAYER UNDER THIS SUBDIVISION  CARRIED  FORWARD  BY  THE
   31  TAXPAYER  TO ITS TAXABLE YEAR IN WHICH SUCH TRANSFER OCCURRED, AS IF THE
   32  CREDIT ALLOWED TO THE TRANSFEROR  WITH  RESPECT  TO  SUCH  PROPERTY  HAD
   33  ORIGINALLY BEEN ALLOWED TO THE TAXPAYER BOTH AS TO AMOUNT AND FIRST DATE
   34  OF  QUALIFIED USE, AND AS IF THE PERIOD OF QUALIFIED USE BY THE TRANSFE-
   35  ROR PRIOR TO THE TRANSFER HAD BEEN A PERIOD OF SUCH USE BY THE TAXPAYER.
   36  ANY AMOUNT OF CREDIT TREATED AS CARRIED  FORWARD  TO  THE  TAXABLE  YEAR
   37  PURSUANT TO THIS SUBPARAGRAPH SHALL BE APPLIED AS PROVIDED IN CLAUSE (H)
   38  OF THIS SUBPARAGRAPH.
   39    (C)  IF  THE  TAXPAYER  AND  THE  TRANSFEROR  DO NOT MAKE THE ELECTION
   40  DESCRIBED IN CLAUSE (B) OF THIS SUBPARAGRAPH, THEN THE AMOUNT OF  CREDIT
   41  REQUIRED  PURSUANT  TO THIS PARAGRAPH TO BE ADDED BACK BY THE TRANSFEROR
   42  SHALL BE TREATED AS AN AMOUNT OF  CREDIT  OF  THE  TAXPAYER  UNDER  THIS
   43  SUBDIVISION TO BE CARRIED FORWARD BY THE TAXPAYER TO ITS TAXABLE YEAR IN
   44  WHICH SUCH TRANSFER OCCURRED, AS IF THE CREDIT ALLOWED TO THE TRANSFEROR
   45  WITH RESPECT TO SUCH PROPERTY HAD ORIGINALLY BEEN ALLOWED TO THE TAXPAY-
   46  ER  BOTH  AS  TO  AMOUNT  AND FIRST DATE OF QUALIFIED USE, AND AS IF THE
   47  PERIOD OF QUALIFIED USE BY THE TRANSFEROR PRIOR TO THE TRANSFER HAD BEEN
   48  A PERIOD OF SUCH USE BY THE TAXPAYER. ANY AMOUNT OF  CREDIT  TREATED  AS
   49  CARRIED  FORWARD TO THE TAXABLE YEAR PURSUANT TO THIS SUBPARAGRAPH SHALL
   50  BE APPLIED AS PROVIDED IN CLAUSE (H) OF THIS SUBPARAGRAPH.
   51    (D) THE TERM "QUALIFIED TRANSACTION" SHALL MEAN A TRANSACTION WHICH IS
   52  A REORGANIZATION DESCRIBED  IN  SECTION  368(A)(1)(D)  OF  THE  INTERNAL
   53  REVENUE  CODE,  WHEREIN  (I)  SUBSTANTIALLY  ALL  OF  THE  ASSETS OF THE
   54  TRANSFEROR NECESSARY TO CONTINUE THE OPERATION OF A  DIVISION  OR  DIVI-
   55  SIONS OF THE TRANSFEROR ARE TRANSFERRED TO THE TAXPAYER IN A TRANSACTION
   56  TO  WHICH SECTION 351 OF SUCH CODE APPLIES, AND (II) STOCK OR SECURITIES
       S. 6359                            69                            A. 8559
    1  OF THE TAXPAYER HELD BY  THE  TRANSFEROR  ARE  DISTRIBUTED  PURSUANT  TO
    2  SECTION 355 OF SUCH CODE.
    3    (E)  THE TERM "UNUSED CREDIT" SHALL MEAN THE AMOUNT OF CREDIT SHOWN AS
    4  CARRIED FORWARD TO THE TRANSACTION YEAR ON THE TRANSFEROR'S  TAX  RETURN
    5  FOR  ITS  TAXABLE  YEAR  IMMEDIATELY PRECEDING THE TRANSACTION YEAR WITH
    6  RESPECT TO THE PROPERTY DESCRIBED IN CLAUSE (A) OF THIS SUBPARAGRAPH.
    7    (F) THE TERM "TRANSACTION YEAR" MEANS THE TAXABLE YEAR  IN  WHICH  THE
    8  QUALIFIED TRANSACTION OCCURS.
    9    (G) NOTWITHSTANDING ANY OTHER PROVISION OF LAW TO THE CONTRARY, IN THE
   10  CASE  OF ALLOWANCE OF CREDIT PURSUANT TO THIS SUBPARAGRAPH TO A TAXPAYER
   11  THE COMMISSIONER SHALL HAVE THE AUTHORITY TO REVEAL TO THE TAXPAYER  ANY
   12  INFORMATION,  WITH RESPECT TO THE CREDIT OF THE TRANSFEROR, WHICH IS THE
   13  BASIS FOR THE DENIAL IN WHOLE OR IN PART OF THE CREDIT CLAIMED  BY  SUCH
   14  TAXPAYER.
   15    (H)  WHERE A CREDIT IS ALLOWED TO A TAXPAYER PURSUANT TO THIS SUBPARA-
   16  GRAPH, THE TAXPAYER MAY TREAT THE AMOUNT OF SUCH CREDIT AS  AN  OVERPAY-
   17  MENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS
   18  OF  SECTION  ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER, PROVIDED, HOWEVER,
   19  THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
   20  THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE  PAID  THEREON.  SUCH
   21  CREDIT  SHALL  BE  ALLOWED  AGAINST THE TAX IMPOSED BY THIS ARTICLE WITH
   22  RESPECT TO THE SECOND SUCCEEDING TAXABLE YEAR NEXT FOLLOWING THE  TRANS-
   23  ACTION  YEAR,  PROVIDED  THAT  NOT MORE THAN ONE-FOURTH OF THE AMOUNT OF
   24  SUCH CREDIT MAY BE APPLIED BY THE TAXPAYER, WHETHER TO REDUCE TAX OTHER-
   25  WISE DUE OR TO BE TREATED AS AN OVERPAYMENT TO BE CREDITED OR  REFUNDED,
   26  WITH RESPECT TO SUCH SECOND SUCCEEDING TAXABLE YEAR AND EACH OF THE NEXT
   27  THREE TAXABLE YEARS FOLLOWING SUCH SECOND SUCCEEDING TAXABLE YEAR.
   28    (F) NEW BUSINESS. FOR PURPOSES OF PARAGRAPH (D) OF THIS SUBDIVISION, A
   29  NEW BUSINESS SHALL INCLUDE ANY CORPORATION, EXCEPT A CORPORATION WHICH:
   30    (I)  OVER FIFTY PERCENT OF THE NUMBER OF SHARES OF STOCK ENTITLING THE
   31  HOLDERS THEREOF TO VOTE FOR THE ELECTION OF  DIRECTORS  OR  TRUSTEES  IS
   32  OWNED  OR  CONTROLLED,  EITHER  DIRECTLY  OR  INDIRECTLY,  BY A TAXPAYER
   33  SUBJECT TO TAX UNDER THIS ARTICLE; SECTION ONE HUNDRED  EIGHTY-THREE  OR
   34  ONE HUNDRED EIGHTY-FOUR OF ARTICLE NINE; OR ARTICLE THIRTY-THREE OF THIS
   35  CHAPTER; OR
   36    (II) IS SUBSTANTIALLY SIMILAR IN OPERATION AND IN OWNERSHIP TO A BUSI-
   37  NESS  ENTITY  (OR  ENTITIES)  TAXABLE, OR PREVIOUSLY TAXABLE, UNDER THIS
   38  ARTICLE; SECTION ONE  HUNDRED  EIGHTY-THREE,  ONE  HUNDRED  EIGHTY-FOUR,
   39  FORMER  SECTION  ONE  HUNDRED  EIGHTY-FIVE OR FORMER SECTION ONE HUNDRED
   40  EIGHTY-SIX OF ARTICLE NINE; ARTICLE THIRTY-TWO OF THIS CHAPTER (AS  SUCH
   41  ARTICLE  WAS IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN);
   42  ARTICLE THIRTY-THREE OF THIS CHAPTER; ARTICLE TWENTY-THREE OF THIS CHAP-
   43  TER OR  WHICH  WOULD  HAVE  BEEN  SUBJECT  TO  TAX  UNDER  SUCH  ARTICLE
   44  TWENTY-THREE  (AS  SUCH ARTICLE WAS IN EFFECT ON JANUARY FIRST, NINETEEN
   45  HUNDRED EIGHTY) OR THE INCOME (OR LOSSES) OF WHICH IS (OR WAS)  INCLUDA-
   46  BLE  UNDER  ARTICLE  TWENTY-TWO  OF  THIS CHAPTER WHEREBY THE INTENT AND
   47  PURPOSE OF THIS PARAGRAPH AND PARAGRAPH (D)  OF  THIS  SUBDIVISION  WITH
   48  RESPECT TO REFUNDING OF CREDIT TO NEW BUSINESS WOULD BE EVADED; OR
   49    (III) HAS BEEN SUBJECT TO TAX UNDER THIS ARTICLE OR UNDER FORMER ARTI-
   50  CLE THIRTY-TWO OF THIS CHAPTER FOR MORE THAN FIVE TAXABLE YEARS (EXCLUD-
   51  ING SHORT TAXABLE YEARS).
   52    2.  EMPLOYMENT  INCENTIVE  CREDIT (EIC). (A)(I) APPLICATION OF CREDIT.
   53  WHERE A TAXPAYER IS ALLOWED A  CREDIT  UNDER  SUBDIVISION  ONE  OF  THIS
   54  SECTION,  OTHER  THAN  AT  THE  OPTIONAL RATE APPLICABLE TO RESEARCH AND
   55  DEVELOPMENT PROPERTY, THE TAXPAYER SHALL BE ALLOWED A CREDIT FOR EACH OF
   56  THE TWO YEARS NEXT SUCCEEDING THE TAXABLE  YEAR  FOR  WHICH  THE  CREDIT
       S. 6359                            70                            A. 8559
    1  UNDER  SUCH  SUBDIVISION  ONE  IS ALLOWED WITH RESPECT TO SUCH PROPERTY,
    2  WHETHER OR NOT DEDUCTIBLE IN SUCH TAXABLE YEAR OR IN SUBSEQUENT  TAXABLE
    3  YEARS  PURSUANT  TO  PARAGRAPH  (D)  OF  SUCH SUBDIVISION ONE. PROVIDED,
    4  HOWEVER,  THAT THE CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXA-
    5  BLE YEAR SHALL BE ALLOWED ONLY IF THE AVERAGE NUMBER OF EMPLOYEES DURING
    6  SUCH TAXABLE YEAR IS AT LEAST ONE HUNDRED ONE  PERCENT  OF  THE  AVERAGE
    7  NUMBER OF EMPLOYEES DURING THE EMPLOYMENT BASE YEAR. THE EMPLOYMENT BASE
    8  YEAR  SHALL  BE  THE TAXABLE YEAR IMMEDIATELY PRECEDING THE TAXABLE YEAR
    9  FOR WHICH THE CREDIT UNDER SUCH SUBDIVISION ONE IS ALLOWED  EXCEPT  THAT
   10  IF  THE  TAXPAYER WAS NOT SUBJECT TO TAX AND DID NOT HAVE A TAXABLE YEAR
   11  IMMEDIATELY PRECEDING THE TAXABLE YEAR FOR WHICH THE CREDIT  UNDER  SUCH
   12  SUBDIVISION  ONE  OF  THIS  SECTION IS ALLOWED, THE EMPLOYMENT BASE YEAR
   13  SHALL BE THE TAXABLE YEAR IN WHICH THE CREDIT UNDER SUCH SUBDIVISION ONE
   14  IS ALLOWED.
   15    (II) AMOUNT OF CREDIT. THE AMOUNT OF THE  CREDIT  ALLOWED  UNDER  THIS
   16  SUBDIVISION SHALL BE AS SET FORTH IN THE FOLLOWING TABLE:
   17  AVERAGE NUMBER OF EMPLOYEES DURING THE      CREDIT ALLOWED UNDER THIS
   18  TAXABLE YEAR EXPRESSED AS A PERCENTAGE      SUBDIVISION EXPRESSED AS A
   19  OF AVERAGE EMPLOYEES IN EMPLOYMENT          PERCENTAGE OF THE APPLICABLE
   20  BASE YEARS                                  INVESTMENT CREDIT BASIS
   21  LESS THAN 102%                              1.5%
   22  AT LEAST 102% AND LESS THAN 103%            2%
   23  AT LEAST 103%                               2.5%
   24    (B)  AVERAGE NUMBER OF EMPLOYEES. THE AVERAGE NUMBER OF EMPLOYEES IN A
   25  TAXABLE YEAR SHALL BE COMPUTED BY ASCERTAINING THE NUMBER  OF  EMPLOYEES
   26  WITHIN  THE  STATE,  EXCEPT  GENERAL EXECUTIVE OFFICERS, EMPLOYED BY THE
   27  TAXPAYER ON THE THIRTY-FIRST DAY OF MARCH, THE THIRTIETH  DAY  OF  JUNE,
   28  THE  THIRTIETH  DAY OF SEPTEMBER AND THE THIRTY-FIRST DAY OF DECEMBER IN
   29  THE TAXABLE YEAR, BY ADDING TOGETHER THE NUMBER OF EMPLOYEES ASCERTAINED
   30  ON EACH OF SUCH DATES AND DIVIDING THE SUM SO OBTAINED BY THE NUMBER  OF
   31  SUCH  ABOVE  MENTIONED DATES OCCURRING WITHIN THE TAXABLE YEAR. HOWEVER,
   32  WITH RESPECT TO THE EMPLOYMENT BASE YEAR, THERE SHALL BE EXCLUDED THERE-
   33  FROM ANY EMPLOYEE WITH RESPECT TO  WHOM  A  CREDIT  PROVIDED  FOR  UNDER
   34  SUBDIVISION  SIX OF THIS SECTION IS CLAIMED, FOR THE TAXABLE YEAR, BASED
   35  ON EMPLOYMENT WITHIN A ZONE EQUIVALENT AREA DESIGNATED AS SUCH  PURSUANT
   36  TO ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL LAW.
   37    (C)  CARRYOVER.  IN  NO  EVENT SHALL THE CREDIT HEREIN PROVIDED FOR BE
   38  ALLOWED IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN  THE
   39  FIXED  DOLLAR  MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION
   40  ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF  THE  AMOUNT
   41  OF  CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES
   42  THE TAX TO SUCH AMOUNT, ANY AMOUNT OF  CREDIT  NOT  DEDUCTIBLE  IN  SUCH
   43  TAXABLE YEAR MAY BE CARRIED OVER TO THE FIFTEEN TAXABLE YEARS IMMEDIATE-
   44  LY  FOLLOWING  SUCH TAXABLE YEAR AND MAY BE DEDUCTED FROM THE TAXPAYER'S
   45  TAX FOR SUCH YEAR OR YEARS.
   46    3. EMPIRE ZONE INVESTMENT TAX CREDIT (EZ-ITC). (A) A TAXPAYER SHALL BE
   47  ALLOWED A CREDIT, TO BE COMPUTED AS HEREIN  PROVIDED,  AGAINST  THE  TAX
   48  IMPOSED  BY  THIS ARTICLE IF THE TAXPAYER HAS BEEN CERTIFIED PURSUANT TO
   49  ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL LAW. THE AMOUNT OF THE CRED-
   50  IT SHALL BE TEN PERCENT OF THE COST OR OTHER BASIS  FOR  FEDERAL  INCOME
   51  TAX  PURPOSES OF TANGIBLE PERSONAL PROPERTY AND OTHER TANGIBLE PROPERTY,
   52  INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS OF BUILDINGS, DESCRIBED IN
   53  PARAGRAPH (B) OF THIS SUBDIVISION, WHICH IS  LOCATED  WITHIN  AN  EMPIRE
   54  ZONE  DESIGNATED AS SUCH PURSUANT TO ARTICLE EIGHTEEN-B OF SUCH LAW, BUT
   55  ONLY IF THE ACQUISITION, CONSTRUCTION,  RECONSTRUCTION  OR  ERECTION  OF
   56  SUCH  PROPERTY  OCCURRED  OR  WAS COMMENCED ON OR AFTER THE DATE OF SUCH
       S. 6359                            71                            A. 8559
    1  DESIGNATION AND PRIOR TO THE EXPIRATION THEREOF. PROVIDED, HOWEVER, THAT
    2  IN THE CASE OF AN ACQUISITION, CONSTRUCTION, RECONSTRUCTION OR  ERECTION
    3  WHICH WAS COMMENCED DURING SUCH PERIOD AND CONTINUED OR COMPLETED SUBSE-
    4  QUENTLY,  SUCH CREDIT SHALL BE TEN PERCENT OF THE PORTION OF THE COST OR
    5  OTHER BASIS FOR FEDERAL INCOME TAX PURPOSES ATTRIBUTABLE TO SUCH PERIOD,
    6  WHICH PORTION SHALL BE ASCERTAINED BY MULTIPLYING SUCH COST OR BASIS  BY
    7  A  FRACTION  THE  NUMERATOR  OF  WHICH SHALL BE THE EXPENDITURES PAID OR
    8  INCURRED DURING SUCH PERIOD FOR SUCH PURPOSES  AND  THE  DENOMINATOR  OF
    9  WHICH  SHALL  BE THE TOTAL OF ALL EXPENDITURES PAID OR INCURRED FOR SUCH
   10  ACQUISITION, CONSTRUCTION, RECONSTRUCTION OR ERECTION.
   11    (B) QUALIFIED PROPERTY. A CREDIT SHALL BE ALLOWED UNDER THIS  SUBDIVI-
   12  SION WITH RESPECT TO TANGIBLE PERSONAL PROPERTY AND OTHER TANGIBLE PROP-
   13  ERTY, INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS OF BUILDINGS, WHICH
   14    (I) ARE DEPRECIABLE PURSUANT TO SECTION ONE HUNDRED SIXTY-SEVEN OF THE
   15  INTERNAL REVENUE CODE,
   16    (II) HAVE A USEFUL LIFE OF FOUR YEARS OR MORE,
   17    (III)  ARE  ACQUIRED  BY  PURCHASE  AS  DEFINED IN SECTION ONE HUNDRED
   18  SEVENTY-NINE (D) OF THE INTERNAL REVENUE CODE,
   19    (IV) HAVE A SITUS IN AN EMPIRE ZONE DESIGNATED  AS  SUCH  PURSUANT  TO
   20  ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL LAW, AND
   21    (V)  ARE  (A)  PRINCIPALLY  USED  BY THE TAXPAYER IN THE PRODUCTION OF
   22  GOODS  BY  MANUFACTURING,  PROCESSING,  ASSEMBLING,  REFINING,   MINING,
   23  EXTRACTING,  FARMING,  AGRICULTURE, HORTICULTURE, FLORICULTURE, VITICUL-
   24  TURE OR COMMERCIAL FISHING,
   25    (B) INDUSTRIAL WASTE TREATMENT FACILITIES  OR  AIR  POLLUTION  CONTROL
   26  FACILITIES USED IN THE TAXPAYER'S TRADE OR BUSINESS,
   27    (C) RESEARCH AND DEVELOPMENT PROPERTY,
   28    (D) PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S TRADE OR
   29  BUSINESS  AS  A BROKER OR DEALER IN CONNECTION WITH THE PURCHASE OR SALE
   30  (WHICH SHALL INCLUDE BUT NOT BE LIMITED TO THE ISSUANCE, ENTERING  INTO,
   31  ASSUMPTION,  OFFSET,  ASSIGNMENT,  TERMINATION,  OR TRANSFER) OF STOCKS,
   32  BONDS  OR  OTHER  SECURITIES  AS  DEFINED  IN   SECTION   FOUR   HUNDRED
   33  SEVENTY-FIVE  (C)(2)  OF THE INTERNAL REVENUE CODE, OR OF COMMODITIES AS
   34  DEFINED IN SECTION FOUR HUNDRED SEVENTY-FIVE (E) OF THE INTERNAL REVENUE
   35  CODE,
   36    (E) PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S TRADE OR
   37  BUSINESS OF PROVIDING  INVESTMENT  ADVISORY  SERVICES  FOR  A  REGULATED
   38  INVESTMENT  COMPANY AS DEFINED IN SECTION EIGHT HUNDRED FIFTY-ONE OF THE
   39  INTERNAL REVENUE CODE, OR LENDING, LOAN ARRANGEMENT, OR LOAN ORIGINATION
   40  SERVICES TO CUSTOMERS IN CONNECTION WITH THE  PURCHASE  OR  SALE  (WHICH
   41  SHALL INCLUDE BUT NOT BE LIMITED TO THE ISSUANCE, ENTERING INTO, ASSUMP-
   42  TION,  OFFSET,  ASSIGNMENT,  TERMINATION  OR  TRANSFER) OF SECURITIES AS
   43  DEFINED IN SECTION FOUR HUNDRED  SEVENTY-FIVE  (C)(2)  OF  THE  INTERNAL
   44  REVENUE CODE,
   45    (E-1)  PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S TRADE
   46  OR BUSINESS OF PROVIDING INVESTMENT ADVISORY SERVICES OR THE SERVICE  OF
   47  MANAGING INVESTMENT PORTFOLIOS TO ACHIEVE SPECIFIC INVESTMENT OBJECTIVES
   48  FOR  ACCOUNTS  OVER ONE MILLION DOLLARS OF ACCREDITED INVESTORS (AS THAT
   49  TERM IS DEFINED IN RULE 501 OF REGULATION D OF  THE  SECURITIES  ACT  OF
   50  1933), IF THE TAXPAYER SATISFIES THE FOLLOWING CRITERIA:
   51    (I)  THE TAXPAYER IS A REGULATED BROKER OR DEALER OR AN AFFILIATE OF A
   52  REGULATED BROKER OR DEALER,
   53    (II) THE TAXPAYER IS REGISTERED AS AN INVESTMENT ADVISER UNDER SECTION
   54  TWO HUNDRED THREE OF THE INVESTMENT ADVISERS ACT OF  1940,  AS  AMENDED,
   55  AND
       S. 6359                            72                            A. 8559
    1    (III)  AT  LEAST  ONE CLIENT OF THE TAXPAYER IS A REGULATED INVESTMENT
    2  COMPANY AS DEFINED IN SECTION EIGHT HUNDRED FIFTY-ONE  OF  THE  INTERNAL
    3  REVENUE CODE THAT HAS ASSETS OF ONE HUNDRED MILLION DOLLARS, OR
    4    (F) PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S BUSINESS
    5  AS  AN  EXCHANGE REGISTERED AS A NATIONAL SECURITIES EXCHANGE WITHIN THE
    6  MEANING OF SECTIONS 3(A)(1) AND 6(A) OF THE SECURITIES EXCHANGE  ACT  OF
    7  1934  OR A BOARD OF TRADE AS DEFINED IN SUBDIVISION ONE OF PARAGRAPH (A)
    8  OF SECTION FOURTEEN HUNDRED TEN OF THE NOT-FOR-PROFIT CORPORATION LAW OR
    9  AS AN ENTITY THAT IS WHOLLY OWNED BY ONE OR MORE SUCH  NATIONAL  SECURI-
   10  TIES  EXCHANGES OR BOARDS OR TRADE AND THAT PROVIDES AUTOMATION OR TECH-
   11  NICAL SERVICES THERETO.
   12    (VI) FOR PURPOSES OF CLAUSES (D), (E), (E-1) AND (F)  OF  SUBPARAGRAPH
   13  (V)  OF THIS PARAGRAPH, PROPERTY PURCHASED BY A TAXPAYER AFFILIATED WITH
   14  A REGULATED BROKER,  DEALER,  REGISTERED  INVESTMENT  ADVISER,  NATIONAL
   15  SECURITIES  EXCHANGE  OR  BOARD  OF TRADE IS ALLOWED A CREDIT UNDER THIS
   16  SUBDIVISION IF THE PROPERTY IS USED BY ITS AFFILIATED REGULATED  BROKER,
   17  DEALER, REGISTERED INVESTMENT ADVISER OR NATIONAL SECURITIES EXCHANGE OR
   18  BOARD  OF  TRADE  IN  ACCORDANCE  WITH THIS SUBDIVISION. FOR PURPOSES OF
   19  DETERMINING IF THE PROPERTY IS PRINCIPALLY USED IN QUALIFYING USES,  THE
   20  USES BY THE TAXPAYER DESCRIBED IN CLAUSES (D), (E) AND (E-1) OF SUBPARA-
   21  GRAPH  (V) OF THIS PARAGRAPH MAY BE AGGREGATED. IN ADDITION, THE USES BY
   22  THE TAXPAYER, ITS AFFILIATED REGULATED  BROKER,  DEALER  AND  REGISTERED
   23  INVESTMENT  ADVISER  UNDER  ANY  OF  THOSE  CLAUSES  MAY  BE AGGREGATED.
   24  PROVIDED, HOWEVER, A TAXPAYER SHALL NOT BE ALLOWED THE  CREDIT  PROVIDED
   25  BY CLAUSES (D), (E), (E-1) AND (F) OF SUBPARAGRAPH (V) OF THIS PARAGRAPH
   26  UNLESS
   27    (I) EIGHTY PERCENT OR MORE OF THE EMPLOYEES PERFORMING THE ADMINISTRA-
   28  TIVE  AND  SUPPORT FUNCTIONS RESULTING FROM OR RELATED TO THE QUALIFYING
   29  USES OF SUCH EQUIPMENT ARE LOCATED IN THIS STATE, OR
   30    (II) THE AVERAGE NUMBER OF EMPLOYEES THAT PERFORM  THE  ADMINISTRATIVE
   31  AND  SUPPORT  FUNCTIONS RESULTING FROM OR RELATED TO THE QUALIFYING USES
   32  OF SUCH EQUIPMENT AND ARE LOCATED IN THIS STATE DURING THE TAXABLE  YEAR
   33  FOR  WHICH THE CREDIT IS CLAIMED IS EQUAL TO OR GREATER THAN NINETY-FIVE
   34  PERCENT OF THE AVERAGE NUMBER OF EMPLOYEES THAT PERFORM THESE  FUNCTIONS
   35  AND  ARE  LOCATED IN THIS STATE DURING THE THIRTY-SIX MONTHS IMMEDIATELY
   36  PRECEDING THE YEAR FOR WHICH THE CREDIT IS CLAIMED, OR
   37    (III) THE NUMBER OF EMPLOYEES LOCATED IN THIS STATE DURING THE TAXABLE
   38  YEAR FOR WHICH THE CREDIT IS CLAIMED IS EQUAL TO OR GREATER THAN  NINETY
   39  PERCENT  OF  THE  NUMBER  OF EMPLOYEES LOCATED IN THIS STATE ON DECEMBER
   40  THIRTY-FIRST, NINETEEN HUNDRED NINETY-EIGHT OR, IF THE TAXPAYER WAS  NOT
   41  A  CALENDAR YEAR TAXPAYER IN NINETEEN HUNDRED NINETY-EIGHT, THE LAST DAY
   42  OF ITS FIRST TAXABLE YEAR ENDING AFTER DECEMBER  THIRTY-FIRST,  NINETEEN
   43  HUNDRED  NINETY-EIGHT.  IF  THE  TAXPAYER BECOMES SUBJECT TO TAX IN THIS
   44  STATE AFTER THE TAXABLE YEAR BEGINNING IN NINETEEN HUNDRED NINETY-EIGHT,
   45  THEN THE TAXPAYER  IS  NOT  REQUIRED  TO  SATISFY  THE  EMPLOYMENT  TEST
   46  PROVIDED  IN  THE  PRECEDING SENTENCE OF THIS SUBPARAGRAPH FOR ITS FIRST
   47  TAXABLE YEAR.
   48    (VII) FOR THE PURPOSES OF CLAUSE (III) OF SUBPARAGRAPH  (VI)  OF  THIS
   49  PARAGRAPH  THE  EMPLOYMENT TEST WILL BE BASED ON THE NUMBER OF EMPLOYEES
   50  LOCATED IN THIS STATE ON THE LAST DAY OF  THE  FIRST  TAXABLE  YEAR  THE
   51  TAXPAYER  IS  SUBJECT  TO TAX IN THIS STATE. IF THE USES OF THE PROPERTY
   52  MUST BE AGGREGATED TO DETERMINE WHETHER THE PROPERTY IS PRINCIPALLY USED
   53  IN QUALIFYING USES, THEN EITHER EACH AFFILIATE USING THE  PROPERTY  MUST
   54  SATISFY  THIS  EMPLOYMENT TEST OR THIS EMPLOYMENT TEST MUST BE SATISFIED
   55  THROUGH THE AGGREGATION OF THE EMPLOYEES OF THE TAXPAYER, ITS AFFILIATED
       S. 6359                            73                            A. 8559
    1  REGULATED BROKER, DEALER, AND REGISTERED INVESTMENT  ADVISER  USING  THE
    2  PROPERTY.
    3    (VIII) FOR THE PURPOSE OF THIS SUBDIVISION, THE TERM "GOODS" SHALL NOT
    4  INCLUDE ELECTRICITY.
    5    (IX)  FOR PURPOSES OF THIS SUBDIVISION, "MANUFACTURING" SHALL MEAN THE
    6  PROCESS OF WORKING RAW MATERIALS INTO WARES SUITABLE FOR  USE  OR  WHICH
    7  GIVES  NEW  SHAPES,  NEW  QUALITY  OR  NEW  COMBINATIONS TO MATTER WHICH
    8  ALREADY HAS GONE THROUGH SOME ARTIFICIAL PROCESS BY THE USE  OF  MACHIN-
    9  ERY, TOOLS, APPLIANCES AND OTHER SIMILAR EQUIPMENT. PROPERTY USED IN THE
   10  PRODUCTION OF GOODS SHALL INCLUDE MACHINERY, EQUIPMENT OR OTHER TANGIBLE
   11  PROPERTY  WHICH  IS  PRINCIPALLY USED IN THE REPAIR AND SERVICE OF OTHER
   12  MACHINERY, EQUIPMENT OR OTHER TANGIBLE PROPERTY USED PRINCIPALLY IN  THE
   13  PRODUCTION  OF  GOODS  AND  SHALL  INCLUDE  ALL  FACILITIES  USED IN THE
   14  PRODUCTION OPERATION, INCLUDING  STORAGE  OF  MATERIAL  TO  BE  USED  IN
   15  PRODUCTION  AND  OF THE PRODUCTS THAT ARE PRODUCED. FOR PURPOSES OF THIS
   16  SUBDIVISION, THE TERMS "RESEARCH AND DEVELOPMENT PROPERTY",  "INDUSTRIAL
   17  WASTE  TREATMENT  FACILITIES",  AND  "AIR  POLLUTION CONTROL FACILITIES"
   18  SHALL HAVE THE MEANINGS ASCRIBED THERETO BY CLAUSES (B),  (C)  AND  (D),
   19  RESPECTIVELY,  OF  SUBPARAGRAPH (IV) OF PARAGRAPH (B) OF SUBDIVISION ONE
   20  OF THIS SECTION, AND THE PROVISIONS OF SUBPARAGRAPH (V)  OF  SUCH  PARA-
   21  GRAPH (B) SHALL APPLY.
   22    (C)  NONQUALIFIED  PROPERTY.  A TAXPAYER SHALL NOT BE ALLOWED A CREDIT
   23  UNDER THIS SUBDIVISION WITH RESPECT TO ANY  TANGIBLE  PERSONAL  PROPERTY
   24  AND  OTHER  TANGIBLE PROPERTY, INCLUDING BUILDINGS AND STRUCTURAL COMPO-
   25  NENTS OF BUILDINGS, WHICH IT LEASES TO ANY OTHER PERSON  OR  CORPORATION
   26  EXCEPT  WHERE  A  TAXPAYER  LEASES  PROPERTY  TO AN AFFILIATED REGULATED
   27  BROKER,  DEALER,  REGISTERED  INVESTMENT  ADVISER,  NATIONAL  SECURITIES
   28  EXCHANGE  OR  BOARD  OF TRADE OR OTHER ENTITY DESCRIBED IN CLAUSE (F) OF
   29  SUBPARAGRAPH (V) OF PARAGRAPH (B) OF THIS  SUBDIVISION  THAT  USES  SUCH
   30  PROPERTY  IN  ACCORDANCE  WITH CLAUSE (D), (E), (E-1) OR (F) OF SUBPARA-
   31  GRAPH (V) OF PARAGRAPH (B) OF THIS  SUBDIVISION.  FOR  PURPOSES  OF  THE
   32  PRECEDING  SENTENCE, ANY CONTRACT OR AGREEMENT TO LEASE OR RENT OR FOR A
   33  LICENSE TO USE SUCH PROPERTY SHALL BE CONSIDERED  A  LEASE.    PROVIDED,
   34  HOWEVER,  IN  DETERMINING  WHETHER  A TAXPAYER SHALL BE ALLOWED A CREDIT
   35  UNDER THIS SUBDIVISION WITH RESPECT TO SUCH PROPERTY, ANY ELECTION  MADE
   36  WITH  RESPECT  TO  SUCH PROPERTY PURSUANT TO THE PROVISIONS OF PARAGRAPH
   37  EIGHT OF SUBSECTION (F) OF SECTION ONE HUNDRED SIXTY-EIGHT OF THE INTER-
   38  NAL REVENUE CODE, AS SUCH PARAGRAPH WAS IN EFFECT FOR AGREEMENTS ENTERED
   39  INTO PRIOR TO JANUARY FIRST,  NINETEEN  HUNDRED  EIGHTY-FOUR,  SHALL  BE
   40  DISREGARDED.
   41    (D) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA-
   42  BLE  YEAR  SHALL  NOT  REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE
   43  FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D)  OF  SUBDIVISION
   44  ONE  OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. PROVIDED, HOWEVER, THAT
   45  IF THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR  ANY  TAXABLE
   46  YEAR REDUCES THE TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE
   47  IN  SUCH TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS
   48  AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR  YEARS.  IN
   49  LIEU OF SUCH CARRYOVER, ANY SUCH TAXPAYER WHICH QUALIFIES AS A NEW BUSI-
   50  NESS  UNDER  PARAGRAPH (F) OF SUBDIVISION ONE OF THIS SECTION MAY ELECT,
   51  ON ITS REPORT FOR ITS TAXABLE YEAR WITH RESPECT TO WHICH SUCH CREDIT  IS
   52  ALLOWED,  TO  TREAT  FIFTY PERCENT OF THE AMOUNT OF SUCH CARRYOVER AS AN
   53  OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED  IN  ACCORDANCE  WITH  THE
   54  PROVISIONS  OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. IN ADDI-
   55  TION, ANY TAXPAYER WHICH IS APPROVED AS THE OWNER OF A QUALIFIED INVEST-
   56  MENT PROJECT OR A SIGNIFICANT CAPITAL  INVESTMENT  PROJECT  PURSUANT  TO
       S. 6359                            74                            A. 8559
    1  SUBDIVISION (W) OF SECTION NINE HUNDRED FIFTY-NINE OF THE GENERAL MUNIC-
    2  IPAL  LAW, ON ITS REPORT FOR ITS TAXABLE YEAR WITH RESPECT TO WHICH SUCH
    3  CREDIT IS ALLOWED, IN LIEU OF SUCH CARRYOVER, MAY ELECT TO  TREAT  FIFTY
    4  PERCENT  OF  THE  AMOUNT  OF SUCH CARRYOVER WHICH IS ATTRIBUTABLE TO THE
    5  CREDIT ALLOWED UNDER THIS SUBDIVISION FOR PROPERTY WHICH IS PART OF SUCH
    6  PROJECT AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED  IN  ACCORD-
    7  ANCE  WITH  THE  PROVISIONS  OF  SECTION ONE THOUSAND EIGHTY-SIX OF THIS
    8  CHAPTER. PROVIDED, HOWEVER, SUCH OWNER SHALL BE ALLOWED SUCH REFUND  FOR
    9  A MAXIMUM OF TEN TAXABLE YEARS WITH RESPECT TO SUCH QUALIFIED INVESTMENT
   10  PROJECT  AND  EACH SIGNIFICANT CAPITAL INVESTMENT PROJECT, STARTING WITH
   11  THE FIRST TAXABLE YEAR IN WHICH  PROPERTY  COMPRISING  SUCH  PROJECT  IS
   12  PLACED  IN  SERVICE.  PROVIDED,  FURTHER,  HOWEVER,  THE  PROVISIONS  OF
   13  SUBSECTION (C) OF SECTION ONE  THOUSAND  EIGHTY-EIGHT  OF  THIS  CHAPTER
   14  NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
   15    (D-1)  ANY  CARRYOVER OF A CREDIT FROM PRIOR TAXABLE YEARS WILL NOT BE
   16  ALLOWED IF AN EMPIRE ZONE RETENTION CERTIFICATE IS NOT  ISSUED  PURSUANT
   17  TO  SUBDIVISION  (W)  OF  SECTION NINE HUNDRED FIFTY-NINE OF THE GENERAL
   18  MUNICIPAL LAW TO THE EMPIRE ZONE ENTERPRISE WHICH IS THE  BASIS  OF  THE
   19  CREDIT.
   20    (E)  AT  THE  OPTION OF THE TAXPAYER, THE TAXPAYER MAY CHOOSE TO CLAIM
   21  THE CREDIT DESCRIBED IN PARAGRAPH (A) OF THIS SUBDIVISION  FOR  PROPERTY
   22  WHICH  ALSO  QUALIFIES  FOR THE CREDIT PROVIDED UNDER SUBDIVISION ONE OF
   23  THIS SECTION. A TAXPAYER SHALL NOT BE ALLOWED A CREDIT UNDER THIS SUBDI-
   24  VISION WITH RESPECT TO ANY PROPERTY DESCRIBED IN PARAGRAPH (A)  OF  THIS
   25  SUBDIVISION  IF  A  CREDIT  IS TAKEN PURSUANT TO SUBDIVISION ONE OF THIS
   26  SECTION.
   27    (F) RECAPTURE. (I) WITH  RESPECT  TO  PROPERTY  WHICH  IS  DEPRECIABLE
   28  PURSUANT TO SECTION ONE HUNDRED SIXTY-SEVEN OF THE INTERNAL REVENUE CODE
   29  BUT  IS NOT SUBJECT TO THE PROVISIONS OF SECTION ONE HUNDRED SIXTY-EIGHT
   30  OF SUCH CODE AND WHICH IS DISPOSED OF OR CEASES TO BE IN  QUALIFIED  USE
   31  PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT IS TO BE TAKEN,
   32  THE  AMOUNT  OF  THE CREDIT SHALL BE THAT PORTION OF THE CREDIT PROVIDED
   33  FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH THE  MONTHS  OF
   34  QUALIFIED  USE  BEAR  TO THE MONTHS OF USEFUL LIFE. IF PROPERTY ON WHICH
   35  CREDIT HAS BEEN TAKEN IS DISPOSED OF OR CEASES TO BE  IN  QUALIFIED  USE
   36  PRIOR  TO  THE END OF ITS USEFUL LIFE, THE DIFFERENCE BETWEEN THE CREDIT
   37  TAKEN AND THE CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED  BACK  IN  THE
   38  YEAR  OF DISPOSITION. PROVIDED, HOWEVER, IF SUCH PROPERTY IS DISPOSED OF
   39  OR CEASES TO BE IN QUALIFIED USE AFTER IT HAS BEEN IN QUALIFIED USE  FOR
   40  MORE  THAN  TWELVE  CONSECUTIVE  YEARS, IT SHALL NOT BE NECESSARY TO ADD
   41  BACK THE CREDIT AS PROVIDED IN THIS SUBPARAGRAPH. THE AMOUNT  OF  CREDIT
   42  ALLOWED  FOR  ACTUAL USE SHALL BE DETERMINED BY MULTIPLYING THE ORIGINAL
   43  CREDIT BY THE RATIO WHICH THE MONTHS OF QUALIFIED USE BEAR TO THE MONTHS
   44  OF USEFUL LIFE. FOR PURPOSES OF THIS SUBPARAGRAPH, USEFUL LIFE OF  PROP-
   45  ERTY  SHALL  BE  THE SAME AS THE TAXPAYER USES FOR DEPRECIATION PURPOSES
   46  WHEN COMPUTING HIS FEDERAL INCOME TAX LIABILITY.
   47    (II) EXCEPT WITH RESPECT TO THAT PROPERTY TO WHICH  SUBPARAGRAPH  (IV)
   48  OF  THIS  PARAGRAPH  APPLIES,  WITH  RESPECT  TO THREE-YEAR PROPERTY, AS
   49  DEFINED IN SUBSECTION (E) OF SECTION  ONE  HUNDRED  SIXTY-EIGHT  OF  THE
   50  INTERNAL REVENUE CODE, WHICH IS DISPOSED OF OR CEASES TO BE IN QUALIFIED
   51  USE  PRIOR  TO  THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT IS TO BE
   52  TAKEN, THE AMOUNT OF THE CREDIT SHALL BE  THAT  PORTION  OF  THE  CREDIT
   53  PROVIDED  FOR  IN  THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH THE
   54  MONTHS OF QUALIFIED USE BEAR TO THIRTY-SIX. IF PROPERTY ON WHICH  CREDIT
   55  HAS  BEEN TAKEN IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE PRIOR TO
   56  THE END OF THIRTY-SIX MONTHS, THE DIFFERENCE BETWEEN  THE  CREDIT  TAKEN
       S. 6359                            75                            A. 8559
    1  AND  THE CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE YEAR OF
    2  DISPOSITION. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL USE SHALL BE DETER-
    3  MINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE RATIO WHICH  THE  MONTHS
    4  OF QUALIFIED USE BEAR TO THIRTY-SIX.
    5    (III)  EXCEPT WITH RESPECT TO THAT PROPERTY TO WHICH SUBPARAGRAPH (IV)
    6  OF THIS PARAGRAPH APPLIES, WITH  RESPECT  TO  PROPERTY  SUBJECT  TO  THE
    7  PROVISIONS  OF  SECTION  ONE HUNDRED SIXTY-EIGHT OF THE INTERNAL REVENUE
    8  CODE OTHER THAN THREE-YEAR PROPERTY AS DEFINED IN SUBSECTION (E) OF SUCH
    9  SECTION ONE HUNDRED SIXTY-EIGHT WHICH IS DISPOSED OF OR CEASES TO BE  IN
   10  QUALIFIED  USE  PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT
   11  IS TO BE TAKEN, THE AMOUNT OF THE CREDIT SHALL BE THAT  PORTION  OF  THE
   12  CREDIT PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH
   13  THE  MONTHS  OF QUALIFIED USE BEAR TO SIXTY. IF PROPERTY ON WHICH CREDIT
   14  HAS BEEN TAKEN IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE PRIOR  TO
   15  THE END OF SIXTY MONTHS, THE DIFFERENCE BETWEEN THE CREDIT TAKEN AND THE
   16  CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE YEAR OF DISPOSI-
   17  TION. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL USE SHALL BE DETERMINED BY
   18  MULTIPLYING  THE ORIGINAL CREDIT BY THE RATIO WHICH THE MONTHS OF QUALI-
   19  FIED USE BEAR TO SIXTY.
   20    (IV) WITH RESPECT TO ANY PROPERTY TO WHICH SECTION ONE HUNDRED  SIXTY-
   21  EIGHT  OF  THE  INTERNAL  REVENUE CODE APPLIES, WHICH IS A BUILDING OR A
   22  STRUCTURAL COMPONENT OF A BUILDING AND WHICH IS DISPOSED OF OR CEASES TO
   23  BE IN QUALIFIED USE PRIOR TO THE END OF THE TAXABLE YEAR  IN  WHICH  THE
   24  CREDIT IS TO BE TAKEN, THE AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF
   25  THE  CREDIT  PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO
   26  WHICH THE MONTHS OF QUALIFIED USE BEAR TO THE  TOTAL  NUMBER  OF  MONTHS
   27  OVER  WHICH THE TAXPAYER CHOOSES TO DEDUCT THE PROPERTY UNDER THE INTER-
   28  NAL REVENUE CODE. IF PROPERTY ON WHICH CREDIT HAS BEEN TAKEN IS DISPOSED
   29  OF OR CEASES TO BE IN QUALIFIED USE PRIOR TO THE END OF THE PERIOD  OVER
   30  WHICH  THE  TAXPAYER  CHOOSES  TO DEDUCT THE PROPERTY UNDER THE INTERNAL
   31  REVENUE CODE, THE DIFFERENCE BETWEEN THE CREDIT  TAKEN  AND  THE  CREDIT
   32  ALLOWED  FOR  ACTUAL  USE MUST BE ADDED BACK IN THE YEAR OF DISPOSITION.
   33  PROVIDED, HOWEVER, IF SUCH PROPERTY IS DISPOSED OF OR CEASES  TO  BE  IN
   34  QUALIFIED  USE  AFTER  IT HAS BEEN IN QUALIFIED USE FOR MORE THAN TWELVE
   35  CONSECUTIVE YEARS, IT SHALL NOT BE NECESSARY TO ADD BACK THE  CREDIT  AS
   36  PROVIDED  IN  THIS SUBPARAGRAPH. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL
   37  USE SHALL BE DETERMINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE  RATIO
   38  WHICH  THE  MONTHS  OF  QUALIFIED USE BEAR TO THE TOTAL NUMBER OF MONTHS
   39  OVER WHICH THE TAXPAYER CHOOSES TO DEDUCT THE PROPERTY UNDER THE  INTER-
   40  NAL REVENUE CODE.
   41    (V) FOR PURPOSES OF THIS PARAGRAPH, DISPOSAL OR CESSATION OF QUALIFIED
   42  USE  SHALL NOT BE DEEMED TO HAVE OCCURRED SOLELY BY REASON OF THE TERMI-
   43  NATION OR EXPIRATION OF AN EMPIRE ZONE'S DESIGNATION AS SUCH.
   44    (VI)(A) FOR PURPOSES OF THIS PARAGRAPH, THE DECERTIFICATION OF A BUSI-
   45  NESS ENTERPRISE WITH RESPECT  TO  AN  EMPIRE  ZONE  SHALL  CONSTITUTE  A
   46  DISPOSAL  OR  CESSATION  OF  QUALIFIED  USE OF THE PROPERTY ON WHICH THE
   47  CREDIT WAS TAKEN WHICH IS LOCATED IN THE ZONE  TO  WHICH  THE  DECERTIF-
   48  ICATION APPLIES, ON THE EFFECTIVE DATE OF SUCH DECERTIFICATION.
   49    (B)  WHERE A BUSINESS ENTERPRISE HAS BEEN DECERTIFIED BASED ON A FIND-
   50  ING PURSUANT TO CLAUSE ONE, TWO, OR FIVE OF SUBDIVISION (A)  OF  SECTION
   51  NINE  HUNDRED  FIFTY-NINE  OF  THE  GENERAL  MUNICIPAL  LAW,  THE AMOUNT
   52  REQUIRED TO BE ADDED BACK BY REASON OF THIS PARAGRAPH SHALL BE  (I)  THE
   53  AMOUNT  OF  CREDIT, WITH RESPECT TO THE PROPERTY WHICH IS DISPOSED OF OR
   54  CEASES TO BE IN QUALIFIED USE, WHICH WAS DEDUCTED  FROM  THE  TAXPAYER'S
   55  TAX  OTHERWISE  DUE  UNDER  THIS  ARTICLE  FOR  ALL PRIOR TAXABLE YEARS,
   56  REDUCED (BUT NOT BELOW ZERO) BY (II) THE CREDIT ALLOWED FOR ACTUAL  USE.
       S. 6359                            76                            A. 8559
    1  FOR  PURPOSES OF THIS SUBPARAGRAPH, THE ATTRIBUTION TO SPECIFIC PROPERTY
    2  OF CREDIT AMOUNTS DEDUCTED FROM TAX SHALL BE ESTABLISHED  IN  ACCORDANCE
    3  WITH  THE  DATE  OF  PLACEMENT IN SERVICE OF SUCH PROPERTY IN THE EMPIRE
    4  ZONE.
    5    (C)  IN  NO  EVENT  SHALL THE AMOUNT OF THE CREDIT ALLOWED PURSUANT TO
    6  THIS SUBDIVISION BE RENDERED, SOLELY BY REASON OF  CLAUSE  (A)  OF  THIS
    7  SUBPARAGRAPH,  LESS  THAN THE AMOUNT OF THE CREDIT TO WHICH THE TAXPAYER
    8  WOULD OTHERWISE BE ENTITLED UNDER SUBDIVISION ONE OF THIS SECTION.
    9    (D) NOTWITHSTANDING ANY OTHER PROVISION OF THIS  SUBDIVISION,  IN  THE
   10  CASE  OF A BUSINESS ENTERPRISE WHICH HAS BEEN DECERTIFIED, ANY AMOUNT OF
   11  CREDIT ALLOWED WITH RESPECT TO THE PROPERTY OF SUCH BUSINESS  ENTERPRISE
   12  LOCATED  IN  THE  ZONE  TO  WHICH  THE  DECERTIFICATION APPLIES WHICH IS
   13  CARRIED OVER PURSUANT TO PARAGRAPH (D) OF THIS SUBDIVISION SHALL NOT  BE
   14  CARRIED  OVER BEYOND THE SEVENTH TAXABLE YEAR NEXT FOLLOWING THE TAXABLE
   15  YEAR WITH RESPECT TO WHICH THE CREDIT PROVIDED FOR IN  THIS  SUBDIVISION
   16  WAS ALLOWED.
   17    (VII)  FOR  PURPOSES OF THIS PARAGRAPH, WHERE A CREDIT IS ALLOWED WITH
   18  RESPECT TO AN AIR POLLUTION CONTROL FACILITY ON THE BASIS OF  A  CERTIF-
   19  ICATE  OF  COMPLIANCE  ISSUED PURSUANT TO THE ENVIRONMENTAL CONSERVATION
   20  LAW AND THE CERTIFICATE IS REVOKED  PURSUANT  TO  SUBDIVISION  THREE  OF
   21  SECTION  19-0309  OF THE ENVIRONMENTAL CONSERVATION LAW, SUCH REVOCATION
   22  SHALL CONSTITUTE A DISPOSAL OR CESSATION OF QUALIFIED USE,  EXCEPT  WITH
   23  RESPECT  TO  PROPERTY  CONTAINED IN OR COMPRISING SUCH FACILITY WHICH IS
   24  DESCRIBED IN CLAUSE (A), (B), OR (C) OF SUBPARAGRAPH  (V)  OF  PARAGRAPH
   25  (B)  OF  THIS  SUBDIVISION  OTHER  THAN  AS PART OF OR COMPRISING AN AIR
   26  POLLUTION CONTROL FACILITY. ALSO FOR PURPOSES OF THIS PARAGRAPH, THE USE
   27  OF AN AIR POLLUTION CONTROL FACILITY OR AN  INDUSTRIAL  WASTE  TREATMENT
   28  FACILITY FOR THE PRIMARY PURPOSE OF SALVAGING MATERIALS WHICH ARE USABLE
   29  IN THE MANUFACTURING PROCESS OR ARE MARKETABLE SHALL CONSTITUTE A CESSA-
   30  TION  OF  QUALIFIED USE, EXCEPT WITH RESPECT TO PROPERTY CONTAINED IN OR
   31  COMPRISING SUCH FACILITY WHICH IS DESCRIBED IN  CLAUSE  (A)  OR  (C)  OF
   32  SUBPARAGRAPH (V) OF PARAGRAPH (B) OF THIS SUBDIVISION.
   33    (VIII)  EXCEPT  AS PROVIDED IN THIS SUBPARAGRAPH, THIS PARAGRAPH SHALL
   34  NOT APPLY TO A CREDIT ALLOWED BY THIS SUBDIVISION TO A TAXPAYER THAT  IS
   35  A  PARTNER  IN  A  PARTNERSHIP  IN  THE  CASE OF MANUFACTURING PROPERTY;
   36  PROVIDED, AT THE TIME SUCH PROPERTY WAS PLACED IN SERVICE BY SUCH  PART-
   37  NERSHIP  IN AN EMPIRE ZONE THE BASIS FOR FEDERAL INCOME TAX PURPOSES FOR
   38  SUCH PROPERTY (OR A PROJECT THAT  INCLUDES  SUCH  PROPERTY)  EQUALED  OR
   39  EXCEEDED  THREE HUNDRED MILLION DOLLARS AND SUCH PARTNER OWNED ITS PART-
   40  NERSHIP INTEREST FOR AT LEAST THREE YEARS FROM THE  DATE  SUCH  PROPERTY
   41  WAS  PLACED  IN  SERVICE. IF SUCH PROPERTY CEASES TO BE IN QUALIFIED USE
   42  AFTER IT IS PLACED IN SERVICE, THIS PARAGRAPH SHALL APPLY TO SUCH  PART-
   43  NER IN THE YEAR SUCH PROPERTY CEASES TO BE IN QUALIFYING USE.
   44    (IX)  IF A TAXPAYER, WHICH IS APPROVED BY THE COMMISSIONER OF ECONOMIC
   45  DEVELOPMENT AS THE OWNER OF A QUALIFIED INVESTMENT PROJECT OR A  SIGNIF-
   46  ICANT  CAPITAL INVESTMENT PROJECT PURSUANT TO SUBDIVISION (W) OF SECTION
   47  NINE HUNDRED FIFTY-NINE OF THE  GENERAL  MUNICIPAL  LAW,  FAILS  TO  (A)
   48  CREATE  AT  LEAST THE MINIMUM NUMBER OF JOBS AT SUCH PROJECT AS REQUIRED
   49  BY THE PROVISIONS OF SUBDIVISION (S) OR  (T)  OF  SECTION  NINE  HUNDRED
   50  FIFTY-SEVEN  AND  SUBDIVISION  (W) OF SECTION NINE HUNDRED FIFTY-NINE OF
   51  THE GENERAL MUNICIPAL LAW OR (B) PLACE IN  SERVICE  PROPERTY  COMPRISING
   52  SUCH  QUALIFIED  INVESTMENT  PROJECT  OR  SIGNIFICANT CAPITAL INVESTMENT
   53  PROJECT WITH A BASIS FOR FEDERAL INCOME TAX PURPOSES EQUALING OR EXCEED-
   54  ING THE APPLICABLE MINIMUM REQUIRED BASIS AS PROVIDED IN  SUCH  SUBDIVI-
   55  SION  (S)  OR  (T),  WHICHEVER IS RELEVANT, BY THE LAST DAY OF THE FIFTH
   56  TAXABLE YEAR FOLLOWING THE TAXABLE YEAR  IN  WHICH  A  CREDIT  IS  FIRST
       S. 6359                            77                            A. 8559
    1  ALLOWED  UNDER  THIS  SUBDIVISION  FOR THE PROPERTY WHICH COMPRISES SUCH
    2  QUALIFIED INVESTMENT PROJECT  OR  SUCH  SIGNIFICANT  CAPITAL  INVESTMENT
    3  PROJECT,  THE  TOTAL AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBDIVISION
    4  FOR  ALL TAXABLE YEARS WITH RESPECT TO THE PROPERTY WHICH COMPRISES SUCH
    5  PROJECT WHICH HAS BEEN REFUNDED TO SUCH TAXPAYER SHALL BE ADDED BACK  IN
    6  SUCH TAXABLE YEAR.
    7    (G)  NOTWITHSTANDING  THE EXPIRATION OF THE EMPIRE ZONES PROGRAM UNDER
    8  ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL  LAW,  A  TAXPAYER  THAT  IS
    9  CERTIFIED  AS  A  QUALIFIED  INVESTMENT PROJECT PURSUANT TO SUCH ARTICLE
   10  EIGHT-B ON THE DAY  IMMEDIATELY  PRECEDING  THE  DAY  THE  EMPIRE  ZONES
   11  PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED CERTIFIED UNDER SUCH ARTICLE
   12  EIGHTEEN-B  FOR  PURPOSES  OF  THIS SUBDIVISION FOR THE REMAINDER OF THE
   13  TAXABLE YEAR IN WHICH THE EXPIRATION OCCURRED AND FOR THE NEXT  SUCCEED-
   14  ING  NINE  TAXABLE  YEARS.  IN  ADDITION, THE AREAS DESIGNATED AS EMPIRE
   15  ZONES IN WHICH THE TAXPAYER  IS  CERTIFIED  AS  A  QUALIFIED  INVESTMENT
   16  PROJECT  ON  THE  DAY  IMMEDIATELY  PRECEDING  THE  DAY THE EMPIRE ZONES
   17  PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED EMPIRE ZONES FOR PURPOSES OF
   18  THIS SUBDIVISION FOR THE REMAINDER OF THE  TAXABLE  YEAR  IN  WHICH  THE
   19  EXPIRATION OCCURRED AND FOR THE NEXT SUCCEEDING NINE TAXABLE YEARS.
   20    (H)  NOTWITHSTANDING  THE EXPIRATION OF THE EMPIRE ZONES PROGRAM UNDER
   21  ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL LAW AND EXCEPT  AS  PROVIDED
   22  IN PARAGRAPH (G) OF THIS SUBDIVISION, A TAXPAYER THAT IS CERTIFIED AS AN
   23  EMPIRE  ZONE  BUSINESS  PURSUANT  TO  SUCH ARTICLE EIGHTEEN-B ON THE DAY
   24  IMMEDIATELY PRECEDING THE DAY THE  EMPIRE  ZONE  PROGRAM  EXPIRED  SHALL
   25  CONTINUE  TO  BE  DEEMED  CERTIFIED  UNDER  SUCH  ARTICLE EIGHTEEN-B FOR
   26  PURPOSES OF THIS SUBDIVISION UNTIL APRIL FIRST, TWO  THOUSAND  FOURTEEN.
   27  IN  ADDITION, THE AREAS DESIGNATED AS EMPIRE ZONES IN WHICH THE TAXPAYER
   28  IS CERTIFIED AS AN EMPIRE ZONE BUSINESS ON THE DAY IMMEDIATELY PRECEDING
   29  THE DAY THE EMPIRE ZONES PROGRAM EXPIRED SHALL  CONTINUE  TO  BE  DEEMED
   30  EMPIRE  ZONES  FOR  PURPOSES OF THIS SUBDIVISIONS UNTIL APRIL FIRST, TWO
   31  THOUSAND FOURTEEN.
   32    4. EMPIRE ZONE EMPLOYMENT INCENTIVE CREDIT (EZ-EIC).  (A)  APPLICATION
   33  OF  CREDIT. WHERE A TAXPAYER IS ALLOWED A CREDIT UNDER SUBDIVISION THREE
   34  OF THIS SECTION, THE TAXPAYER SHALL BE ALLOWED A CREDIT FOR EACH OF  THE
   35  THREE  YEARS NEXT SUCCEEDING THE TAXABLE YEAR FOR WHICH THE CREDIT UNDER
   36  SUCH SUBDIVISION THREE IS ALLOWED, WITH RESPECT TO SUCH PROPERTY, WHETH-
   37  ER OR NOT DEDUCTIBLE IN SUCH TAXABLE YEAR OR IN SUBSEQUENT TAXABLE YEARS
   38  PURSUANT TO PARAGRAPH (D) OF SUCH SUBDIVISION THREE, OF  THIRTY  PERCENT
   39  OF THE CREDIT ALLOWABLE UNDER SUCH SUBDIVISION THREE; PROVIDED, HOWEVER,
   40  THAT  THE  CREDIT  ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
   41  SHALL ONLY BE ALLOWED IF THE AVERAGE NUMBER OF EMPLOYEES EMPLOYED BY THE
   42  TAXPAYER IN THE EMPIRE ZONE, DESIGNATED PURSUANT TO  ARTICLE  EIGHTEEN-B
   43  OF  THE  GENERAL MUNICIPAL LAW, IN WHICH SUCH PROPERTY IS LOCATED DURING
   44  SUCH TAXABLE YEAR IS AT LEAST ONE HUNDRED ONE  PERCENT  OF  THE  AVERAGE
   45  NUMBER OF EMPLOYEES EMPLOYED BY THE TAXPAYER IN SUCH EMPIRE ZONE, DURING
   46  THE  TAXABLE  YEAR  IMMEDIATELY PRECEDING THE TAXABLE YEAR FOR WHICH THE
   47  CREDIT UNDER SUCH SUBDIVISION THREE IS ALLOWED  AND  PROVIDED,  FURTHER,
   48  THAT  IF  THE TAXPAYER WAS NOT SUBJECT TO TAX AND DID NOT HAVE A TAXABLE
   49  YEAR IMMEDIATELY PRECEDING THE TAXABLE YEAR FOR WHICH THE  CREDIT  UNDER
   50  SUBDIVISION THREE OF THIS SECTION IS ALLOWED, THE CREDIT ALLOWABLE UNDER
   51  THIS  SUBDIVISION  FOR  ANY TAXABLE YEAR SHALL BE ALLOWED IF THE AVERAGE
   52  NUMBER OF EMPLOYEES EMPLOYED IN SUCH EMPIRE ZONE IN SUCH TAXABLE YEAR IS
   53  AT LEAST ONE HUNDRED ONE PERCENT OF THE AVERAGE NUMBER OF SUCH EMPLOYEES
   54  DURING THE TAXABLE YEAR IN WHICH THE CREDIT UNDER SUCH SUBDIVISION THREE
   55  IS ALLOWED.
       S. 6359                            78                            A. 8559
    1    (B) AVERAGE NUMBER OF  EMPLOYEES.  THE  AVERAGE  NUMBER  OF  EMPLOYEES
    2  EMPLOYED IN AN EMPIRE ZONE IN A TAXABLE YEAR SHALL BE COMPUTED BY ASCER-
    3  TAINING  THE  NUMBER  OF  SUCH EMPLOYEES WITHIN SUCH ZONE EXCEPT GENERAL
    4  EXECUTIVE OFFICERS, EMPLOYED BY THE TAXPAYER ON THE THIRTY-FIRST DAY  OF
    5  MARCH, THE THIRTIETH DAY OF JUNE, THE THIRTIETH DAY OF SEPTEMBER AND THE
    6  THIRTY-FIRST DAY OF DECEMBER IN THE TAXABLE YEAR, BY ADDING TOGETHER THE
    7  NUMBER  OF  EMPLOYEES ASCERTAINED ON EACH OF SUCH DATES AND DIVIDING THE
    8  SUM SO OBTAINED BY THE NUMBER OF SUCH  ABOVE-MENTIONED  DATES  OCCURRING
    9  WITHIN THE TAXABLE YEAR.
   10    (C)  CARRYOVER.  IN  NO  EVENT SHALL THE CREDIT HEREIN PROVIDED FOR BE
   11  ALLOWED IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN  THE
   12  FIXED  DOLLAR  MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION
   13  ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. PROVIDED, HOWEVER,  THAT
   14  IF THE AMOUNT OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE
   15  YEAR REDUCES THE TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE
   16  IN  SUCH TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS
   17  AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR  YEARS.  IN
   18  LIEU  OF  SUCH  CARRYOVER,  ANY  SUCH TAXPAYER, WHICH IS APPROVED AS THE
   19  OWNER OF A QUALIFIED INVESTMENT PROJECT OR A SIGNIFICANT CAPITAL INVEST-
   20  MENT PROJECT PURSUANT TO SUBDIVISION (V) OF SECTION NINE HUNDRED  FIFTY-
   21  NINE  OF  THE  GENERAL  MUNICIPAL  LAW, MAY ELECT, ON ITS REPORT FOR ITS
   22  TAXABLE YEAR WITH RESPECT TO WHICH SUCH  CREDIT  IS  ALLOWED,  TO  TREAT
   23  FIFTY  PERCENT  OF THE AMOUNT OF SUCH CARRYOVER AS AN OVERPAYMENT OF TAX
   24  TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF  SECTION
   25  ONE  THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, IN THE CASE
   26  OF SUCH OWNER OF A QUALIFIED INVESTMENT PROJECT OR A SIGNIFICANT CAPITAL
   27  INVESTMENT PROJECT, ONLY FIFTY PERCENT OF THE AMOUNT OF  SUCH  CARRYOVER
   28  WHICH  IS ATTRIBUTABLE TO THE CREDIT ALLOWED UNDER THIS SUBDIVISION WITH
   29  RESPECT TO PROPERTY WHICH IS PART OF SUCH PROJECT SHALL BE ALLOWED TO BE
   30  CREDITED OR REFUNDED AND SUCH OWNER SHALL  BE  ALLOWED  SUCH  CREDIT  OR
   31  REFUND ONLY FOR THOSE TAXABLE YEARS IN WHICH SUCH OWNER WOULD BE ALLOWED
   32  A  CREDIT OR REFUND OF THE EMPIRE ZONE INVESTMENT TAX CREDIT PURSUANT TO
   33  PARAGRAPH (D) OF SUBDIVISION THREE OF THIS SECTION.  PROVIDED,  FURTHER,
   34  HOWEVER, THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHT-
   35  Y-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THER-
   36  EON.
   37    (C-1)  ANY  CARRYOVER OF A CREDIT FROM PRIOR TAXABLE YEARS WILL NOT BE
   38  ALLOWED IF AN EMPIRE ZONE RETENTION CERTIFICATE IS NOT  ISSUED  PURSUANT
   39  TO  SUBDIVISION  (W)  OF  SECTION NINE HUNDRED FIFTY-NINE OF THE GENERAL
   40  MUNICIPAL LAW TO THE EMPIRE ZONE ENTERPRISE WHICH IS THE  BASIS  OF  THE
   41  CREDIT.
   42    (D)  NOTWITHSTANDING  THE EXPIRATION OF THE EMPIRE ZONES PROGRAM UNDER
   43  ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL  LAW,  A  TAXPAYER  THAT  IS
   44  CERTIFIED  AS  A  QUALIFIED  INVESTMENT PROJECT PURSUANT TO SUCH ARTICLE
   45  EIGHTEEN-B ON THE DAY IMMEDIATELY PRECEDING THE  DAY  THE  EMPIRE  ZONES
   46  PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED CERTIFIED UNDER SUCH ARTICLE
   47  EIGHTEEN-B  FOR  PURPOSES  OF  THIS SUBDIVISION FOR THE REMAINDER OF THE
   48  TAXABLE YEAR IN WHICH THE EXPIRATION OCCURRED AND FOR THE NEXT  SUCCEED-
   49  ING  NINE  TAXABLE  YEARS.  IN  ADDITION, THE AREAS DESIGNATED AS EMPIRE
   50  ZONES IN WHICH THE TAXPAYER  IS  CERTIFIED  AS  A  QUALIFIED  INVESTMENT
   51  PROJECT  ON  THE  DAY  IMMEDIATELY  PRECEDING  THE  DAY THE EMPIRE ZONES
   52  PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED EMPIRE ZONES FOR PURPOSES OF
   53  THIS SUBDIVISION FOR THE REMAINDER OF THE  TAXABLE  YEAR  IN  WHICH  THE
   54  EXPIRATION OCCURRED AND FOR THE NEXT SUCCEEDING NINE TAXABLE YEARS.
   55    (E)  NOTWITHSTANDING  THE EXPIRATION OF THE EMPIRE ZONES PROGRAM UNDER
   56  ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL LAW AND EXCEPT  AS  PROVIDED
       S. 6359                            79                            A. 8559
    1  IN PARAGRAPH (D) OF THIS SUBDIVISION, A TAXPAYER THAT IS CERTIFIED AS AN
    2  EMPIRE  ZONE  BUSINESS  PURSUANT  TO  SUCH ARTICLE EIGHTEEN-B ON THE DAY
    3  IMMEDIATELY PRECEDING THE DAY THE EMPIRE  ZONES  PROGRAM  EXPIRED  SHALL
    4  CONTINUE  TO  BE  DEEMED  IN  THE  EMPIRE ZONE IN WHICH THE TAXPAYER WAS
    5  CERTIFIED AS AN EMPIRE ZONE BUSINESS ON THE  DAY  IMMEDIATELY  PRECEDING
    6  THE  DAY  THE  EMPIRE  ZONES PROGRAM EXPIRED FOR EACH OF THE THREE YEARS
    7  NEXT SUCCEEDING THE TAXABLE YEAR FOR WHICH THE CREDIT UNDER  SUBDIVISION
    8  THREE OF THIS SECTION IS ALLOWED.
    9    5.  QEZE  CREDIT  FOR  REAL PROPERTY TAXES. (A) ALLOWANCE OF CREDIT. A
   10  TAXPAYER WHICH IS A QUALIFIED EMPIRE ZONE ENTERPRISE SHALL BE ALLOWED  A
   11  CREDIT  FOR  ELIGIBLE REAL PROPERTY TAXES, TO BE COMPUTED AS PROVIDED IN
   12  SECTION FIFTEEN OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY  THIS  ARTI-
   13  CLE.
   14    (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
   15  FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
   16  THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
   17  SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER,  IF
   18  THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
   19  REDUCES THE TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE
   20  IN  SUCH  TAXABLE  YEAR  SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE
   21  CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS  OF  SECTION  ONE
   22  THOUSAND  EIGHTY-SIX  OF THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS
   23  OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF  THIS  CHAPTER
   24  NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
   25    6.  QEZE  TAX  REDUCTION  CREDIT.  (A) ALLOWANCE OF CREDIT. A TAXPAYER
   26  WHICH IS A QUALIFIED EMPIRE ZONE ENTERPRISE SHALL BE ALLOWED A QEZE  TAX
   27  REDUCTION  CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION SIXTEEN OF THIS
   28  CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.
   29    (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
   30  FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
   31  THAN THE FIXED DOLLAR MINIMUM AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF
   32  SUBDIVISION  ONE  OF  SECTION TWO HUNDRED TEN OF THIS ARTICLE. PROVIDED,
   33  HOWEVER, THIS PARAGRAPH SHALL NOT APPLY TO A TAXPAYER WITH A ZONE  ALLO-
   34  CATION FACTOR OF ONE HUNDRED PERCENT.
   35    7. QUALIFIED EMERGING TECHNOLOGY COMPANY EMPLOYMENT CREDIT. (A) APPLI-
   36  CATION  OF  CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED
   37  AS HEREINAFTER PROVIDED,  AGAINST  THE  TAX  IMPOSED  BY  THIS  ARTICLE,
   38  PROVIDED:
   39    (I)  THE  TAXPAYER IS A QUALIFIED EMERGING TECHNOLOGY COMPANY PURSUANT
   40  TO THE PROVISIONS OF SECTION THIRTY-ONE  HUNDRED  TWO-E  OF  THE  PUBLIC
   41  AUTHORITIES LAW; AND
   42    (II)  THE  AVERAGE  NUMBER  OF  INDIVIDUALS  EMPLOYED FULL TIME BY THE
   43  TAXPAYER IN NEW YORK STATE DURING THE  TAXABLE  YEAR  IS  AT  LEAST  ONE
   44  HUNDRED  ONE  PERCENT  OF  THE  TAXPAYER'S BASE YEAR EMPLOYMENT. FOR THE
   45  PURPOSES OF THIS SUBDIVISION, "BASE YEAR EMPLOYMENT" MEANS  THE  AVERAGE
   46  NUMBER  OF  INDIVIDUALS  EMPLOYED FULL-TIME BY THE TAXPAYER IN THE STATE
   47  DURING THE THREE TAXABLE YEARS IMMEDIATELY PRECEDING THE  FIRST  TAXABLE
   48  YEAR  IN  WHICH  THE  CREDIT  IS  CLAIMED.  WHERE  THE TAXPAYER PROVIDED
   49  FULL-TIME EMPLOYMENT WITHIN THE STATE DURING  ONLY  A  PORTION  OF  SUCH
   50  THREE-YEAR PERIOD, THEN THE FIRST EFFECTIVE DATE FOR THE COMPANY TO TAKE
   51  ADVANTAGE OF THIS CREDIT SHALL BE THE NEXT YEAR FOLLOWING THE FIRST FULL
   52  TAXABLE  YEAR  THAT  THE  COMPANY  HAD  FULL-TIME EMPLOYMENT IN NEW YORK
   53  STATE. FOR THE PURPOSES OF THIS PARAGRAPH THE TERM "THREE  YEARS"  SHALL
   54  BE  DEEMED  TO  REFER  INSTEAD  TO THE PRIOR YEAR'S FULL-TIME EMPLOYMENT
   55  AFTER THE FIRST YEAR AND THE AVERAGE OF  THE  FIRST  EIGHT  QUARTERS  OF
   56  EMPLOYMENT AFTER THE FIRST TWO TAXABLE YEARS IN NEW YORK STATE.
       S. 6359                            80                            A. 8559
    1    (B)  CREDIT  LIMITATION. THE CREDIT SHALL BE ALLOWED ONLY IN THE FIRST
    2  TAXABLE YEAR IN WHICH THE CREDIT IS CLAIMED AND IN EACH OF THE NEXT  TWO
    3  TAXABLE  YEARS,  PROVIDED  THAT  THE CONDITIONS OF PARAGRAPH (A) OF THIS
    4  SUBDIVISION ARE SATISFIED IN EACH TAXABLE YEAR.
    5    (C) AVERAGE NUMBER OF INDIVIDUALS EMPLOYED FULL-TIME. FOR THE PURPOSES
    6  OF  THIS  SUBDIVISION,  AVERAGE NUMBER OF INDIVIDUALS EMPLOYED FULL-TIME
    7  SHALL BE COMPUTED BY ADDING THE NUMBER OF SUCH INDIVIDUALS  EMPLOYED  BY
    8  THE  TAXPAYER  AT  THE  END  OF EACH QUARTER DURING EACH TAXABLE YEAR OR
    9  OTHER APPLICABLE PERIOD AND DIVIDING THE SUM SO OBTAINED BY  THE  NUMBER
   10  OF  SUCH QUARTERS OCCURRING WITHIN SUCH TAXABLE YEAR OR OTHER APPLICABLE
   11  PERIOD; PROVIDED HOWEVER, EXCEPT THAT IN COMPUTING BASE YEAR EMPLOYMENT,
   12  THERE SHALL BE EXCLUDED THEREFROM ANY EMPLOYEE WITH RESPECT  TO  WHOM  A
   13  CREDIT PROVIDED FOR UNDER SUBDIVISION SIX OF THIS SECTION IS CLAIMED FOR
   14  THE TAXABLE YEAR.
   15    (D) AMOUNT OF CREDIT. THE AMOUNT OF THE CREDIT SHALL EQUAL THE PRODUCT
   16  OF  ONE  THOUSAND  DOLLARS  TIMES  THE  NUMBER  OF  INDIVIDUALS EMPLOYED
   17  FULL-TIME BY THE TAXPAYER IN THE TAXABLE YEAR THAT ARE IN EXCESS OF  ONE
   18  HUNDRED PERCENT OF THE TAXPAYER'S BASE YEAR EMPLOYMENT.
   19    (E) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA-
   20  BLE  YEAR  SHALL  NOT  REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE
   21  FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D)  OF  SUBDIVISION
   22  ONE  OF  SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT
   23  OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY  TAXABLE  YEAR  REDUCES
   24  THE TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH
   25  TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
   26  REFUNDED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND
   27  EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
   28  SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
   29  NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
   30    8. QUALIFIED EMERGING  TECHNOLOGY  COMPANY  CAPITAL  TAX  CREDIT.  (A)
   31  AMOUNT  OF  CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT AGAINST THE TAX
   32  IMPOSED BY THIS ARTICLE. THE AMOUNT OF THE CREDIT SHALL BE EQUAL TO  ONE
   33  OF  THE FOLLOWING PERCENTAGES, PER EACH QUALIFIED INVESTMENT IN A QUALI-
   34  FIED EMERGING  TECHNOLOGY  COMPANY  AS  DEFINED  IN  SECTION  THIRTY-ONE
   35  HUNDRED  TWO-E  OF  THE  PUBLIC AUTHORITIES LAW, MADE DURING THE TAXABLE
   36  YEAR, AND CERTIFIED BY THE COMMISSIONER, EITHER:
   37    (1) TEN PERCENT OF QUALIFIED INVESTMENTS IN QUALIFIED  EMERGING  TECH-
   38  NOLOGY  COMPANIES,  EXCEPT  FOR  INVESTMENTS  MADE BY OR ON BEHALF OF AN
   39  OWNER OF THE BUSINESS, INCLUDING, BUT NOT  LIMITED  TO,  A  STOCKHOLDER,
   40  PARTNER OR SOLE PROPRIETOR, OR ANY RELATED PERSON, AS DEFINED IN SUBPAR-
   41  AGRAPH  (C) OF PARAGRAPH THREE OF SUBSECTION (B) OF SECTION FOUR HUNDRED
   42  SIXTY-FIVE OF THE INTERNAL REVENUE CODE, AND PROVIDED, HOWEVER, THAT THE
   43  TAXPAYER CERTIFIES TO THE COMMISSIONER  THAT  THE  QUALIFIED  INVESTMENT
   44  WILL  NOT  BE  SOLD, TRANSFERRED, TRADED, OR DISPOSED OF DURING THE FOUR
   45  YEARS FOLLOWING THE YEAR IN WHICH THE CREDIT IS FIRST CLAIMED; OR
   46    (2) TWENTY PERCENT OF  QUALIFIED  INVESTMENTS  IN  QUALIFIED  EMERGING
   47  TECHNOLOGY  COMPANIES, EXCEPT FOR INVESTMENTS MADE BY OR ON BEHALF OF AN
   48  OWNER OF THE BUSINESS, INCLUDING, BUT NOT  LIMITED  TO,  A  STOCKHOLDER,
   49  PARTNER OR SOLE PROPRIETOR, OR ANY RELATED PERSON, AS DEFINED IN SUBPAR-
   50  AGRAPH  (C) OF PARAGRAPH THREE OF SUBSECTION (B) OF SECTION FOUR HUNDRED
   51  SIXTY-FIVE OF THE INTERNAL REVENUE CODE, AND PROVIDED, HOWEVER, THAT THE
   52  TAXPAYER CERTIFIES TO THE COMMISSIONER  THAT  THE  QUALIFIED  INVESTMENT
   53  WILL  NOT  BE  SOLD, TRANSFERRED, TRADED, OR DISPOSED OF DURING THE NINE
   54  YEARS FOLLOWING THE YEAR IN WHICH THE CREDIT IS FIRST CLAIMED.
   55    (B) QUALIFIED INVESTMENT. "QUALIFIED INVESTMENT"  MEANS  THE  CONTRIB-
   56  UTION  OF PROPERTY TO A CORPORATION IN EXCHANGE FOR ORIGINAL ISSUE CAPI-
       S. 6359                            81                            A. 8559
    1  TAL STOCK OR OTHER OWNERSHIP INTEREST, THE CONTRIBUTION OF PROPERTY TO A
    2  PARTNERSHIP IN EXCHANGE FOR AN INTEREST IN THE PARTNERSHIP, AND  SIMILAR
    3  CONTRIBUTIONS IN THE CASE OF A BUSINESS ENTITY NOT IN CORPORATE OR PART-
    4  NERSHIP  FORM IN EXCHANGE FOR AN OWNERSHIP INTEREST IN SUCH ENTITY.  THE
    5  TOTAL AMOUNT OF CREDIT ALLOWABLE TO A TAXPAYER UNDER THIS PROVISION  FOR
    6  ALL  YEARS,  TAKEN  IN THE AGGREGATE, SHALL NOT EXCEED ONE HUNDRED FIFTY
    7  THOUSAND DOLLARS IN THE CASE OF INVESTMENTS MADE  PURSUANT  TO  SUBPARA-
    8  GRAPH  ONE  OF  PARAGRAPH  (A)  OF THIS SUBDIVISION AND SHALL NOT EXCEED
    9  THREE HUNDRED THOUSAND DOLLARS IN THE CASE OF INVESTMENTS MADE  PURSUANT
   10  TO SUBPARAGRAPH TWO OF PARAGRAPH (A) OF THIS SUBDIVISION.
   11    (C)  CARRYOVER.  IN  NO  EVENT  SHALL THE CREDIT AND CARRYOVER OF SUCH
   12  CREDIT ALLOWED UNDER THIS SUBDIVISION  FOR  ANY  TAXABLE  YEAR,  IN  THE
   13  AGGREGATE,  REDUCE  THE  TAX  DUE  FOR  SUCH YEAR TO LESS THAN THE FIXED
   14  DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE  OF
   15  SECTION TWO HUNDRED TEN OF THIS CHAPTER. HOWEVER, IF THE AMOUNT OF CRED-
   16  IT OR CARRYOVERS OF SUCH CREDIT, OR BOTH, ALLOWED UNDER THIS SUBDIVISION
   17  FOR  ANY  TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT, OR IF ANY PART OF
   18  THE CREDIT OR CARRYOVERS OF SUCH CREDIT MAY NOT BE DEDUCTED FROM THE TAX
   19  OTHERWISE DUE BY REASON OF THE FINAL SENTENCE  OF  THIS  PARAGRAPH,  ANY
   20  AMOUNT  OF  CREDIT  OR  CARRYOVERS OF SUCH CREDIT THUS NOT DEDUCTIBLE IN
   21  SUCH TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND
   22  MAY BE DEDUCTED FROM THE TAX FOR SUCH YEAR OR YEARS.  IN  ADDITION,  THE
   23  AMOUNT  OF  SUCH  CREDIT,  AND  CARRYOVERS OF SUCH CREDIT TO THE TAXABLE
   24  YEAR, DEDUCTED FROM THE TAX OTHERWISE DUE MAY  NOT,  IN  THE  AGGREGATE,
   25  EXCEED  FIFTY  PERCENT OF THE TAX IMPOSED UNDER SECTION TWO HUNDRED NINE
   26  OF THIS ARTICLE COMPUTED WITHOUT REGARD TO ANY CREDIT  PROVIDED  FOR  BY
   27  THIS SECTION.
   28    (D)  RECAPTURE.  (1)  WHERE  A  TAXPAYER SELLS, TRANSFERS OR OTHERWISE
   29  DISPOSES OF CORPORATE STOCK, A PARTNERSHIP INTEREST OR  OTHER  OWNERSHIP
   30  INTEREST ARISING FROM THE MAKING OF A QUALIFIED INVESTMENT WHICH WAS THE
   31  BASIS, IN WHOLE OR IN PART, FOR THE ALLOWANCE OF THE CREDIT PROVIDED FOR
   32  UNDER SUBPARAGRAPH ONE OF PARAGRAPH (A) OF THIS SUBDIVISION, OR WHERE AN
   33  INVESTMENT  WHICH  WAS  THE  BASIS FOR SUCH ALLOWANCE IS, IN WHOLE OR IN
   34  PART, RECOVERED BY SUCH  TAXPAYER,  AND  SUCH  DISPOSITION  OR  RECOVERY
   35  OCCURS  DURING  THE  TAXABLE  YEAR OR WITHIN FORTY-EIGHT MONTHS FROM THE
   36  CLOSE OF THE TAXABLE YEAR WITH RESPECT TO WHICH SUCH CREDIT IS  ALLOWED,
   37  THE  TAXPAYER  SHALL ADD BACK, WITH RESPECT TO THE TAXABLE YEAR IN WHICH
   38  THE DISPOSITION OR  RECOVERY  DESCRIBED  ABOVE  OCCURRED,  THE  REQUIRED
   39  PORTION OF THE CREDIT ORIGINALLY ALLOWED.
   40    (2)  WHERE A TAXPAYER SELLS, TRANSFERS OR OTHERWISE DISPOSES OF CORPO-
   41  RATE STOCK, A PARTNERSHIP INTEREST OR OTHER OWNERSHIP  INTEREST  ARISING
   42  FROM  THE MAKING OF A QUALIFIED INVESTMENT WHICH WAS THE BASIS, IN WHOLE
   43  OR IN PART, FOR THE ALLOWANCE OF THE CREDIT PROVIDED FOR UNDER  SUBPARA-
   44  GRAPH  TWO  OF PARAGRAPH (A) OF THIS SUBDIVISION, OR WHERE AN INVESTMENT
   45  WHICH WAS THE BASIS FOR SUCH ALLOWANCE IS IN ANY MANNER, IN WHOLE OR  IN
   46  PART,  RECOVERED  BY  SUCH  TAXPAYER,  AND  SUCH DISPOSITION OR RECOVERY
   47  OCCURS DURING THE TAXABLE YEAR OR WITHIN ONE HUNDRED EIGHT  MONTHS  FROM
   48  THE  CLOSE  OF  THE  TAXABLE  YEAR  WITH RESPECT TO WHICH SUCH CREDIT IS
   49  ALLOWED, THE TAXPAYER SHALL ADD BACK, WITH RESPECT TO THE  TAXABLE  YEAR
   50  IN  WHICH  THE  DISPOSITION OR RECOVERY DESCRIBED IN SUBPARAGRAPH ONE OF
   51  THIS PARAGRAPH OCCURRED THE REQUIRED PORTION OF  THE  CREDIT  ORIGINALLY
   52  ALLOWED.
   53    (3) THE REQUIRED PORTION OF THE CREDIT ORIGINALLY ALLOWED SHALL BE THE
   54  PRODUCT  OF  (A) THE PORTION OF SUCH CREDIT ATTRIBUTABLE TO THE PROPERTY
   55  DISPOSED OF AND (B) THE APPLICABLE PERCENTAGE.
   56    (4) THE APPLICABLE PERCENTAGE SHALL BE:
       S. 6359                            82                            A. 8559
    1    (A) FOR CREDITS ALLOWED PURSUANT TO SUBPARAGRAPH ONE OF PARAGRAPH  (A)
    2  OF THIS SUBDIVISION:
    3    (I)  ONE HUNDRED PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS WITHIN
    4  THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED  OR  WITHIN
    5  TWELVE MONTHS OF THE END OF SUCH TAXABLE YEAR,
    6    (II)  SEVENTY-FIVE PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS MORE
    7  THAN TWELVE BUT NOT MORE THAN TWENTY-FOUR MONTHS AFTER THE  END  OF  THE
    8  TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED,
    9    (III)  FIFTY  PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS MORE THAN
   10  TWENTY-FOUR MONTHS BUT NOT MORE THAN THIRTY-SIX MONTHS AFTER THE END  OF
   11  THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED, OR
   12    (IV)  TWENTY-FIVE  PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS MORE
   13  THAN THIRTY-SIX MONTHS BUT NOT MORE THAN FORTY-EIGHT  MONTHS  AFTER  THE
   14  END OF THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED; OR
   15    (B)  FOR CREDITS ALLOWED PURSUANT TO SUBPARAGRAPH TWO OF PARAGRAPH (A)
   16  OF THIS SUBDIVISION:
   17    (I) ONE HUNDRED PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS  WITHIN
   18  THE  TAXABLE  YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED OR WITHIN
   19  TWELVE MONTHS OF THE END OF SUCH TAXABLE YEAR,
   20    (II) EIGHTY PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS  MORE  THAN
   21  TWELVE BUT NOT MORE THAN FORTY-EIGHT MONTHS AFTER THE END OF THE TAXABLE
   22  YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED,
   23    (III)  SIXTY  PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS MORE THAN
   24  FORTY-EIGHT MONTHS BUT NOT MORE THAN SEVENTY-TWO MONTHS AFTER THE END OF
   25  THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED,
   26    (IV) FORTY PERCENT, IF THE DISPOSITION OR RECOVERY  OCCURS  MORE  THAN
   27  SEVENTY-TWO  MONTHS BUT NOT MORE THAN NINETY-SIX MONTHS AFTER THE END OF
   28  THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED, OR
   29    (V) TWENTY PERCENT, IF THE DISPOSITION OR RECOVERY  OCCURS  MORE  THAN
   30  NINETY-SIX  MONTHS  BUT NOT MORE THAN ONE HUNDRED EIGHT MONTHS AFTER THE
   31  END OF THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED.
   32    9. CREDIT FOR THE  SPECIAL  ADDITIONAL  MORTGAGE  RECORDING  TAX.  (A)
   33  APPLICATION OF CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE CRED-
   34  ITED AGAINST THE TAX IMPOSED BY THIS ARTICLE, EQUAL TO THE AMOUNT OF THE
   35  SPECIAL  ADDITIONAL MORTGAGE RECORDING TAX PAID BY THE TAXPAYER PURSUANT
   36  TO  THE  PROVISIONS  OF  SUBDIVISION  ONE-A  OF  SECTION   TWO   HUNDRED
   37  FIFTY-THREE OF THIS CHAPTER OR MORTGAGES RECORDED. PROVIDED, HOWEVER, NO
   38  CREDIT  SHALL  BE  ALLOWED  WITH  RESPECT TO A MORTGAGE OF REAL PROPERTY
   39  PRINCIPALLY IMPROVED OR  TO  BE  IMPROVED  BY  ONE  OR  MORE  STRUCTURES
   40  CONTAINING  IN  THE  AGGREGATE  NOT  MORE  THAN SIX RESIDENTIAL DWELLING
   41  UNITS, EACH DWELLING UNIT HAVING ITS OWN  SEPARATE  COOKING  FACILITIES,
   42  WHERE  THE  REAL  PROPERTY  IS  LOCATED  IN  ONE OR MORE OF THE COUNTIES
   43  COMPRISING  THE  METROPOLITAN  COMMUTER  TRANSPORTATION  AREA.  PROVIDED
   44  FURTHER,  HOWEVER, NO CREDIT SHALL BE ALLOWED WITH RESPECT TO A MORTGAGE
   45  OF REAL PROPERTY PRINCIPALLY IMPROVED OR TO BE IMPROVED BY ONE  OR  MORE
   46  STRUCTURES  CONTAINING  IN  THE  AGGREGATE NOT MORE THAN SIX RESIDENTIAL
   47  DWELLING UNITS, EACH DWELLING  UNIT  HAVING  ITS  OWN  SEPARATE  COOKING
   48  FACILITIES, WHERE THE REAL PROPERTY IS LOCATED IN THE COUNTY OF ERIE.
   49    (B)  CARRYOVER.  IN  NO  EVENT SHALL THE CREDIT HEREIN PROVIDED FOR BE
   50  ALLOWED IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN  THE
   51  FIXED  DOLLAR  MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION
   52  ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. IF, HOWEVER, THE  AMOUNT
   53  OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR, INCLUD-
   54  ING  ANY  CREDIT CARRIED OVER FROM A PRIOR TAXABLE YEAR, REDUCES THE TAX
   55  TO SUCH AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXABLE YEAR
       S. 6359                            83                            A. 8559
    1  MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY  BE  DEDUCTED
    2  FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
    3    10. CREDIT FOR SERVICING CERTAIN MORTGAGES. (A) GENERAL. EVERY TAXPAY-
    4  ER  MEETING  THE  REQUIREMENTS  OF THE STATE OF NEW YORK MORTGAGE AGENCY
    5  APPLICABLE TO THE SERVICING OF MORTGAGES ACQUIRED BY SUCH AGENCY  PURSU-
    6  ANT  TO  THE  STATE  OF  NEW  YORK MORTGAGE AGENCY ACT, WHICH SHALL HAVE
    7  ENTERED INTO A CONTRACT WITH THE STATE OF NEW YORK  MORTGAGE  AGENCY  TO
    8  SERVICE  MORTGAGES  ACQUIRED BY SUCH AGENCY PURSUANT TO THE STATE OF NEW
    9  YORK MORTGAGE AGENCY ACT, SHALL HAVE CREDITED TO IT OR AN  AMOUNT  EQUAL
   10  TO TWO AND NINETY-THREE ONE HUNDREDTHS PER CENTUM OF THE TOTAL PRINCIPAL
   11  AND  INTEREST  COLLECTED BY THE TAXPAYER DURING ITS TAXABLE YEAR ON EACH
   12  SUCH MORTGAGE SECURED BY A LIEN ON REAL ESTATE IMPROVED BY A  ONE-FAMILY
   13  TO FOUR-FAMILY RESIDENTIAL STRUCTURE AND AN AMOUNT EQUAL TO THE INTEREST
   14  COLLECTED  BY THE TAXPAYER DURING ITS TAXABLE YEAR ON EACH SUCH MORTGAGE
   15  SECURED BY A LIEN ON REAL PROPERTY IMPROVED BY A STRUCTURE  OCCUPIED  AS
   16  THE  RESIDENCE  OF  FIVE  OR  MORE FAMILIES LIVING INDEPENDENTLY OF EACH
   17  OTHER, MULTIPLIED BY A FRACTION THE DENOMINATOR OF WHICH  SHALL  BE  THE
   18  INTEREST  RATE PAYABLE ON THE MORTGAGE (COMPUTED TO FIVE DECIMAL PLACES)
   19  AND THE NUMERATOR OF WHICH SHALL BE .00125 IN THE CASE OF SUCH  A  MORT-
   20  GAGE  ACQUIRED  BY  SUCH  AGENCY  FOR LESS THAN ONE MILLION DOLLARS, AND
   21  .00100 IN THE CASE OF SUCH A MORTGAGE ACQUIRED BY SUCH  AGENCY  FOR  ONE
   22  MILLION DOLLARS OR MORE. IN NO EVENT SHALL THE CREDIT ALLOWED UNDER THIS
   23  SUBDIVISION  REDUCE THE TAX TO LESS THAN THE FIXED DOLLAR MINIMUM AMOUNT
   24  PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF  SECTION  TWO  HUNDRED
   25  TEN  OF  THIS ARTICLE. IN COMPUTING SUCH TAX CREDIT FOR THE SERVICING OF
   26  MORTGAGES ON  ONE-FAMILY  TO  FOUR-FAMILY  RESIDENTIAL  STRUCTURES,  THE
   27  TAXPAYER  SHALL NOT BE ENTITLED TO CREDIT FOR THE COLLECTION OF CURTAIL-
   28  MENT OR PAYMENTS IN DISCHARGE OF ANY SUCH MORTGAGE. FOR THE PURPOSES  OF
   29  THIS SUBDIVISION,
   30    (B)(I) A "CURTAILMENT" SHALL MEAN AMOUNTS PAID BY MORTGAGORS
   31    (A)  IN  EXCESS  OF  THE  MONTHLY  CONSTANT  DUE  DURING  THE MONTH OF
   32  COLLECTION AND
   33    (B) IN REDUCTION OF THE UNPAID PRINCIPAL BALANCE OF THE  MORTGAGE;  IN
   34  THE ABSENCE OF CLEAR EVIDENCE TO THE CONTRARY, AMOUNTS PAID IN EXCESS OF
   35  THE  MONTHLY CONSTANT DUE DURING THE MONTH OF COLLECTION SHALL BE DEEMED
   36  TO BE IN REDUCTION OF THE UNPAID PRINCIPAL BALANCE OF THE MORTGAGE; AND
   37    (II) "MONTHLY CONSTANT" SHALL MEAN THE AMOUNT OF PRINCIPAL AND  INTER-
   38  EST WHICH IS DUE AND PAYABLE ACCORDING TO THE MORTGAGE DOCUMENTS ON EACH
   39  PERIODIC PAYMENT DATE.
   40    11.  AGRICULTURAL  PROPERTY  TAX CREDIT. (A) GENERAL. IN THE CASE OF A
   41  TAXPAYER WHICH IS AN ELIGIBLE FARMER OR AN ELIGIBLE FARMER WHO HAS  PAID
   42  TAXES  PURSUANT  TO A LAND CONTRACT, THERE SHALL BE ALLOWED A CREDIT FOR
   43  THE ALLOWABLE SCHOOL DISTRICT PROPERTY TAXES. THE TERM "ALLOWABLE SCHOOL
   44  DISTRICT PROPERTY TAXES" MEANS THE SCHOOL DISTRICT PROPERTY  TAXES  PAID
   45  DURING  THE  TAXABLE YEAR ON QUALIFIED AGRICULTURAL PROPERTY, SUBJECT TO
   46  THE ACREAGE LIMITATION PROVIDED IN PARAGRAPH (E) OF THIS SUBDIVISION AND
   47  THE INCOME LIMITATION PROVIDED IN PARAGRAPH (F) OF THIS SUBDIVISION.
   48    (B) ELIGIBLE FARMER.  FOR  PURPOSES  OF  THIS  SUBDIVISION,  THE  TERM
   49  "ELIGIBLE FARMER" MEANS A TAXPAYER WHOSE FEDERAL GROSS INCOME FROM FARM-
   50  ING  FOR THE TAXABLE YEAR IS AT LEAST TWO-THIRDS OF EXCESS FEDERAL GROSS
   51  INCOME. THE TERM "ELIGIBLE FARMER" ALSO  INCLUDES  A  CORPORATION  OTHER
   52  THAN  THE  TAXPAYER  OF RECORD FOR QUALIFIED AGRICULTURAL LAND WHICH HAS
   53  PAID THE SCHOOL DISTRICT PROPERTY TAXES  ON  SUCH  LAND  PURSUANT  TO  A
   54  CONTRACT FOR THE FUTURE PURCHASE OF SUCH LAND; PROVIDED THAT SUCH CORPO-
   55  RATION  HAS  A  FEDERAL  GROSS  INCOME FROM FARMING FOR THE TAXABLE YEAR
   56  WHICH IS AT  LEAST  TWO-THIRDS  OF  EXCESS  FEDERAL  GROSS  INCOME;  AND
       S. 6359                            84                            A. 8559
    1  PROVIDED FURTHER THAT, IN DETERMINING SUCH INCOME ELIGIBILITY, A TAXPAY-
    2  ER  MAY,  FOR  ANY  TAXABLE  YEAR, USE THE AVERAGE OF SUCH FEDERAL GROSS
    3  INCOME FROM FARMING FOR THAT TAXABLE YEAR AND SUCH INCOME  FOR  THE  TWO
    4  CONSECUTIVE  TAXABLE  YEARS  IMMEDIATELY  PRECEDING  SUCH  TAXABLE YEAR.
    5  EXCESS FEDERAL GROSS INCOME MEANS THE AMOUNT  OF  FEDERAL  GROSS  INCOME
    6  FROM  ALL  SOURCES  FOR  THE  TAXABLE  YEAR IN EXCESS OF THIRTY THOUSAND
    7  DOLLARS. FOR THE PURPOSES OF THIS PARAGRAPH, PAYMENTS FROM  THE  STATE'S
    8  FARMLAND  PROTECTION PROGRAM, ADMINISTERED BY THE DEPARTMENT OF AGRICUL-
    9  TURE AND MARKETS, SHALL BE INCLUDED AS FEDERAL GROSS INCOME FROM FARMING
   10  FOR OTHERWISE ELIGIBLE FARMERS.
   11    (C) SCHOOL DISTRICT PROPERTY TAXES. FOR PURPOSES OF THIS  SUBDIVISION,
   12  THE  TERM  "SCHOOL  DISTRICT  PROPERTY  TAXES" MEANS ALL PROPERTY TAXES,
   13  SPECIAL AD VALOREM LEVIES AND SPECIAL ASSESSMENTS, EXCLUSIVE  OF  PENAL-
   14  TIES  AND INTEREST, LEVIED FOR SCHOOL DISTRICT PURPOSES ON THE QUALIFIED
   15  AGRICULTURAL PROPERTY OWNED BY THE TAXPAYER.
   16    (D) QUALIFIED AGRICULTURAL PROPERTY. FOR PURPOSES OF THIS SUBDIVISION,
   17  THE TERM "QUALIFIED AGRICULTURAL PROPERTY" MEANS LAND  LOCATED  IN  THIS
   18  STATE  WHICH  IS USED IN AGRICULTURAL PRODUCTION, AND LAND IMPROVEMENTS,
   19  STRUCTURES AND BUILDINGS (EXCLUDING BUILDINGS USED  FOR  THE  TAXPAYER'S
   20  RESIDENTIAL  PURPOSE) LOCATED ON SUCH LAND WHICH ARE USED OR OCCUPIED TO
   21  CARRY OUT SUCH PRODUCTION. QUALIFIED AGRICULTURAL PROPERTY ALSO INCLUDES
   22  LAND SET ASIDE OR RETIRED UNDER A  FEDERAL  SUPPLY  MANAGEMENT  OR  SOIL
   23  CONSERVATION  PROGRAM  OR  LAND THAT AT THE TIME IT BECOMES SUBJECT TO A
   24  CONSERVATION EASEMENT, AS DEFINED UNDER SUBDIVISION TWENTY-EIGHT OF THIS
   25  SECTION, MET THE REQUIREMENTS UNDER THIS PARAGRAPH.
   26    (E) ACREAGE LIMITATION. (I) ELIGIBLE TAXES.  IN  THE  EVENT  THAT  THE
   27  QUALIFIED  AGRICULTURAL  PROPERTY OWNED BY THE TAXPAYER INCLUDES LAND IN
   28  EXCESS OF THE BASE ACREAGE AS PROVIDED IN THIS PARAGRAPH, THE AMOUNT  OF
   29  SCHOOL  DISTRICT  PROPERTY TAXES ELIGIBLE FOR CREDIT UNDER THIS SUBDIVI-
   30  SION SHALL BE THAT PORTION OF THE SCHOOL DISTRICT PROPERTY  TAXES  WHICH
   31  BEARS  THE  SAME  RATIO TO THE TOTAL SCHOOL DISTRICT PROPERTY TAXES PAID
   32  DURING THE TAXABLE YEAR, AS THE ACREAGE ALLOWABLE UNDER  THIS  PARAGRAPH
   33  BEARS TO THE ENTIRE ACREAGE OF SUCH LAND.
   34    (II)  ALLOWABLE  ACREAGE. THE ALLOWABLE ACREAGE IS THE SUM OF THE BASE
   35  ACREAGE SET FORTH BELOW AND FIFTY PERCENT OF  THE  INCREMENTAL  ACREAGE.
   36  THE INCREMENTAL ACREAGE IS THE EXCESS OF THE ENTIRE ACREAGE OF QUALIFIED
   37  AGRICULTURAL LAND OWNED BY THE TAXPAYER OVER THE BASE ACREAGE. EXCEPT AS
   38  PROVIDED  IN  SUBPARAGRAPH  (III) OF THIS PARAGRAPH, THE BASE ACREAGE IS
   39  THREE HUNDRED FIFTY ACRES.
   40  THE TOTAL BASE ACREAGE MAY BE  INCREASED  BY  ANY  ACREAGE  ENROLLED  OR
   41  PARTICIPATING DURING THE TAXABLE YEAR IN A FEDERAL ENVIRONMENTAL CONSER-
   42  VATION  ACREAGE  RESERVE  PROGRAM PURSUANT TO TITLE THREE OF THE FEDERAL
   43  AGRICULTURE IMPROVEMENT AND REFORM ACT OF NINETEEN HUNDRED NINETY-SIX.
   44    (III) BASE ACREAGE OF RELATED PERSONS. WHERE THE TAXPAYER AND  ONE  OR
   45  MORE  RELATED  PERSONS  EACH  OWN QUALIFIED AGRICULTURAL PROPERTY ON THE
   46  FIRST DAY OF MARCH OF ANY YEAR, THE BASE ACREAGE UNDER SUBPARAGRAPH (II)
   47  OF THIS PARAGRAPH SHALL  BE  DIVIDED  EQUALLY  AND  ALLOTTED  AMONG  THE
   48  TAXPAYER  AND  SUCH RELATED PERSONS, AND THE TAXPAYER'S BASE ACREAGE FOR
   49  THE TAXABLE YEAR WHICH INCLUDES SUCH MARCH FIRST SHALL BE LIMITED TO ITS
   50  ALLOTTED SHARE. PROVIDED, HOWEVER, IF THE TAXPAYER AND ALL SUCH  RELATED
   51  PERSONS CONSENT (AT SUCH TIME AND IN SUCH MANNER AS THE COMMISSIONER MAY
   52  PRESCRIBE)  TO AN UNEQUAL DIVISION, THE TAXPAYER'S BASE ACREAGE FOR SUCH
   53  TAXABLE YEAR SHALL BE LIMITED TO ITS ALLOTTED SHARE UNDER  SUCH  UNEQUAL
   54  DIVISION.
   55    (IV)  RELATED  PERSONS. (A) FOR PURPOSES OF SUBPARAGRAPH (III) OF THIS
   56  PARAGRAPH, THE TERM "RELATED PERSON" MEANS:
       S. 6359                            85                            A. 8559
    1    (I) A CORPORATION SUBJECT TO TAX UNDER THIS ARTICLE, WHERE THE TAXPAY-
    2  ER AND THE CORPORATION ARE MEMBERS OF  THE  SAME  CONTROLLED  GROUP,  AS
    3  DEFINED IN SECTION 267(F) OF THE INTERNAL REVENUE CODE;
    4    (II)  AN  INDIVIDUAL,  PARTNERSHIP,  ESTATE  OR TRUST, WHERE MORE THAN
    5  FIFTY PERCENT IN VALUE OF THE  OUTSTANDING  STOCK  OF  THE  TAXPAYER  IS
    6  OWNED,  DIRECTLY  OR INDIRECTLY, BY OR FOR SUCH INDIVIDUAL, PARTNERSHIP,
    7  ESTATE OR TRUST OR BY OR FOR THE GRANTOR OF SUCH TRUST;
    8    (III) A CORPORATION SUBJECT TO TAX UNDER THIS ARTICLE, OR  A  PARTNER-
    9  SHIP,  ESTATE  OR TRUST, IF THE SAME PERSON OWNS MORE THAN FIFTY PERCENT
   10  IN VALUE OF THE OUTSTANDING STOCK OF THE TAXPAYER AND  MORE  THAN  FIFTY
   11  PERCENT  IN  VALUE OF  THE OUTSTANDING STOCK OF THE CORPORATION, OR MORE
   12  THAN FIFTY PERCENT OF THE CAPITAL OR PROFITS INTEREST  IN  THE  PARTNER-
   13  SHIP,  OR  MORE  THAN  FIFTY  PERCENT  OF THE BENEFICIAL INTEREST IN THE
   14  ESTATE OR TRUST;
   15    (IV) A PARTNERSHIP, ESTATE  OR  TRUST  OF  WHICH  THE  TAXPAYER  OWNS,
   16  DIRECTLY  OR INDIRECTLY, MORE THAN FIFTY PERCENT OF THE CAPITAL, PROFITS
   17  OR BENEFICIAL INTEREST.
   18    (B) IN DETERMINING WHETHER A PERSON IS A  RELATED  PERSON  WITHIN  THE
   19  MEANING OF THIS SUBPARAGRAPH:
   20    (I)  STOCK  OWNED,  DIRECTLY  OR  INDIRECTLY, BY OR FOR A CORPORATION,
   21  PARTNERSHIP, ESTATE OR TRUST SHALL BE CONSIDERED AS BEING OWNED  PROPOR-
   22  TIONATELY BY OR FOR ITS SHAREHOLDERS, PARTNERS OR BENEFICIARIES;
   23    (II)  AN  INDIVIDUAL  SHALL  BE  CONSIDERED AS OWNING THE STOCK OWNED,
   24  DIRECTLY OR INDIRECTLY, BY OR FOR HIS SPOUSE;
   25    (III) STOCK CONSTRUCTIVELY OWNED BY A PERSON BY REASON OF THE APPLICA-
   26  TION OF ITEM (I) OF THIS CLAUSE SHALL, FOR THE PURPOSE OF APPLYING  ITEM
   27  (I) OR (II) OF THIS CLAUSE, BE TREATED AS ACTUALLY OWNED BY SUCH PERSON.
   28    (F)  INCOME  LIMITATION. (I) IN THE EVENT THAT THE MODIFIED ENTIRE NET
   29  INCOME OF THE TAXPAYER EXCEEDS TWO HUNDRED THOUSAND DOLLARS, THE  ALLOW-
   30  ABLE SCHOOL DISTRICT PROPERTY TAXES UNDER PARAGRAPH (A) OF THIS SUBDIVI-
   31  SION SHALL BE THE ELIGIBLE TAXES UNDER SUBPARAGRAPH (I) OF PARAGRAPH (E)
   32  OF  THIS SUBDIVISION REDUCED BY THE PRODUCT OF THE AMOUNT OF SUCH ELIGI-
   33  BLE TAXES AND A PERCENTAGE, SUCH PERCENTAGE TO BE DETERMINED  BY  MULTI-
   34  PLYING  ONE HUNDRED PERCENT BY A FRACTION, THE NUMERATOR OF WHICH IS THE
   35  LESSER OF ONE HUNDRED THOUSAND DOLLARS OR THE EXCESS OF  THE  TAXPAYER'S
   36  MODIFIED  ENTIRE  NET  INCOME  OVER TWO HUNDRED THOUSAND DOLLARS AND THE
   37  DENOMINATOR OF WHICH IS ONE HUNDRED THOUSAND DOLLARS.  FOR  PURPOSES  OF
   38  THE  PRECEDING  SENTENCE,  THE  TERM "ELIGIBLE TAXES", WHERE THE ACREAGE
   39  LIMITATION OF PARAGRAPH (E) OF THIS SUBDIVISION DOES  NOT  APPLY,  SHALL
   40  MEAN  THE  TOTAL  SCHOOL DISTRICT PROPERTY TAXES PAID DURING THE TAXABLE
   41  YEAR.
   42    (II) THE TERM "MODIFIED ENTIRE NET INCOME" MEANS THE ENTIRE NET INCOME
   43  FOR THE TAXABLE YEAR REDUCED BY THE AMOUNT OF  PRINCIPAL  PAID  ON  FARM
   44  INDEBTEDNESS DURING THE TAXABLE YEAR. THE TERM "FARM INDEBTEDNESS" MEANS
   45  DEBT INCURRED OR REFINANCED WHICH IS SECURED BY FARM PROPERTY, WHERE THE
   46  PROCEEDS  OF  THE  DEBT  ARE  DISBURSED FOR EXPENDITURES INCURRED IN THE
   47  BUSINESS OF FARMING.
   48    (G) CARRYOVER. IN NO EVENT SHALL THE CREDIT PROVIDED HEREIN BE ALLOWED
   49  IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS  THAN  THE  FIXED
   50  DOLLAR  MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF
   51  SECTION TWO HUNDRED TEN OF THIS ARTICLE.  IF,  HOWEVER,  THE  AMOUNT  OF
   52  CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE
   53  TAX  TO SUCH AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXABLE
   54  YEAR MAY BE CARRIED OVER TO THE FOLLOWING  YEAR  OR  YEARS  AND  MAY  BE
   55  DEDUCTED  FROM  THE  TAXPAYER'S  TAX  FOR  SUCH YEAR OR YEARS. PROVIDED,
   56  HOWEVER, IN LIEU OF CARRYING OVER THE UNUSED PORTION OF SUCH CREDIT, THE
       S. 6359                            86                            A. 8559
    1  TAXPAYER MAY ELECT TO TREAT SUCH UNUSED PORTION AS AN OVERPAYMENT OF TAX
    2  TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF  SECTION
    3  ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER EXCEPT THAT NO INTEREST SHALL BE
    4  PAID ON SUCH OVERPAYMENT.
    5    (H)  NONQUALIFIED  USE. (I) NO CREDIT IN CONVERSION YEAR. IN THE EVENT
    6  THAT QUALIFIED AGRICULTURAL PROPERTY IS CONVERTED  BY  THE  TAXPAYER  TO
    7  NONQUALIFIED  USE,  CREDIT  UNDER  THIS SUBDIVISION SHALL NOT BE ALLOWED
    8  WITH RESPECT TO SUCH PROPERTY FOR THE TAXABLE YEAR  OF  CONVERSION  (THE
    9  CONVERSION YEAR).
   10    (II)  CREDIT RECAPTURE. IF THE CONVERSION BY THE TAXPAYER OF QUALIFIED
   11  AGRICULTURAL PROPERTY TO NONQUALIFIED USE OCCURS DURING  THE  PERIOD  OF
   12  THE  TWO  TAXABLE  YEARS FOLLOWING THE TAXABLE YEAR FOR WHICH THE CREDIT
   13  UNDER THIS SUBDIVISION WAS FIRST CLAIMED WITH RESPECT TO SUCH  PROPERTY,
   14  THE  CREDIT  ALLOWED WITH RESPECT TO SUCH PROPERTY FOR THE TAXABLE YEARS
   15  PRIOR TO THE CONVERSION YEAR MUST BE ADDED BACK IN THE CONVERSION  YEAR.
   16  WHERE  THE PROPERTY CONVERTED INCLUDES LAND, AND WHERE THE CONVERSION IS
   17  OF ONLY A PORTION OF SUCH LAND, THE CREDIT ALLOWED WITH RESPECT  TO  THE
   18  PROPERTY  CONVERTED SHALL BE DETERMINED BY MULTIPLYING THE ENTIRE CREDIT
   19  UNDER THIS SUBDIVISION FOR THE TAXABLE YEARS  PRIOR  TO  THE  CONVERSION
   20  YEAR  BY A FRACTION, THE NUMERATOR OF WHICH IS THE ACREAGE CONVERTED AND
   21  THE DENOMINATOR OF WHICH IS THE ENTIRE ACREAGE OF SUCH LAND OWNED BY THE
   22  TAXPAYER IMMEDIATELY PRIOR TO THE CONVERSION.
   23    (III) EXCEPTION TO RECAPTURE.  SUBPARAGRAPH  (II)  OF  THIS  PARAGRAPH
   24  SHALL NOT APPLY TO THE CONVERSION OF PROPERTY WHERE THE CONVERSION IS BY
   25  REASON  OF  INVOLUNTARY  CONVERSION,  WITHIN  THE MEANING OF SECTION ONE
   26  THOUSAND THIRTY-THREE OF THE INTERNAL REVENUE CODE.
   27    (IV) CONVERSION TO NONQUALIFIED USE. FOR PURPOSES OF THIS PARAGRAPH, A
   28  SALE OR OTHER DISPOSITION OF QUALIFIED AGRICULTURAL PROPERTY ALONE SHALL
   29  NOT CONSTITUTE A CONVERSION TO A NONQUALIFIED USE.
   30    (I) SPECIAL RULES. FOR PURPOSES OF THIS SUBDIVISION, THE TERM "FEDERAL
   31  GROSS  INCOME  FROM  FARMING"  SHALL  INCLUDE  GROSS  INCOME  FROM   THE
   32  PRODUCTION OF MAPLE SYRUP, CIDER, CHRISTMAS TREES DERIVED FROM A MANAGED
   33  CHRISTMAS  TREE  OPERATION WHETHER DUG FOR TRANSPLANTING OR CUT FROM THE
   34  STUMP, OR FROM A COMMERCIAL  HORSE  BOARDING  OPERATION  AS  DEFINED  IN
   35  SUBDIVISION THIRTEEN OF SECTION THREE HUNDRED ONE OF THE AGRICULTURE AND
   36  MARKETS  LAW,  OR  FROM  THE SALE OF WINE FROM A LICENSED FARM WINERY AS
   37  PROVIDED FOR IN ARTICLE SIX OF THE ALCOHOLIC BEVERAGE  CONTROL  LAW,  OR
   38  FROM  THE  SALE  OF CIDER FROM A LICENSED FARM CIDERY AS PROVIDED FOR IN
   39  SECTION FIFTY-EIGHT-C OF THE ALCOHOLIC BEVERAGE CONTROL LAW.
   40    (J) ELECTION TO DEEM GROSS INCOME OF NEW YORK C CORPORATION TO  SHARE-
   41  HOLDERS.  FOR  PURPOSES  OF  THIS SUBDIVISION, FEDERAL GROSS INCOME FROM
   42  FARMING SHALL BE ZERO FOR ANY TAXABLE YEAR OF A NEW YORK  C  CORPORATION
   43  FOR WHICH THE ELECTION UNDER PARAGRAPH NINE OF SUBSECTION (N) OF SECTION
   44  SIX HUNDRED SIX OF THIS CHAPTER IS IN EFFECT.
   45    12.  CREDIT FOR EMPLOYMENT OF PERSONS WITH DISABILITIES. (A) ALLOWANCE
   46  OF CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS HERE-
   47  INAFTER PROVIDED, AGAINST THE TAX IMPOSED BY THIS ARTICLE, FOR EMPLOYING
   48  WITHIN THE STATE A QUALIFIED EMPLOYEE.
   49    (B) QUALIFIED EMPLOYEE. A QUALIFIED EMPLOYEE IS AN INDIVIDUAL:
   50    (1) WHO IS CERTIFIED BY THE EDUCATION DEPARTMENT, OR IN THE CASE OF AN
   51  INDIVIDUAL WHO IS BLIND OR VISUALLY HANDICAPPED,  BY  THE  STATE  AGENCY
   52  RESPONSIBLE  FOR  PROVISION OF VOCATIONAL REHABILITATION SERVICES TO THE
   53  BLIND AND VISUALLY HANDICAPPED: (I) AS A PERSON WITH A DISABILITY  WHICH
   54  CONSTITUTES  OR RESULTS IN A SUBSTANTIAL HANDICAP TO EMPLOYMENT AND (II)
   55  AS HAVING COMPLETED OR AS RECEIVING  SERVICES  UNDER  AN  INDIVIDUALIZED
   56  WRITTEN  REHABILITATION  PLAN  APPROVED  BY  THE EDUCATION DEPARTMENT OR
       S. 6359                            87                            A. 8559
    1  OTHER STATE AGENCY RESPONSIBLE FOR PROVIDING  VOCATIONAL  REHABILITATION
    2  SERVICES TO SUCH INDIVIDUAL; AND
    3    (2) WHO HAS WORKED ON A FULL-TIME BASIS FOR THE EMPLOYER WHO IS CLAIM-
    4  ING  THE  CREDIT  FOR  AT  LEAST ONE HUNDRED EIGHTY DAYS OR FOUR HUNDRED
    5  HOURS.
    6    (C) AMOUNT OF CREDIT. EXCEPT AS PROVIDED  IN  PARAGRAPH  (D)  OF  THIS
    7  SUBDIVISION,  THE  AMOUNT  OF CREDIT SHALL BE THIRTY-FIVE PERCENT OF THE
    8  FIRST SIX THOUSAND DOLLARS IN QUALIFIED FIRST-YEAR WAGES EARNED BY  EACH
    9  QUALIFIED  EMPLOYEE.  "QUALIFIED  FIRST-YEAR  WAGES" MEANS WAGES PAID OR
   10  INCURRED BY THE TAXPAYER DURING THE TAXABLE YEAR TO QUALIFIED  EMPLOYEES
   11  WHICH  ARE  ATTRIBUTABLE, WITH RESPECT TO ANY SUCH EMPLOYEE, TO SERVICES
   12  RENDERED DURING THE ONE-YEAR PERIOD BEGINNING WITH THE DAY THE  EMPLOYEE
   13  BEGINS WORK FOR THE TAXPAYER.
   14    (D)  CREDIT  WHERE  FEDERAL  WORK OPPORTUNITY TAX CREDIT APPLIES. WITH
   15  RESPECT TO ANY QUALIFIED EMPLOYEE WHOSE QUALIFIED FIRST-YEAR WAGES UNDER
   16  PARAGRAPH (C) OF THIS SUBDIVISION ALSO CONSTITUTE  QUALIFIED  FIRST-YEAR
   17  WAGES  FOR  PURPOSES  OF  THE WORK OPPORTUNITY TAX CREDIT FOR VOCATIONAL
   18  REHABILITATION REFERRALS UNDER SECTION FIFTY-ONE OF THE INTERNAL REVENUE
   19  CODE, THE AMOUNT OF CREDIT UNDER  THIS SUBDIVISION SHALL BE  THIRTY-FIVE
   20  PERCENT OF THE FIRST SIX THOUSAND DOLLARS IN QUALIFIED SECOND-YEAR WAGES
   21  EARNED  BY EACH SUCH EMPLOYEE. "QUALIFIED SECOND-YEAR WAGES" MEANS WAGES
   22  PAID OR INCURRED BY THE TAXPAYER DURING THE TAXABLE  YEAR  TO  QUALIFIED
   23  EMPLOYEES  WHICH ARE ATTRIBUTABLE, WITH RESPECT TO ANY SUCH EMPLOYEE, TO
   24  SERVICES RENDERED DURING THE ONE-YEAR PERIOD BEGINNING  ONE  YEAR  AFTER
   25  THE EMPLOYEE BEGINS WORK FOR THE TAXPAYER.
   26    (E) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA-
   27  BLE  YEAR  SHALL  NOT  REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE
   28  FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D)  OF  SUBDIVISION
   29  ONE  OF  SECTION TWO HUNDRED TEN OF THIS CHAPTER. HOWEVER, IF THE AMOUNT
   30  OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR  REDUCES
   31  THE  TAX  TO  SUCH  AMOUNT,  ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH
   32  TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS, AND MAY
   33  BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
   34    (F)  COORDINATION  WITH  FEDERAL  WORK  OPPORTUNITY  TAX  CREDIT.  THE
   35  PROVISIONS  OF  SECTION  FIFTY-ONE AND FIFTY-TWO OF THE INTERNAL REVENUE
   36  CODE, AS SUCH SECTIONS APPLIED ON OCTOBER FIRST, NINETEEN HUNDRED  NINE-
   37  TY-SIX,  THAT APPLY TO THE FEDERAL WORK OPPORTUNITY TAX CREDIT FOR VOCA-
   38  TIONAL REHABILITATION REFERRALS SHALL APPLY TO  THE  CREDIT  UNDER  THIS
   39  SUBDIVISION  TO  THE  EXTENT  THAT SUCH SECTIONS ARE CONSISTENT WITH THE
   40  SPECIFIC PROVISIONS OF THIS SUBDIVISION, PROVIDED THAT IN THE EVENT OF A
   41  CONFLICT THE PROVISIONS OF THIS SUBDIVISION SHALL CONTROL.
   42    13. CREDIT FOR PURCHASE OF  AN  AUTOMATED  EXTERNAL  DEFIBRILLATOR.  A
   43  TAXPAYER  SHALL  BE  ALLOWED  A  CREDIT,  TO  BE COMPUTED AS HEREINAFTER
   44  PROVIDED, AGAINST THE TAX IMPOSED BY THIS  ARTICLE,  FOR  THE  PURCHASE,
   45  OTHER  THAN  FOR RESALE, OF AN AUTOMATED EXTERNAL DEFIBRILLATOR, AS SUCH
   46  TERM IS DEFINED IN SECTION THREE THOUSAND-B OF THE  PUBLIC  HEALTH  LAW.
   47  THE  AMOUNT  OF  CREDIT  SHALL  BE THE COST TO THE TAXPAYER OF AUTOMATED
   48  EXTERNAL DEFIBRILLATORS PURCHASED DURING THE TAXABLE YEAR,  SUCH  CREDIT
   49  NOT  TO EXCEED FIVE HUNDRED DOLLARS WITH RESPECT TO EACH UNIT PURCHASED.
   50  THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT
   51  REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE FIXED  DOLLAR  MINIMUM
   52  AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO
   53  HUNDRED TEN OF THIS CHAPTER.
   54    14. CREDIT FOR PURCHASE OF LONG-TERM CARE INSURANCE.  (A)  GENERAL.  A
   55  TAXPAYER SHALL BE ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY THIS ARTI-
   56  CLE  EQUAL TO TWENTY PERCENT OF THE PREMIUM PAID DURING THE TAXABLE YEAR
       S. 6359                            88                            A. 8559
    1  FOR LONG-TERM CARE INSURANCE. IN ORDER TO QUALIFY FOR SUCH  CREDIT,  THE
    2  TAXPAYER'S PREMIUM PAYMENT MUST BE FOR THE PURCHASE OF OR FOR CONTINUING
    3  COVERAGE UNDER A LONG-TERM CARE INSURANCE POLICY THAT QUALIFIES FOR SUCH
    4  CREDIT  PURSUANT  TO  SECTION  ONE THOUSAND ONE HUNDRED SEVENTEEN OF THE
    5  INSURANCE LAW.
    6    (B) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY  YEAR
    7  SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE FIXED DOLLAR
    8  MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION
    9  TWO  HUNDRED  TEN  OF  THIS  ARTICLE.  IF, HOWEVER, THE AMOUNT OF CREDIT
   10  ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO
   11  SUCH AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN  SUCH  TAXABLE  YEAR
   12  MAY  BE  CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY BE DEDUCTED
   13  FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
   14    15. LOW-INCOME HOUSING CREDIT. (A) ALLOWANCE  OF  CREDIT.  A  TAXPAYER
   15  SHALL  BE  ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY THIS ARTICLE WITH
   16  RESPECT TO THE OWNERSHIP OF ELIGIBLE LOW-INCOME BUILDINGS,  COMPUTED  AS
   17  PROVIDED IN SECTION EIGHTEEN OF THIS CHAPTER.
   18    (B)  APPLICATION  OF  CREDIT. THE CREDIT AND CARRYOVERS OF SUCH CREDIT
   19  ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL  NOT,  IN  THE
   20  AGGREGATE,  REDUCE  THE  TAX  DUE  FOR  SUCH YEAR TO LESS THAN THE FIXED
   21  DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE  OF
   22  SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
   23  IT OR CARRYOVERS OF SUCH CREDIT, OR BOTH, ALLOWED UNDER THIS SUBDIVISION
   24  FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT, ANY AMOUNT OF CRED-
   25  IT OR CARRYOVERS OF SUCH CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR
   26  MAY  BE  CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY BE DEDUCTED
   27  FROM THE TAX FOR SUCH YEAR OR YEARS.
   28    (C) CREDIT RECAPTURE. FOR PROVISIONS REQUIRING  RECAPTURE  OF  CREDIT,
   29  SEE SUBDIVISION (B) OF SECTION EIGHTEEN OF THIS CHAPTER.
   30    16.  GREEN  BUILDING CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAYER SHALL
   31  BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION  NINETEEN  OF
   32  THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.
   33    (B) CARRYOVERS. THE CREDIT AND CARRYOVERS OF SUCH CREDIT ALLOWED UNDER
   34  THIS  SUBDIVISION  FOR  ANY  TAXABLE  YEAR  SHALL NOT, IN THE AGGREGATE,
   35  REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE FIXED  DOLLAR  MINIMUM
   36  AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO
   37  HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CREDIT OR  CARRY-
   38  OVERS  OF  SUCH  CREDIT, OR BOTH, ALLOWED UNDER THIS SUBDIVISION FOR ANY
   39  TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT, ANY  AMOUNT  OF  CREDIT  OR
   40  CARRYOVERS  OF  SUCH CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR MAY
   41  BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY BE DEDUCTED  FROM
   42  THE TAX FOR SUCH YEAR OR YEARS.
   43    17.  BROWNFIELD  REDEVELOPMENT  TAX CREDIT. (A) ALLOWANCE OF CREDIT. A
   44  TAXPAYER SHALL BE ALLOWED A  CREDIT,  TO  BE  COMPUTED  AS  PROVIDED  IN
   45  SECTION  TWENTY-ONE  OF  THIS  CHAPTER,  AGAINST THE TAX IMPOSED BY THIS
   46  ARTICLE.
   47    (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
   48  FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
   49  THAN THE FIXED DOLLAR MINIMUM AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF
   50  SUBDIVISION  ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF
   51  THE AMOUNT OF CREDITS ALLOWED UNDER THIS  SUBDIVISION  FOR  ANY  TAXABLE
   52  YEAR  REDUCES  THE  TAX  TO  SUCH  AMOUNT, ANY AMOUNT OF CREDIT THUS NOT
   53  DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS  AN  OVERPAYMENT  OF
   54  TAX  TO  BE  CREDITED  OR  REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF
   55  SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,  THE
       S. 6359                            89                            A. 8559
    1  PROVISIONS  OF  SUBSECTION  (C)  OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
    2  THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
    3    18. REMEDIATED BROWNFIELD CREDIT FOR REAL PROPERTY TAXES FOR QUALIFIED
    4  SITES.  (A)  ALLOWANCE  OF  CREDIT. A TAXPAYER WHICH IS A DEVELOPER OF A
    5  QUALIFIED SITE SHALL BE ALLOWED A  CREDIT  FOR  ELIGIBLE  REAL  PROPERTY
    6  TAXES,  TO BE COMPUTED AS PROVIDED IN SUBDIVISION (B) OF SECTION TWENTY-
    7  TWO OF THIS CHAPTER, AGAINST  THE  TAX  IMPOSED  BY  THIS  ARTICLE.  FOR
    8  PURPOSES OF THIS SUBDIVISION, THE TERMS "QUALIFIED SITE" AND "DEVELOPER"
    9  SHALL  HAVE  THE  SAME MEANING AS SET FORTH IN PARAGRAPHS TWO AND THREE,
   10  RESPECTIVELY, OF SUBDIVISION (A) OF SECTION TWENTY-TWO OF THIS CHAPTER.
   11    (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
   12  FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
   13  THAN THE FIXED DOLLAR MINIMUM AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF
   14  SUBDIVISION  ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF
   15  THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
   16  REDUCES THE TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE
   17  IN SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT  OF  TAX  TO  BE
   18  CREDITED  OR  REFUNDED  IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE
   19  THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,  THE  PROVISIONS
   20  OF  SUBSECTION  (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
   21  NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
   22    19. ENVIRONMENTAL REMEDIATION INSURANCE CREDIT. (A) ALLOWANCE OF CRED-
   23  IT.  A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN
   24  SECTION TWENTY-THREE OF THIS CHAPTER, AGAINST THE TAX  IMPOSED  BY  THIS
   25  ARTICLE.
   26    (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
   27  FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
   28  THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
   29  SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER,  IF
   30  THE  AMOUNT  OF  CREDITS  ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE
   31  YEAR REDUCES THE TAX TO SUCH AMOUNT,  ANY  AMOUNT  OF  CREDIT  THUS  NOT
   32  DEDUCTIBLE  IN  SUCH  TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF
   33  TAX TO BE CREDITED OR REFUNDED IN  ACCORDANCE  WITH  THE  PROVISIONS  OF
   34  SECTION  ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE
   35  PROVISIONS OF SUBSECTION (C) OF SECTION  ONE  THOUSAND  EIGHTY-EIGHT  OF
   36  THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
   37    20.  EMPIRE  STATE  FILM PRODUCTION CREDIT. (A) ALLOWANCE OF CREDIT. A
   38  TAXPAYER WHO IS ELIGIBLE PURSUANT TO SECTION TWENTY-FOUR OF THIS CHAPTER
   39  SHALL BE ALLOWED A CREDIT TO BE COMPUTED AS  PROVIDED  IN  SUCH  SECTION
   40  TWENTY-FOUR AGAINST THE TAX IMPOSED BY THIS ARTICLE.
   41    (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
   42  FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
   43  THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
   44  SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF  THIS  ARTICLE.  PROVIDED,
   45  HOWEVER,  THAT IF THE AMOUNT OF THE CREDIT ALLOWABLE UNDER THIS SUBDIVI-
   46  SION FOR ANY TAXABLE YEAR REDUCES THE TAX TO  SUCH  AMOUNT,  THE  EXCESS
   47  SHALL  BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED IN
   48  ACCORDANCE WITH THE PROVISIONS OF SECTION  ONE  THOUSAND  EIGHTY-SIX  OF
   49  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE PROVISIONS OF SUBSECTION (C) OF
   50  SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS  CHAPTER  NOTWITHSTANDING,  NO
   51  INTEREST SHALL BE PAID THEREON.
   52    21.  SECURITY TRAINING TAX CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAYER
   53  SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN  SECTION  TWEN-
   54  TY-SIX OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.
   55    (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
   56  FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
       S. 6359                            90                            A. 8559
    1  THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
    2  SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS CHAPTER. HOWEVER,  IF
    3  THE  AMOUNT  OF  CREDITS  ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE
    4  YEAR  REDUCES  THE  TAX  TO  SUCH  AMOUNT, ANY AMOUNT OF CREDIT THUS NOT
    5  DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS  AN  OVERPAYMENT  OF
    6  TAX  TO  BE  CREDITED  OR  REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF
    7  SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,  THE
    8  PROVISIONS  OF  SUBSECTION  (C)  OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
    9  THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
   10    22. CONSERVATION EASEMENT TAX CREDIT. (A) CREDIT ALLOWED. IN THE  CASE
   11  OF  A  TAXPAYER WHO OWNS LAND THAT IS SUBJECT TO A CONSERVATION EASEMENT
   12  HELD BY A PUBLIC OR PRIVATE CONSERVATION AGENCY, THERE SHALL BE  ALLOWED
   13  A CREDIT FOR TWENTY-FIVE PERCENT OF THE ALLOWABLE SCHOOL DISTRICT, COUN-
   14  TY  AND TOWN REAL PROPERTY TAXES ON SUCH LAND. IN NO SUCH CASE SHALL THE
   15  CREDIT ALLOWED UNDER THIS SUBDIVISION  IN  COMBINATION  WITH  ANY  OTHER
   16  CREDIT  FOR  SUCH  SCHOOL  DISTRICT, COUNTY AND TOWN REAL PROPERTY TAXES
   17  UNDER THIS SECTION EXCEED SUCH TAXES.
   18    (B) CONSERVATION EASEMENT. FOR PURPOSES OF THIS SUBDIVISION, THE  TERM
   19  "CONSERVATION  EASEMENT"  MEANS  A  PERPETUAL AND PERMANENT CONSERVATION
   20  EASEMENT AS DEFINED IN ARTICLE FORTY-NINE OF THE ENVIRONMENTAL CONSERVA-
   21  TION LAW THAT SERVES TO PROTECT OPEN SPACE, SCENIC,  NATURAL  RESOURCES,
   22  BIODIVERSITY,   AGRICULTURAL,  WATERSHED  AND/OR  HISTORIC  PRESERVATION
   23  RESOURCES. ANY CONSERVATION EASEMENT FOR WHICH A TAX CREDIT  IS  CLAIMED
   24  UNDER  THIS  SUBDIVISION  SHALL BE FILED WITH THE DEPARTMENT OF ENVIRON-
   25  MENTAL CONSERVATION, AS PROVIDED FOR IN ARTICLE FORTY-NINE OF THE  ENVI-
   26  RONMENTAL  CONSERVATION  LAW AND SUCH CONSERVATION EASEMENT SHALL COMPLY
   27  WITH THE PROVISIONS OF TITLE THREE OF SUCH ARTICLE, AND  THE  PROVISIONS
   28  OF  SUBDIVISION  (H)  OF SECTION 170 OF THE INTERNAL REVENUE CODE. DEDI-
   29  CATIONS OF LAND FOR OPEN SPACE THROUGH  THE  EXECUTION  OF  CONSERVATION
   30  EASEMENTS  FOR  THE PURPOSE OF FULFILLING DENSITY REQUIREMENTS TO OBTAIN
   31  SUBDIVISION OR BUILDING PERMITS SHALL NOT BE CONSIDERED  A  CONSERVATION
   32  EASEMENT UNDER THIS SUBDIVISION.
   33    (C)  LAND.  FOR  PURPOSES OF THIS SUBDIVISION, THE TERM "LAND" MEANS A
   34  FEE SIMPLE TITLE TO REAL PROPERTY LOCATED IN THIS STATE, WITH OR WITHOUT
   35  IMPROVEMENTS THEREON; RIGHTS OF WAY; WATER AND  RIPARIAN  RIGHTS;  EASE-
   36  MENTS;  PRIVILEGES  AND  ALL  OTHER  RIGHTS  OR INTERESTS OF ANY LAND OR
   37  DESCRIPTION IN, RELATING TO OR CONNECTED WITH REAL  PROPERTY,  EXCLUDING
   38  BUILDINGS, STRUCTURES, OR IMPROVEMENTS.
   39    (D) PUBLIC OR PRIVATE CONSERVATION AGENCY. FOR PURPOSES OF THIS SUBDI-
   40  VISION,  THE  TERM  "PUBLIC  OR  PRIVATE  CONSERVATION AGENCY" MEANS ANY
   41  STATE, LOCAL, OR FEDERAL GOVERNMENTAL BODY; OR ANY PRIVATE  NOT-FOR-PRO-
   42  FIT  CHARITABLE  CORPORATION OR TRUST WHICH IS AUTHORIZED TO DO BUSINESS
   43  IN THE STATE OF NEW YORK, IS ORGANIZED AND OPERATED TO PROTECT LAND  FOR
   44  NATURAL  RESOURCES,  CONSERVATION  OR HISTORIC PRESERVATION PURPOSES, IS
   45  EXEMPT FROM FEDERAL INCOME  TAXATION  UNDER  SECTION  501(C)(3)  OF  THE
   46  INTERNAL  REVENUE  CODE, AND HAS THE POWER TO ACQUIRE, HOLD AND MAINTAIN
   47  LAND AND/OR INTERESTS IN LAND FOR SUCH PURPOSES.
   48    (E) CREDIT LIMITATION. THE AMOUNT OF THE CREDIT THAT MAY BE CLAIMED BY
   49  A TAXPAYER PURSUANT TO THIS SUBSECTION SHALL NOT  EXCEED  FIVE  THOUSAND
   50  DOLLARS IN ANY GIVEN YEAR.
   51    (F)  APPLICATION OF THE CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVI-
   52  SION FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR  TO
   53  LESS THAN THE FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
   54  SUBDIVISION  ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF
   55  THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY  TAXABLE
   56  YEAR  REDUCES  THE TAX TO SUCH AMOUNT, ANY AMOUNT OF THE CREDIT THUS NOT
       S. 6359                            91                            A. 8559
    1  DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS  AN  OVERPAYMENT  OF
    2  TAX  TO  BE  CREDITED  OR  REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF
    3  SUBSECTION (C) OF SECTION ONE THOUSAND  EIGHTY-EIGHT  OF  THIS  CHAPTER,
    4  EXCEPT THAT, NO INTEREST SHALL BE PAID THEREON.
    5    23.  EMPIRE STATE COMMERCIAL PRODUCTION CREDIT. (A) ALLOWANCE OF CRED-
    6  IT.  A TAXPAYER THAT IS ELIGIBLE PURSUANT TO PROVISIONS OF SECTION TWEN-
    7  TY-EIGHT OF THIS CHAPTER SHALL BE ALLOWED A CREDIT  TO  BE  COMPUTED  AS
    8  PROVIDED IN SUCH SECTION AGAINST THE TAX IMPOSED BY THIS ARTICLE.
    9    (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
   10  FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
   11  THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
   12  SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF  THIS  ARTICLE.  PROVIDED,
   13  HOWEVER,  THAT IF THE AMOUNT OF THE CREDIT ALLOWABLE UNDER THIS SUBDIVI-
   14  SION FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT, FIFTY  PERCENT
   15  OF  THE  EXCESS SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED
   16  OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF  SECTION  ONE  THOUSAND
   17  EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
   18  SUBSECTION (C) OF SECTION ONE  THOUSAND  EIGHTY-EIGHT  OF  THIS  CHAPTER
   19  NOTWITHSTANDING,  NO INTEREST SHALL BE PAID THEREON. THE BALANCE OF SUCH
   20  CREDIT NOT CREDITED OR REFUNDED IN SUCH TAXABLE YEAR MAY BE CARRIED OVER
   21  TO THE IMMEDIATELY SUCCEEDING TAXABLE YEAR AND MAY BE DEDUCTED FROM  THE
   22  TAXPAYER'S TAX FOR SUCH YEAR. THE EXCESS, IF ANY, OF THE AMOUNT OF CRED-
   23  IT OVER THE TAX FOR SUCH SUCCEEDING YEAR SHALL BE TREATED AS AN OVERPAY-
   24  MENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS
   25  OF  SECTION  ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,
   26  THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
   27  THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
   28    (C) EXPIRATION OF CREDIT. THE CREDIT ALLOWED  UNDER  THIS  SUBDIVISION
   29  SHALL  NOT BE APPLICABLE TO TAXABLE YEARS BEGINNING ON OR AFTER DECEMBER
   30  THIRTY-FIRST, TWO THOUSAND SEVENTEEN.
   31    24. BIOFUEL PRODUCTION  CREDIT.  (A)  GENERAL.  A  TAXPAYER  SHALL  BE
   32  ALLOWED  A CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION TWENTY-EIGHT OF
   33  THIS CHAPTER ADDED AS PART X OF CHAPTER SIXTY-TWO OF  THE  LAWS  OF  TWO
   34  THOUSAND  SIX,  AGAINST  THE  TAX  IMPOSED  BY  THIS ARTICLE. THE CREDIT
   35  ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE
   36  TAX DUE FOR SUCH YEAR TO LESS  THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT
   37  PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO HUNDRED
   38  TEN OF THIS ARTICLE.  HOWEVER, IF THE AMOUNT  OF  CREDIT  ALLOWED  UNDER
   39  THIS  SUBDIVISION  FOR  ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT,
   40  ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR  SHALL  BE
   41  TREATED  AS  AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORD-
   42  ANCE WITH THE PROVISIONS OF SECTION  ONE  THOUSAND  EIGHTY-SIX  OF  THIS
   43  CHAPTER.  PROVIDED, HOWEVER, THE PROVISIONS OF SUBSECTION (C) OF SECTION
   44  ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING,  NO  INTEREST
   45  SHALL  BE  PAID THEREON. THE TAX CREDIT ALLOWED PURSUANT TO THIS SECTION
   46  SHALL APPLY TO TAXABLE YEARS BEGINNING BEFORE JANUARY FIRST,  TWO  THOU-
   47  SAND TWENTY.
   48    25.  CLEAN  HEATING  FUEL  CREDIT.  (A)  GENERAL.  A TAXPAYER SHALL BE
   49  ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY THIS ARTICLE.  SUCH  CREDIT,
   50  TO  BE  COMPUTED  AS HEREINAFTER PROVIDED, SHALL BE ALLOWED FOR BIOHEAT,
   51  USED FOR SPACE HEATING OR HOT WATER PRODUCTION FOR RESIDENTIAL  PURPOSES
   52  WITHIN  THIS  STATE  PURCHASED BEFORE JANUARY FIRST, TWO THOUSAND SEVEN-
   53  TEEN. SUCH CREDIT SHALL BE $0.01 PER PERCENT OF BIODIESEL PER GALLON  OF
   54  BIOHEAT,  NOT  TO  EXCEED  TWENTY  CENTS  PER  GALLON, PURCHASED BY SUCH
   55  TAXPAYER.
       S. 6359                            92                            A. 8559
    1    (B) DEFINITIONS. FOR PURPOSES OF THIS SUBDIVISION, THE FOLLOWING DEFI-
    2  NITIONS SHALL APPLY:
    3    (I)  "BIODIESEL" SHALL MEAN A FUEL COMPRISED EXCLUSIVELY OF MONO-ALKYL
    4  ESTERS OF LONG CHAIN FATTY ACIDS DERIVED FROM VEGETABLE OILS  OR  ANIMAL
    5  FATS, DESIGNATED B100, WHICH MEETS THE SPECIFICATIONS OF AMERICAN SOCIE-
    6  TY OF TESTING AND MATERIALS DESIGNATION D 6751.
    7    (II)  "BIOHEAT"  SHALL MEAN A FUEL COMPRISED OF BIODIESEL BLENDED WITH
    8  CONVENTIONAL HOME HEATING OIL, WHICH MEETS  THE  SPECIFICATIONS  OF  THE
    9  AMERICAN SOCIETY OF TESTING AND MATERIALS DESIGNATION D 396 OR D 975.
   10    (C)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
   11  FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
   12  THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
   13  SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER,  IF
   14  THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
   15  REDUCES THE TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE
   16  IN  SUCH  TAXABLE  YEAR  SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE
   17  CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS  OF  SECTION  ONE
   18  THOUSAND  EIGHTY-SIX  OF THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS
   19  OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF  THIS  CHAPTER
   20  NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
   21    26.  CREDIT FOR REHABILITATION OF HISTORIC PROPERTIES. (A) APPLICATION
   22  OF CREDIT. (I) FOR TAXABLE YEARS BEGINNING ON OR  AFTER  JANUARY  FIRST,
   23  TWO  THOUSAND  TEN,  AND  BEFORE  JANUARY  FIRST, TWO THOUSAND TWENTY, A
   24  TAXPAYER SHALL BE ALLOWED A CREDIT AS HEREINAFTER PROVIDED, AGAINST  THE
   25  TAX  IMPOSED  BY THIS ARTICLE, IN AN AMOUNT EQUAL TO ONE HUNDRED PERCENT
   26  OF THE AMOUNT OF CREDIT ALLOWED THE TAXPAYER FOR THE SAME  TAXABLE  YEAR
   27  WITH  RESPECT  TO A CERTIFIED HISTORIC STRUCTURE UNDER SUBSECTION (C)(2)
   28  OF SECTION 47 OF THE INTERNAL REVENUE CODE WITH RESPECT TO  A  CERTIFIED
   29  HISTORIC  STRUCTURE  LOCATED  WITHIN  THE  STATE. PROVIDED, HOWEVER, THE
   30  CREDIT SHALL NOT EXCEED FIVE MILLION DOLLARS.
   31    (II) FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO  THOU-
   32  SAND  TWENTY,  A  TAXPAYER  SHALL  BE  ALLOWED  A  CREDIT AS HEREINAFTER
   33  PROVIDED, AGAINST THE TAX IMPOSED BY THIS ARTICLE, IN AN AMOUNT EQUAL TO
   34  THIRTY PERCENT OF THE AMOUNT OF CREDIT ALLOWED THE TAXPAYER FOR THE SAME
   35  TAXABLE YEAR WITH  RESPECT  TO  A  CERTIFIED  HISTORIC  STRUCTURE  UNDER
   36  SUBSECTION  (C)(3)  OF  SECTION  47  OF  THE  INTERNAL REVENUE CODE WITH
   37  RESPECT TO A CERTIFIED HISTORIC  STRUCTURE  LOCATED  WITHIN  THE  STATE.
   38  PROVIDED,  HOWEVER,  THE  CREDIT  SHALL  NOT EXCEED ONE HUNDRED THOUSAND
   39  DOLLARS.
   40    (B) IF THE TAXPAYER IS A PARTNER IN A PARTNERSHIP OR A SHAREHOLDER  IN
   41  A  NEW  YORK S CORPORATION, THEN THE CREDIT CAPS IMPOSED IN SUBPARAGRAPH
   42  (A) OF THIS PARAGRAPH SHALL BE APPLIED AT THE ENTITY LEVEL, SO THAT  THE
   43  AGGREGATE  CREDIT  ALLOWED  TO  ALL THE PARTNERS OR SHAREHOLDERS OF EACH
   44  SUCH ENTITY IN THE TAXABLE YEAR DOES NOT EXCEED THE CREDIT CAP  THAT  IS
   45  APPLICABLE IN THAT TAXABLE YEAR.
   46    (B)  TAX CREDITS ALLOWED PURSUANT TO THIS SUBDIVISION SHALL BE ALLOWED
   47  IN THE TAXABLE YEAR THAT  THE  QUALIFIED  REHABILITATION  IS  PLACED  IN
   48  SERVICE UNDER SECTION 167 OF THE FEDERAL INTERNAL REVENUE CODE.
   49    (C)  IF  THE CREDIT ALLOWED THE TAXPAYER PURSUANT TO SECTION 47 OF THE
   50  INTERNAL REVENUE CODE WITH RESPECT  TO  A  QUALIFIED  REHABILITATION  IS
   51  RECAPTURED  PURSUANT  TO  SUBSECTION  (A)  OF SECTION 50 OF THE INTERNAL
   52  REVENUE CODE, A PORTION OF THE CREDIT ALLOWED UNDER THIS SUBSECTION MUST
   53  BE ADDED BACK IN THE SAME TAXABLE YEAR AND IN THE SAME PROPORTION AS THE
   54  FEDERAL CREDIT.
   55    (D) THE CREDIT ALLOWED UNDER THIS SUBDIVISION  FOR  ANY  TAXABLE  YEAR
   56  SHALL  NOT  REDUCE  THE  TAX  DUE  FOR SUCH YEAR TO LESS THAN THE AMOUNT
       S. 6359                            93                            A. 8559
    1  PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF  SECTION  TWO  HUNDRED
    2  TEN  OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF THE CREDIT ALLOWED UNDER
    3  THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX  TO  SUCH  AMOUNT,
    4  ANY  AMOUNT  OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE
    5  TREATED AS AN OVERPAYMENT OF TAX TO BE RECREDITED OR REFUNDED IN ACCORD-
    6  ANCE WITH THE PROVISIONS OF SECTION  ONE  THOUSAND  EIGHTY-SIX  OF  THIS
    7  CHAPTER.  PROVIDED, HOWEVER, THE PROVISIONS OF SUBSECTION (C) OF SECTION
    8  ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING,  NO  INTEREST
    9  SHALL BE PAID THEREON.
   10    (E)  TO  BE  ELIGIBLE FOR THE CREDIT ALLOWABLE UNDER THIS SUBDIVISION,
   11  THE REHABILITATION PROJECT SHALL BE IN WHOLE OR IN PART LOCATED WITHIN A
   12  CENSUS TRACT WHICH IS IDENTIFIED  AS  BEING  AT  OR  BELOW  ONE  HUNDRED
   13  PERCENT  OF  THE  STATE MEDIAN FAMILY INCOME AS CALCULATED AS OF JANUARY
   14  FIRST OF EACH YEAR USING THE MOST RECENT FIVE  YEAR  ESTIMATE  FROM  THE
   15  AMERICAN COMMUNITY SURVEY PUBLISHED BY THE UNITED STATES CENSUS BUREAU.
   16    27.  CREDITS  OF NEW YORK S CORPORATIONS. (A) GENERAL. NOTWITHSTANDING
   17  THE PROVISIONS OF THIS SECTION, NO CARRYOVER OF CREDIT  ALLOWABLE  IN  A
   18  NEW  YORK C YEAR SHALL BE DEDUCTED FROM THE TAX OTHERWISE DUE UNDER THIS
   19  ARTICLE IN A NEW YORK S YEAR, AND NO CREDIT ALLOWABLE IN A  NEW  YORK  S
   20  YEAR,  OR  CARRYOVER  OF  SUCH  CREDIT,  SHALL  BE DEDUCTED FROM THE TAX
   21  IMPOSED BY THIS ARTICLE.  HOWEVER, A NEW YORK S YEAR SHALL BE TREATED AS
   22  A TAXABLE YEAR FOR PURPOSES OF DETERMINING THE NUMBER OF  TAXABLE  YEARS
   23  TO  WHICH A CREDIT MAY BE CARRIED OVER UNDER THIS SECTION. NOTWITHSTAND-
   24  ING THE FIRST SENTENCE OF THIS SUBDIVISION, HOWEVER, THE CREDIT FOR  THE
   25  SPECIAL  ADDITIONAL  MORTGAGE RECORDING TAX SHALL BE ALLOWED AS PROVIDED
   26  IN SUBDIVISION FIFTEEN OF THIS SECTION, AND THE CARRYOVER  OF  ANY  SUCH
   27  CREDIT  SHALL  BE  DETERMINED  WITHOUT  REGARD  TO WHETHER THE CREDIT IS
   28  CARRIED FROM A NEW YORK C YEAR TO A NEW YORK S YEAR OR VICE-VERSA.
   29    28. NET OPERATING LOSS CONVERSION CREDIT. (A) BASE  YEAR  DESIGNATION.
   30  FOR  THE  PURPOSES  OF  THIS SUBDIVISION, THE TERM "BASE YEAR" MEANS THE
   31  LAST TAXABLE YEAR BEGINNING ON OR  AFTER  JANUARY  FIRST,  TWO  THOUSAND
   32  THIRTEEN AND BEFORE JANUARY FIRST, TWO THOUSAND FOURTEEN.
   33    (B) ALLOWANCE OF CREDIT. A TAXPAYER WHICH HAS ANY UNABSORBED NET OPER-
   34  ATING  LOSS CARRYOVER, REFERRED TO IN THIS SUBDIVISION AS A "NOL", AFTER
   35  CALCULATING ITS ENTIRE NET INCOME UNDER ARTICLE NINE-A OR ARTICLE  THIR-
   36  TY-TWO  FOR  THE  BASE  YEAR  SHALL  BE ALLOWED A CREDIT AGAINST THE TAX
   37  IMPOSED BY THIS ARTICLE FOR TAXABLE YEARS BEGINNING ON OR AFTER  JANUARY
   38  FIRST, TWO THOUSAND FIFTEEN.
   39    (C)  CALCULATION  OF  CREDIT.  THE  TOTAL AMOUNT OF THE NOL CONVERSION
   40  CREDIT SHALL BE THE PRODUCT OF:
   41    (I) ANY UNABSORBED PORTION OF NET OPERATING LOSS AS  CALCULATED  UNDER
   42  PARAGRAPH  (F)  OF SUBDIVISION NINE OF SECTION TWO HUNDRED EIGHT OF THIS
   43  ARTICLE OR SUBSECTION (K-1) OF SECTION FOURTEEN HUNDRED  FIFTY-THREE  OF
   44  ARTICLE  THIRTY-TWO, AS SUCH SECTIONS WERE IN EFFECT ON DECEMBER THIRTY-
   45  FIRST, TWO THOUSAND FOURTEEN, THAT WAS NOT DEDUCTIBLE IN PREVIOUS  TAXA-
   46  BLE  YEARS  AND  WAS  ELIGIBLE FOR CARRYOVER ON THE LAST DAY OF THE BASE
   47  YEAR, INCLUDING ANY NET OPERATING LOSS SUSTAINED BY THE TAXPAYER  DURING
   48  THE BASE YEAR;
   49    (II) THE TAXPAYER'S BUSINESS ALLOCATION PERCENTAGE AS CALCULATED UNDER
   50  PARAGRAPH  (A)  OF  SUBDIVISION THREE OF SECTION TWO HUNDRED TEN OF THIS
   51  ARTICLE FOR THE BASE YEAR, OR THE TAXPAYER'S  ALLOCATION  PERCENTAGE  AS
   52  CALCULATED  UNDER SECTION FOURTEEN HUNDRED FIFTY-FOUR OF ARTICLE THIRTY-
   53  TWO FOR PURPOSES OF ALLOCATING ENTIRE NET INCOME FOR THE BASE YEAR (SUCH
   54  ALLOCATION PERCENTAGES REFERRED TO IN THIS  SUBDIVISION  AS  "BAP"),  AS
   55  SUCH  SECTIONS  WERE  IN  EFFECT  ON DECEMBER THIRTY-FIRST, TWO THOUSAND
   56  FOURTEEN; AND
       S. 6359                            94                            A. 8559
    1    (III) THE TAXPAYER'S TAX RATE FOR THE BASE YEAR  AS  CALCULATED  UNDER
    2  PARAGRAPH  (A)  OF  SUBDIVISION  ONE  OF SECTION TWO HUNDRED TEN OF THIS
    3  ARTICLE OR SUBSECTION (A) OF  SECTION  FOURTEEN  HUNDRED  FIFTY-FIVE  OF
    4  ARTICLE  THIRTY-TWO, AS SUCH SECTIONS WERE IN EFFECT ON DECEMBER THIRTY-
    5  FIRST, TWO THOUSAND FOURTEEN.
    6    (D)  APPLICATION  OF  CREDIT.  A TAXPAYER, OTHER THAN A SMALL BUSINESS
    7  CORPORATION AS DEFINED IN PARAGRAPH (E) OF THIS SUBDIVISION, IS  ALLOWED
    8  AN  ANNUAL NOL CONVERSION CREDIT THAT IS EQUAL TO ONE-TENTH OF THE TOTAL
    9  NOL CONVERSION CREDIT AS CALCULATED IN PARAGRAPH (C)  OF  THIS  SUBDIVI-
   10  SION.  SUCH  CREDIT  SHALL NOT BE ALLOWED AGAINST THE TAX COMPUTED UNDER
   11  PARAGRAPH (B) OR (D) OF SUBDIVISION ONE OF SECTION TWO  HUNDRED  TEN  OF
   12  THIS ARTICLE.
   13    (E) SMALL BUSINESS PROVISIONS. (I) FOR PURPOSES OF THIS SUBDIVISION, A
   14  SMALL  BUSINESS  CORPORATION IS A CORPORATION DEFINED IN PARAGRAPH THREE
   15  OF SUBSECTION (C) OF SECTION TWELVE HUNDRED FORTY-FOUR OF  THE  INTERNAL
   16  REVENUE  CODE (WITHOUT REGARD TO THE SECOND SENTENCE OF SUBPARAGRAPH (A)
   17  THEREOF) AS OF THE LAST DAY OF THE BASE YEAR.
   18    (II) APPLICATION OF CREDIT. A SMALL BUSINESS CORPORATION IS ALLOWED TO
   19  CLAIM THE TOTAL NOL CONVERSION CREDIT AS CALCULATED IN PARAGRAPH (C)  OF
   20  THIS  SUBDIVISION  IN  A  TAXABLE YEAR. SUCH CREDIT SHALL NOT BE ALLOWED
   21  AGAINST THE TAX COMPUTED UNDER PARAGRAPH (B) OR (D) OF  SUBDIVISION  ONE
   22  OF SECTION TWO HUNDRED TEN OF THIS ARTICLE.
   23    (F)  CARRYOVER.  (I)  THE  CREDIT  ALLOWED BY THIS SUBDIVISION FOR ANY
   24  TAXABLE YEAR MAY ONLY REDUCE THE TAX DUE FOR SUCH YEAR TO THE HIGHER  OF
   25  THE  AMOUNT  PRESCRIBED  IN  PARAGRAPH  (B) OR (D) OF SUBDIVISION ONE OF
   26  SECTION TWO HUNDRED TEN OF THIS ARTICLE.
   27    (II) HOWEVER, IF THE AMOUNT OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION
   28  FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT, OR, IF THE TAXPAYER
   29  IS REQUIRED TO PAY A TAX UNDER  PARAGRAPH  (B)  OF  SUBDIVISION  ONE  OF
   30  SECTION  TWO HUNDRED TEN OF THIS ARTICLE, ANY REMAINING AMOUNT OF CREDIT
   31  ALLOWED FOR THAT TAXABLE YEAR MAY BE CARRIED OVER TO  THE  NEXT  TAXABLE
   32  YEAR  OR  YEARS FOLLOWING SUCH TAXABLE YEAR AND MAY BE DEDUCTED FROM THE
   33  TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
   34    (G) COMBINED GROUPS. (I) WHERE A TAXPAYER  WAS  PROPERLY  INCLUDED  OR
   35  REQUIRED  TO BE INCLUDED IN A COMBINED REPORT FOR THE BASE YEAR PURSUANT
   36  TO SUBDIVISION FOUR OF SECTION TWO HUNDRED ELEVEN OF THIS  ARTICLE,  THE
   37  COMBINED  GROUP  SHALL  CALCULATE  ITS CREDIT USING THE COMBINED GROUP'S
   38  TOTAL NOL, BAP, AND TAX RATE ACCORDING TO PARAGRAPH (C) OF THIS SUBDIVI-
   39  SION.
   40    (II) IF THE MEMBERS OF THE COMBINED GROUP IN A COMBINED REPORT FOR THE
   41  BASE YEAR ARE THE SAME AS  THE  MEMBERS  OF  THE  COMBINED  GROUP  IN  A
   42  COMBINED  REPORT  FOR  THE  TAXABLE YEAR IMMEDIATELY SUCCEEDING THE BASE
   43  YEAR, THE CREDIT SHALL BE CALCULATED USING THE COMBINED GROUP'S NOL, BAP
   44  AND APPLICABLE TAX RATE ACCORDING TO PARAGRAPH (C) OF THIS  SUBDIVISION.
   45  IF  A  TAXPAYER  WAS PROPERLY INCLUDED IN A COMBINED REPORT FOR THE BASE
   46  YEAR AND FILES A SEPARATE REPORT IN A SUBSEQUENT TAXABLE YEAR, THEN  THE
   47  AMOUNT  OF REMAINING NOL CONVERSION CREDIT ALLOWED TO THE SEPARATE FILER
   48  SHALL BE PROPORTIONATE TO THE AMOUNT THAT SUCH TAXPAYER  CONTRIBUTED  TO
   49  THE  ORIGINAL NOL CONVERSION CREDIT ON A COMBINED BASIS, AND THE REMAIN-
   50  ING NOL CONVERSION CREDIT  ALLOWED  TO  THE  REMAINING  MEMBERS  OF  THE
   51  COMBINED  GROUP  SHALL  BE  REDUCED  BY  THE AMOUNT OF PROPORTIONATE NOL
   52  CONVERSION CREDIT ALLOWED TO THE TAXPAYER OR TAXPAYERS FILING  SEPARATE-
   53  LY.  IF A COMBINED GROUP INCLUDES ADDITIONAL MEMBERS IN THE TAXABLE YEAR
   54  IMMEDIATELY SUCCEEDING THE BASE  YEAR  WHO  WERE  NOT  INCLUDED  IN  THE
   55  COMBINED  GROUP DURING THE BASE YEAR, EACH INDIVIDUAL COMBINED GROUP AND
   56  SEPARATELY FILING TAXPAYER SHALL CALCULATE ITS CREDIT FOR THE BASE  YEAR
       S. 6359                            95                            A. 8559
    1  AND  THE  SUM OF THE CREDITS SHALL BE THE COMBINED NOL CONVERSION CREDIT
    2  OF THE COMBINED GROUP.
    3    (H)  EXPIRATION  OF  CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
    4  SHALL NOT BE APPLICABLE TO TAXABLE YEARS BEGINNING ON OR  AFTER  JANUARY
    5  FIRST, TWO THOUSAND THIRTY-FIVE.
    6    29.  HIRE  A  VET  CREDIT.  (A) ALLOWANCE OF CREDIT. FOR TAXABLE YEARS
    7  BEGINNING ON OR AFTER JANUARY FIRST, TWO  THOUSAND  FIFTEEN  AND  BEFORE
    8  JANUARY  FIRST,  TWO  THOUSAND  SEVENTEEN, A TAXPAYER SHALL BE ALLOWED A
    9  CREDIT, TO BE COMPUTED AS PROVIDED IN THIS SUBDIVISION, AGAINST THE  TAX
   10  IMPOSED BY THIS ARTICLE, FOR HIRING AND EMPLOYING, FOR NOT LESS THAN ONE
   11  YEAR  AND  FOR  NOT  LESS  THAN THIRTY-FIVE HOURS EACH WEEK, A QUALIFIED
   12  VETERAN WITHIN THE STATE. THE TAXPAYER MAY CLAIM THE CREDIT IN THE  YEAR
   13  IN  WHICH  THE QUALIFIED VETERAN COMPLETES ONE YEAR OF EMPLOYMENT BY THE
   14  TAXPAYER. IF THE TAXPAYER CLAIMS THE CREDIT ALLOWED UNDER THIS  SUBDIVI-
   15  SION, THE TAXPAYER MAY NOT USE THE HIRING OF A QUALIFIED VETERAN THAT IS
   16  THE BASIS FOR THIS CREDIT IN THE BASIS OF ANY OTHER CREDIT ALLOWED UNDER
   17  THIS ARTICLE.
   18    (B) QUALIFIED VETERAN. A QUALIFIED VETERAN IS AN INDIVIDUAL:
   19    (1)  WHO  SERVED  ON  ACTIVE DUTY IN THE UNITED STATES ARMY, NAVY, AIR
   20  FORCE, MARINE CORPS, COAST GUARD OR THE RESERVES THEREOF, OR WHO  SERVED
   21  IN  ACTIVE MILITARY SERVICE OF THE UNITED STATES AS A MEMBER OF THE ARMY
   22  NATIONAL GUARD, AIR NATIONAL GUARD, NEW YORK GUARD  OR  NEW  YORK  NAVAL
   23  MILITIA;  WHO  WAS  RELEASED  FROM  ACTIVE  DUTY BY GENERAL OR HONORABLE
   24  DISCHARGE AFTER SEPTEMBER ELEVENTH, TWO THOUSAND ONE;
   25    (2) WHO COMMENCES EMPLOYMENT BY THE QUALIFIED  TAXPAYER  ON  OR  AFTER
   26  JANUARY  FIRST,  TWO  THOUSAND  FOURTEEN,  AND BEFORE JANUARY FIRST, TWO
   27  THOUSAND SIXTEEN; AND
   28    (3) WHO CERTIFIES BY SIGNED AFFIDAVIT, UNDER PENALTY OF PERJURY,  THAT
   29  HE OR SHE HAS NOT BEEN EMPLOYED FOR THIRTY-FIVE OR MORE HOURS DURING ANY
   30  WEEK  IN  THE  ONE HUNDRED EIGHTY DAY PERIOD IMMEDIATELY PRIOR TO HIS OR
   31  HER EMPLOYMENT BY THE TAXPAYER.
   32    (C) EMPLOYER PROHIBITION. AN EMPLOYER SHALL NOT DISCHARGE AN  EMPLOYEE
   33  AND  HIRE  A QUALIFYING VETERAN SOLELY FOR THE PURPOSE OF QUALIFYING FOR
   34  THIS CREDIT.
   35    (D) AMOUNT OF CREDIT. THE AMOUNT OF THE CREDIT SHALL BE TEN PERCENT OF
   36  THE TOTAL AMOUNT OF WAGES PAID  TO  THE  QUALIFIED  VETERAN  DURING  THE
   37  VETERAN'S FIRST FULL YEAR OF EMPLOYMENT. PROVIDED, HOWEVER, THAT, IF THE
   38  QUALIFIED  VETERAN IS A DISABLED VETERAN, AS DEFINED IN PARAGRAPH (B) OF
   39  SUBDIVISION ONE OF SECTION EIGHTY-FIVE OF THE  CIVIL  SERVICE  LAW,  THE
   40  AMOUNT  OF  THE  CREDIT  SHALL BE FIFTEEN PERCENT OF THE TOTAL AMOUNT OF
   41  WAGES PAID TO THE QUALIFIED VETERAN DURING THE VETERAN'S FIRST FULL YEAR
   42  OF EMPLOYMENT. THE CREDIT ALLOWED PURSUANT TO THIS SUBDIVISION SHALL NOT
   43  EXCEED IN ANY TAXABLE YEAR, FIVE  THOUSAND  DOLLARS  FOR  ANY  QUALIFIED
   44  VETERAN  AND FIFTEEN THOUSAND DOLLARS FOR ANY QUALIFIED VETERAN WHO IS A
   45  DISABLED VETERAN.
   46    (E) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA-
   47  BLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR  TO  LESS  THAN  THE
   48  AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO
   49  HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CREDIT  ALLOWABLE
   50  UNDER  THIS  SUBDIVISION  FOR  ANY  TAXABLE YEAR REDUCES THE TAX TO SUCH
   51  AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXABLE YEAR MAY  BE
   52  CARRIED  OVER  TO THE FOLLOWING THREE YEARS AND MAY BE DEDUCTED FROM THE
   53  TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
   54    30. ALTERNATIVE FUELS AND ELECTRIC VEHICLE RECHARGING PROPERTY CREDIT.
   55  (A) GENERAL. A TAXPAYER SHALL BE ALLOWED A CREDIT,  TO  BE  COMPUTED  AS
   56  HEREINAFTER PROVIDED, AGAINST THE TAX IMPOSED BY THIS ARTICLE FOR ALTER-
       S. 6359                            96                            A. 8559
    1  NATIVE  FUEL  VEHICLE REFUELING AND ELECTRIC VEHICLE RECHARGING PROPERTY
    2  PLACED IN SERVICE DURING THE TAXABLE YEAR.
    3    (B)  ALTERNATIVE  FUEL VEHICLE REFUELING PROPERTY AND ELECTRIC VEHICLE
    4  RECHARGING PROPERTY. THE CREDIT UNDER THIS SUBDIVISION  FOR  ALTERNATIVE
    5  FUEL VEHICLE REFUELING PROPERTY AND ELECTRIC VEHICLE RECHARGING PROPERTY
    6  SHALL  EQUAL  FOR EACH INSTALLATION OF PROPERTY THE LESSER OF FIVE THOU-
    7  SAND DOLLARS OR FIFTY PERCENT OF THE COST OF ANY SUCH PROPERTY:
    8    (I) WHICH IS LOCATED IN THIS STATE;
    9    (II) WHICH CONSTITUTES ALTERNATIVE FUEL VEHICLE REFUELING PROPERTY  OR
   10  ELECTRIC VEHICLE RECHARGING PROPERTY; AND
   11    (III)  FOR  WHICH NONE OF THE COST HAS BEEN PAID FOR FROM THE PROCEEDS
   12  OF GRANTS, INCLUDING GRANTS FROM THE NEW YORK STATE ENERGY RESEARCH  AND
   13  DEVELOPMENT AUTHORITY OR THE NEW YORK POWER AUTHORITY.
   14    (C)  DEFINITIONS.  (I)  THE  TERM  "ALTERNATIVE FUEL VEHICLE REFUELING
   15  PROPERTY" MEANS ALL OF THE EQUIPMENT NEEDED  TO  DISPENSE  ANY  FUEL  AT
   16  LEAST EIGHTY-FIVE PERCENT OF THE VOLUME OF WHICH CONSISTS OF ONE OR MORE
   17  OF THE FOLLOWING: NATURAL GAS, LIQUIFIED NATURAL GAS, LIQUIFIED PETROLE-
   18  UM, OR HYDROGEN.
   19    (II)  THE TERM "ELECTRIC VEHICLE RECHARGING PROPERTY" MEANS ALL OF THE
   20  EQUIPMENT NEEDED TO CONVEY ELECTRIC POWER  FROM  THE  ELECTRIC  GRID  OR
   21  ANOTHER POWER SOURCE TO AN ONBOARD VEHICLE ENERGY STORAGE SYSTEM.
   22    (D) CARRYOVERS. IN NO EVENT SHALL THE CREDIT UNDER THIS SUBDIVISION BE
   23  ALLOWED  IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN THE
   24  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION  ONE  OF  SECTION  TWO
   25  HUNDRED  TEN  OF  THIS ARTICLE. PROVIDED, HOWEVER, THAT IF THE AMOUNT OF
   26  CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE
   27  TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH  TAXABLE
   28  YEAR  MAY  BE  CARRIED  OVER  TO  THE FOLLOWING YEAR OR YEARS AND MAY BE
   29  DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
   30    (E) CREDIT RECAPTURE. IF, AT ANY TIME BEFORE THE END OF  ITS  RECOVERY
   31  PERIOD,  ALTERNATIVE FUEL VEHICLE REFUELING OR ELECTRIC VEHICLE RECHARG-
   32  ING PROPERTY CEASES TO BE QUALIFIED, A RECAPTURE AMOUNT  MUST  BE  ADDED
   33  BACK IN THE YEAR IN WHICH SUCH CESSATION OCCURS.
   34    (I)  ALTERNATIVE  FUEL  VEHICLE REFUELING PROPERTY OR ELECTRIC VEHICLE
   35  RECHARGING PROPERTY CEASES TO BE QUALIFIED IF:
   36    (I) THE PROPERTY NO LONGER QUALIFIES AS ALTERNATIVE FUEL VEHICLE REFU-
   37  ELING PROPERTY OR ELECTRIC VEHICLE RECHARGING PROPERTY; OR
   38    (II) FIFTY PERCENT OR MORE OF THE USE OF THE  PROPERTY  IN  A  TAXABLE
   39  YEAR IS OTHER THAN IN A TRADE OR BUSINESS IN THIS STATE; OR
   40    (III)  THE  TAXPAYER RECEIVING THE CREDIT UNDER THIS SUBDIVISION SELLS
   41  OR DISPOSES OF THE PROPERTY AND KNOWS OR HAS REASON  TO  KNOW  THAT  THE
   42  PROPERTY  WILL  BE USED IN A MANNER DESCRIBED IN CLAUSES (I) AND (II) OF
   43  THIS SUBPARAGRAPH.
   44    (II) RECAPTURE AMOUNT. THE RECAPTURE AMOUNT IS  EQUAL  TO  THE  CREDIT
   45  ALLOWABLE UNDER THIS SUBDIVISION MULTIPLIED BY A FRACTION, THE NUMERATOR
   46  OF  WHICH IS THE TOTAL RECOVERY PERIOD FOR THE PROPERTY MINUS THE NUMBER
   47  OF RECOVERY YEARS PRIOR TO, BUT NOT INCLUDING, THE RECAPTURE  YEAR,  AND
   48  THE DENOMINATOR OF WHICH IS THE TOTAL RECOVERY PERIOD.
   49    (F)  TERMINATION. THE CREDIT ALLOWED BY PARAGRAPH (B) OF THIS SUBDIVI-
   50  SION  SHALL  NOT  APPLY  IN  TAXABLE  YEARS  BEGINNING  AFTER   DECEMBER
   51  THIRTY-FIRST, TWO THOUSAND SEVENTEEN.
   52    31. EXCELSIOR JOBS PROGRAM CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAYER
   53  WILL  BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION THIRTY-
   54  ONE OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.
   55    (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
   56  FOR  ANY  TAXABLE  YEAR MAY NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
       S. 6359                            97                            A. 8559
    1  THAN THE AMOUNT PRESCRIBED  IN  PARAGRAPH  (D)  OF  SUBDIVISION  ONE  OF
    2  SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
    3  IT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX
    4  TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE
    5  YEAR WILL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED
    6  IN  ACCORDANCE WITH THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF
    7  THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS  OF  SUBSECTION  (C)  OF
    8  SECTION  ONE  THOUSAND  EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO
    9  INTEREST WILL BE PAID THEREON.
   10    32. EMPIRE STATE FILM POST PRODUCTION CREDIT. (A) ALLOWANCE OF CREDIT.
   11  A TAXPAYER WHO IS ELIGIBLE PURSUANT TO SECTION THIRTY-ONE OF THIS  CHAP-
   12  TER SHALL BE ALLOWED A CREDIT TO BE COMPUTED AS PROVIDED IN SUCH SECTION
   13  THIRTY-ONE AGAINST THE TAX IMPOSED BY THIS ARTICLE.
   14    (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
   15  FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
   16  THAN  THE  AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF SUBDIVISION ONE OF
   17  SECTION TWO HUNDRED TEN OF THIS ARTICLE. PROVIDED, HOWEVER, THAT IF  THE
   18  AMOUNT  OF  THE  CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE
   19  YEAR REDUCES THE TAX TO SUCH AMOUNT, FIFTY PERCENT OF THE  EXCESS  SHALL
   20  BE  TREATED  AS  AN  OVERPAYMENT  OF  TAX  TO BE CREDITED OR REFUNDED IN
   21  ACCORDANCE WITH THE PROVISIONS OF SECTION  ONE  THOUSAND  EIGHTY-SIX  OF
   22  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE PROVISIONS OF SUBSECTION (C) OF
   23  SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS  CHAPTER  NOTWITHSTANDING,  NO
   24  INTEREST  SHALL BE PAID THEREON. THE BALANCE OF SUCH CREDIT NOT CREDITED
   25  OR REFUNDED IN SUCH TAXABLE YEAR MAY BE A CARRYOVER TO  THE  IMMEDIATELY
   26  SUCCEEDING  TAXABLE YEAR AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR
   27  SUCH YEAR. THE EXCESS, IF ANY, OF THE AMOUNT OF THE CREDIT OVER THE  TAX
   28  FOR SUCH SUCCEEDING YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE
   29  CREDITED  OR  REFUNDED  IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE
   30  THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,  THE  PROVISIONS
   31  OF  SUBSECTION  (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
   32  NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
   33    33. TEMPORARY DEFERRAL NONREFUNDABLE PAYOUT CREDIT. (A)  ALLOWANCE  OF
   34  CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED
   35  IN  SUBDIVISION  ONE OF SECTION THIRTY-FOUR OF THIS CHAPTER, AGAINST THE
   36  TAX IMPOSED BY THIS ARTICLE.
   37    (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
   38  FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR THAT YEAR TO LESS
   39  THAN THE AMOUNT PRESCRIBED  IN  PARAGRAPH  (D)  OF  SUBDIVISION  ONE  OF
   40  SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
   41  IT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX
   42  TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE
   43  YEAR MAY BE CARRIED OVER TO THE FOLLOWING  YEAR  OR  YEARS  AND  MAY  BE
   44  DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
   45    34.  TEMPORARY  DEFERRAL  REFUNDABLE  PAYOUT  CREDIT. (A) ALLOWANCE OF
   46  CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED
   47  IN SUBDIVISION TWO OF SECTION THIRTY-FOUR OF THIS CHAPTER,  AGAINST  THE
   48  TAX IMPOSED BY THIS ARTICLE.
   49    (B)  APPLICATION  OF  CREDIT.  IN NO EVENT SHALL THE CREDIT UNDER THIS
   50  SUBDIVISION BE ALLOWED IN AN AMOUNT WHICH WILL REDUCE THE  TAX  TO  LESS
   51  THAN  THE  AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF SUBDIVISION ONE OF
   52  SECTION TWO HUNDRED TEN OF THIS ARTICLE.  IF,  HOWEVER,  THE  AMOUNT  OF
   53  CREDIT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE
   54  TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH  TAXABLE
   55  YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE REFUNDED IN ACCORD-
       S. 6359                            98                            A. 8559
    1  ANCE  WITH  THE  PROVISIONS  OF  SECTION ONE THOUSAND EIGHTY-SIX OF THIS
    2  CHAPTER, PROVIDED HOWEVER, THAT NO INTEREST SHALL BE PAID THEREON.
    3    35.  ECONOMIC  TRANSFORMATION  AND  FACILITY REDEVELOPMENT PROGRAM TAX
    4  CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAYER SHALL BE ALLOWED  A  CREDIT,
    5  TO  BE  COMPUTED  AS  PROVIDED  IN  SECTION THIRTY-FIVE OF THIS CHAPTER,
    6  AGAINST THE TAX IMPOSED BY THIS ARTICLE.
    7    (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
    8  FOR  ANY  TAXABLE  YEAR MAY NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
    9  THAN THE AMOUNT PRESCRIBED  IN  PARAGRAPH  (D)  OF  SUBDIVISION  ONE  OF
   10  SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
   11  IT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX
   12  TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE
   13  YEAR WILL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED
   14  IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX  OF
   15  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE PROVISIONS OF SUBSECTION (C) OF
   16  SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS  CHAPTER  NOTWITHSTANDING,  NO
   17  INTEREST WILL BE PAID THEREON.
   18    36.  NEW  YORK  YOUTH  WORKS  TAX CREDIT. (A) A TAXPAYER THAT HAS BEEN
   19  CERTIFIED BY THE COMMISSIONER OF LABOR AS A QUALIFIED EMPLOYER  PURSUANT
   20  TO  SECTION  TWENTY-FIVE-A  OF  THE  LABOR LAW SHALL BE ALLOWED A CREDIT
   21  AGAINST THE TAX IMPOSED BY  THIS  ARTICLE  EQUAL  TO  (I)  FIVE  HUNDRED
   22  DOLLARS  PER  MONTH FOR UP TO SIX MONTHS FOR EACH QUALIFIED EMPLOYEE THE
   23  EMPLOYER EMPLOYS IN A FULL-TIME JOB OR TWO  HUNDRED  FIFTY  DOLLARS  PER
   24  MONTH  FOR  UP  TO  SIX  MONTHS FOR EACH QUALIFIED EMPLOYEE THE EMPLOYER
   25  EMPLOYS IN A PART-TIME JOB OF AT LEAST TWENTY  HOURS  PER  WEEK  OR  TEN
   26  HOURS  PER  WEEK  WHEN THE QUALIFIED EMPLOYEE IS ENROLLED IN HIGH SCHOOL
   27  FULL-TIME, (II) ONE THOUSAND DOLLARS FOR EACH QUALIFIED EMPLOYEE WHO  IS
   28  EMPLOYED FOR AT LEAST AN ADDITIONAL SIX MONTHS BY THE QUALIFIED EMPLOYER
   29  IN  A  FULL-TIME JOB OR FIVE HUNDRED DOLLARS FOR EACH QUALIFIED EMPLOYEE
   30  WHO IS EMPLOYED FOR AT LEAST AN ADDITIONAL SIX MONTHS BY  THE  QUALIFIED
   31  EMPLOYER  IN  A  PART-TIME  JOB OF AT LEAST TWENTY HOURS PER WEEK OR TEN
   32  HOURS PER WEEK WHEN THE QUALIFIED EMPLOYEE IS ENROLLED  IN  HIGH  SCHOOL
   33  FULL-TIME,  AND (III) AN ADDITIONAL ONE THOUSAND DOLLARS FOR EACH QUALI-
   34  FIED EMPLOYEE WHO IS EMPLOYED FOR AT LEAST AN ADDITIONAL YEAR AFTER  THE
   35  FIRST  YEAR  OF THE EMPLOYEE'S EMPLOYMENT BY THE QUALIFIED EMPLOYER IN A
   36  FULL-TIME JOB OR FIVE HUNDRED DOLLARS FOR EACH QUALIFIED EMPLOYEE WHO IS
   37  EMPLOYED FOR AT LEAST AN ADDITIONAL YEAR AFTER THE  FIRST  YEAR  OF  THE
   38  EMPLOYEE'S EMPLOYMENT BY THE QUALIFIED EMPLOYER IN A PART-TIME JOB OF AT
   39  LEAST  TWENTY  HOURS  PER  WEEK OR TEN HOURS PER WEEK WHEN THE QUALIFIED
   40  EMPLOYEE IS ENROLLED IN HIGH SCHOOL  FULL-TIME.  FOR  PURPOSES  OF  THIS
   41  SUBDIVISION,  THE  TERM "QUALIFIED EMPLOYEE" SHALL HAVE THE SAME MEANING
   42  AS SET FORTH IN SUBDIVISION (B) OF SECTION TWENTY-FIVE-A  OF  THE  LABOR
   43  LAW.  THE  PORTION  OF  THE CREDIT DESCRIBED IN SUBPARAGRAPH (I) OF THIS
   44  PARAGRAPH SHALL BE ALLOWED FOR THE TAXABLE YEAR IN WHICH THE  WAGES  ARE
   45  PAID  TO THE QUALIFIED EMPLOYEE, AND THE PORTION OF THE CREDIT DESCRIBED
   46  IN SUBPARAGRAPH (II) OF THIS PARAGRAPH SHALL BE ALLOWED IN  THE  TAXABLE
   47  YEAR IN WHICH THE ADDITIONAL SIX MONTH PERIOD ENDS.
   48    (B) THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR MAY
   49  NOT  REDUCE THE TAX DUE FOR THAT YEAR TO LESS THAN THE AMOUNT PRESCRIBED
   50  IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION TWO HUNDRED TEN  OF  THIS
   51  ARTICLE.  HOWEVER, IF THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBDI-
   52  VISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO THAT AMOUNT,  ANY  AMOUNT
   53  OF  CREDIT  NOT  DEDUCTIBLE  IN  THAT TAXABLE YEAR WILL BE TREATED AS AN
   54  OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED  IN  ACCORDANCE  WITH  THE
   55  PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED,
   56  HOWEVER, NO INTEREST WILL BE PAID THEREON.
       S. 6359                            99                            A. 8559
    1    (C)  THE  TAXPAYER  MAY  BE  REQUIRED  TO ATTACH TO ITS TAX RETURN ITS
    2  CERTIFICATE OF ELIGIBILITY ISSUED BY THE COMMISSIONER OF LABOR  PURSUANT
    3  TO SECTION TWENTY-FIVE-A OF THE LABOR LAW. IN NO EVENT SHALL THE TAXPAY-
    4  ER  BE  ALLOWED A CREDIT GREATER THAN THE AMOUNT OF THE CREDIT LISTED ON
    5  THE  CERTIFICATE  OF  ELIGIBILITY. NOTWITHSTANDING ANY PROVISION OF THIS
    6  CHAPTER TO THE CONTRARY, THE COMMISSIONER AND THE COMMISSIONER'S  DESIG-
    7  NEES  MAY  RELEASE THE NAMES AND ADDRESSES OF ANY TAXPAYER CLAIMING THIS
    8  CREDIT AND THE AMOUNT OF THE CREDIT EARNED BY THE TAXPAYER.    PROVIDED,
    9  HOWEVER,  IF  A  TAXPAYER CLAIMS THIS CREDIT BECAUSE IT IS A MEMBER OF A
   10  LIMITED LIABILITY COMPANY OR A PARTNER IN A PARTNERSHIP, ONLY THE AMOUNT
   11  OF CREDIT EARNED BY THE ENTITY AND NOT THE AMOUNT OF CREDIT  CLAIMED  BY
   12  THE TAXPAYER MAY BE RELEASED.
   13    37. EMPIRE STATE JOBS RETENTION PROGRAM CREDIT. (A) ALLOWANCE OF CRED-
   14  IT.   A TAXPAYER WILL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN
   15  SECTION THIRTY-SIX OF THIS CHAPTER, AGAINST THE TAXES  IMPOSED  BY  THIS
   16  ARTICLE.
   17    (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
   18  FOR ANY TAXABLE YEAR WILL NOT REDUCE THE TAX DUE FOR SUCH YEAR  TO  LESS
   19  THAN  THE  AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF SUBDIVISION ONE OF
   20  SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
   21  IT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES  THE  TAX
   22  TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE
   23  YEAR WILL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED
   24  IN  ACCORDANCE WITH THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF
   25  THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS  OF  SUBSECTION  (C)  OF
   26  SECTION  ONE  THOUSAND  EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO
   27  INTEREST WILL BE PAID THEREON.
   28    38. CREDIT FOR COMPANIES WHO  PROVIDE  TRANSPORTATION  TO  INDIVIDUALS
   29  WITH  DISABILITIES.  (A) ALLOWANCE AND AMOUNT OF CREDIT. A TAXPAYER, WHO
   30  PROVIDES  A  TAXICAB  SERVICE  AS  DEFINED  IN   SECTION   ONE   HUNDRED
   31  FORTY-EIGHT-A  OF  THE  VEHICLE  AND TRAFFIC LAW, OR A LIVERY SERVICE AS
   32  DEFINED IN SECTION ONE HUNDRED TWENTY-ONE-E OF THE VEHICLE  AND  TRAFFIC
   33  LAW,  SHALL  BE  ALLOWED  A  CREDIT,  TO BE COMPUTED AS PROVIDED IN THIS
   34  SUBDIVISION, AGAINST THE TAX IMPOSED BY THIS ARTICLE. THE AMOUNT OF  THE
   35  CREDIT  SHALL BE EQUAL TO THE INCREMENTAL COST ASSOCIATED WITH UPGRADING
   36  A VEHICLE SO THAT IT IS ACCESSIBLE BY INDIVIDUALS WITH  DISABILITIES  AS
   37  DEFINED  IN  PARAGRAPH  (B) OF THIS SUBDIVISION. PROVIDED, HOWEVER, THAT
   38  SUCH CREDIT SHALL NOT EXCEED  TEN  THOUSAND  DOLLARS  PER  VEHICLE.  FOR
   39  PURPOSES  OF  THIS  SUBDIVISION,  PURCHASES  OF  NEW  VEHICLES  THAT ARE
   40  INITIALLY MANUFACTURED TO BE ACCESSIBLE FOR INDIVIDUALS  WITH  DISABILI-
   41  TIES  AND  FOR WHICH THERE IS NO COMPARABLE MAKE AND MODEL THAT DOES NOT
   42  INCLUDE THE EQUIPMENT NECESSARY TO PROVIDE ACCESSIBILITY TO  INDIVIDUALS
   43  WITH DISABILITIES, THE CREDIT SHALL BE TEN THOUSAND DOLLARS PER VEHICLE.
   44    (B) DEFINITION. THE TERM "ACCESSIBLE BY INDIVIDUALS WITH DISABILITIES"
   45  SHALL,  FOR  THE  PURPOSES  OF THIS SUBDIVISION, REFER TO A VEHICLE THAT
   46  COMPLIES WITH FEDERAL REGULATIONS PROMULGATED PURSUANT TO THE  AMERICANS
   47  WITH  DISABILITIES  ACT  APPLICABLE  TO  VANS  UNDER  TWENTY-TWO FEET IN
   48  LENGTH, BY THE FEDERAL DEPARTMENT OF TRANSPORTATION, IN CODE OF  FEDERAL
   49  REGULATIONS,  TITLE 49, PARTS 37 AND 38, AND BY THE FEDERAL ARCHITECTURE
   50  AND TRANSPORTATION BARRIERS COMPLIANCE BOARD, IN CODE OF  FEDERAL  REGU-
   51  LATIONS, TITLE 36, SECTION 1192.23, AND THE FEDERAL MOTOR VEHICLE SAFETY
   52  STANDARDS, CODE OF FEDERAL REGULATIONS, TITLE 49, PART 57.
   53    (C)  APPLICATION OF CREDIT. IN NO EVENT SHALL THE CREDIT ALLOWED UNDER
   54  THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCE THE TAX DUE FOR  SUCH  YEAR
   55  TO  LESS  THAN THE AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE
   56  OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF  THE  AMOUNT  OF
       S. 6359                            100                           A. 8559
    1  CREDIT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE
    2  TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS  NOT  DEDUCTIBLE  IN  SUCH
    3  TAXABLE  YEAR  SHALL BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS, AND
    4  MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
    5    39.  BEER  PRODUCTION CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO
    6  BE COMPUTED AS PROVIDED IN SECTION THIRTY-SEVEN OF THIS CHAPTER, AGAINST
    7  THE TAX IMPOSED BY THIS ARTICLE. IN NO EVENT SHALL  THE  CREDIT  ALLOWED
    8  UNDER  THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCE THE TAX DUE FOR SUCH
    9  YEAR TO LESS THAN THE AMOUNT PRESCRIBED IN PARAGRAPH (D) OF  SUBDIVISION
   10  ONE  OF  SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT
   11  OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY  TAXABLE  YEAR  REDUCES
   12  THE TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH
   13  TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
   14  REFUNDED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND
   15  EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
   16  SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
   17  NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
   18    40. MINIMUM WAGE REIMBURSEMENT CREDIT.  (A)  ALLOWANCE  OF  CREDIT.  A
   19  TAXPAYER  SHALL  BE  ALLOWED  A  CREDIT,  TO  BE COMPUTED AS PROVIDED IN
   20  SECTION THIRTY-EIGHT OF THIS CHAPTER, AGAINST THE TAX  IMPOSED  BY  THIS
   21  ARTICLE.
   22    (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
   23  FOR ANY TAXABLE YEAR MAY NOT REDUCE THE TAX DUE FOR SUCH  YEAR  TO  LESS
   24  THAN  THE  AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF SUBDIVISION ONE OF
   25  SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
   26  IT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES  THE  TAX
   27  TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE
   28  YEAR WILL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED
   29  IN  ACCORDANCE WITH THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF
   30  THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS  OF  SUBSECTION  (C)  OF
   31  SECTION  ONE  THOUSAND  EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO
   32  INTEREST WILL BE PAID THEREON.
   33    41. THE TAX-FREE NY AREA TAX ELIMINATION CREDIT. A TAXPAYER  SHALL  BE
   34  ALLOWED  A  CREDIT  TO  BE COMPUTED AS PROVIDED IN SECTION FORTY OF THIS
   35  CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.  UNLESS  THE  TAXPAYER
   36  HAS  A  TAX-FREE  NY  AREA ALLOCATION FACTOR OF ONE HUNDRED PERCENT, THE
   37  CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY  TAXABLE  YEAR  SHALL  NOT
   38  REDUCE  THE  TAX DUE FOR SUCH YEAR TO LESS THAN THE AMOUNT PRESCRIBED IN
   39  PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION  TWO  HUNDRED  TEN  OF  THIS
   40  ARTICLE.  HOWEVER,  ANY  AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXABLE
   41  YEAR SHALL BE TREATED AS  AN  OVERPAYMENT  OF  TAX  TO  BE  CREDITED  OR
   42  REFUNDED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND
   43  EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
   44  SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
   45  NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
   46    42. ALTERNATIVE BASE CREDIT. (A) IF THE TAX IMPOSED ON A  TAXPAYER  BY
   47  SUBDIVISION  ONE  OF  SECTION  TWO  HUNDRED  NINE OF THIS ARTICLE IS THE
   48  AMOUNT PRESCRIBED IN PARAGRAPH (B) OF SUBDIVISION  ONE  OF  SECTION  TWO
   49  HUNDRED  TEN  OF  THIS  ARTICLE,  THE TAXPAYER SHALL BE ALLOWED A CREDIT
   50  AGAINST THE TAX IMPOSED UNDER THIS ARTICLE EQUAL TO THE  AMOUNT  OF  TAX
   51  PAID  TO  ANOTHER STATE COMPUTED ON A TAX BASE IDENTICAL TO THE TAX BASE
   52  PRESCRIBED IN SUCH PARAGRAPH (B). IF THE TAX IMPOSED ON  A  TAXPAYER  BY
   53  SUBDIVISION  ONE  OF  SECTION  TWO  HUNDRED  NINE OF THIS ARTICLE IS THE
   54  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION  ONE  OF  SECTION  TWO
   55  HUNDRED  TEN  OF  THIS  ARTICLE,  THE TAXPAYER SHALL BE ALLOWED A CREDIT
   56  AGAINST THE TAX IMPOSED UNDER THIS ARTICLE EQUAL TO THE  AMOUNT  OF  TAX
       S. 6359                            101                           A. 8559
    1  PAID  TO  ANOTHER STATE COMPUTED ON A TAX BASE IDENTICAL TO THE TAX BASE
    2  PRESCRIBED IN SUCH PARAGRAPH (D).
    3    (B)  IN  NO  EVENT SHALL THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR
    4  ANY TAXABLE YEAR REDUCE THE TAX DUE FOR  SUCH  YEAR  TO  LESS  THAN  THE
    5  AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO
    6  HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT  OF  CREDIT  ALLOWED
    7  UNDER  THIS  SUBDIVISION  FOR  ANY  TAXABLE YEAR REDUCES THE TAX TO SUCH
    8  AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN  SUCH  TAXABLE  YEAR
    9  SHALL  BE  CARRIED  OVER  TO  THE  FOLLOWING  YEAR  OR YEARS, AND MAY BE
   10  DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
   11    43. REAL PROPERTY TAX CREDIT FOR MANUFACTURERS. (A)  A  QUALIFIED  NEW
   12  YORK  MANUFACTURER,  AS  DEFINED  IN  SUBDIVISION FIFTEEN OF SECTION TWO
   13  HUNDRED EIGHT OF THIS ARTICLE, WILL BE ALLOWED A CREDIT EQUAL TO  TWENTY
   14  PERCENT  OF  THE  REAL  PROPERTY TAX IT PAID DURING THE TAXABLE YEAR FOR
   15  REAL PROPERTY OWNED BY SUCH MANUFACTURER IN NEW YORK WHICH  WAS  PRINCI-
   16  PALLY  USED  DURING THE TAXABLE YEAR FOR MANUFACTURING TO THE EXTENT NOT
   17  DEDUCTED IN DETERMINING   ENTIRE NET INCOME. THIS  CREDIT  WILL  NOT  BE
   18  ALLOWED  IF  THE  REAL PROPERTY TAXES THAT ARE THE BASIS FOR THIS CREDIT
   19  ARE INCLUDED IN THE CALCULATION OF ANOTHER CREDIT CLAIMED BY THE TAXPAY-
   20  ER.
   21    (B) FOR PURPOSES OF THIS SUBDIVISION, THE TERM REAL PROPERTY TAX MEANS
   22  A CHARGE IMPOSED UPON REAL PROPERTY BY OR ON BEHALF OF A  COUNTY,  CITY,
   23  TOWN,  VILLAGE  OR  SCHOOL  DISTRICT  FOR  MUNICIPAL  OR SCHOOL DISTRICT
   24  PURPOSES, PROVIDED THAT THE CHARGE IS  LEVIED  FOR  THE  GENERAL  PUBLIC
   25  WELFARE  BY  THE  PROPER  TAXING  AUTHORITIES AT A LIKE RATE AGAINST ALL
   26  PROPERTY OVER WHICH SUCH AUTHORITIES  HAVE  JURISDICTION,  AND  PROVIDED
   27  THAT  WHERE TAXES ARE LEVIED PURSUANT TO ARTICLE EIGHTEEN OR NINETEEN OF
   28  THE REAL PROPERTY TAX LAW, THE PROPERTY MUST HAVE BEEN TAXED AT THE RATE
   29  DETERMINED FOR THE CLASS IN WHICH IT IS CONTAINED, AS PROVIDED  BY  SUCH
   30  ARTICLE  EIGHTEEN  OR  NINETEEN,  WHICHEVER IS APPLICABLE. THE TERM REAL
   31  PROPERTY TAX DOES NOT INCLUDE A CHARGE FOR LOCAL BENEFITS, INCLUDING ANY
   32  PORTION OF THAT CHARGE THAT IS PROPERLY ALLOCATED TO THE COSTS ATTRIBUT-
   33  ABLE TO MAINTENANCE OR INTEREST, WHEN (1) THE PROPERTY  SUBJECT  TO  THE
   34  CHARGE  IS LIMITED TO THE PROPERTY THAT BENEFITS FROM THE CHARGE, OR (2)
   35  THE AMOUNT OF THE CHARGE IS DETERMINED BY THE BENEFIT  TO  THE  PROPERTY
   36  ASSESSED,  OR (3) THE IMPROVEMENT FOR WHICH THE CHARGE IS ASSESSED TENDS
   37  TO INCREASE THE PROPERTY VALUE. THE TERM  REAL  PROPERTY  TAX  DOES  NOT
   38  INCLUDE  A  PAYMENT  IN  LIEU  OF  TAXES  MADE BY THE QUALIFIED NEW YORK
   39  MANUFACTURER.
   40    (C) CREDIT RECAPTURE. WHERE A QUALIFIED NEW YORK  MANUFACTURER'S  REAL
   41  PROPERTY  TAXES  WHICH  WERE  THE  BASIS FOR THE ALLOWANCE OF THE CREDIT
   42  PROVIDED FOR UNDER THIS SUBDIVISION ARE SUBSEQUENTLY REDUCED AS A RESULT
   43  OF A FINAL ORDER IN ANY PROCEEDING UNDER ARTICLE SEVEN OF THE REAL PROP-
   44  ERTY TAX LAW OR OTHER PROVISION OF LAW, THE TAXPAYER SHALL ADD BACK,  IN
   45  THE  TAXABLE YEAR IN WHICH SUCH FINAL ORDER IS ISSUED, THE EXCESS OF (1)
   46  THE AMOUNT OF CREDIT ORIGINALLY ALLOWED FOR A TAXABLE YEAR OVER (2)  THE
   47  AMOUNT  OF CREDIT DETERMINED BASED UPON THE REDUCED REAL PROPERTY TAXES.
   48  IF SUCH FINAL ORDER REDUCES REAL PROPERTY TAXES FOR MORE THAN ONE  YEAR,
   49  THE  TAXPAYER  MUST DETERMINE HOW MUCH OF SUCH REDUCTION IS ATTRIBUTABLE
   50  TO EACH YEAR COVERED BY SUCH FINAL ORDER AND  CALCULATE  THE  AMOUNT  OF
   51  CREDIT  WHICH  IS REQUIRED BY THIS SUBDIVISION TO BE RECAPTURED FOR EACH
   52  YEAR BASED ON SUCH REDUCTION.
   53    (D) THE CREDIT ALLOWED UNDER THIS SUBDIVISION  FOR  ANY  TAXABLE  YEAR
   54  SHALL  NOT  REDUCE  THE  TAX  DUE  FOR SUCH YEAR TO LESS THAN THE AMOUNT
   55  PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF  SECTION  TWO  HUNDRED
   56  TEN  OF  THIS  CHAPTER.  HOWEVER, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN
       S. 6359                            102                           A. 8559
    1  SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE  CRED-
    2  ITED  OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE THOU-
    3  SAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,  THE  PROVISIONS  OF
    4  SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
    5  NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
    6    44. THE TAX-FREE NY AREA  EXCISE  TAX  ON  TELECOMMUNICATION  SERVICES
    7  CREDIT.  A  TAXPAYER  THAT  IS A BUSINESS OR OWNER OF A BUSINESS THAT IS
    8  LOCATED IN A TAX-FREE NY AREA APPROVED PURSUANT TO ARTICLE TWENTY-ONE OF
    9  THE ECONOMIC DEVELOPMENT LAW SHALL BE ALLOWED  A  CREDIT  EQUAL  TO  THE
   10  EXCISE  TAX ON TELECOMMUNICATION SERVICES IMPOSED BY SECTION ONE HUNDRED
   11  EIGHTY-SIX-E OF THIS CHAPTER AND PASSED THROUGH TO SUCH BUSINESS  DURING
   12  THE  TAXABLE  YEAR TO THE EXTENT NOT OTHERWISE DEDUCTED IN COMPUTING TAX
   13  UNDER THIS ARTICLE. HOWEVER, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH
   14  TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
   15  REFUNDED IN ACCORDANCE WITH  THE  PROVISIONS  OF  SECTION  ONE  THOUSAND
   16  EIGHTY-SIX  OF  THIS  CHAPTER. THIS CREDIT MAY BE CLAIMED ONLY WHERE ANY
   17  TAX IMPOSED BY SUCH SECTION ONE HUNDRED EIGHTY-SIX-E HAS BEEN SEPARATELY
   18  STATED ON A BILL FROM THE PROVIDER  OF  TELECOMMUNICATION  SERVICES  AND
   19  PAID BY SUCH BUSINESS DURING THE TAXABLE YEAR. UNLESS THE TAXPAYER HAS A
   20  TAX-FREE  NY  AREA  ALLOCATION FACTOR OF ONE HUNDRED PERCENT, THE CREDIT
   21  ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE
   22  TAX DUE FOR SUCH YEAR TO LESS THAN THE AMOUNT  PRESCRIBED  IN  PARAGRAPH
   23  (D)  OF  SUBDIVISION  ONE  OF  SECTION  TWO HUNDRED TEN OF THIS CHAPTER.
   24  PROVIDED, HOWEVER, THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOU-
   25  SAND EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL  BE
   26  PAID THEREON.
   27    45.  ORDER  OF CREDITS. (A) CREDITS ALLOWABLE UNDER THIS ARTICLE WHICH
   28  CANNOT BE CARRIED OVER AND WHICH ARE NOT REFUNDABLE  SHALL  BE  DEDUCTED
   29  FIRST.  THE CREDIT ALLOWABLE UNDER SUBDIVISION SIX OF THIS SECTION SHALL
   30  BE DEDUCTED IMMEDIATELY AFTER THE DEDUCTION  OF  ALL  CREDITS  ALLOWABLE
   31  UNDER  THIS  ARTICLE  WHICH  CANNOT  BE  CARRIED  OVER AND WHICH ARE NOT
   32  REFUNDABLE, WHETHER OR NOT A  PORTION  OF  SUCH  CREDIT  IS  REFUNDABLE.
   33  CREDITS  ALLOWABLE  UNDER  THIS  ARTICLE  WHICH CAN BE CARRIED OVER, AND
   34  CARRYOVERS OF SUCH CREDITS, SHALL BE DEDUCTED NEXT AFTER  THE  DEDUCTION
   35  OF THE CREDIT ALLOWABLE UNDER SUBDIVISION SIX OF THIS SECTION, AND AMONG
   36  SUCH  CREDITS,  THOSE  WHOSE  CARRYOVER  IS OF LIMITED DURATION SHALL BE
   37  DEDUCTED BEFORE THOSE WHOSE CARRYOVER IS OF UNLIMITED DURATION.  CREDITS
   38  ALLOWABLE UNDER THIS ARTICLE WHICH ARE REFUNDABLE (OTHER THAN THE CREDIT
   39  ALLOWABLE UNDER SUBDIVISION SIX OF THIS SECTION) SHALL BE DEDUCTED LAST.
   40    46.  NOTWITHSTANDING  THE REPEAL OF THE CREDIT PROVISIONS CONTAINED IN
   41  SECTION TWO HUNDRED TEN OF  THIS  ARTICLE  AND  THE  ENACTMENT  OF  THIS
   42  SECTION BY A CHAPTER OF THE LAWS OF TWO THOUSAND FOURTEEN:
   43    (A) A TAXPAYER SHALL BE ALLOWED TO UTILIZE ANY CARRYFORWARD AMOUNTS OF
   44  CREDITS  TO WHICH THE TAXPAYER WAS ENTITLED AS OF THE CLOSE OF THE TAXA-
   45  BLE YEAR BEGINNING ON OR AFTER JANUARY FIRST, TWO THOUSAND FOURTEEN  AND
   46  BEFORE  JANUARY FIRST, TWO THOUSAND FIFTEEN, OTHER THAN THE CARRYFORWARD
   47  AMOUNT OF THE MINIMUM TAX CREDIT PROVIDED UNDER SUBDIVISION THIRTEEN  OF
   48  SECTION  TWO  HUNDRED TEN, AS THAT SUBDIVISION WAS IN EFFECT ON DECEMBER
   49  THIRTY-FIRST, TWO THOUSAND FOURTEEN.
   50    (B) A TAXPAYER SHALL BE REQUIRED IN A TAXABLE  YEAR  BEGINNING  ON  OR
   51  AFTER JANUARY FIRST, TWO THOUSAND FIFTEEN, TO RECAPTURE ALL OR A PORTION
   52  OF  A CREDIT ALLOWED UNDER A CREDIT PROVISION IN SECTION TWO HUNDRED TEN
   53  FOR A TAXABLE YEAR  BEGINNING  PRIOR  TO  JANUARY  FIRST,  TWO  THOUSAND
   54  FIFTEEN  IF  RECAPTURE  WOULD  HAVE  BEEN  REQUIRED  UNDER  SUCH  CREDIT
   55  PROVISION.
       S. 6359                            103                           A. 8559
    1    47. IN ANY TAXABLE YEAR, A TAXPAYER MUST FIRST CLAIM ANY OF THE  CRED-
    2  ITS  SPECIFIED  IN  THIS SECTION ON ITS ORIGINALLY FILED REPORT FOR SUCH
    3  TAXABLE YEAR. A TAXPAYER SHALL NOT FIRST CLAIM A CREDIT  ON  AN  AMENDED
    4  REPORT.
    5    S  18. The tax law is amended by adding a new section 210-C to read as
    6  follows:
    7    S 210-C. COMBINED REPORTS. 1. TAX. THE TAX ON A COMBINED REPORT  SHALL
    8  BE  THE HIGHEST OF THE PRODUCTS OF (I) THE COMBINED BUSINESS INCOME BASE
    9  MULTIPLIED BY THE TAX RATE SPECIFIED IN PARAGRAPH (A) OF SUBDIVISION ONE
   10  OF SECTION TWO HUNDRED TEN OF THIS ARTICLE; (II)  THE  COMBINED  CAPITAL
   11  BASE  MULTIPLIED  BY THE TAX RATE SPECIFIED IN PARAGRAPH (B) OF SUBDIVI-
   12  SION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE, BUT  NOT  EXCEEDING
   13  THE  LIMITATION  PROVIDED  FOR IN THAT PARAGRAPH (B); OR (III) THE FIXED
   14  DOLLAR MINIMUM THAT IS ATTRIBUTABLE  TO  THE  DESIGNATED  AGENT  OF  THE
   15  COMBINED  GROUP. IN ADDITION, THE TAX ON A COMBINED REPORT SHALL INCLUDE
   16  THE FIXED DOLLAR MINIMUM TAX SPECIFIED IN PARAGRAPH (D)  OF  SUBDIVISION
   17  ONE  OF  SECTION  TWO HUNDRED TEN OF THIS ARTICLE FOR EACH MEMBER OF THE
   18  COMBINED GROUP, OTHER THAN THE DESIGNATED AGENT, THAT IS A TAXPAYER.
   19    (B) THE COMBINED BUSINESS INCOME BASE IS THE AMOUNT  OF  THE  COMBINED
   20  BUSINESS  INCOME OF THE COMBINED GROUP THAT IS APPORTIONED TO THE STATE,
   21  REDUCED BY ANY NET OPERATING LOSS DEDUCTION FOR THE COMBINED GROUP.  THE
   22  COMBINED CAPITAL BASE IS THE AMOUNT  OF  THE  COMBINED  CAPITAL  OF  THE
   23  COMBINED GROUP THAT IS APPORTIONED TO THE STATE.
   24    2.  COMBINED REPORTS REQUIRED. (A) EXCEPT AS PROVIDED IN PARAGRAPH (C)
   25  OF THIS SUBDIVISION, ANY TAXPAYER (I)  WHICH  OWNS  OR  CONTROLS  EITHER
   26  DIRECTLY  OR  INDIRECTLY MORE THAN FIFTY PERCENT OF THE CAPITAL STOCK OF
   27  ONE OR MORE OTHER CORPORATIONS, OR (II) MORE THAN FIFTY PERCENT  OF  THE
   28  CAPITAL  STOCK  OF WHICH IS OWNED OR CONTROLLED EITHER DIRECTLY OR INDI-
   29  RECTLY BY ONE OR MORE OTHER  CORPORATIONS,  OR  (III)  MORE  THAN  FIFTY
   30  PERCENT  OF  THE  CAPITAL STOCK OF WHICH AND THE CAPITAL STOCK OF ONE OR
   31  MORE OTHER CORPORATIONS, IS OWNED OR CONTROLLED, DIRECTLY OR INDIRECTLY,
   32  BY THE SAME INTERESTS, AND (IV) THAT IS ENGAGED IN  A  UNITARY  BUSINESS
   33  WITH  THOSE  CORPORATIONS, SHALL MAKE A COMBINED REPORT WITH THOSE OTHER
   34  CORPORATIONS.
   35    (B) A CORPORATION REQUIRED TO MAKE A COMBINED REPORT WITHIN THE  MEAN-
   36  ING  OF THIS SECTION SHALL ALSO INCLUDE (I) A CAPTIVE REIT AND A CAPTIVE
   37  RIC IF THE CAPTIVE REIT OR CAPTIVE RIC IS NOT REQUIRED TO BE INCLUDED IN
   38  A COMBINED REPORT UNDER ARTICLE THIRTY-THREE OF  THIS  CHAPTER;  (II)  A
   39  COMBINABLE  CAPTIVE  INSURANCE  COMPANY;  AND (III) AN ALIEN CORPORATION
   40  THAT SATISFIES THE CONDITIONS IN PARAGRAPH (A) OF  THIS  SUBDIVISION  IF
   41  (I)  UNDER  ANY PROVISION OF THE INTERNAL REVENUE CODE, THAT CORPORATION
   42  IS TREATED AS A "DOMESTIC CORPORATION" AS DEFINED IN SECTION SEVEN THOU-
   43  SAND SEVEN HUNDRED ONE OF THE INTERNAL REVENUE  CODE,  OR  (II)  IT  HAS
   44  EFFECTIVELY  CONNECTED  INCOME  FOR  THE TAXABLE YEAR PURSUANT TO CLAUSE
   45  (IV) OF THE OPENING PARAGRAPH OF SUBDIVISION NINE OF SECTION TWO HUNDRED
   46  EIGHT OF THIS ARTICLE.
   47    (C) A CORPORATION REQUIRED OR PERMITTED  TO  MAKE  A  COMBINED  REPORT
   48  UNDER  THIS  SECTION  DOES NOT INCLUDE (I) A CORPORATION THAT IS TAXABLE
   49  UNDER ARTICLE NINE OR THIRTY-THREE OF THIS CHAPTER; (II) A REIT THAT  IS
   50  NOT  A  CAPTIVE  REIT,  AND A RIC THAT IS NOT A CAPTIVE RIC; (III) A NEW
   51  YORK S CORPORATION; (IV) A CORPORATION THAT IS SUBJECT TO TAX UNDER THIS
   52  ARTICLE SOLELY AS A RESULT OF ITS OWNERSHIP OF A LIMITED PARTNER  INTER-
   53  EST  IN A LIMITED PARTNERSHIP THAT IS DOING BUSINESS, EMPLOYING CAPITAL,
   54  OWNING OR LEASING PROPERTY, MAINTAINING AN  OFFICE  IN  THIS  STATE,  OR
   55  DERIVING  RECEIPTS FROM ACTIVITY IN THIS STATE, PROVIDED THAT THE CORPO-
   56  RATION IS NOT OTHERWISE REQUIRED TO FILE A COMBINED REPORT  PURSUANT  TO
       S. 6359                            104                           A. 8559
    1  THIS  SECTION;  OR  (V)  AN  ALIEN  CORPORATION  THAT HAS NO EFFECTIVELY
    2  CONNECTED INCOME FOR THE TAXABLE YEAR PURSUANT TO  CLAUSE  (IV)  OF  THE
    3  OPENING  PARAGRAPH  OF  SUBDIVISION NINE OF SECTION TWO HUNDRED EIGHT OF
    4  THIS ARTICLE.
    5    (D)  A  COMBINED  REPORT SHALL BE FILED BY THE DESIGNATED AGENT OF THE
    6  COMBINED GROUP AS DETERMINED UNDER SUBDIVISION SEVEN OF THIS SECTION.
    7    3. COMMONLY OWNED GROUP ELECTION. (A) SUBJECT  TO  THE  PROVISIONS  OF
    8  PARAGRAPH  (C)  OF SUBDIVISION TWO OF THIS SECTION, A TAXPAYER MAY ELECT
    9  TO TREAT AS ITS COMBINED GROUP ALL CORPORATIONS THAT MEET THE  OWNERSHIP
   10  REQUIREMENTS  DESCRIBED  IN  PARAGRAPH  (A)  OF  SUBDIVISION TWO OF THIS
   11  SECTION (SUCH CORPORATIONS COLLECTIVELY REFERRED TO IN THIS  SUBDIVISION
   12  AS  THE  "COMMONLY OWNED GROUP"). IF THAT ELECTION IS MADE, THE COMMONLY
   13  OWNED GROUP SHALL CALCULATE THE COMBINED BUSINESS INCOME, COMBINED CAPI-
   14  TAL, AND FIXED DOLLAR MINIMUM BASES OF  ALL  MEMBERS  OF  THE  GROUP  IN
   15  ACCORDANCE  WITH PARAGRAPH FOUR OF THIS SUBDIVISION, WHETHER OR NOT THAT
   16  BUSINESS INCOME OR BUSINESS CAPITAL IS FROM A SINGLE UNITARY BUSINESS.
   17    (B) THE ELECTION UNDER THIS SUBDIVISION SHALL BE MADE ON AN  ORIGINAL,
   18  TIMELY  FILED  RETURN  OF THE COMBINED GROUP. ANY CORPORATION ENTERING A
   19  COMMONLY OWNED GROUP  SUBSEQUENT  TO  THE  YEAR  OF  ELECTION  SHALL  BE
   20  INCLUDED  IN  THE  COMBINED  GROUP  AND IS CONSIDERED TO HAVE WAIVED ANY
   21  OBJECTION TO ITS INCLUSION IN THE COMBINED GROUP.
   22    (C) THE ELECTION SHALL BE IRREVOCABLE, AND BINDING FOR AND  APPLICABLE
   23  TO  THE  TAXABLE  YEAR FOR WHICH IT IS MADE AND FOR THE NEXT SIX TAXABLE
   24  YEARS. THE ELECTION WILL AUTOMATICALLY  BE  RENEWED  FOR  ANOTHER  SEVEN
   25  TAXABLE YEARS AFTER IT HAS BEEN IN EFFECT FOR SEVEN TAXABLE YEARS UNLESS
   26  IT  IS  AFFIRMATIVELY  REVOKED.  THE  REVOCATION  SHALL  BE  MADE  ON AN
   27  ORIGINAL, TIMELY FILED RETURN FOR  THE  FIRST  TAXABLE  YEAR  AFTER  THE
   28  COMPLETION  OF  A  SEVEN  YEAR  PERIOD  FOR WHICH AN ELECTION UNDER THIS
   29  SUBDIVISION WAS IN PLACE. IN THE CASE OF A REVOCATION,  A  NEW  ELECTION
   30  UNDER  THIS SUBDIVISION SHALL NOT BE PERMITTED IN ANY OF THE IMMEDIATELY
   31  FOLLOWING THREE TAXABLE YEARS. IN DETERMINING THE SEVEN AND  THREE  YEAR
   32  PERIODS  DESCRIBED  IN  THIS PARAGRAPH, SHORT TAXABLE YEARS SHALL NOT BE
   33  CONSIDERED OR COUNTED.
   34    4. COMPUTATION OF TAX BASES ON A COMBINED REPORT. (A) IN COMPUTING THE
   35  TAX BASES FOR A COMBINED REPORT, THE COMBINED GROUP SHALL  GENERALLY  BE
   36  TREATED  AS  A  SINGLE  CORPORATION,  EXCEPT  AS OTHERWISE PROVIDED, AND
   37  SUBJECT TO ANY REGULATIONS OR GUIDANCE ISSUED BY THE COMMISSIONER OR THE
   38  DEPARTMENT.
   39    (B)(I) IN COMPUTING COMBINED BUSINESS INCOME, ALL INTERCORPORATE DIVI-
   40  DENDS SHALL BE ELIMINATED, AND  ALL  OTHER  INTERCORPORATE  TRANSACTIONS
   41  SHALL BE DEFERRED IN A MANNER SIMILAR TO THE RULES RELATING TO INTERCOM-
   42  PANY  TRANSACTIONS  UNDER  SECTION  FIFTEEN  HUNDRED TWO OF THE INTERNAL
   43  REVENUE CODE.
   44    (II) IN COMPUTING COMBINED CAPITAL, ALL INTERCORPORATE  STOCKHOLDINGS,
   45  INTERCORPORATE  BILLS,  INTERCORPORATE  NOTES  RECEIVABLE  AND  PAYABLE,
   46  INTERCORPORATE ACCOUNTS RECEIVABLE AND PAYABLE, AND OTHER INTERCORPORATE
   47  INDEBTEDNESS, SHALL BE ELIMINATED.
   48    (C) QUALIFICATION FOR  CREDITS,  INCLUDING  ANY  LIMITATIONS  THEREON,
   49  SHALL  BE  DETERMINED SEPARATELY FOR EACH OF THE MEMBERS OF THE COMBINED
   50  GROUP, AND SHALL NOT BE DETERMINED ON A COMBINED GROUP BASIS, EXCEPT  AS
   51  OTHERWISE  PROVIDED.  HOWEVER,  THE CREDITS SHALL BE APPLIED AGAINST THE
   52  COMBINED TAX OF THE GROUP.
   53    (D)(I) A NET OPERATING LOSS DEDUCTION  IS  ALLOWED  IN  COMPUTING  THE
   54  COMBINED  BUSINESS INCOME BASE. SUCH DEDUCTION MAY REDUCE THE TAX ON THE
   55  COMBINED BUSINESS INCOME BASE TO THE HIGHER OF THE TAX ON  THE  COMBINED
   56  CAPITAL  BASE OR THE FIXED DOLLAR MINIMUM. A COMBINED NET OPERATING LOSS
       S. 6359                            105                           A. 8559
    1  DEDUCTION IS EQUAL TO THE AMOUNT OF COMBINED NET OPERATING LOSS OR LOSS-
    2  ES FROM ONE OR MORE TAXABLE YEARS THAT ARE CARRIED FORWARD TO A  PARTIC-
    3  ULAR INCOME YEAR. A COMBINED NET OPERATING LOSS IS THE COMBINED BUSINESS
    4  LOSS  INCURRED  IN  A PARTICULAR TAXABLE YEAR MULTIPLIED BY THE COMBINED
    5  APPORTIONMENT FRACTION FOR THAT YEAR DETERMINED AS PROVIDED IN  SUBDIVI-
    6  SION FIVE OF THIS SECTION.
    7    (II)  THE COMBINED NET OPERATING LOSS DEDUCTION AND COMBINED NET OPER-
    8  ATING LOSS ARE ALSO SUBJECT TO THE PROVISIONS CONTAINED IN  CLAUSES  ONE
    9  THROUGH  SIX  OF SUBPARAGRAPH (VIII) OF PARAGRAPH (A) OF SUBDIVISION ONE
   10  OF SECTION TWO HUNDRED TEN OF THIS ARTICLE.
   11    (III) IN THE CASE OF A  CORPORATION  THAT  FILES  A  COMBINED  REPORT,
   12  EITHER  IN THE YEAR THE NET OPERATING LOSS IS INCURRED OR IN THE YEAR IN
   13  WHICH A DEDUCTION IS CLAIMED ON ACCOUNT OF THE LOSS,  THE  COMBINED  NET
   14  OPERATING  LOSS  DEDUCTION  IS  DETERMINED AS IF THE COMBINED GROUP IS A
   15  SINGLE CORPORATION AND IS SUBJECT TO THE  SAME  LIMITATIONS  THAT  WOULD
   16  APPLY  FOR  FEDERAL  INCOME TAX PURPOSES UNDER THE INTERNAL REVENUE CODE
   17  AND THE CODE OF FEDERAL REGULATIONS AS IF SUCH CORPORATION HAD FILED FOR
   18  SUCH TAXABLE YEAR A CONSOLIDATED FEDERAL INCOME TAX RETURN WITH THE SAME
   19  CORPORATIONS INCLUDED IN THE COMBINED REPORT. IF A CORPORATION  FILES  A
   20  COMBINED  REPORT,  REGARDLESS  OF  WHETHER IT FILED A SEPARATE RETURN OR
   21  CONSOLIDATED RETURN FOR FEDERAL INCOME TAX PURPOSES, THE  NET  OPERATING
   22  LOSS  AND  NET  OPERATING  LOSS DEDUCTION FOR THE COMBINED GROUP MUST BE
   23  COMPUTED AS IF THE CORPORATION HAD FILED A CONSOLIDATED RETURN  FOR  THE
   24  SAME CORPORATIONS FOR FEDERAL INCOME TAX PURPOSES.
   25    (IV) IN GENERAL, ANY NET OPERATING LOSS CARRYOVER FROM A YEAR IN WHICH
   26  A COMBINED REPORT WAS FILED SHALL BE BASED ON THE COMBINED NET OPERATING
   27  LOSS OF THE GROUP OF CORPORATIONS FILING SUCH REPORT. THE PORTION OF THE
   28  COMBINED LOSS ATTRIBUTABLE TO ANY MEMBER OF THE GROUP THAT FILES A SEPA-
   29  RATE  REPORT FOR A SUCCEEDING TAXABLE YEAR WILL BE AN AMOUNT BEARING THE
   30  SAME RELATION TO THE COMBINED LOSS AS THE NET  OPERATING  LOSS  OF  SUCH
   31  CORPORATION  BEARS TO THE TOTAL NET OPERATING LOSS OF ALL MEMBERS OF THE
   32  GROUP HAVING SUCH LOSSES TO THE EXTENT THAT THEY ARE TAKEN INTO  ACCOUNT
   33  IN COMPUTING THE COMBINED NET OPERATING LOSS.
   34    (E)  ANY  ELECTION  MADE PURSUANT TO PARAGRAPH (B) OF SUBDIVISION SIX,
   35  AND PARAGRAPHS (B) AND (C) OF SUBDIVISION SIX-A OF SECTION  TWO  HUNDRED
   36  EIGHT OF THIS ARTICLE SHALL APPLY TO ALL MEMBERS OF THE COMBINED GROUP.
   37    (F)(I)  IN  THE  CASE  OF A CAPTIVE REIT OR CAPTIVE RIC REQUIRED UNDER
   38  THIS SECTION TO BE INCLUDED IN A  COMBINED  REPORT,  ENTIRE  NET  INCOME
   39  SHALL  BE  COMPUTED AS REQUIRED UNDER SUBDIVISION FIVE (IN THE CASE OF A
   40  CAPTIVE REIT) OR SUBDIVISION SEVEN (IN THE CASE OF  A  CAPTIVE  RIC)  OF
   41  SECTION  TWO  HUNDRED NINE OF THIS ARTICLE. HOWEVER, THE DEDUCTION UNDER
   42  THE INTERNAL REVENUE CODE FOR DIVIDENDS PAID  BY  THE  CAPTIVE  REIT  OR
   43  CAPTIVE  RIC  TO  ANY  MEMBER  OF THE AFFILIATED GROUP THAT INCLUDES THE
   44  CORPORATION THAT DIRECTLY OR INDIRECTLY OWNS OVER FIFTY PERCENT  OF  THE
   45  VOTING  STOCK  OF  THE CAPTIVE REIT OR CAPTIVE RIC SHALL NOT BE ALLOWED.
   46  FOR PURPOSES OF THIS SUBPARAGRAPH, THE  TERM  "AFFILIATED  GROUP"  MEANS
   47  "AFFILIATED  GROUP"  AS  DEFINED  IN SECTION FIFTEEN HUNDRED FOUR OF THE
   48  INTERNAL REVENUE CODE, BUT WITHOUT REGARD TO THE EXCEPTIONS PROVIDED FOR
   49  IN SUBSECTION (B) OF THAT SECTION.
   50    (II) IN THE CASE OF A COMBINABLE CAPTIVE  INSURANCE  COMPANY  REQUIRED
   51  UNDER  THIS  SECTION  TO  BE  INCLUDED  IN A COMBINED REPORT, ENTIRE NET
   52  INCOME SHALL BE COMPUTED AS REQUIRED BY SUBDIVISION NINE OF SECTION  TWO
   53  HUNDRED EIGHT OF THIS ARTICLE.
   54    5.  APPORTIONMENT  ON A COMBINED REPORT. (A) IN DETERMINING THE APPOR-
   55  TIONMENT FACTOR FOR A COMBINED REPORT, THE  RECEIPTS,  NET  INCOME,  NET
   56  GAINS  AND  OTHER ITEMS OF ALL MEMBERS OF THE COMBINED GROUP, WHETHER OR
       S. 6359                            106                           A. 8559
    1  NOT THEY ARE A  TAXPAYER,  ARE  INCLUDED  AND  INTERCORPORATE  RECEIPTS,
    2  INCOME  AND  GAINS  ARE  ELIMINATED. RECEIPTS, NET INCOME, NET GAINS AND
    3  OTHER ITEMS ARE SOURCED AS PROVIDED IN SECTION TWO HUNDRED TEN-A OF THIS
    4  ARTICLE.
    5    (B)  AN  ELECTION  MADE  TO APPORTION INCOME AND GAINS FROM QUALIFYING
    6  FINANCIAL INSTRUMENTS PURSUANT TO SUBPARAGRAPH ONE OF PARAGRAPH  (A)  OF
    7  SUBDIVISION  FIVE  OF  SECTION  TWO  HUNDRED TEN-A OF THIS ARTICLE SHALL
    8  APPLY TO ALL MEMBERS OF THE COMBINED GROUP.
    9    6. LIABILITY OF COMBINED GROUP MEMBERS. EVERY MEMBER OF  THE  COMBINED
   10  GROUP  THAT  IS  SUBJECT  TO TAX UNDER THIS ARTICLE SHALL BE JOINTLY AND
   11  SEVERALLY LIABLE FOR THE TAX DUE PURSUANT TO A COMBINED REPORT.
   12    7. DESIGNATED AGENT. EACH COMBINED GROUP  SHALL  HAVE  ONE  DESIGNATED
   13  AGENT,  WHICH  SHALL  BE  A TAXPAYER. THE DESIGNATED AGENT IS THE PARENT
   14  CORPORATION OF THE COMBINED GROUP. IF THERE IS  NO  SUCH  PARENT  CORPO-
   15  RATION, OR THE PARENT CORPORATION IS NOT A TAXPAYER, THEN ANOTHER MEMBER
   16  OF  THE COMBINED GROUP THAT IS A TAXPAYER MAY BE APPOINTED AS THE DESIG-
   17  NATED AGENT. ONLY THE DESIGNATED AGENT MAY ACT ON BEHALF OF THE  MEMBERS
   18  OF THE COMBINED GROUP FOR MATTERS RELATING TO THE COMBINED REPORT.
   19    S  19.  Subdivisions  2-a,  3,  4 and 5 of section 211 of the tax law,
   20  subdivision 2-a as added and subdivision 5 as amended by chapter 817  of
   21  the laws of 1987, subdivision 3 as amended by chapter 770 of the laws of
   22  1992,  subdivision 4 as amended by section 2 of part T of chapter 407 of
   23  the laws of 1999, the opening  paragraph  and  the  second  undesignated
   24  paragraph  of  paragraph  (a)  of subdivision 4 as amended by section 1,
   25  subparagraph 4 of paragraph (a) of subdivision 4 as amended  by  section
   26  2,  and  subparagraph  5 of paragraph (a) of subdivision 4 as amended by
   27  section 3 of part J of chapter 60 of the laws of 2007, subparagraph 6 of
   28  paragraph (a) of subdivision 4 as added by section  3  of  part  FF1  of
   29  chapter  57  of  the  laws  of  2008, subparagraph 7 of paragraph (a) of
   30  subdivision 4 as added by section 2 and subparagraph 1 of paragraph  (b)
   31  of subdivision 4 as amended by section 3 of part E1 of chapter 57 of the
   32  laws of 2009, are amended to read as follows:
   33    2-a.  The  [tax commission] COMMISSIONER may prescribe regulations and
   34  instructions requiring returns of information to be made  and  filed  in
   35  conjunction  with  the reports required to be filed pursuant to [section
   36  two hundred eleven] THIS ARTICLE, relating to payments  made  to  share-
   37  holders  owning,  directly  or indirectly, individually or in the aggre-
   38  gate, more than fifty percent of the issued capital stock of the taxpay-
   39  er, where such payments are treated  as  payments  of  interest  in  the
   40  computation of entire net income [or minimum taxable income] reported on
   41  such reports.
   42    3.  If  the  amount  of taxable income [or alternative minimum taxable
   43  income] for any year of any taxpayer (including any taxpayer  which  has
   44  elected  to  be  taxed under subchapter s of chapter one of the internal
   45  revenue code), as returned to the United States treasury  department  is
   46  changed  or  corrected  by the commissioner of internal revenue or other
   47  officer of the United States or other competent authority,  or  where  a
   48  renegotiation  of  a  contract  or  subcontract  with  the United States
   49  results in a change in taxable income [or  alternative  minimum  taxable
   50  income],  such  taxpayer  shall report such changed or corrected taxable
   51  income [or alternative minimum taxable income], or the results  of  such
   52  renegotiation,  within  ninety  days (or one hundred twenty days, in the
   53  case of a taxpayer making a combined report under this article for  such
   54  year)  after  the  final  determination  of such change or correction or
   55  renegotiation, or as required by the commissioner, and shall concede the
   56  accuracy of such determination or state wherein  it  is  erroneous.  The
       S. 6359                            107                           A. 8559
    1  allowance of a tentative carryback adjustment based upon a net operating
    2  loss  carryback or net capital loss carryback pursuant to section sixty-
    3  four hundred eleven of the internal revenue code, as amended,  shall  be
    4  treated  as  a final determination for purposes of this subdivision. Any
    5  taxpayer filing an amended return with such department shall  also  file
    6  within ninety days (OR ONE HUNDRED TWENTY DAYS, IN THE CASE OF A TAXPAY-
    7  ER MAKING A COMBINED REPORT UNDER THIS ARTICLE FOR SUCH YEAR) thereafter
    8  an amended report with the commissioner.
    9    4.  [(a)  Combined  reports permitted or required. Any taxpayer, which
   10  owns or controls either directly or  indirectly  substantially  all  the
   11  capital  stock  of  one or more other corporations, or substantially all
   12  the capital stock of which is owned or  controlled  either  directly  or
   13  indirectly  by  one or more other corporations or by interests which own
   14  or control either directly or indirectly substantially all  the  capital
   15  stock  of  one  or  more other corporations, (hereinafter referred to in
   16  this paragraph as "related corporations"), shall make a combined  report
   17  covering  any  related corporations if there are substantial intercorpo-
   18  rate transactions among the  related  corporations,  regardless  of  the
   19  transfer price for such intercorporate transactions. It is not necessary
   20  that  there  be  substantial intercorporate transactions between any one
   21  corporation and every other related corporation. It is necessary, howev-
   22  er, that there be substantial intercorporate  transactions  between  the
   23  taxpayer  and  a  related  corporation  or collectively, a group of such
   24  related corporations. The report shall set forth such information as the
   25  commissioner may require, subject to the provisions of subparagraphs one
   26  through five of this paragraph.
   27    In determining whether there  are  substantial  intercorporate  trans-
   28  actions, the commissioner shall consider and evaluate all activities and
   29  transactions  of  the  taxpayer and its related corporations. Activities
   30  and transactions that will be considered include, but  are  not  limited
   31  to:  (i)  manufacturing,  acquiring  goods  or  property,  or performing
   32  services, for related corporations; (ii)  selling  goods  acquired  from
   33  related  corporations;  (iii)  financing  sales of related corporations;
   34  (iv) performing related customer services using  common  facilities  and
   35  employees for related corporations; (v) incurring expenses that benefit,
   36  directly  or  indirectly,  one  or  more  related corporations, and (vi)
   37  transferring assets,  including  such  assets  as  accounts  receivable,
   38  patents or trademarks from one or more related corporations.
   39    (1)  Any  corporation  which owns or controls either directly or indi-
   40  rectly substantially all the capital stock of a DISC not exempt from tax
   41  under paragraph (i) of subdivision nine of section two hundred eight  of
   42  this  article  shall be allowed, at the election of such corporation, to
   43  make a report on a combined basis covering such DISC, but the failure of
   44  such corporation to make such election shall not  prohibit  the  commis-
   45  sioner  from  requiring  a combined report covering such corporation and
   46  such DISC.
   47    (2)(i) No taxpayer may be permitted to make a  report  on  a  combined
   48  basis  covering  any  such other corporations where such taxpayer or any
   49  such other corporation  allocates  in  accordance  with  clause  (A)  of
   50  subparagraph  seven of paragraph (a) of subdivision three of section two
   51  hundred ten of this article (relating to aviation corporations) and such
   52  taxpayer or any such other corporation does not so allocate, unless such
   53  taxpayer or such other corporation is a qualified air freight  forwarder
   54  with  respect  to such other corporation or such taxpayer, respectively,
   55  and all taxpayers included on such combined report elect, by filing such
       S. 6359                            108                           A. 8559
    1  combined report,  to  have  such  qualified  air  freight  forwarder  so
    2  included.
    3    (ii)  A  corporation is a qualified air freight forwarder with respect
    4  to another corporation:
    5    (A) if it owns or controls either directly or indirectly  all  of  the
    6  capital  stock of such other corporation, or if all of its capital stock
    7  is owned or controlled either  directly  or  indirectly  by  such  other
    8  corporation,  or  if  all  of  the capital stock of both corporations is
    9  owned or controlled either directly or indirectly by the same interests,
   10    (B) if it is principally  engaged  in  the  business  of  air  freight
   11  forwarding, and
   12    (C)  if  its air freight forwarding business is carried on principally
   13  with the airline or airlines operated by such other corporation.
   14    (3) No taxpayer may be permitted to make a report on a combined  basis
   15  covering  any  such  other  corporations where such taxpayer or any such
   16  other corporation allocates in accordance  with  subparagraph  eight  of
   17  paragraph  (a)  of  subdivision three of section two hundred ten of this
   18  article (relating  to  railroad  and  trucking  corporations)  and  such
   19  taxpayer or any such other corporation does not so allocate.
   20    (4)  Except  as  provided  in the first undesignated paragraph of this
   21  paragraph, no combined report covering any corporation shall be required
   22  unless the commissioner  deems  such  a  report  necessary,  because  of
   23  inter-company transactions or some agreement, understanding, arrangement
   24  or transaction referred to in subdivision five of this section, in order
   25  properly to reflect the tax liability under this article.
   26    (5) A corporation organized under the laws of a country other than the
   27  United  States  shall not be required or permitted to make a report on a
   28  combined basis.
   29    (6) (i) For purposes of this subparagraph, the term "closest  control-
   30  ling stockholder" means the corporation that indirectly owns or controls
   31  over fifty percent of the voting stock of a captive REIT or captive RIC,
   32  is subject to tax under this article, article thirty-two or thirty-three
   33  of  this  chapter  or  otherwise  required  to be included in a combined
   34  return or report under this article, article thirty-two or  thirty-three
   35  of  this  chapter,  and  is the fewest tiers of corporations away in the
   36  ownership structure from the captive REIT or captive RIC.   The  commis-
   37  sioner  is  authorized  to prescribe by regulation or published guidance
   38  the criteria for determining the closest controlling stockholder.
   39    (ii) A captive REIT or a captive RIC must be included  in  a  combined
   40  report  with  the  corporation that directly owns or controls over fifty
   41  percent of the voting stock of the captive REIT or captive RIC  if  that
   42  corporation  is  subject to tax or required to be included in a combined
   43  report under this article.
   44    (iii) If over fifty percent of the voting stock of a captive  REIT  or
   45  captive RIC is not directly owned or controlled by a corporation that is
   46  subject  to  tax  or  required to be included in a combined report under
   47  this article, then the captive REIT or captive RIC must be included in a
   48  combined return or report with  the  corporation  that  is  the  closest
   49  controlling stockholder of the captive REIT or captive RIC. If the clos-
   50  est  controlling  stockholder  of  the  captive  REIT  or captive RIC is
   51  subject to tax or otherwise required to be included in a combined report
   52  under this article, then  the  captive  REIT  or  captive  RIC  must  be
   53  included in a combined report under this article.
   54    (iv)  If  the  corporation  that  directly owns or controls the voting
   55  stock of the captive REIT or captive RIC is  described  in  subparagraph
   56  two,  three  or five of this paragraph as a corporation not permitted to
       S. 6359                            109                           A. 8559
    1  make a combined report, then the provisions  in  clause  (iii)  of  this
    2  subparagraph  must  be  applied  to  determine  the corporation in whose
    3  combined return or report the captive REIT  or  captive  RIC  should  be
    4  included.  If,  under clause (iii) of this subparagraph, the corporation
    5  that is the closest controlling  stockholder  of  the  captive  REIT  or
    6  captive  RIC  is  described  in  subparagraph two, three or five of this
    7  paragraph as a corporation not permitted to make a combined return, then
    8  that corporation is deemed to not be in the ownership structure  of  the
    9  captive  REIT  or  captive  RIC, and the closest controlling stockholder
   10  will be determined without regard to that corporation.
   11    (v) If a captive REIT owns the stock of a  qualified  REIT  subsidiary
   12  (as  defined in paragraph two of subsection (i) of section eight hundred
   13  fifty-six of the internal revenue code), then the qualified REIT subsid-
   14  iary must be included in a combined report with the captive REIT.
   15    (vi) If a captive REIT or a captive RIC is required under this subpar-
   16  agraph to be included in a combined report with another corporation, and
   17  that other corporation is also required to be  included  in  a  combined
   18  report with another related corporation or corporations under this para-
   19  graph, then the captive REIT or the captive RIC must be included in that
   20  combined report with those corporations.
   21    (vii)  If  a  captive  REIT  or  a  captive  RIC is not required to be
   22  included in a combined report with another corporation under clause (ii)
   23  or (iii) of this  subparagraph,  or  in  a  combined  return  under  the
   24  provisions of either subparagraph (v) of paragraph two of subsection (f)
   25  of  section  fourteen hundred sixty-two or paragraph four of subdivision
   26  (f) of section fifteen hundred fifteen of this chapter, then the captive
   27  REIT or captive RIC is subject to the opening provisions of  this  para-
   28  graph  and  the  provisions  of subparagraph four of this paragraph. The
   29  captive REIT or captive RIC must be included in a combined report  under
   30  this  article  with another corporation if either the substantial inter-
   31  corporate transactions requirement in the  opening  provisions  of  this
   32  paragraph or the inter-company transactions or agreement, understanding,
   33  arrangement  or  transaction  requirement  of  subparagraph four of this
   34  paragraph is satisfied and more than fifty percent of the  voting  stock
   35  of  the  captive  REIT  or  the captive RIC and substantially all of the
   36  capital stock of  that  other  corporation  are  owned  and  controlled,
   37  directly or indirectly, by the same corporation.
   38    (7)  (i) For purposes of this subparagraph, the term "closest control-
   39  ling stockholder" means the corporation that indirectly owns or controls
   40  over fifty percent of the voting stock  of  an  overcapitalized  captive
   41  insurance company; is subject to tax under this article or article thir-
   42  ty-two  of  this  chapter,  or is otherwise required to be included in a
   43  combined return or report under this article or  article  thirty-two  of
   44  this chapter; and is the fewest tiers of corporations away in the owner-
   45  ship  structure from the overcapitalized captive insurance company.  The
   46  commissioner is authorized to prescribe by regulation or published guid-
   47  ance the criteria for determining the closest controlling stockholder.
   48    (ii) An overcapitalized captive insurance company must be included  in
   49  a  combined  report  with the corporation that directly owns or controls
   50  over fifty percent of the voting stock of  the  overcapitalized  captive
   51  insurance  company  if that corporation is subject to tax or required to
   52  be included in a combined report under this article.
   53    (iii) If over fifty percent of the voting stock of an  overcapitalized
   54  captive  insurance  company  is  not  directly  owned or controlled by a
   55  corporation that is subject to tax or  required  to  be  included  in  a
   56  combined  report  under  this  article, then the overcapitalized captive
       S. 6359                            110                           A. 8559
    1  insurance company must be included in a combined return or  report  with
    2  the corporation that is the closest controlling stockholder of the over-
    3  capitalized captive insurance company. If the closest controlling stock-
    4  holder  of  the  overcapitalized captive insurance company is subject to
    5  tax or otherwise required to be included in a combined report under this
    6  article, then the overcapitalized  captive  insurance  company  must  be
    7  included in a combined report under this article.
    8    (iv)  If  the  corporation  that  directly owns or controls the voting
    9  stock of the overcapitalized captive insurance company is  described  in
   10  subparagraph  two, three, or five of this paragraph as a corporation not
   11  permitted to make a combined report, then the provisions in clause (iii)
   12  of this subparagraph must be applied to  determine  the  corporation  in
   13  whose  combined  return  or report the overcapitalized captive insurance
   14  company should be included. If, under clause (iii) of this subparagraph,
   15  the corporation that is the closest controlling stockholder of the over-
   16  capitalized captive insurance company is described in subparagraph  two,
   17  three or five of this paragraph as a corporation not permitted to make a
   18  combined return, then that corporation is deemed not to be in the owner-
   19  ship structure of the overcapitalized captive insurance company, and the
   20  closest  controlling  stockholder  will  be determined without regard to
   21  that corporation.
   22    (v) If an overcapitalized captive insurance company is required  under
   23  this  subparagraph  to  be  included  in  a combined report with another
   24  corporation, and that other corporation is also required to be  included
   25  in  a  combined  report with another related corporation or corporations
   26  under this paragraph, then the overcapitalized captive insurance company
   27  must be included in that combined report with those corporations.
   28    (vi) If an overcapitalized captive insurance company is  not  required
   29  to  be  included  in  a  combined  report with another corporation under
   30  clause (ii) or (iii) of this subparagraph, or in a combined return under
   31  the provisions of subparagraph (v) of paragraph two of subsection (f) of
   32  section fourteen hundred sixty-two of this chapter, then  the  overcapi-
   33  talized  captive  insurance company is subject to the opening provisions
   34  of this paragraph and the provisions of subparagraph four of this  para-
   35  graph. The overcapitalized captive insurance company must be included in
   36  a  combined report under this article with another corporation if either
   37  the substantial intercorporate transactions requirement in  the  opening
   38  provisions of this paragraph or the inter-company transactions or agree-
   39  ment,  understanding, arrangement or transaction requirement of subpara-
   40  graph four of this paragraph is satisfied,  and  both  more  than  fifty
   41  percent  of  the  voting  stock of the overcapitalized captive insurance
   42  company and substantially all of the capital stock of that other  corpo-
   43  ration  are  owned  and  controlled, directly or indirectly, by the same
   44  corporation.
   45    (b) Computation. (1) Tax. (i) In the case of a combined report the tax
   46  shall be measured by the combined entire net  income,  combined  minimum
   47  taxable  income,  combined  pre-nineteen  hundred ninety minimum taxable
   48  income or combined capital, of all  the  corporations  included  in  the
   49  report,  including  any  captive  REIT,  captive  RIC or overcapitalized
   50  captive insurance company; provided, however, in no event shall the  tax
   51  measured by combined capital exceed the limitation provided for in para-
   52  graph (b) of subdivision one of section two hundred ten of this article.
   53    (ii)  In the case of a captive REIT or captive RIC required under this
   54  subdivision to be included in a combined report, entire net income  must
   55  be computed as required under subdivision five (in the case of a captive
   56  REIT) or subdivision seven (in the case of a captive RIC) of section two
       S. 6359                            111                           A. 8559
    1  hundred  nine of this article. However, the deduction under the internal
    2  revenue code for dividends paid by the captive REIT or  captive  RIC  to
    3  any  member  of  the affiliated group that includes the corporation that
    4  directly  or  indirectly  owns over fifty percent of the voting stock of
    5  the captive REIT or captive RIC shall not be allowed for  taxable  years
    6  beginning  on  or  after  January  first,  two  thousand eight. The term
    7  "affiliated group"  means  "affiliated  group"  as  defined  in  section
    8  fifteen hundred four of the internal revenue code, but without regard to
    9  the exceptions provided for in subsection (b) of that section.
   10    (iii)  In  the  case  of  an overcapitalized captive insurance company
   11  required under this subdivision to be included  in  a  combined  report,
   12  entire  net  income  must be computed as required by subdivision nine of
   13  section two hundred eight of this article.
   14    (2) Tax bases. In computing combined entire net income, combined mini-
   15  mum taxable income or combined pre-nineteen hundred ninety minimum taxa-
   16  ble income intercorporate dividends shall be  eliminated,  in  computing
   17  combined  business  and  investment capital intercorporate stockholdings
   18  and intercorporate bills, notes and accounts receivable and payable  and
   19  other  intercorporate  indebtedness shall be eliminated and in computing
   20  combined subsidiary capital intercorporate stockholdings shall be elimi-
   21  nated, provided, however, that intercorporate dividends from a DISC or a
   22  former DISC not exempt from tax under paragraph (i) of subdivision  nine
   23  of  section two hundred eight of this article which are taxable as busi-
   24  ness income under this article shall not be eliminated.
   25    (3) Air freight forwarders: allocation. Notwithstanding any  provision
   26  of law to the contrary, where a combined report includes a qualified air
   27  freight  forwarder  and a corporation described in subparagraph seven of
   28  paragraph (a) of subdivision three of section two hundred  ten  of  this
   29  chapter  (relating  to aviation corporations), in computing the combined
   30  business allocation percentage such subparagraph seven shall be  applied
   31  with  respect  to  such  qualified air freight forwarder] FOR PROVISIONS
   32  RELATING TO COMBINED REPORTS, SEE SECTION  TWO  HUNDRED  TEN-C  OF  THIS
   33  ARTICLE.
   34    5.  In  case it shall appear to the [tax commission] COMMISSIONER that
   35  any agreement, understanding or arrangement exists between the  taxpayer
   36  and  any  other corporation or any person or firm, whereby the activity,
   37  business, income or capital of the taxpayer within the state is  improp-
   38  erly  or  inaccurately  reflected,  the [tax commission] COMMISSIONER is
   39  authorized and empowered, in [its] THE COMMISSIONER'S discretion and  in
   40  such  manner  as [it] THE COMMISSIONER may determine, to adjust items of
   41  income, deductions and capital, and to eliminate assets in computing any
   42  [allocation] APPORTIONMENT percentage  provided  only  that  any  income
   43  directly  traceable  thereto  be  also  excluded from entire net income,
   44  [minimum taxable income or pre-nineteen hundred ninety  minimum  taxable
   45  income,]  so  as  equitably to determine the tax. Where (a) any taxpayer
   46  conducts its activity or business under any  agreement,  arrangement  or
   47  understanding in such manner as either directly or indirectly to benefit
   48  its  members  or  stockholders, or any of them, or any person or persons
   49  directly or indirectly interested  in  such  activity  or  business,  by
   50  entering  into  any transaction at more or less than a fair price which,
   51  but for such agreement, arrangement or understanding,  might  have  been
   52  paid or received therefor, or (b) any taxpayer, a substantial portion of
   53  whose  capital  stock  is owned either directly or indirectly by another
   54  corporation, enters into any transaction with such other corporation  on
   55  such terms as to create an improper loss or net income, the [tax commis-
   56  sion]  COMMISSIONER may include in the entire net income[, minimum taxa-
       S. 6359                            112                           A. 8559
    1  ble income or pre-nineteen hundred ninety minimum taxable income] of the
    2  taxpayer the fair profits which, but for such agreement, arrangement  or
    3  understanding,  the  taxpayer  might have derived from such transaction.
    4  WHERE ANY TAXPAYER OWNS, DIRECTLY OR INDIRECTLY, MORE THAN FIFTY PERCENT
    5  OF THE CAPITAL STOCK OF ANOTHER CORPORATION SUBJECT TO TAX UNDER SECTION
    6  FIFTEEN HUNDRED TWO-A OF THIS CHAPTER AND FIFTY PERCENT OR LESS OF WHOSE
    7  GROSS RECEIPTS FOR THE TAXABLE YEAR CONSIST OF PREMIUMS, THE COMMISSION-
    8  ER  MAY  INCLUDE  IN  THE ENTIRE NET INCOME OF THE TAXPAYER, AS A DEEMED
    9  DISTRIBUTION, THE AMOUNT OF THE NET INCOME OF THE OTHER CORPORATION THAT
   10  IS IN EXCESS OF ITS NET PREMIUM INCOME.
   11    S 19-a. Subdivision 13 of section 211 of the tax law is REPEALED.
   12    S 20.  Subdivision 11 of section 2 of the tax law, as added by section
   13  1 of part E-1 of chapter 57 of the laws of 2009, is amended to  read  as
   14  follows:
   15    11.  The term "[overcapitalized] COMBINABLE captive insurance company"
   16  means an entity that is treated as an association taxable  as  a  corpo-
   17  ration  under  the  internal revenue code (a) more than fifty percent of
   18  the voting stock of which is owned or controlled, directly or  indirect-
   19  ly,  by  a  single entity that is treated as an association taxable as a
   20  corporation under the internal revenue code and not exempt from  federal
   21  income  tax;  (b)  that is licensed as a captive insurance company under
   22  the laws of this state or another jurisdiction; AND (c)  whose  business
   23  includes  providing,  directly  and indirectly, insurance or reinsurance
   24  covering the risks of  its  parent  and/or  members  of  its  affiliated
   25  group[;  and  (d)  fifty percent or less of whose gross receipts for the
   26  taxable year consist of premiums].   For purposes of  this  subdivision,
   27  "affiliated group" has the same meaning as that term is given in section
   28  1504  of  the internal revenue code, except that the term "common parent
   29  corporation" in that section is deemed to mean any person, as defined in
   30  section 7701 of the internal revenue code[;] AND references to "at least
   31  eighty percent" in section 1504 of the internal revenue code are  to  be
   32  read  as  "fifty  percent or more;" section 1504 of the internal revenue
   33  code is to be read without regard to  the  exclusions  provided  for  in
   34  subsection (b) of that section[; "premiums" has the same meaning as that
   35  term  is  given  in  paragraph one of subdivision (c) of section fifteen
   36  hundred ten of this chapter, except that it includes  consideration  for
   37  annuity  contracts and excludes any part of the consideration for insur-
   38  ance, reinsurance or annuity contracts that do  not  provide  bona  fide
   39  insurance,   reinsurance  or  annuity  benefits;  and  "gross  receipts"
   40  includes the amounts included in gross receipts for purposes of  section
   41  501(c) (15) of the internal revenue code, except that those amounts also
   42  include all premiums as defined in this subdivision].
   43    S  21.  Subdivision  (a) of section 1500 of the tax law, as separately
   44  amended by section 1 of part B-1 and section 8 of part E-1 of chapter 57
   45  of the laws of 2009, is amended to read as follows:
   46    (a) The term "insurance corporation" includes a  corporation,  associ-
   47  ation,  joint stock company or association, person, society, aggregation
   48  or partnership, by whatever name known,  doing  an  insurance  business,
   49  and, notwithstanding the provisions of section fifteen hundred twelve of
   50  this  article,  shall  include  (1) a risk retention group as defined in
   51  subsection (n) of section five thousand nine hundred two of  the  insur-
   52  ance  law,  (2)  the state insurance fund and (3) a corporation, associ-
   53  ation, joint stock company or association, person, society,  aggregation
   54  or  partnership  doing an insurance business as a member of the New York
   55  insurance exchange described in section six thousand two hundred one  of
   56  the  insurance  law.  The  definition  of  the  "state  insurance  fund"
       S. 6359                            113                           A. 8559
    1  contained in this subdivision shall be limited  in  its  effect  to  the
    2  provisions  of  this  article and the related provisions of this chapter
    3  and shall have no force and effect  other  than  with  respect  to  such
    4  provisions.  The  term  "insurance  corporation"  shall  also  include a
    5  captive insurance company doing a captive insurance business, as defined
    6  in subsections (c) and (b), respectively, of section seven thousand  two
    7  of  the  insurance law; provided, however, "insurance corporation" shall
    8  not include the metropolitan transportation authority, or a public bene-
    9  fit corporation or not-for-profit corporation formed by a  city  with  a
   10  population  of one million or more pursuant to subsection (a) of section
   11  seven thousand five of the insurance law, each  of  which  is  expressly
   12  exempt  from the payment of fees, taxes or assessments, whether state or
   13  local; and provided further "insurance corporation" does not include any
   14  [overcapitalized] COMBINABLE captive insurance company. The term "insur-
   15  ance corporation" shall also include an unauthorized  insurer  operating
   16  from  an  office  within  the  state,  pursuant  to  paragraph  five  of
   17  subsection (b) of section one thousand one hundred  one  and  subsection
   18  (i)  of section two thousand one hundred seventeen of the insurance law.
   19  The term "insurance corporation"  also  includes  a  health  maintenance
   20  organization required to obtain a certificate of authority under article
   21  forty-four of the public health law.
   22    S  22. Subdivision (a) of section 1502-b of the tax law, as amended by
   23  section 9 of part E-1 of chapter 57 of the laws of 2009 and  as  further
   24  amended  by  section 104 of part A of chapter 62 of the laws of 2011, is
   25  amended to read as follows:
   26    (a) In lieu of the taxes and tax surcharge imposed by sections fifteen
   27  hundred one, fifteen hundred two-a, fifteen hundred five-a, and  fifteen
   28  hundred ten of this article, every captive insurance company licensed by
   29  the  superintendent  of financial services pursuant to the provisions of
   30  article seventy of the insurance law, other than the metropolitan trans-
   31  portation authority and a public benefit corporation  or  not-for-profit
   32  corporation  formed  by  a city with a population of one million or more
   33  pursuant to subsection (a) of section seven thousand five of the  insur-
   34  ance  law,  each  of which is expressly exempt from the payment of fees,
   35  taxes or assessments whether state or local, and other than [an overcap-
   36  italized] COMBINABLE captive insurance company, shall, for the privilege
   37  of exercising its corporate franchise, pay a tax on (1) all gross direct
   38  premiums, less return premiums thereon,  written  on  risks  located  or
   39  resident  in  this  state and (2) all assumed reinsurance premiums, less
   40  return premiums thereon, written on risks located or  resident  in  this
   41  state.  The  rate  of  the tax imposed on gross direct premiums shall be
   42  four-tenths of one percent on all  or  any  part  of  the  first  twenty
   43  million  dollars  of premiums, three-tenths of one percent on all or any
   44  part of the second twenty million dollars of premiums, two-tenths of one
   45  percent on all or any part of the third twenty million dollars of premi-
   46  ums, and seventy-five thousandths of  one  percent  on  each  dollar  of
   47  premiums thereafter. The rate of the tax on assumed reinsurance premiums
   48  shall  be  two  hundred twenty-five thousandths of one percent on all or
   49  any part of the first twenty million dollars of  premiums,  one  hundred
   50  and  fifty  thousandths  of one percent on all or any part of the second
   51  twenty million dollars of premiums, fifty thousandths of one percent  on
   52  all  or  any  part  of  the third twenty million dollars of premiums and
   53  twenty-five thousandths of one percent on each dollar of premiums there-
   54  after. The tax imposed by this section shall be equal to the greater  of
   55  (i)  the  sum  of  the  tax imposed on gross direct premiums and the tax
   56  imposed on assumed reinsurance premiums or (ii) five thousand dollars.
       S. 6359                            114                           A. 8559
    1    S 23. Paragraph 4 of subdivision (f) of section 1515 of the  tax  law,
    2  as amended by section 16 of part FF-1 of chapter 57 of the laws of 2008,
    3  is amended to read as follows:
    4    (4)(i)  For  purposes of this paragraph, the term "closest controlling
    5  stockholder" means the corporation that indirectly owns or controls over
    6  fifty percent of the voting stock of a captive REIT or captive  RIC,  is
    7  subject  to  tax under section fifteen hundred one of this article[,] OR
    8  article nine-A [or article thirty-two] of this chapter or required to be
    9  included in a combined return or report under this article[,] OR article
   10  nine-A [or article thirty-two] of this chapter, and is the fewest  tiers
   11  of corporations away in the ownership structure from the captive REIT or
   12  captive  RIC.  The commissioner is authorized to prescribe by regulation
   13  or published guidance the criteria for determining the closest  control-
   14  ling stockholder.
   15    (ii)  A  captive  REIT or a captive RIC must be included in a combined
   16  return with the corporation that directly owns or  controls  over  fifty
   17  percent  of  the voting stock of the captive REIT or captive RIC if that
   18  corporation is a life insurance corporation and is  subject  to  tax  or
   19  required to be included in a combined return under this article.
   20    (iii)  If  over fifty percent of the voting stock of a captive REIT or
   21  captive RIC is not directly owned or  controlled  by  a  life  insurance
   22  corporation  that  is  subject  to  tax  or required to be included in a
   23  combined return under this article, [then the captive  REIT  or  captive
   24  RIC must be included in a combined report or return with the corporation
   25  that  is  the  closest  controlling  stockholder  of the captive REIT or
   26  captive RIC. If] AND the closest controlling stockholder of the  captive
   27  REIT  or  captive RIC is a life insurance corporation that is subject to
   28  tax or required to be included in a combined return under this  article,
   29  then  the  captive  REIT  or  captive RIC must be included in a combined
   30  return WITH THE CLOSEST CONTROLLING STOCKHOLDER under this article.
   31    (iv) If a captive REIT owns the stock of a qualified  REIT  subsidiary
   32  (as  defined in paragraph two of subsection (i) of section eight hundred
   33  fifty-six of the internal revenue code) AND THE CAPTIVE REIT IS REQUIRED
   34  TO BE INCLUDED IN A COMBINED RETURN UNDER SUBPARAGRAPHS (II) OR (III) OF
   35  THIS PARAGRAPH, then the qualified REIT subsidiary must be  included  in
   36  any  combined  return  required to be made by the captive REIT that owns
   37  the stock of the qualified REIT subsidiary.
   38    (v) If a captive REIT or a captive RIC is required  under  this  para-
   39  graph  to be included in a combined return with another corporation, and
   40  that other corporation is required to be included in a  combined  return
   41  with  another  [related]  corporation  under  this subdivision, then the
   42  captive REIT or the captive RIC must be included in that combined return
   43  with the other [related] corporation.
   44    S 24. Subdivisions (a), (b) and (c) of section 12 of the tax  law,  as
   45  added  by  chapter  615  of  the  laws  of  1998, are amended to read as
   46  follows:
   47    (a) For purposes of subdivision (b) of this section, the term "person"
   48  shall mean a corporation, joint stock company or association,  insurance
   49  corporation,  or  banking  corporation,  as  such  terms  are defined in
   50  section one  hundred  eighty-three,  one  hundred  eighty-four,  or  one
   51  hundred  eighty-six,  or in article nine-A[, thirty-two] or thirty-three
   52  of this chapter, imposing tax on such entities.
   53    (b) No person shall be subject to the taxes imposed under section  one
   54  hundred eighty-three, one hundred eighty-four or one hundred eighty-six,
   55  or  article nine-A[, thirty-two] or thirty-three of this chapter, solely
   56  by reason of (1)  having its advertising stored on  a  server  or  other
       S. 6359                            115                           A. 8559
    1  computer  equipment  located in this state (other than a server or other
    2  computer equipment owned or leased by such person), or  (2)  having  its
    3  advertising  disseminated  or displayed on the Internet by an individual
    4  or  entity  subject  to  tax under section one hundred eighty-three, one
    5  hundred eighty-four or one hundred eighty-six, or article nine-A,  twen-
    6  ty-two[, thirty-two] or thirty-three of this chapter.
    7    (c)  A  person,  as such term is defined in subdivision (a) of section
    8  eleven hundred one of this chapter, shall not be deemed to be a  vendor,
    9  for  purposes  of article twenty-eight of this chapter, solely by reason
   10  of (1)  having its advertising stored on  a  server  or  other  computer
   11  equipment  located  in this state (other than a server or other computer
   12  equipment owned or leased by such person), or (2) having its advertising
   13  disseminated or displayed on the Internet by  an  individual  or  entity
   14  subject  to  tax  under  section  one  hundred eighty-three, one hundred
   15  eighty-four or one hundred eighty-six, or article  nine-A,  twenty-two[,
   16  thirty-two] or thirty-three of this chapter.
   17    S  25. Paragraph 1 of subdivision (a) of section 14 of the tax law, as
   18  amended by section 3 of part V1 of chapter 109 of the laws of  2006,  is
   19  amended to read as follows:
   20    (1)  except as provided in paragraphs one-a and one-b of this subdivi-
   21  sion, for purposes of section one hundred  eighty-seven-j  and  articles
   22  nine-A,  twenty-two[,  thirty-two] and thirty-three of this chapter, for
   23  each of the taxable years within  the  "business  tax  benefit  period,"
   24  which  period  shall consist of (A) in the case of a business enterprise
   25  with a test date occurring on or before December thirty-first, two thou-
   26  sand one, the first fifteen taxable years beginning on or after  January
   27  first, two thousand one, (B) in the case of a business enterprise with a
   28  test  date  occurring  on  or after January first, two thousand two, but
   29  prior to April first, two thousand five, the fifteen taxable years  next
   30  following  the business enterprise's test year, and (C) in the case of a
   31  business enterprise which is first certified under article eighteen-B of
   32  the general municipal law on or after April first,  two  thousand  five,
   33  the  ten taxable years starting with the taxable year in which the busi-
   34  ness enterprise's first date of certification under  article  eighteen-B
   35  of  the  general  municipal law occurs, but only with respect to each of
   36  such business tax benefit period years for which the employment test  is
   37  met,
   38    S  26.  Subdivision  (f)  of  section 14 of the tax law, as amended by
   39  section 10 of part CC of chapter 85 of the laws of 2002, is  amended  to
   40  read as follows:
   41    (f)  Taxable  year.  The term "taxable year" means the taxable year of
   42  the business enterprise under  section  one  hundred  eighty-three,  one
   43  hundred  eighty-four,  one  hundred  eighty-five  or  former section one
   44  hundred eighty-six of article nine, or  under  article  nine-A,  twenty-
   45  two[,  thirty-two] or thirty-three of this chapter. If a business enter-
   46  prise does not have a taxable year because it is exempt from taxation or
   47  otherwise not required to file a return under any of  such  sections  of
   48  article  nine or under article nine-A, twenty-two[, thirty-two] or thir-
   49  ty-three, then the term "taxable year" means  (i)  the  business  enter-
   50  prise's federal taxable year, or, (ii) if the enterprise does not have a
   51  federal taxable year, the calendar year.
   52    S  27. Paragraph 1 of subdivision (i) of section 14 of the tax law, as
   53  amended by section 5 of part A of chapter 63 of the  laws  of  2005,  is
   54  amended to read as follows:
   55    (1)  for  purposes  of  section  one hundred eighty-seven-j of article
   56  nine, and articles nine-A, twenty-two[, thirty-two] and thirty-three  of
       S. 6359                            116                           A. 8559
    1  this  chapter, on the first day of the taxable year during which revoca-
    2  tion of its certification under article eighteen-B of the general munic-
    3  ipal law occurs, and
    4    S  28.  Paragraphs 1 and 2 of subdivision (j) of section 14 of the tax
    5  law, as amended by section 10 of part CC of chapter 85 of  the  laws  of
    6  2002, are amended to read as follows:
    7    (1) A new business shall include any corporation, except a corporation
    8  which  is substantially similar in operation and in ownership to a busi-
    9  ness entity (or entities) taxable, or previously taxable, under  section
   10  one  hundred  eighty-three, one hundred eighty-four, one hundred eighty-
   11  five or one hundred eighty-six of article nine; article nine-A[, article
   12  thirty-two] or thirty-three of this  chapter;  article  twenty-three  of
   13  this  chapter or which would have been subject to tax under such article
   14  twenty-three (as such article was in effect on January  first,  nineteen
   15  hundred  eighty), ARTICLE THIRTY-TWO OF THIS CHAPTER OR WHICH WOULD HAVE
   16  BEEN SUBJECT TO TAX UNDER SUCH ARTICLE THIRTY-TWO (AS SUCH  ARTICLE  WAS
   17  IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN) or the income
   18  (or  losses) of which is (or was) includable under article twenty-two of
   19  this chapter.
   20    (2) For purposes of article twenty-two of this chapter, an  individual
   21  who is either a sole proprietor or a member of a partnership shall qual-
   22  ify as an owner of a new business unless the business of which the indi-
   23  vidual  is  an owner is substantially similar in operation and in owner-
   24  ship to a business entity taxable, or previously taxable, under  section
   25  one  hundred  eighty-three, one hundred eighty-four, one hundred eighty-
   26  five or one hundred eighty-six of article nine; article  nine-A[,  thir-
   27  ty-two] or ARTICLE thirty-three of this chapter; article twenty-three of
   28  this  chapter or which would have been subject to tax under such article
   29  twenty-three (as such article was in effect on January  first,  nineteen
   30  hundred  eighty); ARTICLE THIRTY-TWO OF THIS CHAPTER OR WHICH WOULD HAVE
   31  BEEN SUBJECT TO TAX UNDER SUCH ARTICLE THIRTY-TWO AS SUCH ARTICLE WAS IN
   32  EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND  TEN  or  the  income  (or
   33  losses) of which is (or was) includable under article twenty-two.
   34    S  29.  Clauses  (i)  and  (ii)  of subparagraph (A) of paragraph 4 of
   35  subdivision (j) of section 14 of the tax law, as added by section  5  of
   36  part  A  of  chapter  63  of  the  laws  of 2005, are amended to read as
   37  follows:
   38    (i) Notwithstanding paragraphs one and two of this subdivision, a  new
   39  business  shall  include any corporation which is identical in operation
   40  and ownership to a business entity (or entities) taxable  under  section
   41  one  hundred eighty-three, one hundred eighty-four or one hundred eight-
   42  y-five of article nine; article nine-A[, article thirty-two] or  thirty-
   43  three  of  this chapter or the income (or losses) of which is includable
   44  under article twenty-two of this chapter, provided such corporation  and
   45  such  business entity or entities are operating in different counties in
   46  the state.
   47    (ii) Notwithstanding paragraphs one and two of  this  subdivision,  an
   48  individual  who is either a sole proprietor or a member of a partnership
   49  shall qualify as an owner of a new business if the business of which the
   50  individual is an owner is identical in operation and in ownership  to  a
   51  business  entity (or entities) taxable under section one hundred eighty-
   52  three, one hundred eighty-four or one  hundred  eighty-five  of  article
   53  nine; article nine-A[, article thirty-two] or thirty-three of this chap-
   54  ter or the income (or losses) of which is includable under article twen-
   55  ty-two  of this chapter, provided such business and such business entity
   56  or entities are operating in different counties in the state.
       S. 6359                            117                           A. 8559
    1    S 30. Subparagraph (B) of paragraph 4 of subdivision (j) of section 14
    2  of the tax law, as amended by chapter  161  of  the  laws  of  2005,  is
    3  amended to read as follows:
    4    (B) Notwithstanding any provisions of this subdivision to the contrary
    5  and  notwithstanding  subdivision  c  of  section eighteen of part CC of
    6  chapter eighty-five of the laws of two thousand two,  a  corporation  or
    7  partnership,  which  was first certified under article eighteen-B of the
    8  general municipal law before August first, two thousand two, has a  base
    9  period  of  zero  years  or  zero employment for its base period, and is
   10  similar in operation and in ownership to a business entity  or  entities
   11  taxable,  or  previously  taxable, under sections specified in paragraph
   12  one or two of this subdivision or which would have been subject  to  tax
   13  under  article  twenty-three  of  this  chapter  (as such article was in
   14  effect on January first, nineteen hundred eighty) OR  WHICH  WOULD  HAVE
   15  BEEN  SUBJECT  TO  TAX UNDER ARTICLE THIRTY-TWO OF THIS CHAPTER (AS SUCH
   16  ARTICLE WAS IN EFFECT ON DECEMBER THIRTY-FIRST, TWO  THOUSAND  FOURTEEN)
   17  or  the  income  or  losses  of which is or was includable under article
   18  twenty-two of this chapter shall not be deemed a new business if it  was
   19  not  formed  for  a  valid  business purpose, as such term is defined in
   20  clause (D) of subparagraph one of paragraph (o) of subdivision  nine  of
   21  section  two hundred eight of this chapter and was formed solely to gain
   22  empire zone benefits.
   23    S 31. Subdivision (k) of section 14 of the  tax  law,  as  amended  by
   24  section  5  of  part  A of chapter 63 of the laws of 2005, is amended to
   25  read as follows:
   26    (k) If the designation of an area as an empire zone is  no  longer  in
   27  effect  because section nine hundred sixty-nine of the general municipal
   28  law was not amended to extend the effective date of such designation  so
   29  that the designations of all empire zones pursuant to article eighteen-B
   30  of  the  general  municipal law have expired, a business enterprise that
   31  was certified pursuant to article eighteen-B of  the  general  municipal
   32  law  on  the day immediately preceding the day on which such designation
   33  expired shall be deemed to continue to be certified under  such  article
   34  eighteen-B  for purposes of this section, and sections fifteen, sixteen,
   35  section one hundred eighty-seven-j, subdivisions [twenty-seven] FIVE and
   36  [twenty-eight] SIX of section two hundred [ten] TEN-B, subsections  (bb)
   37  and  (cc)  of section six hundred six, subdivision (z) of section eleven
   38  hundred fifteen[, subsections (o) and (p) of  section  fourteen  hundred
   39  fifty-six,]  and  subdivisions  (r)  and  (s) of section fifteen hundred
   40  eleven of this chapter. In addition, if the designation of an area as an
   41  empire zone is no longer in effect because section nine  hundred  sixty-
   42  nine  of  the general municipal law was not amended to extend the effec-
   43  tive date of such designation so that the  designations  of  all  empire
   44  zones  pursuant  to article eighteen-B of the general municipal law have
   45  expired, all references to empire zones in the provisions of this  chap-
   46  ter  listed  in  the  previous  sentence  shall be read as meaning areas
   47  designated as empire zones on the day immediately preceding the  day  on
   48  which such designation expired.
   49    S  32.  Subdivisions  (a)  and  (h)  of  section 15 of the tax law, as
   50  amended by section 5 of part A of chapter 63 of the laws  of  2005,  are
   51  amended to read as follows:
   52    (a)  Allowance  of credit. A taxpayer which is a qualified empire zone
   53  enterprise (QEZE), or which is a sole proprietor of a QEZE or  a  member
   54  of  a  partnership  which  is  a QEZE, and which is subject to tax under
   55  article nine-A, twenty-two[, thirty-two] or thirty-three of  this  chap-
   56  ter,  shall  be  allowed  a  credit  against  such  tax, pursuant to the
       S. 6359                            118                           A. 8559
    1  provisions referenced in subdivision (h) of this section,  for  eligible
    2  real property taxes.
    3    (h) Definitions and cross-references. For definitions of terms used in
    4  this  section  see  section fourteen of this article. For application of
    5  the credit provided for in this section, see the following provisions of
    6  this chapter:
    7    (1) Article 9: Section 187-j.
    8    (2) Article 9-A: Section [210] 210-B: subdivision [27] 5.
    9    (3) Article 22: Section 606: subsections (i) and (bb).
   10    (4) [Article 32: Section 1456: subsection (o).
   11    (5)] Article 33: Section 1511: subdivision (r).
   12    S 33. Subdivision (a) of section 16  of  the  tax  law,  as  added  by
   13  section  2  of  part GG of chapter 63 of the laws of 2000, is amended to
   14  read as follows:
   15    (a) Allowance of credit. A taxpayer which is a qualified  empire  zone
   16  enterprise  (QEZE),  or which is a sole proprietor of a QEZE or a member
   17  of a partnership which is a QEZE, and which  is  subject  to  tax  under
   18  article  nine-A,  twenty-two[, thirty-two] or thirty-three of this chap-
   19  ter, shall be allowed  a  credit  against  such  tax,  pursuant  to  the
   20  provisions referenced in subdivision (g) of this section, to be computed
   21  as hereinafter provided.
   22    S 34. Paragraph 1, clause (ii) of subparagraph (B) of paragraph 2, and
   23  subparagraph  (A) of paragraph 3 of subdivision (f) of section 16 of the
   24  tax law, as amended by section 14 of part CC of chapter 85 of  the  laws
   25  of 2002, are amended to read as follows:
   26    (1) General. The tax factor shall be, in the case of article nine-A of
   27  this  chapter,  the [larger of the amounts] AMOUNT of tax determined for
   28  the taxable year under [paragraphs] PARAGRAPH (a) [and (c)] of  subdivi-
   29  sion  one  of  section  two  hundred ten of such article. The tax factor
   30  shall be, in the case of article twenty-two of  this  chapter,  the  tax
   31  determined  for  the  taxable  year under subsections (a) through (d) of
   32  section six hundred one of such article. [The tax factor  shall  be,  in
   33  the  case  of  article  thirty-two  of  this  chapter, the larger of the
   34  amounts of tax determined for the taxable year under subsection (a)  and
   35  paragraph  two  of subsection (b) of section fourteen hundred fifty-five
   36  of such article.] The tax factor shall be, in the case of article  thir-
   37  ty-three  of  this  chapter, the larger of the amounts of tax determined
   38  for the taxable year under paragraphs one and three of  subdivision  (a)
   39  of section fifteen hundred two of such article.
   40    (ii)  For  purposes of article nine-A[, thirty-two or thirty-three] of
   41  this chapter, the term "partner's income  from  the  partnership"  means
   42  partnership  items  of  income,  gain,  loss and deduction, and New York
   43  modifications thereto, entering  into  [entire  net]  BUSINESS  income[,
   44  minimum  taxable  income,  alternative  entire  net income or entire net
   45  income plus compensation] and the term "partner's entire  income"  means
   46  [entire  net]  BUSINESS  income[,  minimum  taxable  income, alternative
   47  entire net income or entire net  income  plus  compensation,]  allocated
   48  within the state.  FOR PURPOSES OF ARTICLE THIRTY-THREE OF THIS CHAPTER,
   49  THE TERM "PARTNER'S INCOME FROM THE PARTNERSHIP" MEANS PARTNERSHIP ITEMS
   50  OF INCOME, GAIN, LOSS AND DEDUCTION, AND NEW YORK MODIFICATIONS THERETO,
   51  ENTERING  INTO  ENTIRE NET INCOME OR ENTIRE NET INCOME PLUS COMPENSATION
   52  AND THE TERM "PARTNER'S ENTIRE  INCOME"  MEANS  ENTIRE  NET  INCOME,  OR
   53  ENTIRE  NET  INCOME  PLUS  COMPENSATION, ALLOCATED WITHIN THE STATE. For
   54  purposes of article twenty-two of  this  chapter,  the  term  "partner's
   55  income  from  the  partnership" means partnership items of income, gain,
   56  loss and deduction, and New York modifications  thereto,  entering  into
       S. 6359                            119                           A. 8559
    1  New  York  adjusted gross income, and the term "partner's entire income"
    2  means New York adjusted gross income.
    3    (A)  Where  the  taxpayer is a qualified empire zone enterprise and is
    4  required or permitted to make a return or report  on  a  combined  basis
    5  under article nine-A[, thirty-two] or ARTICLE thirty-three of this chap-
    6  ter,  the  taxpayer's tax factor shall be the amount determined in para-
    7  graph one of this subdivision which is attributable to the income of the
    8  qualified empire zone enterprise.   Such attribution shall  be  made  in
    9  accordance  with  the  ratio  of  the qualified empire zone enterprise's
   10  income allocated within the state to the combined group's income, or  in
   11  accordance  with such other methods as the commissioner may prescribe as
   12  providing an apportionment which reasonably reflects the portion of  the
   13  combined  group's tax attributable to the income of the qualified empire
   14  zone enterprise. In no event may the ratio so determined exceed 1.0.
   15    S 35. Subdivision (g) of section 16  of  the  tax  law,  as  added  by
   16  section  2  of  part GG of chapter 63 of the laws of 2000, is amended to
   17  read as follows:
   18    (g) Definitions and cross-references. For definitions of terms used in
   19  this section see sections fourteen and  fifteen  of  this  article.  For
   20  application  of the credit provided for in this section, see the follow-
   21  ing provisions of this chapter:
   22    (1) Article 9-A: Section [210] 210-B:  subdivision [28]6.
   23    (2) Article 22: Section 606: subsections (i) and (cc).
   24    (3) [Article 32: Section 1456: subsection (p).
   25    (4)] Article 33: Section 1511: subdivision (s).
   26    S 36. Paragraph 1 of subdivision (b) of section 17 of the tax law,  as
   27  added  by  section  43  of part S1 of chapter 57 of the laws of 2009, is
   28  amended to read as follows:
   29    (1) The empire zones tax benefits report must  contain  the  following
   30  information  about  the  empire  zone tax credits claimed under articles
   31  nine, nine-A, twenty-two[, thirty-two] and thirty-three of this  chapter
   32  during the previous calendar year:
   33    (A) the name of each taxpayer claiming a credit; and
   34    (B) the amount of each credit earned by each taxpayer.
   35    S  37. Subdivisions (a) and (d) of section 18 of the tax law, as added
   36  by section 2 of part CC of chapter 63 of the laws of 2000,  are  amended
   37  to read as follows:
   38    (a)  Allowance  of  credit.  A  taxpayer  subject to tax under article
   39  nine-A, twenty-two[, thirty-two] or thirty-three of this  chapter  shall
   40  be  allowed a credit against such tax, pursuant to the provisions refer-
   41  enced in subdivision (d) of this section, with respect to the  ownership
   42  of  eligible low-income buildings for which an eligibility statement has
   43  been issued by the commissioner of housing and  community  renewal.  The
   44  amount  of  the credit shall be the credit amount for each such building
   45  allocated by such commissioner as  provided  in  article  two-A  of  the
   46  public  housing  law. The credit amount shall be allowed for each of the
   47  ten taxable years in the credit period, and any reduction in  first-year
   48  credit  as provided in subdivision two of section twenty-two of such law
   49  shall be allowed in the eleventh taxable year.
   50    (d) Cross-references. For application of the credit  provided  for  in
   51  this section, see the following provisions of this chapter:
   52    (1) Article 9-A: Section [210] 210-B:  subdivision [30] 15,
   53    (2) Article 22: Section 606: subsections (i) and (x),
   54    (3) [Article 32: Section 1456: subsection (l),
   55    (4)] Article 33: Section 1511: subdivision (n).
       S. 6359                            120                           A. 8559
    1    S  38. Subparagraph (A) of paragraph 1 of subdivision (a) and subdivi-
    2  sion (f) of section 19 of the tax law, as added by section 2 of part  II
    3  of chapter 63 of the laws of 2000, are amended to read as follows:
    4    (A)  Green  building  credit.  A taxpayer subject to tax under article
    5  nine, nine-A, twenty-two[, thirty-two] or thirty-three of  this  chapter
    6  shall  be  allowed a green building credit against such tax, pursuant to
    7  the provisions referenced in subdivision (f) of this section.  Provided,
    8  however,  no  credit  shall  be  allowed  under  this section unless the
    9  taxpayer has complied with the applicable requirements of paragraph  two
   10  of  subdivision  (d)  of  this section (relating to reports to DEC). The
   11  amount of the credit shall be the sum of the credit components specified
   12  in paragraphs two through seven of this subdivision. Provided,  however,
   13  the  amount of each such credit component shall not exceed the limit set
   14  forth in the initial credit component certificate obtained  pursuant  to
   15  subdivision  (c)  of  this  section. In the determination of such credit
   16  components, no cost paid or incurred by the taxpayer shall be the  basis
   17  for more than one such component.
   18    (f)  Cross-references.  For  application of the credit provided for in
   19  this section, see the following provisions of this chapter:
   20    (1) Article nine: Section one hundred eighty-seven-d;
   21    (2) Article nine-A: Subdivision [thirty-one] SIXTEEN  of  section  two
   22  hundred [ten] TEN-B;
   23    (3) Article twenty-two: Subsections (i) and (y) of section six hundred
   24  six;
   25    (4)  [Article  thirty-two:  Subsection (m) of section fourteen hundred
   26  fifty-six;
   27    (5)] Article thirty-three: Subdivision (o) of section fifteen  hundred
   28  eleven.
   29    S  39.  Paragraphs 1 and 5 of subdivision (a) of section 21 of the tax
   30  law, as amended by section 1 of part H of chapter 577  of  the  laws  of
   31  2004, are amended to read as follows:
   32    (1)  General.  A  taxpayer  subject to tax under article nine, nine-A,
   33  twenty-two[, thirty-two]  or  thirty-three  of  this  chapter  shall  be
   34  allowed a credit against such tax, pursuant to the provisions referenced
   35  in  subdivision  (f)  of this section. Such credit shall be allowed with
   36  respect to a qualified site, as such term is defined in paragraph one of
   37  subdivision (b) of this section. The amount of the credit in  a  taxable
   38  year  shall  be the sum of the credit components specified in paragraphs
   39  two, three and four of this subdivision applicable in such year.
   40    (5) Applicable percentage. For purposes of paragraphs two,  three  and
   41  four  of  this  subdivision,  the  applicable percentage shall be twelve
   42  percent in the case of credits  claimed  under  article  nine,  nine-A[,
   43  thirty-two] or thirty-three of this chapter, and ten percent in the case
   44  of credits claimed under article twenty-two of this chapter, except that
   45  where  at least fifty percent of the area of the qualified site relating
   46  to the credit provided for in this section is  located  in  an  environ-
   47  mental  zone  as  defined  in  paragraph  six of subdivision (b) of this
   48  section, the applicable percentage shall be increased by  an  additional
   49  eight  percent. Provided, however, as afforded in section 27-1419 of the
   50  environmental conservation law, if the certificate of  completion  indi-
   51  cates  that  the  qualified  site has been remediated to Track 1 as that
   52  term is described in subdivision four of section 27-1415 of the environ-
   53  mental conservation law, the applicable  percentage  set  forth  in  the
   54  first sentence of this paragraph shall be increased by an additional two
   55  percent.
       S. 6359                            121                           A. 8559
    1    S  39-a.  Subdivisions  (c)  and  (f) of section 21 of the tax law, as
    2  added by section 1 of part H of chapter 1  of  the  laws  of  2003,  are
    3  amended to read as follows:
    4    (c)  Qualifying  property.  Property  which  qualifies  for the credit
    5  provided for under this section and also for a credit provided  for  (1)
    6  under either subdivision [twelve] ONE or subdivision [twelve-B] THREE of
    7  section  two  hundred  [ten]  TEN-B  of  this  chapter,  or both, OR (2)
    8  subsection (a) or subsection (j) of section  six  hundred  six  of  this
    9  chapter,  or  both[, (3) the credit provided for under subsection (i) of
   10  section fourteen hundred fifty-six of this chapter, or  (4)  the  credit
   11  provided under subdivision (q) of section fifteen hundred eleven of this
   12  chapter]  may be the basis for either the credit provided for under this
   13  section or one of the credits enumerated in paragraph  one[,]  OR  two[,
   14  three or four] of this subdivision, but not both.
   15    (f)  Cross-references.  For  application of the credit provided for in
   16  this section, see the following provisions of this chapter:
   17    (1) Article 9: Section 187-g
   18    (2) Article 9-A: Section [210] 210-B, subdivision [33] 17
   19    (3) Article 22: Section 606, subsections (i) and (dd)
   20    (4) [Article 32: Section 1456, subsection (q)
   21    (5)] Article 33: Section 1511, subdivision (u).
   22    S 40. Paragraph 3 of subdivision (a) and paragraphs 1 and 9 of  subdi-
   23  vision (b) of section 22 of the tax law, as amended by section 4 of part
   24  H of chapter 577 of the laws of 2004, are amended to read as follows:
   25    (3)  Developer.  (i)  A  "developer" is a taxpayer under article nine,
   26  nine-A, twenty-two[, thirty-two] or thirty-three of this chapter who  or
   27  which  either  (I)  has  been  issued  a  certificate of completion with
   28  respect to a qualified site or (II) has purchased or in  any  other  way
   29  has been conveyed all or any portion of a qualified site from a taxpayer
   30  or  any  other  party  who  or  which  has  been issued a certificate of
   31  completion with respect to such site provided, such purchase or  convey-
   32  ance  occurs within seven years of the effective date of the certificate
   33  of completion issued with respect to  such  qualified  site.    Provided
   34  further, that the taxpayer who or which is purchasing all or any portion
   35  of a qualified site and the taxpayer or any other party who or which has
   36  been  issued  a  certificate of completion with respect to such site may
   37  not be related persons, as such term is defined in subparagraph  (C)  of
   38  paragraph  three of subsection (b) of section four hundred sixty-five of
   39  the internal revenue code.
   40    (ii) Where the entity to whom a certificate  of  completion  has  been
   41  issued  is a partnership, or where the entity which has purchased all or
   42  any portion of a qualified site from a taxpayer who or  which  has  been
   43  issued  a certificate of completion with respect to such site within the
   44  applicable time limit is a partnership, any partner in such  partnership
   45  who  or  which is taxable under article nine, nine-A, twenty-two[, thir-
   46  ty-two] or thirty-three of this chapter shall be a developer under  this
   47  paragraph. Where the entity to whom a certificate of completion has been
   48  issued  is  a  New  York  S  corporation,  or where the entity which has
   49  purchased all or any portion of a qualified site from a taxpayer who  or
   50  which  has  been issued a certificate of completion with respect to such
   51  site within the applicable time limit is a New York S  corporation,  any
   52  shareholder  in  such  New York S corporation shall be a developer under
   53  this paragraph.
   54    (1) Allowance of credit. A developer of a qualified site who or  which
   55  is  subject  to tax under article nine, nine-A, twenty-two[, thirty-two]
   56  or thirty-three of this chapter, shall be allowed a credit against  such
       S. 6359                            122                           A. 8559
    1  tax,  pursuant  to  the  provisions referenced in paragraph nine of this
    2  subdivision, for eligible real property taxes imposed on such site.
    3    (9)  Cross-references.  For  application of the credit provided for in
    4  this subdivision, see the following provisions of this chapter:
    5    (i) Article 9: Section 187-h.
    6    (ii) Article 9-A: Section [210] 210-B:  subdivision [34] 18.
    7    (iii) Article 22: Section 606: subsections (i) and (ee).
    8    (iv) [Article 32: Section 1456: subsection (r).
    9    (v)] Article 33: Section 1511: subdivision (v).
   10    S 41. Subdivision (a) of section 23 of the  tax  law,  as  amended  by
   11  section 10 of part H chapter 577 of the laws of 2004, is amended to read
   12  as follows:
   13    (a)  Allowance  of  credit.  General.  A taxpayer subject to tax under
   14  article nine, nine-A, twenty-two[, thirty-two] or thirty-three  of  this
   15  chapter  shall  be  allowed  a  credit against such tax, pursuant to the
   16  provisions referenced in subdivision (e) of this section. The amount  of
   17  such  credit  shall be equal to the lesser of thirty thousand dollars or
   18  fifty percent of the premiums paid on or after the date  of  the  brown-
   19  field site cleanup agreement executed by the taxpayer and the department
   20  of  environmental  conservation pursuant to section 27-1409 of the envi-
   21  ronmental conservation law by the taxpayer for environmental remediation
   22  insurance issued with respect to a qualified site.
   23    S 42. Subdivision (e) of section 23  of  the  tax  law,  as  added  by
   24  section  19  of  part  H of chapter 1 of the laws of 2003, is amended to
   25  read as follows:
   26    (e) Cross-references. For application of the credit  provided  for  in
   27  this section, see the following provisions of this chapter:
   28    (1) Article 9: Section 187-i
   29    (2) Article 9-A: Section [210] 210-B, subdivision [35] 19
   30    (3) Article 22: Section 606, subsections (i) and (ff)
   31    (4) [Article 32: Section 1456, subsection (s)
   32    (5)] Article 33: Section 1511, subdivision (w).
   33    S 43. Paragraphs 1 and 2 of subdivision (a) and clause (i) of subpara-
   34  graph  (D)  of  paragraph  1 of subdivision (b) of section 25 of the tax
   35  law, as added by section 1 of part N of chapter 61 of the laws of  2005,
   36  are amended to read as follows:
   37    (1)  Every  taxpayer,  or  person as defined in section seven thousand
   38  seven hundred one of the internal  revenue  code,  required  to  file  a
   39  disclosure  statement  with  the  internal  revenue  service pursuant to
   40  section six thousand eleven of the internal revenue code, or  the  regu-
   41  lations promulgated thereunder, related to a reportable transaction or a
   42  listed  transaction, as those terms are defined in such section or regu-
   43  lations, must attach a duplicate of such  disclosure  statement  to  the
   44  return or report required to be filed by such taxpayer or person for the
   45  taxable  year  under  article  nine, nine-A, twenty-two[, thirty-two] or
   46  thirty-three of this chapter, and provide such other information related
   47  to such disclosure as prescribed by the  commissioner.  Such  disclosure
   48  shall be made notwithstanding that one member of an affiliated group, as
   49  defined  by  section  fifteen hundred four of the internal revenue code,
   50  may file such disclosure statement with the internal revenue service  on
   51  behalf of its affiliates including such taxpayer or person.
   52    (2)  Every  taxpayer  or  such  person  who participates in a New York
   53  reportable transaction for a taxable year  must  disclose  such  partic-
   54  ipation  with  its  return  or report required to be filed under article
   55  nine, nine-A, twenty-two[, thirty-two] or thirty-three of  this  chapter
   56  for  the  taxable  year  in  a  form prescribed by the commissioner, and
       S. 6359                            123                           A. 8559
    1  provide such other information related to such transaction as prescribed
    2  by the commissioner. A New York reportable transaction is a  transaction
    3  that  has  the potential to be a tax avoidance transaction as determined
    4  by the commissioner.
    5    (i)  the  list  required  to  be maintained by such person pursuant to
    6  section six thousand one hundred twelve of  the  internal  revenue  code
    7  identifies  or  is  required to identify a taxpayer subject to tax under
    8  article nine, nine-A, twenty-two[, thirty-two] or thirty-three  of  this
    9  chapter, and
   10    S  44. Subdivisions (a) and (f) of section 26 of the tax law, as added
   11  by chapter 537 of the laws of 2005, are amended to read as follows:
   12    (a) Allowance of credit. A taxpayer, which is  subject  to  tax  under
   13  article  nine,  nine-A, twenty-two[, thirty-two] or thirty-three of this
   14  chapter and which is a qualified building  owner,  shall  be  allowed  a
   15  credit  against  such tax.   The amount of the credit allowed under this
   16  section shall equal the sum of the number of qualified security officers
   17  providing protection to a building or buildings owned  by  the  taxpayer
   18  multiplied  by  three  thousand  dollars. Provided, however, that in the
   19  case of a worker not so employed for a full year, such amount  shall  be
   20  prorated  to  reflect the length of such employment under regulations of
   21  the commissioner.
   22    (f) Cross-references. For application of the credit  provided  for  in
   23  this section, see the following provisions of this chapter:
   24    (1) article 9: section 187-n.
   25    (2) article 9-A: section [210] 210-B:  subdivision [37] 21.
   26    (3) article 22: section 606: subsection (ii).
   27    (4) [article 32: section 1456: subsection (t).
   28    (5)] article 33: section 1511: subdivision (x).
   29    S 45. Paragraph 3 of subdivision (a) and subdivision (c) of section 28
   30  of  the  tax  law,  as added by section 2 of part V of chapter 62 of the
   31  laws of 2006, are amended to read as follows:
   32    (3) No qualified production costs used by a  taxpayer  either  as  the
   33  basis for the allowance of the credit provided for under this section or
   34  used  in  the  calculation of the credit provided for under this section
   35  shall be used by such taxpayer to claim any other credit allowed  pursu-
   36  ant to this chapter.
   37    Notwithstanding  any  provisions  of  this  section to the contrary, a
   38  corporation or partnership, which otherwise  qualifies  as  a  qualified
   39  commercial production company, and is similar in operation and in owner-
   40  ship  to  a  business entity or entities taxable, or previously taxable,
   41  under section one hundred eighty-three, one hundred eighty-four  or  one
   42  hundred  eighty-five  of  article nine; article nine-A[, article thirty-
   43  two] or thirty-three of this chapter or which would have been subject to
   44  tax under article twenty-three of this chapter (as such article  was  in
   45  effect  on  January  first, nineteen hundred eighty) OR WHICH WOULD HAVE
   46  BEEN SUBJECT TO TAX UNDER ARTICLE THIRTY-TWO OF THIS  CHAPTER  (AS  SUCH
   47  ARTICLE  WAS  IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN)
   48  or the income or losses of which is  or  was  includable  under  article
   49  twenty-two  of  this chapter shall not be deemed a new or separate busi-
   50  ness, and therefore shall not be eligible for  empire  state  commercial
   51  production  benefits, if it was not formed for a valid business purpose,
   52  as such term is defined in clause (D) of subparagraph one  of  paragraph
   53  (o) of subdivision nine of section two hundred eight of this chapter and
   54  was  formed  solely  to  gain  empire state commercial production credit
   55  benefits.
       S. 6359                            124                           A. 8559
    1    (c) Cross-references. For application of the credit  provided  for  in
    2  this section, see the following provision of this chapter:
    3    (1) article 9-A: section [210] 210-B:  subdivision [38] 23.
    4    (2) article 22: section 606: subsection (jj).
    5    S  46.  Subdivision  (d)  of  section  28  of the tax law, as added by
    6  section 1 of part X of chapter 62 of the laws of  2006,  is  amended  to
    7  read as follows:
    8    (d)  Cross-references.  For  application of the credit provided for in
    9  this section, see the following provisions of this chapter:
   10    (1) Article 9: Section 187-c.
   11    (2) Article 9-A: Section [210] 210-B, subdivision [38] 24.
   12    (3) Article 22: Section 606, subsections (i) and (jj).
   13    S 47. The opening paragraph of subdivision (a)  and  subdivisions  (c)
   14  and  (g) of section 31 of the tax law, the opening paragraph of subdivi-
   15  sion (a) and subdivision (g) as amended by section 7 of part G of  chap-
   16  ter  61  of  the  laws of 2011, subdivision (c) as added by section 2 of
   17  part MM of chapter 59 of the laws  of  2010,  are  amended  to  read  as
   18  follows:
   19    General.  A  taxpayer subject to tax under section one hundred eighty-
   20  five, article nine-A, twenty-two[, thirty-two] or thirty-three  of  this
   21  chapter  shall  be  allowed  a  credit against such tax, pursuant to the
   22  provisions referenced in subdivision (g) of this section. The amount  of
   23  the  credit,  allowable  for up to ten consecutive taxable years, is the
   24  sum of the following four credit components:
   25    (c) Election of credit. A taxpayer who or which is qualified to  claim
   26  the  excelsior  investment tax credit component and is also qualified to
   27  claim the investment tax credit provided for under subdivision  [twelve]
   28  ONE of section two hundred [ten,] TEN-B OR subsection (a) of section six
   29  hundred  six[,  or subsection (i) of section fourteen hundred fifty-six]
   30  of this chapter, may claim either the excelsior  investment  tax  credit
   31  component  or  the  investment tax credit, but not both with regard to a
   32  particular piece of property. In addition, a taxpayer who  or  which  is
   33  qualified  to claim the excelsior investment tax credit component and is
   34  also qualified to claim the brownfield tangible property  credit  compo-
   35  nent  under  section twenty-one of this article, as added by chapter one
   36  of the laws of two  thousand  three,  may  claim  either  the  excelsior
   37  investment  tax credit component or such tangible property credit compo-
   38  nent, but not both with regard to a particular piece  of  property.  The
   39  election  to  claim  the  excelsior investment tax credit component, the
   40  investment tax credit or the brownfield tangible property credit  compo-
   41  nent, with regard to the same property, is irrevocable.
   42    (g)  Cross-references.  For  application of the credit provided for in
   43  this section, see the following provisions of this chapter:
   44    (1) article 9: section 187-q.
   45    (2) article 9-A: section [210] 210-B: subdivision [41] 31.
   46    (3) article 22: section 606: subsection (qq).
   47    (4) [article 32: section 1456: subsection (u).
   48    (5)] article 33: section 1511: subdivision (y).
   49    S 48. Subdivision (d) of section 31  of  the  tax  law,  as  added  by
   50  section  12  of  part Q of chapter 57 of the laws of 2010, is amended to
   51  read as follows:
   52    (d) Cross-references. For application of the credit  provided  for  in
   53  this section, see the following provisions of this chapter:
   54    (1) article 9-A: section [210] 210-B: subdivision [41] 32.
   55    (2) article 22: section 606: subsection (qq).
       S. 6359                            125                           A. 8559
    1    S  49. Subdivision 3 of section 34 of the tax law, as added by section
    2  2 of part Y of chapter 57 of the laws of 2010, is  amended  to  read  as
    3  follows:
    4    3.  (a) For application of the temporary deferral nonrefundable payout
    5  credit, see the following provisions of this chapter:
    6    (1) Article 9: section 187-0
    7    (2) Article 9-A: section [210(41)] 210-B(33)
    8    (3) Article 22: section 606(qq)
    9    (4) [Article 32: section 1456(v)
   10    (5)] Article 33: section 1511(y)
   11    (b) For application of the temporary deferral refundable payout  cred-
   12  it, see the following provisions of this chapter:
   13    (1) Article 9: section 187-p
   14    (2) Article 9-A: section [210(42)] 210-B(34)
   15    (3) Article 22: section 606(rr)
   16    (4) [Article 32: section 1456(w)
   17    (5)] Article 33: section 1511(z)
   18    S  50.  The  opening paragraph of subdivision (a), subparagraph (C) of
   19  paragraph 2 of subdivision (e), and subdivision (f) of section 35 of the
   20  tax law, as added by section 3 of part V of chapter 61 of  the  laws  of
   21  2011, are amended to read as follows:
   22    A taxpayer which is a participant or the owner of a participant in the
   23  economic transformation and facility redevelopment program under article
   24  eighteen  of  the  economic development law that is subject to tax under
   25  section one hundred eighty-five of  article  nine,  or  article  nine-A,
   26  twenty-two[,  thirty-two]  or  thirty-three  of  this  chapter  shall be
   27  allowed the sum of following components against such  tax,  pursuant  to
   28  the provisions referenced in subdivision (f) of this section.
   29    (C) the business entity must not be substantially similar in ownership
   30  and  operation  to  another taxpayer taxable or previously taxable under
   31  section one hundred eighty-three, one hundred eighty-four or one hundred
   32  eighty-five of article nine, former section one  hundred  eighty-six  of
   33  this chapter or article nine-A, twenty-two[, thirty-two] or thirty-three
   34  of  this  chapter  OR  FORMER  ARTICLE THIRTY-TWO OF THIS CHAPTER or the
   35  income or losses of which is or was includable under article  twenty-two
   36  of this chapter;
   37    (f)  Cross-references.  For application of the credits provided for in
   38  this section, see the following provisions of this chapter:
   39    (1) section 185: section 187-r.
   40    (2) article 9-A: section [210(43)] 210-B(35).
   41    (3) article 22: section 606 (ss).
   42    (4) [article 32: section 1456(x).
   43    (5)] article 33: section 1511 (aa).
   44    S 51. Subdivisions (a) and (e) of section 36 of the tax law, as  added
   45  by section 2 of part E of chapter 56 of the laws of 2011, are amended to
   46  read as follows:
   47    (a)  Allowance  of  credit.  A  taxpayer  subject to tax under article
   48  nine-A, twenty-two[, thirty-two] or thirty-three of this  chapter  shall
   49  be  allowed a credit against such tax, pursuant to the provisions refer-
   50  enced in subdivision (e) of this section.  The  amount  of  the  credit,
   51  allowable  for  ten consecutive tax years, is equal to the amount deter-
   52  mined pursuant to section  four  hundred  twenty-five  of  the  economic
   53  development law.
   54    (e)  Cross-references.  For  application of the credit provided for in
   55  this section, see the following provisions of this chapter:
   56    (1) article 9-A: section [210] 210-B, subdivision [44] 37;
       S. 6359                            126                           A. 8559
    1    (2) article 22: section 606, subsection (tt);
    2    (3) [article 32: section 1456, subsection (y);
    3    (4)] article 33, section 1511, subdivision (bb).
    4    S  52. Subdivision (c) of section 37 of the tax law, as added by chap-
    5  ter 109 of the laws of 2012, is amended to read as follows:
    6    (c) Cross-references. For application of the credit  provided  for  in
    7  this section, see the following provisions of this chapter:
    8    (1) Article 9-A: Section [210] 210-B, subdivision [45] 39.
    9    (2) Article 22: Section 606, subsections (i) and (uu).
   10    S 52-a. Subdivision (c) of section 39 of the tax law is REPEALED.
   11    S  53.  Paragraphs  2, 3 and 4 of subdivision (k) of section 39 of the
   12  tax law, paragraphs 2 and 3 as added by section 2 of part A  of  chapter
   13  68  of  the  laws  of  2013,  paragraph 4 as amended by section 2 of LBD
   14  number 74039-02-4, are amended to read as follows:
   15    [(2) Article 9: section 180, subdivision 3.
   16    (3) Article 9: section 181, subdivision 3.]
   17    (4) Article 9-A: section [210] 210-B, subdivision [47] 41 and subdivi-
   18  sion [48] 44.
   19    S 54. Subdivision 1 of section 171-a of the tax  law,  as  amended  by
   20  section  1  of  part  R of chapter 60 of the laws of 2004, is amended to
   21  read as follows:
   22    1. All taxes, interest, penalties and fees collected  or  received  by
   23  the commissioner or the commissioner's duly authorized agent under arti-
   24  cles nine (except section one hundred eighty-two-a thereof and except as
   25  otherwise  provided  in  section  two  hundred  five  thereof),  nine-A,
   26  twelve-A (except as otherwise provided in section  two  hundred  eighty-
   27  four-d  thereof),  thirteen, thirteen-A (except as otherwise provided in
   28  section  three  hundred  twelve  thereof),  eighteen,  nineteen,  twenty
   29  (except  as otherwise provided in section four hundred eighty-two there-
   30  of),  twenty-one,  twenty-two,  twenty-six,  twenty-six-B,  twenty-eight
   31  (except  as  otherwise  provided in section eleven hundred two or eleven
   32  hundred three thereof), twenty-eight-A, thirty-one (except as  otherwise
   33  provided  in section fourteen hundred twenty-one thereof), [thirty-two,]
   34  thirty-three and thirty-three-A of this chapter shall be deposited daily
   35  in one account with such responsible  banks,  banking  houses  or  trust
   36  companies  as may be designated by the comptroller, to the credit of the
   37  comptroller. Such an account may be established in one or more  of  such
   38  depositories.  Such  deposits  shall be kept separate and apart from all
   39  other money in the possession of the comptroller. The comptroller  shall
   40  require  adequate  security  from  all  such  depositories. Of the total
   41  revenue collected or received under such articles of this  chapter,  the
   42  comptroller  shall  retain in the comptroller's hands such amount as the
   43  commissioner may determine to be necessary for refunds or reimbursements
   44  under such articles of this chapter [and article  ten  thereof]  out  of
   45  which  amount the comptroller shall pay any refunds or reimbursements to
   46  which taxpayers shall be entitled under the provisions of such  articles
   47  of  this  chapter  [and  article  ten thereof]. The commissioner and the
   48  comptroller shall maintain a system of accounts showing  the  amount  of
   49  revenue  collected  or  received  from each of the taxes imposed by such
   50  articles. The comptroller,  after  reserving  the  amount  to  pay  such
   51  refunds  or  reimbursements,  shall,  on or before the tenth day of each
   52  month, pay into the state treasury to the credit of the general fund all
   53  revenue deposited under this section during the preceding calendar month
   54  and remaining to the comptroller's  credit  on  the  last  day  of  such
   55  preceding  month, (i) except that the comptroller shall pay to the state
   56  department of social services that amount of overpayments of tax imposed
       S. 6359                            127                           A. 8559
    1  by article twenty-two of this chapter and the interest  on  such  amount
    2  which  is certified to the comptroller by the commissioner as the amount
    3  to be credited against past-due support pursuant to subdivision  six  of
    4  section  one  hundred  seventy-one-c of this [chapter] ARTICLE, (ii) and
    5  except that the comptroller shall pay  to  the  New  York  state  higher
    6  education  services  corporation and the state university of New York or
    7  the city university of New York respectively that amount of overpayments
    8  of tax imposed by article twenty-two of this chapter and the interest on
    9  such amount which is certified to the comptroller by the commissioner as
   10  the amount to be credited against the amount of defaults in repayment of
   11  guaranteed student loans and state university loans or  city  university
   12  loans  pursuant to subdivision five of section one hundred seventy-one-d
   13  and subdivision six of section one hundred seventy-one-e of this  [chap-
   14  ter]  ARTICLE,  (iii)  and except further that, notwithstanding any law,
   15  the comptroller shall credit to the revenue arrearage account,  pursuant
   16  to  section  ninety-one-a of the state finance law, that amount of over-
   17  payment of tax imposed by  article  nine,  nine-A,  twenty-two,  thirty,
   18  thirty-A,  thirty-B[,  thirty-two]  or thirty-three of this chapter, and
   19  any interest thereon, which is  certified  to  the  comptroller  by  the
   20  commissioner  as  the  amount  to be credited against a past-due legally
   21  enforceable debt owed to a state agency pursuant  to  paragraph  (a)  of
   22  subdivision  six  of  section one hundred seventy-one-f of this article,
   23  provided, however, he shall  credit  to  the  special  offset  fiduciary
   24  account,  pursuant to section ninety-one-c of the state finance law, any
   25  such amount creditable as a liability as set forth in paragraph  (b)  of
   26  subdivision  six  of  section one hundred seventy-one-f of this article,
   27  (iv) and except further that the comptroller shall pay to  the  city  of
   28  New  York  that  amount  of  overpayment of tax imposed by article nine,
   29  nine-A, twenty-two, thirty, thirty-A, thirty-B[, thirty-two,]  or  thir-
   30  ty-three  of  this chapter and any interest thereon that is certified to
   31  the comptroller by the commissioner as the amount to be credited against
   32  city of New York tax warrant  judgment  debt  pursuant  to  section  one
   33  hundred  seventy-one-l  of this article, (v) and except further that the
   34  comptroller shall pay to a non-obligated spouse that amount of  overpay-
   35  ment of tax imposed by article twenty-two of this chapter and the inter-
   36  est  on  such  amount  which  has  been credited pursuant to section one
   37  hundred seventy-one-c, one hundred seventy-one-d, one  hundred  seventy-
   38  one-e,  one  hundred  seventy-one-f or one hundred seventy-one-l of this
   39  article and which is certified to the comptroller by the commissioner as
   40  the amount due such non-obligated spouse pursuant to  paragraph  six  of
   41  subsection  (b)  of  section  six hundred fifty-one of this chapter; and
   42  (vi) the comptroller shall deduct a like amount  which  the  comptroller
   43  shall  pay  into  the  treasury  to  the credit of the general fund from
   44  amounts subsequently payable to the department of social  services,  the
   45  state  university  of  New York, the city university of New York, or the
   46  higher education services corporation, or the revenue arrearage  account
   47  or  special offset fiduciary account pursuant to section ninety-one-a or
   48  ninety-one-c of the state finance law, as the case may be, whichever had
   49  been credited the amount originally withheld from such overpayment,  and
   50  (vii)  with respect to amounts originally withheld from such overpayment
   51  pursuant to section one hundred seventy-one-l of this article  and  paid
   52  to  the  city  of  New York, the comptroller shall collect a like amount
   53  from the city of New York.
   54    S 55. Subdivision 2 of section 171-a of the tax  law,  as  amended  by
   55  chapter 57 of the laws of 1993, is amended to read as follows:
       S. 6359                            128                           A. 8559
    1    2.  Notwithstanding  subdivision  one  of  this  section  or any other
    2  provision of law to the contrary, the taxes imposed pursuant to sections
    3  one hundred eighty-three-a,  one  hundred  eighty-four-a,  [one  hundred
    4  eighty-six-b,]  one  hundred  eighty-six-c, [one hundred eighty-nine-a,]
    5  two  hundred nine-B[, fourteen hundred fifty-five-b] and fifteen hundred
    6  five-a of this chapter, reduced by an amount for  administrative  costs,
    7  shall be deposited to the credit of the metropolitan mass transportation
    8  operating  assistance  account  in  the  mass  transportation  operating
    9  assistance fund, created pursuant to section eighty-eight-a of the state
   10  finance law, as such taxes are received. The amount  for  administrative
   11  costs  shall  be  determined by the commissioner to represent reasonable
   12  costs of the  department  of  taxation  and  finance  in  administering,
   13  collecting, determining and distributing such taxes. Of the total reven-
   14  ue  collected or received under such sections of this chapter, the comp-
   15  troller shall retain in his hands such amount as  the  commissioner  may
   16  determine  to  be  necessary  for  refunds  or reimbursements under such
   17  sections of this chapter out of which amount the comptroller  shall  pay
   18  any refunds or reimbursements to which taxpayers shall be entitled under
   19  provisions  of  such  sections. The tax commissioner and the comptroller
   20  shall maintain a system  of  accounts  showing  the  amount  of  revenue
   21  collected or received from each of the taxes imposed by such sections.
   22    S  56. Paragraphs (b) and (c) of subdivision 1 of section 171-f of the
   23  tax law, as amended by chapter 81 of the laws of 1995,  are  amended  to
   24  read as follows:
   25    (b)  "taxpayer"  shall mean a corporation, association, company, part-
   26  nership, estate, trust, liquidator, fiduciary or other entity  or  indi-
   27  vidual who or which is liable for any tax or other imposition imposed by
   28  or pursuant to article nine, nine-A, twenty-two, thirty, thirty-A, thir-
   29  ty-B[,  thirty-two,] or thirty-three of this chapter or article two-E of
   30  the general city law, which tax or other imposition is  administered  by
   31  the  commissioner  of  taxation  and finance, or who or which is under a
   32  duty to perform an act under or pursuant  to  such  tax  or  imposition,
   33  excluding  a  state agency, a municipal corporation or a district corpo-
   34  ration; and (c) "overpayment" shall mean an overpayment which  has  been
   35  requested  or determined to be refunded, a refund or a reimbursement, of
   36  a tax or other imposition  imposed  by  or  pursuant  to  article  nine,
   37  nine-A,  twenty-two,  thirty, thirty-A, thirty-B[, thirty-two,] or thir-
   38  ty-three of this chapter or article two-E of the general city law, which
   39  is administered by the commissioner of taxation and finance.
   40    S 57. Subdivision 2 of section 171-f of the tax law, as added by chap-
   41  ter 55 of the laws of 1992, is amended to read as follows:
   42    (2) The commissioner of taxation and finance, upon agreement with  the
   43  state  comptroller  and  acting  as  an agent for the state comptroller,
   44  shall set forth the  procedures  for  crediting  any  overpayment  by  a
   45  taxpayer  of  any tax or other imposition imposed by or authorized to be
   46  imposed pursuant to article nine, nine-A, twenty-two, thirty,  thirty-A,
   47  thirty-B[, thirty-two,] or thirty-three of this chapter or article two-E
   48  of  the  general  city law, which is administered by the commissioner of
   49  taxation and finance, and the interest on any such overpayments, against
   50  the amount of a past-due legally enforceable debt owed by such  taxpayer
   51  to  a  state  agency.  An  implementation plan shall be developed by the
   52  division of the budget and the department of taxation and finance  which
   53  shall  provide,  but not be limited to, guidance with respect to coordi-
   54  nation of debt collection pursuant to this section and subdivision twen-
   55  ty-seventh of section one hundred  seventy-one  of  this  article.  This
   56  section  shall  not be deemed to abrogate or limit in any way the powers
       S. 6359                            129                           A. 8559
    1  and authority of the state comptroller to set off debts owed  the  state
    2  against  payments from the state, under the constitution of the state or
    3  any other law.
    4    S  58. Paragraphs (a) and (b) of subdivision 1 of section 171-l of the
    5  tax law, as added by section 6 of part R of chapter 60 of  the  laws  of
    6  2004, are amended to read as follows:
    7    (a)  "taxpayer"  shall mean a corporation, association, company, part-
    8  nership, estate, trust, liquidator, fiduciary or other entity  or  indi-
    9  vidual who or which is liable for any tax or other imposition imposed by
   10  or pursuant to article nine, nine-A, twenty-two, thirty, thirty-A, thir-
   11  ty-B[,  thirty-two,] or thirty-three of this chapter, which tax or other
   12  imposition is administered by the commissioner of taxation and  finance,
   13  or  who  or which is under a duty to perform an act under or pursuant to
   14  such tax or imposition, excluding a state  agency,  a  municipal  corpo-
   15  ration or a district corporation;
   16    (b)  "overpayment"  shall mean an overpayment which has been requested
   17  or determined to be refunded, a refund or a reimbursement, of a  tax  or
   18  other  imposition  imposed by or pursuant to article nine, nine-A, twen-
   19  ty-two, thirty, thirty-A, thirty-B[,  thirty-two,]  or  thirty-three  of
   20  this  chapter, which is administered by the commissioner of taxation and
   21  finance; and
   22    S 59. Paragraph (b) of subdivision 1 of section 183 of the tax law, as
   23  amended by section 1 of part Y of chapter 63 of the  laws  of  2000,  is
   24  amended to read as follows:
   25    (b)  For  the  privilege  of exercising its corporate franchise, or of
   26  doing business, or of employing capital, or of owning or leasing proper-
   27  ty in this state in a corporate or organized capacity, or of maintaining
   28  an office in this state, every domestic corporation, joint-stock company
   29  or association formed for or  principally  engaged  in  the  conduct  of
   30  canal, steamboat, ferry (except a ferry company operating between any of
   31  the boroughs of the city of New York under a lease granted by the city),
   32  express,  navigation,  pipe  line,  transfer,  baggage express, omnibus,
   33  taxicab, telegraph, or telephone business, or formed for or  principally
   34  engaged  in  the  conduct  of  two or more of such businesses, and every
   35  domestic corporation, joint-stock company or association formed  for  or
   36  principally  engaged  in the conduct of a railroad, palace car, sleeping
   37  car or trucking business or formed for or  principally  engaged  in  the
   38  conduct of two or more of such businesses and which has made an election
   39  pursuant  to  subdivision  ten of this section, and every other domestic
   40  corporation, joint-stock company or association principally  engaged  in
   41  the  conduct  of  a  transportation  or  transmission business, except a
   42  corporation, joint-stock company or association formed for or principal-
   43  ly engaged in the conduct of a railroad, palace  car,  sleeping  car  or
   44  trucking business or formed for or principally engaged in the conduct of
   45  two  or  more  of  such  businesses  and which has not made the election
   46  provided for in subdivision ten of this section,  and  except  a  corpo-
   47  ration,  joint-stock  company  or association principally engaged in the
   48  conduct of aviation (including air freight forwarders acting as  princi-
   49  pal and like indirect air carriers) and except a corporation principally
   50  engaged  in  providing  telecommunication  services between aircraft and
   51  dispatcher, aircraft and air  traffic  control  or  ground  station  and
   52  ground  station  (or  any combination of the foregoing), at least ninety
   53  percent of the voting stock of which corporation is owned,  directly  or
   54  indirectly,  by  air carriers and which corporation's principal function
   55  is to fulfill the requirements of  (i)  the  federal  aviation  adminis-
   56  tration  (or  the  successor  thereto)  or  (ii) the international civil
       S. 6359                            130                           A. 8559
    1  aviation organization (or the successor thereto), relating to the exist-
    2  ence of a communication system between aircraft and dispatcher, aircraft
    3  and air traffic control or ground station and  ground  station  (or  any
    4  combination of the foregoing) for the purposes of air safety and naviga-
    5  tion  [and  except  a  corporation,  joint-stock  company or association
    6  subject to taxation under article thirty-two  of  this  chapter,]  shall
    7  pay,  in  advance,  an  annual  tax to be computed upon the basis of the
    8  amount of its capital stock within this state during the preceding year,
    9  and upon each dollar of such amount. Provided, however,  a  corporation,
   10  joint-stock  company or association formed for or principally engaged in
   11  the transportation, transmission or distribution of gas, electricity  or
   12  steam  shall  not  be  subject  to tax under this section or section one
   13  hundred eighty-four of this article.
   14    S 60. Subdivision 10 of section 183 of the tax law, as added by  chap-
   15  ter 309 of the laws of 1996, is amended to read as follows:
   16    10.  Election. [With respect to taxable years beginning after nineteen
   17  hundred ninety-seven, every] EVERY corporation, joint-stock  company  or
   18  association  formed for or principally engaged in the conduct of a rail-
   19  road (including surface railroad, whether  or  not  operated  by  steam,
   20  subway  railroad  or  elevated  railroad),  palace  car, sleeping car or
   21  trucking business or formed for or principally engaged in the conduct of
   22  two or more of such businesses, which would be subject to article nine-A
   23  [or thirty-two] of this chapter if the election provided for under  this
   24  subdivision  were not made, may elect to be subject to the provisions of
   25  this section and, as applicable, section one hundred eighty-four of this
   26  article, rather than the provisions of such article nine-A  [or  thirty-
   27  two]. [In the case of such a corporation, joint-stock company or associ-
   28  ation  subject to the tax imposed under this section and, as applicable,
   29  section one hundred eighty-four of this article, for  the  taxable  year
   30  ending December thirty-first, nineteen hundred ninety-seven, such corpo-
   31  ration, joint-stock company or association must make such election on or
   32  before March fifteenth, nineteen hundred ninety-eight, and such election
   33  shall  apply  to the taxable year ending on December thirty-first, nine-
   34  teen  hundred  ninety-eight  and  to  succeeding  taxable  years,  until
   35  revoked. In the case of such a corporation, joint-stock company or asso-
   36  ciation  which is not subject to the tax imposed under this section and,
   37  as applicable, section one hundred eighty-four of this article  for  the
   38  taxable  year ending December thirty-first, nineteen hundred ninety-sev-
   39  en, but thereafter would be subject to article nine-A or  thirty-two  of
   40  this  chapter  if  the election provided for under this subdivision were
   41  not made, such] SUCH corporation,  joint-stock  company  or  association
   42  must  make  such  election  by  the first day on which such corporation,
   43  joint-stock company or association would be required to file a return or
   44  report (without regard to extensions) under this section or section  one
   45  hundred  eighty-four  of  this  article,  or section one hundred eighty-
   46  three-a or one  hundred[-]eighty-four-a  of  this  article,  or  article
   47  nine-A  [or  thirty-two]  of  this chapter. An election made pursuant to
   48  this subdivision shall continue to be in effect  until  revoked  by  the
   49  taxpayer.  A  revocation  of  the election to be subject to this section
   50  and, as applicable, section one hundred  eighty-four  of  this  article,
   51  shall  be irrevocable. Such election, and a revocation thereof, shall be
   52  made in the manner prescribed by the commissioner, whether by regulation
   53  or otherwise. Such revocation shall apply as of the first day of January
   54  next following the end of a taxable  year  with  respect  to  which  the
   55  taxpayer  had  been  subject to this section and, as applicable, section
       S. 6359                            131                           A. 8559
    1  one hundred eighty-four of this article, by reason of an  election  made
    2  pursuant to this subdivision.
    3    S 61. The section heading and subdivisions 1 and 5 of section 183-a of
    4  the  tax law, the section heading as added by chapter 931 of the laws of
    5  1982, subdivision 1 as amended by section 1 of part A of chapter  59  of
    6  the laws of 2013 and subdivision 5 as amended by chapter 945 of the laws
    7  of 1990, are amended to read as follows:
    8    [Temporary  metropolitan]  METROPOLITAN  transportation  business  tax
    9  surcharge on transportation and transmission  corporations  and  associ-
   10  ations.  1. The term "corporation" as used in this section shall include
   11  an  association, within the meaning of paragraph three of subsection (a)
   12  of section seventy-seven  hundred  one  of  the  internal  revenue  code
   13  (including  a  limited liability company), a publicly traded partnership
   14  treated as a corporation for  purposes  of  the  internal  revenue  code
   15  pursuant  to section seventy-seven hundred four thereof and any business
   16  conducted by a trustee or trustees  wherein  interest  or  ownership  is
   17  evidenced  by  certificates  or  other written instruments. Every corpo-
   18  ration, joint-stock company or association  formed  for  or  principally
   19  engaged in the conduct of canal, steamboat, ferry (except a ferry compa-
   20  ny operating between any of the boroughs of the city of New York under a
   21  lease  granted  by  the city), express, navigation, pipe line, transfer,
   22  baggage express, omnibus, taxicab, telegraph, or telephone business,  or
   23  formed  for  or  principally  engaged in the conduct of two or more such
   24  businesses, and every corporation, joint-stock  company  or  association
   25  formed  for  or principally engaged in the conduct of a railroad, palace
   26  car, sleeping car or trucking business  or  formed  for  or  principally
   27  engaged  in  the conduct of two or more of such businesses and which has
   28  made an election pursuant to subdivision  ten  of  section  one  hundred
   29  eighty-three  of  this article, and every other corporation, joint-stock
   30  company or association principally engaged in the conduct of a transpor-
   31  tation or  transmission  business,  except  a  corporation,  joint-stock
   32  company  or association formed for or principally engaged in the conduct
   33  of a railroad, palace car, sleeping car or trucking business  or  formed
   34  for  or  principally engaged in the conduct of two or more of such busi-
   35  nesses and which has not made the election provided for  in  subdivision
   36  ten  of  section  one hundred eighty-three of this article, and except a
   37  corporation, joint-stock company or association principally  engaged  in
   38  the  conduct  of  aviation  (including  air freight forwarders acting as
   39  principal and like indirect air carriers) and except a corporation prin-
   40  cipally engaged in providing telecommunication services between aircraft
   41  and dispatcher, aircraft and air traffic control or ground  station  and
   42  ground  station  (or  any combination of the foregoing), at least ninety
   43  percent of the voting stock of which corporation is owned,  directly  or
   44  indirectly,  by  air carriers and which corporation's principal function
   45  is to fulfill the requirements of  (i)  the  federal  aviation  adminis-
   46  tration  (or  the  successor  thereto)  or  (ii) the international civil
   47  aviation organization (or the successor thereto), relating to the exist-
   48  ence of a communication system between aircraft and dispatcher, aircraft
   49  and air traffic control or ground station and  ground  station  (or  any
   50  combination of the foregoing) for the purposes of air safety and naviga-
   51  tion [and except a corporation, joint-stock company or association which
   52  is  liable  to taxation under article thirty-two of this chapter], shall
   53  pay for the privilege of exercising its corporate franchise, or of doing
   54  business, or of employing capital, or of owning or leasing  property  in
   55  the  metropolitan  commuter transportation district in such corporate or
   56  organized capacity, or of maintaining an office in such district, a  tax
       S. 6359                            132                           A. 8559
    1  surcharge [for all or any part of its years commencing on or after Janu-
    2  ary  first, nineteen hundred eighty-two but ending before December thir-
    3  ty-first, two thousand eighteen], which tax surcharge,  in  addition  to
    4  the  tax  imposed  by  section one hundred eighty-three of this article,
    5  shall be computed at the rate of [eighteen percent of  the  tax  imposed
    6  under  such  section one hundred eighty-three for such years or any part
    7  of such years ending  before  December  thirty-first,  nineteen  hundred
    8  eighty-three  after  the  deduction  of  any credits otherwise allowable
    9  under this article, and at the rate of] seventeen  percent  of  the  tax
   10  imposed  under  such  section  for  such years or any part of such years
   11  [ending on or after  December  thirty-first,  nineteen  hundred  eighty-
   12  three] after the deduction of any credits otherwise allowable under this
   13  article;  provided,  however,  that such rates of tax surcharge shall be
   14  applied only to that portion  of  the  tax  imposed  under  section  one
   15  hundred  eighty-three of this article after the deduction of any credits
   16  otherwise allowable under this article  which  is  attributable  to  the
   17  taxpayer's business activity carried on within the metropolitan commuter
   18  transportation district as so determined in the manner prescribed by the
   19  rules  and  regulations  promulgated by the commissioner[; and provided,
   20  further, that the tax surcharge imposed by this  section  shall  not  be
   21  imposed upon any taxpayer for more than four hundred thirty-two months].
   22    5.  [The  report  covering  the tax surcharge which must be calculated
   23  pursuant to this section based upon the tax reportable on the report due
   24  by March  fifteenth,  nineteen  hundred  eighty-two  under  section  one
   25  hundred  eighty-three  of this article shall be filed on or before March
   26  fifteenth, nineteen hundred eighty-three. The report  covering  the  tax
   27  surcharge  which  must be calculated pursuant to this section based upon
   28  the tax reportable on  the  report  due  by  March  fifteenth,  nineteen
   29  hundred  eighty-three  under  section  one  hundred eighty-three of this
   30  article shall be filed on or before March  fifteenth,  nineteen  hundred
   31  eighty-four.  The report covering the tax surcharge which must be calcu-
   32  lated pursuant to this section based upon  the  tax  reportable  on  the
   33  report  due  by  March  fifteenth,  nineteen  hundred  eighty-four under
   34  section one hundred eighty-three of this article shall be  filed  on  or
   35  before  March fifteenth, nineteen hundred eighty-five. The report cover-
   36  ing the tax surcharge which must be calculated pursuant to this  section
   37  based  upon  the  tax  reportable  on the report due by March fifteenth,
   38  nineteen hundred eighty-five under section one hundred  eighty-three  of
   39  this  article  shall  be  filed  on  or before March fifteenth, nineteen
   40  hundred eighty-six. The report covering the tax surcharge which must  be
   41  calculated pursuant to this section based upon the tax reportable on the
   42  report due by March fifteenth, nineteen hundred eighty-six under section
   43  one  hundred  eighty-three  of  this article shall be filed on or before
   44  March fifteenth, nineteen hundred eighty-seven. The report covering  the
   45  tax  surcharge  which  must be calculated pursuant to this section based
   46  upon the tax reportable on the report due by March  fifteenth,  nineteen
   47  hundred  eighty-seven  under  section  one  hundred eighty-three of this
   48  article shall be filed on or before March  fifteenth,  nineteen  hundred
   49  eighty-eight. The report covering the tax surcharge which must be calcu-
   50  lated  pursuant  to  this  section  based upon the tax reportable on the
   51  report due by  March  fifteenth,  nineteen  hundred  eighty-eight  under
   52  section  one  hundred  eighty-three of this article shall be filed on or
   53  before March fifteenth, nineteen hundred eighty-nine. The report  cover-
   54  ing  the tax surcharge which must be calculated pursuant to this section
   55  based upon the tax reportable on the  report  due  by  March  fifteenth,
   56  nineteen  hundred  eighty-nine under section one hundred eighty-three of
       S. 6359                            133                           A. 8559
    1  this article shall be filed  on  or  before  March  fifteenth,  nineteen
    2  hundred  ninety.]  The  report  covering the tax surcharge which must be
    3  calculated pursuant to this section based upon the tax reportable on the
    4  report  due  by  March  fifteenth  of  any  year [subsequent to nineteen
    5  hundred eighty-nine] under section  one  hundred  eighty-three  of  this
    6  article  shall  be  filed  on or before March fifteenth of the year next
    7  succeeding such year. An extension pursuant to section one hundred nine-
    8  ty-three OF THIS ARTICLE shall be allowed only if a taxpayer files  with
    9  the  commissioner  an  application  for  extension  in such form as said
   10  commissioner may prescribe by regulation and pays on or before the  date
   11  of  such  filing  in  addition  to any other amounts required under this
   12  article, either ninety percent of the entire tax surcharge  required  to
   13  be  paid  under this section for the applicable period, or not less than
   14  the tax surcharge shown on the taxpayer's report for the preceding year,
   15  if such preceding year consisted of twelve  months.  The  tax  surcharge
   16  imposed  by this section shall be payable to the commissioner in full at
   17  the time the report is required to be filed, and such tax  surcharge  or
   18  the  balance  thereof,  imposed on any taxpayer which ceases to exercise
   19  its franchise or be subject to the tax surcharge imposed by this section
   20  shall be payable to the commissioner at the time the report is  required
   21  to be filed, provided such tax surcharge of a domestic corporation which
   22  continues to possess its franchise shall be subject to adjustment as the
   23  circumstances  may require; all other tax surcharges of any such taxpay-
   24  er, which pursuant to the foregoing provisions  of  this  section  would
   25  otherwise  be  payable subsequent to the time such report is required to
   26  be filed, shall nevertheless  be  payable  at  such  time.  All  of  the
   27  provisions  of  this article presently applicable to section one hundred
   28  eighty-three of this article are applicable to the tax surcharge imposed
   29  by this section except for section one hundred ninety-two of this  arti-
   30  cle.
   31    S  62.  Subdivision  1  of  section  184 of the tax law, as amended by
   32  section 2 of part Y of chapter 63 of the laws of  2000,  is  amended  to
   33  read as follows:
   34    1.  The  term  "corporation"  as used in this section shall include an
   35  association, within the meaning of paragraph three of subsection (a)  of
   36  section  seventy-seven hundred one of the internal revenue code (includ-
   37  ing a limited liability company), a publicly traded partnership  treated
   38  as  a  corporation for purposes of the internal revenue code pursuant to
   39  section seventy-seven hundred four thereof.
   40    Every corporation, joint-stock company or association  formed  for  or
   41  principally  engaged in the conduct of canal, steamboat, ferry (except a
   42  ferry company operating between any of the boroughs of the city  of  New
   43  York under a lease granted by the city), express, navigation, pipe line,
   44  transfer,  baggage  express,  omnibus, taxicab, telegraph or local tele-
   45  phone business, or formed for or principally engaged in the  conduct  of
   46  two  or  more  of  such  businesses,  and every corporation, joint-stock
   47  company or association formed for or principally engaged in the  conduct
   48  of  surface railroad, whether or not operated by steam, subway railroad,
   49  elevated railroad, palace car, sleeping  car  or  trucking  business  or
   50  formed  for  or  principally  engaged in the conduct of two or more such
   51  businesses and which has made an election pursuant to subdivision ten of
   52  section one hundred eighty-three of this article, and every other corpo-
   53  ration, joint-stock company or association  formed  for  or  principally
   54  engaged  in  the  conduct  of  a transportation or transmission business
   55  (other than a telephone business),  except  a  corporation,  joint-stock
   56  company  or association formed for or principally engaged in the conduct
       S. 6359                            134                           A. 8559
    1  of a surface railroad, whether or not operated by  steam,  subway  rail-
    2  road,  elevated  railroad, palace car, sleeping car or trucking business
    3  or formed for or principally engaged in the conduct of two  or  more  of
    4  such  businesses  and  which  has  not made the election provided for in
    5  subdivision ten of section one hundred  eighty-three  of  this  article,
    6  and, except a corporation, joint-stock company or association principal-
    7  ly  engaged in the conduct of aviation (including air freight forwarders
    8  acting as principal and like indirect air carriers) and except a  corpo-
    9  ration  principally  engaged  in  providing  telecommunication  services
   10  between aircraft and dispatcher, aircraft and  air  traffic  control  or
   11  ground station and ground station (or any combination of the foregoing),
   12  at  least  ninety  percent  of  the voting stock of which corporation is
   13  owned, directly or indirectly, by air carriers and  which  corporation's
   14  principal  function  is  to  fulfill the requirements of (i) the federal
   15  aviation administration (or the successor thereto) or (ii) the  interna-
   16  tional  civil aviation organization (or the successor thereto), relating
   17  to  the  existence  of  a  communication  system  between  aircraft  and
   18  dispatcher,  aircraft  and  air  traffic  control  or ground station and
   19  ground station (or any combination of the foregoing) for the purposes of
   20  air safety and navigation and [except a corporation, joint-stock company
   21  or association which is liable to taxation under article  thirty-two  of
   22  this  chapter,] for the privilege of exercising its corporate franchise,
   23  or of doing business, or of employing capital, or of owning  or  leasing
   24  property  in  this  state in a corporate or organized capacity, or main-
   25  taining an office in this state, shall pay a franchise tax  which  shall
   26  be  equal to [(i) three-quarters of one percent for taxable years ending
   27  before two thousand one, provided that for a taxable year ending in  two
   28  thousand  the  rate  shall  be  reduced  to three-eighths of one percent
   29  effective July first, two thousand with the result that for purposes  of
   30  implementation  of  such  change  in rate the applicable rate for such a
   31  year shall be nine-sixteenths of one percent, and (ii)] three-eighths of
   32  one percent for taxable years commencing after two  thousand,  upon  its
   33  gross  earnings  from  all  sources within this state; except that, [for
   34  taxable years commencing on or after  January  first,  nineteen  hundred
   35  eighty-five  and  ending  on  or  before December thirty-first, nineteen
   36  hundred eighty-nine, every corporation, joint-stock company  or  associ-
   37  ation  formed  for or principally engaged in the conduct of telephone or
   38  telegraph business shall pay a franchise tax which  shall  be  equal  to
   39  three-tenths  of one per centum upon its gross earnings from all sources
   40  within this state and,] for taxable years commencing on or after January
   41  first, nineteen hundred ninety, every corporation,  joint-stock  company
   42  or association formed for or principally engaged in the conduct of local
   43  telephone  business,  or  telegraph  business  shall pay a franchise tax
   44  which shall be equal to [(i) three-quarters of one percent  for  taxable
   45  years  ending  before two thousand one, provided that for a taxable year
   46  ending in two thousand the rate shall be reduced to three-eighths of one
   47  percent effective July first, two thousand  with  the  result  that  for
   48  purposes  of  implementation  of such change in rate the applicable rate
   49  for such a year shall be  nine-sixteenths  of  one  percent,  and  (ii)]
   50  three-eighths  of  one  percent  for  taxable years commencing after two
   51  thousand, upon its gross earnings from all sources  within  this  state,
   52  except that a corporation, joint-stock company or association formed for
   53  or  principally  engaged  in  the  conduct of a local telephone business
   54  shall exclude the following earnings (but  not  in  any  event  earnings
   55  derived  by such taxpayer from the provision of carrier access services)
   56  derived by such taxpayer from sales for ultimate consumption of telecom-
       S. 6359                            135                           A. 8559
    1  munications service to its customers (i) thirty  percent  of  separately
    2  charged  intra-LATA  toll  service (which shall also include interregion
    3  regional calling plan service) and (ii) one hundred percent of separate-
    4  ly  charged  inter-LATA,  interstate or international telecommunications
    5  service; and except that [corporations, joint-stock companies or associ-
    6  ations formed for or principally engaged in the conduct of surface rail-
    7  road, whether or not operated by steam, subway railroad, elevated  rail-
    8  road,  palace  car  or  sleeping  car, business or any other corporation
    9  formed for or principally engaged in the conduct of a railroad business,
   10  for taxable years prior to nineteen hundred  ninety-seven,  and]  corpo-
   11  rations, joint-stock companies or associations formed for or principally
   12  engaged in the conduct of canal, steamboat, ferry (except a ferry compa-
   13  ny operating between any of the boroughs of the city of New York under a
   14  lease  granted by the city), navigation or any corporation formed for or
   15  principally engaged in the operation of vessels, shall pay  a  franchise
   16  tax  which  shall  be equal to three-quarters of one per centum upon its
   17  gross earnings from all sources within this  state,  excluding  earnings
   18  derived from business of an interstate or foreign character; except that
   19  for  taxable  years beginning in nineteen hundred ninety-seven or there-
   20  after, in the case of a corporation, joint-stock company or  association
   21  which,  with  respect  to taxable years beginning after nineteen hundred
   22  ninety-seven, has made  an  election  pursuant  to  subdivision  ten  of
   23  section one hundred eighty-three of this article and which is formed for
   24  or  principally  engaged  in the conduct of surface railroad, whether or
   25  not operated by steam, subway railroad, elevated railroad,  palace  car,
   26  sleeping  car  or trucking business or formed for or principally engaged
   27  in the conduct of two or more  of  such  businesses,  such  corporation,
   28  joint-stock company or association shall pay a franchise tax which shall
   29  be  equal  to  [(i)  six-tenths  of one percent for taxable years ending
   30  before two thousand one, provided that for a taxable year ending in  two
   31  thousand  the  rate  shall  be  reduced  to three-eighths of one percent
   32  effective July first, two thousand with the result that for purposes  of
   33  implementation  of  such  change  in rate the applicable rate for such a
   34  year shall be thirty-nine eightieths of one percent,  and  (ii)]  three-
   35  eighths  of one percent for taxable years commencing after two thousand,
   36  upon its gross earnings from all sources  within  this  state,  provided
   37  that  in  the  case of a corporation, joint-stock company or association
   38  formed for or principally engaged in the conduct  of  surface  railroad,
   39  whether  or  not  operated by steam, subway railroad, elevated railroad,
   40  palace car or sleeping  car  business,  or  formed  for  or  principally
   41  engaged  in  the  conduct  of two or more of such businesses, such gross
   42  earnings shall not include earnings derived from business of  an  inter-
   43  state or foreign character.
   44    Provided, however, with respect to railroad, elevated railroad, palace
   45  car  or  sleeping  car  business  or any other corporation formed for or
   46  principally engaged in the conduct of a  railroad  business  and  canal,
   47  steamboat,  ferry  (except  a ferry company operating between any of the
   48  boroughs of the city of New York under a lease  granted  by  the  city),
   49  navigation  or  any corporation formed for or principally engaged in the
   50  operation of vessels where the gross earnings from  such  transportation
   51  business both originating and terminating within this state and travers-
   52  ing  both  this  state  and  another state or states or country shall be
   53  subject to the franchise tax imposed by this section (except where  such
   54  corporation, joint-stock company or association is formed for or princi-
   55  pally  engaged in the conduct of a railroad (including surface railroad,
   56  whether or not operated by steam, subway railroad or elevated railroad),
       S. 6359                            136                           A. 8559
    1  palace car or sleeping car business or formed for or principally engaged
    2  in the conduct of two or more of such businesses, and has not  made  the
    3  election  provided  for  under  subdivision  ten  of section one hundred
    4  eighty-three  of  this  article) and such earnings shall be allocated to
    5  this state in the same ratio that the mileage within the state bears  to
    6  the  total  mileage  of such business. Provided, further, a corporation,
    7  joint-stock company or association formed for or principally engaged  in
    8  the  transportation, transmission or distribution of gas, electricity or
    9  steam shall not be subject to tax under  this  section  or  section  one
   10  hundred eighty-three of this article.
   11    The  term "local telephone business" means the provision or furnishing
   12  of telecommunication services for hire wherein the service furnished  by
   13  the  provider  thereof consists of carrier access service or the service
   14  originates and terminates within the same  local  access  and  transport
   15  area  ("LATA"),  a local access and transport area being that geographic
   16  area as established and approved, and as so set and in existence on July
   17  first, nineteen hundred ninety-four, pursuant  to  the  modification  of
   18  final  judgment  in  United  States  v.  Western Electric Company (civil
   19  action no. 82-0192) in the United States district court for the District
   20  of Columbia or within the LATA-like Rochester non-associated independent
   21  area.
   22    The term "telecommunication services" shall have the meaning  ascribed
   23  to such term in section one hundred eighty-six-e of this article.
   24    S  63.  The section heading and the opening paragraph of subdivision 1
   25  of section 184-a of the tax law, the section heading as added by chapter
   26  931 of the laws of 1982 and the opening paragraph of  subdivision  1  as
   27  amended  by  section  2 of part A of chapter 59 of the laws of 2013, are
   28  amended to read as follows:
   29    Additional  [temporary]  metropolitan  transportation   business   tax
   30  surcharge  on  transportation  and transmission corporations and associ-
   31  ations services.
   32    The term "corporation" as used in this section shall include an  asso-
   33  ciation,  within  the  meaning  of  paragraph three of subsection (a) of
   34  section seventy-seven hundred one of the internal revenue code  (includ-
   35  ing  a  limited  liability  company),  and a publicly traded partnership
   36  treated as a corporation for  purposes  of  the  internal  revenue  code
   37  pursuant  to  section  seventy-seven hundred four thereof.  Every corpo-
   38  ration, joint-stock company or association  formed  for  or  principally
   39  engaged in the conduct of canal, steamboat, ferry (except a ferry compa-
   40  ny operating between any of the boroughs of the city of New York under a
   41  lease  granted  by  the city), express, navigation, pipe line, transfer,
   42  baggage express, omnibus, taxicab, telegraph or  local  telephone  busi-
   43  ness, or formed for or principally engaged in the conduct of two or more
   44  such  businesses,  and every corporation, joint-stock company or associ-
   45  ation formed for or principally engaged in  the  conduct  of  a  surface
   46  railroad,  whether  or  not operated by steam, subway railroad, elevated
   47  railroad, palace car, sleeping car or trucking business  or  principally
   48  engaged in the conduct of two or more such businesses and which has made
   49  an  election  pursuant to subdivision ten of section one hundred eighty-
   50  three of this article, and every other corporation, joint-stock  company
   51  or  association  formed  for  or principally engaged in the conduct of a
   52  transportation or transmission business (other than  a  telephone  busi-
   53  ness)  except  a  corporation, joint-stock company or association formed
   54  for or principally engaged in the conduct of a surface railroad, whether
   55  or not operated by steam, subway  railroad,  elevated  railroad,  palace
   56  car,  sleeping  car  or  trucking business or principally engaged in the
       S. 6359                            137                           A. 8559
    1  conduct of two or more such  businesses  and  which  has  not  made  the
    2  election  provided for in subdivision ten of section one hundred eighty-
    3  three of this article, and except a corporation, joint-stock company  or
    4  association  principally  engaged  in the conduct of aviation (including
    5  air freight forwarders acting as principal and like indirect air  carri-
    6  ers)  and except a corporation principally engaged in providing telecom-
    7  munication services between aircraft and dispatcher,  aircraft  and  air
    8  traffic control or ground station and ground station (or any combination
    9  of  the foregoing), at least ninety percent of the voting stock of which
   10  corporation is owned, directly or indirectly, by air carriers and  which
   11  corporation's  principal  function is to fulfill the requirements of (i)
   12  the federal aviation administration (or the successor thereto)  or  (ii)
   13  the  international  civil aviation organization (or the successor there-
   14  to), relating  to  the  existence  of  a  communication  system  between
   15  aircraft  and  dispatcher,  aircraft  and  air traffic control or ground
   16  station and ground station (or any combination of the foregoing) for the
   17  purposes of air safety and navigation [and except a corporation,  joint-
   18  stock  company  or association which is liable to taxation under article
   19  thirty-two of this chapter], shall pay for the privilege  of  exercising
   20  its  corporate franchise, or of doing business, or of employing capital,
   21  or of owning or leasing property in the metropolitan commuter  transpor-
   22  tation district in such corporate or organized capacity, or of maintain-
   23  ing  an office in such district, a tax surcharge [for all or any part of
   24  its taxable years commencing on or after January first, nineteen hundred
   25  eighty-two, but ending before December thirty-first, two thousand  eigh-
   26  teen],  which  tax  surcharge, in addition to the tax imposed by section
   27  one hundred eighty-four of this article, shall be computed at  the  rate
   28  of  [eighteen  percent of the tax imposed under such section one hundred
   29  eighty-four for such taxable years or any part  of  such  taxable  years
   30  ending before December thirty-first, nineteen hundred eighty-three after
   31  the deduction of any credits otherwise allowable under this article, and
   32  at  the rate of] seventeen percent of the tax imposed under such section
   33  for such taxable years or any part of such taxable years [ending  on  or
   34  after  December  thirty-first,  nineteen hundred eighty-three] after the
   35  deduction  of  any  credits  otherwise  allowable  under  this  article;
   36  provided,  however,  that  such  rates of tax surcharge shall be applied
   37  only to that portion of the tax imposed under section one hundred eight-
   38  y-four of this article after the  deduction  of  any  credits  otherwise
   39  allowable  under  this  article  which is attributable to the taxpayer's
   40  business activity carried on within the metropolitan commuter  transpor-
   41  tation  district[; and provided, further, that the tax surcharge imposed
   42  by this section on corporations, joint-stock companies and  associations
   43  formed  for  or principally engaged in the conduct of telephone or tele-
   44  graph business shall be computed in accordance with this subdivision and
   45  paragraph (c) of subdivision two of this section as if  the  three-quar-
   46  ters  of  one  percent  rate  of  tax provided for in subdivision one of
   47  section one hundred eighty-four of this article were applicable to  such
   48  telephone  and  telegraph  businesses for taxable years commencing on or
   49  after January first, nineteen  hundred  eighty-five  and  ending  on  or
   50  before   December   thirty-first,   nineteen  hundred  eighty-nine;  and
   51  provided, further, that the tax surcharge imposed by this section  shall
   52  not  be  imposed upon any taxpayer for more than four hundred thirty-two
   53  months].  Provided, however, that for taxable  years  beginning  in  two
   54  thousand  and  thereafter,  for  purposes  of  this  subdivision the tax
   55  imposed under section one hundred eighty-four of this article  shall  be
   56  deemed  to  have  been  imposed  at  the  rate  of three-quarters of one
       S. 6359                            138                           A. 8559
    1  percent, except that in the case of a corporation,  joint-stock  company
    2  or association which has made an election pursuant to subdivision ten of
    3  section  one  hundred eighty-three of this article, for purposes of this
    4  subdivision  the  tax  imposed  under section one hundred eighty-four of
    5  this article shall be deemed to have been imposed at the  rate  of  six-
    6  tenths of one percent.
    7    S 64. Subdivision 8 of section 186-a of the tax law is REPEALED.
    8    S  65.   The section heading and subdivision 1 of section 186-c of the
    9  tax law, the section heading as amended by chapter  2  of  the  laws  of
   10  1995,  subdivision  1 as amended by section 3 of part II-1 of chapter 57
   11  of the laws of 2008, subparagraph 1 of paragraph (a) of subdivision 1 as
   12  amended by section 3 of part A of chapter 59 f the  laws  of  2013,  are
   13  amended to read as follows:
   14    [Temporary  metropolitan]  METROPOLITAN  transportation  business  tax
   15  surcharge on utility services and excise tax  on  sale  of  telecommuni-
   16  cation  services.  1. (a) (1) Every utility doing business in the metro-
   17  politan commuter transportation district shall pay a tax  surcharge,  in
   18  addition  to the tax imposed by section one hundred eighty-six-a of this
   19  article[, for all or any parts of its taxable  years  commencing  on  or
   20  after  January  first,  nineteen  hundred  eighty-two  but ending before
   21  December thirty-first, two thousand eighteen], to be  computed  [at  the
   22  rate  of  eighteen  percent of the tax imposed under section one hundred
   23  eighty-six-a of this article for such taxable years or any part of  such
   24  taxable  years  ending  before  December  thirty-first, nineteen hundred
   25  eighty-three after the deduction  of  any  credits  otherwise  allowable
   26  under  this  article,  and]  at the rate of seventeen percent of the tax
   27  imposed under such section [for such taxable years or any part  of  such
   28  taxable years ending on or after December thirty-first, nineteen hundred
   29  eighty-three]  after  the deduction of credits otherwise allowable under
   30  this article except any utility credit provided  for  by  article  thir-
   31  teen-A  of  this  chapter;  provided,  however,  that  such rates of tax
   32  surcharge shall be applied only to that portion of the tax imposed under
   33  section one hundred eighty-six-a of this article after the deduction  of
   34  credits otherwise allowable under this article, except any utility cred-
   35  it  provided for by article thirteen-A of this chapter, which is attrib-
   36  utable to the taxpayer's gross income or  gross  operating  income  from
   37  business  activity carried on within the metropolitan commuter transpor-
   38  tation district[; and provided, further, that the tax surcharge  imposed
   39  by  this  section  shall  not be imposed upon any taxpayer for more than
   40  four hundred thirty-two months].
   41    (2) Provided however, that [commencing January first,  two  thousand,]
   42  in the case of the tax imposed under paragraph (a) of subdivision one of
   43  section  one hundred eighty-six-a of this article (relating to providers
   44  of telecommunications services) such tax surcharge shall  be  calculated
   45  as  if  the  tax  imposed under section one hundred eighty-six-a of this
   46  article were imposed at a rate of three and one-half percent.
   47    (b) In addition to the surcharge imposed  by  paragraph  (a)  of  this
   48  subdivision,  there  is hereby imposed a surcharge on the gross receipts
   49  from telecommunication services relating to  the  metropolitan  commuter
   50  transportation  district  at  the rate of seventeen percent of the state
   51  tax rate under section one hundred eighty-six-e of this article [for all
   52  or part of taxable years commencing on and after January first, nineteen
   53  hundred ninety-five but ending before December thirty-first,  two  thou-
   54  sand  thirteen]. All the definitions and other provisions of section one
   55  hundred eighty-six-e of this article shall apply to the tax  imposed  by
   56  this paragraph with such modification and limitation as may be necessary
       S. 6359                            139                           A. 8559
    1  (including  substituting the words "metropolitan commuter transportation
    2  district" for "state" where appropriate) in order to adapt the  language
    3  of  such  section  one  hundred  eighty-six-e  of  this  article  to the
    4  surcharge  imposed  by  this paragraph within such metropolitan commuter
    5  transportation district so as to include (1) any intra-district telecom-
    6  munication services, except any  telecommunication  services  the  gross
    7  receipts  from  which are subject to tax under subparagraph four of this
    8  paragraph, (2) any inter-district telecommunication services which orig-
    9  inate or terminate in such district and are charged to a service address
   10  therein regardless of where the amounts charged for  such  services  are
   11  billed  or  ultimately  paid, except any telecommunications services the
   12  gross receipts from which are subject to tax under subparagraph four  of
   13  this  paragraph, (3) as apportioned to such district, private telecommu-
   14  nication services,  except  any  telecommunication  services  the  gross
   15  receipts  from  which are subject to tax under subparagraph four of this
   16  paragraph, and (4) mobile telecommunications service provided by a  home
   17  service provider where the place of primary use is within such metropol-
   18  itan  commuter  transportation  district.  Provided however, [commencing
   19  October first, nineteen hundred ninety-eight] such tax  surcharge  shall
   20  be  calculated  as  if the tax imposed under section one hundred eighty-
   21  six-e of this article were imposed at  a  rate  of  three  and  one-half
   22  percent.
   23    S  66.  Clause  (iii) of subparagraph (D) of paragraph 3 of subsection
   24  (b) of section 605 of the tax law, as added by chapter 658 of  the  laws
   25  of 2003, is amended to read as follows:
   26    (iii)  Provided  further,  that for the purposes of item (I) of clause
   27  (i) of this subparagraph, a trustee which is a  banking  corporation  as
   28  defined  in subsection (a) of section fourteen hundred fifty-two of this
   29  chapter, AS SUCH SECTION WAS IN EFFECT  ON  DECEMBER  THIRTY-FIRST,  TWO
   30  THOUSAND  FOURTEEN, and which is domiciled outside the state of New York
   31  at the time it becomes a trustee of the trust shall be deemed to contin-
   32  ue to be a trustee domiciled outside the state of New York notwithstand-
   33  ing that it thereafter otherwise becomes  a  trustee  domiciled  in  the
   34  state  of New York by virtue of being acquired by, or becoming an office
   35  or branch of, a corporate trustee domiciled  within  the  state  of  New
   36  York.
   37    S  67.  Subparagraph  (A) of paragraph 10 of subsection (a) of section
   38  606 of the tax law, as amended by section 3 of part CC of chapter 85  of
   39  the laws of 2002, is amended to read as follows:
   40    (A)  the business of which the individual is an owner is substantially
   41  similar in operation and in ownership to a business entity  taxable,  or
   42  previously  taxable, under section one hundred eighty-three, one hundred
   43  eighty-four[,] OR one hundred eighty-five [or one hundred eighty-six] of
   44  article nine; article nine-A[, thirty-two] or thirty-three of this chap-
   45  ter; article twenty-three of this  chapter  or  which  would  have  been
   46  subject  to  tax under such article twenty-three (as such article was in
   47  effect on January first, nineteen hundred eighty), ARTICLE THIRTY-TWO OF
   48  THIS CHAPTER OR WHICH WOULD HAVE BEEN SUBJECT TO TAX UNDER SUCH  ARTICLE
   49  THIRTY-TWO  (AS SUCH ARTICLE WAS IN EFFECT ON DECEMBER THIRTY-FIRST, TWO
   50  THOUSAND FOURTEEN) or the income  (or  losses)  of  which  is  (or  was)
   51  includable  under  article twenty-two of this chapter whereby the intent
   52  and purpose of this paragraph and paragraph five of this subsection with
   53  respect to refunding of credit to new business would be evaded; or
   54    S 68. Subparagraph (B) of paragraph 1 of subsection (i) of section 606
   55  of the tax law, as amended by section 7 of part C-1 of chapter 57 of the
   56  laws of 2009, clause (ix) as amended by section 4 of part G  of  chapter
       S. 6359                            140                           A. 8559
    1  59  of  the laws of 2013, clause (xxxi) as added by section 5 of part MM
    2  of chapter 59 of the laws of 2010, clause (xxxi) as added by section  14
    3  of  part Q of chapter 57 of the laws of 2010, clause (xxxii) as added by
    4  section  6  of part V of chapter 61 of the laws of 2011, clause (xxxiii)
    5  as added by section 4 of part D of chapter  56  of  the  laws  of  2011,
    6  clause  (xxxiii)  as  added  by section 5 of part E of chapter 56 of the
    7  laws of 2011, clause (xxxiii) as added by chapter 604  of  the  laws  of
    8  2011, clause (xxxiv) as added by chapter 109 of the laws of 2012, clause
    9  (xxxv)  as  added  by  section 2 of part AA of chapter 59 of the laws of
   10  2013, clause (xxxv) as added by section 4 of part EE of  chapter  59  of
   11  the  laws  of 2013 and clause (xxxvi) as added by section 8 of part A of
   12  chapter 68 of the laws of 2013, clause (xxxvii) as added by section 3 of
   13  LBD number 74021-03-4, and clause (xxxvii) as added by section 5 of  LBD
   14  number 74039-02-4, is amended to read as follows:
   15    (B)  shall  be  treated as the owner of a new business with respect to
   16  such share if the corporation qualifies as a new  business  pursuant  to
   17  paragraph  [(j)]  (F) of subdivision [twelve] ONE of section two hundred
   18  [ten] TEN-B of this chapter.
   19  With respect to the following        The corporation's credit base under
   20  credit under this section:           section two hundred [ten or section
   21                                       fourteen hundred fifty-six] TEN-B
   22                                       of this chapter is:
   23  (i) Investment tax credit under      Investment credit base or qualified
   24  subsection (a)                       rehabilitation expenditures under
   25                                       subdivision [twelve] ONE of section
   26                                       two hundred [ten] TEN-B
   27  (ii) Empire zone investment          Cost or other basis under
   28  tax credit under subsection (j)      subdivision [twelve-B] THREE
   29                                       of section two hundred [ten] TEN-B
   30  [(iii) Empire zone wage tax credit   Eligible wages under subdivision
   31  under subsection (k)                 nineteen of section two hundred
   32                                       ten or subsection (e) of section
   33                                       fourteen hundred fifty-six
   34  (iv) Empire zone capital tax         Qualified investments and
   35  credit under subsection (l)          contributions under subdivision
   36                                       twenty of section two hundred ten
   37                                       or subsection (d) of section
   38                                       fourteen hundred fifty-six]
   39  (v) Agricultural property tax        Allowable school district property
   40  credit under subsection (n)          taxes under subdivision
   41                                       [twenty-two] ELEVEN of
   42                                       section two hundred [ten]
   43                                       TEN-B
   44  (vi) Credit for employment of        Qualified first-year wages or
   45  persons with disabilities            qualified second-year wages under
   46  under subsection (o)                 subdivision [twenty-three] TWELVE
   47                                       of section two hundred [ten or
   48                                       subsection (f) of section
   49                                       fourteen hundred fifty-six] TEN-B
       S. 6359                            141                           A. 8559
    1  (vii) Employment incentive credit    Applicable investment credit base
    2  under subsection (a-1)               under subdivision [twelve-D] TWO
    3                                       of section two hundred [ten]
    4                                       TEN-B
    5  (viii) Empire zone employment        Applicable investment credit
    6  incentive credit under subsection    under subdivision [twelve-C]
    7  (j-1)                                FOUR of section
    8                                       two hundred [ten] TEN-B
    9  (ix) Alternative fuels               Amount of credit under subdivision
   10  and electric vehicle                 [twenty-four] THIRTY of section
   11  recharging property                  two hundred [ten] TEN-B
   12  credit under subsection (p)
   13  (x) Qualified emerging technology    Applicable credit base under
   14  company employment credit under      subdivision [twelve-E] SEVEN
   15  subsection (q)                       of section two hundred [ten] TEN-B
   16  (xi) Qualified emerging technology   Qualified investments under
   17  company capital tax credit under     subdivision [twelve-F] EIGHT
   18  subsection (r)                       of section two hundred [ten] TEN-B
   19  (xii) Credit for purchase of an      Cost of an automated external
   20  automated external defibrillator     defibrillator under subdivision
   21  under subsection (s)                 [twenty-five] THIRTEEN of section
   22                                       two hundred [ten or subsection
   23                                       (j) of section fourteen hundred
   24                                       fifty-six] TEN-B
   25  (xiii) Low-income housing credit     Credit amount under subdivision
   26  under subsection (x)                 [thirty] FIFTEEN of section
   27                                       two hundred [ten or subsection
   28                                       (l) of section fourteen
   29                                       hundred fifty-six] TEN-B
   30  [(xiv) Credit for transportation     For taxable years beginning
   31  improvement contributions under      before January first, two thousand
   32  subsection (z)                       nine, amount of credit under
   33                                       subdivision thirty-two of
   34                                       section two hundred ten
   35                                       or subsection (n) of section
   36                                       fourteen hundred fifty-six]
   37  (xv) QEZE credit for real property   Amount of credit under subdivision
   38  taxes under subsection (bb)          [twenty-seven] FIVE of
   39                                       section two hundred [ten
   40                                       or subsection (o) of section
   41                                       fourteen hundred fifty-six]
   42                                       TEN-B
   43  (xvi) QEZE tax reduction credit      Amount of benefit period factor,
   44  under subsection (cc)                employment increase factor and zone
   45                                       allocation factor (without regard
   46                                       to pro ration) under subdivision
   47                                       [twenty-eight] SIX of
       S. 6359                            142                           A. 8559
    1                                       section two hundred [ten
    2                                       or subsection (p) of section
    3                                       fourteen hundred fifty-six]
    4                                       TEN-B and amount
    5                                       of tax factor as determined under
    6                                       subdivision (f) of section sixteen
    7  (xvii) Green building credit under   Amount of green building credit
    8  subsection (y)                       under subdivision [thirty-one]
    9                                       SIXTEEN of section two
   10                                       hundred [ten or subsection (m)
   11                                       of section fourteen hundred
   12                                       fifty-six] TEN-B
   13  (xviii) Credit for long-term care    Qualified costs under subdivision
   14  insurance premiums under subsection  [twenty-five-a] FOURTEEN
   15  (aa)                                 of section two hundred [ten
   16                                       or subsection (k) of
   17                                       section fourteen hundred fifty-six]
   18                                       TEN-B
   19  (xix) Brownfield redevelopment       Amount of credit under subdivision
   20  credit under subsection (dd)         [thirty-three] SEVENTEEN
   21                                       of section two hundred
   22                                       [ten or subsection (q) of section
   23                                       fourteen hundred fifty-six]
   24                                       TEN-B
   25  (xx) Remediated brownfield credit    Amount of credit under subdivision
   26  for real property taxes for          [thirty-four] EIGHTEEN
   27  qualified sites under subsection     of section two hundred
   28  (ee)                                 [ten of subsection (r) of section
   29                                       fourteen hundred fifty-six]
   30                                       TEN-B
   31  (xxi) Environmental remediation      Amount of credit under subdivision
   32  insurance credit under subsection    [thirty-five] NINETEEN
   33  (ff)                                 of section two hundred
   34                                       [ten or subsection (s) of section
   35                                       fourteen hundred fifty-six]
   36                                       TEN-B
   37  (xxii) Empire state film             Amount of credit for qualified
   38  production credit under              production costs in production of a
   39  subsection (gg)                      qualified film under subdivision
   40                                       [thirty-six] TWENTY of
   41                                       section two hundred [ten] TEN-B
   42  [(xxiii) Qualified emerging          Qualifying expenditures and
   43  technology company facilities,       development activities under
   44  operations and training credit       subdivision twelve-G of section two
   45  under subsection (nn)                hundred ten]
   46  (xxiv) Security training tax credit  Amount of credit under subdivision
   47  under subsection (ii)                [thirty-seven] TWENTY-ONE
   48                                       of section two hundred
       S. 6359                            143                           A. 8559
    1                                       [ten or under subsection (t) of
    2                                       section fourteen hundred fifty-six]
    3                                       TEN-B
    4  [(xxv) Credit for qualified fuel     For taxable years beginning before
    5  cell electric generating             January first, two thousand nine,
    6  equipment expenditures               amount of credit under subdivision
    7  under subsection (g-2)               thirty-seven of section two hundred
    8                                       ten or subsection (t) of section
    9                                       fourteen hundred fifty-six]
   10  (xxvi) Empire state commercial       Amount of credit for qualified
   11  production credit under subsection   production costs in production of
   12  (jj)                                 a qualified commercial under
   13                                       subdivision [thirty-eight]
   14                                       TWENTY-THREE of
   15                                       section two hundred [ten]
   16                                       TEN-B
   17  (xxvii) Biofuel production tax       Amount of credit under subdivision
   18  credit under subsection (jj)         [thirty-eight] TWENTY-FOUR
   19                                       of section two hundred [ten]
   20                                       TEN-B
   21  (xxviii) Clean heating fuel credit   Amount of credit under subdivision
   22  under subsection (mm)                [thirty-nine] TWENTY-FIVE of
   23                                       section two hundred [ten]
   24                                       TEN-B
   25  (xxix) Credit for rehabilitation     Amount of credit under subdivision
   26  of historic properties under         [forty] TWENTY-SIX of
   27  subsection (oo)                      section two hundred [ten]
   28                                       TEN-B
   29   (xxxi) Excelsior jobs program tax   Amount of credit under subdivision
   30  credit under subsection (qq)         [forty-one] THIRTY-ONE of
   31                                       section two hundred [ten
   32                                       or under subdivision (u) of
   33                                       section fourteen hundred fifty-six]
   34                                       TEN-B
   35  (xxxi) Empire state film             Amount of credit for
   36  post production credit under         qualified post production
   37  subsection (qq)                      costs of a qualified film
   38                                       under subdivision [forty-one]
   39                                       THIRTY-TWO of section
   40                                       two hundred [ten] TEN-B
   41   (xxxii) Economic transformation     Amount of credit under subdivision
   42  and facility redevelopment credit    [forty-three] THIRTY-FIVE
   43                                       of section [210 or under
   44                                       subsection (x) of section fourteen
   45                                       hundred fifty-six] TWO HUNDRED
   46                                       TEN-B
   47   (xxxiii) New York youth works       Amount of credit under
       S. 6359                            144                           A. 8559
    1  tax credit                           subdivision [forty-four] THIRTY-SIX
    2                                       of section two hundred [ten]
    3                                       TEN-B
    4   (xxxiii) Empire state jobs          Amount of credit under
    5  retention program credit             subdivision [forty-four]
    6                                       THIRTY-SEVEN of section
    7                                       two hundred [ten or under
    8                                       subsection (y) of section
    9                                       fourteen hundred fifty-six]
   10                                       TEN-B
   11  (xxxiii) Credit for companies who    Amount of credit under
   12  provide transportation to            subdivision [forty-four]
   13  individuals with disabilities        THIRTY-EIGHT of section
   14  under subsection (tt)                two hundred [ten] TEN-B
   15  (xxxiv) Beer production credit       Amount of credit under
   16  under subsection (uu)                [subdivision] subdivision
   17                                       [forty-five] THIRTY-NINE of
   18                                       section two hundred [ten]
   19                                       TEN-B
   20  (xxxv) Hire a vet credit             Amount of credit under subdivision
   21  under subsection (a-2)               [twenty-three-a] TWENTY-NINE
   22                                       of section two hundred [ten
   23                                       or subsection (e-1) of
   24                                       of section fourteen hundred
   25                                       fifty-six] TEN-B
   26  (xxxv) Minimum wage reimbursement    Amount of credit under subdivision
   27  credit under subsection (aaa)        [forty-six] FORTY
   28                                       of section two hundred
   29                                       [ten or subsection (z) of
   30                                       section fourteen hundred
   31                                       fifty-six] TEN-B
   32  (xxxvi) Tax-free NY area tax         Amount of credit under
   33  elimination credit                   subdivision [forty-seven] FORTY-ONE
   34                                       of section two hundred [ten]
   35                                       TEN-B
   36  (xxxvii) Real property tax           Amount of credit under
   37  credit for manufacturers             subdivision [forty-eight]
   38  under subsection (xx)                FORTY-THREE of section
   39                                       two hundred [ten] TEN-B
   40  (xxxvii) Tax-free NY area            Amount of credit under
   41  excise tax on                        subdivision [forty-eight]
   42  telecommunications services          FORTY-FOUR of section
   43  credit under subsection (xx)         two hundred [ten] TEN-B
   44    S  69.  Subparagraphs  (A) and (B) of paragraph 3 of subsection (i) of
   45  section 606 of the tax law, as added by chapter 170 of the laws of 1994,
   46  are amended to read as follows:
       S. 6359                            145                           A. 8559
    1    (A) Credit carryover. Any excess  credit  under  subparagraph  (A)  of
    2  paragraph  one of this subsection, as it was in effect for taxable years
    3  beginning before nineteen hundred ninety-four, may be  carried  over  to
    4  the  shareholder's following year or years and may be deducted from such
    5  shareholder's  tax for such year or years, except that any excess credit
    6  attributable to subdivision [twelve] ONE of section  two  hundred  [ten]
    7  TEN-B  of  this chapter shall in no event be carried over beyond the ten
    8  taxable years next following the taxable year of origin.
    9    (B) Credit recapture. Any redetermination of credit required  by  this
   10  subsection  as it was in effect for taxable years beginning before nine-
   11  teen hundred ninety-four, upon disposition or cessation of qualified use
   12  of property pursuant to paragraph [(g)] (E) of subdivision [twelve] ONE,
   13  OR paragraph (f) of subdivision [twelve-B or paragraph (f)  of  subdivi-
   14  sion  eighteen] THREE of section two hundred [ten] TEN-B of this chapter
   15  shall be attributed in pro rata shares  to  the  shareholders  who  were
   16  allowed  credit under this subsection with respect to such property, and
   17  the reduction of a shareholder's proportionate stock interest  shall  be
   18  treated  as  a  disposition  of  property for which a redetermination of
   19  credit under such paragraphs is required with respect to such sharehold-
   20  er.
   21    S 70. Subparagraph (B) of paragraph 3 and paragraph 21  of  subsection
   22  (b)  and  paragraph  21 of subsection (c) of section 612 of the tax law,
   23  subparagraph (B) of paragraph 3 of subsection (b) as amended by  section
   24  57,  paragraph  21  of subsection (b) as amended by section 59 and para-
   25  graph 21 of subsection (c) as amended by section 60 of part A of chapter
   26  389 of the laws of 1997, are amended to read as follows:
   27    (B) Shareholders of S corporations. In the case of a shareholder of an
   28  S corporation, with respect to taxes imposed  upon  or  payable  by  the
   29  corporation,  the  term "income taxes" in subparagraph (A) of this para-
   30  graph shall also include the  taxes  imposed  under  [articles]  ARTICLE
   31  nine-A  [and  thirty-two]  of this chapter, regardless of the measure of
   32  such tax, but shall not otherwise include taxes imposed by this  or  any
   33  other  state  of the United States, or any political subdivision of this
   34  or any other state, or the District of Columbia.
   35    (21) In relation to the disposition of  stock  or  indebtedness  of  a
   36  corporation  which  elected  under  subchapter  s  of chapter one of the
   37  internal revenue code for any taxable year of  such  corporation  begin-
   38  ning,  in the case of a corporation taxable under article nine-A of this
   39  chapter, after December thirty-first, nineteen hundred eighty,  [and  in
   40  the case of a corporation taxable under article thirty-two of this chap-
   41  ter,  after  December  thirty-first,  nineteen  hundred ninety-six,] the
   42  amount required to be added to federal adjusted gross income pursuant to
   43  subsection (n) of this section.
   44    (21) In relation to the disposition of  stock  or  indebtedness  of  a
   45  corporation  which  elected  under  subchapter  s  of chapter one of the
   46  internal revenue code for any taxable year of  such  corporation  begin-
   47  ning,  in the case of a corporation taxable under article nine-A of this
   48  chapter, after December thirty-first, nineteen hundred eighty,  [and  in
   49  the case of a corporation taxable under article thirty-two of this chap-
   50  ter,  after  December  thirty-first,  nineteen  hundred ninety-six,] the
   51  amounts required to be subtracted from  federal  adjusted  gross  income
   52  pursuant to subsection (n) of this section.
   53    S  71. Paragraph 2 of subsection (a) of section 632 of the tax law, as
   54  amended by section 2 of part C of chapter 57 of the  laws  of  2010,  is
   55  amended to read as follows:
       S. 6359                            146                           A. 8559
    1    (2) In determining New York source income of a nonresident shareholder
    2  of an S corporation where the election provided for in subsection (a) of
    3  section  six  hundred sixty of this article is in effect, there shall be
    4  included only the portion derived from or connected with New York sourc-
    5  es  of  such  shareholder's  pro  rata  share  of items of S corporation
    6  income, loss and deduction entering  into  his  federal  adjusted  gross
    7  income,  increased  by  reductions for taxes described in paragraphs two
    8  and three of subsection (f) of section thirteen hundred sixty-six of the
    9  internal revenue code, as such portion shall be determined  under  regu-
   10  lations  of  the commissioner consistent with the applicable methods and
   11  rules for allocation under article nine-A [or thirty-two] of this  chap-
   12  ter,  regardless of whether or not such item or reduction is included in
   13  entire net income under article nine-A [or thirty-two] for the tax year.
   14  If a nonresident is a shareholder in an S corporation where the election
   15  provided for in subsection (a) of section  six  hundred  sixty  of  this
   16  article  is in effect, and the S corporation has distributed an install-
   17  ment obligation under section 453(h)(1)(A) of the Internal Revenue Code,
   18  then any gain recognized on the receipt of payments from the installment
   19  obligation for federal income tax purposes will be treated as  New  York
   20  source income allocated in a manner consistent with the applicable meth-
   21  ods  and  rules  for  allocation under article nine-A [or thirty-two] of
   22  this chapter in the year that the assets were sold. In addition, if  the
   23  shareholders  of  the  S corporation have made an election under section
   24  338(h)(10) of the Internal Revenue Code, then any gain recognized on the
   25  deemed asset sale for federal income tax purposes will be treated as New
   26  York source income allocated in a manner consistent with the  applicable
   27  methods and rules for allocation under article nine-A [or thirty-two] of
   28  this  chapter  in  the  year  that  the  shareholder  made  the  section
   29  338(h)(10) election. For purposes of a section 338(h)(10) election, when
   30  a nonresident shareholder exchanges his or her S  corporation  stock  as
   31  part  of  the  deemed  liquidation, any gain or loss recognized shall be
   32  treated as the disposition of an intangible asset and will not  increase
   33  or  offset  any gain recognized on the deemed assets sale as a result of
   34  the section 338(h)(10) election.
   35    S 72. Subparagraph (A) of paragraph 4 of subsection (c) of section 658
   36  of the tax law, as amended by section 1 of part DD of chapter 686 of the
   37  laws of 2003, is amended to read as follows:
   38    (A) General. Every entity which is a partnership, other than a public-
   39  ly traded partnership as defined in section 7704 of the federal Internal
   40  Revenue Code, subchapter K limited liability company or an S corporation
   41  for which the election provided for in subsection  (a)  of  section  six
   42  hundred  sixty  of this [article] PART is in effect, which has partners,
   43  members or shareholders who  are  nonresident  individuals,  as  defined
   44  under  subsection  (b) of section six hundred five of this article, or C
   45  corporations, and which has any income derived from  New  York  sources,
   46  determined  in  accordance  with  the  applicable  rules  of section six
   47  hundred thirty-one of this article as in the case of a nonresident indi-
   48  vidual, shall pay estimated tax on such income on behalf of  such  part-
   49  ners,  members or shareholders in the manner and at the times prescribed
   50  by subsection (c) of section six hundred eighty-five  of  this  article.
   51  For  purposes  of  this paragraph, the term "estimated tax" shall mean a
   52  partner's, member's or shareholder's  distributive  share  or  pro  rata
   53  share  of the entity income derived from New York sources, multiplied by
   54  the highest rate of tax prescribed by section six hundred  one  of  this
   55  article  for  the taxable year of any partner, member or shareholder who
   56  is an individual taxpayer,  or  paragraph  (a)  of  subdivision  one  of
       S. 6359                            147                           A. 8559
    1  section  two  hundred  ten  of  this chapter for the taxable year of any
    2  partner, member or shareholder which is a C corporation, whether or  not
    3  such  C corporation is subject to tax under article nine, nine-A[, thir-
    4  ty-two,]  or  thirty-three of this chapter, and reduced by the distribu-
    5  tive share or pro rata share of any credits determined under section one
    6  hundred eighty-seven, one  hundred  eighty-seven-a,  six  hundred  six[,
    7  fourteen  hundred  fifty-six] or fifteen hundred eleven of this chapter,
    8  whichever is applicable, derived from the entity.
    9    S 73. Subsections  (a)  and  (h)  of  section  660  of  the  tax  law,
   10  subsection (a) as amended by section 50 and subsection (h) as amended by
   11  section  66 of part A of chapter 389 of the laws of 1997, are amended to
   12  read as follows:
   13    (a) Election. If a corporation  is  an  eligible  S  corporation,  the
   14  shareholders  of  the  corporation  may elect in the manner set forth in
   15  subsection (b) of this section to  take  into  account,  to  the  extent
   16  provided for in this article (or in article thirteen of this chapter, in
   17  the case of a shareholder which is a taxpayer under such article), the S
   18  corporation  items  of  income, loss, deduction and reductions for taxes
   19  described in paragraphs two and three of subsection (f) of section thir-
   20  teen hundred sixty-six of the internal revenue code which are taken into
   21  account for federal  income  tax  purposes  for  the  taxable  year.  No
   22  election  under this subsection shall be effective unless all sharehold-
   23  ers of the corporation have so elected. An eligible S corporation is (i)
   24  an S corporation which is subject to tax under article nine-A [or  thir-
   25  ty-two] of this chapter, OR (ii) an S corporation which is the parent of
   26  a qualified subchapter S subsidiary subject to tax under article nine-A,
   27  where  the  shareholders of such parent corporation are entitled to make
   28  the election under this subsection by reason of  subparagraph  three  of
   29  paragraph  (k)  of subdivision nine of section two hundred eight of this
   30  chapter[; or (iii) an S corporation which is the parent of  a  qualified
   31  subchapter  S corporation subject to tax under article thirty-two, where
   32  the shareholders of such parent are entitled to make the election  under
   33  this  subsection  by  reason  of  paragraph  three  of subsection (o) of
   34  section fourteen hundred fifty-three of this chapter].
   35    (h) Cross reference. For definitions relating to S  corporations,  see
   36  subdivision  one-A of section two hundred eight [and subsections (f) and
   37  (g) of section fourteen hundred fifty] of this chapter.
   38    S 74. Paragraph 1 of subsection (i) of section 660 of the tax law,  as
   39  added  by  section  1  of  part  L of chapter 60 of the laws of 2007, is
   40  amended to read as follows:
   41    (1) Notwithstanding the provisions in subsection (a) of this  section,
   42  in  the  case  of an eligible S corporation for which the election under
   43  subsection (a) of this section is not in effect for the current  taxable
   44  year,  the  shareholders of an eligible S corporation are deemed to have
   45  made that election effective for the  eligible  S  corporation's  entire
   46  current  taxable year, if the eligible S corporation's investment income
   47  for the current taxable year is more than fifty percent of  its  federal
   48  gross  income  for  such  year  [provided that this subsection shall not
   49  apply to an eligible S corporation that is subject to tax under  article
   50  thirty-two  of this chapter]. IN DETERMINING AN ELIGIBLE S CORPORATION'S
   51  INVESTMENT INCOME, THE INVESTMENT INCOME OF  A  QUALIFIED  SUBCHAPTER  S
   52  SUBSIDIARY  OWNED  DIRECTLY  OR INDIRECTLY BY THE ELIGIBLE S CORPORATION
   53  SHALL BE INCLUDED.
   54    S 75. Paragraph 3 of subsection (c) of section 1085 of the tax law, as
   55  amended by section 15 of part Y of chapter 63 of the laws  of  2000,  is
   56  amended to read as follows:
       S. 6359                            148                           A. 8559
    1    (3)  The  provisions of this subsection and subsections (d) and (e) of
    2  this section shall apply to the failure of a taxpayer to file a declara-
    3  tion of estimated tax surcharge or the failure to pay all or any part of
    4  an amount which is applied as an installment against such estimated  tax
    5  surcharge  pursuant  to sections one hundred ninety-seven-a, one hundred
    6  ninety-seven-b, two hundred thirteen-a, two hundred  thirteen-b,  [four-
    7  teen  hundred  sixty, fourteen hundred sixty-one,] fifteen hundred thir-
    8  teen and fifteen hundred fourteen  of  this  chapter.  For  purposes  of
    9  applying this section and subsections (d) and (e) of this section to the
   10  estimated  tax surcharge, where appropriate the term "tax" shall be read
   11  to mean "tax surcharge," and the terms "amount  required  to  be  paid,"
   12  "amount  which  would  be  required to be paid," and "amount which would
   13  have been required to be paid" shall be computed as the product  of  (1)
   14  such  amount computed without regard to the tax surcharges imposed under
   15  sections  one  hundred  eighty-four-a,  one  hundred  eighty-six-c,  one
   16  hundred  eighty-eight, two hundred nine-A, two hundred nine-B, [fourteen
   17  hundred fifty-five-A, fourteen hundred  fifty-five-B,]  fifteen  hundred
   18  five-a,  and  fifteen  hundred  twenty  of this chapter, and (2) the MTA
   19  percentage. The term "MTA percentage" shall mean the product of (A)  the
   20  tax rate applicable under such sections imposing such surcharges and (B)
   21  the  percentage  utilized  in  determining the portion of the taxpayer's
   22  business activity carried on within the metropolitan commuter  transpor-
   23  tation district under such sections.
   24    S  76.  The  opening  paragraph  of subparagraph (A) of paragraph 3 of
   25  subsection (d) of section 1085 of the tax law, as amended by chapter 170
   26  of the laws of 1994, is amended to read as follows:
   27    An amount equal to ninety-one percent of the tax for the taxable  year
   28  computed  on all items entering into the computation of the tax or taxes
   29  of the taxpayer for the taxable year under article nine, nine-A[,  thir-
   30  ty-two]  or  thirty-three of this chapter. For purposes of computing the
   31  tax, all items of receipts, income and expenses shall be  placed  on  an
   32  annualized basis--
   33    S  77. Clause (i) of subparagraph (A) of paragraph 4 of subsection (d)
   34  of section 1085 of the tax law, as amended by chapter 57 of the laws  of
   35  1993, is amended to read as follows:
   36    (i)  take  the items entering into the computation of the tax or taxes
   37  of the taxpayer for the taxable year under article nine, nine-A[,  thir-
   38  ty-two] or thirty-three of this chapter, for all months during the taxa-
   39  ble year preceding the filing month,
   40    S 78. Paragraph 5 of subsection (d) of section 1085 of the tax law, as
   41  added by chapter 61 of the laws of 1989, is amended to read as follows:
   42    (5)  In the case of any declaration installment, any reduction in such
   43  installment resulting from the application of paragraph three or four of
   44  this subsection shall be recaptured by increasing the amount of the next
   45  installment determined under paragraph one or two of this subsection  or
   46  paragraph  one  of  subsection (c) of this section by the amount of such
   47  reduction (and by increasing subsequent installments to the extent  that
   48  the  reduction has not previously been recaptured under this paragraph).
   49  For purposes of the preceding sentence, a declaration installment  means
   50  any installment of estimated tax other than the mandatory first install-
   51  ment  required  under  paragraph  (a)  of subdivision one of section one
   52  hundred ninety-seven-b, subdivision (a) of  section  two  hundred  thir-
   53  teen-b[, subsection (a) of section fourteen hundred sixty-one] or subdi-
   54  vision (a) of section fifteen hundred fourteen of this chapter.
       S. 6359                            149                           A. 8559
    1    S 79. Paragraph 1 of subsection (e) of section 1085 of the tax law, as
    2  amended  by  section 28-p of part H-3 of chapter 62 of the laws of 2003,
    3  is amended to read as follows:
    4    (1) Paragraphs (1) and (2) of subsection (d) of this section shall not
    5  apply  in  the  case of any corporation (or any predecessor corporation)
    6  which had [entire net] BUSINESS income, or the portion thereof allocated
    7  within the state, of one million dollars or more for  any  taxable  year
    8  during  the  three  taxable years immediately preceding the taxable year
    9  involved; provided, however, that in the case of a  corporation  subject
   10  to  tax  under section fifteen hundred two-a of this chapter, paragraphs
   11  (1) and (2) of subsection (d) of this section shall not  apply  if  such
   12  corporation  had  entire  net  income,  or the portion thereof allocated
   13  within the state, of one million dollars or more for any  of  the  three
   14  taxable years immediately preceding the taxable year involved, or if the
   15  direct  premiums  subject  to tax under section fifteen hundred two-a of
   16  this chapter of the corporation for any of such three preceding  taxable
   17  years  beginning on or after January first, two thousand three equals or
   18  exceeds three million seven hundred fifty thousand dollars.
   19    S 80. Subsections (m) and (o) of section  1085  of  the  tax  law  are
   20  REPEALED.
   21    S  81.  Clause  (ii)  of subparagraph (B) of paragraph 2 of subsection
   22  (q), paragraph 3 of subsection (s) and the closing  paragraph  of  para-
   23  graph  1  of  subsection (t) of section 1085 of the tax law, as added by
   24  section 10 of part N of chapter 61 of the laws of 2005, are  amended  to
   25  read as follows:
   26    (ii)  fifty percent of the gross income that the organizer or material
   27  advisor derived with respect to activities that were the basis  for  the
   28  requirement to file, disclose or provide information pursuant to section
   29  six  thousand  eleven  of  the internal revenue code, to the extent such
   30  gross income is attributable to the avoidance of any tax  imposed  under
   31  article nine, nine-A[, thirty-two,] or thirty-three of this chapter.
   32    (3)  For  purposes  of  this  subsection,  the term "understatement of
   33  liability" means any understatement  of  the  net  amount  payable  with
   34  respect  to any tax imposed under article nine, nine-A[, thirty-two,] or
   35  thirty-three of this chapter or any  overstatement  of  the  net  amount
   36  creditable or refundable with respect to any such tax.
   37  shall  pay,  with respect to each activity described in subparagraph (A)
   38  of this paragraph, a penalty equal to one thousand dollars  or,  if  the
   39  person  establishes  that it is lesser, one hundred percent of the gross
   40  income derived (or to be derived) by such person from such  activity  to
   41  the  extent  such gross income is attributed to the avoidance of any tax
   42  imposed under articles nine, nine-A[,  thirty-two]  or  thirty-three  of
   43  this  chapter;  provided,  however,  that if an activity with respect to
   44  which a penalty imposed  under  this  subsection  involves  a  statement
   45  described  in  clause  (i)  of subparagraph (B) of paragraph one of this
   46  subsection, the penalty shall be equal to fifty  percent  of  the  gross
   47  income derived (or to be derived) from that activity within the state by
   48  the  person on which the penalty is imposed. For purposes of the preced-
   49  ing sentence, activities described in clause (i) of subparagraph (A)  of
   50  this  paragraph  with  respect  to  each  entity or arrangement shall be
   51  treated as a separate activity and participation in each sale  described
   52  in  clause (ii) of subparagraph (A) of this paragraph shall be so treat-
   53  ed.
   54    S 82. The opening paragraph of subsection (c) of section 1087  of  the
   55  tax  law,  as  separately amended by chapters 760 and 770 of the laws of
   56  1992, is amended to read as follows:
       S. 6359                            150                           A. 8559
    1    If a taxpayer is required by subdivision three of section two  hundred
    2  eleven[,  subsection (e) of section fourteen hundred sixty-two] or para-
    3  graph one of subdivision (e) of section fifteen hundred fifteen OF  THIS
    4  CHAPTER, to file a report or amended return in respect of (i) a decrease
    5  or  increase  in  federal  taxable income or federal alternative minimum
    6  taxable income or federal tax, or (ii) a federal change or correction or
    7  renegotiation, or computation or recomputation of tax, which is  treated
    8  in  the  same manner as if it were an overpayment for federal income tax
    9  purposes, claim for credit or refund of any resulting overpayment of tax
   10  shall be filed by the taxpayer within  two  years  from  the  time  such
   11  report  or amended return was required to be filed with the commissioner
   12  [of taxation and finance]. If the report or amended return  required  by
   13  any  such provision of law is not filed within the period therein speci-
   14  fied, no interest shall be payable on any claim for credit or refund  of
   15  the  overpayment  attributable  to the federal change or correction. The
   16  amount of such credit or refund--
   17    S 83. Subsection (g) of section 1088 of the tax  law,  as  amended  by
   18  chapter  61 of the laws of 1989 and relettered by chapter 55 of the laws
   19  of 1992, is amended to read as follows:
   20    (g) Cross-reference.--For provision with  respect  to  interest  after
   21  failure  to  file  a report or amended return under subdivision three of
   22  section two hundred eleven[, subsection (e) of section fourteen  hundred
   23  sixty-two]  or  paragraph  one  of  subdivision  (e)  of section fifteen
   24  hundred fifteen, see subsection (c) of section one thousand  eighty-sev-
   25  en.
   26    S 84. Paragraph 2 of subsection (b) of section 1096 of the tax law, as
   27  amended  by  chapter  411  of  the  laws  of 1986, is amended to read as
   28  follows:
   29    (2) The [tax commission] COMMISSIONER may take any action under  para-
   30  graph  one  of  this  subdivision  to  inquire into the commission of an
   31  offense connected with the administration or enforcement of this article
   32  or article nine, [nine-a] NINE-A,  thirteen,  [thirteen-a,  thirty-two,]
   33  THIRTEEN-A  or  thirty-three  of  this  chapter, provided, however, that
   34  notwithstanding the provisions of section one  hundred  seventy-four  of
   35  this  chapter  no  such  action  shall  be  taken when a referral by the
   36  department or the [tax commission] COMMISSIONER to the attorney general,
   37  a district attorney or any other  prosecutorial  agency  is  in  effect.
   38  Provided,  however,  the [tax commission] COMMISSIONER shall have power,
   39  during the period when such referral is in  effect,  to  examine  or  to
   40  cause  to have examined, by any agent or representative designated by it
   41  for that purpose, any books, papers, records or memoranda  bearing  upon
   42  the  matters  required  to  be included in the return, where such books,
   43  papers, records or memoranda are in its possession, or where such books,
   44  papers, records or memoranda are  in  the  possession  of  the  attorney
   45  general,  district  attorney or other prosecutorial agency to which such
   46  referral is made.
   47    S 85. Paragraph 1 of subsection (e) of section 1096 of the tax law, as
   48  amended by section 8 of subpart D of part V1 of chapter 57 of  the  laws
   49  of 2009, is amended to read as follows:
   50    (1)  Authority to set interest rates.---The commissioner shall set the
   51  overpayment and underpayment rates of interest to be  paid  pursuant  to
   52  sections  two  hundred  thirteen,  two  hundred  thirteen-b, two hundred
   53  fifty-eight, two hundred sixty-three, two hundred ninety-four, one thou-
   54  sand eighty-four, one thousand eighty-five[,] AND one  thousand  eighty-
   55  eight[,  fourteen hundred sixty-one and fourteen hundred sixty-three] of
   56  this chapter, but if no such rate or rates of  interest  are  set,  such
       S. 6359                            151                           A. 8559
    1  overpayment  rate shall be deemed to be set at six percent per annum and
    2  such underpayment rate shall be deemed to be set at seven  and  one-half
    3  percent  per annum. Such overpayment and underpayment rates shall be the
    4  rates  prescribed in paragraph two of this subsection, but the underpay-
    5  ment rate shall not be less than seven and one-half percent  per  annum.
    6  Any  such  rates  set  by  the commissioner shall apply to taxes, or any
    7  portion thereof, which remain or become due or overpaid on or after  the
    8  date  on  which  such  rates  become effective and shall apply only with
    9  respect to interest computed or computable for periods  or  portions  of
   10  periods occurring in the period during which such rates are in effect.
   11    S  86. Subdivision (b) of section 1201-a of the tax law, as amended by
   12  section 5 of part Y of chapter 62 of the laws of  2006,  is  amended  to
   13  read as follows:
   14    (b) Empire state film production credit. Any city in this state having
   15  a  population  of one million or more, acting through its local legisla-
   16  tive body, is hereby authorized to adopt and amend local laws to allow a
   17  credit against the general corporation tax and the unincorporated  busi-
   18  ness  tax  imposed  pursuant  to  the authority of chapter seven hundred
   19  seventy-two of the laws of nineteen hundred  sixty-six  which  shall  be
   20  substantially  identical to the credit allowed under section twenty-four
   21  of this chapter, except that (A) the percentage of qualified  production
   22  costs  used to calculate such credit shall be five percent, (B) whenever
   23  such section twenty-four references the state, such words shall be  read
   24  as  referencing  the  city,  (C)  such credit shall be allowed only to a
   25  taxpayer which is a qualified  film  production  company,  and  (D)  the
   26  effective  date  of  such  credit shall be July first, two thousand six.
   27  Such credit shall be applied in a  manner  consistent  with  the  credit
   28  allowed  under  subdivision  [thirty-six]  TWENTY of section two hundred
   29  [ten] TEN-B of this chapter except as may  be  necessary  to  take  into
   30  account differences between the general corporation tax and the unincor-
   31  porated business tax.
   32    S  87. Subdivision (c) of section 1201-a of the tax law, as amended by
   33  chapter 300 of the laws of 2007, is amended to read as follows:
   34    (c) Empire state commercial production credit. Any city in this  state
   35  having  a  population  of  one million or more, acting through its local
   36  legislative body, is hereby authorized to adopt and amend local laws  to
   37  allow a credit against the general corporation tax and the unincorporat-
   38  ed  business  tax  imposed  pursuant  to  the authority of chapter seven
   39  hundred seventy-two of the laws  of  nineteen  hundred  sixty-six  which
   40  shall  be  substantially  identical  to  the  credit  allowed  under the
   41  provisions of section twenty-eight of this chapter, except that (A)  the
   42  percentage  of  qualified production costs used to calculate such credit
   43  shall be five percent, (B) whenever such section twenty-eight references
   44  the state, such words shall be read as referencing the  city,  (C)  such
   45  credit  shall  be allowed only to a taxpayer that is a qualified commer-
   46  cial production company, and (D) the effective date of such credit shall
   47  be as provided in local laws. Such credit shall be applied in  a  manner
   48  consistent  with  the  credit  allowed  under subdivision [thirty-eight]
   49  TWENTY-THREE of section two hundred [ten] TEN-B of this  chapter  except
   50  as may be necessary to take into account differences between the general
   51  corporation tax and unincorporated business tax.
   52    S 88. The section heading and paragraphs 1 and 3 of subdivision (a) of
   53  section  1505-a  of the tax law, the section heading as added by chapter
   54  11 of the laws of 1983 and paragraphs 1 and  3  of  subdivision  (a)  as
   55  amended  by  section  6 of part A of chapter 59 of the laws of 2013, are
   56  amended to read as follows:
       S. 6359                            152                           A. 8559
    1    [Temporary  metropolitan]  METROPOLITAN  transportation  business  tax
    2  surcharge on insurance corporations.
    3    (1)  Every  domestic  insurance corporation and every foreign or alien
    4  insurance corporation, and every life insurance corporation described in
    5  subdivision (b) of section fifteen hundred one of this article, for  the
    6  privilege  of  exercising its corporate franchise, or of doing business,
    7  or of employing capital, or of owning or leasing property in the  metro-
    8  politan  commuter  transportation  district  in a corporate or organized
    9  capacity, or of maintaining  an  office  in  the  metropolitan  commuter
   10  transportation  district,  [for  all  or  any  part of its taxable years
   11  commencing on or after January first, nineteen hundred  eighty-two,  but
   12  ending  before  December  thirty-first,  two  thousand eighteen,] except
   13  corporations specified in subdivision (c)  of  section  fifteen  hundred
   14  twelve  of  this  article,  shall annually pay, in addition to the taxes
   15  otherwise imposed by this article, a tax surcharge on the taxes  imposed
   16  under  this  article after the deduction of any credits otherwise allow-
   17  able under this article as allocated to such district. Such taxes  shall
   18  be  allocated  to  such  district  for  purposes  of  computing such tax
   19  surcharge upon taxpayers subject to tax under subdivision (b) of section
   20  fifteen hundred ten of this article by applying the methodology,  proce-
   21  dures  and computations set forth in subdivisions (a) and (b) of section
   22  fifteen hundred four of this article, except that  references  to  terms
   23  denoting  New York premiums, and total wages, salaries, personal service
   24  compensation and commissions within New York shall be read  as  denoting
   25  within  the  metropolitan  commuter  transportation  district  and terms
   26  denoting total premiums and  total  wages,  salaries,  personal  service
   27  compensation and commissions shall be read as denoting within the state.
   28  If it shall appear to the commissioner that the application of the meth-
   29  odology,  procedures and computations set forth in such subdivisions (a)
   30  and (b) does not properly reflect the activity, business or income of  a
   31  taxpayer  within the metropolitan commuter transportation district, then
   32  the commissioner shall be authorized, in the commissioner's  discretion,
   33  to  adjust such methodology, procedures and computations for the purpose
   34  of allocating such taxes by:
   35    (A) excluding one or more factors therein;
   36    (B) including one or more other factors  therein,  such  as  expenses,
   37  purchases,  receipts  other  than  premiums,  real  property or tangible
   38  personal property; or
   39    (C) any other similar or different method which allocates  such  taxes
   40  by  attributing a fair and proper portion of such taxes to the metropol-
   41  itan commuter transportation district. The  commissioner  from  time  to
   42  time  shall  publish all rulings of general public interest with respect
   43  to any application of the provisions  of  the  preceding  sentence.  The
   44  commissioner  may  promulgate rules and regulations to further implement
   45  the provisions of this section.
   46    (3) Such tax surcharge shall be computed  at  the  rate  of  [eighteen
   47  percent  of  the  taxes  imposed  under sections fifteen hundred one and
   48  fifteen hundred ten of  this  article  as  limited  by  section  fifteen
   49  hundred  five  of  this article, as allocated to such district, for such
   50  taxable years or any part of such taxable years ending  before  December
   51  thirty-first,  nineteen  hundred eighty-three after the deduction of any
   52  credits otherwise allowable under this article, at the rate of seventeen
   53  percent of the taxes imposed under such sections as limited  by  section
   54  fifteen hundred five of this article, as allocated to such district, for
   55  such  taxable years or any part of such taxable years ending on or after
   56  December thirty-first, nineteen hundred eighty-three and before  January
       S. 6359                            153                           A. 8559
    1  first,  two  thousand three after the deduction of any credits otherwise
    2  allowable under this article, and at the rate of] seventeen  percent  of
    3  the  taxes  imposed  under sections fifteen hundred one, fifteen hundred
    4  two-a,  and fifteen hundred ten of this article, as limited or otherwise
    5  determined by subdivision (a) or (b) of section fifteen hundred five  of
    6  this  article, as allocated to such district, [for such taxable years or
    7  any part of such taxable years ending after December  thirty-first,  two
    8  thousand  two]  after  the  deduction of any credits otherwise allowable
    9  under this article[; provided, however, that the tax  surcharge  imposed
   10  by  this  section  shall  not be imposed upon any taxpayer for more than
   11  four hundred thirty-two months].  Provided  however,  that  for  taxable
   12  years  commencing  on or after July first, two thousand, and in the case
   13  of taxpayers subject to tax under section fifteen hundred two-a of  this
   14  article,  for taxable years of such taxpayers beginning on or after July
   15  first, two thousand and before January first, two thousand  three,  such
   16  surcharge  shall  be  calculated  as if (i) the rate of the tax computed
   17  under paragraph one of subdivision (a) of section fifteen hundred two of
   18  this article was nine percent and (ii) the rate of the limitation on tax
   19  set forth in section fifteen hundred five of this article for  domestic,
   20  foreign  and  alien  insurance corporations except life insurance corpo-
   21  rations was two and six-tenths percent.
   22    S 89. Section 1825 of the tax law, as amended by section 2 of  part  E
   23  of chapter 25 of the laws of 2009, is amended to read as follows:
   24    S  1825.  Violation  of secrecy provisions of the tax law.--Any person
   25  who violates the provisions of subdivision (b)  of  section  twenty-one,
   26  subdivision one of section two hundred two, subdivision eight of section
   27  two  hundred  eleven, subdivision (a) of section three hundred fourteen,
   28  subdivision one or two of section  four  hundred  thirty-seven,  section
   29  four  hundred  eighty-seven,  subdivision  one  or  two  of section five
   30  hundred fourteen, subsection (e) of section  six  hundred  ninety-seven,
   31  subsection  (a)  of section nine hundred ninety-four, subdivision (a) of
   32  section eleven hundred forty-six, section twelve  hundred  eighty-seven,
   33  subdivision (a) of section fourteen hundred eighteen, [subsection (a) of
   34  section  fourteen  hundred  sixty-seven,]  subdivision  (a)  of  section
   35  fifteen hundred eighteen, subdivision (a)  of  section  fifteen  hundred
   36  fifty-five  of  this  chapter, and subdivision (e) of section 11-1797 of
   37  the administrative code of the city of New York shall  be  guilty  of  a
   38  misdemeanor.
   39    S 90. Subdivisions (s) and (t) of section 957 of the general municipal
   40  law,  as  amended  by  section 1 of part S1 of chapter 57 of the laws of
   41  2009, are amended to read as follows:
   42    (s) "Qualified investment project" shall mean a  project  (i)  located
   43  within  an  empire zone, (ii) at which five hundred or more jobs will be
   44  created, provided such jobs are new to the state and are in addition  to
   45  any  other  jobs  previously created by the owner of such project in the
   46  state, and (iii) which will consist of tangible  personal  property  and
   47  other  tangible  property, including buildings and structural components
   48  of buildings, described in subparagraphs  (i),  (ii),  (iii),  (iv)  and
   49  clause  (A)  or  (C) of subparagraph (v) of paragraph (b) of subdivision
   50  [twelve-B] THREE of section two hundred [ten] TEN-B of the tax law,  the
   51  basis  of  which  for  federal  income tax purposes will equal or exceed
   52  seven hundred fifty million dollars. Provided however, the owner of such
   53  project does not employ more than two hundred persons in  the  state  at
   54  the time such project is commenced.
   55    (t)  "Significant capital investment project" shall mean a project (i)
   56  located within an empire  zone,  (ii)  which  will  be  either  a  newly
       S. 6359                            154                           A. 8559
    1  constructed  facility or a newly constructed addition to or expansion of
    2  a qualified investment project, consisting of tangible personal property
    3  and other tangible property, including buildings and  structural  compo-
    4  nents  of  buildings,  described in subparagraphs (i), (ii), (iii), (iv)
    5  and clause (A) or (C) of subparagraph (v) of paragraph (b)  of  subdivi-
    6  sion [twelve-B] THREE of section two hundred [ten] TEN-B of the tax law,
    7  the  basis of which for federal income tax purposes will equal or exceed
    8  seven hundred fifty million dollars, (iii) which  is  constructed  after
    9  the  basis  for  federal  income tax purposes of the property comprising
   10  such qualified investment project equals or exceeds seven hundred  fifty
   11  million  dollars,  and  (iv)  at which five hundred or more jobs will be
   12  created, provided such jobs are new to the state and are in addition  to
   13  any  other  jobs  previously created by the owner of such project in the
   14  state.
   15    S 91. Subclauses (III) and (IV) of clause (ii) of subparagraph (B)  of
   16  paragraph 6 of subdivision (a) of section 292 of the tax law, as amended
   17  by section 3 of part E of chapter 59 of the laws of 2013, are amended to
   18  read as follows:
   19    (III)  [The  adjustment  required in this paragraph shall not apply if
   20  the taxpayer establishes, by clear and convincing evidence of  the  type
   21  and  in  the  form  specified by the commissioner, that: (a) the royalty
   22  payment was paid, accrued or incurred  to  a  related  member  organized
   23  under  the  laws  of  a  country  other  than the United States; (b) the
   24  related member's income from the transaction was subject to a comprehen-
   25  sive income tax treaty between such country and the United  States;  (c)
   26  the  related member was subject to tax in a foreign nation on a tax base
   27  that included the royalty payment  paid,  accrued  or  incurred  by  the
   28  taxpayer; (d) the related member's income from the transaction was taxed
   29  in  such  country  at  an  effective  rate of tax at least equal to that
   30  imposed by this state; and (e) the royalty payment was paid, accrued  or
   31  incurred pursuant to a transaction that was undertaken for a valid busi-
   32  ness purpose and using terms that reflect an arm's length relationship.
   33    (IV)] The adjustment required in this paragraph shall not apply if the
   34  taxpayer and the commissioner agree in writing to the application or use
   35  of alternative adjustments or computations. The commissioner may, in his
   36  or  her  discretion,  agree  to  the  application  or use of alternative
   37  adjustments or computations when he or she concludes that in the absence
   38  of such agreement the income of  the  taxpayer  would  not  be  properly
   39  reflected.
   40    S  92.  Clauses  (iii)  and (iv) of subparagraph (B) of paragraph 2 of
   41  subsection (r) of section 612 of the tax law, as amended by section 5 of
   42  part E of chapter 59 of the  laws  of  2013,  are  amended  to  read  as
   43  follows:
   44    (iii)  [The  adjustment required in this subsection shall not apply if
   45  the taxpayer establishes, by clear and convincing evidence of  the  type
   46  and  in  the  form  specified by the commissioner, that: (I) the royalty
   47  payment was paid, accrued or incurred  to  a  related  member  organized
   48  under  the  laws  of  a  country  other than the United States; (II) the
   49  related member's income from the transaction was subject to a comprehen-
   50  sive income tax treaty between such country and the United States; (III)
   51  the related member was subject to tax in a foreign nation on a tax  base
   52  that  included  the  royalty  payment  paid,  accrued or incurred by the
   53  taxpayer; (IV) the related member's  income  from  the  transaction  was
   54  taxed  in  such  country at an effective tax rate at least equal to that
   55  imposed by this state; and (V) the royalty payment was paid, accrued  or
       S. 6359                            155                           A. 8559
    1  incurred pursuant to a transaction that was undertaken for a valid busi-
    2  ness purpose and using terms that reflect an arm's length relationship.
    3    (iv)]  The  adjustment  required in this subsection shall not apply if
    4  the taxpayer and the commissioner agree in writing to the application or
    5  use of alternative adjustments or computations. The commissioner may, in
    6  his or her discretion, agree to the application or  use  of  alternative
    7  adjustments or computations when he or she concludes that in the absence
    8  of  such  agreement  the  income  of  the taxpayer would not be properly
    9  reflected.
   10    S 93. Intentionally omitted.
   11    S 94. Subclauses (III) and (IV) of clause (ii) of subparagraph (B)  of
   12  paragraph  14  of  subdivision  (b)  of  section 1503 of the tax law, as
   13  amended by section 8 of part E of chapter 59 of the laws  of  2013,  are
   14  amended to read as follows:
   15    (III)  [The  adjustment  required in this paragraph shall not apply if
   16  the taxpayer establishes, by clear and convincing evidence of  the  type
   17  and  in  the  form  specified by the commissioner, that: (a) the royalty
   18  payment was paid, accrued or incurred  to  a  related  member  organized
   19  under  the  laws  of  a  country  other  than the United States; (b) the
   20  related member's income from the transaction was subject to a comprehen-
   21  sive income tax treaty between such country and the United  States;  (c)
   22  the  related member was subject to tax in a foreign nation on a tax base
   23  that included the royalty payment  paid,  accrued  or  incurred  by  the
   24  taxpayer; (d) the related member's income from the transaction was taxed
   25  in  such  country  at  an  effective  rate of tax at least equal to that
   26  imposed by this state; and (e) the royalty payment was paid, accrued  or
   27  incurred pursuant to a transaction that was undertaken for a valid busi-
   28  ness purpose and using terms that reflect an arm's length relationship.
   29    (IV)] The adjustment required in this paragraph shall not apply if the
   30  taxpayer and the commissioner agree in writing to the application or use
   31  of alternative adjustments or computations. The commissioner may, in his
   32  or  her  discretion,  agree  to  the  application  or use of alternative
   33  adjustments or computations when he or she concludes that in the absence
   34  of such agreement the income of  the  taxpayer  would  not  be  properly
   35  reflected.
   36    S  95.  Clauses  (iii)  and (iv) of subparagraph (B) of paragraph 2 of
   37  subdivision (e) of section 11-506 of the administrative code of the city
   38  of New York, as amended by section 9 of part E of chapter 59 of the laws
   39  of 2013, are amended to read as follows:
   40    (iii) [The adjustment required in this subdivision shall not apply  if
   41  the  taxpayer  establishes, by clear and convincing evidence of the type
   42  and in the form specified by the commissioner of finance, that: (I)  the
   43  royalty payment was paid, accrued or incurred to a related member organ-
   44  ized  under the laws of a country other than the United States; (II) the
   45  related member's income from the transaction was subject to a comprehen-
   46  sive income tax treaty between such country and the United States; (III)
   47  the related member was subject to tax in a foreign nation on a tax  base
   48  that  included  the  royalty  payment  paid,  accrued or incurred by the
   49  taxpayer; (IV) the related member's  income  from  the  transaction  was
   50  taxed in such country at an effective rate of tax at least equal to that
   51  imposed  by  this city; and (V) the royalty payment was paid, accrued or
   52  incurred pursuant to a transaction that was undertaken for a valid busi-
   53  ness purpose and using terms that reflect an arm's length relationship.
   54    (iv)] The adjustment required in this subdivision shall not  apply  if
   55  the  taxpayer  and  the  commissioner of finance agree in writing to the
   56  application or use  of  alternative  adjustments  or  computations.  The
       S. 6359                            156                           A. 8559
    1  commissioner  of  finance  may,  in  his or her discretion, agree to the
    2  application or use of alternative adjustments or computations when he or
    3  she concludes that in the absence of such agreement the  income  of  the
    4  taxpayer would not be properly reflected.
    5    S  96.  Subclauses  (iii)  and (iv) of clause (B) of subparagraph 2 of
    6  paragraph (n) of subdivision 8 of section 11-602 of  the  administrative
    7  code  of  the  city  of  New York, as amended by section 10 of part E of
    8  chapter 59 of the laws of 2013, are amended to read as follows:
    9    (iii) [The adjustment required in this paragraph shall  not  apply  if
   10  the  taxpayer  establishes, by clear and convincing evidence of the type
   11  and in the form specified by the commissioner of finance, that: (I)  the
   12  royalty payment was paid, accrued or incurred to a related member organ-
   13  ized  under the laws of a country other than the United States; (II) the
   14  related member's income from the transaction was subject to a comprehen-
   15  sive income tax treaty between such country and the United States; (III)
   16  the related member was subject to tax in a foreign nation on a tax  base
   17  that  included  the  royalty  payment  paid,  accrued or incurred by the
   18  taxpayer; (IV) the related member's  income  from  the  transaction  was
   19  taxed in such country at an effective rate of tax at least equal to that
   20  imposed  by  this city; and (V) the royalty payment was paid, accrued or
   21  incurred pursuant to a transaction that was undertaken for a valid busi-
   22  ness purpose and using terms that reflect an arm's length relationship.
   23    (iv)] The adjustment required in this paragraph shall not apply if the
   24  taxpayer and the commissioner of finance agree in writing to the  appli-
   25  cation  or  use  of alternative adjustments or computations. The commis-
   26  sioner of finance may, in his or her discretion, agree to  the  applica-
   27  tion  or  use  of alternative adjustments or computations when he or she
   28  concludes that in the absence  of  such  agreement  the  income  of  the
   29  taxpayer would not be properly reflected.
   30    S  97.  Clauses  (iii)  and (iv) of subparagraph (B) of paragraph 2 of
   31  subdivision (q) of section 11-641 of the administrative code of the city
   32  of New York, as amended by section 11 of part E of  chapter  59  of  the
   33  laws of 2013, are amended to read as follows:
   34    (iii)  [The adjustment required in this subdivision shall not apply if
   35  the taxpayer establishes, by clear and convincing evidence of  the  type
   36  and  in the form specified by the commissioner of finance, that: (I) the
   37  royalty payment was paid, accrued or incurred to a related member organ-
   38  ized under the laws of a country other than the United States; (II)  the
   39  related member's income from the transaction was subject to a comprehen-
   40  sive income tax treaty between such country and the United States; (III)
   41  the  related member was subject to tax in a foreign nation on a tax base
   42  that included the royalty payment  paid,  accrued  or  incurred  by  the
   43  taxpayer;  (IV)  the  related  member's  income from the transaction was
   44  taxed in such country at an effective rate of tax at least equal to that
   45  imposed by this city; and (V) the royalty payment was paid,  accrued  or
   46  incurred pursuant to a transaction that was undertaken for a valid busi-
   47  ness purpose and using terms that reflect an arm's length relationship.
   48    (iv)]  The  adjustment required in this subdivision shall not apply if
   49  the taxpayer and the commissioner of finance agree  in  writing  to  the
   50  application  or  use  of  alternative  adjustments  or computations. The
   51  commissioner of finance may, in his or  her  discretion,  agree  to  the
   52  application or use of alternative adjustments or computations when he or
   53  she  concludes  that  in the absence of such agreement the income of the
   54  taxpayer would not be properly reflected.
   55    S 98. Clauses (iii) and (iv) of subparagraph (B)  of  paragraph  2  of
   56  subdivision  (t)  of  section  11-1712 of the administrative code of the
       S. 6359                            157                           A. 8559
    1  city of New York, as amended by section 12 of part E of  chapter  59  of
    2  the laws of 2013, are amended to read as follows:
    3    (iii)  [The adjustment required in this subdivision shall not apply if
    4  the taxpayer establishes, by clear and convincing evidence of  the  type
    5  and  in the form specified by the commissioner of finance, that: (I) the
    6  royalty payment was paid, accrued or incurred to a related member organ-
    7  ized under the laws of a country other than the United States; (II)  the
    8  related member's income from the transaction was subject to a comprehen-
    9  sive income tax treaty between such country and the United States; (III)
   10  the  related member was subject to tax in a foreign nation on a tax base
   11  that included the royalty payment  paid,  accrued  or  incurred  by  the
   12  taxpayer;  (IV)  the  related  member's  income from the transaction was
   13  taxed in such country at an effective rate of tax at least equal to that
   14  imposed by this city; and (V) the royalty payment was paid,  accrued  or
   15  incurred pursuant to a transaction that was undertaken for a valid busi-
   16  ness purpose and using terms that reflect an arm's length relationship.
   17    (iv)]  The  adjustment required in this subdivision shall not apply if
   18  the taxpayer and the commissioner of finance agree  in  writing  to  the
   19  application  or  use  of  alternative  adjustments  or computations. The
   20  commissioner of finance may, in his or  her  discretion,  agree  to  the
   21  application or use of alternative adjustments or computations when he or
   22  she  concludes  that  in the absence of such agreement the income of the
   23  taxpayer would not be properly reflected.
   24    S 99. Notwithstanding any  provisions  of  law  to  the  contrary  and
   25  notwithstanding  the  repeal of article 32 of the tax law by section one
   26  of this act, the repeal of section 180 of the tax law by section two  of
   27  this  act  and the repeal of section 181 of the tax law by section three
   28  of this act, all provisions  of  such  article  and  such  sections,  in
   29  respect to the imposition, exemption, assessment, payment, payment over,
   30  determination,  collection,  and  credit  or refund of tax, interest and
   31  penalty imposed thereunder, the filing of forms and returns, the preser-
   32  vation of records for the purposes of such tax, the secrecy of  returns,
   33  the disposition of revenues, and the civil and criminal penalties appli-
   34  cable  to  the  violation  of the provisions of such article 32 and such
   35  sections 180 and 181, shall continue  in  full  force  and  effect  with
   36  respect to all such tax accrued for taxable years beginning before Janu-
   37  ary  1,  2015;  and  all  actions  and  proceedings,  civil or criminal,
   38  commenced or authorized to be  commenced  under  or  by  virtue  of  any
   39  provision  of  such  article  32  or  by virtue of any provision of such
   40  section 180 or 181 so repealed, and pending  or  able  to  be  commenced
   41  immediately prior to the taking effect of such repeal, may be commenced,
   42  prosecuted and defended to final effect in the same manner as they might
   43  if such provisions were not so repealed.
   44    S  100.  Subdivision  1  of  section 187 of the tax law, as amended by
   45  chapter 2 of the laws of 1995, is amended to read as follows:
   46    1. A taxpayer shall be allowed a credit, to be  credited  against  the
   47  taxes  imposed by this article, other than the taxes and fees imposed by
   48  sections [one hundred  eighty,  one  hundred  eighty-one,]  one  hundred
   49  eighty-six-a and one hundred eighty-six-e of this chapter. The amount of
   50  the  credit  shall  be  the  amount  of  the special additional mortgage
   51  recording tax paid by the taxpayer pursuant to the provisions of  subdi-
   52  vision one-a of section two hundred fifty-three of this chapter on mort-
   53  gages  recorded  on  and  after January first, nineteen hundred seventy-
   54  nine. Provided, however,  that  the  amount  of  such  credit  allowable
   55  against the tax imposed by section one hundred eighty-four of this chap-
   56  ter  shall  be the excess of the amount of such special additional mort-
       S. 6359                            158                           A. 8559
    1  gage recording tax paid over the amount of any credit  allowed  by  this
    2  section  against  the tax imposed by section one hundred eighty-three of
    3  this chapter. Provided further, however, no credit shall be allowed with
    4  respect  to  a  mortgage  of real property principally improved or to be
    5  improved by one or more structures containing in the aggregate not  more
    6  than  six  residential dwelling units, each dwelling unit having its own
    7  separate cooking facilities, where the real property is located  in  one
    8  or more of the counties comprising the metropolitan commuter transporta-
    9  tion  district and where the mortgage is recorded on or after May first,
   10  nineteen hundred eighty-seven.  Provided  further,  however,  no  credit
   11  shall be allowed with respect to a mortgage of real property principally
   12  improved  or  to be improved by one or more structures containing in the
   13  aggregate not more than six residential dwelling  units,  each  dwelling
   14  unit having its own separate cooking facilities, where the real property
   15  is  located  in the county of Erie and where the mortgage is recorded on
   16  or after May first, nineteen hundred eighty-seven.
   17    S 101. Subdivision 1 of section 187-a of the  tax  law,  as  added  by
   18  chapter 142 of the laws of 1997, is amended to read as follows:
   19    1.    Allowance of credit. A taxpayer shall be allowed a credit, to be
   20  computed as hereinafter provided, against  the  taxes  imposed  by  this
   21  article,  other  than the taxes imposed by sections [one hundred eighty,
   22  one hundred eighty-one,] one hundred eighty-six-a, one  hundred  eighty-
   23  six-e  and one hundred eighty-nine of this article, for employing within
   24  the state a qualified employee. Provided, however, the amount of  credit
   25  allowed  by  this section against the tax imposed by section one hundred
   26  eighty-four of this article shall be the excess of the  credit  computed
   27  under  this  section  over  the amount of credit allowed by this section
   28  against the tax imposed by section  one  hundred  eighty-three  of  this
   29  article.
   30    S  102.  Subdivision  1  of  section 190 of the tax law, as amended by
   31  section 17 of part B of chapter 58 of the laws of 2004,  is  amended  to
   32  read as follows:
   33    1.  General.  A  taxpayer  shall  be  allowed a credit against the tax
   34  imposed by this article[, other than  the  taxes  and  fees  imposed  by
   35  sections one hundred eighty and one hundred eighty-one of this article,]
   36  equal  to twenty percent of the premium paid during the taxable year for
   37  long-term care insurance. In order  to  qualify  for  such  credit,  the
   38  taxpayer's premium payment must be for the purchase of or for continuing
   39  coverage under a long-term care insurance policy that qualifies for such
   40  credit  pursuant  to  section  one thousand one hundred seventeen of the
   41  insurance law.
   42    S 103. Subdivision 5 of section 192 of the tax law is REPEALED.
   43    S 104. Clauses 1 and 2 of subparagraph (A)  and  subparagraph  (B)  of
   44  paragraph (iii) of subdivision 9 of section 16-v of section 1 of chapter
   45  174  of  the laws of 1968 constituting the urban development corporation
   46  act, as added by section 1 of part C of chapter 59 of the laws of  2013,
   47  is amended to read as follows:
   48    (1)  over fifty percent of the number of shares of stock entitling the
   49  holders thereof to vote for the election of  directors  or  trustees  is
   50  owned  or  controlled,  either  directly  or  indirectly,  by a taxpayer
   51  subject to tax under the following provisions of the  tax  law:  article
   52  nine-A; section one hundred eighty-three, OR one hundred eighty-four [or
   53  one  hundred eighty-five] of article nine; [article thirty-two] or arti-
   54  cle thirty-three; or
   55    (2) is substantially similar in operation and in ownership to a  busi-
   56  ness  entity  (or  entities)  taxable  or  previously  taxable under the
       S. 6359                            159                           A. 8559
    1  following provisions of the tax law: article nine-A; section one hundred
    2  eighty-three, one hundred eighty-four, FORMER SECTION one hundred eight-
    3  y-five or former section one hundred eighty-six of article nine;  FORMER
    4  article thirty-two; article thirty-three; article twenty-three, or would
    5  have  been subject to tax under such article twenty-three (as such arti-
    6  cle was in effect on January first,  nineteen  hundred  eighty)  or  the
    7  income  (or  losses) of which is (or was) includable under article twen-
    8  ty-two; or
    9    (B) a sole proprietorship, partnership, limited  partnership,  limited
   10  liability  company,  or  New  York  subchapter S corporation that is not
   11  substantially similar in operation and in ownership to a business entity
   12  (or entities) taxable, or previously taxable, under  article  nine-A  of
   13  the  tax law, section one hundred eighty-three, one hundred eighty-four,
   14  FORMER SECTION one hundred eighty-five or  former  section  one  hundred
   15  eighty-six  of article nine of the tax law, FORMER article thirty-two or
   16  ARTICLE thirty-three of the tax law, article twenty-three of the tax law
   17  or which would have been subject to tax under such article  twenty-three
   18  (as  such  article  was  in  effect  on  January first, nineteen hundred
   19  eighty) or the income (or losses) of which is (or was) includable  under
   20  article twenty-two of the tax law; and
   21    S  105. Section 206 of the tax law, as added by chapter 69 of the laws
   22  of 1978, is amended to read as follows:
   23    S 206.   Deposit and disposition of  revenue.    The  [license  fees,]
   24  taxes,  percentage,  interest  and other charges imposed by this article
   25  shall be collected and deposited and receipts  therefor  issued  by  the
   26  [tax  commission,  except  that  such  license  fees, taxes, percentage,
   27  interest and other charges imposed by section one hundred eighty of this
   28  chapter shall be collected and deposited and receipts therefor issued by
   29  the proper state officer in accordance with the provisions  of  subdivi-
   30  sion  two  of  section one hundred eighty of this chapter,] COMMISSIONER
   31  and all revenues  so  collected  or  received  shall  be  deposited  and
   32  disposed  of  pursuant to the provisions of section one hundred seventy-
   33  one-a of this chapter.
   34    S 106. Subsection (a) of section 1080 of the  tax  law,  as  added  by
   35  chapter 188 of the laws of 1964, is amended to read as follows:
   36    (a)  General.---  The  provisions  of  this article shall apply to the
   37  administration of and the procedures with respect to the  taxes  imposed
   38  by  articles  nine  [(except  section one hundred eighty)], AND nine-a[,
   39  nine-b and nine-c] of this chapter for taxable years or  periods  ending
   40  on or after December thirty-first, nineteen hundred sixty-four.
   41    S  107.  Subdivisions  (a)  and (c) of section 1809 of the tax law, as
   42  added by section 1 of subpart A of part S of chapter 57 of the  laws  of
   43  2010, are amended to read as follows:
   44    (a)  Any  person  who, with intent to evade payment of any tax imposed
   45  under article nine [(other than under section one hundred eighty or  one
   46  hundred  eighty-one)],  nine-A,  thirteen, [thirty-two,] thirty-three or
   47  thirty-three-A of this chapter, fails to file a  return  or  report  for
   48  three  consecutive  taxable  years  shall be guilty of a class E felony,
   49  provided that such person had an unpaid tax liability, in excess of  the
   50  threshold  amount  with respect to each of the three consecutive taxable
   51  years. The threshold amount in the case of a taxable year under  article
   52  nine-A  of  this  chapter  ending after June thirtieth, nineteen hundred
   53  eighty-nine is the applicable  fixed  dollar  minimum  prescribed  under
   54  paragraph  (d)  of  subdivision  one  of section two hundred ten of this
   55  chapter. In the event such fixed dollar minimum is less than two hundred
   56  fifty dollars, the threshold amount in the case of such taxable year  is
       S. 6359                            160                           A. 8559
    1  two  hundred  fifty  dollars. In all other cases the threshold amount is
    2  two hundred fifty dollars.
    3    (c)  As  used  in  this section, the terms "return" and "report" shall
    4  mean a return or report required under section one  hundred  ninety-two,
    5  two  hundred  eleven,  two hundred ninety-four, [fourteen hundred sixty-
    6  two,] fifteen hundred fifteen or  fifteen  hundred  fifty-four  of  this
    7  chapter.    It  shall  not  include  any return or report referred to in
    8  section one hundred ninety-seven-a, two  hundred  thirteen-a,  [fourteen
    9  hundred sixty] or fifteen hundred thirteen of this chapter.
   10    S  108.  Paragraphs (d), (e), (g), (h) and (q) of section 104-A of the
   11  business corporation law, subdivisions (d), (e) and (q)  as  amended  by
   12  chapter 166 of the laws of 1991, subdivision (g) as added by chapter 591
   13  of  the  laws  of 1982, and subdivision (h) as amended by chapter 117 of
   14  the laws of 1986, are amended to read as follows:
   15    (d) For filing a certificate of incorporation pursuant to section four
   16  hundred two of this chapter, one hundred twenty-five dollars  [plus  the
   17  tax on shares prescribed by section one hundred eighty of the tax law].
   18    (e)  For  filing  a certificate of amendment pursuant to section eight
   19  hundred five of this chapter, sixty dollars  [plus  the  tax  on  shares
   20  prescribed  by section one hundred eighty of the tax law if such certif-
   21  icate shows a change of shares].
   22    (g) For filing a restated certificate  of  incorporation  pursuant  to
   23  section eight hundred seven of this chapter, sixty dollars [plus the tax
   24  on  shares  prescribed  by  section one hundred eighty of the tax law if
   25  such certificate shows a change of shares].
   26    (h) For filing a certificate of merger or  consolidation  pursuant  to
   27  section  nine hundred four of this chapter, or a certificate of exchange
   28  pursuant to section nine hundred thirteen (other than paragraph  (g)  of
   29  section  nine hundred thirteen) of this chapter, sixty dollars [plus the
   30  tax on shares prescribed by section one hundred eighty of the tax law if
   31  such certificate shows a change of shares].
   32    (q) For filing  a  certificate  of  incorporation  by  a  professional
   33  service  corporation  pursuant  to section fifteen hundred three of this
   34  chapter, one  hundred  twenty-five  dollars  [plus  the  tax  on  shares
   35  prescribed by section one hundred eighty of the tax law].
   36    S  109.  Subdivision 8 of section 7-a of the general associations law,
   37  as added by chapter 575 of the laws of  1964,  is  amended  to  read  as
   38  follows:
   39    8. The provisions of section ninety-six of the executive law prescrib-
   40  ing  the  fee  to  be  collected by the department of state for filing a
   41  certificate of incorporation under the business  corporation  law  shall
   42  apply  to  the certificate of incorporation to be filed pursuant to this
   43  section[, and the organization tax payable  under  section  one  hundred
   44  eighty of the tax law in respect of a corporation formed under the busi-
   45  ness  corporation law shall be paid before the department of state shall
   46  file such certificate of incorporation].
   47    S 110. Severability. If any provision of this act shall for any reason
   48  be finally adjudged by any court of competent jurisdiction to be  inval-
   49  id,  such judgment shall not affect, impair, or invalidate the remainder
   50  of this act, but shall be confined in its  operation  to  the  provision
   51  directly  involved  in the controversy in which such judgment shall have
   52  been rendered. It is hereby declared to be in the intent of the legisla-
   53  ture that this  act  would  have  been  enacted  even  if  such  invalid
   54  provision  had  not  been  included  in this act. Provided further, if a
   55  court of final, competent jurisdiction adjudges the tax rates imposed on
   56  qualified New York manufacturers  to  be  invalid,  qualified  New  York
       S. 6359                            161                           A. 8559
    1  manufacturers  shall  be  subject  to  the  same  tax rates as all other
    2  taxpayers subject to tax under article 9-A  of  the  tax  law.  Provided
    3  further,  if  a court of final, competent jurisdiction adjudges that any
    4  of  the  tax  credits provided by this act to be invalid, such credit or
    5  credits shall be deemed repealed and shall be of no force and effect  as
    6  to any taxpayers.
    7    S  111.  This act shall take effect January 1, 2015 and shall apply to
    8  taxable years commencing on or after such date; provided that the amend-
    9  ments to section 25 of the tax law made by section forty-three  of  this
   10  act  shall  not  affect  the  repeal of such section and shall be deemed
   11  repealed therewith; provided, further, that the amendments to the  open-
   12  ing  paragraph  of  subdivision  (a), subparagraph (C) of paragraph 2 of
   13  subdivision (e) and subdivision (f) of section 35 of the tax law made by
   14  section fifty of this act shall not affect the repeal of such provisions
   15  and shall be deemed repealed  therewith;  provided,  further,  that  the
   16  amendments  to  clause  (xxxii)  of  subparagraph  (B) of paragraph 1 of
   17  subsection (i) of section 606 of the tax law made by section sixty-eight
   18  of this act shall not affect the repeal of  such  clause  and  shall  be
   19  deemed  repealed  therewith;  provided,  further, that the amendments to
   20  clause (xxxiii) of subparagraph (B) of paragraph 1 of subsection (i)  of
   21  section 606 of the tax law made by section sixty-eight of this act shall
   22  not affect the repeal of such clause and shall be deemed repealed there-
   23  with;  and  provided,  further,  that  the  amendments to clause (ii) of
   24  subparagraph (B) of paragraph  2  of  subsection  (q),  paragraph  3  of
   25  subsection  (s)  and  the closing paragraph of paragraph 1 of subsection
   26  (t) of section 1085 of the tax law made by section  eighty-one  of  this
   27  act  shall  not affect the repeal of such provisions and shall be deemed
   28  repealed therewith.
   29                                   PART B
   30    Section 1. Subparagraph (iii) of paragraph (a) of  subdivision  14  of
   31  section  425 of the real property tax law, as added by section 1 of part
   32  J of chapter 57 of the laws of 2013, is amended to read as follows:
   33    (iii) An owner who fails to register by the registration  deadline  so
   34  established  shall be permitted to file a petition with the commissioner
   35  requesting that the commissioner excuse such failure and accept  a  late
   36  registration, provided that such petition shall explain why such failure
   37  occurred  and shall be filed no later than one year after such deadline,
   38  AND PROVIDED FURTHER THAT IF THE COMMISSIONER ACCEPTS A  LATE  REGISTRA-
   39  TION  AFTER HAVING DIRECTED THE REMOVAL OF THE BASIC STAR EXEMPTION FROM
   40  THE PROPERTY TO WHICH THE REGISTRATION PERTAINS, THEN IN LIEU OF DIRECT-
   41  ING THE EXEMPTION TO BE RESTORED, THE COMMISSIONER IS AUTHORIZED IN  HIS
   42  OR  HER DISCRETION TO REMIT DIRECTLY TO THE PROPERTY OWNER OR OWNERS THE
   43  TAX SAVINGS THAT THE EXEMPTION  WOULD  HAVE  YIELDED  HAD  IT  NOT  BEEN
   44  REMOVED,  AND TO FURTHER DIRECT THE ASSESSOR TO RESTORE THE EXEMPTION ON
   45  A PROSPECTIVE BASIS WITHOUT A NEW APPLICATION UNLESS  THE  ASSESSOR  HAS
   46  REASON  TO  BELIEVE  THAT  THE  PROPERTY OWNER IS NO LONGER ELIGIBLE FOR
   47  REASONS OTHER THAN A FAILURE TO REGISTER;
   48    S 2. This act shall take effect immediately and  shall  be  deemed  to
   49  have been in full force and effect on and after April 1, 2014.
   50                                   PART C
   51    Section  1. Section 2 of chapter 540 of the laws of 1992, amending the
   52  real property tax law relating to oil and gas  charges,  as  amended  by
       S. 6359                            162                           A. 8559
    1  section  1  of  part  A of chapter 59 of the laws of 2012, is amended to
    2  read as follows:
    3    S  2.  This  act  shall take effect immediately and shall be deemed to
    4  have been in full force and effect on and after April 1, 1992; provided,
    5  however that any charges imposed by section 593 of the real property tax
    6  law as added by section one of this act shall first be  due  for  values
    7  for assessment rolls with tentative completion dates after July 1, 1992,
    8  and  provided  further,  that  this  act  shall remain in full force and
    9  effect until March 31, [2015] 2018, at which time  section  593  of  the
   10  real  property  tax  law  as  added  by section one of this act shall be
   11  repealed.
   12    S 2. This act shall take effect immediately.
   13                                   PART D
   14    Section 1. Subdivision 1 of section 236  of  the  racing,  pari-mutuel
   15  wagering and breeding law, as amended by chapter 18 of the laws of 2008,
   16  is amended to read as follows:
   17    1. Every corporation authorized under this chapter to conduct pari-mu-
   18  tuel  betting at a race meeting on races run thereat, except as provided
   19  in section two hundred thirty-eight of this article with respect to  the
   20  franchised corporation, shall distribute all sums deposited in any pari-
   21  mutuel  pool  to  the holders of winning tickets therein, providing such
   22  tickets be presented for payment before April first of the year  follow-
   23  ing  the  year  of  their purchase, less an amount which shall be estab-
   24  lished and retained by such racing corporation of  between  fourteen  to
   25  twenty  per centum of the total deposits in pools resulting from regular
   26  on-track bets and less sixteen to twenty-two per  centum  of  the  total
   27  deposits  in pools resulting from multiple on-track bets and less twenty
   28  to thirty per centum of the total deposits in pools resulting from exot-
   29  ic on-track bets and less twenty to thirty-six per centum of  the  total
   30  pools  resulting  from  super exotic on-track bets, plus the breaks. The
   31  retention rate to be established is subject to the prior approval of the
   32  [racing and wagering board] COMMISSION.  Such rate may  not  be  changed
   33  more  than once per calendar quarter to be effective on the first day of
   34  the calendar quarter. "Exotic bets" and "multiple bets" shall  have  the
   35  meanings  set forth in section five hundred nineteen of this chapter and
   36  breaks are hereby defined as the odd cents over any multiple of ten,  or
   37  for  exotic  bets  over any multiple of fifty, or for super exotic bets,
   38  over any multiple of one hundred, calculated on the basis of one dollar,
   39  otherwise payable to a patron provided, however,  that  effective  after
   40  October  fifteenth,  nineteen  hundred  ninety-four  breaks  are  hereby
   41  defined as the odd cents over any multiple of five for  payoffs  greater
   42  than one dollar five cents but less than five dollars, over any multiple
   43  of  ten  for payoffs greater than five dollars but less than twenty-five
   44  dollars, over any multiple of twenty-five for payoffs greater than twen-
   45  ty-five dollars but less than two hundred fifty  dollars,  or  over  any
   46  multiple  of  fifty  for  payoffs over two hundred fifty dollars. "Super
   47  exotic bets" shall have the meaning set forth in section  three  hundred
   48  one  of  this  chapter. Of the amount so retained there shall be paid by
   49  such corporation to the department of taxation and finance as a  reason-
   50  able  tax  by  the  state  for  the  privilege of conducting pari-mutuel
   51  betting on the races run at the race meeting held by  such  corporation,
   52  which tax is hereby levied, the following percentages of the total pool,
   53  plus fifty-five per centum of the breaks; the applicable rates for regu-
   54  lar and multiple bets shall be one and one-half per centum; the applica-
       S. 6359                            163                           A. 8559
    1  ble  rates for exotic bets shall be six and three-quarter per centum and
    2  the applicable rate for super exotic bets shall be seven and three-quar-
    3  ter per centum. Effective on and after September first, nineteen hundred
    4  ninety-four,  the  applicable  tax  rate  shall be one per centum of all
    5  wagers, provided that,  an  amount  equal  to  one-half  the  difference
    6  between the taxation rate for on-track regular, multiple and exotic bets
    7  as of December thirty-first, nineteen hundred ninety-three and the rates
    8  on such on-track wagers as herein provided shall be used exclusively for
    9  purses. Provided, however, that for any twelve-month period beginning on
   10  April  first in nineteen hundred ninety and any year thereafter, each of
   11  the applicable rates set forth above shall be increased  by  one-quarter
   12  of  one  per  centum on all on-track bets of any such racing corporation
   13  that did not expend an amount equal to at  least  one-half  of  one  per
   14  centum  of  its  on-track bets during the immediately preceding calendar
   15  year for enhancements consisting of capital improvements as  defined  by
   16  section  two  hundred thirty-seven of this article, repairs to its phys-
   17  ical plant, structures, and equipment used in  its  racing  or  wagering
   18  operations as certified by the [state racing and wagering board] COMMIS-
   19  SION  to  the  commissioner of taxation and finance no later than eighty
   20  days after the close of such calendar year, and five special  events  at
   21  each  track  in each calendar year, not otherwise conducted in the ordi-
   22  nary course of business, the purpose of which  shall  be  to  encourage,
   23  attract  and  promote  track  attendance and encourage new and continued
   24  patronage, which events shall be approved by the  [racing  and  wagering
   25  board] COMMISSION for purposes of this subdivision. In the determination
   26  of  the  amounts  expended for such enhancements, the [board] COMMISSION
   27  may consider the immediately preceding twelve month calendar  period  or
   28  the average of the two immediately preceding twelve month calendar peri-
   29  ods.  Provided  further,  however,  that of the portion of the increased
   30  amounts retained by such corporation above  those  amounts  retained  in
   31  nineteen  hundred  eighty-four,  an  amount  of  such  increase shall be
   32  distributed to purses in the same proportion as commissions  and  purses
   33  were distributed during nineteen hundred eighty-four as certified by the
   34  [board]  COMMISSION. Such corporation in the second zone shall receive a
   35  credit against the daily tax imposed by this subdivision  in  an  amount
   36  equal  to  one per centum of total daily pools resulting from the simul-
   37  cast of such corporation's races  to  licensed  facilities  operated  by
   38  regional  off-track  betting corporations in accordance with section one
   39  thousand eight of this chapter, provided however, that sixty per  centum
   40  of the amount of such credit shall be used exclusively to increase purs-
   41  es  for  overnight  races  conducted  by such corporation; and, provided
   42  further, that in no event shall such total daily credit exceed  one  per
   43  centum  of  the total daily pool of such corporation. Provided, however,
   44  that on and after September first,  nineteen  hundred  ninety-four  such
   45  credit  shall be four-tenths percent of total daily pools resulting from
   46  such simulcasting and that in no event shall  such  total  daily  credit
   47  equal four-tenths percent of the total daily pool of such corporation.
   48    Such corporation shall pay to the New York state thoroughbred breeding
   49  and  development  fund  one-half  of  one  per centum of the total daily
   50  on-track pari-mutuel pools from regular, multiple and exotic  bets,  and
   51  three  per  centum  of  super exotic bets. The corporation shall receive
   52  credit as a reduction of the tax by  the  state  for  the  privilege  of
   53  conducting pari-mutuel betting for the amounts, except amounts paid from
   54  super  exotic  betting  pools,  paid  to the New York state thoroughbred
   55  breeding and development fund  after  January  first,  nineteen  hundred
   56  seventy-eight.
       S. 6359                            164                           A. 8559
    1    Such  corporation  shall distribute to purses an amount equal to fifty
    2  per centum of any compensation it receives  from  simulcasting  or  from
    3  wagering conducted outside the United States. Such corporation shall pay
    4  to the [racing and wagering board] COMMISSION as a regulatory fee, which
    5  fee  is hereby levied, [fifty] SIXTY hundredths of one per centum of the
    6  total daily on-track pari-mutuel pools of such corporation.
    7    S 2. Paragraph (d) of subdivision 1 of  section  238  of  the  racing,
    8  pari-mutuel  wagering  and breeding law, as amended by chapter 18 of the
    9  laws of 2008, is amended to read as follows:
   10    (d) The pari-mutuel tax rate  authorized  by  paragraph  (a)  of  this
   11  subdivision shall be effective so long as a franchised corporation noti-
   12  fies  the  [racing and wagering board] COMMISSION by August fifteenth of
   13  each year that such pari-mutuel tax rate is effective of its  intent  to
   14  conduct a race meeting at Aqueduct racetrack during the months of Decem-
   15  ber,  January, February, March and April. For purposes of this paragraph
   16  such race meeting shall consist of not less  than  ninety-five  days  of
   17  racing.  Not later than May first of each year that such pari-mutuel tax
   18  rate  is  effective,  the  [racing  and wagering board] COMMISSION shall
   19  determine whether a race meeting at Aqueduct racetrack consisted of  the
   20  number  of days as required by this paragraph. In determining the number
   21  of race days, cancellation of a race day because of an act of God, which
   22  the [racing and wagering board] COMMISSION approves or because of weath-
   23  er conditions that are unsafe or hazardous which the [racing and  wager-
   24  ing  board]  COMMISSION  approves shall not be construed as a failure to
   25  conduct a race day. Additionally, cancellation of a race day because  of
   26  circumstances  beyond  the  control  of  such franchised corporation for
   27  which the [racing and wagering board] COMMISSION  gives  approval  shall
   28  not  be construed as a failure to conduct a race day. If the [racing and
   29  wagering board] COMMISSION determines that the number of days of  racing
   30  as required by this paragraph have not occurred then the pari-mutuel tax
   31  rate in paragraph (a) of this subdivision shall revert to the pari-mutu-
   32  el  tax rates in effect prior to January first, nineteen hundred ninety-
   33  five. Such franchised corporation shall pay to the [racing and  wagering
   34  board]  COMMISSION  as  a  regulatory  fee,  which fee is hereby levied,
   35  [fifty] SIXTY hundredths of one per centum of the total  daily  on-track
   36  pari-mutuel pools of such franchised corporation.
   37    S  3. Paragraph d of subdivision 1 of section 318 of the racing, pari-
   38  mutuel wagering and breeding law, as amended by section 3 of part  B  of
   39  chapter 59 of the laws of 2005, is amended to read as follows:
   40    d.  Every  harness  racing association or corporation shall pay to the
   41  [board] COMMISSION as a regulatory fee,  which  fee  is  hereby  levied,
   42  [fifty]  SIXTY  hundredths  of  one  percent of the total daily on-track
   43  pari-mutuel pools of such association or corporation.
   44    S 4. The opening paragraph of subdivision 1  of  section  527  of  the
   45  racing,  pari-mutuel wagering and breeding law, as amended by chapter 18
   46  of the laws of 2008, is amended to read as follows:
   47    The disposition of the retained commission from pools  resulting  from
   48  regular,  multiple or exotic bets, as the case may be, whether placed on
   49  races run within a region or  outside  a  region,  conducted  by  racing
   50  corporations, harness racing associations or corporations, quarter horse
   51  racing associations or corporations or races run outside the state shall
   52  be governed by the tables in paragraphs a and b of this subdivision. The
   53  rate  denominated  "state  tax" shall represent the rate of a reasonable
   54  tax imposed upon the retained commission for the privilege of conducting
   55  off-track pari-mutuel betting, which tax is hereby levied and  shall  be
   56  payable  in the manner set forth in this section. Each off-track betting
       S. 6359                            165                           A. 8559
    1  corporation shall pay to the [racing and wagering board] COMMISSION as a
    2  regulatory fee, which fee is hereby levied, [fifty] SIXTY hundredths  of
    3  one  percent  of  the total daily pools of such corporation. Each corpo-
    4  ration  shall also pay twenty per centum of the breaks derived from bets
    5  on harness races and fifty per centum of the breaks derived from bets on
    6  all other races to the agriculture and New York State horse breeding and
    7  development fund and to the thoroughbred breeding and development  fund,
    8  the  total  of  such payments to be apportioned fifty per centum to each
    9  such fund. For the purposes of this section, the New York city, Suffolk,
   10  Nassau, and the Catskill regions shall constitute a  single  region  and
   11  any  thoroughbred track located within the Capital District region shall
   12  be deemed to be within such single region. A  "regional  meeting"  shall
   13  refer to either harness or thoroughbred meetings, or both, except that a
   14  franchised  corporation shall not be a regional track for the purpose of
   15  receiving distributions from bets on thoroughbred races conducted  by  a
   16  thoroughbred  track  in  the Catskill region conducting a mixed meeting.
   17  With the exception of a harness racing association or corporation  first
   18  licensed  to  conduct  pari-mutuel  wagering at a track located in Tioga
   19  county after January first, two thousand five, racing corporations first
   20  licensed to conduct pari-mutuel racing  after  January  first,  nineteen
   21  hundred  eighty-six or a harness racing association or corporation first
   22  licensed to conduct pari-mutuel wagering at a track located  in  Genesee
   23  County  after January first, two thousand five, and quarter horse tracks
   24  shall not be "regional tracks"; if there is more than one harness  track
   25  within  a region, such tracks shall evenly divide payments made pursuant
   26  to the tables in paragraphs a and b of  this  subdivision  when  neither
   27  track  is  running.  In  the event a track elects to reduce its retained
   28  percentage from any or all of its pari-mutuel pools, the payments to the
   29  track holding the race and the regional track required by  paragraphs  a
   30  and  b  of  this  subdivision  shall  be  reduced  in proportion to such
   31  reduction. Nothing in this section shall be construed to  authorize  the
   32  conduct  of off-track betting contrary to the provisions of section five
   33  hundred twenty-three of this article.
   34    S 5. Paragraph a of subdivision 1 of section 904 of the racing,  pari-
   35  mutuel  wagering  and breeding law, as amended by chapter 18 of the laws
   36  of 2008, is amended to read as follows:
   37    a. The applicable state tax provided for in  paragraphs  a  and  b  of
   38  subdivision  one  of  section  five hundred twenty-seven of this chapter
   39  shall be one-half per centum for regular, multiple and exotic bets.  Any
   40  harness  racing  or  association  or corporation, or thoroughbred racing
   41  corporation authorized pursuant to this section shall pay to the [racing
   42  and wagering board] COMMISSION as a regulatory fee, which fee is  hereby
   43  levied, [fifty] SIXTY hundredths of one percent of the total daily pari-
   44  mutuel pools.
   45    S 6. Paragraph g of subdivision 3 of section 1007 of the racing, pari-
   46  mutuel  wagering  and breeding law, as amended by chapter 18 of the laws
   47  of 2008, is amended to read as follows:
   48    g. Any harness racing or association or corporation,  or  thoroughbred
   49  racing  corporation authorized pursuant to this section shall pay to the
   50  [racing and wagering board] COMMISSION as a regulatory fee, which fee is
   51  hereby levied, [fifty] SIXTY hundredths of  one  percent  of  the  total
   52  daily pari-mutuel pools.
   53    S 7. Paragraph b of subdivision 3 of section 1008 of the racing, pari-
   54  mutuel  wagering and breeding law, as  amended by section 7 of part B of
   55  chapter 59 of the laws of 2005, is amended to read as follows:
       S. 6359                            166                           A. 8559
    1    b. Of the sums received by the sending track, fifty percent  shall  be
    2  distributed  to  purses  in  addition  to moneys distributed pursuant to
    3  section five hundred twenty-seven of this chapter. The off-track betting
    4  corporation shall pay to the [racing and wagering board] COMMISSION as a
    5  regulatory  fee, which fee is hereby levied, [fifty] SIXTY hundredths of
    6  one percent of the total daily pools.
    7    S 8. Paragraph d of subdivision 4 of section 1009 of the racing, pari-
    8  mutuel wagering and breeding law, as amended by section 8 of part  B  of
    9  chapter 59 of the laws of 2005, is amended to read as follows:
   10    d.  The  operator shall pay to the [racing and wagering board] COMMIS-
   11  SION as a regulatory fee, which fee  is  hereby  levied,  [fifty]  SIXTY
   12  hundredths of one percent of the total daily pools.
   13    S 9. Subparagraph (iv) of paragraph i of subdivision 1 of section 1014
   14  of  the  racing,  pari-mutuel  wagering  and breeding law, as amended by
   15  chapter 18 of the laws of 2008, is amended to read as follows:
   16    (iv) Any thoroughbred racing corporation or harness racing association
   17  or corporation or off-track betting corporation authorized  pursuant  to
   18  this  section shall pay to the [racing and wagering board] COMMISSION as
   19  a regulatory fee, which fee is hereby levied, [fifty]  SIXTY  hundredths
   20  of one percent of all wagering pools.
   21    S  10.  Paragraph  e  of  subdivision 3 of section 1015 of the racing,
   22  pari-mutuel wagering and breeding law, as amended by chapter 18  of  the
   23  laws of 2008, is amended to read as follows:
   24    e.  Any  thoroughbred racing corporation or harness racing association
   25  or corporation or off-track betting corporation authorized  pursuant  to
   26  this  section shall pay to the [racing and wagering board] COMMISSION as
   27  a regulatory fee, which fee is hereby levied, [fifty]  SIXTY  hundredths
   28  of one percent of all wagering pools.
   29    S  11. Clause (B) of subparagraph 2 of paragraph b of subdivision 1 of
   30  section 1016 of the racing, pari-mutuel wagering and  breeding  law,  as
   31  amended  by  chapter  18  of  the  laws  of  2008, is amended to read as
   32  follows:
   33    (B) Any harness racing or association or corporation  or  thoroughbred
   34  racing  corporation authorized pursuant to this section shall pay to the
   35  [racing and wagering board] COMMISSION as a regulatory fee, which fee is
   36  hereby levied, [fifty] SIXTY hundredths of  one  percent  of  the  total
   37  daily pari-mutuel pools.
   38    S  12.  Paragraph  b  of  subdivision 2 of section 1018 of the racing,
   39  pari-mutuel wagering and breeding law, as amended by chapter 18  of  the
   40  laws of 2008, is amended to read as follows:
   41    b.  Any  thoroughbred racing corporation or harness racing association
   42  or corporation or off-track betting corporation shall pay to the [racing
   43  and wagering board] COMMISSION as a regulatory fee, which fee is  hereby
   44  levied, [fifty] SIXTY hundredths of one percent of all wagering pools.
   45    S 13. This act shall take effect immediately.
   46                                   PART E
   47    Section 1. Subsection (a) of section 653 of the tax law, as amended by
   48  chapter 65 of the laws of 1985, is amended to read as follows:
   49    (a)  General.  (1) Any return, statement or other document required to
   50  be made pursuant to this article shall  be  signed  in  accordance  with
   51  regulations  or  instructions prescribed by the [tax commission] COMMIS-
   52  SIONER.   The fact that an individual's name  is  signed  to  a  return,
   53  statement,  or  other  document,  shall  be prima facie evidence for all
       S. 6359                            167                           A. 8559
    1  purposes that the return,  statement  or  other  document  was  actually
    2  signed by him OR HER.
    3    (2)  IN  THE  CASE  OF  AN  ELECTRONICALLY FILED INDIVIDUAL'S PERSONAL
    4  INCOME TAX RETURN PREPARED BY A TAX PREPARER, AN AUTHORIZATION  TO  FILE
    5  ANY  RETURN, STATEMENT OR OTHER DOCUMENT REQUIRED TO BE MADE PURSUANT TO
    6  THIS ARTICLE SIGNED BY THE TAXPAYER IN ACCORDANCE WITH  THE  REGULATIONS
    7  OR  INSTRUCTIONS  PRESCRIBED  BY THE COMMISSIONER AND RECEIVED ELECTRON-
    8  ICALLY BY THE TAX PREPARER  SHALL  SATISFY  THE  SIGNATURE  REQUIREMENTS
    9  UNDER THIS ARTICLE.
   10    S 2. This act shall take effect immediately and shall apply to returns
   11  filed for taxable years beginning on or after January 1, 2014.
   12                                   PART F
   13    Section 1. Clause (C) of subparagraph (i) of paragraph (b) of subdivi-
   14  sion  4  of  section  425  of  the  real property tax law, as amended by
   15  section 3 of part E of chapter 83 of the laws of  2002,  is  amended  to
   16  read as follows:
   17    (C)  For final assessment rolls to be completed in [each ensuing year]
   18  THE YEARS TWO THOUSAND FOUR THROUGH TWO THOUSAND FOURTEEN, the  applica-
   19  ble income tax year, cost-of-living-adjustment percentage and applicable
   20  increase  percentage  shall  all be advanced by one year, and the income
   21  standard shall be the previously-applicable income standard increased by
   22  the new cost-of-living-adjustment percentage. If there should be a  year
   23  for  which  there  is no applicable increase percentage due to a general
   24  benefit increase as defined by subdivision three of  subsection  (i)  of
   25  section  four  hundred  fifteen  of title forty-two of the United States
   26  code, the applicable increase percentage for purposes of  this  computa-
   27  tion  shall be deemed to be the percentage which would have yielded that
   28  general benefit increase. FOR FINAL ASSESSMENT ROLLS TO BE COMPLETED  IN
   29  TWO  THOUSAND  FIFTEEN  AND  THEREAFTER,  THE APPLICABLE INCOME TAX YEAR
   30  SHALL BE  ADVANCED  BY  ONE  YEAR,  AND  ELIGIBILITY  FOR  THE  ENHANCED
   31  EXEMPTION  SHALL  BE  BASED  UPON  THE INCOME STANDARD APPLIED FOR FINAL
   32  ASSESSMENT ROLLS COMPLETED IN TWO THOUSAND FOURTEEN.
   33    S 2. This act shall take effect immediately and shall apply to assess-
   34  ment rolls completed in 2015 and thereafter.
   35                                   PART G
   36    Section 1. Section 2 of part I of chapter 58  of  the  laws  of  2006,
   37  relating  to  providing an enhanced earned income tax credit, as amended
   38  by section 1 of part L of chapter 59 of the laws of 2012, is amended  to
   39  read as follows:
   40    S 2. This act shall take effect immediately and shall apply to taxable
   41  years beginning on or after January 1, 2006 and before January 1, [2015]
   42  2017.
   43    S 2. This act shall take effect immediately.
   44                                   PART H
   45    Section  1.  The  general  obligations  law is amended by adding a new
   46  section 3-505 to read as follows:
   47    S 3-505. ENFORCEMENT OF DELINQUENT TAX LIABILITIES THROUGH  ELECTRONIC
   48  TAX CLEARANCES FOR OCCUPATIONAL, PROFESSIONAL AND BUSINESS LICENSES.
   49    1. AS USED IN THIS SECTION:
       S. 6359                            168                           A. 8559
    1    A.  "GOVERNMENT  ENTITY"  MEANS  THE  STATE OF NEW YORK, OR ANY OF ITS
    2  AGENCIES, POLITICAL SUBDIVISIONS, INSTRUMENTALITIES, PUBLIC CORPORATIONS
    3  (INCLUDING A PUBLIC CORPORATION CREATED PURSUANT TO AGREEMENT OR COMPACT
    4  WITH ANOTHER STATE OR CANADA), OR COMBINATION THEREOF,  RESPONSIBLE  FOR
    5  DETERMINING WHETHER A LICENSE SHALL BE ISSUED OR RENEWED.
    6    B.  "ELECTRONIC  LICENSE  APPLICATION"  MEANS ANY ELECTRONIC DATA FORM
    7  THAT MUST BE COMPLETED BY AN APPLICANT TO OBTAIN OR RENEW A LICENSE,  OR
    8  AN ELECTRONIC DATA PROCESS WHICH IS USED BY A GOVERNMENT ENTITY TO PROC-
    9  ESS  DATA  RECEIVED  FROM  AN  APPLICANT  SEEKING  TO RECEIVE OR RENEW A
   10  LICENSE.
   11    C. "ELECTRONIC TAX CLEARANCE" MEANS AN ELECTRONIC  COMMUNICATION  FROM
   12  THE  DEPARTMENT OF TAXATION AND FINANCE INDICATING THAT AN APPLICANT HAD
   13  NO PAST-DUE TAX LIABILITIES, AS THAT TERM  IS  DEFINED  IN  SECTION  ONE
   14  HUNDRED  SEVENTY-ONE-W OF THE TAX LAW, OR THAT NO CONCLUSIVE MATCH COULD
   15  BE MADE.
   16    D. "LICENSE" MEANS  ANY  CERTIFICATE,  LICENSE,  PERMIT  OR  GRANT  OF
   17  PERMISSION  REQUIRED  BY LAW OR AGENCY REGULATION AS A CONDITION FOR THE
   18  LAWFUL PRACTICE OF ANY OCCUPATION, EMPLOYMENT,  TRADE,  VOCATION,  BUSI-
   19  NESS, OR PROFESSION, INCLUDING ANY REGISTRATION REQUIRED BY LAW OR AGEN-
   20  CY  REGULATION  AS  A  CONDITION  FOR  SUCH  LAWFUL PRACTICE. THIS SHALL
   21  INCLUDE, BUT IS NOT LIMITED TO, ANY LICENSE GRANTED TO AN INDIVIDUAL  OR
   22  ENTITY  BY  THE  STATE EDUCATION DEPARTMENT, THE DEPARTMENT OF STATE, OR
   23  THE OFFICE OF COURT ADMINISTRATION.  PROVIDED, HOWEVER,  THAT  "LICENSE"
   24  SHALL  NOT,  FOR  THE  PURPOSES  OF THIS SECTION, INCLUDE ANY LICENSE OR
   25  PERMIT TO OWN, POSSESS, CARRY, OR FIRE ANY EXPLOSIVE,  PISTOL,  HANDGUN,
   26  RIFLE, SHOTGUN, OTHER FIREARM OR AMMUNITION.
   27    2.  NOTWITHSTANDING  ANY  OTHER PROVISION OF LAW, AND WHEN NOT ALREADY
   28  REQUIRED BY ANOTHER PROVISION OF LAW OR REGULATION, ANY GOVERNMENT ENTI-
   29  TY MAY ELECT TO CONDITION THE ISSUANCE OR RENEWAL OF A  LICENSE  ON  THE
   30  ABSENCE  OF  PAST-DUE  TAX  LIABILITIES  AND  TO MAKE SUCH DETERMINATION
   31  THROUGH THE RECEIPT OF AN ELECTRONIC TAX CLEARANCE FROM  THE  DEPARTMENT
   32  OF  TAXATION AND FINANCE AS PROVIDED FOR IN SECTION ONE HUNDRED SEVENTY-
   33  ONE-W OF THE TAX LAW.
   34    3. ANY APPLICANT FOR A LICENSE SUBJECT  TO  ELECTRONIC  TAX  CLEARANCE
   35  SHALL  BE  REQUIRED  TO  PROVIDE ANY INFORMATION DEEMED NECESSARY BY THE
   36  GOVERNMENT ENTITY AND THE DEPARTMENT OF TAXATION AND  FINANCE  TO  EFFI-
   37  CIENTLY  AND  ACCURATELY  PROVIDE  AN  ELECTRONIC TAX CLEARANCE, AND THE
   38  FAILURE BY THE APPLICANT TO PROVIDE SUCH INFORMATION  SHALL  RENDER  THE
   39  APPLICATION INCOMPLETE.
   40    4.  THE APPLICATION FOR A LICENSE SUBJECT TO ELECTRONIC TAX CLEARANCE,
   41  OR THE INSTRUCTIONS FOR  SUCH  APPLICATION,  SHALL  CLEARLY  INFORM  THE
   42  APPLICANT  THAT  AN ELECTRONIC TAX CLEARANCE WILL BE PERFORMED AND THAT,
   43  IF THE TAX CLEARANCE IS DENIED, THE APPLICANT MUST CONTACT  THE  DEPART-
   44  MENT  OF  TAXATION  AND  FINANCE TO RESOLVE ANY PAST-DUE TAX LIABILITIES
   45  BEFORE THE APPLICATION FOR A LICENSE OR RENEWAL MAY BE RESUBMITTED.
   46    5. IF AN ELECTRONIC TAX CLEARANCE IS DENIED BY THE DEPARTMENT OF TAXA-
   47  TION AND FINANCE, THE GOVERNMENT ENTITY SHALL DENY ISSUANCE  OR  RENEWAL
   48  OF  THE  REQUESTED LICENSE AND SHALL ELECTRONICALLY NOTIFY THE APPLICANT
   49  TO CONTACT THE  DEPARTMENT  OF  TAXATION  AND  FINANCE  TO  RESOLVE  THE
   50  PAST-DUE  TAX  LIABILITIES  AND THAT NO LICENSE MAY BE ISSUED OR RENEWED
   51  UNTIL THE TAX LIABILITIES ARE RESOLVED.
   52    6. ANY TAX CLEARANCE OR RELATED  COMMUNICATIONS  SHALL  BE  BY  SECURE
   53  ELECTRONIC  COMMUNICATION BETWEEN THE DEPARTMENT OF TAXATION AND FINANCE
   54  AND THE REQUESTING GOVERNMENT ENTITY SUCH THAT PROCESSING OF  THE  ELEC-
   55  TRONIC  APPLICATION  IS  NOT  DELAYED IF THE ELECTRONIC TAX CLEARANCE IS
   56  RECEIVED.  NOTWITHSTANDING ANY OTHER LAW TO THE CONTRARY,  A  GOVERNMENT
       S. 6359                            169                           A. 8559
    1  ENTITY  SHALL  BE  AUTHORIZED TO SHARE ANY APPLICANT DATA OR INFORMATION
    2  WITH THE DEPARTMENT OF TAXATION AND FINANCE THAT IS NECESSARY TO  ENSURE
    3  THE  PROPER  MATCHING  OF THE APPLICANT TO THE TAX RECORDS MAINTAINED BY
    4  THE DEPARTMENT OF TAXATION AND FINANCE.
    5    7.  NO  FEE  SHALL  BE  CHARGED  TO  THE APPLICANT FOR THE PURPOSES OF
    6  RECEIVING AN ELECTRONIC TAX CLEARANCE.
    7    S 2. The tax law is amended by adding a new section 171-w to  read  as
    8  follows:
    9    S  171-W. ENFORCEMENT OF DELINQUENT TAX LIABILITIES THROUGH ELECTRONIC
   10  TAX CLEARANCES FOR OCCUPATIONAL, PROFESSIONAL AND BUSINESS LICENSES.  1.
   11  IN ACCORDANCE WITH SECTION 3-505 OF THE  GENERAL  OBLIGATIONS  LAW,  THE
   12  COMMISSIONER  SHALL  COOPERATE WITH ANY GOVERNMENT ENTITY THAT ELECTS TO
   13  REQUIRE AN ELECTRONIC TAX CLEARANCE AS A PART OF AN  ELECTRONIC  LICENSE
   14  APPLICATION  PROCESS FOR WHICH THE GOVERNMENT ENTITY IS RESPONSIBLE. FOR
   15  THE PURPOSES OF THIS SECTION, THE TERM "TAX LIABILITIES" SHALL MEAN  ANY
   16  TAX,  SURCHARGE, OR FEE ADMINISTERED BY THE COMMISSIONER, OR ANY PENALTY
   17  OR INTEREST OWED BY AN INDIVIDUAL OR  ENTITY.  THE  TERM  "PAST-DUE  TAX
   18  LIABILITIES"  MEANS  ANY UNPAID TAX LIABILITIES EQUAL TO OR IN EXCESS OF
   19  FIVE HUNDRED DOLLARS WHICH HAVE BECOME FIXED AND  FINAL  SUCH  THAT  THE
   20  TAXPAYER  NO  LONGER HAS ANY RIGHT TO ADMINISTRATIVE OR JUDICIAL REVIEW.
   21  FOR THE PURPOSES OF THIS SECTION, THE TERMS "GOVERNMENT ENTITY,"  "ELEC-
   22  TRONIC  LICENSE  APPLICATION," AND "LICENSE" SHALL HAVE THE SAME MEANING
   23  AS PROVIDED IN SECTION 3-505 OF THE GENERAL OBLIGATIONS LAW.
   24    2. THE COMMISSIONER, OR HIS OR HER DESIGNEE, SHALL COOPERATE WITH  ANY
   25  GOVERNMENT  ENTITY EXERCISING ITS AUTHORITY PURSUANT TO SECTION 3-505 OF
   26  THE GENERAL OBLIGATIONS LAW TO ESTABLISH PROCEDURES BY WHICH THE DEPART-
   27  MENT SHALL ELECTRONICALLY RECEIVE A TAX CLEARANCE REQUEST  AS  AN  ELEC-
   28  TRONIC  LICENSE  APPLICATION  IS  PROCESSED, AND ELECTRONICALLY TRANSMIT
   29  SUCH TAX CLEARANCE TO THE  GOVERNMENT  ENTITY.  THESE  PROCEDURES  SHALL
   30  INCLUDE  THE  IDENTIFICATION  OF OWNERS, OFFICERS OR RESPONSIBLE PERSONS
   31  SUBJECT TO ELECTRONIC TAX CLEARANCE IN CONJUNCTION WITH  AN  APPLICATION
   32  BY AN ENTITY, AND ANY OTHER PROCEDURES DEEMED NECESSARY TO CARRY OUT THE
   33  PROVISIONS OF THIS SECTION.
   34    3.  IN ANY INSTANCE WHERE A LICENSE OR LICENSE RENEWAL PROVIDED BY THE
   35  GOVERNMENT ENTITY IS OF A TYPE THAT MAY BE ISSUED ONLY TO AN  INDIVIDUAL
   36  OR  ENTITY THAT IS A PERSON REQUIRED TO REGISTER PURSUANT TO SECTION ONE
   37  THOUSAND ONE HUNDRED THIRTY-FOUR OF THIS CHAPTER, THE  DEPARTMENT  SHALL
   38  ALSO  VERIFY  THAT THE APPLICANT IS REGISTERED PURSUANT TO SUCH SECTION,
   39  AND NO ELECTRONIC TAX CLEARANCE MAY BE ISSUED UNLESS  THE  APPLICANT  IS
   40  REGISTERED PURSUANT TO SUCH SECTION.
   41    4.  IF A TAX CLEARANCE IS DENIED, THE GOVERNMENT ENTITY PROCESSING THE
   42  APPLICATION SHALL PROVIDE NOTICE TO THE APPLICANT TO CONTACT THE DEPART-
   43  MENT.  WHEN THE APPLICANT CONTACTS THE DEPARTMENT, THE DEPARTMENT  SHALL
   44  INFORM THE APPLICANT (A) WHAT PAST-DUE TAX LIABILITIES ARE AT ISSUE; (B)
   45  THAT AN ELECTRONIC TAX CLEARANCE MAY BE RECEIVED BY FULLY SATISFYING THE
   46  PAST-DUE  TAX LIABILITIES OR BY MAKING PAYMENT ARRANGEMENTS SATISFACTORY
   47  TO THE COMMISSIONER OR, IF THE APPLICANT NEEDS TO REGISTER FOR SALES TAX
   48  PURPOSES, BY REGISTERING PURSUANT TO SECTION ONE  THOUSAND  ONE  HUNDRED
   49  THIRTY-FOUR  OF  THIS  CHAPTER;  AND (C) THE GROUNDS FOR CHALLENGING THE
   50  DENIAL OF AN ELECTRONIC TAX CLEARANCE LISTED IN SUBDIVISION FIVE OF THIS
   51  SECTION. THE GOVERNMENT ENTITY SHALL ALSO INFORM THE APPLICANT  THAT  AN
   52  APPLICATION  MAY  BE  RESUBMITTED  AFTER  PAYMENT  FOR  THE PAST-DUE TAX
   53  LIABILITIES HAS CLEARED, OR, IF A PAYMENT PLAN IS AGREED TO,  AFTER  THE
   54  FIRST PAYMENT PURSUANT TO SUCH PLAN HAS CLEARED.
   55    5.  (A)  NOTWITHSTANDING  ANY  OTHER  PROVISION  OF LAW, AND EXCEPT AS
   56  SPECIFICALLY PROVIDED HEREIN, AN  APPLICANT  DENIED  AN  ELECTRONIC  TAX
       S. 6359                            170                           A. 8559
    1  CLEARANCE  SHALL  HAVE NO RIGHT TO COMMENCE A COURT ACTION OR PROCEEDING
    2  OR SEEK ANY OTHER LEGAL RECOURSE AGAINST THE DEPARTMENT OR  THE  GOVERN-
    3  MENT  ENTITY RELATED TO THE DENIAL OF AN ELECTRONIC TAX CLEARANCE BY THE
    4  DEPARTMENT.  AN APPLICANT MAY CHALLENGE SUCH DENIAL OF AN ELECTRONIC TAX
    5  CLEARANCE ONLY ON THE GROUNDS THAT:
    6    (I) THE INDIVIDUAL OR ENTITY DENIED THE ELECTRONIC  TAX  CLEARANCE  IS
    7  NOT THE INDIVIDUAL OR ENTITY WITH THE PAST-DUE TAX LIABILITIES AT ISSUE;
    8  (II)  THE PAST-DUE TAX LIABILITIES WERE SATISFIED; (III) THE APPLICANT'S
    9  WAGES ARE BEING GARNISHED FOR THE PAYMENT OF CHILD SUPPORT  OR  COMBINED
   10  CHILD  AND SPOUSAL SUPPORT PURSUANT TO AN INCOME EXECUTION ISSUED PURSU-
   11  ANT TO SECTION FIVE THOUSAND TWO HUNDRED FORTY-ONE OR FIVE THOUSAND  TWO
   12  HUNDRED FORTY-TWO OF THE CIVIL PRACTICE LAW AND RULES OR ANOTHER STATE'S
   13  INCOME WITHHOLDING ORDER AS AUTHORIZED UNDER PART FIVE OF ARTICLE FIVE-B
   14  OF  THE FAMILY COURT ACT, OR GARNISHED BY THE DEPARTMENT FOR THE PAYMENT
   15  OF THE PAST-DUE TAX LIABILITIES AT ISSUE; (IV) THE APPLICANT  IS  MAKING
   16  CHILD  SUPPORT  PAYMENTS  OR COMBINED CHILD AND SPOUSAL SUPPORT PAYMENTS
   17  PURSUANT TO A SATISFACTORY PAYMENT ARRANGEMENT UNDER SECTION ONE HUNDRED
   18  ELEVEN-B OF THE SOCIAL SERVICES LAW WITH A SUPPORT  COLLECTION  UNIT  OR
   19  OTHERWISE  MAKING  PERIODIC  PAYMENTS  IN  ACCORDANCE  WITH SECTION FOUR
   20  HUNDRED FORTY OF THE FAMILY COURT ACT; OR (V) IF THE ONLY BASIS FOR  THE
   21  DENIAL  OF  AN  ELECTRONIC  TAX CLEARANCE WAS THE APPLICANT'S FAILURE TO
   22  REGISTER PURSUANT TO SECTION ONE THOUSAND  ONE  HUNDRED  THIRTY-FOUR  OF
   23  THIS  CHAPTER,  THAT  THE  APPLICANT WAS PROPERLY REGISTERED PURSUANT TO
   24  SUCH SECTION ONE THOUSAND ONE HUNDRED THIRTY-FOUR.
   25    (B) AN APPLICANT SEEKING TO CHALLENGE THE DENIAL OF AN ELECTRONIC  TAX
   26  CLEARANCE  MUST PROTEST TO THE DEPARTMENT OR THE DIVISION OF TAX APPEALS
   27  NO LATER THAN SIXTY DAYS FROM THE DATE OF THE ELECTRONIC NOTIFICATION TO
   28  THE APPLICANT, PURSUANT TO SUBDIVISION FOUR  OF  SECTION  3-505  OF  THE
   29  GENERAL OBLIGATIONS LAW, THAT THE ELECTRONIC TAX CLEARANCE WAS DENIED.
   30    (C)  NOTHING  IN  THIS  SUBDIVISION IS INTENDED TO LIMIT ANY APPLICANT
   31  FROM SEEKING RELIEF FROM JOINT AND SEVERAL LIABILITY PURSUANT TO SECTION
   32  SIX HUNDRED FIFTY-FOUR OF THIS CHAPTER, TO THE EXTENT THAT HE OR SHE  IS
   33  ELIGIBLE  PURSUANT  TO  THAT  SECTION, OR ESTABLISHING TO THE DEPARTMENT
   34  THAT THE ENFORCEMENT OF THE UNDERLYING TAX LIABILITIES HAS  BEEN  STAYED
   35  BY  THE  FILING  OF  A  PETITION PURSUANT TO THE BANKRUPTCY CODE OF 1978
   36  (TITLE ELEVEN OF THE UNITED STATES CODE).
   37    6. NOTWITHSTANDING ANY OTHER PROVISION  OF  LAW,  THE  DEPARTMENT  MAY
   38  EXCHANGE  WITH  A  GOVERNMENT  ENTITY  ANY DATA OR INFORMATION NECESSARY
   39  THAT, IN THE DISCRETION OF THE COMMISSIONER, IS NECESSARY FOR THE IMPLE-
   40  MENTATION OF ANY ELECTRONIC TAX CLEARANCE. HOWEVER, NO OTHER AGENCY  MAY
   41  RE-DISCLOSE  THIS  INFORMATION TO ANY OTHER ENTITY OR PERSON, OTHER THAN
   42  FOR THE PURPOSE OF INFORMING THE APPLICANT THAT THE  APPLICATION  FOR  A
   43  LICENSE  OR THE RENEWAL OF SUCH LICENSE WILL NOT BE PROCESSED DUE TO THE
   44  LACK OF A REQUIRED TAX CLEARANCE AUTHORIZED  BY  ANY  PROVISION  OF  LAW
   45  UNLESS OTHERWISE PERMITTED BY LAW.
   46    7.  EXCEPT  AS  OTHERWISE  PROVIDED IN THIS SECTION, THE ACTIVITIES TO
   47  COLLECT PAST-DUE TAX LIABILITIES UNDERTAKEN BY THE  DEPARTMENT  PURSUANT
   48  TO  THIS  SECTION  SHALL  NOT  IN  ANY WAY LIMIT, RESTRICT OR IMPAIR THE
   49  DEPARTMENT FROM EXERCISING ANY OTHER AUTHORITY TO COLLECT OR ENFORCE TAX
   50  LIABILITIES UNDER ANY OTHER APPLICABLE PROVISION OF LAW.
   51    8. EXCEPT AS OTHERWISE PROVIDED IN THIS  SECTION,  THE  PROVISIONS  OF
   52  THIS SECTION ARE NOT APPLICABLE TO THE TAX CLEARANCE REQUIRED BY SECTION
   53  ONE HUNDRED SEVENTY-ONE-V OF THIS CHAPTER.
   54    S  3. This act shall take effect June 1, 2014; provided, however, that
   55  the department of taxation and finance and any government entity  elect-
   56  ing  to receive an electronic tax clearance from the department of taxa-
       S. 6359                            171                           A. 8559
    1  tion and finance may work to execute the necessary procedures and  tech-
    2  nical  changes  to  support  the  electronic  tax  clearance  process as
    3  described in sections  one  and  two  of  this  act  before  that  date;
    4  provided, further, that this effective date will not impact the adminis-
    5  tration  of  any  electronic tax clearance program authorized by another
    6  provision of law.
    7                                   PART I
    8    Section 1. Subsection (b) of section 612 of the tax law is amended  by
    9  adding a new paragraph 40 to read as follows:
   10    (40)  IN  THE  CASE OF A BENEFICIARY OF A NONRESIDENT TRUST OR A TRUST
   11  NOT SUBJECT TO TAX PURSUANT TO SUBPARAGRAPH (D) OF  PARAGRAPH  THREE  OF
   12  SUBSECTION  (B)  OF SECTION SIX HUNDRED FIVE OF THIS ARTICLE (EXCEPT FOR
   13  AN INCOMPLETE GIFT NON-GRANTOR TRUST, AS DEFINED BY PARAGRAPH  FORTY-ONE
   14  OF  THIS  SUBSECTION),  THE  AMOUNT  OF ANY ACCUMULATION DISTRIBUTION AS
   15  DESCRIBED IN SUBSECTION (B) OF SECTION SIX  HUNDRED  SIXTY-FIVE  OF  THE
   16  INTERNAL  REVENUE  CODE  FOR  THE TAX YEAR, SUCH AMOUNT TO BE DETERMINED
   17  WITHOUT REGARD TO THE  PENULTIMATE  SENTENCE  OF  SUCH  SUBSECTION  THAT
   18  REFERENCES  SECTION  SIX  HUNDRED  SIXTY-SEVEN OF SUCH CODE, AND WITHOUT
   19  REGARD TO SUBSECTION (C) OF SECTION SIX HUNDRED SIXTY-FIVE OF THE INTER-
   20  NAL REVENUE CODE, TO THE EXTENT NOT ALREADY INCLUDED  IN  FEDERAL  GROSS
   21  INCOME FOR THE TAX YEAR.
   22    S 2. Subsection (b) of section 612 of the tax law is amended by adding
   23  a new paragraph 41 to read as follows:
   24    (41)  IN  THE CASE OF A TAXPAYER WHO TRANSFERRED PROPERTY TO AN INCOM-
   25  PLETE GIFT  NON-GRANTOR  TRUST,  THE  INCOME  OF  THE  TRUST,  LESS  ANY
   26  DEDUCTIONS  OF  THE  TRUST,  TO THE EXTENT SUCH INCOME AND DEDUCTIONS OF
   27  SUCH TRUST WOULD BE TAKEN  INTO  ACCOUNT  IN  COMPUTING  THE  TAXPAYER'S
   28  FEDERAL  TAXABLE  INCOME IF SUCH TRUST IN ITS ENTIRETY WERE TREATED AS A
   29  GRANTOR TRUST FOR FEDERAL TAX PURPOSES. FOR PURPOSES OF THIS  PARAGRAPH,
   30  AN "INCOMPLETE GIFT NON-GRANTOR TRUST" MEANS A RESIDENT TRUST THAT MEETS
   31  THE  FOLLOWING  CONDITIONS:  (I) THE TRUST DOES NOT QUALIFY AS A GRANTOR
   32  TRUST UNDER SECTION SIX HUNDRED SEVENTY-ONE THROUGH SIX  HUNDRED  SEVEN-
   33  TY-NINE  OF THE INTERNAL REVENUE CODE, AND (2) THE GRANTOR'S TRANSFER OF
   34  ASSETS TO THE TRUST IS TREATED AS AN INCOMPLETE GIFT UNDER SECTION TWEN-
   35  TY-FIVE HUNDRED ELEVEN OF THE INTERNAL REVENUE CODE, AND THE REGULATIONS
   36  THEREUNDER.
   37    S 3. Section 621 of the tax law, as added by chapter 272 of  the  laws
   38  of  1963  and  subsection  (a)  as amended by chapter 267 of the laws of
   39  1987, is amended to read as follows:
   40    S 621. [Credit] CREDITS to trust  beneficiary  receiving  accumulation
   41  distribution.   (a) General. A resident beneficiary of a trust whose New
   42  York adjusted gross income includes  all  or  part  of  an  accumulation
   43  distribution by such trust, as defined in section six hundred sixty-five
   44  of the internal revenue code, INCLUDING A BENEFICIARY WHO IS REQUIRED TO
   45  MAKE  THE  MODIFICATION REQUIRED BY PARAGRAPH FORTY OF SUBSECTION (B) OF
   46  SECTION SIX HUNDRED TWELVE OF THIS PART, shall be allowed (1)  a  credit
   47  against  the  tax  otherwise due under this article for all or a propor-
   48  tionate part of any tax paid by the trust under this  article  or  under
   49  FORMER article sixteen of this chapter (as such article was in effect on
   50  or before December thirtieth, nineteen hundred sixty), for any preceding
   51  taxable  year which would not have been payable if the trust had in fact
   52  made distributions to its beneficiaries at the times and in the  amounts
   53  specified in section six hundred sixty-six of the internal revenue code;
   54  AND (2) A CREDIT AGAINST THE TAXES IMPOSED BY THIS ARTICLE FOR THE TAXA-
       S. 6359                            172                           A. 8559
    1  BLE YEAR FOR ANY INCOME TAX IMPOSED ON THE TRUST FOR THE TAXABLE YEAR OR
    2  ANY  PRIOR  TAXABLE  YEAR BY ANOTHER STATE OF THE UNITED STATES, A POLI-
    3  TICAL SUBDIVISION THEREOF, OR THE DISTRICT OF COLUMBIA, UPON INCOME BOTH
    4  DERIVED  THEREFROM  AND SUBJECT TO TAX UNDER THIS ARTICLE, PROVIDED THAT
    5  THE AMOUNT OF THE CREDIT SHALL NOT EXCEED  THE  PERCENTAGE  OF  THE  TAX
    6  OTHERWISE  DUE  UNDER THIS ARTICLE DETERMINED BY DIVIDING THE PORTION OF
    7  THE INCOME THAT IS BOTH TAXABLE TO THE TRUST IN SUCH OTHER  JURISDICTION
    8  AND TAXABLE TO THE BENEFICIARY UNDER THIS ARTICLE BY THE TOTAL AMOUNT OF
    9  THE BENEFICIARY'S NEW YORK INCOME.
   10    (b)  Limitation.  The  [credit]  CREDITS  under this section shall not
   11  reduce the tax otherwise due from the beneficiary under this article  to
   12  an amount less than would have been due if the accumulation distribution
   13  or  his  part  thereof  were  excluded  from his New York adjusted gross
   14  income.
   15    S 4. Section 658 of the tax law is amended by adding a new  subsection
   16  (f) to read as follows:
   17     (F)  (1) EVERY NONRESIDENT TRUST OR A TRUST DESCRIBED BY SUBPARAGRAPH
   18  (D) OF PARAGRAPH THREE OF SUBSECTION (B) OF SECTION SIX HUNDRED FIVE  OF
   19  THIS  ARTICLE SHALL MAKE A RETURN FOR ANY TAXABLE YEAR IN WHICH IT MAKES
   20  AN ACCUMULATION DISTRIBUTION WITHIN THE MEANING OF  SUBDIVISION  (B)  OF
   21  SECTION SIX HUNDRED SIXTY-FIVE OF THE INTERNAL REVENUE CODE TO A BENEFI-
   22  CIARY  WHO  IS  A  RESIDENT,  WHICH RETURN SHALL INCLUDE (I) INFORMATION
   23  IDENTIFYING SUCH RESIDENT, (II) THE AMOUNT OF SUCH ACCUMULATION DISTRIB-
   24  UTION, AND (III) SUCH OTHER INFORMATION AS THE COMMISSIONER MAY REQUIRE.
   25    (2) EVERY RESIDENT TRUST THAT DOES NOT FILE  THE  RETURN  REQUIRED  BY
   26  SECTION  SIX HUNDRED FIFTY-ONE OF THIS PART ON THE GROUND THAT IT IS NOT
   27  SUBJECT TO TAX PURSUANT  TO  SUBPARAGRAPH  (D)  OF  PARAGRAPH  THREE  OF
   28  SUBSECTION (B) OF SECTION SIX HUNDRED FIVE OF THIS ARTICLE FOR THE TAXA-
   29  BLE  YEAR  SHALL  MAKE A RETURN FOR SUCH TAXABLE YEAR SUBSTANTIATING ITS
   30  ENTITLEMENT TO THAT EXEMPTION AND PROVIDING SUCH  OTHER  INFORMATION  AS
   31  THE COMMISSIONER MAY REQUIRE.
   32    (3)  THE  RETURNS  REQUIRED  BY  THIS  SUBSECTION SHALL BE FILED ON OR
   33  BEFORE THE FIFTEENTH DAY OF THE FOURTH MONTH FOLLOWING THE CLOSE OF EACH
   34  TAXABLE YEAR. FOR PURPOSES OF THIS PARAGRAPH,  "TAXABLE  YEAR"  MEANS  A
   35  YEAR  OR  A PERIOD WHICH WOULD BE A TAXABLE YEAR OF THE TRUST IF IT WERE
   36  SUBJECT TO TAX UNDER THIS ARTICLE.
   37    S 5. Paragraph 2 of subsection (h) of section 685 of the tax  law,  as
   38  amended  by  chapter  190  of  the  laws  of 1990, is amended to read as
   39  follows:
   40    (2) If any partnership [or], S corporation, OR TRUST required to  file
   41  a return or report under subsection (c) OR SUBSECTION (F) of section six
   42  hundred  fifty-eight  or  under  section  six hundred fifty-nine OF THIS
   43  ARTICLE for any taxable year fails to file such return or report at  the
   44  time  prescribed  therefor  (determined  with regard to any extension of
   45  time for filing), or files a return or report which fails  to  show  the
   46  information  required  under  such subsection (c) or section six hundred
   47  fifty-nine OF THIS ARTICLE, unless it is shown that such failure is  due
   48  to  reasonable  cause  and not due to willful neglect, there shall, upon
   49  notice and demand by the commissioner and in the same manner as tax,  be
   50  paid  by  the  partnership or S corporation a penalty for each month (or
   51  fraction thereof) during which such failure continues (but not to exceed
   52  five months). The amount of such penalty for any month is the product of
   53  fifty dollars, multiplied by the number of partners in  the  partnership
   54  or shareholders in the S corporation during any part of the taxable year
   55  who were subject to tax under this article during any part of such taxa-
   56  ble  year,  EXCEPT  THAT,  IN  THE CASE OF A TRUST, THE PENALTY SHALL BE
       S. 6359                            173                           A. 8559
    1  EQUAL TO ONE HUNDRED FIFTY DOLLARS A MONTH UP TO A  MAXIMUM  OF  FIFTEEN
    2  HUNDRED DOLLARS PER TAXABLE YEAR.
    3    S  6. Subdivision (b) of section 11-1712 of the administrative code of
    4  the city of New York is amended by adding a new paragraph 36 to read  as
    5  follows:
    6    (36)  IN  THE  CASE OF A BENEFICIARY OF A NONRESIDENT TRUST OR A TRUST
    7  NOT SUBJECT TO TAX PURSUANT TO SUBPARAGRAPH (D) OF  PARAGRAPH  THREE  OF
    8  SUBSECTION  (B) OF SECTION 11-1705 OF THIS CHAPTER (EXCEPT FOR AN INCOM-
    9  PLETE GIFT NON-GRANTOR TRUST, AS DEFINED BY  PARAGRAPH  THIRTY-SEVEN  OF
   10  THIS  SUBDIVISION),  THE  AMOUNT  OF  ANY  ACCUMULATION  DISTRIBUTION AS
   11  DESCRIBED IN SUBSECTION (B) OF SECTION SIX  HUNDRED  SIXTY-FIVE  OF  THE
   12  INTERNAL  REVENUE  CODE  FOR  THE TAX YEAR, SUCH AMOUNT TO BE DETERMINED
   13  WITHOUT REGARD TO THE  PENULTIMATE  SENTENCE  OF  SUCH  SUBSECTION  THAT
   14  REFERENCES  SECTION  SIX  HUNDRED  SIXTY-SEVEN  OF SUCH CODE AND WITHOUT
   15  REGARD TO SUBSECTION (C) OF SECTION SIX HUNDRED SIXTY-FIVE OF THE INTER-
   16  NAL REVENUE CODE, TO THE EXTENT NOT ALREADY INCLUDED  IN  FEDERAL  GROSS
   17  INCOME FOR THE TAX YEAR.
   18    S  7. Subdivision (b) of section 11-1712 of the administrative code of
   19  the city of New York is amended by adding a new paragraph 37 to read  as
   20  follows:
   21    (37)  IN  THE CASE OF A TAXPAYER WHO TRANSFERRED PROPERTY TO AN INCOM-
   22  PLETE GIFT  NON-GRANTOR  TRUST,  THE  INCOME  OF  THE  TRUST,  LESS  ANY
   23  DEDUCTIONS  OF  SUCH  TRUST, TO THE EXTENT SUCH INCOME AND DEDUCTIONS OF
   24  SUCH TRUST WOULD BE TAKEN  INTO  ACCOUNT  IN  COMPUTING  THE  TAXPAYER'S
   25  FEDERAL  TAXABLE  INCOME IF SUCH TRUST IN ITS ENTIRETY WERE TREATED AS A
   26  GRANTOR TRUST FOR FEDERAL TAX PURPOSES. FOR PURPOSES OF THIS  PARAGRAPH,
   27  AN "INCOMPLETE GIFT NON-GRANTOR TRUST" MEANS A RESIDENT TRUST THAT MEETS
   28  THE  FOLLOWING  CONDITIONS:  (I) THE TRUST DOES NOT QUALIFY AS A GRANTOR
   29  TRUST UNDER SECTION SIX HUNDRED SEVENTY-ONE THROUGH SIX  HUNDRED  SEVEN-
   30  TY-NINE  OF THE INTERNAL REVENUE CODE, AND (2) THE GRANTOR'S TRANSFER OF
   31  ASSETS TO THE TRUST IS TREATED AS AN INCOMPLETE GIFT UNDER SECTION TWEN-
   32  TY FIVE HUNDRED ELEVEN OF THE INTERNAL REVENUE CODE, AND THE REGULATIONS
   33  THEREUNDER.
   34    S 8. Section 11-1721 of the administrative code of  the  city  of  New
   35  York, subdivisions (a) and (b) as amended by section 72 and such section
   36  as  renumbered  by  section  43  of  chapter 639 of the laws of 1986, is
   37  amended to read as follows:
   38    S 11-1721 [Credit] CREDITS to trust beneficiary receiving accumulation
   39  distribution. (a) General. A city resident beneficiary of a trust  whose
   40  city  adjusted  gross  income  includes  all  or part of an accumulation
   41  distribution by such trust, as defined in section six hundred sixty-five
   42  of the internal revenue code, INCLUDING A BENEFICIARY WHO IS REQUIRED TO
   43  MAKE THE MODIFICATION REQUIRED BY PARAGRAPH  THIRTY-SIX  OF  SUBDIVISION
   44  (B) OF SECTION 11-1712 OF THIS SUBCHAPTER, shall be allowed (1) a credit
   45  against  the  tax  otherwise due under this chapter for all or a propor-
   46  tionate part of any tax paid by the trust under this  chapter  or  under
   47  FORMER  title  T  of chapter forty-six of this code, as it was in effect
   48  prior to September first, nineteen hundred eighty-six, for any preceding
   49  taxable year which would not have been payable if the trust had in  fact
   50  made  distributions to its beneficiaries at the times and in the amounts
   51  specified in section six hundred sixty-six of the internal revenue code;
   52  AND (2) A CREDIT AGAINST THE TAXES IMPOSED BY THIS CHAPTER FOR THE TAXA-
   53  BLE YEAR FOR ANY INCOME TAX IMPOSED FOR THE TAXABLE YEAR  OR  ANY  PRIOR
   54  TAXABLE YEAR BY ANOTHER STATE OF THE UNITED STATES, A POLITICAL SUBDIVI-
   55  SION  THEREOF,  OR  THE  DISTRICT  OF COLUMBIA, UPON INCOME BOTH DERIVED
   56  THEREFROM AND SUBJECT TO TAX  UNDER  THIS  CHAPTER,  PROVIDED  THAT  THE
       S. 6359                            174                           A. 8559
    1  AMOUNT  OF  THE CREDIT SHALL NOT EXCEED THE PERCENTAGE OF THE TAX OTHER-
    2  WISE DUE UNDER THIS CHAPTER DETERMINED BY DIVIDING THE  PORTION  OF  THE
    3  INCOME  THAT IS BOTH TAXABLE TO THE TRUST IN SUCH OTHER JURISDICTION AND
    4  TAXABLE TO THE BENEFICIARY UNDER THIS CHAPTER BY THE TOTAL AMOUNT OF THE
    5  BENEFICIARY'S NEW YORK CITY INCOME.
    6    (b)  Limitation.  The  [credit]  CREDITS  under this section shall not
    7  reduce the tax otherwise due from the beneficiary under this chapter  to
    8  an amount less than would have been due if the accumulation distribution
    9  or  his  or her part thereof were excluded from his or her city adjusted
   10  gross income.
   11    S 9. This act shall take effect immediately and shall apply to taxable
   12  years beginning on or after January 1, 2014, provided that sections  one
   13  and  six  of  this  act  shall not apply to income of an exempt resident
   14  trust paid to a beneficiary before June 1, 2014, and  sections  two  and
   15  seven  of this act shall not apply to income from a trust that is liqui-
   16  dated before June 1, 2014.
   17                                   PART J
   18    Section 1. Section 602 of the tax law is REPEALED.
   19    S 2. Paragraph 4 of subsection (c) and paragraph 4 of  subsection  (d)
   20  of section 606 of the tax law, paragraph 4 of subsection (c) as added by
   21  chapter  309  of  the  laws of 1996 and paragraph 4 of subsection (d) as
   22  amended by chapter 2 of the  laws  of  1995,  are  amended  to  read  as
   23  follows:
   24    (4) Part-year residents. In the case of a part-year resident taxpayer,
   25  the credit under this subsection shall be allowed against the tax deter-
   26  mined  under  subsections  (a)  through  (d)  of section six hundred one
   27  reduced by the credit permitted under subsection (b)  of  this  section,
   28  and  any  excess  credit after such application shall be allowed against
   29  the [taxes] TAX imposed by [sections six hundred two  and]  SECTION  six
   30  hundred  three.  Any  remaining excess, after such application, shall be
   31  refunded as provided in paragraph two hereof,  provided,  however,  that
   32  any  overpayment  under such paragraph shall be limited to the amount of
   33  the remaining excess multiplied by a fraction, the numerator of which is
   34  federal adjusted gross income for the period of residence,  computed  as
   35  if  the taxable year for federal income tax purposes were limited to the
   36  period of residence, and the denominator of which  is  federal  adjusted
   37  gross income for the taxable year.
   38    (4) Part-year residents. In the case of a part-year resident taxpayer,
   39  the credit under this subsection shall be allowed against the tax deter-
   40  mined  under  subsections  (a)  through  (d)  of section six hundred one
   41  reduced by the credits permitted under subsections (b), (c) and  (m)  of
   42  this  section,  and  any  excess  credit after such application shall be
   43  allowed against the [taxes] TAX imposed by  [sections  six  hundred  two
   44  and]  SECTION six hundred three. Any remaining excess, after such appli-
   45  cation, shall be refunded as provided in paragraph two hereof, provided,
   46  however, that any overpayment under such paragraph shall be  limited  to
   47  the amount of the remaining excess multiplied by a fraction, the numera-
   48  tor  of  which  is federal adjusted gross income for the period of resi-
   49  dence, computed as if the taxable year for federal income  tax  purposes
   50  were limited to the period of residence, and the denominator of which is
   51  federal adjusted gross income for the taxable year.
   52    S 3. Section 622 of the tax law is REPEALED.
   53    S 4. Section 636 of the tax law is REPEALED.
       S. 6359                            175                           A. 8559
    1    S  5.  Subsections  (a), (b) and (c) of section 639 of the tax law, as
    2  added by chapter 170 of the  laws  of  1994,  are  amended  to  read  as
    3  follows:
    4    (a)  If  an  individual changes status from resident to nonresident he
    5  shall, regardless of his method of accounting, accrue to the  period  of
    6  residence  any  items  of  income,  gain, loss, deduction, [items of tax
    7  preference] or ordinary income portion of a lump sum distribution accru-
    8  ing prior to the change of status, with the applicable modifications and
    9  adjustments to federal adjusted gross income[,] AND itemized  deductions
   10  [and  items  of tax preference] under sections six hundred twelve[,] AND
   11  six hundred fifteen [and six hundred twenty-two], if not otherwise prop-
   12  erly includible or allowable for New York income tax purposes  for  such
   13  period or a prior taxable year under his method of accounting.
   14    (b)  If  an  individual changes status from nonresident to resident he
   15  shall, regardless of his method of accounting, accrue to the  period  of
   16  nonresidence any items of income, gain, loss or deduction, [items of tax
   17  preference] or ordinary income portion of a lump sum distribution accru-
   18  ing prior to the change of status, with the applicable modifications and
   19  adjustments  to federal adjusted gross income[,] AND itemized deductions
   20  [and items of tax preference] under sections six hundred  twelve[,]  AND
   21  six  hundred  fifteen  [and  six  hundred  twenty-two], other than items
   22  derived from or connected with New York sources, if not otherwise  prop-
   23  erly  includible  or allowable for New York income tax purposes for such
   24  period or for a prior taxable year under his method of accounting.
   25    (c) No item of income, gain, loss, deduction,  [item  of  tax  prefer-
   26  ence,]  ordinary  income portion of a lump sum distribution or modifica-
   27  tion or adjustment which is accrued under this section  shall  be  taken
   28  into  account  in  determining the tax under this article for any subse-
   29  quent taxable year.
   30    S 6. Paragraphs 1, 2, 3 and 4 of subsection (a) of section 651 of  the
   31  tax  law,  paragraph  1  as  amended by chapter 333 of the laws of 1987,
   32  paragraph 2 as amended by chapter 28 of the laws of 1987, and paragraphs
   33  3 and 4 as amended by chapter 170 of the laws of 1994,  are  amended  to
   34  read as follows:
   35    (1)  every  resident  individual (A) required to file a federal income
   36  tax return for the taxable year, or (B) having  federal  adjusted  gross
   37  income  for  the  taxable  year,  increased  by  the modifications under
   38  subsection (b) of section six hundred twelve, in excess of four thousand
   39  dollars, or in excess of his New York standard deduction, if  lower,  or
   40  (C)  [subject  to  tax  under  section  six  hundred two, or (D)] having
   41  received during the taxable year a lump sum distribution any portion  of
   42  which is subject to tax under section six hundred three;
   43    (2)  every  resident estate or trust required to file a federal income
   44  tax return for the taxable year, or having any New York  taxable  income
   45  for the taxable year, determined under section six hundred eighteen, [or
   46  subject to tax under section six hundred two,] or having received during
   47  the taxable year a lump sum distribution any portion of which is subject
   48  to tax under section six hundred three;
   49    (3) every nonresident or part-year resident individual having New York
   50  source  income  for  the taxable year, determined under part III of this
   51  article, and having New York adjusted gross income for the taxable year,
   52  determined under part II of this article, in excess  of  the  taxpayer's
   53  New  York  standard  deduction,  [or  subject  to  tax under section six
   54  hundred two,] or having received during the  taxable  year  a  lump  sum
   55  distribution  any  portion  of which is subject to tax under section six
   56  hundred three; and
       S. 6359                            176                           A. 8559
    1    (4) every nonresident estate or  trust  or  part-year  resident  trust
    2  having  New  York  source  income for the taxable year, determined under
    3  part III of this article, and having New York adjusted gross income  for
    4  the  taxable  year, determined under paragraph four of subsection (e) of
    5  section  six  hundred  one, [or subject to tax under section six hundred
    6  two,] or having received during the taxable year a lump sum distribution
    7  any portion of which is subject to tax under section six hundred three.
    8    S 7. Paragraph 6 of subsection (b) of section 654 of the tax  law,  as
    9  added  by  section  5  of  part Q of chapter 407 of the laws of 1999, is
   10  amended to read as follows:
   11    (6) In subparagraph (B) of paragraph two of subsection (d), the phrase
   12  "section 1 or 55" shall be read as "section  six  hundred  one  [or  six
   13  hundred two] of this article".
   14    S 8. Section 659 of the tax law, as amended by chapter 577 of the laws
   15  of 1997, is amended to read as follows:
   16    S  659.   Report of federal changes, corrections or disallowances.  If
   17  the amount of a taxpayer's federal taxable income, [federal items of tax
   18  preference,] total taxable amount or ordinary income portion of  a  lump
   19  sum  distribution  or includible gain of a trust reported on his federal
   20  income tax return for any taxable year, or the amount  of  a  taxpayer's
   21  earned income credit or credit for employment-related expenses set forth
   22  on  such return, or the amount of any federal foreign tax credit affect-
   23  ing the calculation of the credit for Canadian  provincial  taxes  under
   24  section  six  hundred twenty or six hundred twenty-A of this article, or
   25  the amount of any claim of right adjustment, is changed or corrected  by
   26  the  United States internal revenue service or other competent authority
   27  or as the result of a renegotiation of a contract  or  subcontract  with
   28  the  United  States, or the amount an employer is required to deduct and
   29  withhold from wages for  federal  income  tax  withholding  purposes  is
   30  changed  or  corrected  by  such service or authority or if a taxpayer's
   31  claim for credit or refund of federal income tax is disallowed in  whole
   32  or  in  part,  the  taxpayer  or  employer  shall  report such change or
   33  correction or disallowance within ninety days after the  final  determi-
   34  nation  of such change, correction, renegotiation or disallowance, or as
   35  otherwise required by the commissioner, and shall concede  the  accuracy
   36  of  such  determination or state wherein it is erroneous.  The allowance
   37  of a tentative carryback adjustment based  upon  a  net  operating  loss
   38  carryback  pursuant to section sixty-four hundred eleven of the internal
   39  revenue code shall be treated as a final determination for  purposes  of
   40  this  section.  Any taxpayer filing an amended federal income tax return
   41  and any employer filing an amended federal return of income tax withheld
   42  shall also file within ninety days thereafter an  amended  return  under
   43  this  article,  and  shall give such information as the commissioner may
   44  require.  The commissioner may by regulation prescribe  such  exceptions
   45  to the requirements of this section as he or she deems appropriate.  For
   46  purposes  of this section, (i) the term "taxpayer" shall include a part-
   47  nership having a resident partner or having any income derived from  New
   48  York  sources,  and a corporation with respect to which the taxable year
   49  of such change, correction, disallowance or amendment  is  a  year  with
   50  respect  to which the election provided for in subsection (a) of section
   51  six hundred sixty of this article  is  in  effect,  and  (ii)  the  term
   52  "federal income tax return" shall include the returns of income required
   53  under  sections six thousand thirty-one and six thousand thirty-seven of
   54  the internal revenue code.   In the case of  such  a  corporation,  such
   55  report  shall  also  include  any  change  or  correction  of  the taxes
   56  described in paragraphs two and three of subsection (f) of section thir-
       S. 6359                            177                           A. 8559
    1  teen hundred sixty-six of the internal revenue code.  Reports made under
    2  this section by a partnership or corporation shall indicate the  portion
    3  of  the  change in each item of income, gain, loss or deduction (and, in
    4  the case of a corporation, of each change in, or disallowance of a claim
    5  for  credit  or  refund of, a tax referred to in the preceding sentence)
    6  allocable to each partner or shareholder and shall set forth such  iden-
    7  tifying  information  with respect to such partner or shareholder as may
    8  be prescribed by the commissioner.
    9    S 9. Subsection (d) of section 683 of the tax law, as amended by chap-
   10  ter 170 of the laws of 1994, is amended to read as follows:
   11    (d) Omission of income, [item of tax preference,] total taxable amount
   12  or ordinary income portion of a lump sum  distribution  on  return.--The
   13  tax  may  be  assessed at any time within six years after the return was
   14  filed if--
   15    (1) an individual omits from his New York adjusted gross income,  [the
   16  sum  of  his  items  of  tax preference,] or the total taxable amount or
   17  ordinary income portion of a lump sum distribution  an  amount  properly
   18  includible  therein  which  is  in  excess of twenty-five percent of the
   19  amount of New York adjusted gross income, [the sum of the items  of  tax
   20  preference,] or the total taxable amount or ordinary income portion of a
   21  lump sum distribution stated in the return, or
   22    (2)  an estate or trust omits from its New York adjusted gross income,
   23  [the sum of its items of tax preference,] or the total taxable amount or
   24  ordinary income portion of a lump sum distribution  an  amount  properly
   25  includible  therein  which  is  in  excess of twenty-five percent of the
   26  amount stated in the return of New York adjusted gross income determined
   27  in accordance with paragraph four  of  subsection  (e)  of  section  six
   28  hundred  one,  [or the sum of the items of tax preference,] or the total
   29  taxable amount or ordinary income portion of a  lump  sum  distribution,
   30  respectively.  For  purposes of this subsection there shall not be taken
   31  into account any amount which is omitted in the return if such amount is
   32  disclosed in the return, or in a statement attached to the return, in  a
   33  manner  adequate to apprise the commissioner of the nature and amount of
   34  the item of income, [tax preference,] total taxable amount  or  ordinary
   35  income portion of a lump sum distribution.
   36    S 10. Subparagraph (B) of paragraph 4 of subsection (c) of section 685
   37  of the tax law, as amended by chapter 28 of the laws of 1987, is amended
   38  to read as follows:
   39    (B)  Determination  of  annualized income installment.--In the case of
   40  any required installment,  the  annualized  income  installment  is  the
   41  excess,  if  any, of an amount equal to the applicable percentage of the
   42  tax for the taxable year computed by placing on an annualized basis  the
   43  taxable  income  [and  minimum taxable income] for months in the taxable
   44  year ending before the due date for the installment, over the  aggregate
   45  amount  of  any  prior  required  installments for the taxable year. The
   46  applicable percentage of  the  tax  shall  be  twenty-two  and  one-half
   47  percent  in the case of the first installment, forty-five percent in the
   48  case of the second installment, sixty-seven and one-half percent in  the
   49  case  of  the  third  installment  and ninety percent in the case of the
   50  fourth installment, and shall be computed without regard to any increase
   51  in the rates applicable to the taxable year  unless  such  increase  was
   52  enacted at least thirty days prior to the due date of the installment.
   53    S  11. Paragraphs 2 and 3 of subsection (a) of section 1301 of the tax
   54  law, as amended by chapter 209 of the laws of 2011, are amended to  read
   55  as follows:
       S. 6359                            178                           A. 8559
    1    (2)  [for  taxable years beginning before two thousand fifteen, a city
    2  minimum income tax on such residents, and
    3    (3)] for taxable years beginning after nineteen hundred seventy-six, a
    4  separate tax on the ordinary income portion of lump sum distributions of
    5  such  residents,  at  the  rates  provided  for herein, such taxes to be
    6  administered, collected and distributed by the commissioner as  provided
    7  for in this article.
    8    S 12. Section 1301-A of the tax law is REPEALED.
    9    S  13.  Subsection  (a)  of section 1302 of the tax law, as amended by
   10  chapter 333 of the laws of 1987, is amended to read as follows:
   11    (a) Imposition of tax. The city personal income tax  (other  than  the
   12  [city  minimum  income  tax  and  the] city separate tax on the ordinary
   13  income portion of  lump  sum  distributions)  imposed  pursuant  to  the
   14  authority  of this article shall be imposed for each taxable year on the
   15  city taxable income of every city resident individual, estate and trust.
   16  A taxpayer's taxable year for purposes of a tax imposed pursuant to  the
   17  authority  of  this  article shall be the same as his taxable year under
   18  article twenty-two of this chapter.
   19    S 14. The opening paragraph of subsection (a) of section 1304  of  the
   20  tax  law, as amended by section 134 of part A of chapter 389 of the laws
   21  of 1997, is amended to read as follows:
   22    A tax (other than the [city minimum income tax, the] city separate tax
   23  relating to qualified higher education funds and the city  separate  tax
   24  on the ordinary income portion of lump sum distributions) imposed pursu-
   25  ant  to  the  authority  of section thirteen hundred one of this article
   26  shall be determined as follows:
   27    S 15. Subsection (c) of section 1307 of the tax  law,  as  amended  by
   28  chapter 712 of the laws of 2004, is amended to read as follows:
   29    (c)  When  an individual changes his status from city resident to city
   30  nonresident, or from  city  nonresident  to  city  resident,  he  shall,
   31  regardless  of  his  method  of  accounting, accrue any items of income,
   32  gain, loss, deduction[, items of  tax  preference]  or  ordinary  income
   33  portion  of  a  lump  sum  distribution  accruing prior to the change of
   34  status, with the applicable modifications  and  adjustments  to  federal
   35  adjusted gross income[,] AND itemized deductions [and items of tax pref-
   36  erence]  under  sections  six  hundred twelve[,] AND six hundred fifteen
   37  [and six hundred twenty-two], if not otherwise  properly  includible  or
   38  allowable  for  New  York income tax purposes for such period or a prior
   39  taxable year under his method of accounting. Such accruals shall be made
   40  as provided in section six hundred thirty-nine of this chapter.
   41    S 16. Subsection (a) of section 1306 of the tax  law,  as  amended  by
   42  chapter 333 of the laws of 1987, is amended to read as follows:
   43    (a)  General.  On  or  before  the  fifteenth  day of the fourth month
   44  following the close of a taxable year, an income tax return under a city
   45  tax imposed pursuant to the authority of this article shall be made  and
   46  filed by or for every city resident individual, estate or trust required
   47  to  file  a  New  York  state  personal income tax (including [a minimum
   48  income tax and] a city separate tax on the ordinary  income  portion  of
   49  lump sum distributions) return for the taxable year.
   50    S  17.  Section  11-1702 of the administrative code of the city of New
   51  York is REPEALED.
   52    S 18. Subdivision (a) of section 11-1704 of the administrative code of
   53  the city of New York, as amended by chapter 17 of the laws of  1997,  is
   54  amended to read as follows:
   55    (a)  In  addition  to the taxes imposed by sections 11-1701[, 11-1702]
   56  and 11-1703, there is hereby imposed for  each  taxable  year  beginning
       S. 6359                            179                           A. 8559
    1  after  nineteen  hundred eighty-nine but before nineteen hundred ninety-
    2  nine, a tax surcharge on the city taxable income of every city  resident
    3  individual, estate and trust.
    4    S 19. Subdivision (c) of section 11-1704 of the administrative code of
    5  the  city of New York, as amended by chapter 271 of the laws of 1991, is
    6  amended to read as follows:
    7    (c) The tax surcharge imposed pursuant to this section shall be admin-
    8  istered, collected and distributed by the commissioner of  taxation  and
    9  finance  in  the  same  manner as the taxes imposed pursuant to sections
   10  11-1701[, 11-1702] and 11-1703, and all of the provisions of this  chap-
   11  ter, including sections 11-1706, 11-1721 and 11-1773, shall apply to the
   12  tax surcharge imposed by this section.
   13    S  20.  Section  11-1722 of the administrative code of the city of New
   14  York is REPEALED.
   15    S 21. Subdivision (a) of section 11-1751 of the administrative code of
   16  the city of New York, as amended by chapter 333 of the laws of 1987,  is
   17  amended to read as follows:
   18    (a)  General.  On  or  before  the  fifteenth  day of the fourth month
   19  following the close of a taxable year, an income tax return  under  this
   20  chapter  shall  be made and filed by or for every city resident individ-
   21  ual, estate or trust required to file a New York state  personal  income
   22  tax  (including  a [minimum income tax and] separate tax on the ordinary
   23  income portion of lump sum distributions) return for the taxable year.
   24    S 22. Subdivision (b) of section 11-1754 of the administrative code of
   25  the city of New York, as amended by chapter 712 of the laws of 2004,  is
   26  amended to read as follows:
   27    (b)  City  taxable  income  [and  city minimum taxable income] as city
   28  resident. The city taxable income [and city minimum taxable income]  for
   29  the  portion of the year during which he or she is a city resident shall
   30  be determined, except as provided in subdivision (c), as if his  or  her
   31  taxable  year for federal income tax purposes were limited to the period
   32  of his or her city resident status.
   33    S 23. Paragraph 6 of subdivision (b) of section 11-1755 of the  admin-
   34  istrative code of the city of New York, as added by section 17 of part Q
   35  of chapter 407 of the laws of 1999, is amended to read as follows:
   36    (6) In subparagraph (B) of paragraph two of subsection (d), the phrase
   37  "section 1 or 55" shall be read as "section 11-1701 [or 11-1702] of this
   38  chapter".
   39    S  24.  Section  11-1759 of the administrative code of the city of New
   40  York, as amended by chapter 577 of the laws of 1997, is amended to  read
   41  as follows:
   42    S  11-1759 Report of federal changes, corrections or disallowances. If
   43  the amount of a taxpayer's federal taxable income, [federal items of tax
   44  preference,] total taxable amount or ordinary income portion of  a  lump
   45  sum  distribution  or includible gain of a trust reported on his federal
   46  income tax return for any taxable year, or the amount of  any  claim  of
   47  right  adjustment, is changed or corrected by the United States internal
   48  revenue service or other competent authority, or  as  the  result  of  a
   49  renegotiation of a contract or subcontract with the United States or the
   50  amount  an  employer  is  required to deduct and withhold from wages for
   51  federal income tax withholding purposes is changed or corrected by  such
   52  service  or  authority  or if a taxpayer's claim for credit or refund of
   53  federal income tax is disallowed in whole or in part,  the  taxpayer  or
   54  employer  shall  report such change or correction or disallowance within
   55  ninety days after the final determination of  such  change,  correction,
   56  renegotiation,  or disallowance, or as otherwise required by the commis-
       S. 6359                            180                           A. 8559
    1  sioner, and shall concede the accuracy of such  determination  or  state
    2  wherein  it is erroneous. The allowance of a tentative carryback adjust-
    3  ment based upon a net  operating  loss  carryback  pursuant  to  section
    4  sixty-four  hundred eleven of the internal revenue code shall be treated
    5  as a final determination for purposes  of  this  section.  Any  taxpayer
    6  filing  an  amended federal income tax return and any employer filing an
    7  amended federal return of income tax withheld  shall  also  file  within
    8  ninety  days  thereafter an amended return under this chapter, and shall
    9  give such information as the commissioner may require. The  commissioner
   10  may  by regulation prescribe such exceptions to the requirements of this
   11  section as he or she deems appropriate. For purposes  of  this  section,
   12  (i)  the  term  "taxpayer" shall include a partnership having a resident
   13  partner or having any income derived from New York sources, and a corpo-
   14  ration  with  respect  to  which  the  taxable  year  of  such   change,
   15  correction,  disallowance  or  amendment is a year with respect to which
   16  the election provided for in subsection (a) of section six hundred sixty
   17  of the tax law is in effect, and  (ii)  the  term  "federal  income  tax
   18  return"  shall include the returns of income required under sections six
   19  thousand thirty-one and six thousand thirty-seven of the internal reven-
   20  ue code. In the case of such  a  corporation,  such  report  shall  also
   21  include  any  change  or correction of the taxes described in paragraphs
   22  two and three of subsection (f) of section thirteen hundred sixty-six of
   23  the internal revenue code. Reports made under this section by a partner-
   24  ship or corporation shall indicate the portion of  the  change  in  each
   25  item  of  income,  gain, loss or deduction (and, in the case of a corpo-
   26  ration, of each change in, or disallowance of  a  claim  for  credit  or
   27  refund  of,  a  tax  referred to in the preceding sentence) allocable to
   28  each partner or shareholder and shall set forth such identifying  infor-
   29  mation  with respect to such partner or shareholder as may be prescribed
   30  by the commissioner.
   31    S 25. Subdivision (d) of section 11-1783 of the administrative code of
   32  the city of New York, as amended by chapter 170 of the laws of 1994,  is
   33  amended to read as follows:
   34    (d) Omission of income, [item of tax preference,] total taxable amount
   35  or ordinary income portion of a lump sum distribution on return. The tax
   36  may  be assessed at any time within six years after the return was filed
   37  if:
   38    (1) an individual omits from his city adjusted gross income[, the  sum
   39  of his items of tax preference, or] the total taxable amount or ordinary
   40  income  portion of a lump sum distribution an amount properly includible
   41  therein which is in excess of twenty-five percent of the amount of  city
   42  adjusted  gross  income[, the sum of the items of tax preference] or the
   43  total taxable amount or ordinary income portion of a lump  sum  distrib-
   44  ution stated in the return, or
   45    (2) an estate or trust omits from its city adjusted gross income, [the
   46  sum  of  its  items  of  tax preference,] or the total taxable amount or
   47  ordinary income portion of a lump sum distribution  an  amount  properly
   48  includible  therein  which  is  in  excess of twenty-five percent of the
   49  amount stated in the return of city adjusted gross income, [or  the  sum
   50  of the items of tax preference,] or the total taxable amount or ordinary
   51  income portion of a lump sum distribution, respectively. For purposes of
   52  this paragraph, city adjusted gross income means New York adjusted gross
   53  income  as  determined under paragraph four of subsection (e) of section
   54  six hundred one of the tax law.
   55    For purposes of this subdivision there shall not be taken into account
   56  any amount which is omitted in the return if such amount is disclosed in
       S. 6359                            181                           A. 8559
    1  the return, or in a statement  attached  to  the  return,  in  a  manner
    2  adequate  to  apprise  the  commissioner of the nature and amount of the
    3  item of income, [tax preference,] the total taxable amount  or  ordinary
    4  income portion of a lump sum distribution.
    5    S  26.  Subparagraph  (B) of paragraph 4 of subdivision (c) of section
    6  11-1785 of the administrative code of the city of New York,  as  amended
    7  by chapter 333 of the laws of 1987, is amended to read as follows:
    8    (B) Determination of annualized income installment. In the case of any
    9  required  installment,  the annualized income installment is the excess,
   10  if any, of an amount equal to the applicable percentage of the  tax  for
   11  the  taxable year computed by placing on an annualized basis the taxable
   12  income [and minimum taxable income]  for  months  in  the  taxable  year
   13  ending  before  the  due  date  for  the installment, over the aggregate
   14  amount of any prior required installments  for  the  taxable  year.  The
   15  applicable  percentage  of  the  tax  shall  be  twenty-two and one-half
   16  percent in the case of the first installment, forty-five percent in  the
   17  case  of the second installment, sixty-seven and one-half percent in the
   18  case of the third installment and ninety percent  in  the  case  of  the
   19  fourth installment, and shall be computed without regard to any increase
   20  in  the  rates  applicable  to the taxable year unless such increase was
   21  enacted at least thirty days prior to the due date of the installment.
   22    S 27. This act shall take effect  immediately  and  apply  to  taxable
   23  years beginning on or after January 1, 2014.
   24                                   PART K
   25    Section  1.  Subsection  (e-1) of section 606 of the tax law is relet-
   26  tered subsection (e-2).
   27    S 2. Section 606 of the tax law is amended by adding a new  subsection
   28  (e-1) to read as follows:
   29    (E-1)  ENHANCED  REAL  PROPERTY  TAX  CIRCUIT  BREAKER CREDIT. (1) FOR
   30  PURPOSES OF THIS SUBSECTION:
   31    (A) "QUALIFIED TAXPAYER" MEANS A RESIDENT INDIVIDUAL OF THE STATE  WHO
   32  HAS  OCCUPIED  THE  SAME RESIDENCE FOR SIX MONTHS OR MORE OF THE TAXABLE
   33  YEAR, AND IS REQUIRED OR CHOOSES TO FILE A RETURN UNDER THIS ARTICLE.
   34    (B) "HOUSEHOLD" OR  "MEMBERS  OF  THE  HOUSEHOLD"  MEANS  A  QUALIFIED
   35  TAXPAYER  AND  ALL  OTHER PERSONS, NOT NECESSARILY RELATED, WHO HAVE THE
   36  SAME RESIDENCE AND SHARE ITS FURNISHINGS, FACILITIES AND ACCOMMODATIONS.
   37  SUCH TERMS SHALL NOT INCLUDE A TENANT, SUBTENANT, ROOMER OR BOARDER  WHO
   38  IS  NOT  RELATED  TO  THE  QUALIFIED TAXPAYER IN ANY DEGREE SPECIFIED IN
   39  PARAGRAPHS ONE THROUGH EIGHT OF SUBSECTION (A) OF  SECTION  ONE  HUNDRED
   40  FIFTY-TWO  OF  THE  INTERNAL REVENUE CODE.  PROVIDED, HOWEVER, NO PERSON
   41  MAY BE A MEMBER OF MORE THAN ONE HOUSEHOLD AT ONE TIME.
   42    (C) "HOUSEHOLD GROSS INCOME" MEANS THE AGGREGATE ADJUSTED GROSS INCOME
   43  OF ALL MEMBERS OF THE HOUSEHOLD FOR THE TAXABLE  YEAR  AS  REPORTED  FOR
   44  FEDERAL  INCOME  TAX  PURPOSES,  OR  WHICH WOULD BE REPORTED AS ADJUSTED
   45  GROSS INCOME IF A FEDERAL INCOME TAX RETURN WERE REQUIRED TO  BE  FILED,
   46  WITH  THE  MODIFICATIONS IN SUBSECTION (B) OF SECTION SIX HUNDRED TWELVE
   47  OF THIS ARTICLE BUT WITHOUT THE MODIFICATIONS IN SUBSECTION (C) OF  SUCH
   48  SECTION, PLUS ANY PORTION OF THE GAIN FROM THE SALE OR EXCHANGE OF PROP-
   49  ERTY  OTHERWISE  EXCLUDED  FROM  SUCH AMOUNT; EARNED INCOME FROM SOURCES
   50  WITHOUT THE UNITED  STATES  EXCLUDABLE  FROM  FEDERAL  GROSS  INCOME  BY
   51  SECTION  NINE HUNDRED ELEVEN OF THE INTERNAL REVENUE CODE; SUPPORT MONEY
   52  NOT INCLUDED IN  ADJUSTED  GROSS  INCOME;  NONTAXABLE  STRIKE  BENEFITS;
   53  SUPPLEMENTAL  SECURITY  INCOME PAYMENTS; THE GROSS AMOUNT OF ANY PENSION
   54  OR ANNUITY BENEFITS TO THE EXTENT NOT INCLUDED IN  SUCH  ADJUSTED  GROSS
       S. 6359                            182                           A. 8559
    1  INCOME  (INCLUDING, BUT NOT LIMITED TO, RAILROAD RETIREMENT BENEFITS AND
    2  ALL PAYMENTS RECEIVED UNDER THE FEDERAL SOCIAL SECURITY ACT  AND  VETER-
    3  ANS'  DISABILITY  PENSIONS); NONTAXABLE INTEREST RECEIVED FROM THE STATE
    4  OF  NEW  YORK,  ITS AGENCIES, INSTRUMENTALITIES, PUBLIC CORPORATIONS, OR
    5  POLITICAL SUBDIVISIONS (INCLUDING A PUBLIC CORPORATION CREATED  PURSUANT
    6  TO  AGREEMENT OR COMPACT WITH ANOTHER STATE OR CANADA); WORKERS' COMPEN-
    7  SATION; THE GROSS AMOUNT OF "LOSS-OF-TIME" INSURANCE; AND THE AMOUNT  OF
    8  CASH PUBLIC ASSISTANCE AND RELIEF, OTHER THAN MEDICAL ASSISTANCE FOR THE
    9  NEEDY,  PAID  TO OR FOR THE BENEFIT OF THE QUALIFIED TAXPAYER OR MEMBERS
   10  OF HIS OR HER  HOUSEHOLD.  HOUSEHOLD  GROSS  INCOME  SHALL  NOT  INCLUDE
   11  SURPLUS  FOODS  OR  OTHER RELIEF IN KIND OR PAYMENTS MADE TO INDIVIDUALS
   12  BECAUSE OF THEIR STATUS AS VICTIMS OF NAZI  PERSECUTION  AS  DEFINED  IN
   13  P.L.  103-286.  PROVIDED,  FURTHER,  HOUSEHOLD  GROSS  INCOME SHALL ONLY
   14  INCLUDE ALL SUCH INCOME RECEIVED BY ALL MEMBERS OF THE  HOUSEHOLD  WHILE
   15  MEMBERS  OF SUCH HOUSEHOLD. IN COMPUTING HOUSEHOLD GROSS INCOME, THE NET
   16  AMOUNT OF LOSS REPORTED ON FEDERAL SCHEDULE C, D,  E,  OR  F  SHALL  NOT
   17  EXCEED  THREE THOUSAND DOLLARS PER SCHEDULE. IN ADDITION, THE NET AMOUNT
   18  OF ANY OTHER SEPARATE CATEGORY OF LOSS SHALL NOT EXCEED  THREE  THOUSAND
   19  DOLLARS. THE AGGREGATE AMOUNT OF ALL LOSSES INCLUDED IN COMPUTING HOUSE-
   20  HOLD GROSS INCOME SHALL NOT EXCEED FIFTEEN THOUSAND DOLLARS.
   21    (D)  "RESIDENCE" MEANS A DWELLING IN THIS STATE OWNED BY THE TAXPAYER,
   22  AND SO MUCH OF THE LAND ABUTTING IT,  NOT  EXCEEDING  ONE  ACRE,  AS  IS
   23  REASONABLY  NECESSARY FOR USE OF THE DWELLING AS A HOME, AND MAY CONSIST
   24  OF A PART OF A MULTI-DWELLING  OR  MULTI-PURPOSE  BUILDING  INCLUDING  A
   25  COOPERATIVE  OR  CONDOMINIUM.    RESIDENCE  INCLUDES A TRAILER OR MOBILE
   26  HOME, USED EXCLUSIVELY FOR RESIDENTIAL  PURPOSES  AND  DEFINED  AS  REAL
   27  PROPERTY  PURSUANT TO PARAGRAPH (G) OF SUBDIVISION TWELVE OF SECTION ONE
   28  HUNDRED TWO OF THE REAL PROPERTY TAX LAW.
   29    (E) "QUALIFYING REAL PROPERTY TAXES" MEANS ALL  REAL  PROPERTY  TAXES,
   30  SPECIAL  AD  VALOREM LEVIES AND SPECIAL ASSESSMENTS, EXCLUSIVE OF PENAL-
   31  TIES AND INTEREST, LEVIED BY A TAXING JURISDICTION WITH A  CAP-COMPLIANT
   32  BUDGET  ON  THE  RESIDENCE  OF  A QUALIFIED TAXPAYER AND PAID DURING THE
   33  TAXABLE YEAR.
   34    (I) FOR THE PURPOSES OF THIS SUBSECTION, A "CAP-COMPLIANT BUDGET"  FOR
   35  A  SCHOOL DISTRICT SUBJECT TO SECTION TWO THOUSAND TWENTY-THREE-A OF THE
   36  EDUCATION LAW MEANS A BUDGET FOR WHICH THE CHIEF  EXECUTIVE  OFFICER  OF
   37  SUCH  SCHOOL  DISTRICT HAS CERTIFIED, NO LATER THAN THE TWENTY-FIRST DAY
   38  OF THE FISCAL YEAR TO WHICH IT APPLIES, TO THE  STATE  COMPTROLLER,  THE
   39  COMMISSIONER  OF TAXATION AND FINANCE AND THE COMMISSIONER OF EDUCATION,
   40  IN A FORM AND MANNER PRESCRIBED BY THE STATE COMPTROLLER IN CONSULTATION
   41  WITH THE COMMISSIONER OF TAXATION AND FINANCE AND  THE  COMMISSIONER  OF
   42  EDUCATION, THAT THE BUDGET SO ADOPTED DOES NOT EXCEED THE TAX LEVY LIMIT
   43  PRESCRIBED BY SUCH SECTION. A "CAP-COMPLIANT BUDGET" FOR A LOCAL GOVERN-
   44  MENT  SUBJECT TO SECTION THREE-C OF THE GENERAL MUNICIPAL LAW SHALL MEAN
   45  A BUDGET FOR WHICH THE CHIEF EXECUTIVE OFFICER OR BUDGET OFFICER OF SUCH
   46  LOCAL GOVERNMENT UNIT HAS CERTIFIED, NO LATER THAN THE TWENTY-FIRST  DAY
   47  OF THE FISCAL YEAR TO WHICH IT APPLIES, TO THE STATE COMPTROLLER AND THE
   48  COMMISSIONER OF TAXATION AND FINANCE, IN A FORM AND MANNER PRESCRIBED BY
   49  THE  STATE COMPTROLLER IN CONSULTATION WITH THE COMMISSIONER OF TAXATION
   50  AND FINANCE, THAT THE ADOPTED BUDGET OF SUCH LOCAL  GOVERNMENT  DID  NOT
   51  REQUIRE AND THE GOVERNING BODY OF SUCH LOCAL GOVERNMENT DID NOT ENACT OR
   52  APPROVE  A  LOCAL  LAW  OR  RESOLUTION  TO  OVERRIDE  THE TAX LEVY LIMIT
   53  PRESCRIBED BY SUCH SECTION, OR, IF  THE  GOVERNING  BODY  OF  THE  LOCAL
   54  GOVERNMENT  DID  ENACT  A  LOCAL LAW OR APPROVE A RESOLUTION TO OVERRIDE
   55  SUCH TAX LEVY LIMIT, THAT SUCH LOCAL LAW OR RESOLUTION WAS  SUBSEQUENTLY
   56  REPEALED.  IF  A  CERTIFICATION REQUIRED BY THIS PARAGRAPH HAS BEEN MADE
       S. 6359                            183                           A. 8559
    1  AND THE ACTUAL TAX LEVY OF THE TAXING JURISDICTION EXCEEDS THE  APPLICA-
    2  BLE  TAX  LEVY  LIMIT,  THE EXCESS AMOUNT SHALL BE PLACED IN RESERVE AND
    3  USED IN THE MANNER PRESCRIBED BY  SUBDIVISION  FIVE  OF  SECTION  TWENTY
    4  THOUSAND  TWENTY-THREE-A  OF  THE  EDUCATION  LAW  OR SUBDIVISION SIX OF
    5  SECTION THREE-C OF THE GENERAL MUNICIPAL LAW, WHICHEVER  IS  APPLICABLE,
    6  EVEN IF A TAX LEVY IN EXCESS OF THE TAX LEVY LIMIT HAD BEEN DULY AUTHOR-
    7  IZED FOR THE APPLICABLE FISCAL YEAR IN ACCORDANCE WITH SUCH SECTION.
    8    (II)  FOR  TAX  YEAR  TWO  THOUSAND FOURTEEN, ONLY REAL PROPERTY TAXES
    9  LEVIED BY SCHOOL DISTRICTS WITH CAP-COMPLIANT BUDGETS CONSTITUTE  QUALI-
   10  FYING REAL PROPERTY TAXES.
   11    (III)  IN  A  CITY  WITH  A  POPULATION  OF  ONE  MILLION OR MORE, THE
   12  RESTRICTION IN CLAUSE (I) OF THIS SUBPARAGRAPH THAT TAXES MUST BE LEVIED
   13  BY A TAXING JURISDICTION WITH A CAP-COMPLIANT  BUDGET  DOES  NOT  APPLY.
   14  HOWEVER,  REAL  PROPERTY  TAXES,  SPECIAL AD VALOREM LEVIES, AND SPECIAL
   15  ASSESSMENTS LEVIED BY SUCH CITY SHALL CONSTITUTE QUALIFYING REAL PROPER-
   16  TY TAXES ONLY IF TAXES  LEVIED  IN  THE  STATE  OUTSIDE  SUCH  CITY  ARE
   17  REQUIRED  FOR  PURPOSES  OF THIS CREDIT TO BE LEVIED BY TAXING JURISDIC-
   18  TIONS WITH CAP-COMPLIANT BUDGETS.
   19    (IV) A QUALIFIED TAXPAYER MAY ELECT TO INCLUDE ANY  ADDITIONAL  AMOUNT
   20  THAT  WOULD  HAVE  BEEN  LEVIED IN THE ABSENCE OF AN EXEMPTION FROM REAL
   21  PROPERTY TAXATION PURSUANT TO SECTION FOUR HUNDRED  SIXTY-SEVEN  OF  THE
   22  REAL  PROPERTY  TAX LAW. IF TENANT-STOCKHOLDERS IN A COOPERATIVE HOUSING
   23  CORPORATION HAVE MET THE REQUIREMENTS OF SECTION TWO HUNDRED SIXTEEN  OF
   24  THE INTERNAL REVENUE CODE BY WHICH THEY ARE ALLOWED A DEDUCTION FOR REAL
   25  ESTATE TAXES, THE AMOUNT OF TAXES SO ALLOWABLE, OR WHICH WOULD BE ALLOW-
   26  ABLE  IF THE TAXPAYER HAD FILED RETURNS ON A CASH BASIS, SHALL BE QUALI-
   27  FYING REAL PROPERTY TAXES. IF A RESIDENCE IS OWNED BY TWO OR MORE  INDI-
   28  VIDUALS  AS JOINT TENANTS OR TENANTS IN COMMON, AND ONE OR MORE THAN ONE
   29  INDIVIDUAL IS NOT A MEMBER OF THE HOUSEHOLD,  QUALIFYING  REAL  PROPERTY
   30  TAXES  IS  THAT  PART  OF SUCH TAXES ON THE RESIDENCE WHICH REFLECTS THE
   31  OWNERSHIP PERCENTAGE OF THE QUALIFIED TAXPAYER AND MEMBERS OF HIS OR HER
   32  HOUSEHOLD. IF A RESIDENCE IS AN INTEGRAL PART OF A LARGER UNIT, QUALIFY-
   33  ING REAL PROPERTY TAXES SHALL BE LIMITED TO THAT AMOUNT  OF  SUCH  TAXES
   34  PAID  AS MAY BE REASONABLY APPORTIONED TO SUCH RESIDENCE. IF A HOUSEHOLD
   35  OWNS AND OCCUPIES TWO OR MORE RESIDENCES DURING DIFFERENT PERIODS IN THE
   36  SAME TAXABLE YEAR, QUALIFYING REAL PROPERTY TAXES SHALL BE  THE  SUM  OF
   37  THE  PRORATED  QUALIFYING REAL PROPERTY TAXES ATTRIBUTABLE TO THE HOUSE-
   38  HOLD DURING THE PERIODS SUCH HOUSEHOLD OCCUPIES EACH OF SUCH RESIDENCES.
   39  IF THE HOUSEHOLD OWNS AND OCCUPIES A RESIDENCE FOR PART OF  THE  TAXABLE
   40  YEAR  AND  RENTS  A  RESIDENCE FOR PART OF THE SAME TAXABLE YEAR, IT MAY
   41  INCLUDE THE PRORATION OF QUALIFYING REAL PROPERTY TAXES ON THE RESIDENCE
   42  OWNED.  PROVIDED, HOWEVER, FOR PURPOSES OF THE CREDIT ALLOWED UNDER THIS
   43  SUBSECTION, QUALIFYING REAL PROPERTY TAXES MAY BE INCLUDED BY  A  QUALI-
   44  FIED  TAXPAYER  ONLY  TO  THE EXTENT THAT SUCH TAXPAYER OR THE SPOUSE OF
   45  SUCH TAXPAYER, OCCUPYING SUCH RESIDENCE  FOR  ONE  HUNDRED  EIGHTY-THREE
   46  DAYS  OR  MORE  OF THE TAXABLE YEAR, OWNS OR HAS OWNED THE RESIDENCE AND
   47  PAID SUCH TAXES.
   48    (2) A QUALIFIED TAXPAYER SHALL BE ALLOWED  A  CREDIT  AS  PROVIDED  IN
   49  PARAGRAPH THREE HEREOF AGAINST THE TAXES IMPOSED BY THIS ARTICLE REDUCED
   50  BY  THE CREDITS PERMITTED BY THIS ARTICLE. IF THE CREDIT EXCEEDS THE TAX
   51  AS SO REDUCED FOR SUCH YEAR UNDER THIS  ARTICLE,  THE  EXCESS  SHALL  BE
   52  TREATED AS AN OVERPAYMENT, TO BE CREDITED OR REFUNDED, WITHOUT INTEREST.
   53  IF  A  QUALIFIED  TAXPAYER  IS NOT REQUIRED TO FILE A RETURN PURSUANT TO
   54  SECTION SIX HUNDRED FIFTY-ONE OF THIS ARTICLE, A QUALIFIED TAXPAYER  MAY
   55  NEVERTHELESS  RECEIVE  THE  FULL  AMOUNT OF THE CREDIT TO BE CREDITED OR
   56  REFUNDED AS AN OVERPAYMENT, WITHOUT INTEREST.
       S. 6359                            184                           A. 8559
    1    (3) DETERMINATION OF CREDIT. (A) FOR TAXABLE YEARS  BEGINNING  IN  TWO
    2  THOUSAND  FOURTEEN,  THE  AMOUNT  OF  THE  CREDIT  ALLOWABLE  UNDER THIS
    3  SUBSECTION SHALL BE DETERMINED AS FOLLOWS:
    4  IF THE HOUSEHOLD        EXCESS REAL PROPERTY        THE CREDIT AMOUNT IS
    5  GROSS INCOME FOR THE    TAXES ARE THE EXCESS        THE FOLLOWING
    6  TAXABLE YEAR IS:        OF QUALIFYING REAL          PERCENTAGE OF THE
    7                          PROPERTY TAXES OVER         EXCESS REAL PROPERTY
    8                          THE FOLLOWING               TAXES:
    9                          PERCENTAGE OF
   10                          HOUSEHOLD GROSS INCOME:
   11  LESS THAN $120,000      2.4%                        6.25%
   12  $120,000 TO LESS
   13  THAN $150,000           3.2%                        4.75%
   14  $150,000 TO LESS
   15  THAN $200,000           4.0%                        3.25%
   16    NOTWITHSTANDING  THE  FOREGOING  PROVISIONS, THE MAXIMUM CREDIT DETER-
   17  MINED UNDER THIS SUBPARAGRAPH MAY NOT EXCEED FIVE HUNDRED DOLLARS.
   18    (B) FOR TAXABLE YEARS BEGINNING IN TWO THOUSAND FIFTEEN, THE AMOUNT OF
   19  THE CREDIT ALLOWABLE  UNDER  THIS  SUBSECTION  SHALL  BE  DETERMINED  AS
   20  FOLLOWS:
   21  IF THE HOUSEHOLD        EXCESS REAL PROPERTY        THE CREDIT AMOUNT IS
   22  GROSS INCOME FOR THE    TAXES ARE THE EXCESS        THE FOLLOWING
   23  TAXABLE YEAR IS:        OF QUALIFYING REAL          PERCENTAGE OF THE
   24                          PROPERTY TAXES OVER         EXCESS REAL PROPERTY
   25                          THE FOLLOWING               TAXES:
   26                          PERCENTAGE OF
   27                          HOUSEHOLD GROSS INCOME:
   28  LESS THAN $120,000      3.0%                        8.25%
   29  $120,000 TO LESS
   30  THAN $150,000           4.0%                        6.00%
   31  $150,000 TO LESS
   32  THAN $200,000           5.0%                        3.75%
   33    NOTWITHSTANDING  THE  FOREGOING  PROVISIONS, THE MAXIMUM CREDIT DETER-
   34  MINED UNDER  THIS  SUBPARAGRAPH  MAY  NOT  EXCEED  SEVEN  HUNDRED  FIFTY
   35  DOLLARS.
   36    (C) FOR TAXABLE YEARS BEGINNING AFTER TWO THOUSAND FIFTEEN, THE AMOUNT
   37  OF  THE  CREDIT  ALLOWABLE  UNDER THIS SUBSECTION SHALL BE DETERMINED AS
   38  FOLLOWS:
   39  IF THE HOUSEHOLD        EXCESS REAL PROPERTY        THE CREDIT AMOUNT IS
   40  GROSS INCOME FOR THE    TAXES ARE THE EXCESS        THE FOLLOWING
   41  TAXABLE YEAR IS:        OF QUALIFYING REAL          PERCENTAGE OF THE
   42                          PROPERTY TAXES OVER         EXCESS REAL PROPERTY
   43                          THE FOLLOWING               TAXES:
   44                          PERCENTAGE OF
   45                          HOUSEHOLD GROSS INCOME:
   46  LESS THAN $120,000      3.0%                        20.0%
   47  $120,000 TO LESS
   48  THAN $150,000           4.0%                        15.0%
   49  $150,000 TO LESS
   50  THAN $200,000           5.0%                        10.0%
   51    NOTWITHSTANDING THE FOREGOING PROVISIONS, THE  MAXIMUM  CREDIT  DETER-
   52  MINED UNDER THIS SUBPARAGRAPH MAY NOT EXCEED ONE THOUSAND DOLLARS.
   53    (4)  IF A QUALIFIED TAXPAYER OCCUPIES A RESIDENCE FOR A PERIOD OF LESS
   54  THAN TWELVE MONTHS DURING THE TAXABLE YEAR OR OCCUPIES TWO OR MORE RESI-
   55  DENCES DURING DIFFERENT PERIODS IN SUCH TAXABLE YEAR, THE CREDIT ALLOWED
   56  PURSUANT TO THIS SUBSECTION SHALL BE COMPUTED  IN  SUCH  MANNER  AS  THE
       S. 6359                            185                           A. 8559
    1  COMMISSIONER  MAY  PRESCRIBE  IN ORDER TO PROPERLY REFLECT THE CREDIT OR
    2  PORTION THEREOF ATTRIBUTABLE TO SUCH RESIDENCE OR  RESIDENCES  AND  SUCH
    3  PERIOD OR PERIODS.
    4    (5)  THE  COMMISSIONER  MAY  PRESCRIBE  THAT  THE  CREDIT  UNDER  THIS
    5  SUBSECTION SHALL BE DETERMINED IN WHOLE OR IN PART BY THE USE OF  TABLES
    6  PRESCRIBED  BY SUCH COMMISSIONER. SUCH TABLES SHALL SET FORTH THE CREDIT
    7  TO THE NEAREST DOLLAR.
    8    (6) ONLY ONE CREDIT PER HOUSEHOLD AND PER QUALIFIED TAXPAYER SHALL  BE
    9  ALLOWED PER TAXABLE YEAR UNDER THIS SUBSECTION. WHEN TWO OR MORE MEMBERS
   10  OF  A  HOUSEHOLD  ARE  ABLE  TO  MEET THE QUALIFICATIONS FOR A QUALIFIED
   11  TAXPAYER, THE CREDIT SHALL BE EQUALLY  DIVIDED  BETWEEN  OR  AMONG  SUCH
   12  INDIVIDUALS UNLESS SUCH INDIVIDUALS FILE WITH THE COMMISSIONER A WRITTEN
   13  AGREEMENT AMONG SUCH INDIVIDUALS SETTING FORTH A DIFFERENT DIVISION.
   14    (A)  PROVIDED, HOWEVER, WHERE A JOINT INCOME TAX RETURN HAS BEEN FILED
   15  PURSUANT TO THE PROVISIONS OF SECTION  SIX  HUNDRED  FIFTY-ONE  OF  THIS
   16  ARTICLE  BY  A  QUALIFIED  TAXPAYER AND HIS OR HER SPOUSE (OR WHERE BOTH
   17  SPOUSES ARE QUALIFIED TAXPAYERS AND HAVE FILED SUCH JOINT  RETURN),  THE
   18  CREDIT,  OR  THE  PORTION OF THE CREDIT IF DIVIDED, TO WHICH THE SPOUSES
   19  ARE ENTITLED SHALL BE APPLIED AGAINST THE TAX OF BOTH  SPOUSES  AND  ANY
   20  OVERPAYMENT SHALL BE MADE TO BOTH SPOUSES.
   21    (B)  WHERE  ANY RETURN REQUIRED TO BE FILED PURSUANT TO THE PROVISIONS
   22  OF SECTION SIX HUNDRED FIFTY-ONE OF THIS ARTICLE IS  COMBINED  WITH  ANY
   23  RETURN  OF  TAX IMPOSED PURSUANT TO THE AUTHORITY OF THIS CHAPTER OR ANY
   24  OTHER LAW IF SUCH TAX IS ADMINISTERED BY THE COMMISSIONER, THE CREDIT OR
   25  THE PORTION OF THE CREDIT IF DIVIDED, ALLOWED TO THE QUALIFIED  TAXPAYER
   26  MAY  BE  APPLIED BY THE COMMISSIONER TOWARD ANY LIABILITY FOR THE AFORE-
   27  MENTIONED TAXES.
   28    (7) NO CREDIT SHALL BE GRANTED UNDER THIS SUBSECTION:
   29    (A) IF HOUSEHOLD GROSS INCOME FOR THE TAXABLE YEAR EQUALS  OR  EXCEEDS
   30  TWO HUNDRED THOUSAND DOLLARS.
   31    (B)  TO A PROPERTY OWNER UNLESS: (I) THE PROPERTY IS USED FOR RESIDEN-
   32  TIAL PURPOSES, (II) NOT MORE THAN TWENTY PERCENT OF THE  RENTAL  INCOME,
   33  IF ANY, FROM THE PROPERTY IS FROM RENTAL FOR NONRESIDENTIAL PURPOSES AND
   34  (III) THE PROPERTY IS OCCUPIED AS A RESIDENCE IN WHOLE OR IN PART BY ONE
   35  OR MORE OF THE OWNERS OF THE PROPERTY.
   36    (C) TO AN INDIVIDUAL WITH RESPECT TO WHOM A DEDUCTION UNDER SUBSECTION
   37  (C)  OF  SECTION  ONE  HUNDRED FIFTY-ONE OF THE INTERNAL REVENUE CODE IS
   38  ALLOWABLE TO ANOTHER TAXPAYER FOR THE TAXABLE YEAR.
   39    (D) WITH RESPECT TO A RESIDENCE THAT  IS  WHOLLY  EXEMPTED  FROM  REAL
   40  PROPERTY TAXATION.
   41    (E) TO AN INDIVIDUAL WHO IS NOT A RESIDENT INDIVIDUAL OF THE STATE FOR
   42  THE ENTIRE TAXABLE YEAR.
   43    (8) THE RIGHT TO CLAIM A CREDIT OR THE PORTION OF A CREDIT, WHERE SUCH
   44  CREDIT  HAS BEEN DIVIDED UNDER THIS SUBSECTION, SHALL BE PERSONAL TO THE
   45  QUALIFIED TAXPAYER AND SHALL NOT SURVIVE HIS  OR  HER  DEATH,  BUT  SUCH
   46  RIGHT MAY BE EXERCISED ON BEHALF OF A CLAIMANT BY HIS OR HER LEGAL GUAR-
   47  DIAN OR ATTORNEY IN FACT DURING HIS OR HER LIFETIME.
   48    (9)  RETURNS. IF A QUALIFIED TAXPAYER IS NOT REQUIRED TO FILE A RETURN
   49  PURSUANT TO SECTION SIX HUNDRED FIFTY-ONE OF THIS ARTICLE, A CLAIM FOR A
   50  CREDIT MAY BE TAKEN ON A RETURN FILED WITH THE COMMISSIONER WITHIN THREE
   51  YEARS FROM THE TIME IT WOULD HAVE BEEN REQUIRED THAT A RETURN  BE  FILED
   52  PURSUANT  TO  SUCH SECTION HAD THE QUALIFIED TAXPAYER HAD A TAXABLE YEAR
   53  ENDING ON DECEMBER THIRTY-FIRST.  RETURNS UNDER THIS PARAGRAPH SHALL  BE
   54  IN  SUCH FORM AS SHALL BE PRESCRIBED BY THE COMMISSIONER, WHO SHALL MAKE
   55  AVAILABLE SUCH FORMS AND INSTRUCTIONS FOR FILING SUCH RETURNS.
       S. 6359                            186                           A. 8559
    1    (10) PROOF OF CLAIM. THE COMMISSIONER MAY REQUIRE A QUALIFIED TAXPAYER
    2  TO FURNISH THE FOLLOWING INFORMATION IN SUPPORT OF HIS OR HER CLAIM  FOR
    3  CREDIT  UNDER  THIS  SUBSECTION:  HOUSEHOLD  GROSS INCOME, REAL PROPERTY
    4  TAXES LEVIED OR THAT WOULD  HAVE  BEEN  LEVIED  IN  THE  ABSENCE  OF  AN
    5  EXEMPTION  FROM  REAL  PROPERTY  TAX  PURSUANT  TO  SECTION FOUR HUNDRED
    6  SIXTY-SEVEN OF THE REAL PROPERTY TAX LAW, THE NAMES OF  MEMBERS  OF  THE
    7  HOUSEHOLD  AND  OTHER  QUALIFYING TAXPAYERS OCCUPYING THE SAME RESIDENCE
    8  AND THEIR IDENTIFYING NUMBERS INCLUDING SOCIAL SECURITY NUMBERS,  HOUSE-
    9  HOLD  GROSS INCOME, SIZE AND NATURE OF PROPERTY CLAIMED AS RESIDENCE AND
   10  ALL OTHER INFORMATION WHICH MAY  BE  REQUIRED  BY  THE  COMMISSIONER  TO
   11  DETERMINE THE CREDIT.
   12    (11)  ADMINISTRATION.  THE  PROVISIONS  OF THIS ARTICLE, INCLUDING THE
   13  PROVISIONS OF SECTION SIX HUNDRED FIFTY-THREE, SIX HUNDRED  FIFTY-EIGHT,
   14  AND  SIX HUNDRED FIFTY-NINE AND THE PROVISIONS OF PART SIX OF THIS ARTI-
   15  CLE RELATING TO PROCEDURE AND  ADMINISTRATION,  INCLUDING  THE  JUDICIAL
   16  REVIEW  OF  THE DECISIONS OF THE COMMISSIONER, EXCEPT SO MUCH OF SECTION
   17  SIX HUNDRED EIGHTY-SEVEN WHICH PERMITS A CLAIM FOR CREDIT OR  REFUND  TO
   18  BE  FILED  AFTER  THE  PERIOD  PROVIDED  FOR  IN  PARAGRAPH NINE OF THIS
   19  SUBSECTION AND EXCEPT SECTIONS  SIX  HUNDRED  FIFTY-SEVEN,  SIX  HUNDRED
   20  EIGHTY-EIGHT  AND  SIX HUNDRED NINETY-SIX, SHALL APPLY TO THE PROVISIONS
   21  OF THIS SUBSECTION IN THE SAME MANNER AND WITH THE SAME FORCE AND EFFECT
   22  AS IF THE LANGUAGE OF THOSE PROVISIONS HAD  BEEN  INCORPORATED  IN  FULL
   23  INTO THIS SUBSECTION AND HAD EXPRESSLY REFERRED TO THE CREDIT ALLOWED OR
   24  RETURNS  FILED UNDER THIS SUBSECTION, EXCEPT TO THE EXTENT THAT ANY SUCH
   25  PROVISION IS EITHER INCONSISTENT WITH A PROVISION OF THIS SUBSECTION  OR
   26  IS  NOT  RELEVANT  TO THIS SUBSECTION. AS USED IN SUCH SECTIONS AND SUCH
   27  PART, THE TERM "TAXPAYER" SHALL INCLUDE A QUALIFIED TAXPAYER UNDER  THIS
   28  SUBSECTION  AND,  NOTWITHSTANDING  THE  PROVISIONS  OF SUBSECTION (E) OF
   29  SECTION  SIX  HUNDRED  NINETY-SEVEN,  WHERE  A  QUALIFIED  TAXPAYER  HAS
   30  PROTESTED THE DENIAL OF A CLAIM FOR CREDIT UNDER THIS SUBSECTION AND THE
   31  TIME  TO  FILE  A  PETITION  FOR  REDETERMINATION OF A DEFICIENCY OR FOR
   32  REFUND HAS NOT EXPIRED, HE OR SHE SHALL, SUBJECT TO SUCH  CONDITIONS  AS
   33  MAY  BE  SET  BY  THE COMMISSIONER, RECEIVE SUCH INFORMATION (A) THAT IS
   34  CONTAINED IN ANY RETURN FILED UNDER THIS ARTICLE BY A MEMBER OF  HIS  OR
   35  HER  HOUSEHOLD FOR THE TAXABLE YEAR FOR WHICH THE CREDIT IS CLAIMED, AND
   36  (B) THAT THE COMMISSIONER FINDS IS RELEVANT AND MATERIAL TO THE ISSUE OF
   37  WHETHER SUCH CLAIM WAS PROPERLY DENIED.
   38    (12) NOTWITHSTANDING ANY OTHER PROVISION OF THIS ARTICLE,  THE  CREDIT
   39  ALLOWED  UNDER  THIS  SUBSECTION  SHALL BE DETERMINED AFTER THE DETERMI-
   40  NATION  AND  APPLICATION  OF  ANY  OTHER  CREDITS  PERMITTED  UNDER  THE
   41  PROVISIONS  OF  THIS  ARTICLE.    A TAXPAYER SHALL BE ALLOWED EITHER THE
   42  CREDIT PROVIDED BY THIS SUBSECTION OR  THE  REAL  PROPERTY  TAX  CIRCUIT
   43  BREAKER  CREDIT PROVIDED BY SUBSECTION (E) OF THIS SECTION, WHICHEVER IS
   44  GREATER.
   45    S 3. Paragraph 14 of subsection (e) of section 606 of the tax  law  is
   46  REPEALED.
   47    S 4. This act shall take effect immediately and shall apply to taxable
   48  years beginning on or after January 1, 2014.
   49                                   PART L
   50    Section  1.    Section  606  of the tax law is amended by adding a new
   51  subsection (b-1) to read as follows:
   52    (B-1) RENTERS' CREDIT.
   53    (1) FOR THE PURPOSES OF THIS SUBSECTION:
       S. 6359                            187                           A. 8559
    1    (A) "QUALIFIED TAXPAYER" MEANS A RESIDENT INDIVIDUAL OF THE STATE  WHO
    2  HAS  OCCUPIED  AND  PAID  RENT  FOR HIS OR HER PRIMARY RESIDENCE IN THIS
    3  STATE FOR SIX MONTHS OR MORE OF THE TAXABLE YEAR, IS REQUIRED OR CHOOSES
    4  TO FILE A RETURN UNDER THIS ARTICLE, AND (I) IS SIXTY-FIVE YEARS OF  AGE
    5  OR  OLDER, (II) IS FILING A JOINT RETURN WITH A SPOUSE WHO IS SIXTY-FIVE
    6  YEARS OF AGE OR OLDER, (III) IS A HEAD OF HOUSEHOLD, (IV) IS  A  MARRIED
    7  INDIVIDUAL  FILING  A  JOINT  RETURN  WITH A SPOUSE AND HAS AT LEAST ONE
    8  DEPENDENT, (V) IS A MARRIED INDIVIDUAL FILING A SEPARATE RETURN AND  HAS
    9  AT  LEAST  ONE DEPENDENT, OR (VI) IS A SURVIVING SPOUSE AND HAS AT LEAST
   10  ONE DEPENDENT. AN INDIVIDUAL CANNOT BE A QUALIFIED TAXPAYER IF HE OR SHE
   11  IS AN INDIVIDUAL WITH RESPECT TO WHOM A DEDUCTION UNDER  SUBSECTION  (C)
   12  OF  SECTION  151  OF  THE  INTERNAL REVENUE CODE IS ALLOWABLE TO ANOTHER
   13  TAXPAYER FOR THE TAXABLE YEAR OR PAYS RENT FOR HIS OR HER PRIMARY  RESI-
   14  DENCE  TO  A FAMILY MEMBER SHARING THE SAME PRIMARY RESIDENCE.  A FAMILY
   15  MEMBER OF AN INDIVIDUAL IS THE  INDIVIDUAL'S  SPOUSE,  BROTHER,  SISTER,
   16  PARENT,  GRANDPARENT,  CHILD, GRANDCHILD, UNCLE, AUNT, NEPHEW, OR NIECE,
   17  RELATED TO THE INDIVIDUAL BY BLOOD, MARRIAGE OR ADOPTION.
   18    (B) "RESIDENCE" MEANS A DWELLING IN THIS STATE AND MAY  CONSIST  OF  A
   19  PART  OF  A MULTI-DWELLING OR MULTI-PURPOSE BUILDING INCLUDING A COOPER-
   20  ATIVE OR CONDOMINIUM, AND RENTAL UNITS WITHIN A SINGLE  DWELLING.  RESI-
   21  DENCE  INCLUDES  A TRAILER OR MOBILE HOME, USED EXCLUSIVELY FOR RESIDEN-
   22  TIAL PURPOSES AND DEFINED AS REAL PROPERTY PURSUANT TO PARAGRAPH (G)  OF
   23  SUBDIVISION  TWELVE  OF SECTION ONE HUNDRED TWO OF THE REAL PROPERTY TAX
   24  LAW.
   25    (2) (A) A QUALIFIED TAXPAYER SHALL BE ALLOWED A CREDIT AS PROVIDED  IN
   26  THIS SUBSECTION AGAINST THE TAXES IMPOSED BY THIS ARTICLE REDUCED BY THE
   27  CREDITS  PERMITTED  BY THIS ARTICLE. IF THE CREDIT EXCEEDS THE TAX AS SO
   28  REDUCED FOR SUCH YEAR UNDER THIS ARTICLE, THE EXCESS SHALL BE TREATED AS
   29  AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH  THE
   30  PROVISIONS  OF SECTION SIX HUNDRED EIGHTY-SIX OF THIS ARTICLE, PROVIDED,
   31  HOWEVER, THAT NO INTEREST SHALL BE PAID THEREON. IF A QUALIFIED TAXPAYER
   32  IS NOT REQUIRED TO FILE A RETURN PURSUANT TO SECTION SIX HUNDRED  FIFTY-
   33  ONE  OF  THIS  ARTICLE  BUT  OTHERWISE QUALIFIES FOR A CREDIT UNDER THIS
   34  SUBSECTION, A CLAIM FOR A CREDIT MAY BE TAKEN ON A RETURN FILED WITH THE
   35  COMMISSIONER WITHIN THREE YEARS FROM THE TIME THAT A RETURN  WOULD  HAVE
   36  BEEN  REQUIRED  TO  BE FILED PURSUANT TO SUCH SECTION HAD SUCH QUALIFIED
   37  TAXPAYER HAD A TAXABLE YEAR ENDING  ON  DECEMBER  THIRTY-FIRST.  RETURNS
   38  SHALL  BE  IN  SUCH  FORM AS PRESCRIBED BY THE COMMISSIONER. A QUALIFIED
   39  TAXPAYER MUST PROVIDE ANY INFORMATION THE COMMISSIONER  DEEMS  NECESSARY
   40  TO DETERMINE THE CREDIT ALLOWED.
   41    (B) IF MORE THAN ONE QUALIFIED TAXPAYER PAYS RENT FOR THE SAME PRIMARY
   42  RESIDENCE  AND  HAS  A  FEDERAL ADJUSTED GROSS INCOME FOR WHICH A CREDIT
   43  WOULD OTHERWISE BE DUE, EACH SUCH QUALIFIED TAXPAYER  SHALL  DIVIDE  THE
   44  BASE  AMOUNT  OF  THE  CREDIT ALLOWED FOR HIS OR HER INCOME LEVEL BY THE
   45  TOTAL NUMBER OF INDIVIDUALS OR MARRIED COUPLES FILING A JOINT RETURN WHO
   46  ARE PAYING THE RENT, WHETHER OR NOT ELIGIBLE FOR A CREDIT, TO  DETERMINE
   47  THE  AMOUNT OF CREDIT ALLOWED TO THAT QUALIFIED TAXPAYER. ANY ADDITIONAL
   48  AMOUNT OF CREDIT DETERMINED BASED ON THE NUMBER OF EXEMPTIONS CLAIMED BY
   49  SUCH TAXPAYER SHALL NOT BE SO DIVIDED.
   50    (C) A QUALIFIED TAXPAYER  SHALL  BE  ALLOWED  THE  CREDIT  UNDER  THIS
   51  SUBSECTION OR THE CREDIT UNDER SUBSECTION (E) OF THIS SECTION, WHICHEVER
   52  IS THE HIGHER AMOUNT.
   53    (3)  (A)  FOR ANY QUALIFIED TAXPAYER WHO IS SIXTY-FIVE YEARS OF AGE OR
   54  OLDER WITH A FILING STATUS OF SINGLE, THE AMOUNT OF THE  CREDIT  ALLOWED
   55  PURSUANT  TO  THIS  PARAGRAPH SHALL BE DETERMINED IN ACCORDANCE WITH THE
   56  FOLLOWING TABLES:
       S. 6359                            188                           A. 8559
    1  FOR TAXABLE YEARS BEGINNING IN 2014,
    2  IF FEDERAL ADJUSTED GROSS INCOME IS:        THE CREDIT SHALL BE:
    3  $25,000 OR LESS                                     $110
    4  OVER $25,000 BUT NOT OVER $40,000                    $90
    5  OVER $40,000 BUT NOT OVER $50,000                    $70
    6  FOR TAXABLE YEARS BEGINNING IN OR
    7  AFTER 2015, IF FEDERAL ADJUSTED GROSS
    8  INCOME IS:                                  THE CREDIT SHALL BE:
    9  $25,000 OR LESS                                     $220
   10  OVER $25,000 BUT NOT OVER $40,000                   $180
   11  OVER $40,000 BUT NOT OVER $50,000                   $140
   12    (B) FOR ANY OTHER QUALIFIED TAXPAYER, THE AMOUNT OF THE CREDIT ALLOWED
   13  PURSUANT  TO  THIS  PARAGRAPH SHALL BE DETERMINED IN ACCORDANCE WITH THE
   14  FOLLOWING TABLES; PROVIDED, HOWEVER, THAT A QUALIFIED TAXPAYER WHO IS  A
   15  MARRIED  INDIVIDUAL  FILING  A SEPARATE NEW YORK INCOME TAX RETURN SHALL
   16  RECEIVE ONE-HALF OF THE BASE AMOUNT OF THE CREDIT  PLUS  ANY  ADDITIONAL
   17  AMOUNT FOR WHICH SUCH TAXPAYER WOULD BE ELIGIBLE BASED ON THE INCOME AND
   18  NUMBER OF EXEMPTIONS CLAIMED BY SUCH TAXPAYER:
   19  FOR TAXABLE YEARS BEGINNING IN 2014,
   20  IF FEDERAL ADJUSTED GROSS INCOME IS:         THE CREDIT SHALL BE:
   21  $25,000 OR LESS                              $80 PLUS AN AMOUNT
   22                                               EQUAL TO $35
   23                                               MULTIPLIED BY A
   24                                               NUMBER WHICH IS ONE
   25                                               LESS THAN THE NUMBER
   26                                               OF EXEMPTIONS FOR
   27                                               WHICH THE TAXPAYER
   28                                               (OR IN THE CASE
   29                                               OF A MARRIED COUPLE
   30                                               FILING A JOINT RETURN,
   31                                               TAXPAYERS) IS ENTITLED
   32                                               TO A DEDUCTION FOR THE
   33                                               TAXABLE YEAR FOR FEDERAL
   34                                               INCOME TAX PURPOSES
   35                                               UNDER SUBSECTIONS (B)
   36                                               AND (C) OF SECTION 151
   37                                               OF THE INTERNAL REVENUE CODE
   38  OVER $25,000 BUT NOT OVER $45,000            $65 PLUS AN AMOUNT
   39                                               EQUAL TO $24
   40                                               MULTIPLIED BY A NUMBER
   41                                               WHICH IS ONE LESS THAN
   42                                               THE NUMBER OF EXEMPTIONS
   43                                               FOR WHICH THE TAXPAYER
   44                                               (OR IN THE CASE OF
   45                                               A MARRIED COUPLE FILING A
   46                                               JOINT RETURN, TAXPAYERS)
   47                                               IS ENTITLED TO A
   48                                               DEDUCTION FOR THE TAXABLE
   49                                               YEAR FOR FEDERAL INCOME
   50                                               TAX PURPOSES UNDER
   51                                               SUBSECTIONS (B) AND (C)
   52                                               OF SECTION 151 OF THE
   53                                               INTERNAL REVENUE CODE
       S. 6359                            189                           A. 8559
    1  OVER $45,000 BUT NOT OVER $65,000            $55 PLUS AN AMOUNT
    2                                               EQUAL TO $12 MULTIPLIED
    3                                               BY A NUMBER WHICH IS ONE
    4                                               LESS THAN THE NUMBER
    5                                               OF EXEMPTIONS FOR
    6                                               WHICH THE TAXPAYER (OR
    7                                               IN THE CASE OF A MARRIED
    8                                               COUPLE FILING A JOINT RETURN
    9                                               TAXPAYERS) IS ENTITLED
   10                                               TO A DEDUCTION FOR THE
   11                                               TAXABLE YEAR FOR FEDERAL
   12                                               INCOME TAX PURPOSES UNDER
   13                                               SUBSECTIONS (B) AND (C)
   14                                               OF SECTION 151 OF THE
   15                                               INTERNAL REVENUE CODE
   16  OVER $65,000 BUT NOT OVER $100,000           $45 PLUS AN AMOUNT
   17                                               EQUAL TO $12 MULTIPLIED
   18                                               BY A NUMBER WHICH IS ONE
   19                                               LESS THAN THE NUMBER
   20                                               OF EXEMPTIONS FOR WHICH
   21                                               THE TAXPAYER (OR IN THE
   22                                               CASE OF A MARRIED COUPLE
   23                                               FILING A JOINT RETURN,
   24                                               TAXPAYERS) IS ENTITLED TO
   25                                               A DEDUCTION FOR THE TAXABLE
   26                                               YEAR FOR FEDERAL INCOME TAX
   27                                               PURPOSES UNDER SUBSECTIONS
   28                                               (B) AND (C) OF SECTION 151
   29                                               OF THE INTERNAL REVENUE CODE
   30  FOR TAXABLE YEARS BEGINNING IN OR
   31  AFTER 2015, IF FEDERAL ADJUSTED GROSS
   32  INCOME IS:                                   THE CREDIT SHALL BE:
   33  $25,000 OR LESS                              $160 PLUS AN
   34                                               AMOUNT EQUAL TO $70
   35                                               MULTIPLIED BY A NUMBER WHICH
   36                                               IS ONE LESS THAN THE
   37                                               NUMBER OF EXEMPTIONS
   38                                               FOR WHICH THE TAXPAYER
   39                                               (OR IN THE CASE OF A
   40                                               MARRIED COUPLE FILING A
   41                                               JOINT RETURN, TAXPAYERS)
   42                                               IS ENTITLED TO A DEDUCTION
   43                                               FOR THE TAXABLE YEAR FOR
   44                                               FEDERAL INCOME TAX PURPOSES
   45                                               UNDER SUBSECTIONS (B) AND
   46                                               (C) OF SECTION 151 OF THE
   47                                               INTERNAL REVENUE CODE
   48  OVER $25,000 BUT NOT OVER $45,000            $130 PLUS AN AMOUNT
   49                                               EQUAL TO $48
   50                                               MULTIPLIED BY A NUMBER
   51                                               WHICH IS ONE LESS THAN
   52                                               THE NUMBER OF EXEMPTIONS
   53                                               FOR WHICH THE TAXPAYER
       S. 6359                            190                           A. 8559
    1                                               (OR IN THE CASE OF
    2                                               A MARRIED COUPLE FILING
    3                                               A JOINT RETURN, TAXPAYERS)
    4                                               IS ENTITLED TO A DEDUCTION
    5                                               FOR THE TAXABLE YEAR FOR
    6                                               FEDERAL INCOME TAX PURPOSES
    7                                               UNDER SUBSECTIONS (B)
    8                                               AND (C) OF SECTION 151
    9                                               OF THE INTERNAL REVENUE CODE
   10  OVER $45,000 BUT NOT OVER $65,000            $110 PLUS AN AMOUNT
   11                                               EQUAL TO $24 MULTIPLIED
   12                                               BY A NUMBER WHICH IS ONE
   13                                               LESS THAN THE NUMBER
   14                                               OF EXEMPTIONS FOR
   15                                               WHICH THE TAXPAYER (OR
   16                                               IN THE CASE OF A MARRIED
   17                                               COUPLE FILING A JOINT RETURN
   18                                               TAXPAYERS) IS ENTITLED TO A
   19                                               DEDUCTION FOR THE TAXABLE
   20                                               YEAR FOR FEDERAL INCOME TAX
   21                                               PURPOSES UNDER SUBSECTIONS
   22                                               (B) AND (C) OF SECTION 151
   23                                               OF THE INTERNAL  REVENUE COD
   24  OVER $65,000 BUT NOT OVER $100,000           $90 PLUS AN AMOUNT
   25                                               EQUAL TO $24 MULTIPLIED
   26                                               BY A NUMBER WHICH IS ONE
   27                                               LESS THAN THE NUMBER
   28                                               OF EXEMPTIONS FOR
   29                                               WHICH THE TAXPAYER (OR
   30                                               IN THE CASE OF A MARRIED
   31                                               COUPLE FILING A JOINT RETURN
   32                                               TAXPAYERS) IS
   33                                               ENTITLED TO A DEDUCTION
   34                                               FOR THE TAXABLE YEAR FOR
   35                                               FEDERAL INCOME TAX PURPOSES
   36                                               UNDER SUBSECTIONS (B) AND
   37                                               (C) OF SECTION 151 OF THE
   38                                               INTERNAL REVENUE CODE
   39    S 2. This act shall take effect immediately.
   40                                   PART M
   41    Section  1. Paragraphs 2, 4 and 5 of subsection (vv) of section 606 of
   42  the tax law, as added by section 1 of part CC of chapter 59 of the  laws
   43  of 2013, are amended to read as follows:
   44    2.  To  be  eligible for the credit, the taxpayer (or taxpayers filing
   45  joint returns) on the personal income tax return filed for  the  taxable
   46  year  [two  years  prior],  must  [have]  (a)  [been] BE a resident, (b)
   47  [claimed] CLAIM one or more dependent children who were under the age of
   48  seventeen on the last day of the taxable year, (c) [had] HAVE  New  York
   49  adjusted  gross income of at least forty thousand dollars but no greater
   50  than three hundred thousand dollars, and (d) [had] HAVE a tax  liability
   51  as  determined  under paragraph three of this subsection of greater than
   52  or equal to zero.
       S. 6359                            191                           A. 8559
    1    4. [For each year  this  credit  is  allowed,  on  or  before  October
    2  fifteenth  of such year, the commissioner shall determine the taxpayer's
    3  eligibility for this credit utilizing the information available  to  the
    4  commissioner  on the taxpayer's personal income tax return filed for the
    5  taxable  year two years prior to the taxable year in which the credit is
    6  allowed. For those taxpayers whom the commissioner has determined eligi-
    7  ble for this credit, the commissioner shall advance a payment  of  three
    8  hundred  fifty  dollars. When a taxpayer files his or her return for the
    9  taxable year, such taxpayer shall properly reconcile that payment on his
   10  or her return.
   11    5.] If the amount of the credit allowed under  this  subsection  shall
   12  exceed  the  taxpayer's  tax  for  the taxable year, the excess shall be
   13  treated as an overpayment of tax to be credited or refunded  in  accord-
   14  ance with the provisions of SECTION six hundred eighty-six of this arti-
   15  cle, provided, however, that no interest shall be paid thereon.
   16    S 2. This act shall take effect immediately and apply to taxable years
   17  beginning on or after January 1, 2015.
   18                                   PART N
   19    Section  1.  Paragraph  1  of subsection (a) of section 651 of the tax
   20  law, as amended by chapter 333 of the laws of 1987, is amended  to  read
   21  as follows:
   22    (1)  every  resident  individual (A) required to file a federal income
   23  tax return for the taxable year, or (B) having  federal  adjusted  gross
   24  income  for  the  taxable  year,  increased  by  the modifications under
   25  subsection (b) of section six hundred twelve OF THIS ARTICLE, in  excess
   26  of [four thousand dollars, or in excess of] his OR HER New York standard
   27  deduction,  [if  lower,] or (C) subject to tax under section six hundred
   28  two OF THIS ARTICLE, or (D) having received during the  taxable  year  a
   29  lump  sum  distribution  any  portion  of  which is subject to tax under
   30  section six hundred three OF THIS ARTICLE;
   31    S 2. This act shall take effect immediately and apply to taxable years
   32  beginning on or after January 1, 2014.
   33                                   PART O
   34    Section 1. Paragraph 1 of subdivision (a) of section  28  of  the  tax
   35  law,  as  amended  by  section  1 of part I of chapter 59 of the laws of
   36  2012, is amended to read as follows:
   37    (1) A taxpayer which is a qualified commercial production company,  or
   38  which is a sole proprietor of a qualified commercial production company,
   39  and  which  is subject to tax under article nine-A or twenty-two of this
   40  chapter, shall be allowed a credit against such  tax,  pursuant  to  the
   41  provisions referenced in subdivision (c) of this section, to be computed
   42  as  provided in this section. Provided, however, to be eligible for such
   43  credit, at least seventy-five percent of the production costs (excluding
   44  post production costs) paid or incurred directly  and  predominantly  in
   45  the  actual  filming  or  recording  of the qualified commercial must be
   46  costs incurred in New York state. The tax  credit  allowed  pursuant  to
   47  this  section  shall  apply  to  taxable  years beginning before January
   48  first, two thousand [fifteen] SEVENTEEN.
   49    S 2. Paragraph (a) of subdivision 38 of section 210 of the tax law, as
   50  amended by section 3 of part I of chapter 59 of the  laws  of  2012,  is
   51  amended to read as follows:
       S. 6359                            192                           A. 8559
    1    (a)  Allowance  of  credit.  A  taxpayer  that is eligible pursuant to
    2  provisions of section twenty-eight of this chapter shall  be  allowed  a
    3  credit  to  be  computed  as  provided  in  such section against the tax
    4  imposed by this article. The tax credit allowed pursuant to this section
    5  shall  apply  to taxable years beginning before January first, two thou-
    6  sand [fifteen] SEVENTEEN.
    7    S 3. Paragraph 1 of subsection (jj) of section 606 of the tax law,  as
    8  amended  by  section  4  of part I of chapter 59 of the laws of 2012, is
    9  amended to read as follows:
   10    (1) Allowance of credit. A taxpayer that is eligible pursuant  to  the
   11  provisions  of  section  twenty-eight of this chapter shall be allowed a
   12  credit to be computed as  provided  in  such  section  against  the  tax
   13  imposed by this article. The tax credit allowed pursuant to this section
   14  shall  apply  to taxable years beginning before January first, two thou-
   15  sand [fifteen] SEVENTEEN.
   16    S 4. This act shall take effect immediately.
   17                                   PART P
   18    Section 1. Subdivision 4 of section 22 of the public housing  law,  as
   19  amended  by  section  2  of part J of chapter 59 of the laws of 2012, is
   20  amended to read as follows:
   21    4. Statewide limitation. The aggregate dollar amount of  credit  which
   22  the  commissioner  may  allocate  to eligible low-income buildings under
   23  this article shall be [forty-eight] FIFTY-SIX million dollars. The limi-
   24  tation provided by this subdivision applies only to  allocation  of  the
   25  aggregate  dollar  amount  of  credit  by the commissioner, and does not
   26  apply to allowance to a taxpayer of the credit with respect to an eligi-
   27  ble low-income building for each year of the credit period.
   28    S 2. Subdivision 4 of section 22 of the public housing law, as amended
   29  by section one of this act, is amended to read as follows:
   30    4. Statewide limitation. The aggregate dollar amount of  credit  which
   31  the  commissioner  may  allocate  to eligible low-income buildings under
   32  this article shall be [fifty-six] SIXTY-FOUR million dollars. The  limi-
   33  tation  provided  by  this subdivision applies only to allocation of the
   34  aggregate dollar amount of credit by  the  commissioner,  and  does  not
   35  apply to allowance to a taxpayer of the credit with respect to an eligi-
   36  ble low-income building for each year of the credit period.
   37    S  3.  This act shall take effect immediately; provided, however, that
   38  section two of this act shall take effect April 1, 2015.
   39                                   PART Q
   40    Section 1. Subdivision (b) of section  27-1318  of  the  environmental
   41  conservation  law,  as  amended by section 2 of part E of chapter 577 of
   42  the laws of 2004, is amended to read as follows:
   43    (b) Within [sixty] ONE HUNDRED EIGHTY  days  of  commencement  of  the
   44  remedial design, the owner of an inactive hazardous waste disposal site,
   45  and/or  any  person  responsible  for implementing a remedial program at
   46  such site, where institutional  or  engineering  controls  are  employed
   47  pursuant to this title, shall execute an environmental easement pursuant
   48  to title thirty-six of article seventy-one of this chapter.
   49    S  2.  Subdivision 2 of section 27-1405 of the environmental conserva-
   50  tion law, as amended by section 2 of part A of chapter 577 of  the  laws
   51  of 2004, is amended to read as follows:
       S. 6359                            193                           A. 8559
    1    2.  "Brownfield  site"  or  "site"  shall mean any real property[, the
    2  redevelopment or reuse of which may be complicated by  the  presence  or
    3  potential  presence of] WHERE a contaminant IS PRESENT AT LEVELS EXCEED-
    4  ING THE SOIL CLEANUP OBJECTIVES OR OTHER HEALTH-BASED  OR  ENVIRONMENTAL
    5  STANDARDS PROMULGATED BY THE DEPARTMENT THAT ARE APPLICABLE BASED ON THE
    6  REASONABLY ANTICIPATED USE OF THE PROPERTY, AS DETERMINED BY THE DEPART-
    7  MENT. Such term shall not include real property:
    8    (a)  listed in the registry of inactive hazardous waste disposal sites
    9  under section 27-1305 of this article at the time of application to this
   10  program and given a classification as described in subparagraph  one  or
   11  two  of  paragraph b of subdivision two of section 27-1305 of this arti-
   12  cle; provided, however [except until July  first,  two  thousand  five],
   13  real  property  listed  in  the  registry  of  inactive  hazardous waste
   14  disposal sites under subparagraph two of paragraph b of subdivision  two
   15  of  section 27-1305 of this article [prior to the effective date of this
   16  article], where such real property is owned  by  a  volunteer  OR  UNDER
   17  CONTRACT  TO  BE  TRANSFERRED  TO A VOLUNTEER AND THE DEPARTMENT HAS NOT
   18  IDENTIFIED ANY RESPONSIBLE PARTIES FOR THAT PROPERTY HAVING THE  ABILITY
   19  TO  PAY  FOR  THE INVESTIGATION OR CLEANUP OF THE PROPERTY, shall not be
   20  deemed ineligible to participate and further provided that the status of
   21  any such site as listed in the registry shall not be  altered  prior  to
   22  the  issuance of a certificate of completion pursuant to section 27-1419
   23  of this title. THE DEPARTMENT'S ASSESSMENT  OF  ELIGIBILITY  UNDER  THIS
   24  PARAGRAPH  SHALL  NOT  CONSTITUTE  A  FINDING  CONCERNING LIABILITY WITH
   25  RESPECT TO THE PROPERTY;
   26    (b) listed on the national priorities list established under authority
   27  of 42 U.S.C. section 9605;
   28    (c) subject to an enforcement action under title seven or nine of this
   29  article, [except] OR PERMITTED  AS  a  treatment,  storage  or  disposal
   30  facility  [subject to a permit]; provided, that nothing herein contained
   31  shall be deemed otherwise to exclude from the scope of the term  "brown-
   32  field  site"  a  hazardous waste treatment, storage or disposal facility
   33  having interim  status  according  to  regulations  promulgated  by  the
   34  commissioner;
   35    (d)  subject to an order for cleanup pursuant to article twelve of the
   36  navigation law or pursuant to title ten of  article  seventeen  of  this
   37  chapter  except  such  property  shall not be deemed ineligible if it is
   38  subject to a stipulation agreement; or
   39    (e) subject to any  other  on-going  state  or  federal  environmental
   40  enforcement action related to the contamination which is at or emanating
   41  from the site subject to the present application.
   42    S  3.  Subdivision 1 of section 27-1407 of the environmental conserva-
   43  tion law, as amended by section 3 of part A of chapter 577 of  the  laws
   44  of  2004,  is  amended  and  a  new  subdivision 1-a is added to read as
   45  follows:
   46    1. A person who seeks to participate in this program  shall  submit  a
   47  request  to  the  department  on a form provided by the department. Such
   48  form shall include information to be determined by the department suffi-
   49  cient to allow the department to determine eligibility and the  current,
   50  intended and reasonably anticipated future land use of the site pursuant
   51  to  section  27-1415  of  this  title.   ANY SUCH PERSON SHALL SUBMIT AN
   52  INVESTIGATION REPORT SUFFICIENT TO DEMONSTRATE THAT  THE  SITE  REQUIRES
   53  REMEDIATION  IN  ORDER  TO MEET THE REMEDIAL REQUIREMENTS OF THIS TITLE;
   54  AND, FOR ANY STRATEGIC SITE LOCATED WITHIN A BROWNFIELD OPPORTUNITY AREA
   55  DESIGNATED BY THE SECRETARY OF STATE PURSUANT TO  SECTION  NINE  HUNDRED
   56  SEVENTY-R  OF THE GENERAL MUNICIPAL LAW, A CERTIFICATION THAT THE DEVEL-
       S. 6359                            194                           A. 8559
    1  OPMENT OF THE SITE WILL BE IN CONFORMANCE WITH SUCH BROWNFIELD  OPPORTU-
    2  NITY AREA PLAN.
    3    1-A.  IF  THE  PERSON IS ALSO SEEKING TO RECEIVE THE TANGIBLE PROPERTY
    4  CREDIT COMPONENT OF THE BROWNFIELD REDEVELOPMENT TAX CREDIT PURSUANT  TO
    5  PARAGRAPH  THREE OF SUBDIVISION (A) OF SECTION TWENTY-ONE OF THE TAX LAW
    6  SUCH PERSON SHALL SUBMIT INFORMATION SUFFICIENT TO DEMONSTRATE THAT  (1)
    7  THE SITE HAS: (I) BEEN A VACANT LOT FOR FIFTEEN OR MORE YEARS, OR (II) A
    8  BUILDING  OR  BUILDINGS THAT HAVE BEEN VACANT FOR FIFTEEN OR MORE YEARS,
    9  OR (III) A LOT OR BUILDINGS HAVE BEEN BOTH VACANT AND TAX DELINQUENT FOR
   10  TEN OR MORE YEARS, (2) THE PROJECTED COST OF THE INVESTIGATION AND REME-
   11  DIATION WHICH IS PROTECTIVE FOR THE ANTICIPATED USE OF THE SITE  EXCEEDS
   12  THE  CERTIFIED  APPRAISED VALUE OF THE PROPERTY ABSENT CONTAMINATION, OR
   13  (3) THE PROJECT IS A PRIORITY ECONOMIC DEVELOPMENT PROJECT AS DETERMINED
   14  BY THE DEPARTMENT OF ECONOMIC DEVELOPMENT THAT HAS RECEIVED A RESOLUTION
   15  FROM THE MUNICIPALITY WITHIN WHICH  THE  SITE  IS  LOCATED  STATING  THE
   16  PROPOSED PROJECT IS CONSISTENT WITH THE MUNICIPALITY'S LOCAL REVITALIZA-
   17  TION OR DEVELOPMENT PLAN.  "PRIORITY ECONOMIC DEVELOPMENT PROJECT" MEANS
   18  (A)  A  MANUFACTURER  CREATING  AT LEAST ONE HUNDRED NET NEW JOBS IN THE
   19  STATE AND MAKING SIGNIFICANT CAPITAL INVESTMENT  IN  THE  STATE;  (B)  A
   20  BUSINESS  CREATING  AT  LEAST ONE HUNDRED NET NEW JOBS IN AGRICULTURE IN
   21  THE STATE AND MAKING SIGNIFICANT CAPITAL INVESTMENT IN THE STATE; (C)  A
   22  FINANCIAL  SERVICES  FIRM, DISTRIBUTION CENTER, OR BACK OFFICE OPERATION
   23  CREATING AT LEAST THREE HUNDRED NET NEW JOBS IN  THE  STATE  AND  MAKING
   24  SIGNIFICANT  CAPITAL  INVESTMENT IN THE STATE; (D) A SCIENTIFIC RESEARCH
   25  AND DEVELOPMENT FIRM CREATING AT LEAST ONE HUNDRED NET NEW JOBS  IN  THE
   26  STATE,  AND  MAKING SIGNIFICANT CAPITAL INVESTMENT IN THE STATE; (E) THE
   27  CORPORATE HEADQUARTERS OF A FIRM CREATING AT LEAST ONE HUNDRED  NET  NEW
   28  JOBS  IN  THE  STATE,  AND  MAKING SIGNIFICANT CAPITAL INVESTMENT IN THE
   29  STATE; OR (F) A SOFTWARE DEVELOPMENT OR NEW MEDIA FIRM CREATING AT LEAST
   30  FIFTY NET NEW JOBS IN THE STATE, AND MAKING SIGNIFICANT CAPITAL  INVEST-
   31  MENT  IN  THE STATE. OTHER BUSINESSES CREATING THREE HUNDRED OR MORE NET
   32  NEW JOBS IN THE STATE AND MAKING SIGNIFICANT CAPITAL INVESTMENT  IN  THE
   33  STATE  MAY  BE  CONSIDERED  ELIGIBLE  AS  PRIORITY  ECONOMIC DEVELOPMENT
   34  PROJECT BY THE COMMISSIONER OF ECONOMIC DEVELOPMENT AS WELL.  AN  APPLI-
   35  CANT  MAY  REQUEST  AN  ELIGIBILITY  DETERMINATION FOR TANGIBLE PROPERTY
   36  CREDITS FROM THE COMMISSIONER OF ECONOMIC  DEVELOPMENT  FOR  A  PRIORITY
   37  ECONOMIC  DEVELOPMENT PROJECT WHEN IT CAN DEMONSTRATE THAT IT MEETS SUCH
   38  CRITERIA ANY TIME FROM APPLICATION TO THREE YEARS FROM THE DATE THE SITE
   39  RECEIVES A CERTIFICATE OF COMPLETION PURSUANT TO SECTION 27-1419 OF THIS
   40  TITLE.  THE COMMISSIONER OF ECONOMIC DEVELOPMENT SHALL PROMULGATE  REGU-
   41  LATIONS TO DETERMINE WHAT CONSTITUTES SIGNIFICANT CAPITAL INVESTMENT FOR
   42  EACH  OF  THE  PROJECT CATEGORIES INDICATED IN THIS SUBDIVISION AND WHAT
   43  ADDITIONAL CRITERIA A BUSINESS MUST MEET TO BE ELIGIBLE  AS  A  PRIORITY
   44  ECONOMIC DEVELOPMENT PROJECT.
   45    SITES  ARE  NOT  ELIGIBLE FOR TANGIBLE PROPERTY TAX CREDITS IF (1) THE
   46  CONTAMINATION IS SOLELY EMANATING FROM  PROPERTY  OTHER  THAN  THE  SITE
   47  SUBJECT TO THE PRESENT APPLICATION; OR (2) THE DEPARTMENT HAS DETERMINED
   48  THAT  THE  PROPERTY  HAS  PREVIOUSLY BEEN REMEDIATED SUCH THAT IT MAY BE
   49  DEVELOPED FOR ITS THEN INTENDED USE.
   50    S 4. Subdivision 3 of section 27-1407 of the  environmental  conserva-
   51  tion  law,  as amended by section 3 of part A of chapter 577 of the laws
   52  of 2004, is amended to read as follows:
   53    3. The department shall notify the person requesting participation  in
   54  this  program within [ten] THIRTY days after receiving such request that
   55  such request is either complete or incomplete. In the event the applica-
   56  tion is determined to be incomplete  the  department  shall  specify  in
       S. 6359                            195                           A. 8559
    1  writing  the  missing  necessary  information  required pursuant to this
    2  article to complete the  application  and  shall  have  ten  days  after
    3  receipt  of  the missing information to issue a written determination if
    4  the application is complete.
    5    S  5.  Subdivision 6 of section 27-1407 of the environmental conserva-
    6  tion law, as added by section 1 of part A of chapter 1 of  the  laws  of
    7  2003, is amended to read as follows:
    8    6.  The  department shall use all best efforts to expeditiously notify
    9  the applicant within forty-five days after receiving [their  request]  A
   10  COMPLETE  APPLICATION  for  participation  that  such  request is either
   11  accepted or rejected, AND, FOR ANY  APPLICANT  SEEKING  TO  RECEIVE  THE
   12  TANGIBLE  PROPERTY  CREDIT COMPONENT OF THE BROWNFIELD REDEVELOPMENT TAX
   13  CREDIT PURSUANT TO PARAGRAPH THREE OF SUBDIVISION (A) OF  SECTION  TWEN-
   14  TY-ONE OF THE TAX LAW, WHETHER THE CRITERIA FOR RECEIVING SUCH COMPONENT
   15  AS SET FORTH IN SUBDIVISION ONE OF THIS SECTION HAVE BEEN MET.
   16    S  6.  Subdivision 9 of section 27-1407 of the environmental conserva-
   17  tion law is amended by adding a new paragraph (g) to read as follows:
   18    (G) THE PERSON'S PARTICIPATION  IN  ANY  REMEDIAL  PROGRAM  UNDER  THE
   19  DEPARTMENT'S  OVERSIGHT  WAS  TERMINATED BY THE DEPARTMENT OR BY A COURT
   20  FOR FAILURE TO SUBSTANTIALLY COMPLY WITH AN AGREEMENT OR ORDER.
   21    S 7. Subdivision 2 of section 27-1409 of the  environmental  conserva-
   22  tion  law,  as amended by section 4 of part A of chapter 577 of the laws
   23  of 2004, is amended to read as follows:
   24    2. One requiring (A) the [applicant]  PARTICIPANT  to  pay  for  state
   25  costs,  INCLUDING THE RECOVERY OF STATE COSTS INCURRED BEFORE THE EFFEC-
   26  TIVE DATE OF SUCH AGREEMENT; provided, however, that SUCH COSTS  MAY  BE
   27  BASED  ON  A  REASONABLE FLAT-FEE FOR OVERSIGHT, WHICH SHALL REFLECT THE
   28  PROJECTED FUTURE STATE COSTS  INCURRED  IN  NEGOTIATING  AND  OVERSEEING
   29  IMPLEMENTATION OF SUCH AGREEMENT; AND
   30    (B)  with respect to a brownfield site which the department has deter-
   31  mined constitutes a significant threat to the public health or  environ-
   32  ment  the  department may include a provision requiring the applicant to
   33  provide a technical assistance grant, as described in  subdivision  four
   34  of  section  27-1417  of  this  title and under the conditions described
   35  therein, to an eligible party in accordance with procedures  established
   36  under  such  program, with the cost of such a grant incurred by a volun-
   37  teer serving as an offset against such state costs[. Where the applicant
   38  is a participant, the department shall include  provisions  relating  to
   39  recovery  of  state  costs  incurred  before  the effective date of such
   40  agreement];
   41    S 8. Section 27-1411 of the environmental conservation law is  amended
   42  by adding two new subdivisions 6 and 7 to read as follows:
   43    6.  AN APPLICANT SHALL COMMENCE IMPLEMENTATION OF ANY WORK PLAN WITHIN
   44  NINETY DAYS OF APPROVAL OF THE PLAN BY THE DEPARTMENT AND  COMPLETE  THE
   45  ACTIVITIES  PROVIDED FOR IN SUCH WORK PLAN IN ACCORDANCE WITH THE SCHED-
   46  ULE SET FORTH THEREIN, OR AS OTHERWISE APPROVED  BY  THE  DEPARTMENT  IN
   47  WRITING.
   48    7.  AN  APPLICANT  SHALL  INCLUDE  WITH  EVERY REPORT SUBMITTED TO THE
   49  DEPARTMENT A SCHEDULE FOR THE SUBMISSION OF  ANY  SUBSEQUENT  WORK  PLAN
   50  REQUIRED TO MEET THE REQUIREMENTS OF THIS TITLE.
   51    S  9.  Subdivision 2 of section 27-1413 of the environmental conserva-
   52  tion law, as amended by section 6 of part A of chapter 577 of  the  laws
   53  of 2004, is amended to read as follows:
   54    2.  For  all  [other]  sites  SEEKING TO RECEIVE THE TANGIBLE PROPERTY
   55  CREDIT COMPONENT PURSUANT TO  PARAGRAPH  THREE  OF  SUBDIVISION  (A)  OF
   56  SECTION TWENTY-ONE OF THE TAX LAW, the applicant shall develop and eval-
       S. 6359                            196                           A. 8559
    1  uate  at  least  two remedial alternatives, one of which would achieve a
    2  Track 1 cleanup. The department shall have the discretion to require the
    3  evaluation of additional alternatives at a site that has been determined
    4  to  pose  a  significant threat. The applicant shall submit the alterna-
    5  tives analysis [as a part of the remedial work plan] to  the  department
    6  for review, approval, modification or rejection.
    7    S  10. Subdivision 4 of section 27-1415 of the environmental conserva-
    8  tion law, as amended by section 7 of part A of chapter 577 of  the  laws
    9  of 2004, is amended to read as follows:
   10    4.  Tracks. The commissioner, in consultation with the commissioner of
   11  health, shall propose within twelve months and thereafter timely promul-
   12  gate regulations which create a multi-track approach for the remediation
   13  of contamination, and, commencing on the effective date  of  such  regu-
   14  lations,  utilize  such  multi-track  approach.  Such  regulations shall
   15  provide that groundwater  use  in  Tracks  2,  3  or  4  can  be  either
   16  restricted or unrestricted. The tracks shall be as follows:
   17    Track  1: The remedial program shall achieve a cleanup level that will
   18  allow the site to be used for any purpose without restriction and  with-
   19  out reliance on the long-term employment of institutional or engineering
   20  controls,  and shall achieve contaminant-specific remedial action objec-
   21  tives for soil which conform with those contained in the  generic  table
   22  of  contaminant-specific remedial action objectives for unrestricted use
   23  developed pursuant to subdivision six of this section.  Provided, howev-
   24  er, that volunteers whose proposed remedial program [for the remediation
   25  of groundwater] (1)(I) may require the long-term employment of  institu-
   26  tional  or engineering controls FOR THE REMEDIATION OF GROUNDWATER after
   27  the bulk reduction of groundwater contamination to asymptotic levels has
   28  been achieved OR  (II)  MAY  REQUIRE  AN  INSTITUTIONAL  OR  ENGINEERING
   29  CONTROL  FOR MORE THAN FIVE YEARS SOLELY TO ADDRESS SOIL VAPOR INTRUSION
   30  but (2) whose program would  otherwise  conform  with  the  requirements
   31  necessary to qualify for Track 1, shall qualify for Track 1.
   32    Track  2:  The remedial program may include restrictions on the use of
   33  the site or reliance on the long-term employment of  engineering  and/or
   34  institutional  controls, but shall achieve contaminant-specific remedial
   35  action objectives for soil which conform with those contained in one  of
   36  the generic tables developed pursuant to subdivision six of this section
   37  without  the  use of institutional or engineering controls to reach such
   38  objectives.
   39    Track 3: The remedial program shall achieve contaminant-specific reme-
   40  dial action objectives for soil which conform with the criteria used  to
   41  develop  the  generic  tables  for such objectives developed pursuant to
   42  subdivision six of this section but may use site specific data to deter-
   43  mine such objectives.
   44    Track 4: The remedial program shall achieve a cleanup level that  will
   45  be protective for the site's current, intended or reasonably anticipated
   46  residential,  commercial,  or  industrial use with restrictions and with
   47  reliance on the long-term employment  of  institutional  or  engineering
   48  controls  to  achieve  such  level.  The  regulations  shall  include  a
   49  provision requiring that a cleanup level which poses a  risk  in  excee-
   50  dance  of  an  excess cancer risk of one in one million for carcinogenic
   51  end points and a hazard index of one for non-cancer  end  points  for  a
   52  specific  contaminant  at a specific site may be approved by the depart-
   53  ment without requiring the use of institutional or engineering  controls
   54  to  eliminate  exposure only upon a site specific finding by the commis-
   55  sioner, in consultation with the commissioner of health, that such level
   56  shall be protective of public health and environment. Such finding shall
       S. 6359                            197                           A. 8559
    1  be included in the draft remedial work  plan  for  the  site  and  fully
    2  described in the notice and fact sheet provided for such work plan.
    3    S  11. Paragraphs (b), (c) and (d) of subdivision 7 of section 27-1415
    4  of the environmental conservation law are relettered paragraphs (c), (d)
    5  and (e) and a new paragraph (b) is added to read as follows:
    6    (B) WITHIN ONE HUNDRED EIGHTY DAYS OF  COMMENCEMENT  OF  THE  REMEDIAL
    7  DESIGN  OR  AT  LEAST  THREE MONTHS PRIOR TO THE DATE OF THE ANTICIPATED
    8  ISSUANCE OF THE CERTIFICATE OF COMPLETION, THE  OWNER  OF  A  BROWNFIELD
    9  SITE,  AND/OR ANY PERSON RESPONSIBLE FOR IMPLEMENTING A REMEDIAL PROGRAM
   10  AT SUCH SITE, WHERE INSTITUTIONAL OR ENGINEERING CONTROLS  ARE  EMPLOYED
   11  PURSUANT TO THIS TITLE, SHALL EXECUTE AN ENVIRONMENTAL EASEMENT PURSUANT
   12  TO TITLE THIRTY-SIX OF ARTICLE SEVENTY-ONE OF THIS CHAPTER.
   13    S  12.  Paragraph (h) of subdivision 3 of section 27-1417 of the envi-
   14  ronmental conservation law is  REPEALED,  paragraph  (i)  is  relettered
   15  paragraph  (h)  and  paragraph (f), as amended by section 8 of part A of
   16  chapter 577 of the laws of 2004, is amended to read as follows:
   17    (f) Before the department [finalizes]  SELECTS  a  proposed  [remedial
   18  work  plan]  REMEDY  FROM THE ALTERNATIVES SET FORTH IN THE ALTERNATIVES
   19  ANALYSIS AS PRESCRIBED BY SECTION 27-1413  OF  THIS  TITLE  or  makes  a
   20  determination  that  site conditions meet the requirements of this title
   21  without the necessity for remediation pursuant  to  section  27-1411  of
   22  this  title,  the  department,  in consultation with the applicant, must
   23  notify individuals on the brownfield  site  contact  list.  Such  notice
   24  shall  include  a  fact  sheet  describing  such  plan and provide for a
   25  forty-five day public comment period.  The  commissioner  shall  hold  a
   26  public  meeting  if  requested by the affected community and the commis-
   27  sioner has found that the site constitutes a significant threat  to  the
   28  public  health  or  the environment. Further, the affected community may
   29  request a public meeting at sites that do not constitute  a  significant
   30  threat.  (1)  To the extent that the department has determined that site
   31  conditions do not pose a  significant  threat  and  the  site  is  being
   32  addressed by a volunteer, the notice shall state that the department has
   33  determined  that  no  remediation is required for the off-site areas and
   34  that the department's determination of a significant threat  is  subject
   35  to  this  forty-five day comment period. (2) If the [remedial work plan]
   36  REMEDY includes a Track 2, Track 3 or Track 4 remedy at  a  non-signifi-
   37  cant  threat  site, such comment period shall apply both to the approval
   38  of the alternatives analysis by the department, IF APPLICABLE,  and  the
   39  proposed remedy selected by the applicant.
   40    S  13.  Paragraph  (a)  of  subdivision 2 and subdivision 3 of section
   41  27-1419 of the environmental conservation law, paragraph (a) of subdivi-
   42  sion 2 as added by section 1 of part A of chapter 1 of the laws of 2003,
   43  subdivision 3 as amended by chapter 390 of the laws of 2008, are amended
   44  to read as follows:
   45    (a) a description of the remediation activities completed pursuant  to
   46  the  remedial work plan AND ANY INTERIM REMEDIAL MEASURES for the brown-
   47  field site AND THE COSTS PAID FOR THOSE ACTIVITIES;
   48    3. Upon receipt of the final engineering report, the department  shall
   49  review  such  report  and  the data submitted pursuant to the brownfield
   50  site cleanup agreement as well as any other relevant information regard-
   51  ing the brownfield site. Upon satisfaction of the commissioner that  the
   52  remediation  requirements  set  forth in this title have been or will be
   53  achieved in accordance with the timeframes, if any, established  in  the
   54  remedial  work  plan, the commissioner shall issue a written certificate
   55  of completion[, such]. THE certificate shall include such information as
   56  determined by the department of taxation and finance, including but  not
       S. 6359                            198                           A. 8559
    1  limited  to  the  brownfield site boundaries included in the final engi-
    2  neering report, the  date  of  the  brownfield  site  CLEANUP  agreement
    3  [pursuant to section 27-1409 of this title], IDENTIFICATION OF THE ENTI-
    4  TY  OR  ENTITIES  ELIGIBLE  FOR CREDITS PURSUANT TO SECTIONS TWENTY-ONE,
    5  TWENTY-TWO OR TWENTY-THREE OF THE TAX LAW, and the  applicable  percent-
    6  ages  available AS OF THE DATE OF THE CERTIFICATE OF COMPLETION for that
    7  site for purposes of section twenty-one  of  the  tax  law[,  with  such
    8  percentages  to  be determined as follows with respect to such qualified
    9  site]. FOR THOSE SITES FOR WHICH THE DEPARTMENT HAS ISSUED A  NOTICE  TO
   10  THE  APPLICANT  ON  OR  AFTER JULY FIRST, TWO THOUSAND FOURTEEN THAT ITS
   11  REQUEST FOR PARTICIPATION HAS BEEN ACCEPTED  UNDER  SUBDIVISION  SIX  OF
   12  SECTION 27-1407 OF THIS TITLE, THE TANGIBLE PROPERTY CREDIT COMPONENT OF
   13  THE  BROWNFIELD  REDEVELOPMENT TAX CREDIT PURSUANT TO PARAGRAPH THREE OF
   14  SUBDIVISION (A) OF SECTION TWENTY-ONE OF  THE  TAX  LAW  SHALL  ONLY  BE
   15  AVAILABLE  TO  THE  TAXPAYER IF THE NOTICE INCLUDES A DETERMINATION THAT
   16  THE CRITERIA FOR RECEIVING SUCH TAX COMPONENT HAVE BEEN MET.  FOR  THOSE
   17  SITES for which the department has issued a notice to the taxpayer after
   18  June twenty-third, two thousand eight that its request for participation
   19  has  been  accepted  under  subdivision  six  of section 27-1407 of this
   20  title[:
   21    For the purposes of calculating], THE APPLICABLE  PERCENTAGE  FOR  the
   22  site  preparation credit component pursuant to paragraph two of subdivi-
   23  sion (a) of section twenty-one of the tax law, and the on-site groundwa-
   24  ter remediation credit component pursuant to paragraph four of  subdivi-
   25  sion  (a)  of  section  twenty-one  of  the  tax  law[,  the  applicable
   26  percentage] shall be based on the level of cleanup achieved pursuant  to
   27  subdivision  four  of  section  27-1415  of  this title and the level of
   28  cleanup of soils to contaminant-specific soil cleanup objectives promul-
   29  gated pursuant to subdivision six of section 27-1415 of this  title,  up
   30  to a maximum of fifty percent, as follows:
   31    (a)  soil  cleanup for unrestricted use, the protection of groundwater
   32  or the protection of ecological  resources,  the  applicable  percentage
   33  shall be fifty percent;
   34    (b)  soil cleanup for residential use, the applicable percentage shall
   35  be forty percent,  except  for  Track  4  which  shall  be  twenty-eight
   36  percent;
   37    (c)  soil  cleanup for commercial use, the applicable percentage shall
   38  be thirty-three percent, except for Track 4 which shall  be  twenty-five
   39  percent;
   40    (d)  soil  cleanup for industrial use, the applicable percentage shall
   41  be twenty-seven percent, except for Track 4 which  shall  be  twenty-two
   42  percent.
   43    S  14. Subdivision 5 of section 27-1419 of the environmental conserva-
   44  tion law, as amended by section 9 of part A of chapter 577 of  the  laws
   45  of 2004, is amended to read as follows:
   46    5.  A certificate of completion issued pursuant to this section may be
   47  transferred [to the applicant's successors or assigns upon  transfer  or
   48  sale  of  the  brownfield site] BY THE APPLICANT OR SUBSEQUENT HOLDER OF
   49  THE CERTIFICATE OF COMPLETION TO A SUCCESSOR TO A REAL  PROPERTY  INTER-
   50  EST,  INCLUDING  LEGAL  TITLE, EQUITABLE TITLE OR LEASEHOLD, IN ALL OR A
   51  PART OF THE BROWNFIELD SITE FOR WHICH THE CERTIFICATE OF COMPLETION  WAS
   52  ISSUED;  PROVIDED,  HOWEVER, ANY TRANSFER OF A CERTIFICATE OF COMPLETION
   53  TO A RESPONSIBLE PARTY SHALL NOT PROVIDE RELIEF FROM LIABILITY. Further,
   54  a certificate of completion may be modified or revoked  by  the  commis-
   55  sioner upon a finding that:
       S. 6359                            199                           A. 8559
    1    (a)  Either  the  applicant, or the applicant's successors or assigns,
    2  has failed to comply with the terms and  conditions  of  the  brownfield
    3  site cleanup agreement;
    4    (b)  The applicant made a misrepresentation of a material fact tending
    5  to demonstrate that (I) it was qualified as a volunteer OR (II) MET  THE
    6  CRITERIA SET FORTH IN SUBDIVISION ONE-A OF SECTION 27-1407 OF THIS TITLE
    7  FOR  THE  PURPOSE OF RECEIVING THE TANGIBLE PROPERTY CREDIT COMPONENT OF
    8  THE BROWNFIELD REDEVELOPMENT TAX CREDIT PURSUANT TO PARAGRAPH  THREE  OF
    9  SUBDIVISION (A) OF SECTION TWENTY-ONE OF THE TAX LAW;
   10    (c)  Either  the  applicant, or the applicant's successors or assigns,
   11  made a misrepresentation of a material fact tending to demonstrate  that
   12  the  cleanup  levels identified in the brownfield site cleanup agreement
   13  were reached; [or]
   14    (d) THE ENVIRONMENTAL EASEMENT CREATED AND RECORDED PURSUANT TO  TITLE
   15  THIRTY-SIX  OF ARTICLE SEVENTY-ONE OF THIS CHAPTER NO LONGER PROVIDES AN
   16  EFFECTIVE OR ENFORCEABLE MEANS OF ENSURING THE  PERFORMANCE  OF  MAINTE-
   17  NANCE,  MONITORING  OR  OPERATING  REQUIREMENTS,  OR THE RESTRICTIONS ON
   18  FUTURE USES, INCLUDING  RESTRICTIONS  ON  DRILLING  FOR  OR  WITHDRAWING
   19  GROUNDWATER; OR
   20    (E) There is good cause for such modification or revocation.
   21    S  15.  Section  27-1423  of  the  environmental  conservation  law is
   22  REPEALED.
   23    S 16. Section  27-1429  of  the  environmental  conservation  law,  as
   24  amended  by  section 13 of part A of chapter 577 of the laws of 2004, is
   25  amended to read as follows:
   26  S 27-1429. Permit waivers.
   27    The department[, by and through the commissioner,]  shall  be  EXEMPT,
   28  AND  SHALL  BE  authorized  to  exempt  a person from the requirement to
   29  obtain any state or local permit or other authorization for any activity
   30  needed to implement a program for the investigation  and/or  remediation
   31  of  contamination  AT OR EMANATING FROM A BROWNFIELD SITE; provided that
   32  the activity is conducted in a manner which  satisfies  all  substantive
   33  technical requirements applicable to like activity conducted pursuant to
   34  a permit.
   35    S  17. Subdivision 1 of section 27-1431 of the environmental conserva-
   36  tion law is amended by adding a new paragraph c to read as follows:
   37    C. TO INSPECT FOR COMPLIANCE WITH THE SITE MANAGEMENT PLAN APPROVED BY
   38  THE DEPARTMENT, INCLUDING (I) INSPECTION OF THE PERFORMANCE  OF  MAINTE-
   39  NANCE,  MONITORING  AND  OPERATIONAL  ACTIVITIES REQUIRED AS PART OF THE
   40  REMEDIAL PROGRAM FOR THE SITE, (II) INSPECTION FOR THE PURPOSE OF ASCER-
   41  TAINING CURRENT USES OF THE SITE, AND (III) TAKING SAMPLES IN ACCORDANCE
   42  WITH PARAGRAPH A OF THIS SUBDIVISION.
   43    S 17-a. Section 27-1435  of  the  environmental  conservation  law  is
   44  REPEALED.
   45    S  18.  The  environmental conservation law is amended by adding a new
   46  section 27-1437 to read as follows:
   47  S 27-1437. BCP-EZ PROGRAM.
   48    1. NOTWITHSTANDING THE PROVISIONS OF THIS TITLE OR ANY OTHER PROVISION
   49  OF LAW, THE DEPARTMENT IS AUTHORIZED TO EXEMPT A VOLUNTEER  FROM  PROCE-
   50  DURAL  REQUIREMENTS  OF THIS TITLE THAT THE DEPARTMENT MAY SPECIFY WHICH
   51  ARE OTHERWISE APPLICABLE TO IMPLEMENTATION OF  AN  INVESTIGATION  AND/OR
   52  REMEDIATION OF CONTAMINATION, PROVIDED THAT:
   53    (A)  THE  DEPARTMENT  HAS DETERMINED THAT THE BROWNFIELD SITE DOES NOT
   54  POSE A SIGNIFICANT THREAT PURSUANT TO SECTION 27-1411 OF THIS TITLE;
       S. 6359                            200                           A. 8559
    1    (B) THE APPLICANT HAS WAIVED IN WRITING  ANY  CLAIM  FOR  TAX  CREDITS
    2  PURSUANT  TO  SECTION  TWENTY-ONE OF THE TAX LAW ON A FORM PRESCRIBED BY
    3  THE DEPARTMENT; AND
    4    (C) THE ACTIVITY IS CONDUCTED IN A MANNER WHICH SATISFIES ALL SUBSTAN-
    5  TIVE TECHNICAL REQUIREMENTS APPLICABLE TO LIKE ACTIVITY CONDUCTED PURSU-
    6  ANT TO THIS TITLE.
    7    2.  WHERE  A  WAIVER  HAS  BEEN  GRANTED, THE APPROVED WORK PLAN FOR A
    8  BROWNFIELD SITE SHALL INCLUDE THE PROCEDURAL REQUIREMENTS THE DEPARTMENT
    9  DETERMINES APPROPRIATE BASED ON SITE SPECIFIC CONSIDERATIONS AND CONSID-
   10  ERATION OF SECTION 27-1417 OF THIS TITLE.
   11    3. FOR ANY SITE ACCEPTED INTO THE  BCP-EZ  PROGRAM  PURSUANT  TO  THIS
   12  SECTION  WHICH  IS  PURSUING  A TRACK 4 REMEDIATION, IF A CONTAMINANT IS
   13  IDENTIFIED IN SOIL IN EXCESS OF THE REMEDIAL ACTION OBJECTIVES CONTAINED
   14  IN AN APPLICABLE GENERIC TABLE DEVELOPED PURSUANT TO SUBDIVISION SIX  OF
   15  SECTION  27-1415 OF THIS TITLE, THE APPLICANT MAY USE SITE-SPECIFIC DATA
   16  TO DEMONSTRATE TO THE DEPARTMENT THAT THE CONCENTRATION OF  THE  CONTAM-
   17  INANT  IN  THE SOILS REFLECTS BACKGROUND CONDITIONS AND, IN THAT CASE, A
   18  CONTAMINANT-SPECIFIC ACTION OBJECTIVE FOR SUCH CONTAMINANT EQUAL TO SUCH
   19  BACKGROUND CONCENTRATION MAY BE ESTABLISHED.
   20    S 19. The opening paragraph of subdivision 10 of  section  71-3605  of
   21  the  environmental  conservation law, as added by section 2 of part A of
   22  chapter 1 of the laws of 2003, is amended to read as follows:
   23    An environmental easement may be enforced in  law  or  equity  by  its
   24  grantor,  by  the  state, or any affected local government as defined in
   25  section 71-3603 of this title. Such easement is enforceable against  the
   26  owner  of  the  burdened property, any lessees, and any person using the
   27  land. Enforcement shall  not  be  defeated  because  of  any  subsequent
   28  adverse  possession,  laches,  estoppel, REVERSION or waiver. No general
   29  law of the state which operates to defeat the enforcement of any  inter-
   30  est  in  real  property  shall  operate to defeat the enforcement of any
   31  environmental easement unless such  general  law  expressly  states  the
   32  intent  to  defeat  the enforcement of such easement or provides for the
   33  exercise of the power of eminent domain. It is  not  a  defense  in  any
   34  action to enforce an environmental easement that:
   35    S  20. Paragraph 2 of subdivision (a) of section 21 of the tax law, as
   36  amended by section 1 of part H of chapter 577 of the laws  of  2004,  is
   37  amended to read as follows:
   38    (2)  Site  preparation  credit  component. The site preparation credit
   39  component shall be equal to the applicable percentage of the site prepa-
   40  ration costs paid [or incurred] by the taxpayer with respect to a quali-
   41  fied site. The credit component amount so determined with respect  to  a
   42  site's  qualification  for  a certificate of completion shall be allowed
   43  for the taxable year in which the effective date of the  certificate  of
   44  completion  occurs.  The  credit  component amount determined other than
   45  with respect to such qualification shall be allowed for the taxable year
   46  in which the improvement to which the applicable costs apply  is  placed
   47  in  service  for  up  to  five  taxable years after the issuance of such
   48  certificate of completion.
   49    S 21. Paragraph 3 of subdivision (a) of section 21 of the tax law,  as
   50  amended  by  chapter  390  of  the  laws  of 2008, is amended to read as
   51  follows:
   52    (3) Tangible property credit component. The tangible  property  credit
   53  component  shall  be  equal  to the applicable percentage of the cost or
   54  other basis for federal income tax purposes of tangible personal proper-
   55  ty and other  tangible  property,  including  buildings  and  structural
   56  components  of  buildings, which constitute qualified tangible property;
       S. 6359                            201                           A. 8559
    1  provided[, however,] that in determining the cost or other basis of such
    2  property, the taxpayer shall exclude the acquisition cost of any item of
    3  property with respect to which a credit under this section was allowable
    4  to  another taxpayer.   WITH RESPECT TO ANY QUALIFIED SITE FOR WHICH THE
    5  DEPARTMENT OF ENVIRONMENTAL CONSERVATION HAS  ISSUED  A  NOTICE  TO  THE
    6  TAXPAYER  ON OR AFTER JULY FIRST, TWO THOUSAND FOURTEEN THAT ITS REQUEST
    7  FOR PARTICIPATION HAS BEEN ACCEPTED UNDER  SUBDIVISION  SIX  OF  SECTION
    8  27-1407  OF  THE  ENVIRONMENTAL  CONSERVATION LAW, THE TAXPAYER MAY ALSO
    9  INCLUDE THE COSTS INCURRED IN CONNECTION WITH PREPARING A SITE  FOR  THE
   10  ERECTION OF A BUILDING OR A COMPONENT OF A BUILDING, SUCH AS THE COST OF
   11  EXCAVATION,  DEMOLITION, TEMPORARY ELECTRIC WIRING, SCAFFOLDING, FENCING
   12  AND SECURITY FACILITIES, TO THE EXTENT THAT SUCH COSTS ARE NOT USED AS A
   13  BASIS FOR COMPUTING THE SITE PREPARATION  COMPONENT  OF  THE  BROWNFIELD
   14  REDEVELOPMENT  TAX CREDIT PURSUANT TO PARAGRAPH TWO OF THIS SUBDIVISION;
   15  AND PROVIDED FURTHER THAT, IN THE CASE OF QUALIFIED SITES  ELIGIBLE  FOR
   16  THE  FIVE  PERCENT AFFORDABLE HOUSING TANGIBLE PROPERTY CREDIT COMPONENT
   17  PURSUANT TO CLAUSE (III) OF SUBPARAGRAPH (B) OF PARAGRAPH FIVE  OF  THIS
   18  SUBDIVISION, THAT PORTION OF THE TANGIBLE PROPERTY CREDIT COMPONENT WILL
   19  BE  DETERMINED BY MULTIPLYING THE TOTAL COSTS QUALIFIED FOR THE TANGIBLE
   20  PROPERTY CREDIT COMPONENT BY A FRACTION, THE NUMERATOR OF WHICH SHALL BE
   21  THE SQUARE FOOTAGE OF SPACE OF THE AFFORDABLE HOUSING UNITS DEDICATED TO
   22  RESIDENTIAL OCCUPANCY AND THE DENOMINATOR OF WHICH SHALL  BE  THE  TOTAL
   23  SQUARE  FOOTAGE  OF  THE SITE. The credit component amount so determined
   24  shall be allowed for the taxable year in which such  qualified  tangible
   25  property  is FIRST placed in service on a qualified site with respect to
   26  which a certificate of completion has been issued to  the  taxpayer,  OR
   27  FOR THE TAXABLE YEAR IN WHICH THE CERTIFICATE OF COMPLETION IS ISSUED IF
   28  THE  QUALIFIED TANGIBLE PROPERTY IS PLACED IN SERVICE PRIOR TO THE ISSU-
   29  ANCE OF THE CERTIFICATE OF COMPLETION, for up to [ten]  FIVE CONSECUTIVE
   30  taxable years [after] FROM THE START OF THE REDEVELOPMENT  OF  THE  SITE
   31  PROVIDED  THAT  THE REDEVELOPMENT STARTS WITHIN TEN YEARS OF the date of
   32  the issuance of such certificate of completion.  The  tangible  property
   33  credit  component  shall be allowed with respect to property leased to a
   34  second party only if such second party is either (i) not a party respon-
   35  sible for the disposal of hazardous waste or the discharge of  petroleum
   36  at  the  site  according to applicable principles of statutory or common
   37  law liability, or (ii) a party responsible according to applicable prin-
   38  ciples of statutory or common law liability if  such  party's  liability
   39  arises  solely  from operation of the site subsequent to the disposal of
   40  hazardous waste or the discharge of petroleum, and is  so  certified  by
   41  the  commissioner  of  environmental  conservation at the request of the
   42  taxpayer, pursuant to section 27-1419 of the environmental  conservation
   43  law.  Notwithstanding any other provision of law to the contrary, in the
   44  case of allowance of credit under this section to  such  a  lessor,  the
   45  commissioner  shall  have  the  authority  to  reveal to such lessor any
   46  information, with respect to the issue of qualified use of  property  by
   47  the  lessee,  which  is the basis for the denial in whole or in part, or
   48  for the recapture, of the credit claimed by such lessor. For purposes of
   49  the tangible property credit component allowed under  this  section  the
   50  taxpayer  to  whom  the certificate of completion is issued, as provided
   51  for under subdivision five  of  section  27-1419  of  the  environmental
   52  conservation  law,  may transfer the benefits and burdens of the certif-
   53  icate of completion, which run with the  land  and  to  the  applicant's
   54  successors  or assigns upon transfer or sale of all or any portion of an
   55  interest or estate in the qualified site. However, the taxpayer to  whom
   56  certificate's benefits and burdens are transferred shall not include the
       S. 6359                            202                           A. 8559
    1  cost  of  acquiring  all  or any portion of an interest or estate in the
    2  site and the amounts included in the cost or  other  basis  for  federal
    3  income  tax  purposes  of qualified tangible property already claimed by
    4  the  previous  taxpayer pursuant to this section.  THE TANGIBLE PROPERTY
    5  CREDIT COMPONENT SHALL NOT INCLUDE COSTS PAID  TO  A  RELATED  PARTY  OR
    6  PARTIES, AS SUCH TERM "RELATED PERSON" IS DEFINED IN SUBPARAGRAPH (C) OF
    7  PARAGRAPH THREE OF SUBDIVISION (B) OF SECTION FOUR HUNDRED SIXTY-FIVE OF
    8  THE  INTERNAL  REVENUE  CODE.  ELIGIBLE  COSTS FOR THE TANGIBLE PROPERTY
    9  CREDIT  COMPONENT  ARE  LIMITED  TO   COSTS   ASSOCIATED   WITH   ACTUAL
   10  CONSTRUCTION  OF  TANGIBLE PROPERTY INCORPORATED AS PART OF THE PHYSICAL
   11  STRUCTURE, AND COSTS ASSOCIATED WITH THE PREPARATION  OF  THE  SITE  FOR
   12  ERECTION OF A BUILDING OR A COMPONENT OF A BUILDING THAT ARE NOT PROPER-
   13  LY INCLUDED IN THE SITE PREPARATION COMPONENT.
   14    S  22. Subparagraph (A) of paragraph 3-a of subdivision (a) of section
   15  21 of the tax law, as added by chapter 390  of  the  laws  of  2008,  is
   16  amended to read as follows:
   17    (A)  Notwithstanding  any  other provision of law to the contrary, the
   18  tangible property credit component  available  for  any  qualified  site
   19  pursuant  to  paragraph three of this subdivision shall not exceed thir-
   20  ty-five million dollars or three times the SUM OF THE costs included  in
   21  the calculation of the site preparation credit component and the on-site
   22  groundwater  remediation credit component under paragraphs two and four,
   23  respectively, of this subdivision, AND THE COSTS THAT  WOULD  HAVE  BEEN
   24  INCLUDED  IN  THE  CALCULATION  OF  SUCH COMPONENTS IF NOT TREATED AS AN
   25  EXPENSE AND DEDUCTED PURSUANT TO SECTION ONE HUNDRED NINETY-EIGHT OF THE
   26  INTERNAL REVENUE CODE, whichever is less; provided, however,  that:  (1)
   27  in  the  case of a qualified site to be used primarily for manufacturing
   28  activities, the tangible property credit  component  available  for  any
   29  qualified site pursuant to paragraph three of this subdivision shall not
   30  exceed  forty-five  million  dollars  or  six times the SUM OF THE costs
   31  included in the calculation of the site preparation credit component and
   32  the on-site groundwater remediation credit  component  under  paragraphs
   33  two  and  four,  respectively,  of  this subdivision, AND THE COSTS THAT
   34  WOULD HAVE BEEN INCLUDED IN THE CALCULATION OF SUCH  COMPONENTS  IF  NOT
   35  TREATED AS AN EXPENSE AND DEDUCTED PURSUANT TO SECTION ONE HUNDRED NINE-
   36  TY-EIGHT  OF  THE  INTERNAL REVENUE CODE, whichever is less; and (2) the
   37  provisions of this paragraph shall not apply to any qualified  site  for
   38  which  the  department of environmental conservation has issued a notice
   39  to the taxpayer before June twenty-third, two thousand  eight  that  its
   40  request  for  participation  has  been accepted under subdivision six of
   41  section 27-1407 of the environmental conservation law.
   42    S 23. Subparagraph (D) of paragraph 3-a of subdivision (a) of  section
   43  21  of  the  tax  law,  as  added by chapter 390 of the laws of 2008, is
   44  amended to read as follows:
   45    (D) [If] WITH RESPECT TO ANY QUALIFIED SITE FOR WHICH  THE  DEPARTMENT
   46  OF ENVIRONMENTAL CONSERVATION HAS ISSUED A NOTICE TO THE TAXPAYER BEFORE
   47  JULY FIRST, TWO THOUSAND FOURTEEN THAT ITS REQUEST FOR PARTICIPATION HAS
   48  BEEN  ACCEPTED  UNDER SUBDIVISION SIX OF SECTION 27-1407 OF THE ENVIRON-
   49  MENTAL CONSERVATION LAW, OR WHERE THE TAXPAYER HAS EITHER BEEN ISSUED OR
   50  RECEIVED A CERTIFICATE OF COMPLETION FROM ANOTHER TAXPAYER UNDER SECTION
   51  27-1419 OF THE ENVIRONMENTAL CONSERVATION LAW  BEFORE  JULY  FIRST,  TWO
   52  THOUSAND  FOURTEEN,  IF  the  qualifying site is located in a brownfield
   53  opportunity area and is developed in  conformance  with  the  goals  and
   54  priorities  established  for that applicable brownfield opportunity area
   55  as designated pursuant to section nine hundred seventy-r of the  general
       S. 6359                            203                           A. 8559
    1  municipal law, the applicable percentage of the tangible property credit
    2  component will be increased by two percent.
    3    S  24. Paragraph 4 of subdivision (a) of section 21 of the tax law, as
    4  amended by section 1 of part H of chapter 577 of the laws  of  2004,  is
    5  amended to read as follows:
    6    (4)  On-site  groundwater  remediation  credit  component. The on-site
    7  groundwater remediation credit component shall be equal to the  applica-
    8  ble  percentage  of  the  on-site groundwater remediation costs paid [or
    9  incurred] by the taxpayer with respect  to  a  qualified  site  (to  the
   10  extent  that  such groundwater remediation costs are not included in the
   11  determination of the site preparation credit or the cost or other  basis
   12  included  in  the  determination  of  the tangible property credit). The
   13  credit component so  determined  for  costs  [incurred  and]  paid  with
   14  respect  to  and  prior  to  the issuance of a certificate of completion
   15  shall be allowed for the taxable year in which the effective date of the
   16  issuance of a certificate of completion  occurs.  The  credit  component
   17  amount determined in taxable years after the effective date of the issu-
   18  ance of a certificate of completion shall be allowed in the taxable year
   19  such  qualified  costs  are  [incurred  and] paid for up to five taxable
   20  years after the issuance of such certificate of completion.
   21    S 25. Paragraph 5 of subdivision (a) of section 21 of the tax law,  as
   22  amended  by  section  1 of part H of chapter 577 of the laws of 2004, is
   23  amended to read as follows:
   24    (5) Applicable percentage. (A) For  purposes  of  COMPUTING  THE  SITE
   25  PREPARATION AND ON-SITE GROUNDWATER REMEDIATION CREDIT COMPONENTS PURSU-
   26  ANT  TO  paragraphs  two[,  three]  and  four  of this subdivision, WITH
   27  RESPECT TO SUCH QUALIFIED SITES FOR WHICH  THE  DEPARTMENT  OF  ENVIRON-
   28  MENTAL  CONSERVATION  HAS  ISSUED  A  NOTICE TO THE TAXPAYER BEFORE JUNE
   29  TWENTY-THIRD, TWO THOUSAND EIGHT THAT ITS REQUEST FOR PARTICIPATION  HAS
   30  BEEN  ACCEPTED  UNDER SUBDIVISION SIX OF SECTION 27-1407 OF THE ENVIRON-
   31  MENTAL CONSERVATION LAW, OR WHERE THE TAXPAYER HAS EITHER BEEN ISSUED OR
   32  RECEIVED A CERTIFICATE OF COMPLETION FROM ANOTHER TAXPAYER UNDER SECTION
   33  27-1419 OF THE ENVIRONMENTAL CONSERVATION LAW BEFORE JUNE  TWENTY-THIRD,
   34  TWO THOUSAND EIGHT, AND, FOR PURPOSES OF COMPUTING THE TANGIBLE PROPERTY
   35  COMPONENT  PURSUANT  TO PARAGRAPH THREE OF THIS SUBDIVISION WITH RESPECT
   36  TO SUCH QUALIFIED  SITES  FOR  WHICH  THE  DEPARTMENT  OF  ENVIRONMENTAL
   37  CONSERVATION  HAS ISSUED A NOTICE TO THE TAXPAYER BEFORE JULY FIRST, TWO
   38  THOUSAND FOURTEEN THAT ITS REQUEST FOR PARTICIPATION HAS  BEEN  ACCEPTED
   39  UNDER  SUBDIVISION SIX OF SECTION 27-1407 OF THE ENVIRONMENTAL CONSERVA-
   40  TION LAW, OR WHERE THE TAXPAYER HAS EITHER BEEN  ISSUED  OR  RECEIVED  A
   41  CERTIFICATE OF COMPLETION FROM ANOTHER TAXPAYER UNDER SECTION 27-1419 OF
   42  THE ENVIRONMENTAL CONSERVATION LAW BEFORE JULY FIRST, TWO THOUSAND FOUR-
   43  TEEN,  the  applicable percentage shall be twelve percent in the case of
   44  credits claimed under article nine, nine-A, thirty-two  or  thirty-three
   45  of  this  chapter,  and ten percent in the case of credits claimed under
   46  article twenty-two of this chapter, except that  where  at  least  fifty
   47  percent  of  the  area  of  the  qualified  site  relating to the credit
   48  provided for in this section is located  in  an  environmental  zone  as
   49  defined  in paragraph six of subdivision (b) of this section, the appli-
   50  cable percentage shall be increased  by  an  additional  eight  percent.
   51  Provided,  however,  as afforded in section 27-1419 of the environmental
   52  conservation law, if the certificate of completion  indicates  that  the
   53  qualified  site has been remediated to Track 1 as that term is described
   54  in subdivision four of section 27-1415 of the environmental conservation
   55  law, the applicable percentage set forth in the first sentence  of  this
   56  paragraph shall be increased by an additional two percent.
       S. 6359                            204                           A. 8559
    1    (B)  WITH  RESPECT  TO SUCH QUALIFIED SITE FOR WHICH THE DEPARTMENT OF
    2  ENVIRONMENTAL CONSERVATION HAS ISSUED A NOTICE TO  THE  TAXPAYER  ON  OR
    3  AFTER  JULY  FIRST,  TWO  THOUSAND FOURTEEN THAT ITS REQUEST FOR PARTIC-
    4  IPATION HAS BEEN ACCEPTED UNDER SUBDIVISION SIX OF  SECTION  27-1407  OF
    5  THE  ENVIRONMENTAL  CONSERVATION  LAW, THE APPLICABLE PERCENTAGE FOR THE
    6  TANGIBLE PROPERTY CREDIT COMPONENT OF THE BROWNFIELD  REDEVELOPMENT  TAX
    7  CREDIT  PURSUANT  TO  PARAGRAPH THREE OF SUBDIVISION (A) OF THIS SECTION
    8  SHALL BE THE SUM OF TEN PERCENT AND THE  FOLLOWING  ADDITIONAL  PERCENT-
    9  AGES, PROVIDED THAT THE TOTAL PERCENTAGE OF THE TANGIBLE PROPERTY CREDIT
   10  COMPONENT  SHALL NOT EXCEED TWENTY-FOUR PERCENT AND IS OTHERWISE SUBJECT
   11  TO THE LIMITATIONS SET FORTH IN PARAGRAPHS THREE AND THREE-A OF SUBDIVI-
   12  SION (A) OF THIS SECTION:
   13    (I) TEN PERCENT FOR A SITE WITHIN AN ENVIRONMENTAL ZONE;
   14    (II) FIVE PERCENT FOR A STRATEGIC SITE  LOCATED  WITHIN  A  DESIGNATED
   15  BROWNFIELD  OPPORTUNITY  AREA IF THE PROPOSED DEVELOPMENT OF THE SITE IS
   16  CERTIFIED TO BE IN CONFORMANCE WITH  SUCH  BROWNFIELD  OPPORTUNITY  AREA
   17  PLAN PURSUANT TO SECTION NINE HUNDRED SEVENTY-R OF THE GENERAL MUNICIPAL
   18  LAW; AND
   19    (III)  FIVE PERCENT FOR SITES DEVELOPED AS AFFORDABLE HOUSING, DEFINED
   20  AS HAVING AT LEAST TWENTY PERCENT OF ITS RESIDENTIAL UNITS SUBJECT TO AN
   21  AGREEMENT WITH A MUNICIPALITY, THE STATE, THE FEDERAL GOVERNMENT, OR  AN
   22  INSTRUMENTALITY  THEREOF,  WHERE  SUCH  AGREEMENT RESTRICTS OCCUPANCY OF
   23  THOSE UNITS TO RESIDENTS WHO QUALIFY IN ACCORDANCE WITH AN INCOME TEST.
   24    (C) THE TAXPAYER SHALL SUBMIT, IN THE MANNER PRESCRIBED BY THE COMMIS-
   25  SIONER, INFORMATION SUFFICIENT TO DEMONSTRATE THAT  THE  SITE  QUALIFIES
   26  FOR  ANY  CREDIT COMPONENTS AVAILABLE UNDER CLAUSES (I) THROUGH (III) OF
   27  SUBPARAGRAPH (B) OF THIS PARAGRAPH. IF THE SITE IS A  PRIORITY  ECONOMIC
   28  DEVELOPMENT PROJECT, THE TAXPAYER MUST ALSO DEMONSTRATE THAT THE PROJECT
   29  HAS BEEN APPROVED BY THE DEPARTMENT OF ECONOMIC DEVELOPMENT.
   30    S  26. Paragraph 6 of subdivision (a) of section 21 of the tax law, as
   31  amended by section 1 of part H of chapter 577 of the laws  of  2004,  is
   32  amended to read as follows:
   33    (6)  Site  preparation costs and on-site groundwater remediation costs
   34  paid [or incurred] by the taxpayer with respect to a qualified site  and
   35  the  cost  or  other  basis  for federal income tax purposes of tangible
   36  personal property and other tangible property, including  buildings  and
   37  structural  components of buildings, which constitute qualified tangible
   38  property shall only include costs paid [or incurred] by the taxpayer  on
   39  or  after  the date of the brownfield site cleanup agreement executed by
   40  the taxpayer and the department of environmental  conservation  pursuant
   41  to section 27-1409 of the environmental conservation law.
   42    S  27.  Paragraphs  2, 4 and 6 of subdivision (b) of section 21 of the
   43  tax law, as amended by section 1 of part H of chapter 577 of the laws of
   44  2004 and subparagraph (B) and the closing paragraph of  paragraph  6  as
   45  amended  by  section  1 of part G of chapter 62 of the laws of 2006, are
   46  amended to read as follows:
   47    (2) Site preparation costs. The term "site  preparation  costs"  shall
   48  mean all amounts properly [chargeable] CHARGED to a capital account, (i)
   49  which  are  paid [or incurred] in connection with a site's qualification
   50  for a certificate of completion AND ATTRIBUTABLE TO ACTIVITIES SPECIFIED
   51  IN A DECISION DOCUMENT ISSUED BY THE DEPARTMENT OF ENVIRONMENTAL CONSER-
   52  VATION UNDER SECTION 27-1411 OF THE ENVIRONMENTAL CONSERVATION  LAW  AND
   53  WHICH  MAY INCLUDE COSTS ATTRIBUTABLE TO ACTIVITIES UNDERTAKEN UNDER THE
   54  OVERSIGHT OF THE DEPARTMENT OF HEALTH OR  THE  DEPARTMENT  OF  LABOR  TO
   55  REMEDIATE REGULATED MATERIALS INCLUDING ASBESTOS, LEAD OR POLYCHLORINAT-
   56  ED  BIPHENYLS  IN BUILDINGS WHICH WILL REMAIN ON THE SITE, and (ii) WITH
       S. 6359                            205                           A. 8559
    1  RESPECT TO ANY QUALIFIED SITE FOR WHICH THE DEPARTMENT OF  ENVIRONMENTAL
    2  CONSERVATION  HAS ISSUED A NOTICE TO THE TAXPAYER BEFORE JULY FIRST, TWO
    3  THOUSAND FOURTEEN THAT ITS REQUEST FOR PARTICIPATION HAS  BEEN  ACCEPTED
    4  UNDER  SUBDIVISION SIX OF SECTION 27-1407 OF THE ENVIRONMENTAL CONSERVA-
    5  TION LAW, all  other  site  preparation  costs  paid  [or  incurred]  in
    6  connection  with  preparing  a  site for the erection of a building or a
    7  component of a building, or otherwise to establish a site as usable  for
    8  its  industrial,  commercial  (including  the  commercial development of
    9  residential housing), recreational or conservation purposes. [Site]  FOR
   10  PURPOSES  OF SUBPARAGRAPH (II) OF THIS PARAGRAPH, SITE preparation costs
   11  shall include, but not be limited to, the costs of excavation, temporary
   12  electric wiring, scaffolding, demolition costs, and the costs of fencing
   13  and security facilities. Site preparation costs shall  not  include  the
   14  cost of acquiring the site and shall not include amounts included in the
   15  cost  or other basis for federal income tax purposes of qualified tangi-
   16  ble property, as described  in  paragraph  three  of  this  subdivision.
   17  "SITE PREPARATION COSTS" SHALL NOT INCLUDE COSTS PAID TO A RELATED PARTY
   18  OR PARTIES, AS SUCH TERM "RELATED PERSON" IS DEFINED IN SUBPARAGRAPH (C)
   19  OF PARAGRAPH THREE OF SUBDIVISION (B) OF SECTION FOUR HUNDRED SIXTY-FIVE
   20  OF  THE  INTERNAL  REVENUE  CODE.    ELIGIBLE SITE PREPARATION COSTS ARE
   21  LIMITED TO COSTS DIRECTLY ASSOCIATED WITH ACTUAL SITE PREPARATION-RELAT-
   22  ED CONSTRUCTION.
   23    (4) On-site groundwater remediation costs. The term "on-site groundwa-
   24  ter remediation costs" shall  mean  all  amounts  properly  [chargeable]
   25  CHARGED  to  a  capital  account,  (i)  which  are paid [or incurred] in
   26  connection with a site's qualification for a certificate of  completion,
   27  and  (ii)  include costs which are paid [or incurred] in connection with
   28  the remediation of on-site groundwater contamination and [incurred] PAID
   29  to implement a requirement of the remedial work plan or an interim reme-
   30  dial measure work plan for a qualified site which are  imposed  pursuant
   31  to  subdivisions  two  and three of section 27-1411 of the environmental
   32  conservation law.   "ON-SITE GROUNDWATER REMEDIATION  COSTS"  SHALL  NOT
   33  INCLUDE  COSTS PAID TO A RELATED PARTY OR PARTIES, AS SUCH TERM "RELATED
   34  PERSON" IS DEFINED IN SUBPARAGRAPH (C) OF PARAGRAPH THREE OF SUBDIVISION
   35  (B) OF SECTION FOUR HUNDRED SIXTY-FIVE OF THE INTERNAL REVENUE CODE.  ON
   36  SITE GROUNDWATER REMEDIATION COSTS ARE LIMITED TO COSTS DIRECTLY ASSOCI-
   37  ATED WITH ACTUAL GROUNDWATER REMEDIATION ACTIVITIES.
   38    (6) Environmental zones (EN-Zones). An "environmental zone" shall mean
   39  an area designated as such by the commissioner of [economic development]
   40  LABOR.  Such areas so designated are areas which are census  tracts  and
   41  block  numbering  areas  which,  as  of  the  [two thousand] MOST RECENT
   42  census, satisfy either of the following criteria:
   43    (A) areas that have both:
   44    (i) a poverty rate of at least twenty percent for the  year  to  which
   45  the data relate; and
   46    (ii)  an  unemployment  rate of at least one and one-quarter times the
   47  statewide unemployment rate for the year to which the data relate, or;
   48    (B) areas that have a poverty rate of at least two times  the  poverty
   49  rate for the county in which the areas are located for the year to which
   50  the  data relate [provided, however, that a qualified site shall only be
   51  deemed to be located in an environmental zone  under  this  subparagraph
   52  (B)  if such site was the subject of a brownfield site cleanup agreement
   53  pursuant to section 27-1409 of the environmental conservation  law  that
   54  was entered into prior to September first, two thousand ten].
   55    Such  designation  shall  be made and a list of all such environmental
   56  zones shall be established by the commissioner of [economic development]
       S. 6359                            206                           A. 8559
    1  LABOR no later than [December thirty-first, two thousand four  provided,
    2  however,  that a qualified site shall only be deemed to be located in an
    3  environmental zone under subparagraph (B) of this paragraph if such site
    4  was  the  subject  of  a  brownfield  site cleanup agreement pursuant to
    5  section 27-1409 of the environmental conservation law that  was  entered
    6  into  prior  to September first, two thousand ten] NINETY DAYS FOLLOWING
    7  THE OFFICIAL PUBLICATION OF THE MOST RECENT CENSUS.
    8    S 28. Paragraph 2 of subdivision (b) of section 22 of the tax law,  as
    9  amended  by  section  4 of part H of chapter 577 of the laws of 2004, is
   10  amended to read as follows:
   11    (2) Amount of credit. The amount of the credit  shall  be  twenty-five
   12  percent  of  the  product  of  (i)  the  benefit period factor, (ii) the
   13  employment number factor, and (iii) the  eligible  real  property  taxes
   14  paid  [or  incurred]  by  the developer of the qualified site during the
   15  taxable year (or the pro rata share of such taxes in the case of a part-
   16  ner in a partnership or a shareholder in  a  New  York  S  corporation),
   17  except  that  if  the  real  property which is the subject of the credit
   18  provided for under this  section  is  attributed  to  a  qualified  site
   19  located  in an environmental zone as defined in paragraph five of subdi-
   20  vision (a) of this section, the amount of the credit shall be the  prod-
   21  uct  of the factors and taxes referred to in subparagraphs (i), (ii) and
   22  (iii) of this paragraph. However, the  amount  of  the  credit  may  not
   23  exceed the credit limitation set forth in paragraph seven of this subdi-
   24  vision.
   25    S 29. Section 171-r of the tax law is amended by adding a new subdivi-
   26  sion (e) to read as follows:
   27    (E)  THE  COMMISSIONER, IN CONSULTATION WITH THE COMMISSIONER OF ENVI-
   28  RONMENTAL CONSERVATION, SHALL PUBLISH BY JANUARY THIRTY-FIRST, TWO THOU-
   29  SAND FIFTEEN A SUPPLEMENTAL  BROWNFIELD  CREDIT  REPORT  CONTAINING  THE
   30  INFORMATION  REQUIRED  BY THIS SECTION ABOUT THE CREDITS CLAIMED FOR THE
   31  YEARS TWO THOUSAND FIVE, TWO THOUSAND SIX, AND TWO THOUSAND SEVEN.
   32    S 30. Section 171-s of the tax law is REPEALED.
   33    S 31. Section 970-r of the general municipal law is amended by  adding
   34  a new subdivision 10 to read as follows:
   35    10.  THE SECRETARY SHALL ESTABLISH CRITERIA FOR BROWNFIELD OPPORTUNITY
   36  AREA  CONFORMANCE  DETERMINATIONS FOR PURPOSES OF THE BROWNFIELD CLEANUP
   37  PROGRAM PURSUANT TO TITLE FOURTEEN OF ARTICLE TWENTY-SEVEN OF THE  ENVI-
   38  RONMENTAL  CONSERVATION LAW AND THE BROWNFIELD REDEVELOPMENT TAX CREDITS
   39  PURSUANT TO SECTION TWENTY-ONE OF THE TAX LAW.   IN ESTABLISHING  CRITE-
   40  RIA, THE SECRETARY SHALL BE GUIDED BY, BUT NOT LIMITED TO, THE FOLLOWING
   41  CONSIDERATIONS: HOW THE PROPOSED USE AND DEVELOPMENT ADVANCES THE DESIG-
   42  NATED  BROWNFIELD  OPPORTUNITY  AREA  PLAN'S VISION STATEMENT, GOALS AND
   43  OBJECTIVES FOR REVITALIZATION; HOW THE DENSITY OF DEVELOPMENT AND  ASSO-
   44  CIATED  BUILDINGS AND STRUCTURES ADVANCES THE PLAN'S OBJECTIVES, DESIRED
   45  REDEVELOPMENT  AND  PRIORITIES  FOR  INVESTMENT;  AND  HOW  THE  PROJECT
   46  COMPLIES  WITH  ZONING  AND  OTHER LOCAL LAWS AND STANDARDS TO GUIDE AND
   47  ENSURE APPROPRIATE USE OF THE PROJECT SITE.
   48    S 32. Section 31 of part H of chapter 1 of the laws of 2003,  amending
   49  the tax law relating to brownfield redevelopment tax credits, remediated
   50  brownfield  credit for real property taxes for qualified sites and envi-
   51  ronmental remediation insurance credits, as amended by  chapter  474  of
   52  the laws of 2012, is amended to read as follows:
   53    S  31. The tax credits allowed under section [21,] 22 or 23 of the tax
   54  law and the corresponding provisions in articles 9, 9-A, 22, 32  and  33
   55  of the tax law, as added by the provisions of sections one through twen-
   56  ty-nine  of  this act, shall not be applicable [if] TO ANY SITE ACCEPTED
       S. 6359                            207                           A. 8559
    1  INTO THE BROWNFIELD CLEANUP PROGRAM ON AND AFTER JULY 1, 2014.  THE  TAX
    2  CREDITS  ALLOWED  UNDER  SECTION 21 OF THE TAX LAW AND THE CORRESPONDING
    3  PROVISIONS IN ARTICLES 9, 9-A, 22, 32 AND 33 OF THE TAX LAW, AS ADDED BY
    4  THE  PROVISIONS  OF  SECTIONS ONE THROUGH TWENTY-NINE OF THIS ACT, SHALL
    5  NOT BE APPLICABLE TO ANY  SITE  ACCEPTED  INTO  THE  BROWNFIELD  CLEANUP
    6  PROGRAM  AFTER  DECEMBER  31,  2022,  PROVIDED,  HOWEVER  THAT ANY SITES
    7  ACCEPTED ON OR BEFORE DECEMBER 31, 2022 MUST HAVE RECEIVED the  [remedi-
    8  ation]  certificate  OF  COMPLETION  required to qualify for any of such
    9  credits [is issued after] BY December 31, [2015] 2025.
   10    S 33. Any site for which  a  brownfield  cleanup  agreement  with  the
   11  department  of  environmental conservation was entered into (1) prior to
   12  June 23, 2008 and which has not received a certificate of completion  by
   13  December  31, 2015 or (2) on or after June 23, 2008 and prior to July 1,
   14  2014 which has not received a certificate of completion by December  31,
   15  2017, shall be terminated from the brownfield cleanup program. If such a
   16  site  reapplies  for  acceptance into the brownfield cleanup program, it
   17  shall be accepted into the program subject to all  the  requirements  of
   18  title  14  of article 27 of the environmental conservation law in effect
   19  at the time of acceptance.
   20    S 34. Paragraph c of subdivision 3 of section 27-0923 of the  environ-
   21  mental  conservation  law,  as amended by section 5 of part I of chapter
   22  577 of the laws of 2004, is amended to read as follows:
   23    c. For the purpose of this  section,  generation  of  hazardous  waste
   24  shall not include retrieval or creation of hazardous waste which must be
   25  disposed  of under an order of or agreement with the department pursuant
   26  to title thirteen or title fourteen of this article or under a  contract
   27  OR  AGREEMENT  with  the  department  pursuant  to title five of article
   28  fifty-six of this chapter OR UNDER AN ORDER OF  OR  AGREEMENT  WITH  THE
   29  UNITED  STATES ENVIRONMENTAL PROTECTION AGENCY OR AN ORDER OF A COURT OF
   30  COMPETENT JURISDICTION, RELATED TO A FACILITY ADDRESSED PURSUANT TO  THE
   31  COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT (42
   32  U.S.C.  9601  ET  SEQ.) OR UNDER A WRITTEN AGREEMENT WITH A MUNICIPALITY
   33  WHICH IS SUBJECT TO  A  MEMORANDUM  OF  AGREEMENT  WITH  THE  DEPARTMENT
   34  RELATED TO THE REMEDIATION OF BROWNFIELD SITES.
   35    S  35.  Subparagraphs  (i) and (vi) of paragraph d of subdivision 1 of
   36  section 72-0402 of the environmental conservation  law,  as  amended  by
   37  chapter 99 of the laws of 2010, are amended to read as follows:
   38    (i)  under  a  contract  with the department, or with the department's
   39  written approval and  in  compliance  with  department  regulations,  or
   40  pursuant  to an order of the department, the United States environmental
   41  protection agency or a court OF COMPETENT JURISDICTION, related  to  the
   42  cleanup  or  remediation  of  a  hazardous  materials or hazardous waste
   43  spill, discharge, or surficial cleanup, pursuant to this chapter; or
   44    (vi) under a brownfield site cleanup  agreement  with  the  department
   45  pursuant to section 27-1409 of this chapter OR UNDER AN AGREEMENT WITH A
   46  MUNICIPALITY  WHICH  IS  SUBJECT  TO  A MEMORANDUM OF AGREEMENT WITH THE
   47  DEPARTMENT RELATED TO THE REMEDIATION OF BROWNFIELD SITES; or
   48    S 36. Subdivision 1 of section 1285-q of the public  authorities  law,
   49  as  added  by  section  6 of part I of chapter 1 of the laws of 2003, is
   50  amended to read as follows:
   51    1. Subject to chapter fifty-nine of the  laws  of  two  thousand,  but
   52  notwithstanding any other provisions of law to the contrary, in order to
   53  assist the corporation in undertaking the administration and the financ-
   54  ing  of  hazardous  waste  site  remediation projects for payment of the
   55  state's share of the costs of the remediation of hazardous waste  sites,
   56  in  accordance  with title thirteen of article twenty-seven of the envi-
       S. 6359                            208                           A. 8559
    1  ronmental conservation law  and  section  ninety-seven-b  of  the  state
    2  finance  law, and for payment of state costs associated with the remedi-
    3  ation of offsite contamination at significant threat sites  as  provided
    4  in  section 27-1411 of the environmental conservation law, AND FOR ENVI-
    5  RONMENTAL RESTORATION PROJECTS PURSUANT TO TITLE FIVE OF ARTICLE  FIFTY-
    6  SIX  OF THE ENVIRONMENTAL CONSERVATION LAW pursuant to capital appropri-
    7  ations  made  to  the  department  of  environmental  conservation,  the
    8  director  of the division of budget and the corporation are each author-
    9  ized to enter into one or more service contracts, none  of  which  shall
   10  exceed  twenty  years in duration, upon such terms and conditions as the
   11  director and the corporation may agree, so as to annually provide to the
   12  corporation in the aggregate, a  sum  not  to  exceed  the  annual  debt
   13  service  payments  and related expenses required for any bonds and notes
   14  authorized pursuant to section twelve hundred ninety of this title.  Any
   15  service  contract  entered  into  pursuant to this section shall provide
   16  that the obligation of the state to fund or to pay the  amounts  therein
   17  provided for shall not constitute a debt of the state within the meaning
   18  of  any constitutional or statutory provision and shall be deemed execu-
   19  tory only to the extent of moneys available for such  purposes,  subject
   20  to annual appropriation by the legislature. Any such service contract or
   21  any  payments  made or to be made thereunder may be assigned and pledged
   22  by the corporation as security for its bonds and  notes,  as  authorized
   23  pursuant to section twelve hundred ninety of this title.
   24    S  37. Section 56-0501 of the environmental conservation law, as added
   25  by chapter 413 of the laws of 1996, is amended to read as follows:
   26  S 56-0501. Allocation of moneys.
   27    1. Of the moneys received by the state from the sale of bonds pursuant
   28  to the Clean Water/Clean Air Bond  Act  of  1996,  two  hundred  million
   29  dollars ($200,000,000) shall be available for disbursements for environ-
   30  mental restoration projects.
   31    2. ENVIRONMENTAL RESTORATION PROJECTS MAY BE FUNDED USING THE PROCEEDS
   32  OF  BONDS ISSUED PURSUANT TO SECTION TWELVE HUNDRED EIGHTY-FIVE-Q OF THE
   33  PUBLIC AUTHORITIES LAW.
   34    S 38. Subdivision 6 of section 56-0502 of the environmental  conserva-
   35  tion  law,  as amended by section 2 of part D of chapter 577 of the laws
   36  of 2004, is amended to read as follows:
   37    6. "State assistance", for purposes of this title, shall mean  in  the
   38  case  of  a contract authorized by subdivision one of section 56-0503 of
   39  this title, payments made to a municipality  to  reimburse  the  munici-
   40  pality  for the state share of the costs incurred by the municipality to
   41  undertake an environmental restoration project OR  IN  THE  CASE  OF  AN
   42  AGREEMENT  AUTHORIZED  BY  SUBDIVISION  THREE OF SECTION 56-0503 OF THIS
   43  TITLE, COSTS INCURRED BY THE STATE TO UNDERTAKE AN ENVIRONMENTAL  RESTO-
   44  RATION PROJECT BUT NOT REIMBURSED BY A MUNICIPALITY.
   45    S  39.  Paragraph (c) of subdivision 2 of section 56-0503 of the envi-
   46  ronmental conservation law, as amended by section 4 of part D of chapter
   47  1 of the laws of 2003, is amended and a new subdivision 3  is  added  to
   48  read as follows:
   49    (c)  A  provision  that THE MUNICIPALITY SHALL ASSIST IN IDENTIFYING A
   50  RESPONSIBLE PARTY BY SEARCHING LOCAL  RECORDS,  INCLUDING  PROPERTY  TAX
   51  ROLLS,  OR  DOCUMENT  REVIEWS,  AND  if, in accordance with the required
   52  departmental approval of any settlement with a  responsible  party,  any
   53  responsible party payments become available to the municipality, before,
   54  during  or after the completion of an environmental restoration project,
   55  which were not included when the state share was calculated pursuant  to
   56  this  section, the state assistance share shall be recalculated, and the
       S. 6359                            209                           A. 8559
    1  municipality shall pay to the state, for deposit into the  environmental
    2  restoration  project account of the hazardous waste remedial fund estab-
    3  lished under section  ninety-seven-b  of  the  state  finance  law,  the
    4  difference  between the original state assistance payment and the recal-
    5  culated state share. Recalculation of the state share shall be done each
    6  time a payment from a responsible party is received by the municipality;
    7    3. THE DEPARTMENT MAY UNDERTAKE AN ENVIRONMENTAL  RESTORATION  PROJECT
    8  ON  BEHALF OF A MUNICIPALITY UPON REQUEST.  IF THE DEPARTMENT UNDERTAKES
    9  THE PROJECT ON BEHALF OF THE MUNICIPALITY, THE STATE SHALL ENTER INTO AN
   10  AGREEMENT WITH THE MUNICIPALITY AND  THE  AGREEMENT  SHALL  REQUIRE  THE
   11  MUNICIPALITY  TO  PERIODICALLY  PROVIDE ITS SHARE TO THE STATE FOR COSTS
   12  INCURRED DURING THE PROGRESS OF SUCH PROJECT. THE  MUNICIPALITY'S  SHARE
   13  SHALL  BE  THE  SAME  AS WOULD BE REQUIRED UNDER SUBDIVISION ONE OF THIS
   14  SECTION. THE AGREEMENT SHALL INCLUDE ALL PROVISIONS SPECIFIED IN  SUBDI-
   15  VISION  TWO  OF  THIS SECTION AS APPROPRIATE.   FOR PURPOSES OF PROJECTS
   16  SUBJECT  TO  AGREEMENTS  UNDER  THIS  SUBDIVISION,  ALL  REFERENCES   TO
   17  CONTRACTS IN THIS TITLE SHALL ALSO APPLY TO AGREEMENTS UNDER THIS SUBDI-
   18  VISION AS APPROPRIATE.
   19    S  40. Subdivision 4 of section 56-0505 of the environmental conserva-
   20  tion law, as amended by section 5 of part D of chapter 1 of the laws  of
   21  2003, is amended to read as follows:
   22    4.  After  completion  of  such  project, the municipality may use the
   23  property for public purposes or may dispose of it. If  the  municipality
   24  shall  dispose  of  such  property  by sale to a responsible party, such
   25  party shall pay to such municipality, in addition to such other  consid-
   26  eration,  an amount of money constituting the amount of state assistance
   27  provided [to the municipality] under this title  plus  accrued  interest
   28  and transaction costs and the municipality shall deposit that money into
   29  the  environmental  restoration  project  account of the hazardous waste
   30  remedial fund established under  section  ninety-seven-b  of  the  state
   31  finance law.
   32    S  41.  Subdivisions  3  and 4 of section 56-0508 of the environmental
   33  conservation law, as added by section 7 of part D of chapter  1  of  the
   34  laws of 2003, are amended to read as follows:
   35    3. such temporary incidents of ownership by such taxing district shall
   36  also qualify it as being the owner of such property [for the purposes of
   37  obtaining]  TO  BE  ELIGIBLE  FOR funding from the state of New York for
   38  such environmental restoration investigation project under this  article
   39  or  for such funding from any source pursuant to any other state, feder-
   40  al, or local law, but such incidents of ownership shall  not  be  suffi-
   41  cient  to  qualify  it as the owner of such property for the purposes of
   42  holding it wholly or partially liable for any damages, past, present, or
   43  future from any release of any hazardous material, substance, or contam-
   44  inant into the air, ground, or water, unless such release was caused  by
   45  such taxing district.
   46    4.  within thirty days of the completion of the environmental restora-
   47  tion investigation project and the receipt by the taxing jurisdiction of
   48  the final report of such investigation, such taxing  jurisdiction  shall
   49  file  such  report  with  the court on notice to the court and all other
   50  parties of record, and the stay  of  the  foreclosure  shall  be  lifted
   51  (unless  lifted  earlier  by  a prior court order), and all incidents of
   52  temporary ownership of the taxing jurisdiction  that  was  awarded  such
   53  taxing  district, except any right [to receive funding] for the environ-
   54  mental restoration investigation project TO BE FUNDED,  shall  cease  to
   55  exist,  and nothing in this subdivision shall preclude the taxing juris-
   56  diction  that  conducted  the  environmental  restoration  investigation
       S. 6359                            210                           A. 8559
    1  project  or  the  taxing  jurisdiction  that  commenced  the foreclosure
    2  action, if it is a different taxing jurisdiction than the taxing  juris-
    3  diction  which  conducted the investigation, from withdrawing the parcel
    4  from  foreclosure pursuant to section eleven hundred thirty-eight of the
    5  real property tax law.
    6    S 42. Subdivision 2 and paragraph (f) of subdivision 3 of section 97-b
    7  of the state finance law, as amended by section 4 of part I of chapter 1
    8  of the laws of 2003, are amended to read as follows:
    9    2. Such fund shall consist of all of the following:
   10    (a) moneys appropriated for transfer to the fund's site  investigation
   11  and  construction  account;  (b) all fines and other sums accumulated in
   12  the fund prior to April first, nineteen hundred eighty-eight pursuant to
   13  section 71-2725 of the environmental conservation law for deposit in the
   14  fund's site investigation  and  construction  account;  (c)  all  moneys
   15  collected or received by the department of taxation and finance pursuant
   16  to  section 27-0923 of the environmental conservation law for deposit in
   17  the fund's industry fee transfer account; (d) all moneys paid  into  the
   18  fund  pursuant  to section 72-0201 of the environmental conservation law
   19  which shall be deposited in the fund's industry  fee  transfer  account;
   20  (e) all moneys paid into the fund pursuant to section one hundred eight-
   21  y-six  of  the  navigation  law  which  shall be deposited in the fund's
   22  industry fee transfer account; (f) [all moneys paid  into  the  fund  by
   23  municipalities  for repayment of landfill closure loans made pursuant to
   24  title five of article fifty-two of the  environmental  conservation  law
   25  for  deposit  in the fund's site investigation and construction account;
   26  (g)] all monies recovered under sections 56-0503, 56-0505 and 56-0507 of
   27  the environmental conservation law into the fund's environmental  resto-
   28  ration  project  account; [(h) all] (G) fees paid into the fund pursuant
   29  to section [72-0403] 72-0402 of the environmental conservation law which
   30  shall be deposited in the fund's industry fee  transfer  account;  [(i)]
   31  (H)  payments  received  for all state costs incurred in negotiating and
   32  overseeing the implementation  of  brownfield  site  cleanup  agreements
   33  pursuant  to title fourteen OF ARTICLE TWENTY-SEVEN of the environmental
   34  conservation law shall be deposited in the hazardous  waste  remediation
   35  oversight and assistance account; and [(j)] (I) other moneys credited or
   36  transferred  thereto  from  any  other fund or source for deposit in the
   37  fund's site investigation and construction account.
   38    (f) to undertake such remedial measures as the department of  environ-
   39  mental  conservation may determine necessary due to environmental condi-
   40  tions related to the property subject to an agreement [to provide  state
   41  assistance]  OR  CONTRACT  under  title five of article fifty-six of the
   42  environmental conservation law [that were unknown to such department  at
   43  the  time  of its approval of such agreement which indicates that condi-
   44  tions on such property are not sufficiently protective of  human  health
   45  for  its  reasonably anticipated uses or due to information received, in
   46  whole or in part, after such department's approval of  such  agreement's
   47  final  engineering  report and certification], which indicates that such
   48  agreement's remedial activities are not sufficiently protective of human
   49  health for such property's reasonably anticipated uses; and, [respecting
   50  the monies in the environmental restoration project account in excess of
   51  ten million dollars,] shall provide state assistance under title five of
   52  article fifty-six of the environmental conservation law;
   53    S 43. Severability. If any clause, sentence,  paragraph,  subdivision,
   54  section  or part of this act shall be adjudged by any court of competent
   55  jurisdiction to be invalid, such judgment shall not  affect,  impair  or
   56  invalidate the remainder thereof, but shall be confined in its operation
       S. 6359                            211                           A. 8559
    1  to the clause, sentence, paragraph, subdivision, section or part thereof
    2  directly  involved  in the controversy in which such judgment shall have
    3  been rendered. It is hereby declared to be the intent of the legislature
    4  that  this  act  would have been enacted even if such invalid provisions
    5  had not been included herein.
    6    S 44. This act shall take effect July 1, 2014; provided, however, that
    7  the department of environmental conservation shall not charge volunteers
    8  in the brownfield cleanup program for oversight costs for any  sites  in
    9  the program incurred on or after July 1, 2014.
   10                                   PART R
   11    Section  1.  Section 208 of the tax law is amended by adding three new
   12  subdivisions 13, 14 and 15 to read as follows:
   13    13. THE TERM "MANUFACTURER" MEANS A TAXPAYER OR,  IN  THE  CASE  OF  A
   14  COMBINED  REPORT,  A  COMBINED  GROUP, THAT, DURING THE TAXABLE YEAR, IS
   15  PRINCIPALLY ENGAGED IN MANUFACTURING. A TAXPAYER OR A COMBINED GROUP  IS
   16  PRINCIPALLY  ENGAGED  IN MANUFACTURING IF MORE THAN FIFTY PERCENT OF THE
   17  GROSS RECEIPTS OF THE TAXPAYER  OR  THE  COMBINED  GROUP,  RESPECTIVELY,
   18  DURING  THE  TAXABLE YEAR ARE DERIVED FROM THE SALE OF GOODS PRODUCED BY
   19  MANUFACTURING. IN COMPUTING A COMBINED GROUP'S GROSS RECEIPTS, INTERCOR-
   20  PORATE RECEIPTS SHALL BE ELIMINATED. IN COMPUTING GROSS RECEIPTS  FOR  A
   21  TAXPAYER THAT IS A PARTNER IN PARTNERSHIP, INTER-ENTITY RECEIPTS BETWEEN
   22  THE TAXPAYER AND SUCH PARTNERSHIP SHALL BE ELIMINATED.
   23    14.  (A)  THE  TERM  "MANUFACTURING"  MEANS THE PROCESS OF WORKING RAW
   24  MATERIALS INTO WARES SUITABLE FOR USE OR WHICH  GIVES  NEW  SHAPES,  NEW
   25  QUALITY  OR  NEW  COMBINATIONS  TO MATTER WHICH ALREADY HAS GONE THROUGH
   26  SOME ARTIFICIAL PROCESS BY THE USE OF MACHINERY, TOOLS,  APPLIANCES  AND
   27  OTHER SIMILAR EQUIPMENT.
   28    (B)  NOTWITHSTANDING  THE DEFINITION OF MANUFACTURING IN PARAGRAPH (A)
   29  OF THIS SUBDIVISION:
   30    (I) THE GENERATION AND DISTRIBUTION OF ELECTRICITY, THE EXTRACTION AND
   31  DISTRIBUTION OF NATURAL GAS, AND THE PRODUCTION OF STEAM ASSOCIATED WITH
   32  THE GENERATION OF ELECTRICITY DOES NOT CONSTITUTE MANUFACTURING.
   33    (II) THE CREATION, PRODUCTION OR REPRODUCTION OF  A  FILM,  TELEVISION
   34  SHOW OR COMMERCIAL DOES NOT CONSTITUTE MANUFACTURING.
   35    (III)  THE  BLENDING OF TWO OR MORE FUELS DOES NOT CONSTITUTE MANUFAC-
   36  TURING.
   37    (IV) THE MASS PRODUCTION OF FOOD  PRODUCTS  FOR  WHOLESALE  COMMERCIAL
   38  DISTRIBUTION AND SALE CONSTITUTES MANUFACTURING.
   39    15.  THE  TERM  "QUALIFIED NEW YORK MANUFACTURER" MEANS A MANUFACTURER
   40  THAT HAS PROPERTY IN THE STATE THAT IS USED IN MANUFACTURING AND  EITHER
   41  THE  FAIR MARKET VALUE OF THAT PROPERTY AT THE CLOSE OF THE TAXABLE YEAR
   42  IS AT LEAST TEN MILLION DOLLARS OR ALL OF ITS REAL AND PERSONAL PROPERTY
   43  IS LOCATED IN NEW YORK. A TAXPAYER OR, IN THE CASE OF A COMBINED REPORT,
   44  A COMBINED GROUP, THAT DOES NOT  SATISFY  THE  CRITERIA  IN  SUBDIVISION
   45  THIRTEEN OF THIS SECTION MAY BE A QUALIFIED NEW YORK MANUFACTURER IF THE
   46  TAXPAYER  OR THE COMBINED GROUP EMPLOYS DURING THE TAXABLE YEAR AT LEAST
   47  TWO THOUSAND FIVE HUNDRED EMPLOYEES IN MANUFACTURING IN NEW YORK AND THE
   48  TAXPAYER OR THE COMBINED GROUP HAS PROPERTY IN THE STATE USED  IN  MANU-
   49  FACTURING,  THE  ADJUSTED BASIS OF WHICH FOR FEDERAL INCOME TAX PURPOSES
   50  AT THE CLOSE OF THE  TAXABLE  YEAR  IS  AT  LEAST  ONE  HUNDRED  MILLION
   51  DOLLARS.
   52    S 2. Section 210 of the tax law is amended by adding a new subdivision
   53  48 to read as follows:
       S. 6359                            212                           A. 8559
    1    48.  REAL  PROPERTY  TAX CREDIT FOR MANUFACTURERS. (A) A QUALIFIED NEW
    2  YORK MANUFACTURER, AS DEFINED IN  SUBDIVISION  FIFTEEN  OF  SECTION  TWO
    3  HUNDRED  EIGHT OF THIS ARTICLE, WILL BE ALLOWED A CREDIT EQUAL TO TWENTY
    4  PERCENT OF THE REAL PROPERTY TAX IT PAID DURING  THE  TAXABLE  YEAR  FOR
    5  REAL  PROPERTY  OWNED BY SUCH MANUFACTURER IN NEW YORK WHICH WAS PRINCI-
    6  PALLY USED DURING THE TAXABLE YEAR FOR MANUFACTURING TO THE  EXTENT  NOT
    7  DEDUCTED  IN  DETERMINING  ENTIRE  NET  INCOME.  THIS CREDIT WILL NOT BE
    8  ALLOWED IF THE REAL PROPERTY TAXES THAT ARE THE BASIS  FOR  THIS  CREDIT
    9  ARE INCLUDED IN THE CALCULATION OF ANOTHER CREDIT CLAIMED BY THE TAXPAY-
   10  ER.
   11    (B) FOR PURPOSES OF THIS SUBDIVISION, THE TERM REAL PROPERTY TAX MEANS
   12  A  CHARGE  IMPOSED UPON REAL PROPERTY BY OR ON BEHALF OF A COUNTY, CITY,
   13  TOWN, VILLAGE OR  SCHOOL  DISTRICT  FOR  MUNICIPAL  OR  SCHOOL  DISTRICT
   14  PURPOSES,  PROVIDED  THAT  THE  CHARGE  IS LEVIED FOR THE GENERAL PUBLIC
   15  WELFARE BY THE PROPER TAXING AUTHORITIES AT  A  LIKE  RATE  AGAINST  ALL
   16  PROPERTY  OVER  WHICH  SUCH  AUTHORITIES HAVE JURISDICTION, AND PROVIDED
   17  THAT WHERE TAXES ARE LEVIED PURSUANT TO ARTICLE EIGHTEEN OR NINETEEN  OF
   18  THE REAL PROPERTY TAX LAW, THE PROPERTY MUST HAVE BEEN TAXED AT THE RATE
   19  DETERMINED  FOR  THE CLASS IN WHICH IT IS CONTAINED, AS PROVIDED BY SUCH
   20  ARTICLE EIGHTEEN OR NINETEEN, WHICHEVER IS  APPLICABLE.  THE  TERM  REAL
   21  PROPERTY TAX DOES NOT INCLUDE A CHARGE FOR LOCAL BENEFITS, INCLUDING ANY
   22  PORTION OF THAT CHARGE THAT IS PROPERLY ALLOCATED TO THE COSTS ATTRIBUT-
   23  ABLE  TO  MAINTENANCE  OR INTEREST, WHEN (1) THE PROPERTY SUBJECT TO THE
   24  CHARGE IS LIMITED TO THE PROPERTY THAT BENEFITS FROM THE CHARGE, OR  (2)
   25  THE  AMOUNT  OF  THE CHARGE IS DETERMINED BY THE BENEFIT TO THE PROPERTY
   26  ASSESSED, OR (3) THE IMPROVEMENT FOR WHICH THE CHARGE IS ASSESSED  TENDS
   27  TO  INCREASE  THE  PROPERTY  VALUE.  THE TERM REAL PROPERTY TAX DOES NOT
   28  INCLUDE A PAYMENT IN LIEU OF  TAXES  MADE  BY  THE  QUALIFIED  NEW  YORK
   29  MANUFACTURER.
   30    (C)  CREDIT  RECAPTURE. WHERE A QUALIFIED NEW YORK MANUFACTURER'S REAL
   31  PROPERTY TAXES WHICH WERE THE BASIS FOR  THE  ALLOWANCE  OF  THE  CREDIT
   32  PROVIDED FOR UNDER THIS SUBDIVISION ARE SUBSEQUENTLY REDUCED AS A RESULT
   33  OF A FINAL ORDER IN ANY PROCEEDING UNDER ARTICLE SEVEN OF THE REAL PROP-
   34  ERTY  TAX LAW OR OTHER PROVISION OF LAW, THE TAXPAYER SHALL ADD BACK, IN
   35  THE TAXABLE YEAR IN WHICH SUCH FINAL ORDER IS ISSUED, THE EXCESS OF  (1)
   36  THE  AMOUNT OF CREDIT ORIGINALLY ALLOWED FOR A TAXABLE YEAR OVER (2) THE
   37  AMOUNT OF CREDIT DETERMINED BASED UPON THE REDUCED REAL PROPERTY  TAXES.
   38  IF  SUCH FINAL ORDER REDUCES REAL PROPERTY TAXES FOR MORE THAN ONE YEAR,
   39  THE TAXPAYER MUST DETERMINE HOW MUCH OF SUCH REDUCTION  IS  ATTRIBUTABLE
   40  TO  EACH  YEAR  COVERED  BY SUCH FINAL ORDER AND CALCULATE THE AMOUNT OF
   41  CREDIT WHICH IS REQUIRED BY THIS SUBDIVISION TO BE RECAPTURED  FOR  EACH
   42  YEAR BASED ON SUCH REDUCTION.
   43    (D)  THE  CREDIT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
   44  SHALL NOT REDUCE THE TAX DUE FOR SUCH  YEAR  TO  LESS  THAN  THE  AMOUNT
   45  PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF THIS SECTION. HOWEVER,
   46  ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREAT-
   47  ED  AS  AN  OVERPAYMENT  OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE
   48  WITH THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS  CHAPTER.
   49  PROVIDED, HOWEVER, THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOU-
   50  SAND  EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE
   51  PAID THEREON.
   52    S 3. Subparagraph (B) of paragraph 1 of subsection (i) of section  606
   53  of  the  tax  law  is amended by adding a new clause (xxxvii) to read as
   54  follows:
   55  (XXXVII) REAL PROPERTY TAX            AMOUNT OF CREDIT UNDER
       S. 6359                            213                           A. 8559
    1  CREDIT FOR MANUFACTURERS UNDER        SUBDIVISION FORTY-EIGHT OF
    2  SUBSECTION (XX)                       SECTION TWO HUNDRED TEN
    3    S  4.  Subsections  (yy)  and  (zz)  of section 606 of the tax law, as
    4  relettered by section 5 of part H of chapter 1 of the laws of 2003,  are
    5  relettered  subsections  (yyy)  and  (zzz)  and a new subsection (xx) is
    6  added to read as follows:
    7    (XX) REAL PROPERTY TAX CREDIT FOR MANUFACTURERS. (1) A  QUALIFIED  NEW
    8  YORK  MANUFACTURER  WILL  BE ALLOWED A CREDIT EQUAL TO TWENTY PERCENT OF
    9  THE REAL PROPERTY TAX IT PAID DURING THE TAXABLE YEAR FOR REAL  PROPERTY
   10  OWNED BY SUCH MANUFACTURER IN NEW YORK WHICH WAS PRINCIPALLY USED DURING
   11  THE TAXABLE YEAR FOR MANUFACTURING TO THE EXTENT NOT DEDUCTED IN COMPUT-
   12  ING  FEDERAL  ADJUSTED  GROSS INCOME. THIS CREDIT WILL NOT BE ALLOWED IF
   13  THE REAL PROPERTY TAXES THAT ARE THE BASIS FOR THIS CREDIT ARE  INCLUDED
   14  IN THE CALCULATION OF ANOTHER CREDIT CLAIMED BY THE TAXPAYER.
   15    (2)(A)  THE  TERM QUALIFIED NEW YORK MANUFACTURER HAS THE SAME MEANING
   16  AS UNDER SUBPARAGRAPH (B) OF PARAGRAPH TWO OF  SUBSECTION  (A)  OF  THIS
   17  SECTION.
   18    (B)  THE TERM REAL PROPERTY TAX MEANS A CHARGE IMPOSED UPON REAL PROP-
   19  ERTY BY OR ON BEHALF OF A COUNTY, CITY, TOWN, VILLAGE OR SCHOOL DISTRICT
   20  FOR MUNICIPAL OR SCHOOL DISTRICT PURPOSES, PROVIDED THAT THE  CHARGE  IS
   21  LEVIED  FOR  THE GENERAL PUBLIC WELFARE BY THE PROPER TAXING AUTHORITIES
   22  AT A LIKE RATE AGAINST ALL PROPERTY OVER  WHICH  SUCH  AUTHORITIES  HAVE
   23  JURISDICTION, AND PROVIDED THAT WHERE TAXES ARE LEVIED PURSUANT TO ARTI-
   24  CLE EIGHTEEN OR NINETEEN OF THE REAL PROPERTY TAX LAW, THE PROPERTY MUST
   25  HAVE  BEEN  TAXED  AT  THE  RATE DETERMINED FOR THE CLASS IN WHICH IT IS
   26  CONTAINED, AS PROVIDED BY SUCH ARTICLE EIGHTEEN OR  NINETEEN,  WHICHEVER
   27  IS  APPLICABLE. THE TERM REAL PROPERTY TAX DOES NOT INCLUDE A CHARGE FOR
   28  LOCAL BENEFITS, INCLUDING ANY PORTION OF THAT CHARGE  THAT  IS  PROPERLY
   29  ALLOCATED TO THE COSTS ATTRIBUTABLE TO MAINTENANCE OR INTEREST, WHEN (I)
   30  THE PROPERTY SUBJECT TO THE CHARGE IS LIMITED TO THE PROPERTY THAT BENE-
   31  FITS  FROM THE CHARGE, OR (II) THE AMOUNT OF THE CHARGE IS DETERMINED BY
   32  THE BENEFIT TO THE PROPERTY ASSESSED, OR (III) THE IMPROVEMENT FOR WHICH
   33  THE CHARGE IS ASSESSED TENDS TO INCREASE THE PROPERTY  VALUE.  THE  TERM
   34  REAL  PROPERTY  TAX  DOES NOT INCLUDE A PAYMENT IN LIEU OF TAXES MADE BY
   35  THE QUALIFIED NEW YORK MANUFACTURER.
   36    (3) CREDIT RECAPTURE. WHERE A QUALIFIED NEW YORK  MANUFACTURER'S  REAL
   37  PROPERTY  TAXES  WHICH  WERE  THE  BASIS FOR THE ALLOWANCE OF THE CREDIT
   38  PROVIDED FOR UNDER THIS SUBDIVISION ARE SUBSEQUENTLY REDUCED AS A RESULT
   39  OF A FINAL ORDER IN ANY PROCEEDING UNDER ARTICLE SEVEN OF THE REAL PROP-
   40  ERTY TAX LAW OR OTHER PROVISION OF LAW, THE TAXPAYER SHALL ADD BACK,  IN
   41  THE  TAXABLE YEAR IN WHICH SUCH FINAL ORDER IS ISSUED, THE EXCESS OF (I)
   42  THE AMOUNT OF CREDIT ORIGINALLY ALLOWED FOR A TAXABLE YEAR OVER (II) THE
   43  AMOUNT OF CREDIT DETERMINED BASED UPON THE REDUCED REAL PROPERTY  TAXES.
   44  IF  SUCH FINAL ORDER REDUCES REAL PROPERTY TAXES FOR MORE THAN ONE YEAR,
   45  THE TAXPAYER MUST DETERMINE HOW MUCH OF SUCH REDUCTION  IS  ATTRIBUTABLE
   46  TO  EACH  YEAR  COVERED  BY SUCH FINAL ORDER AND CALCULATE THE AMOUNT OF
   47  CREDIT WHICH IS REQUIRED BY THIS SUBDIVISION TO BE RECAPTURED  FOR  EACH
   48  YEAR BASED ON SUCH REDUCTION.
   49    (4)  IF THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBSECTION FOR ANY
   50  TAXABLE YEAR EXCEEDS THE TAXPAYER'S TAX FOR SUCH YEAR, THE  EXCESS  WILL
   51  BE  TREATED  AS  AN OVERPAYMENT TO BE CREDITED OR REFUNDED IN ACCORDANCE
   52  WITH THE PROVISIONS OF SECTION SIX HUNDRED EIGHTY-SIX OF  THIS  ARTICLE,
   53  PROVIDED HOWEVER, NO INTEREST WILL BE PAID THEREON.
   54    S 5. Paragraph (b) of subdivision 12 of section 210 of the tax law, as
   55  amended  by chapter 817 of the laws of 1987, subparagraph (i) as amended
       S. 6359                            214                           A. 8559
    1  by chapter 637 of the laws of 2008 and clause (E) of  subparagraph  (ii)
    2  as  added  by  chapter  393  of  the laws of 2005, is amended to read as
    3  follows:
    4    (b)  (i)  A credit shall be allowed under this subdivision TO A QUALI-
    5  FIED NEW YORK MANUFACTURER, A QUALIFIED NEW YORK  AGRICULTURAL  BUSINESS
    6  OR  A  QUALIFIED  NEW  YORK  MINING  BUSINESS  with  respect to tangible
    7  personal property and other tangible property, including  buildings  and
    8  structural  components of buildings, which (A) are[:] depreciable pursu-
    9  ant to section one hundred sixty-seven of the internal revenue code, (B)
   10  have a useful life of four years or more, (C) are acquired  by  purchase
   11  as  defined  in  section  one  hundred  seventy-nine (d) of the internal
   12  revenue code, (D) HAVE NOT BEEN PREVIOUSLY THE SUBJECT OF AN  INVESTMENT
   13  TAX CREDIT OR EMPIRE ZONE INVESTMENT TAX CREDIT ALLOWED UNDER THIS CHAP-
   14  TER  TO  ANOTHER  TAXPAYER,  (E) have a situs in this state, and (F) are
   15  [(A)] principally used by the taxpayer in the production  of  goods  [by
   16  manufacturing,  processing,  assembling,  refining,  mining, extracting,
   17  farming, agriculture, horticulture, floriculture, viticulture or commer-
   18  cial fishing, (B) industrial waste treatment facilities or air pollution
   19  control facilities, used in the taxpayer's trade or business,  (C)]  FOR
   20  SALE  OR ARE research and development property[, (D) principally used in
   21  the ordinary course of the taxpayer's trade or business as a  broker  or
   22  dealer  in connection with the purchase or sale (which shall include but
   23  not be limited to  the  issuance,  entering  into,  assumption,  offset,
   24  assignment,  termination, or transfer) of stocks, bonds or other securi-
   25  ties as defined in section  four  hundred  seventy-five  (c)(2)  of  the
   26  Internal  Revenue  Code,  or  of  commodities as defined in section four
   27  hundred seventy-five (e) of the Internal Revenue Code,  (E)  principally
   28  used  in  the  ordinary  course  of  the taxpayer's trade or business of
   29  providing investment advisory services for a regulated investment compa-
   30  ny as defined in section eight hundred fifty-one of the Internal Revenue
   31  Code, or lending, loan  arrangement  or  loan  origination  services  to
   32  customers  in  connection with the purchase or sale (which shall include
   33  but not be limited to the issuance, entering into,  assumption,  offset,
   34  assignment,  termination,  or  transfer)  of  securities  as  defined in
   35  section four hundred seventy-five (c)(2) of the Internal  Revenue  Code,
   36  (F)  principally  used in the ordinary course of the taxpayer's business
   37  as an exchange registered as a national securities exchange  within  the
   38  meaning  of  sections 3(a)(1) and 6(a) of the Securities Exchange Act of
   39  1934 or a board of trade as defined in section  1410(a)(1)  of  the  New
   40  York Not-for-Profit Corporation Law or as an entity that is wholly owned
   41  by one or more such national securities exchanges or boards of trade and
   42  that  provides  automation or technical services thereto, or (G) princi-
   43  pally used as a qualified film production facility  including  qualified
   44  film  production  facilities having a situs in an empire zone designated
   45  as such pursuant to article eighteen-B of  the  general  municipal  law,
   46  where  the taxpayer is providing three or more services to any qualified
   47  film production company using the facility, including such services as a
   48  studio lighting grid, lighting  and  grip  equipment,  multi-line  phone
   49  service, broadband information technology access, industrial scale elec-
   50  trical  capacity,  food services, security services, and heating, venti-
   51  lation and air conditioning. For purposes of clauses (D), (E) and (F) of
   52  this subparagraph, property purchased by a taxpayer  affiliated  with  a
   53  regulated  broker, dealer, registered investment adviser, national secu-
   54  rities exchange or board of trade, is allowed a credit under this subdi-
   55  vision if the property is used by its affiliated regulated broker, deal-
   56  er, registered investment adviser, national securities exchange or board
       S. 6359                            215                           A. 8559
    1  of trade in accordance with this subdivision. For purposes of  determin-
    2  ing  if the property is principally used in qualifying uses, the uses by
    3  the taxpayer described in clauses (D) and (E) of this  subparagraph  may
    4  be  aggregated.  In  addition,  the uses by the taxpayer, its affiliated
    5  regulated broker, dealer, and registered investment adviser under either
    6  or both of those clauses  may  be  aggregated.    Provided,  however,  a
    7  taxpayer  shall  not  be allowed the credit provided by clauses (D), (E)
    8  and (F) of this subparagraph unless (I) eighty percent or  more  of  the
    9  employees  performing the administrative and support functions resulting
   10  from or related to the qualifying uses of such equipment are located  in
   11  this  state  or  (II)  the  average number of employees that perform the
   12  administrative and support functions resulting from or  related  to  the
   13  qualifying  uses  of such equipment and are located in this state during
   14  the taxable year for which the credit is claimed is equal to or  greater
   15  than ninety-five percent of the average number of employees that perform
   16  these  functions  and  are  located  in this state during the thirty-six
   17  months immediately preceding the year for which the credit  is  claimed,
   18  or  (III) the number of employees located in this state during the taxa-
   19  ble year for which the credit is claimed is equal  to  or  greater  than
   20  ninety  percent  of  the  number  of  employees located in this state on
   21  December thirty-first, nineteen hundred ninety-eight or, if the taxpayer
   22  was not a calendar year taxpayer in nineteen hundred  ninety-eight,  the
   23  last  day  of its first taxable year ending after December thirty-first,
   24  nineteen hundred ninety-eight. If the taxpayer becomes subject to tax in
   25  this state after the taxable year beginning in nineteen hundred  ninety-
   26  eight,  then the taxpayer is not required to satisfy the employment test
   27  provided in the preceding sentence of this subparagraph  for  its  first
   28  taxable  year.  For  purposes  of  clause (III) of this subparagraph the
   29  employment test will be based on the number of employees located in this
   30  state on the last day of the first taxable year the taxpayer is  subject
   31  to  tax in this state. If the uses of the property must be aggregated to
   32  determine whether the property is principally used in  qualifying  uses,
   33  then  either each affiliate using the property must satisfy this employ-
   34  ment test or this employment test must be satisfied through  the  aggre-
   35  gation  of  the  employees  of  the  taxpayer,  its affiliated regulated
   36  broker, dealer, and registered investment adviser  using  the  property.
   37  For  purposes  of  this  subdivision, the term "goods" shall not include
   38  electricity].
   39    (ii) For purposes of this paragraph, the following  definitions  shall
   40  apply--
   41    (A)  [Manufacturing  shall  mean  the process of working raw materials
   42  into wares suitable for use or which gives new shapes,  new  quality  or
   43  new  combinations  to matter which already has gone through some artifi-
   44  cial process by the use of machinery, tools, appliances and other  simi-
   45  lar  equipment.] Property used in the production of goods FOR SALE shall
   46  include machinery, equipment or other tangible property which is princi-
   47  pally used in the repair and service of other  machinery,  equipment  or
   48  other  tangible property used principally in the production of goods FOR
   49  SALE and shall include all facilities used in the production  operation,
   50  including  storage  of  material  to  be  used  in production and of the
   51  products that are produced.
   52    (B) Research and development property shall  mean  property  which  is
   53  used  for  purposes  of  research and development in the experimental or
   54  laboratory sense. Such purposes shall not be deemed to include the ordi-
   55  nary testing or inspection of materials or products for quality control,
   56  efficiency surveys, management studies, consumer  surveys,  advertising,
       S. 6359                            216                           A. 8559
    1  promotions, or research in connection with literary, historical or simi-
    2  lar projects.
    3    (C) [Industrial waste treatment facilities shall mean property consti-
    4  tuting  facilities for the treatment, neutralization or stabilization of
    5  industrial waste and other wastes (as the terms "industrial  waste"  and
    6  "other  wastes"  are  defined  in  section  17-0105 of the environmental
    7  conservation law) from a point immediately preceding the point  of  such
    8  treatment,  neutralization  or  stabilization  to the point of disposal,
    9  including the necessary pumping and transmitting facilities, but exclud-
   10  ing such facilities installed for the primary purpose of salvaging mate-
   11  rials which are usable in the manufacturing process or are  marketable.]
   12  A  QUALIFIED NEW YORK AGRICULTURAL BUSINESS SHALL MEAN A TAXPAYER OR, IN
   13  THE CASE OF A COMBINED REPORT, A COMBINED GROUP, PRINCIPALLY ENGAGED  IN
   14  FARMING, AGRICULTURE, HORTICULTURE, FLORICULTURE, VITICULTURE OR COMMER-
   15  CIAL FISHING IN THE STATE. A TAXPAYER OR A COMBINED GROUP IS PRINCIPALLY
   16  ENGAGED IN FARMING, AGRICULTURE, HORTICULTURE, FLORICULTURE, VITICULTURE
   17  OR  COMMERCIAL  FISHING  IN  THE STATE IF MORE THAN FIFTY PERCENT OF THE
   18  GROSS RECEIPTS OF THE TAXPAYER  OR  THE  COMBINED  GROUP,  RESPECTIVELY,
   19  DURING  THE  TAXABLE YEAR ARE DERIVED FROM THE SALE OF GOODS PRODUCED BY
   20  THE TAXPAYER BY ANY OF THE ACTIVITIES SPECIFIED IN  THIS  SENTENCE  THAT
   21  ARE  CONDUCTED  IN  THE  STATE.  IN  COMPUTING  A COMBINED GROUP'S GROSS
   22  RECEIPTS, INTERCORPORATE RECEIPTS  SHALL  BE  ELIMINATED.  IN  COMPUTING
   23  GROSS  RECEIPTS  FOR  A  TAXPAYER  THAT  IS  A  PARTNER  IN PARTNERSHIP,
   24  INTER-ENTITY RECEIPTS BETWEEN THE TAXPAYER AND SUCH PARTNERSHIP SHALL BE
   25  ELIMINATED.
   26    (D) [Air pollution control facilities shall mean property constituting
   27  facilities which remove, reduce, or render less noxious air contaminants
   28  emitted from an air contamination source (as the terms "air contaminant"
   29  and "air contamination source" are defined in  section  19-0107  of  the
   30  environmental  conservation  law) from a point immediately preceding the
   31  point of such removal, reduction or rendering to the point of  discharge
   32  of  air,  meeting emission standards as established by the department of
   33  environmental conservation, but excluding such facilities installed  for
   34  the primary purpose of salvaging materials which are usable in the manu-
   35  facturing process or are marketable and excluding those facilities which
   36  rely  for  their efficacy on dilution, dispersion or assimilation of air
   37  contaminants in the ambient air after emission. Such term shall  further
   38  include flue gas desulfurization equipment and attendant sludge disposal
   39  facilities,  fluidized  bed boilers, precombustion coal cleaning facili-
   40  ties or other facilities that conform with this  subdivision  and  which
   41  comply  with the provisions of the state acid deposition control act set
   42  forth in title nine of article nineteen of the  environmental  conserva-
   43  tion  law]  A  QUALIFIED  NEW YORK MINING BUSINESS SHALL MEAN A TAXPAYER
   44  PRINCIPALLY ENGAGED IN MINING IN THE STATE. A  TAXPAYER  IS  PRINCIPALLY
   45  ENGAGED  IN  MINING IN THE STATE IF MORE THAN FIFTY PERCENT OF THE GROSS
   46  RECEIPTS OF THE TAXPAYER OR, IN THE  CASE  OF  A  COMBINED  REPORT,  THE
   47  COMBINED  GROUP,  RESPECTIVELY, DURING THE TAXABLE YEAR ARE DERIVED FROM
   48  THE SALE OF GOODS PRODUCED BY THE TAXPAYER BY MINING ACTIVITIES THAT ARE
   49  CONDUCTED IN THE STATE. IN COMPUTING A COMBINED GROUP'S GROSS  RECEIPTS,
   50  INTERCORPORATE RECEIPTS SHALL BE ELIMINATED. IN COMPUTING GROSS RECEIPTS
   51  FOR  A  TAXPAYER THAT IS A PARTNER IN PARTNERSHIP, INTER-ENTITY RECEIPTS
   52  BETWEEN THE TAXPAYER AND SUCH PARTNERSHIP SHALL BE ELIMINATED.
   53    [(E) The terms "qualified film  production  facility"  and  "qualified
   54  film production company" shall have the same meaning as in section twen-
   55  ty-four of this chapter.]
       S. 6359                            217                           A. 8559
    1    (iii)  [However,  such  credit shall be allowed with respect to indus-
    2  trial waste treatment facilities and air  pollution  control  facilities
    3  only  on condition that such facilities have been certified by the state
    4  commissioner of environmental conservation or his  designated  represen-
    5  tative,  pursuant  to  subdivision one of section 17-0707 or subdivision
    6  one of section 19-0309 of the environmental conservation law, as comply-
    7  ing with applicable provisions of the  environmental  conservation  law,
    8  the  public  health law, the state sanitary code and codes, rules, regu-
    9  lations, permits or orders issued pursuant thereto.] IN ORDER TO PROPER-
   10  LY ADMINISTER THE CREDIT AUTHORIZED BY THIS SUBDIVISION, THE  DEPARTMENT
   11  MAY  DISCLOSE  INFORMATION ABOUT THE ALLOWANCE TO ANOTHER TAXPAYER OF AN
   12  INVESTMENT TAX CREDIT OR AN EMPIRE ZONE INVESTMENT TAX CREDIT UNDER THIS
   13  CHAPTER WITH RESPECT TO THE SAME PROPERTY.
   14    S 6. Paragraph (d) of subdivision 12 of section 210 of the tax law, as
   15  amended by chapter 637 of the laws  of  2008,  is  amended  to  read  as
   16  follows:
   17    (d)  A  taxpayer  shall not be allowed a credit under this subdivision
   18  with respect to tangible personal property and other tangible  property,
   19  including  buildings  and  structural  components of buildings, which it
   20  leases to any other person or corporation [except where a taxpayer leas-
   21  es property  to  an  affiliated  regulated  broker,  dealer,  registered
   22  investment  adviser,  national securities exchange or board of trade (or
   23  other entity described in clause (F) of subparagraph  (i)  of  paragraph
   24  (b)  of  this  subdivision)  that  uses such property in accordance with
   25  clause (D), (E) or (F) of subparagraph (i)  of  paragraph  (b)  of  this
   26  subdivision].  For  purposes  of the preceding sentence, any contract or
   27  agreement to lease or rent or for a license to use such  property  shall
   28  be  considered  a  lease.  Provided,  however,  in determining whether a
   29  taxpayer shall be allowed a credit under this subdivision  with  respect
   30  to such property, any election made with respect to such property pursu-
   31  ant  to  the  provisions of paragraph eight of subsection (f) of section
   32  one hundred sixty-eight of the internal revenue code, as such  paragraph
   33  was  in effect for agreements entered into prior to January first, nine-
   34  teen hundred eighty-four, shall be disregarded. [For  purposes  of  this
   35  paragraph,  the  use of a qualified film production facility by a quali-
   36  fied film production company shall not be considered  a  lease  of  such
   37  facility to such company.]
   38    S  7. Subparagraph 6 of paragraph (g) of subdivision 12 of section 210
   39  of the tax law is REPEALED.
   40    S 8. Paragraphs (f), (k), (l) and (m) of subdivision 12 of section 210
   41  of the tax law are REPEALED.
   42    S 9. Paragraph 2 of subsection (a) of section 606 of the tax  law,  as
   43  amended  by chapter 817 of the laws of 1987, subparagraph (A) as amended
   44  by chapter 637 of the laws of 2008 and clause (v) of subparagraph (B) as
   45  added by chapter 393 of the laws of 2005, is amended to read as follows:
   46    (2)(A) A credit shall be allowed under this subsection TO A  QUALIFIED
   47  NEW  YORK  MANUFACTURER, A QUALIFIED NEW YORK AGRICULTURAL BUSINESS OR A
   48  QUALIFIED NEW YORK MINING BUSINESS with  respect  to  tangible  personal
   49  property and other tangible property, including buildings and structural
   50  components  of  buildings,  which  (I)  are[:]  depreciable  pursuant to
   51  section one hundred sixty-seven of the internal revenue code, (II)  have
   52  a  useful  life of four years or more, (III) are acquired by purchase as
   53  defined in section one hundred seventy-nine (d) of the internal  revenue
   54  code,  (IV)  HAVE  NOT  BEEN PREVIOUSLY THE SUBJECT OF AN INVESTMENT TAX
   55  CREDIT OR AN EMPIRE ZONE INVESTMENT TAX CREDIT ALLOWED UNDER THIS  CHAP-
   56  TER  TO  ANOTHER  TAXPAYER, (V) have a situs in this state, and (VI) are
       S. 6359                            218                           A. 8559
    1  [(i)] principally used by the taxpayer in the production  of  goods  [by
    2  manufacturing,  processing,  assembling,  refining,  mining, extracting,
    3  farming, agriculture, horticulture, floriculture, viticulture or commer-
    4  cial   fishing,  (ii)  industrial  waste  treatment  facilities  or  air
    5  pollution control facilities, used in the taxpayer's trade or  business,
    6  (iii)]  FOR SALE OR ARE research and development property[, (iv) princi-
    7  pally used in the ordinary course of the taxpayer's trade or business as
    8  a broker or dealer in connection with the purchase or sale (which  shall
    9  include  but  not be limited to the issuance, entering into, assumption,
   10  offset, assignment, termination, or transfer) of stocks, bonds or  other
   11  securities as defined in section four hundred seventy-five (c)(2) of the
   12  Internal Revenue Code, or of commodities as defined in section 475(e) of
   13  the  Internal  Revenue Code, (v) principally used in the ordinary course
   14  of the taxpayer's trade or business  of  providing  investment  advisory
   15  services  for a regulated investment company as defined in section eight
   16  hundred fifty-one  of  the  Internal  Revenue  Code,  or  lending,  loan
   17  arrangement or loan origination services to customers in connection with
   18  the  purchase  or  sale  (which  shall include but not be limited to the
   19  issuance, entering into, assumption, offset, assignment, termination, or
   20  transfer) of securities as defined in section four hundred  seventy-five
   21  (c)(2) of the Internal Revenue Code, or (vi) principally used as a qual-
   22  ified  film  production  facility  including  qualified  film production
   23  facilities having a situs in an empire zone designated as such  pursuant
   24  to  article  eighteen-B of the general municipal law, where the taxpayer
   25  is providing three or more services to  any  qualified  film  production
   26  company using the facility, including such services as a studio lighting
   27  grid,  lighting  and grip equipment, multi-line phone service, broadband
   28  information technology access,  industrial  scale  electrical  capacity,
   29  food  services,  security  services,  and  heating,  ventilation and air
   30  conditioning. For purposes of clauses (iv) and (v) of this subparagraph,
   31  property purchased by a taxpayer affiliated  with  a  regulated  broker,
   32  dealer,  or registered investment adviser is allowed a credit under this
   33  subsection if the property is used by its affiliated  regulated  broker,
   34  dealer   or  registered  investment  adviser  in  accordance  with  this
   35  subsection. For purposes of determining if the property  is  principally
   36  used  in  qualifying uses, the uses by the taxpayer described in clauses
   37  (iv) and (v) of this subparagraph may be aggregated.  In  addition,  the
   38  uses by the taxpayer, its affiliated regulated broker, dealer and regis-
   39  tered  investment  adviser  under either or both of those clauses may be
   40  aggregated. Provided, however, a taxpayer shall not be allowed the cred-
   41  it provided by clauses (iv) and (v)  of  this  subparagraph  unless  (I)
   42  eighty  percent  or  more of the employees performing the administrative
   43  and support functions resulting from or related to the  qualifying  uses
   44  of  such equipment are located in this state, or (II) the average number
   45  of employees that  perform  the  administrative  and  support  functions
   46  resulting  from  or related to the qualifying uses of such equipment and
   47  are located in this state during the taxable year for which  the  credit
   48  is  claimed is equal to or greater than ninety-five percent of the aver-
   49  age number of employees that perform these functions and are located  in
   50  this  state  during the thirty-six months immediately preceding the year
   51  for which the credit is  claimed,  or  (III)  the  number  of  employees
   52  located  in  this  state during the taxable year for which the credit is
   53  claimed is equal to or greater than ninety  percent  of  the  number  of
   54  employees  located  in  this  state  on  December thirty-first, nineteen
   55  hundred ninety-eight or, if the taxpayer was not a calendar year taxpay-
   56  er in nineteen hundred ninety-eight, the last day of its  first  taxable
       S. 6359                            219                           A. 8559
    1  year  ending after December thirty-first, nineteen hundred ninety-eight.
    2  If the taxpayer becomes subject to tax in this state after  the  taxable
    3  year  beginning  in  nineteen hundred ninety-eight, then the taxpayer is
    4  not  required  to  satisfy the employment test provided in the preceding
    5  sentence of this subparagraph  for  its  first  taxable  year.  For  the
    6  purposes  of  clause (III) of this subparagraph the employment test will
    7  be based on the number of employees located in this state  on  the  last
    8  day  of  the  first  taxable year the taxpayer is subject to tax in this
    9  state. If the uses of the  property  must  be  aggregated  to  determine
   10  whether the property is principally used in qualifying uses, then either
   11  each  affiliate  using the property must satisfy this employment test or
   12  this employment test must be satisfied through the  aggregation  of  the
   13  employees  of the taxpayer, its affiliated regulated broker, dealer, and
   14  registered investment adviser using the property. For purposes  of  this
   15  subsection, the term "goods" shall not include electricity].
   16    (B)  For  purposes  of this paragraph, the following definitions shall
   17  apply:
   18    (i) (I) Manufacturing shall mean the process of working raw  materials
   19  into  wares  suitable  for use or which gives new shapes, new quality or
   20  new combinations to matter which already has gone through  some  artifi-
   21  cial  process by the use of machinery, tools, appliances and other simi-
   22  lar equipment. Property used in the production of goods FOR  SALE  shall
   23  include machinery, equipment or other tangible property which is princi-
   24  pally  used  in  the repair and service of other machinery, equipment or
   25  other tangible property used principally in the production of goods  and
   26  shall include all facilities used in the production operation, including
   27  storage  of  material  to be used in production and of the products that
   28  are produced.
   29    (II) NOTWITHSTANDING THE DEFINITION OF MANUFACTURING IN  ITEM  (I)  OF
   30  THIS  CLAUSE:  THE  GENERATION  AND  DISTRIBUTION  OF  ELECTRICITY,  THE
   31  EXTRACTION AND DISTRIBUTION OF NATURAL GAS, AND THE PRODUCTION OF  STEAM
   32  ASSOCIATED  WITH THE GENERATION OF ELECTRICITY DOES NOT CONSTITUTE MANU-
   33  FACTURING. THE CREATION, PRODUCTION OR REPRODUCTION  OF  A  FILM,  TELE-
   34  VISION  SHOW OR COMMERCIAL DOES NOT CONSTITUTE MANUFACTURING. THE BLEND-
   35  ING OF TWO OR MORE FUELS DOES NOT  CONSTITUTE  MANUFACTURING.  THE  MASS
   36  PRODUCTION  OF  FOOD  PRODUCTS FOR COMMERCIAL WHOLESALE DISTRIBUTION AND
   37  SALE CONSTITUTES MANUFACTURING.
   38    (ii) Research and development property shall mean  property  which  is
   39  used  for  purposes  of  research and development in the experimental or
   40  laboratory sense. Such purposes shall not be deemed to include the ordi-
   41  nary testing or inspection of materials or products for quality control,
   42  efficiency surveys, management studies, consumer  surveys,  advertising,
   43  promotions, or research in connection with literary, historical or simi-
   44  lar projects.
   45    (iii)  [Industrial  waste  treatment  facilities  shall  mean property
   46  constituting facilities for the treatment, neutralization or  stabiliza-
   47  tion  of  industrial  waste  and  other wastes (as the terms "industrial
   48  waste" and "other wastes" are defined in section 17-0105 of the environ-
   49  mental conservation law) from a point immediately preceding the point of
   50  such  treatment,  neutralization  or  stabilization  to  the  point   of
   51  disposal,  including  the necessary pumping and transmitting facilities,
   52  but excluding such facilities  installed  for  the  primary  purpose  of
   53  salvaging materials which are usable in the manufacturing process or are
   54  marketable.]  "MANUFACTURER" SHALL MEAN A TAXPAYER THAT DURING THE TAXA-
   55  BLE YEAR IS PRINCIPALLY ENGAGED IN MANUFACTURING. A TAXPAYER IS  PRINCI-
   56  PALLY  ENGAGED  IN MANUFACTURING IF MORE THAN FIFTY PERCENT OF THE GROSS
       S. 6359                            220                           A. 8559
    1  RECEIPTS OF THE TAXPAYER DURING THE TAXABLE YEAR ARE  DERIVED  FROM  THE
    2  SALE OF GOODS PRODUCED BY MANUFACTURING. IN COMPUTING GROSS RECEIPTS FOR
    3  A  TAXPAYER  THAT  IS  A  PARTNER  IN PARTNERSHIP, INTER-ENTITY RECEIPTS
    4  BETWEEN THE TAXPAYER AND SUCH PARTNERSHIP SHALL BE ELIMINATED.
    5    (iv)  [Air pollution control facilities shall mean property constitut-
    6  ing facilities which remove, reduce, or render less noxious air  contam-
    7  inants  emitted  from  an  air  contamination  source (as the terms "air
    8  contaminant" and "air  contamination  source"  are  defined  in  section
    9  19-0107  of the environmental conservation law) from a point immediately
   10  preceding the point of such removal, reduction or rendering to the point
   11  of discharge of air, meeting emission standards as  established  by  the
   12  department  of environmental conservation, but excluding such facilities
   13  installed for the primary  purpose  of  salvaging  materials  which  are
   14  usable  in  the  manufacturing  process  or are marketable and excluding
   15  those facilities which rely for their efficacy on  dilution,  dispersion
   16  or  assimilation  of air contaminants in the ambient air after emission.
   17  Such term shall further include flue gas desulfurization  equipment  and
   18  attendant  sludge  disposal  facilities,  fluidized bed boilers, precom-
   19  bustion coal cleaning facilities or other facilities that  conform  with
   20  this  subsection  and which comply with the provisions of the State Acid
   21  Deposition Control Act set forth in title nine of  article  nineteen  of
   22  the  environmental  conservation law.] "QUALIFIED NEW YORK MANUFACTURER"
   23  SHALL MEAN A MANUFACTURER THAT HAS PROPERTY IN THE STATE THAT IS USED IN
   24  MANUFACTURING AND EITHER THE FAIR MARKET VALUE OF THAT PROPERTY  AT  THE
   25  CLOSE  OF THE TAXABLE YEAR IS AT LEAST TEN MILLION DOLLARS OR ALL OF ITS
   26  REAL AND PERSONAL PROPERTY IS LOCATED IN NEW YORK.
   27    (v) [For  purposes  of  this  paragraph,  the  terms  "qualified  film
   28  production  facility" and "qualified film production company" shall have
   29  the same meaning as in section twenty-four of this chapter.] A QUALIFIED
   30  NEW YORK AGRICULTURAL BUSINESS SHALL MEAN A TAXPAYER PRINCIPALLY ENGAGED
   31  IN FARMING,  AGRICULTURE,  HORTICULTURE,  FLORICULTURE,  VITICULTURE  OR
   32  COMMERCIAL  FISHING  IN  THE STATE. A TAXPAYER IS PRINCIPALLY ENGAGED IN
   33  FARMING, AGRICULTURE, HORTICULTURE, FLORICULTURE, VITICULTURE OR COMMER-
   34  CIAL FISHING IN THE STATE IF  MORE  THAN  FIFTY  PERCENT  OF  THE  GROSS
   35  RECEIPTS  OF  THE  TAXPAYER DURING THE TAXABLE YEAR ARE DERIVED FROM THE
   36  SALE OF GOODS PRODUCED BY THE TAXPAYER BY ANY OF THE  ACTIVITIES  SPECI-
   37  FIED  IN  THIS  SENTENCE  THAT ARE CONDUCTED IN THE STATE.  IN COMPUTING
   38  GROSS RECEIPTS  FOR  A  TAXPAYER  THAT  IS  A  PARTNER  IN  PARTNERSHIP,
   39  INTER-ENTITY RECEIPTS BETWEEN THE TAXPAYER AND SUCH PARTNERSHIP SHALL BE
   40  ELIMINATED.
   41    (VI)  A QUALIFIED NEW YORK MINING BUSINESS SHALL MEAN A TAXPAYER PRIN-
   42  CIPALLY ENGAGED IN MINING  IN  THE  STATE.  A  TAXPAYER  IS  PRINCIPALLY
   43  ENGAGED  IN  MINING IN THE STATE IF MORE THAN FIFTY PERCENT OF THE GROSS
   44  RECEIPTS OF THE TAXPAYER DURING THE TAXABLE YEAR ARE  DERIVED  FROM  THE
   45  SALE  OF  GOODS  PRODUCED  BY THE TAXPAYER BY MINING ACTIVITIES THAT ARE
   46  CONDUCTED IN THE STATE. IN COMPUTING GROSS RECEIPTS FOR A TAXPAYER  THAT
   47  IS  A PARTNER IN PARTNERSHIP, INTER-ENTITY RECEIPTS BETWEEN THE TAXPAYER
   48  AND SUCH PARTNERSHIP SHALL BE ELIMINATED.
   49    (C) [However, such credit shall be allowed with respect to  industrial
   50  waste  treatment facilities and air pollution control facilities only on
   51  condition that such facilities have been certified by the state  commis-
   52  sioner  of  environmental conservation or his designated representative,
   53  pursuant to subdivision one of section 17-0707  or  subdivision  one  of
   54  section 19-0309 of the environmental conservation law, as complying with
   55  applicable  provisions of the environmental conservation law, the public
   56  health law, the state  sanitary  code  and  codes,  rules,  regulations,
       S. 6359                            221                           A. 8559
    1  permits  or orders issued pursuant thereto.] IN ORDER TO PROPERLY ADMIN-
    2  ISTER THE CREDIT AUTHORIZED BY  THIS  SUBDIVISION,  THE  DEPARTMENT  MAY
    3  DISCLOSE  INFORMATION  ABOUT  THE  ALLOWANCE  TO  ANOTHER TAXPAYER OF AN
    4  INVESTMENT TAX CREDIT OR AN EMPIRE ZONE INVESTMENT TAX CREDIT UNDER THIS
    5  CHAPTER WITH RESPECT TO THE SAME PROPERTY.
    6    S  10. Paragraph 4 of subsection (a) of section 606 of the tax law, as
    7  amended by chapter 637 of the laws  of  2008,  is  amended  to  read  as
    8  follows:
    9    (4)  A  taxpayer  shall  not be allowed a credit under this subsection
   10  with respect to tangible personal property and other tangible  property,
   11  including  buildings  and  structural  components of buildings, which it
   12  leases to any other person or corporation [except where a taxpayer leas-
   13  es property to an affiliated regulated  broker,  dealer,  or  registered
   14  investment  adviser  that  uses  such property in accordance with clause
   15  (iv) or (v) of subparagraph (A) of paragraph two  of  this  subsection].
   16  For  purposes  of  the  preceding sentence, any contract or agreement to
   17  lease or rent or for a license to use such property shall be  considered
   18  a  lease.  Provided, however, in determining whether a taxpayer shall be
   19  allowed a credit under this subsection with respect  to  such  property,
   20  any  election  made  with  respect  to  such  property  pursuant  to the
   21  provisions of paragraph eight of subsection (f) of section  one  hundred
   22  sixty-eight  of  the  internal  revenue  code,  as such paragraph was in
   23  effect for agreements entered into  prior  to  January  first,  nineteen
   24  hundred  eighty-four,  shall be disregarded. [For purposes of this para-
   25  graph, the use of a qualified film production facility  by  a  qualified
   26  film production company shall not be considered a lease of such facility
   27  to such company.]
   28    S  11.  Paragraph 6 of subsection (a) of section 606 of the tax law is
   29  REPEALED.
   30    S 12. Subparagraph (F) of paragraph 7 of subsection (a) of section 606
   31  of the tax law is REPEALED.
   32    S 13. Paragraphs 11, 12 and 13 of subsection (a) of section 606 of the
   33  tax law are REPEALED.
   34    S 14. Subsection (i) of section 1456 of the tax law is REPEALED.
   35    S 15. Subdivision (q) of section 1511 of the tax law is REPEALED.
   36    S 16. Subparagraphs (vi) and (vii) of paragraph (a) of  subdivision  1
   37  of section 210 of the tax law, subparagraph (vi) as amended by section 1
   38  of  part  C  of chapter 56 of the laws of 2011 and subparagraph (vii) as
   39  added by section 1 of part Z of chapter 59 of  the  laws  of  2013,  are
   40  amended to read as follows:
   41    (vi) EXCEPT AS OTHERWISE PROVIDED IN THIS SUBPARAGRAPH OR SUBPARAGRAPH
   42  (VII) OF THIS PARAGRAPH, for taxable years beginning on or after January
   43  thirty-first,  two  thousand  seven, the amount prescribed by this para-
   44  graph for a taxpayer which is a  qualified  New  York  manufacturer,  AS
   45  DEFINED  IN  SUBDIVISION  FIFTEEN  OF  SECTION TWO HUNDRED EIGHT OF THIS
   46  ARTICLE, shall be computed at the rate of six and one-half (6.5) percent
   47  of the taxpayer's entire net income base. For taxable years beginning on
   48  or after January first, two thousand twelve and  before  January  first,
   49  two  thousand  fifteen,  the  amount  prescribed by this paragraph for a
   50  taxpayer which is an eligible qualified New York manufacturer  shall  be
   51  computed  at  the  rate  of  three and one-quarter (3.25) percent of the
   52  taxpayer's entire net income base.  [The term "manufacturer" shall  mean
   53  a  taxpayer  which during the taxable year is principally engaged in the
   54  production of goods by manufacturing, processing, assembling,  refining,
   55  mining,  extracting,  farming,  agriculture, horticulture, floriculture,
   56  viticulture or commercial fishing. However, the generation and  distrib-
       S. 6359                            222                           A. 8559
    1  ution   of  electricity,  the  distribution  of  natural  gas,  and  the
    2  production of steam associated with the generation of electricity  shall
    3  not be qualifying activities for a manufacturer under this subparagraph.
    4  Moreover,  the  combined  group shall be considered a "manufacturer" for
    5  purposes of this subparagraph only if  the  combined  group  during  the
    6  taxable  year is principally engaged in the activities set forth in this
    7  paragraph, or any combination thereof. A taxpayer or  a  combined  group
    8  shall  be "principally engaged" in activities described above if, during
    9  the taxable year, more than fifty percent of the gross receipts  of  the
   10  taxpayer or combined group, respectively, are derived from receipts from
   11  the  sale  of goods produced by such activities. In computing a combined
   12  group's gross receipts, intercorporate receipts shall be  eliminated.  A
   13  "qualified  New  York manufacturer" is a manufacturer which has property
   14  in New York which is described in clause  (A)  of  subparagraph  (i)  of
   15  paragraph  (b)  of subdivision twelve of this section and either (I) the
   16  adjusted basis of such property for federal income tax purposes  at  the
   17  close of the taxable year is at least one million dollars or (II) all of
   18  its  real  and  personal property is located in New York. In addition, a
   19  "qualified New York manufacturer" means a taxpayer which is defined as a
   20  qualified emerging technology company under paragraph (c) of subdivision
   21  one of section thirty-one hundred two-e of the  public  authorities  law
   22  regardless  of  the  ten million dollar limitation expressed in subpara-
   23  graph one of such  paragraph  (c).]  The  commissioner  shall  establish
   24  guidelines and criteria that specify requirements by which a manufactur-
   25  er  may  be  classified  as an eligible qualified New York manufacturer.
   26  Criteria may include but not be limited  to  factors  such  as  regional
   27  unemployment,   the  economic  impact  that  manufacturing  has  on  the
   28  surrounding community, population decline within the region  and  median
   29  income within the region in which the manufacturer is located. In estab-
   30  lishing  these  guidelines and criteria, the commissioner shall endeavor
   31  that the total annual cost of the lower rates shall not  exceed  twenty-
   32  five million dollars.
   33    [(vii)] For a qualified New York manufacturer, as defined in [subpara-
   34  graph (vi) of this paragraph] SUBDIVISION FIFTEEN OF SECTION TWO HUNDRED
   35  EIGHT  OF  THIS ARTICLE, the rate at which the tax is computed in effect
   36  for taxable years beginning on or  after  January  first,  two  thousand
   37  thirteen  and  before January first, two thousand fourteen for qualified
   38  New York manufacturers shall be reduced by nine and  two-tenths  percent
   39  for  taxable  years  commencing  on or after January first, two thousand
   40  fourteen and before January first,  two  thousand  fifteen,  twelve  and
   41  three-tenths  percent  for  taxable years commencing on or after January
   42  first, two thousand fifteen  and  before  January  first,  two  thousand
   43  sixteen, fifteen and four-tenths percent for taxable years commencing on
   44  or  after  January first, two thousand sixteen and before January first,
   45  two thousand eighteen, and twenty-five percent for taxable years  begin-
   46  ning on or after January first, two thousand eighteen.
   47    (VII)  FOR A QUALIFIED NEW YORK MANUFACTURER THAT HAS AN APPORTIONMENT
   48  FACTOR FOR PURPOSES OF  THE  METROPOLITAN  TRANSPORTATION  BUSINESS  TAX
   49  SURCHARGE  COMPUTED  PURSUANT  TO SUBDIVISION TWO OF SECTION TWO HUNDRED
   50  NINE-B OF THIS ARTICLE EQUAL TO ZERO FOR THE TAXABLE  YEAR,  THE  AMOUNT
   51  PRESCRIBED  BY  THIS  PARAGRAPH  FOR TAXABLE YEARS BEGINNING ON OR AFTER
   52  JANUARY FIRST, TWO THOUSAND FOURTEEN SHALL BE COMPUTED AT  THE  RATE  OF
   53  ZERO PERCENT OF THE TAXPAYER'S ENTIRE NET INCOME BASE.
   54    S  17.  Subparagraphs  2  and  3  of paragraph (b) of subdivision 1 of
   55  section 210 of the tax law, subparagraph 2 as amended by  section  1  of
   56  part  GG-1 of chapter 57 of the laws of 2008 and subparagraph 3 as added
       S. 6359                            223                           A. 8559
    1  by section 2 of part Z of chapter 59 of the laws of 2013, are amended to
    2  read as follows:
    3    (2)  [For  purposes  of  subparagraph  one of this paragraph, the term
    4  "manufacturer" shall mean a taxpayer which during the  taxable  year  is
    5  principally  engaged  in the production of goods by manufacturing, proc-
    6  essing, assembling, refining, mining, extracting, farming,  agriculture,
    7  horticulture, floriculture, viticulture or commercial fishing. Moreover,
    8  for  purposes  of  computing  the capital base in a combined report, the
    9  combined group shall be considered a "manufacturer" for purposes of this
   10  subparagraph only if the combined group during the taxable year is prin-
   11  cipally engaged in the activities set forth in this subparagraph, or any
   12  combination thereof. A taxpayer or a combined group shall be "principal-
   13  ly engaged" in activities described above if, during the  taxable  year,
   14  more  than  fifty  percent  of  the  gross  receipts  of the taxpayer or
   15  combined group, respectively, are derived from receipts from the sale of
   16  goods produced by such activities. In computing a combined group's gross
   17  receipts, intercorporate receipts shall be eliminated. A "qualified  New
   18  York  manufacturer" is a manufacturer that has property in New York that
   19  is described in clause (A) of  subparagraph  (i)  of  paragraph  (b)  of
   20  subdivision  twelve of this section and either (i) the adjusted basis of
   21  that property for federal income tax purposes at the close of the  taxa-
   22  ble  year  is  at  least one million dollars or (ii) all of its real and
   23  personal property is located in New York. In addition, a "qualified  New
   24  York  manufacturer"  means  a  taxpayer  that  is defined as a qualified
   25  emerging technology company under paragraph (c) of  subdivision  one  of
   26  section  thirty-one  hundred two-e of the public authorities law regard-
   27  less of the ten million dollar limitation expressed in subparagraph  one
   28  of such paragraph.
   29    (3)]  For  a  qualified New York manufacturer, as defined in [subpara-
   30  graph two of this paragraph] SUBDIVISION FIFTEEN OF SECTION TWO  HUNDRED
   31  EIGHT  OF  THIS ARTICLE, the rate at which the tax is computed in effect
   32  for taxable years beginning on or  after  January  first,  two  thousand
   33  thirteen  and  before  January  first,  two  thousand  fourteen shall be
   34  reduced by nine and two-tenths percent for taxable years  commencing  on
   35  or  after January first, two thousand fourteen and before January first,
   36  two thousand fifteen, twelve and three-tenths percent for taxable  years
   37  commencing  on  or  after January first, two thousand fifteen and before
   38  January first, two thousand sixteen, fifteen and four-tenths percent for
   39  taxable years commencing on or after January first, two thousand sixteen
   40  and before January first, two thousand eighteen, and twenty-five percent
   41  for taxable years beginning on or  after  January  first,  two  thousand
   42  eighteen.
   43    S  18. Subparagraph (iii) of paragraph (c) of subdivision 1 of section
   44  210 of the tax law, as added by section 3 of part Z of chapter 59 of the
   45  laws of 2013, is amended to read as follows:
   46    (iii) For a qualified New York manufacturer, as defined  in  [subpara-
   47  graph  (vi) of paragraph (a) of this] subdivision FIFTEEN OF SECTION TWO
   48  HUNDRED EIGHT OF THIS ARTICLE, the rate at which the tax is computed  in
   49  effect  for taxable years beginning on or after January first, two thou-
   50  sand thirteen and before January first, two thousand fourteen for quali-
   51  fied New York manufacturers shall be  reduced  by  nine  and  two-tenths
   52  percent  for  taxable  years  commencing  on or after January first, two
   53  thousand fourteen and before January first, two thousand fifteen, twelve
   54  and three-tenths percent for taxable years commencing on or after  Janu-
   55  ary  first,  two thousand fifteen and before January first, two thousand
   56  sixteen, fifteen and four-tenths percent for taxable years commencing on
       S. 6359                            224                           A. 8559
    1  or after January first, two thousand sixteen and before  January  first,
    2  two  thousand eighteen, and twenty-five percent for taxable years begin-
    3  ning on or after January first, two thousand eighteen.
    4    S  19. Subparagraph 6 of paragraph (d) of subdivision 1 of section 210
    5  of the tax law, as added by section 4 of part Z of  chapter  59  of  the
    6  laws of 2013, is amended to read as follows:
    7    (6) For a qualified New York manufacturer, as defined in [subparagraph
    8  (vi)  of  paragraph  (a)  of  this]  subdivision  FIFTEEN OF SECTION TWO
    9  HUNDRED EIGHT OF THIS ARTICLE, the amounts prescribed  in  subparagraphs
   10  one  and four of this paragraph in effect for taxable years beginning on
   11  or after January first, two thousand thirteen and before January  first,
   12  two  thousand  fourteen  for  qualified  New York manufacturers shall be
   13  reduced by nine and two-tenths percent for taxable years  commencing  on
   14  or  after January first, two thousand fourteen and before January first,
   15  two thousand fifteen, twelve and three-tenths percent for taxable  years
   16  commencing  on  or  after January first, two thousand fifteen and before
   17  January first, two thousand sixteen, fifteen and four-tenths percent for
   18  taxable years commencing on or after January first, two thousand sixteen
   19  and before January first, two thousand eighteen, and twenty-five percent
   20  for taxable years beginning on or  after  January  first,  two  thousand
   21  eighteen.
   22    S 20. Subdivision 1 of section 210 of the tax law is amended by adding
   23  a new paragraph (h) to read as follows:
   24    (H)  FOR  PURPOSES  OF  DETERMINING  WHETHER A TAXPAYER IS AN ELIGIBLE
   25  QUALIFIED NEW  YORK  MANUFACTURER  FOR  PURPOSES  OF  THE  TAX  BENEFITS
   26  PROVIDED  IN  SUBPARAGRAPH  (VI)  OF  PARAGRAPH (A) OF THIS SUBDIVISION,
   27  SUBPARAGRAPH (II) OF PARAGRAPH (C) OF THIS SUBDIVISION, AND SUBPARAGRAPH
   28  FIVE OF PARAGRAPH (D) OF THIS SUBDIVISION, A TAXPAYER SHALL UTILIZE  THE
   29  LAW,  GUIDELINES  AND  CRITERIA  IN EFFECT ON DECEMBER THIRTY-FIRST, TWO
   30  THOUSAND THIRTEEN.
   31    S 21. Subdivision 2 of section 355 of the economic development law, as
   32  amended by section 4 of part G of chapter 61 of the  laws  of  2011,  is
   33  amended to read as follows:
   34    2.  Excelsior  investment  tax  credit component. A participant in the
   35  excelsior jobs program shall be eligible to claim a credit on  qualified
   36  investments.  The  credit  shall  be equal to two percent of the cost or
   37  other basis for federal income tax purposes of the qualified investment.
   38  A participant may not claim both the  excelsior  investment  tax  credit
   39  component  and the investment tax credit set forth in subdivision twelve
   40  of section two hundred ten[,] OR subsection (a) of section  six  hundred
   41  six[,  subsection (i) of section fourteen hundred fifty-six, or subdivi-
   42  sion (q) of section fifteen hundred eleven] of the tax law for the  same
   43  property  in  any taxable year, except that a participant may claim both
   44  the excelsior investment tax credit component  and  the  investment  tax
   45  credit  for  research  and development property. In addition, a taxpayer
   46  who or which is qualified to claim the excelsior investment  tax  credit
   47  component and is also qualified to claim the brownfield tangible proper-
   48  ty  credit  component  under section twenty-one of the tax law may claim
   49  either the excelsior investment tax credit component  or  such  tangible
   50  property  credit  component,  but  not  both with regard to a particular
   51  piece of property. A credit may not be claimed until a  business  enter-
   52  prise  has received a certificate of tax credit, provided that qualified
   53  investments made on or after the issuance of the certificate  of  eligi-
   54  bility  but  before the issuance of the certificate of tax credit to the
   55  business enterprise, may be claimed in the first taxable year for  which
   56  the  business  enterprise  is  allowed  to  claim  the  credit. Expenses
       S. 6359                            225                           A. 8559
    1  incurred prior to the date the certificate of eligibility is issued  are
    2  not eligible to be included in the calculation of the credit.
    3    S  22.  Severability.  The  legislature intends by this act to provide
    4  needed tax relief to New York manufacturers.  However,  if  a  court  of
    5  final,  competent  jurisdiction adjudges the tax rates imposed on quali-
    6  fied New York manufacturers to be invalid, qualified New  York  manufac-
    7  turers  shall  be  subject  to the same tax rates as all other taxpayers
    8  subject to tax under article nine-A of the tax law. Provided further, if
    9  a court of final, competent jurisdiction adjudges that the  tax  credits
   10  provided  by this act to qualified New York manufacturers, qualified New
   11  York agricultural businesses and qualified New York mining businesses to
   12  be invalid, such credits shall be deemed repealed and  shall  be  of  no
   13  force and effect as to any taxpayers.
   14    S  23. This act shall take effect immediately and shall apply to taxa-
   15  ble years beginning on or after January 1, 2014.
   16                                   PART S
   17    Section 1. Sections 185, 187-j, 187-k, 187-l, 187-m, 187-q, 187-r  and
   18  187-s of the tax law are REPEALED.
   19    S  2.  Paragraph  (c)  of subdivision 9 of section 400 of the economic
   20  development law, as added by section 2 of part V of chapter  61  of  the
   21  laws of 2011, is amended to read as follows:
   22    (c) the business entity must not be substantially similar in ownership
   23  and  operation  to  another taxpayer taxable or previously taxable under
   24  section one hundred eighty-three[,] OR one hundred eighty-four or FORMER
   25  SECTION one hundred eighty-five of  article  nine,  former  section  one
   26  hundred  eighty-six or article nine-A, twenty-two, thirty-two or thirty-
   27  three of the tax law or the income or losses of which is or was includa-
   28  ble under article twenty-two of the tax law;
   29    S 3. Paragraph (c) of subdivision 6 of section  431  of  the  economic
   30  development  law,  as  added by section 1 of part A of chapter 68 of the
   31  laws of 2013, is amended to read as follows:
   32    (c) the business is not substantially  similar  in  operation  and  in
   33  ownership  to  a  business  entity  (or entities) taxable, or previously
   34  taxable within the last five taxable years, under  section  one  hundred
   35  eighty-three[,]  OR  one hundred eighty-four, FORMER SECTION one hundred
   36  eighty-five or FORMER SECTION one hundred eighty-six  of  the  tax  law,
   37  article nine-A, thirty-two or thirty-three of the tax law, article twen-
   38  ty-three  of  the  tax law or which would have been subject to tax under
   39  such article twenty-three (as such article  was  in  effect  on  January
   40  first,  nineteen  hundred eighty), or the income (or losses) of which is
   41  (or was) includable under article twenty-two of the tax law; and
   42    S 4. Paragraph 1 of subdivision (a), subdivision (f), paragraph  1  of
   43  subdivision  (i)  and  subdivisions (j) and (k) of section 14 of the tax
   44  law, paragraph 1 of subdivision (a) as amended by section 3 of  part  V1
   45  of  chapter 109 of the laws of 2006, subdivisions (f) and (j) as amended
   46  by section 10 of part CC of chapter 85 of the laws of 2002, paragraph  1
   47  of  subdivision  (i)  and  subdivision (k) as amended and paragraph 4 of
   48  subdivision (j) as added by section 5 of part A of  chapter  63  of  the
   49  laws  of  2005,  subparagraph  (B)  of paragraph 4 of subdivision (j) as
   50  amended by chapter 161 of the laws of 2005 and paragraph 5  of  subdivi-
   51  sion  (j)  as amended by section 4 of part V1 of chapter 109 of the laws
   52  of 2006, are amended to read as follows:
   53    (1) except as provided in paragraphs one-a and one-b of this  subdivi-
   54  sion,  for purposes of [section one hundred eighty-seven-j and] articles
       S. 6359                            226                           A. 8559
    1  nine-A, twenty-two, thirty-two and thirty-three  of  this  chapter,  for
    2  each  of  the  taxable  years  within the "business tax benefit period,"
    3  which period shall consist of (A) in the case of a  business  enterprise
    4  with a test date occurring on or before December thirty-first, two thou-
    5  sand  one, the first fifteen taxable years beginning on or after January
    6  first, two thousand one, (B) in the case of a business enterprise with a
    7  test date occurring on or after January first,  two  thousand  two,  but
    8  prior  to April first, two thousand five, the fifteen taxable years next
    9  following the business enterprise's test year, and (C) in the case of  a
   10  business enterprise which is first certified under article eighteen-B of
   11  the  general  municipal  law on or after April first, two thousand five,
   12  the ten taxable years starting with the taxable year in which the  busi-
   13  ness  enterprise's  first date of certification under article eighteen-B
   14  of the general municipal law occurs, but only with respect  to  each  of
   15  such  business tax benefit period years for which the employment test is
   16  met,
   17    (f) Taxable year. The term "taxable year" means the  taxable  year  of
   18  the business enterprise under section one hundred eighty-three[,] OR one
   19  hundred  eighty-four[,  one  hundred  eighty-five] or former section one
   20  hundred eighty-six of article nine, or under article nine-A, twenty-two,
   21  thirty-two or thirty-three of this chapter.  If  a  business  enterprise
   22  does  not  have  a  taxable  year  because it is exempt from taxation or
   23  otherwise not required to file a return under any of  such  sections  of
   24  article  nine or under article nine-A, twenty-two, thirty-two or thirty-
   25  three, then the term "taxable year" means (i) the business  enterprise's
   26  federal taxable year, or, (ii) if the enterprise does not have a federal
   27  taxable year, the calendar year.
   28    (1)  for  purposes  of  [section one hundred eighty-seven-j of article
   29  nine, and] articles nine-A, twenty-two, thirty-two and  thirty-three  of
   30  this  chapter, on the first day of the taxable year during which revoca-
   31  tion of its certification under article eighteen-B of the general munic-
   32  ipal law occurs, and
   33    (j) New business. (1) A new business shall  include  any  corporation,
   34  except  a corporation which is substantially similar in operation and in
   35  ownership to a business entity  (or  entities)  taxable,  or  previously
   36  taxable,  under  section  one  hundred eighty-three, one hundred eighty-
   37  four, FORMER SECTION one  hundred  eighty-five  or  FORMER  SECTION  one
   38  hundred  eighty-six  of article nine; article nine-A, article thirty-two
   39  or thirty-three of this chapter; article twenty-three of this chapter or
   40  which would have been subject to tax under such article twenty-three (as
   41  such article was in effect on January first, nineteen hundred eighty) or
   42  the income (or losses) of which is (or  was)  includable  under  article
   43  twenty-two of this chapter.
   44    (2)  For purposes of article twenty-two of this chapter, an individual
   45  who is either a sole proprietor or a member of a partnership shall qual-
   46  ify as an owner of a new business unless the business of which the indi-
   47  vidual is an owner is substantially similar in operation and  in  owner-
   48  ship  to a business entity taxable, or previously taxable, under section
   49  one hundred eighty-three, one hundred eighty-four,  FORMER  SECTION  one
   50  hundred  eighty-five or FORMER SECTION one hundred eighty-six of article
   51  nine; article nine-A, thirty-two or thirty-three of this chapter;  arti-
   52  cle twenty-three of this chapter or which would have been subject to tax
   53  under  such article twenty-three (as such article was in effect on Janu-
   54  ary first, nineteen hundred eighty) or the income (or losses)  of  which
   55  is (or was) includable under article twenty-two.
       S. 6359                            227                           A. 8559
    1    (3)  For purposes of article twenty-two of this chapter, a shareholder
    2  of a New York S corporation shall be treated as the owner of a new busi-
    3  ness with respect to such share if the corporation qualifies  as  a  new
    4  business pursuant to paragraph one of this subdivision.
    5    (4) (A)(i) Notwithstanding paragraphs one and two of this subdivision,
    6  a new business shall include any corporation which is identical in oper-
    7  ation  and  ownership  to  a business entity (or entities) taxable under
    8  section one hundred eighty-three[,] OR one hundred eighty-four or FORMER
    9  SECTION one hundred eighty-five of article nine; article nine-A, article
   10  thirty-two or thirty-three of this chapter or the income (or losses)  of
   11  which  is  includable under article twenty-two of this chapter, provided
   12  such corporation and such business entity or entities are  operating  in
   13  different counties in the state.
   14    (ii)  Notwithstanding  paragraphs  one and two of this subdivision, an
   15  individual who is either a sole proprietor or a member of a  partnership
   16  shall qualify as an owner of a new business if the business of which the
   17  individual  is  an owner is identical in operation and in ownership to a
   18  business entity (or entities) taxable under section one hundred  eighty-
   19  three[,] OR one hundred eighty-four or FORMER SECTION one hundred eight-
   20  y-five  of  article  nine; article nine-A, article thirty-two or thirty-
   21  three of this chapter or the income (or losses) of which  is  includable
   22  under  article  twenty-two  of  this chapter, provided such business and
   23  such business entity or entities are operating in different counties  in
   24  the state.
   25    (iii)  Any  corporation qualifying as a new business or any individual
   26  qualifying as an owner of a new business as a result of  the  provisions
   27  of this subparagraph shall have the same business tax benefit period and
   28  sales  and  use tax benefit period as the business entity to which it is
   29  identical in operation and in ownership.
   30    (B) Notwithstanding any provisions of this subdivision to the contrary
   31  and notwithstanding subdivision c of section  eighteen  of  part  CC  of
   32  chapter  eighty-five  of  the laws of two thousand two, a corporation or
   33  partnership, which was first certified under article eighteen-B  of  the
   34  general  municipal law before August first, two thousand two, has a base
   35  period of zero years or zero employment for  its  base  period,  and  is
   36  similar  in  operation and in ownership to a business entity or entities
   37  taxable, or previously taxable, under sections  specified  in  paragraph
   38  one  or  two of this subdivision or which would have been subject to tax
   39  under article twenty-three of this  chapter  (as  such  article  was  in
   40  effect on January first, nineteen hundred eighty) or the income or loss-
   41  es  of which is or was includable under article twenty-two of this chap-
   42  ter shall not be deemed a new business if it was not formed for a  valid
   43  business  purpose, as such term is defined in clause (D) of subparagraph
   44  one of paragraph (o) of subdivision nine of section two hundred eight of
   45  this chapter and was formed solely to gain empire zone benefits.
   46    (5) Notwithstanding any other provision of this  section,  a  business
   47  enterprise which is approved by the commissioner of economic development
   48  as  the owner of a qualified investment project or a significant capital
   49  investment project pursuant to subdivision (w) of section  nine  hundred
   50  fifty-nine of the general municipal law, has a base period of zero years
   51  and  places in service property (or a project that includes such proper-
   52  ty) which comprises such qualified investment project  or  such  signif-
   53  icant  capital  investment project[,], shall be deemed to be a new busi-
   54  ness under this section. Provided, however, to be deemed a new  business
   55  under  this  paragraph,  such  business  enterprise  shall have received
       S. 6359                            228                           A. 8559
    1  certification under article eighteen-B of the general  business  law  by
    2  December thirty-first, two thousand seven.
    3    (k)  If  the  designation of an area as an empire zone is no longer in
    4  effect because section nine hundred sixty-nine of the general  municipal
    5  law  was not amended to extend the effective date of such designation so
    6  that the designations of all empire zones pursuant to article eighteen-B
    7  of the general municipal law have expired, a  business  enterprise  that
    8  was  certified  pursuant  to article eighteen-B of the general municipal
    9  law on the day immediately preceding the day on which  such  designation
   10  expired  shall  be deemed to continue to be certified under such article
   11  eighteen-B for purposes of this section, and sections fifteen,  sixteen,
   12  [section  one  hundred  eighty-seven-j,]  subdivisions  twenty-seven and
   13  twenty-eight of section two hundred ten, subsections (bb)  and  (cc)  of
   14  section six hundred six, subdivision [(z)] (D) of section eleven hundred
   15  [fifteen]  NINETEEN, subsections (o) and (p) of section fourteen hundred
   16  fifty-six, and subdivisions (r) and (s) of section fifteen hundred elev-
   17  en of this chapter. In addition, if the designation of  an  area  as  an
   18  empire  zone  is no longer in effect because section nine hundred sixty-
   19  nine of the general municipal law was not amended to extend  the  effec-
   20  tive  date  of  such  designation so that the designations of all empire
   21  zones pursuant to article eighteen-B of the general municipal  law  have
   22  expired,  all references to empire zones in the provisions of this chap-
   23  ter listed in the previous sentence  shall  be  read  as  meaning  areas
   24  designated  as  empire zones on the day immediately preceding the day on
   25  which such designation expired.
   26    S 5. Paragraph 1 of subdivision (h) of section 15 of the  tax  law  is
   27  REPEALED.
   28    S 6. The closing paragraph of subdivision (a) of section 28 of the tax
   29  law,  as added by section 2 of part V of chapter 62 of the laws of 2006,
   30  is amended to read as follows:
   31    (4) Notwithstanding any provisions of this section to the contrary,  a
   32  corporation  or  partnership,  which  otherwise qualifies as a qualified
   33  commercial production company, and is similar in operation and in owner-
   34  ship to a business entity or entities taxable,  or  previously  taxable,
   35  under  section one hundred eighty-three[,] OR one hundred eighty-four or
   36  FORMER SECTION one hundred eighty-five of article nine; article  nine-A,
   37  article  thirty-two  or thirty-three of this chapter or which would have
   38  been subject to tax under article twenty-three of this chapter (as  such
   39  article  was in effect on January first, nineteen hundred eighty) or the
   40  income or losses of which is or was includable under article  twenty-two
   41  of  this  chapter  shall  not  be deemed a new or separate business, and
   42  therefore shall not be eligible for empire state  commercial  production
   43  benefits,  if  it  was  not formed for a valid business purpose, as such
   44  term is defined in clause (D) of subparagraph one of  paragraph  (o)  of
   45  subdivision  nine  of  section two hundred eight of this chapter and was
   46  formed solely to gain empire state commercial  production  credit  bene-
   47  fits.
   48    S  7.  Subdivision  (a)  of  section  31 of the tax law, as amended by
   49  section 7 of part G of chapter 61 of the laws of  2011,  is  amended  to
   50  read as follows:
   51    (a)  General.  A  taxpayer  subject  to tax under [section one hundred
   52  eighty-five,] article nine-A, twenty-two, thirty-two or thirty-three  of
   53  this chapter shall be allowed a credit against such tax, pursuant to the
   54  provisions  referenced in subdivision (g) of this section. The amount of
   55  the credit, allowable for up to ten consecutive taxable  years,  is  the
   56  sum of the following four credit components:
       S. 6359                            229                           A. 8559
    1    (1) the excelsior jobs tax credit component;
    2    (2) the excelsior investment tax credit component;
    3    (3) the excelsior research and development tax credit component; and
    4    (4) the excelsior real property tax credit component.
    5    S  8.  Paragraph  1 of subdivision (g) of section 31 of the tax law is
    6  REPEALED.
    7    S 9. The opening paragraph of  paragraph  1  of  subdivision  (a)  and
    8  subparagraph  (C) of paragraph 2 of subdivision (e) of section 35 of the
    9  tax law, as added by section 3 of part V of chapter 61 of  the  laws  of
   10  2011, are amended to read as follows:
   11    A taxpayer which is a participant or the owner of a participant in the
   12  economic transformation and facility redevelopment program under article
   13  eighteen  of  the  economic development law that is subject to tax under
   14  [section one hundred eighty-five of article nine,  or]  article  nine-A,
   15  twenty-two,  thirty-two or thirty-three of this chapter shall be allowed
   16  the sum of following  components  against  such  tax,  pursuant  to  the
   17  provisions referenced in subdivision (f) of this section.
   18    (C) the business entity must not be substantially similar in ownership
   19  and  operation  to  another taxpayer taxable or previously taxable under
   20  section one hundred eighty-three[,] OR one hundred eighty-four or FORMER
   21  SECTION one hundred eighty-five of  article  nine,  former  section  one
   22  hundred  eighty-six of this chapter or article nine-A, twenty-two, thir-
   23  ty-two or thirty-three of this chapter or the income or losses of  which
   24  is or was includable under article twenty-two of this chapter;
   25    S  10. Paragraph 1 of subdivision (f) of section 35 of the tax law, as
   26  added by section 3 of part V of chapter 61  of  the  laws  of  2011,  is
   27  REPEALED.
   28    S  11. Paragraph 1 of subdivision (e) of section 38 of the tax law, as
   29  added by section 1 of part EE of chapter 59 of  the  laws  of  2013,  is
   30  REPEALED.
   31    S 12. Subdivision 2 of section 187 of the tax law, as added by chapter
   32  788 of the laws of 1978, is amended to read as follows:
   33    2.  In  no event shall the credit herein provided for be allowed in an
   34  amount which will reduce the tax payable to  less  than  the  applicable
   35  minimum  tax  fixed  by  section  one hundred eighty-three[, one hundred
   36  eighty-five] or FORMER SECTION one hundred eighty-six. If, however,  the
   37  amount  of  credit  allowable  under  this  section for any taxable year
   38  reduces the tax to such amount, any amount of credit not  deductible  in
   39  such taxable year may be carried over to the following year or years and
   40  may be deducted from the taxpayer's tax for such year or years.
   41    S 13. Subdivision 5 of section 187-a of the tax law, as added by chap-
   42  ter 142 of the laws of 1997, is amended to read as follows:
   43    5.  Carryover.  In  no  event  shall  the credit under this section be
   44  allowed in an amount which will reduce the tax payable to less than  the
   45  applicable  minimum  tax fixed by section one hundred eighty-three[, one
   46  hundred eighty-five] or FORMER SECTION one hundred  eighty-six  of  this
   47  article.  If, however, the amount of credit allowable under this section
   48  for any taxable year reduces the tax to such amount, any amount of cred-
   49  it  not  deductible  in  such  taxable  year  may be carried over to the
   50  following year or years and may be deducted from the taxpayer's tax  for
   51  such year or years.
   52    S 14. Subdivisions 1 and 4 of section 187-b of the tax law, as amended
   53  by section 1 of part G of chapter 59 of the laws of 2013, are amended to
   54  read as follows:
   55    1.  General.  A  taxpayer  shall  be  allowed a credit, to be credited
   56  against the taxes imposed under sections one hundred eighty-three[,] AND
       S. 6359                            230                           A. 8559
    1  one hundred eighty-four[, and one hundred eighty-five] of this  article.
    2  Such  credit,  to  be computed as hereinafter provided, shall be allowed
    3  for alternative fuel vehicle refueling and electric  vehicle  recharging
    4  property  placed  in service during the taxable year. Provided, however,
    5  that the amount of such credit allowable  against  the  tax  imposed  by
    6  section  one  hundred eighty-four of this article shall be the excess of
    7  the credit allowed by this section over the amount of such credit allow-
    8  able against the tax imposed by section one hundred eighty-three of this
    9  article.
   10    4. Carryovers. In no event shall the  credit  under  this  section  be
   11  allowed  in an amount which will reduce the tax payable to less than the
   12  applicable minimum tax fixed by section one hundred eighty-three [or one
   13  hundred eighty-five] of this article. If, however, the amount of  credit
   14  allowable  under  this  section  for any taxable year reduces the tax to
   15  such amount, any amount of credit not deductible in  such  taxable  year
   16  may  be  carried over to the following year or years and may be deducted
   17  from the taxpayer's tax for such year or years.
   18    S 15. Section 187-c of the tax law, as amended by section 2 of part  K
   19  of chapter 59 of the laws of 2012, is amended to read as follows:
   20    S  187-c.  Biofuel  production  credit.  A taxpayer shall be allowed a
   21  credit to be computed as provided in section twenty-eight of this  chap-
   22  ter, as added by part X of chapter sixty-two of the laws of two thousand
   23  six,  against  the  tax imposed by this article. Provided, however, that
   24  the amount of such credit allowed against the tax imposed by section one
   25  hundred eighty-four of this article shall be the excess of the amount of
   26  such credit over the amount  of  any  credit  allowed  by  this  section
   27  against  the  tax  imposed  by  section one hundred eighty-three of this
   28  article. In no event shall the credit under this section be  allowed  in
   29  an  amount which will reduce the tax payable to less than the applicable
   30  minimum tax fixed by section one hundred eighty-three  [or  one  hundred
   31  eighty-five]  of  this  article.  If,  however, the amount of the credit
   32  allowed under this section for any taxable year reduces the tax to  such
   33  amount, the excess shall be treated as an overpayment of tax to be cred-
   34  ited  or  refunded  in  accordance  with  the  provisions of section six
   35  hundred eighty-six of this chapter. Provided, however, the provisions of
   36  subsection (c) of section one  thousand  eighty-eight  of  this  chapter
   37  notwithstanding,  no  interest  shall  be  paid  thereon. The tax credit
   38  allowed pursuant to this section shall apply to taxable years  beginning
   39  before January first, two thousand twenty.
   40    S  16.  Section 187-d of the tax law, as added by section 3 of part II
   41  of chapter 63 of the laws of 2000, is amended to read as follows:
   42    S 187-d. Green building credit. 1. Allowance  of  credit.  A  taxpayer
   43  shall  be  allowed a credit, to be computed as provided in section nine-
   44  teen of this chapter, against the taxes imposed by sections one  hundred
   45  eighty-three,  one  hundred  eighty-four[,  one hundred eighty-five] and
   46  FORMER SECTION one hundred eighty-six of this article. Provided,  howev-
   47  er,  that the amount of such credit allowable against the tax imposed by
   48  section one hundred eighty-four of this article shall be the  excess  of
   49  the  amount of such credit over the amount of any credit allowed by this
   50  section against the tax imposed by section one hundred  eighty-three  of
   51  this article.
   52    2.  Carryovers.  In  no  event  shall the credit under this section be
   53  allowed in an amount which will reduce the tax payable to less than  the
   54  applicable  minimum  tax fixed by section one hundred eighty-three[, one
   55  hundred eighty-five] or FORMER SECTION one hundred  eighty-six  of  this
   56  article.  If, however, the amount of credit allowable under this section
       S. 6359                            231                           A. 8559
    1  for any taxable year reduces the tax to such amount, any amount of cred-
    2  it not deductible in such taxable  year  may  be  carried  over  to  the
    3  following  year or years and may be deducted from the taxpayer's tax for
    4  such year or years.
    5    S  17.  Subdivisions 1 and 2 of section 187-e of the tax law, as added
    6  by section 2 of part I of chapter 63 of the laws of 2000, are amended to
    7  read as follows:
    8    1. Allowance of credit. A taxpayer shall be allowed a  credit,  to  be
    9  computed  as  provided  in  section  twenty of this chapter, against the
   10  taxes imposed by sections one hundred eighty-three, one hundred  eighty-
   11  four[,  one  hundred eighty-five] and FORMER SECTION one hundred eighty-
   12  six of this article. Provided, however, that the amount of  such  credit
   13  allowable  against the tax imposed by section one hundred eighty-four of
   14  this article shall be the excess of the amount of such credit  over  the
   15  amount  of any credit allowed by this section against the tax imposed by
   16  section one hundred eighty-three of this article.
   17    2. Application of credit. In no event  shall  the  credit  under  this
   18  section  be  allowed  in  an amount which will reduce the tax payable to
   19  less than the applicable minimum tax fixed by section one hundred eight-
   20  y-three[, one hundred eighty-five] or FORMER SECTION one hundred  eight-
   21  y-six of this article. If, however, the amount of credit allowable under
   22  this  section  for  any taxable year reduces the tax to such amount, any
   23  amount of credit not thus deductible  in  such  taxable  year  shall  be
   24  treated  as  an overpayment of tax to be credited or refunded in accord-
   25  ance with the provisions of section ten hundred eighty-six of this chap-
   26  ter. Provided, however, the provisions of subsection (c) of section  ten
   27  hundred  eighty-eight of this chapter notwithstanding, no interest shall
   28  be paid thereon.
   29    S 18. Section 187-g of the tax law, as added by section 2 of part H of
   30  chapter 1 of the laws of 2003, is amended to read as follows:
   31    S 187-g. Brownfield redevelopment tax credit. 1. Allowance of  credit.
   32  A  taxpayer  shall  be  allowed  a credit, to be computed as provided in
   33  section twenty-one  of  this  chapter,  against  the  taxes  imposed  by
   34  sections  one  hundred  eighty-three[,] AND one hundred eighty-four [and
   35  one hundred eighty-five] of this article. Provided,  however,  that  the
   36  amount  of  such credit allowable against the tax imposed by section one
   37  hundred eighty-four of this article shall be the excess of the amount of
   38  such credit over the amount  of  any  credit  allowed  by  this  section
   39  against  the  tax  imposed  by  section one hundred eighty-three of this
   40  article.
   41    2. Application of credit. In no event  shall  the  credit  under  this
   42  section  be  allowed  in  an amount which will reduce the tax payable to
   43  less than the applicable minimum tax fixed by section one hundred eight-
   44  y-three [or one hundred eighty-five] of this article. If,  however,  the
   45  amount  of  credit  allowable  under  this  section for any taxable year
   46  reduces the tax to such amount, any amount of credit not  deductible  in
   47  such  taxable  year  shall  be  treated  as  an overpayment of tax to be
   48  refunded in accordance with the provisions of section ten hundred eight-
   49  y-six of this chapter. Provided, however, the provisions  of  subsection
   50  (c) of section ten hundred eighty-eight of this chapter notwithstanding,
   51  no interest shall be paid thereon.
   52    S  19.  Section 187-h of the tax law, as added by section 13 of part H
   53  of chapter 1 of the laws of 2003, subdivision 1 as amended by section  5
   54  of  part  H  of  chapter  577 of the laws of 2004, is amended to read as
   55  follows:
       S. 6359                            232                           A. 8559
    1    S 187-h. Remediated brownfield credit  for  real  property  taxes  for
    2  qualified  sites.  1. Allowance of credit. A taxpayer shall be allowed a
    3  credit, to be computed as provided in subdivision (b) of  section  twen-
    4  ty-two  of  this  chapter,  against  the  taxes  imposed by sections one
    5  hundred  eighty-three[,]  AND  one  hundred eighty-four [and one hundred
    6  eighty-five] of this article. Provided, however, that the amount of such
    7  credit allowed against the tax imposed by section  one  hundred  eighty-
    8  four  of  this  article shall be the excess of the amount of such credit
    9  over the amount of any credit allowed by this section  against  the  tax
   10  imposed by section one hundred eighty-three of this article.
   11    2.  Application  of  credit.  In  no event shall the credit under this
   12  section be allowed in an amount which will reduce  the  tax  payable  to
   13  less than the applicable minimum tax fixed by section one hundred eight-
   14  y-three  [or  one hundred eighty-five] of this article. If, however, the
   15  amount of credit allowed under this section for any taxable year reduces
   16  the tax to such amount, any amount of credit not thus deductible in such
   17  taxable year shall be treated as an overpayment of tax to be credited or
   18  refunded in accordance with the provisions of section ten hundred eight-
   19  y-six of this chapter. Provided, however, the provisions  of  subsection
   20  (c) of section ten hundred eighty-eight of this chapter notwithstanding,
   21  no interest shall be paid thereon.
   22    S  20.  Section 187-i of the tax law, as added by section 20 of part H
   23  of chapter 1 of the laws of 2003, is amended to read as follows:
   24    S 187-i. Environmental remediation insurance credit. 1.  Allowance  of
   25  credit. A taxpayer shall be allowed a credit, to be computed as provided
   26  in  section  twenty-three  of this chapter, against the taxes imposed by
   27  sections one hundred eighty-three[,] AND one  hundred  eighty-four  [and
   28  one  hundred  eighty-five]  of this article. Provided, however, that the
   29  amount of such credit allowable against the tax imposed by  section  one
   30  hundred eighty-four of this article shall be the excess of the amount of
   31  such  credit  over  the  amount  of  any  credit allowed by this section
   32  against the tax imposed by section  one  hundred  eighty-three  of  this
   33  article.
   34    2.  Application  of  credit.  In  no event shall the credit under this
   35  section be allowed in an amount which will reduce  the  tax  payable  to
   36  less  than  the  applicable  minimum  tax  fixed  by section one hundred
   37  eighty-three [or one hundred eighty-five] of this article. If,  however,
   38  the  amount  of credit allowable under this section for any taxable year
   39  reduces the tax to such amount, any amount of credit not  deductible  in
   40  such  taxable  year  shall  be  treated  as  an overpayment of tax to be
   41  refunded in accordance with  the  provisions  of  section  one  thousand
   42  eighty-six  of  this  chapter.  Provided,  however,  the  provisions  of
   43  subsection (c) of section one  thousand  eighty-eight  of  this  chapter
   44  notwithstanding, no interest shall be paid thereon.
   45    S  21.  Subdivision  2  of  section  187-n of the tax law, as added by
   46  chapter 537 of the laws of 2005, is amended to read as follows:
   47    2. Application of credit. In no event  shall  the  credit  under  this
   48  section  be  allowed  in  an amount which will reduce the tax payable to
   49  less than the applicable  minimum  tax  fixed  by  section  one  hundred
   50  eighty-three  [or one hundred eighty-five] of this article. If, however,
   51  the amount of credit allowable under this section for any  taxable  year
   52  reduces  the  tax to such amount, any amount of credit not deductible in
   53  such taxable year shall be treated  as  an  overpayment  of  tax  to  be
   54  refunded  in  accordance  with  the  provisions  of section one thousand
   55  eighty-six  of  this  chapter.  Provided,  however,  the  provisions  of
       S. 6359                            233                           A. 8559
    1  subsection  (c)  of  section  one  thousand eighty-eight of this chapter
    2  notwithstanding, no interest shall be paid thereon.
    3    S  22.  Subdivisions 1 and 3 of section 187-n of the tax law, subdivi-
    4  sion 1 as amended by section 1 of part C1 of chapter 57 of the  laws  of
    5  2009  and subdivision 3 as added by chapter 446 of the laws of 2005, are
    6  amended to read as follows:
    7    (1) Allowance of credit. For taxable years  beginning  before  January
    8  first, two thousand nine, a taxpayer whose business is not substantially
    9  engaged  in  the  commercial  generation, distribution, transmission, or
   10  servicing of energy or energy products shall be allowed a credit against
   11  the taxes imposed  by  sections  one  hundred  eighty-three[,]  AND  one
   12  hundred eighty-four [and one hundred eighty-five] of this article, equal
   13  to  its  qualified fuel cell electric generating equipment expenditures.
   14  Provided, however, that the amount of such credit allowable against  the
   15  tax  imposed by section one hundred eighty-four of this article shall be
   16  the excess of the amount of such credit over the amount  of  any  credit
   17  allowed  by  this section against the tax imposed by section one hundred
   18  eighty-three of this article. This credit shall not exceed one  thousand
   19  five  hundred  dollars  per  generating unit with respect to any taxable
   20  year. The credit provided for herein shall be allowed  with  respect  to
   21  the taxable year in which the fuel cell electric generating equipment is
   22  placed in service.
   23    (3)  Application  of  credit.  In no event shall the credit under this
   24  section be allowed in an amount which will reduce  the  tax  payable  to
   25  less than the applicable minimum tax fixed by section one hundred eight-
   26  y-three  [or  one hundred eighty-five] of this article. If, however, the
   27  amount of credit allowable under  this  section  for  any  taxable  year
   28  reduces  the  tax to such amount, any amount of credit not deductible in
   29  such taxable year may be carried over to the following year or years and
   30  may be deducted from the taxpayer's tax for such year or years.
   31    S 23. Section 187-o of the tax law, as added by section 3 of part Y of
   32  chapter 57 of the laws of 2010, is amended to read as follows:
   33    S 187-o. Temporary deferral nonrefundable payout credit. 1.  Allowance
   34  of  credit.  A  taxpayer  shall  be  allowed a credit, to be computed as
   35  provided in subdivision one of  section  thirty-four  of  this  chapter,
   36  against either the taxes imposed by sections one hundred eighty-three[,]
   37  AND  one  hundred eighty-four, [and one hundred eighty-five,] or the tax
   38  imposed by section one hundred eighty-six-a of  this  article.  However,
   39  the amount of such credit against the tax imposed by section one hundred
   40  eighty-four  of  this  article shall be the excess of the amount of that
   41  credit over the amount of any credit allowed by this section against the
   42  tax imposed by section one hundred eighty-three of this article.
   43    2. Application of credit. In no event  shall  the  credit  under  this
   44  section  be  allowed in an amount which will reduce the tax to less than
   45  the applicable minimum tax fixed by section one hundred eighty-three [or
   46  one hundred eighty-five] of this article. If,  however,  the  amount  of
   47  credit  allowed  under this section for any taxable year reduces the tax
   48  to such amount, any amount of credit not deductible in such taxable year
   49  may be carried over to the following year or years and may  be  deducted
   50  from the taxpayer's tax for such year or years.
   51    S 24. Section 187-p of the tax law, as added by section 3 of part Y of
   52  chapter 57 of the laws of 2010, is amended to read as follows:
   53    S  187-p. Temporary deferral refundable payout credit. 1. Allowance of
   54  credit. A taxpayer shall be allowed a credit, to be computed as provided
   55  in subdivision two of section thirty-four of this chapter,  against  the
   56  taxes  imposed  by  sections one hundred eighty-three[,] AND one hundred
       S. 6359                            234                           A. 8559
    1  eighty-four [and one hundred eighty-five] of this article,  or  the  tax
    2  imposed  by  section  one hundred eighty-six-a of this article. However,
    3  the amount of such credit against the tax imposed by section one hundred
    4  eighty-four  of  this  article shall be the excess of the amount of that
    5  credit over the amount of any credit allowed by this section against the
    6  tax imposed by section one hundred eighty-three of this article.
    7    2. Application of credit. In no event  shall  the  credit  under  this
    8  section  be  allowed in an amount which will reduce the tax to less than
    9  the applicable minimum tax fixed by section one hundred eighty-three [or
   10  one hundred eighty-five] of this article. If,  however,  the  amount  of
   11  credit  allowed  under this section for any taxable year reduces the tax
   12  to such amount, any amount of credit not deductible in such taxable year
   13  shall be treated as an overpayment of tax to be refunded  in  accordance
   14  with  the provisions of section one thousand eighty-six of this chapter,
   15  provided however, that no interest shall be paid thereon.
   16    S 25. Subdivisions 2 and 3 of section 190 of the tax law, as added  by
   17  section  1  of  part E of chapter 63 of the laws of 2000, are amended to
   18  read as follows:
   19    2. Computation. The credit allowed by  this  section  shall  first  be
   20  deducted  from  the  taxes imposed by section one hundred eighty-three[,
   21  one hundred eighty-five] or FORMER SECTION  one  hundred  eighty-six  of
   22  this  article.  The  amount  of  any such credit remaining shall next be
   23  deducted from the taxes imposed by section one  hundred  eighty-four  of
   24  this article.
   25    3.  Carryover.  In  no  event shall the amount of credit allowed under
   26  this section reduce the tax payable to less than the minimum  tax  fixed
   27  by section one hundred eighty-three[, one hundred eighty-five] or FORMER
   28  SECTION  one hundred eighty-six of this article. If, however, the amount
   29  of credit allowable under this section for any taxable year reduces  the
   30  tax  to such amount, any amount of credit not deductible in such taxable
   31  year may be carried over to the following  year  or  years  and  may  be
   32  deducted from the taxpayer's tax for such year or years.
   33    S 26. Subdivision 1 of section 192 of the tax law, as amended by chap-
   34  ter 96 of the laws of 1976, is amended to read as follows:
   35    1.  Corporations  paying franchise tax. Every corporation, association
   36  or joint-stock company liable to pay a tax  under  section  one  hundred
   37  eighty-three  [or  one hundred eighty-five] of this chapter shall, on or
   38  before March fifteenth in each year, make a written report  to  the  tax
   39  commission  of its condition at the close of its business on the preced-
   40  ing December thirty-first, stating the amount of its authorized  capital
   41  stock, the amount of stock paid in, the date and rate per centum of each
   42  dividend  paid  by  it  during the year ending with such day, the entire
   43  amount of the capital of such corporation, and the capital  employed  by
   44  it in this state during such year.
   45    S  27.  Subdivision  4  of  section  209 of the tax law, as amended by
   46  section 2 of part FF1 of chapter 57 of the laws of 2008, is  amended  to
   47  read as follows:
   48    4.  Corporations liable to tax under sections one hundred eighty-three
   49  to one  hundred  [eighty-five]  EIGHTY-FOUR-A,  inclusive,  corporations
   50  taxable  under articles thirty-two and thirty-three of this chapter, any
   51  trust company organized under a law of this state all of  the  stock  of
   52  which  is  owned by not less than twenty savings banks organized under a
   53  law of this state, bank holding companies filing a  combined  return  in
   54  accordance with [subdivision] SUBSECTION (f) of section fourteen hundred
   55  sixty-two  of  this  chapter,  a  captive REIT or a captive RIC filing a
   56  combined return under either [subdivision]  SUBSECTION  (f)  of  section
       S. 6359                            235                           A. 8559
    1  fourteen hundred sixty-two or subdivision (f) of section fifteen hundred
    2  fifteen  of  this chapter, and housing companies organized and operating
    3  pursuant to the provisions of article two or article five of the private
    4  housing  finance  law  and  housing development fund companies organized
    5  pursuant to the provisions of article  eleven  of  the  private  housing
    6  finance law shall not be subject to tax under this article.
    7    S  28.  Section 209 of the tax law is amended by adding a new subdivi-
    8  sion 12 to read as follows:
    9    12. ALL FARMERS', FRUIT GROWERS' AND OTHER  LIKE  AGRICULTURAL  CORPO-
   10  RATIONS  ORGANIZED AND OPERATED ON A CO-OPERATIVE BASIS FOR THE PURPOSES
   11  EXPRESSED IN AND AS PROVIDED UNDER THE CO-OPERATIVE CORPORATIONS LAW  OF
   12  THE  STATE  OF  NEW  YORK, WHETHER OR NOT SUCH CORPORATIONS HAVE CAPITAL
   13  STOCK, SHALL BE EXEMPT FROM TAXATION UNDER THE PROVISIONS OF THIS  ARTI-
   14  CLE.
   15    S 29. Paragraphs (b) and (c) of subdivision 1-c, clause (i) of subpar-
   16  agraph 1 of paragraph (b) of subdivision 3, and subparagraphs 1 and 2 of
   17  paragraph (j) of subdivision 12 of section 210 of the tax law, paragraph
   18  (b)  of subdivision 1-c as amended by section 12 of part Y of chapter 63
   19  of the laws of 2000, paragraph (c) of subdivision 1-c and subparagraph 2
   20  of paragraph (j) of subdivision 12 as amended by  chapter  1043  of  the
   21  laws  of 1981, clause (i) of subparagraph 1 of paragraph (b) of subdivi-
   22  sion 3 as amended by chapter 61 of the laws of 1989 and  subparagraph  1
   23  of paragraph (j) of subdivision 12 as amended by section 14 of part Y of
   24  chapter 63 of the laws of 2000, are amended to read as follows:
   25    (b) is not a corporation over fifty percent of the number of shares of
   26  stock of which entitling the holders thereof to vote for the election of
   27  directors or trustees is owned by a taxpayer which (1) is subject to tax
   28  under  this  article; section one hundred eighty-three[,] OR SECTION one
   29  hundred eighty-four or FORMER SECTION one hundred eighty-five of article
   30  nine; article thirty-two or thirty-three of this chapter, and  (2)  does
   31  not  qualify  as  a  small  business corporation as defined in paragraph
   32  three of subsection (c) of section  twelve  hundred  forty-four  of  the
   33  internal revenue code (without regard to the second sentence of subpara-
   34  graph  (A) thereof) as of the last day of its taxable year ending within
   35  or with the taxable year of the taxpayer,
   36    (c) is not a corporation which is substantially similar  in  operation
   37  and  in  ownership to a business entity (or entities) taxable, or previ-
   38  ously taxable, under this article; section one hundred eighty-three, one
   39  hundred eighty-four, OR FORMER SECTION one hundred eighty-five or FORMER
   40  SECTION one hundred eighty-six of article nine;  article  thirty-two  or
   41  thirty-three  of  this  chapter; article twenty-three of this chapter or
   42  which would have been subject to tax under such article twenty-three (as
   43  such article was in effect on January first, nineteen hundred eighty) or
   44  the income (or losses) of which is (or  was)  includable  under  article
   45  twenty-two of this chapter, and
   46    (i)  In  the case of an issuer or obligor subject to tax under section
   47  one hundred eighty-three[, one hundred eighty-five]  or  FORMER  SECTION
   48  one  hundred eighty-six of this chapter or under this article or article
   49  thirty-three of this chapter (except for  savings  and  insurance  banks
   50  described  in  subdivision  (b) of section fifteen hundred of this chap-
   51  ter), the issuer's allocation percentage shall be the percentage of  the
   52  appropriate  measure  (as  defined  hereinafter) which is required to be
   53  allocated within the state on the report, if any, required of the issuer
   54  or obligor under this chapter for the preceding  year.  The  appropriate
   55  measure  referred  to in the preceding sentence shall be: in the case of
   56  an issuer or obligor subject to section one hundred eighty-three of this
       S. 6359                            236                           A. 8559
    1  chapter, issued capital stock; in the  case  of  an  issuer  or  obligor
    2  [subject  to  section  one  hundred  eighty-five]  EXEMPT FROM TAX UNDER
    3  SUBDIVISION TWELVE  OF  SECTION  TWO  HUNDRED  NINE  of  this  [chapter]
    4  ARTICLE,  issued  capital  stock;  in  the  case of an issuer or obligor
    5  subject to FORMER section one hundred eighty-six of this chapter,  gross
    6  earnings;  in  the case of an issuer or obligor subject to this article,
    7  entire capital; and in the case of an issuer or obligor subject to arti-
    8  cle thirty-three of this chapter, gross direct premiums.
    9    (1) over fifty percent of the number of shares of stock entitling  the
   10  holders  thereof  to  vote  for the election of directors or trustees is
   11  owned or controlled,  either  directly  or  indirectly,  by  a  taxpayer
   12  subject to tax under this article; section one hundred eighty-three, one
   13  hundred eighty-four or FORMER SECTION one hundred eighty-five of article
   14  nine; article thirty-two or thirty-three of this chapter; or
   15    (2)  is substantially similar in operation and in ownership to a busi-
   16  ness entity (or entities) taxable, or  previously  taxable,  under  this
   17  article;  section  one  hundred  eighty-three,  one hundred eighty-four,
   18  FORMER SECTION one hundred eighty-five or  FORMER  SECTION  one  hundred
   19  eighty-six  of  article nine; article thirty-two or thirty-three of this
   20  chapter; article twenty-three of this chapter or which would  have  been
   21  subject  to  tax under such article twenty-three (as such article was in
   22  effect on January first, nineteen hundred  eighty)  or  the  income  (or
   23  losses) of which is (or was) includable under article twenty-two of this
   24  chapter  whereby  the intent and purpose of this paragraph and paragraph
   25  (e) of this subdivision with respect to refunding of credit to new busi-
   26  ness would be evaded; or
   27    S 30. Subparagraph (A) of paragraph 10 of subsection  (a)  of  section
   28  606  of the tax law, as amended by section 3 of part CC of chapter 85 of
   29  the laws of 2002, is amended to read as follows:
   30    (A) the business of which the individual is an owner is  substantially
   31  similar  in  operation and in ownership to a business entity taxable, or
   32  previously taxable, under section one hundred eighty-three, one  hundred
   33  eighty-four,  FORMER  SECTION  one hundred eighty-five or FORMER SECTION
   34  one hundred eighty-six of article nine; article  nine-A,  thirty-two  or
   35  thirty-three  of  this  chapter; article twenty-three of this chapter or
   36  which would have been subject to tax under such article twenty-three (as
   37  such article was in effect on January first, nineteen hundred eighty) or
   38  the income (or losses) of which is (or  was)  includable  under  article
   39  twenty-two  of this chapter whereby the intent and purpose of this para-
   40  graph and paragraph five of this subsection with respect to refunding of
   41  credit to new business would be evaded; or
   42    S 31. Subparagraphs (A) and (B) of paragraph 8 of  subsection  (i)  of
   43  section 1456 of the tax law, as added by section 27 of part A of chapter
   44  56 of the laws of 1998, are amended to read as follows:
   45    (A)  over fifty percent of the number of shares of stock entitling the
   46  holders thereof to vote for the election of  directors  or  trustees  is
   47  owned  or  controlled,  either  directly  or  indirectly,  by a taxpayer
   48  subject to tax under this article; section one hundred eighty-three, one
   49  hundred eighty-four, FORMER SECTION one hundred  eighty-five  or  FORMER
   50  SECTION  one hundred eighty-six of article nine; article nine-A or arti-
   51  cle thirty-three of this chapter; or
   52    (B) is substantially similar in operation and in ownership to a  busi-
   53  ness  entity  (or  entities)  taxable, or previously taxable, under this
   54  article; section one  hundred  eighty-three,  one  hundred  eighty-four,
   55  FORMER  SECTION  one  hundred  eighty-five or FORMER SECTION one hundred
   56  eighty-six of article nine; article nine-A or  article  thirty-three  of
       S. 6359                            237                           A. 8559
    1  this  chapter;  article twenty-three of this chapter or which would have
    2  been subject to tax under such article twenty-three (as such article was
    3  in effect on January first, nineteen hundred eighty) or the  income  (or
    4  losses) of which is (or was) includable under article twenty-two of this
    5  chapter  whereby  the intent and purpose of this paragraph and paragraph
    6  five of this subsection with respect to refunding of credit to new busi-
    7  ness would be evaded; or
    8    S 32. Subparagraph (A) of paragraph 7 of subdivision  (q)  of  section
    9  1511  of  the  tax law, as added by section 1 of part L of chapter 63 of
   10  the laws of 2000, is amended to read as follows:
   11    (A) over fifty percent of the number of shares of stock entitling  the
   12  holders  thereof  to  vote  for the election of directors or trustees is
   13  owned or controlled,  either  directly  or  indirectly,  by  a  taxpayer
   14  subject to tax under this article; section one hundred eighty-three, one
   15  hundred  eighty-four,  FORMER  SECTION one hundred eighty-five or FORMER
   16  SECTION one hundred eighty-six of article nine; article nine-A or  arti-
   17  cle thirty-two of this chapter; or
   18    S  33.  Subdivision  13  of  section 171 of the transportation law, as
   19  added by chapter 478 of the laws of 1991, is amended to read as follows:
   20    13. The transportation for compensation performed by  an  agricultural
   21  cooperative  corporation[,  which  corporation  is  subject to tax under
   22  section one hundred eighty-five of the tax law,] for non-members who are
   23  not farmers or cooperative  corporations  when  such  transportation  is
   24  limited  to  that  which  is  incidental to the agricultural cooperative
   25  corporation's primary transportation operation and is necessary for  its
   26  effective  performance. Such transportation shall be provided only after
   27  the agricultural cooperative corporation notifies  the  commissioner  in
   28  writing  of  its  intent  to provide the transportation and it shall not
   29  exceed twenty-five percent of the agricultural cooperative corporation's
   30  total transportation services in each calendar year measured in terms of
   31  tonnage. The commissioner may prescribe the records to be kept  and  the
   32  information to be furnished by all agricultural cooperative corporations
   33  performing transportation pursuant to this subdivision.
   34    S  34. Subclause 2 of clause (v) of subparagraph (B) of paragraph 1 of
   35  subdivision (o) of section 11-1712 of the  administrative  code  of  the
   36  city  of  New York, such subdivision as relettered by chapter 639 of the
   37  laws of 1986, is amended to read as follows:
   38    (2) A new business does not include: (i) any  new  business  of  which
   39  twenty-five  percent or more of the number of shares of stock that enti-
   40  tle the holders thereof to vote for the election of directors  or  trus-
   41  tees  is  owned,  directly  or  indirectly, by a taxpayer subject to tax
   42  under section one hundred eighty-three, one hundred eighty-four,  FORMER
   43  SECTION one hundred eighty-five or FORMER SECTION one hundred eighty-six
   44  of  article nine of the tax law, or under article [nine-a] NINE-A, thir-
   45  ty-two or thirty-three of the tax law or (ii) any new business  substan-
   46  tially similar in operation and in ownership, directly or indirectly, to
   47  a  business  entity  (or entities) taxable, or previously taxable, under
   48  such section, such article, article twenty-three of the tax law or which
   49  would have been subject to tax under such article twenty-three (as  such
   50  article  was in effect on January first, nineteen hundred eighty) or the
   51  income (or losses) of which is (or was) includible under  article  twen-
   52  ty-two  of  such  tax law whereby the intent and purpose of this section
   53  would be evaded.
   54    S 35. Paragraph (iii) of subdivision 9 of section 16-v of section 1 of
   55  chapter 174 of the laws of 1968, constituting the New York  state  urban
       S. 6359                            238                           A. 8559
    1  development  corporation act, as added by section 1 of part C of chapter
    2  59 of the laws of 2013, is amended to read as follows:
    3    (iii) either: (A) any corporation, except a corporation which:
    4    (1)  over fifty percent of the number of shares of stock entitling the
    5  holders thereof to vote for the election of  directors  or  trustees  is
    6  owned  or  controlled,  either  directly  or  indirectly,  by a taxpayer
    7  subject to tax under the following provisions of the  tax  law:  article
    8  nine-A;  section  one hundred eighty-three[,] OR one hundred eighty-four
    9  or FORMER SECTION one hundred eighty-five of article nine; article thir-
   10  ty-two or article thirty-three; or
   11    (2) is substantially similar in operation and in ownership to a  busi-
   12  ness  entity  (or  entities)  taxable  or  previously  taxable under the
   13  following provisions of the tax law: article nine-A; section one hundred
   14  eighty-three, one hundred eighty-four, FORMER SECTION one hundred eight-
   15  y-five or former section one hundred eighty-six of article nine; article
   16  thirty-two; article thirty-three; article twenty-three,  or  would  have
   17  been subject to tax under such article twenty-three (as such article was
   18  in  effect  on January first, nineteen hundred eighty) or the income (or
   19  losses) of which is (or was) includable under article twenty-two; or
   20    (B) a sole proprietorship, partnership, limited  partnership,  limited
   21  liability  company,  or  New  York  subchapter S corporation that is not
   22  substantially similar in operation and in ownership to a business entity
   23  (or entities) taxable, or previously taxable, under  article  nine-A  of
   24  the  tax law, section one hundred eighty-three, one hundred eighty-four,
   25  FORMER SECTION one hundred eighty-five or  former  section  one  hundred
   26  eighty-six  of  article nine of the tax law, article thirty-two or thir-
   27  ty-three of the tax law, article twenty-three of the tax  law  or  which
   28  would  have been subject to tax under such article twenty-three (as such
   29  article was in effect on January first, nineteen hundred eighty) or  the
   30  income  (or  losses) of which is (or was) includable under article twen-
   31  ty-two of the tax law; and
   32    S 36. Notwithstanding the repeal of section 185  of  the  tax  law  by
   33  section  one of this act, all provisions of such section 185, in respect
   34  to the imposition, exemption, assessment, payment, payment over,  deter-
   35  mination,  collection,  and  credit or refund of tax imposed thereunder,
   36  the filing of forms and returns, the preservation  of  records  for  the
   37  purposes  of such tax, the secrecy of returns, the disposition of reven-
   38  ues, and the civil and criminal penalties applicable to the violation of
   39  the provisions of such section 185, shall continue  in  full  force  and
   40  effect with respect to all such tax accrued up to December 31, 2014; all
   41  actions  and  proceedings, civil or criminal, commenced or authorized to
   42  be commenced under or by virtue of any provision of such section 185  so
   43  repealed,  and pending or able to commence prior to the taking effect of
   44  such repeal, may be commenced, prosecuted and defended to  final  effect
   45  in  the  same  manner  as  they  might  if  such  provisions were not so
   46  repealed.
   47    S 37. This act shall take effect immediately and shall apply to  taxa-
   48  ble years beginning on or after January 1, 2015; provided, however that:
   49    a.  the  amendments  to  subdivision  9 of section 400 of the economic
   50  development law made by section two of this act  shall  not  affect  the
   51  repeal of such section and shall be deemed repealed therewith; and
   52    b. the amendments to subdivisions (a) and (e) of section 35 of the tax
   53  law made by section nine of this act shall not affect the repeal of such
   54  section and shall be deemed repealed therewith.
   55                                   PART T
       S. 6359                            239                           A. 8559
    1    Section 1. Section 39 of the tax law is amended by adding a new subdi-
    2  vision (c-1) to read as follows:
    3    (C-1) EXCISE TAX ON TELECOMMUNICATION SERVICES. SUCH BUSINESS OR OWNER
    4  OF  A BUSINESS SHALL BE ELIGIBLE FOR A CREDIT OF THE EXCISE TAX ON TELE-
    5  COMMUNICATION SERVICES IMPOSED BY SECTION ONE  HUNDRED  EIGHTY-SIX-E  OF
    6  THIS  CHAPTER  THAT  IS PASSED THROUGH TO SUCH BUSINESS, PURSUANT TO THE
    7  PROVISIONS REFERENCED IN SUBDIVISION (K) OF THIS SECTION.
    8    S 2. Paragraphs 4 and 6 of subdivision (k) of section 39  of  the  tax
    9  law,  as added by section 2 of part A of chapter 68 of the laws of 2013,
   10  are amended to read as follows:
   11    (4) Article 9-A: section 210, subdivision 47 AND SUBDIVISION 48.
   12    (6) Article 22: section 606, subsection (ww) AND SUBSECTION (XX).
   13    S 3. Section 210 of the tax law is amended by adding a new subdivision
   14  48 to read as follows:
   15    48. THE TAX-FREE NY AREA  EXCISE  TAX  ON  TELECOMMUNICATION  SERVICES
   16  CREDIT.  A  TAXPAYER  THAT  IS A BUSINESS OR OWNER OF A BUSINESS THAT IS
   17  LOCATED IN A TAX-FREE NY AREA APPROVED PURSUANT TO ARTICLE TWENTY-ONE OF
   18  THE ECONOMIC DEVELOPMENT LAW SHALL BE ALLOWED  A  CREDIT  EQUAL  TO  THE
   19  EXCISE  TAX ON TELECOMMUNICATION SERVICES IMPOSED BY SECTION ONE HUNDRED
   20  EIGHTY-SIX-E OF THIS CHAPTER AND PASSED THROUGH TO SUCH BUSINESS  DURING
   21  THE  TAXABLE  YEAR  TO  THE  EXTENT  NOT OTHERWISE DEDUCTED IN COMPUTING
   22  ENTIRE NET INCOME. HOWEVER, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN  SUCH
   23  TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
   24  REFUNDED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND
   25  EIGHTY-SIX OF THIS CHAPTER. THIS CREDIT MAY BE CLAIMED  ONLY  WHERE  ANY
   26  TAX IMPOSED BY SUCH SECTION ONE HUNDRED EIGHTY-SIX-E HAS BEEN SEPARATELY
   27  STATED  ON  A  BILL  FROM THE PROVIDER OF TELECOMMUNICATION SERVICES AND
   28  PAID BY SUCH BUSINESS DURING THE TAXABLE YEAR. UNLESS THE TAXPAYER HAS A
   29  TAX-FREE NY AREA ALLOCATION FACTOR OF ONE HUNDRED  PERCENT,  THE  CREDIT
   30  ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE
   31  TAX  DUE  FOR  SUCH YEAR TO LESS THAN THE AMOUNT PRESCRIBED IN PARAGRAPH
   32  (D)  OF  SUBDIVISION  ONE  OF  THIS  SECTION.  PROVIDED,  HOWEVER,   THE
   33  PROVISIONS  OF  SUBSECTION  (C)  OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
   34  THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
   35    S 4. Section 606 of the tax law is amended by adding a new  subsection
   36  (xx) to read as follows:
   37    (XX)  THE  TAX-FREE  NY  AREA EXCISE TAX ON TELECOMMUNICATION SERVICES
   38  CREDIT. A TAXPAYER THAT IS A BUSINESS OR OWNER OF  A  BUSINESS  THAT  IS
   39  LOCATED IN A TAX-FREE NY AREA APPROVED PURSUANT TO ARTICLE TWENTY-ONE OF
   40  THE  ECONOMIC  DEVELOPMENT  LAW  SHALL  BE ALLOWED A CREDIT EQUAL TO THE
   41  EXCISE TAX ON TELECOMMUNICATION SERVICES IMPOSED BY SECTION ONE  HUNDRED
   42  EIGHTY-SIX-E  OF THIS CHAPTER AND PASSED THROUGH TO SUCH BUSINESS DURING
   43  THE TAXABLE YEAR TO THE  EXTENT  NOT  OTHERWISE  DEDUCTED  IN  COMPUTING
   44  FEDERAL  ADJUSTED  GROSS INCOME.   THIS CREDIT MAY BE CLAIMED ONLY WHERE
   45  ANY TAX IMPOSED BY SUCH SECTION ONE HUNDRED EIGHTY-SIX-E HAS BEEN  SEPA-
   46  RATELY  STATED ON A BILL FROM THE PROVIDER OF TELECOMMUNICATION SERVICES
   47  AND PAID BY SUCH TAXPAYER DURING THE TAXABLE YEAR. IF THE AMOUNT OF  THE
   48  CREDIT  ALLOWED  UNDER  THIS SUBSECTION FOR ANY TAXABLE YEAR EXCEEDS THE
   49  TAXPAYER'S TAX FOR SUCH YEAR, THE EXCESS WILL BE TREATED AS AN  OVERPAY-
   50  MENT  TO  BE  CREDITED  OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF
   51  SECTION SIX HUNDRED EIGHTY-SIX OF THIS ARTICLE, PROVIDED, HOWEVER,  THAT
   52  NO INTEREST WILL BE PAID THEREON.
   53    S  5. Subparagraph (B) of paragraph 1 of subsection (i) of section 606
   54  of the tax law is amended by adding a new clause  (xxxvii)  to  read  as
   55  follows:
       S. 6359                            240                           A. 8559
    1  (XXXVII) TAX FREE NY AREA EXCISE        AMOUNT OF CREDIT UNDER
    2  TAX ON TELECOMMUNICATION SERVICES       SUBDIVISION FORTY-EIGHT
    3  CREDIT UNDER SUBSECTION (XX)            OF SECTION TWO HUNDRED TEN
    4    S 6. This act shall take effect immediately and shall apply to taxable
    5  years beginning on or after January 1, 2014.
    6                                   PART U
    7    Section  1.  Paragraph (a) of subdivision 44 of section 210 of the tax
    8  law, as amended by section 2 of part T of chapter  59  of  the  laws  of
    9  2012, is amended to read as follows:
   10    (a) A taxpayer that has been certified by the commissioner of labor as
   11  a  qualified employer pursuant to section twenty-five-a of the labor law
   12  shall be allowed a credit against the tax imposed by this article  equal
   13  to  (i)  five  hundred  dollars  per month for up to six months for each
   14  qualified employee the employer  employs  in  a  full-time  job  or  two
   15  hundred  fifty dollars per month for up to six months for each qualified
   16  employee the employer employs in a part-time  job  of  at  least  twenty
   17  hours  per  week  OR  TEN  HOURS PER WEEK WHEN THE QUALIFIED EMPLOYEE IS
   18  ENROLLED IN HIGH SCHOOL FULL-TIME, and (ii)  one  thousand  dollars  for
   19  each  qualified  employee who is employed for at least an additional six
   20  months by the qualified employer in a  full-time  job  or  five  hundred
   21  dollars  for  each  qualified  employee  who is employed for at least an
   22  additional six months by the qualified employer in a part-time job of at
   23  least twenty hours per week OR TEN HOURS PER  WEEK  WHEN  THE  QUALIFIED
   24  EMPLOYEE  IS  ENROLLED IN HIGH SCHOOL FULL-TIME, AND (III) AN ADDITIONAL
   25  ONE THOUSAND DOLLARS FOR EACH QUALIFIED EMPLOYEE WHO IS EMPLOYED FOR  AT
   26  LEAST  AN ADDITIONAL YEAR AFTER THE FIRST YEAR OF THE EMPLOYEE'S EMPLOY-
   27  MENT BY THE QUALIFIED EMPLOYER  IN  A  FULL-TIME  JOB  OR  FIVE  HUNDRED
   28  DOLLARS  FOR  EACH  QUALIFIED  EMPLOYEE  WHO IS EMPLOYED FOR AT LEAST AN
   29  ADDITIONAL YEAR AFTER THE FIRST YEAR OF THE EMPLOYEE'S EMPLOYMENT BY THE
   30  QUALIFIED EMPLOYER IN A PART-TIME JOB OF AT LEAST TWENTY HOURS PER  WEEK
   31  OR  TEN  HOURS  PER WEEK WHEN THE QUALIFIED EMPLOYEE IS ENROLLED IN HIGH
   32  SCHOOL FULL-TIME.  For purposes of this subdivision, the term "qualified
   33  employee" shall have the same meaning as set forth in subdivision (b) of
   34  section twenty-five-a of the  labor  law.  The  portion  of  the  credit
   35  described in subparagraph (i) of this paragraph shall be allowed for the
   36  taxable  year in which the wages are paid to the qualified employee, and
   37  the portion of the credit described in subparagraph (ii) of  this  para-
   38  graph  shall  be allowed in the taxable year in which the additional six
   39  month period ends.
   40    S 2. Paragraph 1 of subsection (tt) of section 606 of the tax law,  as
   41  amended  by  section  3  of part T of chapter 59 of the laws of 2012, is
   42  amended to read as follows:
   43    (1) A taxpayer that has been certified by the commissioner of labor as
   44  a qualified employer pursuant to section twenty-five-a of the labor  law
   45  shall  be allowed a credit against the tax imposed by this article equal
   46  to (A) five hundred dollars per month for up  to  six  months  for  each
   47  qualified  employee  the  employer  employs  in  a  full-time job or two
   48  hundred fifty dollars per month for up to six months for each  qualified
   49  employee  the  employer  employs  in  a part-time job of at least twenty
   50  hours per week OR TEN HOURS PER WEEK  WHEN  THE  QUALIFIED  EMPLOYEE  IS
   51  ENROLLED IN HIGH SCHOOL FULL-TIME, and (B) one thousand dollars for each
   52  qualified employee who is employed for at least an additional six months
   53  by the qualified employer in a full-time job or five hundred dollars for
   54  each  qualified  employee who is employed for at least an additional six
       S. 6359                            241                           A. 8559
    1  months by the qualified employer in a part-time job of at  least  twenty
    2  hours  per  week  OR  TEN  HOURS PER WEEK WHEN THE QUALIFIED EMPLOYEE IS
    3  ENROLLED IN HIGH SCHOOL FULL-TIME, AND (C) AN  ADDITIONAL  ONE  THOUSAND
    4  DOLLARS  FOR  EACH  QUALIFIED  EMPLOYEE  WHO IS EMPLOYED FOR AT LEAST AN
    5  ADDITIONAL YEAR AFTER THE FIRST YEAR OF THE EMPLOYEE'S EMPLOYMENT BY THE
    6  QUALIFIED EMPLOYER IN A FULL-TIME JOB OR FIVE HUNDRED DOLLARS  FOR  EACH
    7  QUALIFIED EMPLOYEE WHO IS EMPLOYED FOR AT LEAST AN ADDITIONAL YEAR AFTER
    8  THE FIRST YEAR OF THE EMPLOYEE'S EMPLOYMENT BY THE QUALIFIED EMPLOYER IN
    9  A  PART-TIME JOB OF AT LEAST TWENTY HOURS PER WEEK OR TEN HOURS PER WEEK
   10  WHEN THE QUALIFIED EMPLOYEE IS ENROLLED IN HIGH  SCHOOL  FULL-TIME.    A
   11  taxpayer that is a partner in a partnership, member of a limited liabil-
   12  ity  company  or shareholder in an S corporation that has been certified
   13  by the commissioner of labor as a qualified employer pursuant to section
   14  twenty-five-a of the labor law shall be allowed its pro  rata  share  of
   15  the  credit  earned  by  the partnership, limited liability company or S
   16  corporation. For  purposes  of  this  subsection,  the  term  "qualified
   17  employee" shall have the same meaning as set forth in subdivision (b) of
   18  section  twenty-five-a  of  the  labor  law.  The  portion of the credit
   19  described in subparagraph (A) of this paragraph shall be allowed for the
   20  taxable year in which the wages are paid to the qualified employee,  and
   21  the  portion  of  the credit described in subparagraph (B) of this para-
   22  graph shall be allowed in the taxable year in which the  additional  six
   23  month period ends.
   24    S  3.  Subdivision (a) of section 25-a of the labor law, as amended by
   25  section 2 of part DD of chapter 59 of the laws of 2013,  is  amended  to
   26  read as follows:
   27    (a) The commissioner is authorized to establish and administer the New
   28  York youth works tax credit program to provide tax incentives to employ-
   29  ers  for  employing  at risk youth in part-time and full-time positions.
   30  There will be five distinct pools of tax incentives.  Program  one  will
   31  cover  tax incentives allocated for two thousand twelve and two thousand
   32  thirteen. Program two will cover tax incentives allocated in  two  thou-
   33  sand  fourteen to be used in two thousand fourteen and fifteen.  Program
   34  three will cover tax incentives allocated in two thousand fifteen to  be
   35  used  in  two  thousand fifteen and sixteen. Program four will cover tax
   36  incentives allocated in two thousand sixteen to be used in two  thousand
   37  sixteen  and seventeen. Program five will cover tax incentives allocated
   38  in two thousand seventeen to be used in two thousand seventeen and eigh-
   39  teen. The commissioner is  authorized  to  allocate  up  to  twenty-five
   40  million  dollars  of  tax  credits  under program one, [six] TEN million
   41  dollars of tax credits under program two, [six] TEN million  dollars  of
   42  tax  credits  under  program three, [and six] TEN million dollars of tax
   43  credits under program four, and [six] TEN million dollars of tax credits
   44  under program five.
   45    S 4. This act shall take effect immediately and apply to taxable years
   46  beginning on or after January 1, 2014.
   47                                   PART V
   48    Section 1. Section 19 of Part W-1 of chapter 109 of the laws  of  2006
   49  amending  the  tax  law and other laws relating to providing exemptions,
   50  reimbursements and credits from various taxes  for  certain  alternative
   51  fuels,  as  amended  by section 1 of part D of chapter 59 of the laws of
   52  2012, is amended to read as follows:
   53    S 19. This act shall take effect immediately; provided, however,  that
   54  sections one through thirteen of this act shall take effect September 1,
       S. 6359                            242                           A. 8559
    1  2006  and  shall be deemed repealed on September 1, [2014] 2016 and such
    2  repeal shall  apply  in  accordance  with  the  applicable  transitional
    3  provisions  of sections 1106 and 1217 of the tax law, and shall apply to
    4  sales  made,  fuel  compounded or manufactured, and uses occurring on or
    5  after such date, and with respect to sections seven  through  eleven  of
    6  this  act,  in  accordance  with  applicable  transitional provisions of
    7  sections 1106 and 1217 of the  tax  law;  provided,  however,  that  the
    8  commissioner  of  taxation  and finance shall be authorized on and after
    9  the date this act shall have become a law to adopt and amend  any  rules
   10  or  regulations  and  to  take  any  steps  necessary  to  implement the
   11  provisions of this act; provided further that sections fourteen  through
   12  sixteen  of  this  act  shall take effect immediately and shall apply to
   13  taxable years beginning on or after January 1, 2006.
   14    S 2. This act shall take effect immediately.
   15                                   PART W
   16    Section 1. Section 11 of part EE of chapter 63 of the  laws  of  2000,
   17  amending  the  tax law and other laws relating to modifying the distrib-
   18  ution of funds from the motor vehicle fuel excise  tax,  as  amended  by
   19  section  1  of  part  M of chapter 61 of the laws of 2011, is amended to
   20  read as follows:
   21    S 11. Notwithstanding any other law, rule or regulation to the contra-
   22  ry, the comptroller is hereby authorized  and  directed  to  deposit  in
   23  equal  monthly installments and distribute pursuant to the provisions of
   24  subdivision (d) of section 301-j of the tax law amounts listed below  to
   25  the  credit of the dedicated highway and bridge trust fund and the dedi-
   26  cated mass transportation trust fund from all motor vehicle receipts now
   27  deposited into the general fund pursuant to provisions  of  the  vehicle
   28  and  traffic  law:    twenty-eight million four hundred thousand dollars
   29  from April 1, 2002 through March  31,  2003,  sixty-seven  million  nine
   30  hundred  thousand dollars from April 1, 2003 through March 31, 2004, one
   31  hundred seventy million one hundred thousand dollars from April 1,  2004
   32  through  March  31,  2005,  and one hundred percent of all motor vehicle
   33  receipts pursuant to provisions of the vehicle and traffic law that  are
   34  not  otherwise directed to be deposited in a fund other than the general
   35  fund from April 1, 2005 through March 31, 2006, and the same amount each
   36  year thereafter UNTIL MARCH 31, 2014. FROM APRIL 1, 2014  THROUGH  MARCH
   37  31, 2015, AND EACH YEAR THEREAFTER, THE COMPTROLLER SHALL, ON A QUARTER-
   38  LY BASIS, CERTIFY AND TRANSFER SIXTEEN MILLION FOUR HUNDRED NINETY-EIGHT
   39  THOUSAND  TWO  HUNDRED  FIFTY-FIVE  DOLLARS TO THE DEDICATED HIGHWAY AND
   40  BRIDGE TRUST FUND AND FIFTEEN MILLION SIX  HUNDRED  SIXTY-FIVE  THOUSAND
   41  TWO  HUNDRED  FORTY-FIVE  DOLLARS  TO  THE DEDICATED MASS TRANSPORTATION
   42  TRUST FUND.
   43    S 2. Paragraph (f) of subdivision 4 of section 503 of the vehicle  and
   44  traffic  law,  as added by section 1 of part W of chapter 59 of the laws
   45  of 2006, is amended to read as follows:
   46    (f) Notwithstanding any  other  provision  of  law  to  the  contrary,
   47  commencing  April first, two thousand six and ending March thirty-first,
   48  two thousand [seven] FOURTEEN, IN EACH YEAR,  the  first  forty  million
   49  seven hundred thousand dollars of fees collected pursuant to this subdi-
   50  vision  and  section  eleven hundred ninety-nine of this chapter, in the
   51  aggregate, shall be paid to the state comptroller who shall deposit such
   52  money in the state treasury pursuant to section one  hundred  twenty-one
   53  of  the  state  finance  law to the credit of the general fund. Any such
   54  fees collected in excess of such amount shall be paid to the  credit  of
       S. 6359                            243                           A. 8559
    1  the  comptroller  on  account  of the dedicated highway and bridge trust
    2  fund established pursuant to section eighty-nine-b of the state  finance
    3  law.  [Commencing April first, two thousand seven and ending March thir-
    4  ty-first,  two thousand eight, and for each such fiscal year thereafter,
    5  the first forty million seven hundred thousand dollars of fees collected
    6  pursuant to this subdivision and section eleven hundred  ninety-nine  of
    7  this  chapter,  in the aggregate, shall be paid to the state comptroller
    8  who shall deposit such money in the state treasury pursuant  to  section
    9  one  hundred  twenty-one  of  the state finance law to the credit of the
   10  general fund. Any such fees collected in excess of such amount for  each
   11  such  state  fiscal year, shall be paid to the credit of the comptroller
   12  on account of the dedicated highway and bridge  trust  fund  established
   13  pursuant  to section eighty-nine-b of the state finance law.] COMMENCING
   14  APRIL FIRST, TWO THOUSAND FOURTEEN AND FOR EACH SUCH FISCAL YEAR  THERE-
   15  AFTER,  ANY SUCH FEES COLLECTED PURSUANT TO THIS SUBDIVISION AND SECTION
   16  ELEVEN HUNDRED NINETY-NINE OF THIS CHAPTER SHALL BE PAID TO  THE  CREDIT
   17  OF  THE COMPTROLLER ON ACCOUNT OF THE DEDICATED HIGHWAY AND BRIDGE TRUST
   18  FUND ESTABLISHED PURSUANT TO SECTION EIGHTY-NINE-B OF THE STATE  FINANCE
   19  LAW.
   20    S  3.  This  act  shall take effect immediately and shall be deemed to
   21  have been in full force and effect on and after April 1, 2014.
   22                                   PART X
   23    Section 1. Section 951 of the tax law, as amended by chapter 67 of the
   24  laws of 1978, subsection (a) as amended by section 1 of part T of  chap-
   25  ter  57  of  the laws of 2010, subsection (b) as amended by section 5 of
   26  part A of chapter 389 of the laws of 1997 and subsection (c) as added by
   27  chapter 538 of the laws of 2013, is amended to read as follows:
   28    S 951. Applicable internal revenue code  provisions.--  (a)  [Dates]
   29  GENERAL.    For  purposes of this article, any reference to the internal
   30  revenue code means the United States Internal Revenue Code of 1986, with
   31  all amendments  enacted  on  or  before  [July  twenty-second,  nineteen
   32  hundred  ninety-eight,] JANUARY FIRST, TWO THOUSAND FOURTEEN and, unless
   33  specifically provided otherwise in this article, any reference to Decem-
   34  ber thirty-first, nineteen hundred seventy-six or January  first,  nine-
   35  teen  hundred  seventy-seven  contained  in  the provisions of such code
   36  which are applicable to the determination of the  tax  imposed  by  this
   37  article shall be read as a reference to June thirtieth, nineteen hundred
   38  seventy-eight or July first, nineteen hundred seventy-eight, respective-
   39  ly.  [Notwithstanding  the  foregoing,  the  unified  credit against the
   40  estate tax provided in section two thousand ten of the internal  revenue
   41  code  shall, for purposes of this article, be the amount allowable as if
   42  the federal applicable exclusion amount were one million dollars.]
   43    (b) [Applicable generation-skipping  transfer  tax  provisions.--Where
   44  any  reference  is  made  in  this  article (or in the provisions of the
   45  internal revenue code which are  made  applicable  by  section  two,  as
   46  amended,  of  chapter  one  thousand  thirteen  of  the laws of nineteen
   47  hundred sixty-two, to the determination of the tax imposed by this arti-
   48  cle and appended thereto) to provisions of  the  internal  revenue  code
   49  contained  in  section  one  thousand  twenty-five of this chapter, such
   50  internal revenue code provisions contained in such section one  thousand
   51  twenty-five  shall  apply  to the provisions of this article in the same
   52  manner and with the same force and effect as if  the  language  of  such
   53  provisions  of  the  internal revenue code had been incorporated in full
   54  into this article except to the extent that any such provision is either
       S. 6359                            244                           A. 8559
    1  inconsistent with a provision of this article or is not relevant  there-
    2  to.
    3    (c)]  Disposition to surviving spouse who is not a United States citi-
    4  zen. In the case of an estate where a federal estate tax return  is  not
    5  required  for  federal estate tax purposes, a disposition to a surviving
    6  spouse that would qualify for the federal estate tax  marital  deduction
    7  under  section  2056 of the internal revenue code if not for the limita-
    8  tion imposed by subsection (d)(1) of such section shall  nonetheless  be
    9  treated  as  qualifying for the federal estate tax marital deduction for
   10  purposes of computing the tax imposed by section nine hundred  fifty-two
   11  of  this  part,  without  requiring  that  such  disposition pass to the
   12  surviving spouse in a qualified domestic trust as required  for  federal
   13  purposes by internal revenue code section 2056(d)(2).
   14    S  2.  Section  952 of the tax law, as added by section 9 of part A of
   15  chapter 389 of the laws of 1997, subsection (b) as amended by section  3
   16  of  part  I  of  chapter  60  of the laws of 2004, is amended to read as
   17  follows:
   18    S 952. Tax imposed. (a) A tax is hereby imposed on the transfer of the
   19  New York estate by every deceased individual who at his or her death was
   20  a resident of New York state. [The tax imposed by this subsection  shall
   21  be  an  amount equal to the maximum amount allowable against the federal
   22  estate tax as a credit for state death taxes under section two  thousand
   23  eleven of the internal revenue code.]
   24    (b)  [If the transfer of any part of the estate of a deceased resident
   25  includes real or tangible  personal  property  having  an  actual  situs
   26  outside  New  York  state,  the  tax  imposed  by subsection (a) of this
   27  section shall be reduced by an  amount  determined  by  multiplying  the
   28  maximum  amount  of  the federal credit for state death taxes by a frac-
   29  tion, the numerator of which is  the  decedent's  federal  gross  estate
   30  reduced by his or her New York gross estate and the denominator of which
   31  is his or her federal gross estate.] COMPUTATION OF TAX. THE TAX IMPOSED
   32  BY  THIS  SECTION  SHALL BE COMPUTED ON THE DECEASED RESIDENT'S NEW YORK
   33  TAXABLE ESTATE AS FOLLOWS:
   34  IN THE CASE OF DECEDENTS DYING ON OR AFTER  APRIL  1,  2014  AND  BEFORE
   35  APRIL 1, 2015
   36  IF THE NEW YORK TAXABLE ESTATE IS:      THE TAX IS:
   37  NOT OVER $500,000                       3.06% OF TAXABLE ESTATE
   38  OVER $500,000 BUT NOT OVER $1,000,000   $15,300 PLUS 5.0% OF EXCESS OVER
   39                                          $500,000
   40  OVER $1,000,000 BUT NOT OVER $1,500,000 $40,300 PLUS 5.5% OF EXCESS OVER
   41                                          $1,000,000
   42  OVER $1,500,000 BUT NOT OVER $2,100,000 $67,800 PLUS 6.5% OF EXCESS OVER
   43                                          $1,500,000
   44  OVER $2,100,000 BUT NOT OVER $2,600,000 $106,800 PLUS 8.0% OF EXCESS
   45                                          OVER $2,100,000
   46  OVER $2,600,000 BUT NOT OVER $3,100,000 $146,800 PLUS 8.8% OF EXCESS OVER
   47                                          $2,600,000
   48  OVER $3,100,000 BUT NOT OVER $3,600,000 $190,800 PLUS 9.6% OF EXCESS OVER
   49                                          $3,100,000
   50  OVER $3,600,000 BUT NOT OVER $4,100,000 $238,800 PLUS 10.4% OF EXCESS
   51                                          OVER $3,600,000
   52  OVER $4,100,000 BUT NOT OVER $5,100,000 $290,800 PLUS 11.2% OF EXCESS
   53                                          OVER $4,100,000
   54  OVER $5,100,000 BUT NOT OVER $6,100,000 $402,800 PLUS 12.0% OF EXCESS
   55                                          OVER $5,100,000
   56  OVER $6,100,000 BUT NOT OVER $7,100,000 $522,800 PLUS 12.8% OF EXCESS
       S. 6359                            245                           A. 8559
    1                                          OVER $6,100,000
    2  OVER $7,100,000 BUT NOT OVER $8,100,000 $650,800 PLUS 13.6% OF EXCESS
    3                                          OVER $7,100,000
    4  OVER $8,100,000 BUT NOT OVER $9,100,000 $786,800 PLUS 14.4% OF EXCESS
    5                                          OVER $8,100,000
    6  OVER $9,100,000                         $930,800 PLUS 14.5% OF EXCESS OVE
    7                                          $9,100,000
    8  IN THE CASE OF DECEDENTS DYING ON OR AFTER APRIL 1, 2015 AND BEFORE
    9  APRIL 1, 2016
   10  IF THE NEW YORK TAXABLE ESTATE IS:      THE TAX IS:
   11  NOT OVER $500,000                       3.06% OF TAXABLE ESTATE
   12  OVER $500,000 BUT NOT OVER $1,000,000   $15,300 PLUS 5.0% OF EXCESS OVER
   13                                          $500,000
   14  OVER $1,000,000 BUT NOT OVER $1,500,000 $40,300 PLUS 5.5% OF EXCESS OVER
   15                                          $1,000,000
   16  OVER $1,500,000 BUT NOT OVER $2,100,000 $67,800 PLUS 6.5% OF EXCESS
   17                                          OVER $1,500,000
   18  OVER $2,100,000 BUT NOT OVER $2,600,000 $106,800 PLUS 8.0% OF EXCESS
   19                                          OVER $2,100,000
   20  OVER $2,600,000 BUT NOT OVER $3,100,000 $146,800 PLUS 8.8% OF EXCESS
   21                                          OVER $2,600,000
   22  OVER $3,100,000 BUT NOT OVER $3,600,000 $190,800 PLUS 9.6% OF EXCESS
   23                                          OVER $3,100,000
   24  OVER $3,600,000 BUT NOT OVER $4,100,000 $238,800 PLUS 10.4% OF EXCESS
   25                                          OVER $3,600,000
   26  OVER $4,100,000 BUT NOT OVER $5,100,000 $290,800 PLUS 11.2% OF EXCESS
   27                                          OVER $4,100,000
   28  OVER $5,100,000 BUT NOT OVER $6,100,000 $402,800 PLUS 12.0% OF EXCESS
   29                                          OVER $5,100,000
   30  OVER $6,100,000 BUT NOT OVER $7,100,000 $522,800 PLUS 12.8% OF EXCESS
   31                                          OVER $6,100,000
   32  OVER $7,100,000                         $650,800 PLUS 13.0% OF EXCESS
   33                                          OVER $7,100,000
   34  IN THE CASE OF DECEDENTS DYING ON OR AFTER APRIL 1, 2016 AND BEFORE
   35  APRIL 1, 2017
   36  IF THE NEW YORK TAXABLE ESTATE IS:      THE TAX IS:
   37  NOT OVER $500,000                       3.06% OF TAXABLE ESTATE
   38  OVER $500,000 BUT NOT OVER $1,000,000   $15,300 PLUS 5.0% OF EXCESS OVER
   39                                          $500,000
   40  OVER $1,000,000 BUT NOT OVER $1,500,000 $40,300 PLUS 5.5% OF EXCESS OVER
   41                                          $1,000,000
   42  OVER $1,500,000 BUT NOT OVER $2,100,000 $67,800 PLUS 6.5% OF EXCESS
   43                                          OVER $1,500,000
   44  OVER $2,100,000 BUT NOT OVER $2,600,000 $106,800 PLUS 8.0% OF EXCESS
   45                                          OVER $2,100,000
   46  OVER $2,600,000 BUT NOT OVER $3,100,000 $146,800 PLUS 8.8% OF EXCESS
   47                                          OVER $2,600,000
   48  OVER $3,100,000 BUT NOT OVER $3,600,000 $190,800 PLUS 9.6% OF EXCESS
   49                                          OVER $3,100,000
   50  OVER $3,600,000 BUT NOT OVER $4,100,000 $238,800 PLUS 10.4% OF EXCESS
   51                                          OVER $3,600,000
   52  OVER $4,100,000 BUT NOT OVER $5,100,000 $290,800 PLUS 11.2% OF EXCESS
   53                                          OVER $4,100,000
   54  OVER $5,100,000                         $402,800 PLUS 11.5% OF EXCESS
   55                                          OVER $5,100,000
   56  IN THE CASE OF DECEDENTS DYING ON OR AFTER APRIL 1, 2017
       S. 6359                            246                           A. 8559
    1  IF THE NEW YORK TAXABLE ESTATE IS:      THE TAX IS:
    2  NOT OVER $500,000                       3.06% OF TAXABLE ESTATE
    3  OVER $500,000 BUT NOT OVER $1,000,000   $15,300 PLUS 5.0% OF EXCESS OVER
    4                                          $500,000
    5  OVER $1,000,000 BUT NOT OVER $1,500,000 $40,300 PLUS 5.5% OF EXCESS OVER
    6                                          $1,000,000
    7  OVER $1,500,000 BUT NOT OVER $2,100,000 $67,800 PLUS 6.5% OF
    8                                          EXCESS OVER $1,500,000
    9  OVER $2,100,000 BUT NOT OVER $2,600,000 $106,800 PLUS 8.0% OF
   10                                          EXCESS OVER $2,100,000
   11  OVER $2,600,000 BUT NOT OVER $3,100,000 $146,800 PLUS 8.8% OF
   12                                          EXCESS OVER $2,600,000
   13  OVER $3,100,000 BUT NOT OVER $3,600,000 $190,800 PLUS 9.6% OF EXCESS
   14                                          OVER $3,100,000
   15  OVER $3,600,000                         $238,800 PLUS 10.0% OF EXCESS
   16                                          OVER $3,600,000
   17    (C)  APPLICABLE  CREDIT  AMOUNT. (1) A CREDIT OF THE APPLICABLE CREDIT
   18  AMOUNT SHALL BE ALLOWED AGAINST THE  TAX  IMPOSED  BY  THIS  SECTION  AS
   19  PROVIDED  IN  THIS  SUBSECTION. IN THE CASE OF A DECEDENT WHOSE NEW YORK
   20  TAXABLE ESTATE IS LESS THAN OR EQUAL TO THE BASIC EXCLUSION AMOUNT,  THE
   21  APPLICABLE  CREDIT  AMOUNT  SHALL BE THE AMOUNT OF TAX THAT WOULD BE DUE
   22  UNDER SUBSECTION (B) OF THIS SECTION ON SUCH DECEDENT'S NEW YORK TAXABLE
   23  ESTATE. IN THE CASE OF A DECEDENT WHOSE NEW YORK TAXABLE ESTATE  EXCEEDS
   24  THE  BASIC  EXCLUSION  AMOUNT BY AN AMOUNT THAT IS LESS THAN OR EQUAL TO
   25  FIVE PERCENT OF SUCH AMOUNT, THE APPLICABLE CREDIT AMOUNT SHALL  BE  THE
   26  AMOUNT  OF TAX THAT WOULD BE DUE UNDER SUBSECTION (B) OF THIS SECTION IF
   27  THE AMOUNT ON WHICH THE TAX IS TO BE COMPUTED WERE EQUAL  TO  THE  BASIC
   28  EXCLUSION  AMOUNT  MULTIPLIED  BY ONE MINUS A FRACTION, THE NUMERATOR OF
   29  WHICH IS THE DECEDENT'S NEW YORK TAXABLE ESTATE MINUS THE  BASIC  EXCLU-
   30  SION  AMOUNT,  AND THE DENOMINATOR OF WHICH IS FIVE PERCENT OF THE BASIC
   31  EXCLUSION AMOUNT.  PROVIDED, HOWEVER, THAT THE CREDIT  ALLOWED  BY  THIS
   32  SUBSECTION  SHALL  NOT  EXCEED  THE  TAX IMPOSED BY THIS SECTION, AND NO
   33  CREDIT SHALL BE ALLOWED TO THE ESTATE OF ANY  DECEDENT  WHOSE  NEW  YORK
   34  TAXABLE  ESTATE  EXCEEDS ONE HUNDRED FIVE PERCENT OF THE BASIC EXCLUSION
   35  AMOUNT.
   36    (2) (A) FOR PURPOSES OF THIS SECTION, THE BASIC EXCLUSION AMOUNT SHALL
   37  BE AS FOLLOWS:
   38  IN THE CASE OF DECEDENTS DYING ON OR AFTER: THE BASIC  EXCLUSION  AMOUNT
   39  IS:
   40  APRIL 1, 2014 AND BEFORE APRIL 1, 2015       $ 2,062,500
   41  APRIL 1, 2015 AND BEFORE APRIL 1, 2016       3,125,000
   42  APRIL 1, 2016 AND BEFORE APRIL 1, 2017       4,187,500
   43  APRIL 1, 2017 AND BEFORE JANUARY 1, 2019     5,250,000
   44    (B)  IN  THE CASE OF ANY DECEDENT DYING ON OR AFTER JANUARY FIRST, TWO
   45  THOUSAND NINETEEN AND BEFORE JANUARY FIRST,  TWO  THOUSAND  TWENTY,  THE
   46  BASIC  EXCLUSION  AMOUNT IN SUBPARAGRAPH (A) OF THIS PARAGRAPH FOR DECE-
   47  DENTS DYING ON AND AFTER APRIL FIRST, TWO THOUSAND SEVENTEEN AND  BEFORE
   48  JANUARY  FIRST,  TWO  THOUSAND  NINETEEN SHALL BE INCREASED BY AN AMOUNT
   49  EQUAL TO:
   50    (I) SUCH DOLLAR AMOUNT, MULTIPLIED BY
   51    (II) THE COST-OF-LIVING ADJUSTMENT, WHICH SHALL BE THE  PERCENTAGE  BY
   52  WHICH  THE  CONSUMER PRICE INDEX FOR THE PRECEDING CALENDAR YEAR EXCEEDS
   53  THE CONSUMER PRICE INDEX FOR CALENDAR YEAR TWO THOUSAND TWELVE.
   54    (C) IN THE CASE OF ANY DECEDENT DYING IN A CALENDAR YEAR BEGINNING  ON
   55  OR  AFTER JANUARY FIRST, TWO THOUSAND TWENTY, THE BASIC EXCLUSION AMOUNT
       S. 6359                            247                           A. 8559
    1  FOR DECEDENTS DYING IN THE PRECEDING CALENDAR YEAR SHALL BE INCREASED BY
    2  AN AMOUNT EQUAL TO:
    3    (I) SUCH DOLLAR AMOUNT, MULTIPLIED BY
    4    (II)  THE  COST-OF-LIVING ADJUSTMENT, WHICH SHALL BE THE PERCENTAGE BY
    5  WHICH THE CONSUMER PRICE INDEX FOR THE PRECEDING CALENDAR  YEAR  EXCEEDS
    6  THE CONSUMER PRICE INDEX FOR CALENDAR YEAR TWO THOUSAND EIGHTEEN.
    7    (D)  (I)  FOR PURPOSES OF THIS PARAGRAPH, "CONSUMER PRICE INDEX" MEANS
    8  THE MOST RECENT CONSUMER PRICE INDEX FOR ALL-URBAN  CONSUMERS  PUBLISHED
    9  BY THE UNITED STATES DEPARTMENT OF LABOR.
   10    (II)  IF ANY AMOUNT ADJUSTED UNDER THIS PARAGRAPH IS NOT A MULTIPLE OF
   11  TEN THOUSAND DOLLARS, SUCH AMOUNT SHALL BE ROUNDED TO THE NEAREST MULTI-
   12  PLE OF TEN THOUSAND DOLLARS.
   13    S 3. Section 954 of the tax law, as amended by chapter 67 of the  laws
   14  of  1978,  paragraph  1  of  subsection (a) as amended by section 10 and
   15  subsection (b) as amended by section 11 of part A of chapter 389 of  the
   16  laws  of  1997,  subsection (c) as amended by chapter 916 of the laws of
   17  1982, paragraph 1 of subsection (c) as amended by section 3 of part A of
   18  chapter 407 of the laws of 1999 and such subsection (c) as relettered by
   19  section 12 of part A of chapter 389 of the laws of 1997, is  amended  to
   20  read as follows:
   21    S  954.  Resident's New York gross estate. (a) General.-- The New York
   22  gross estate of a deceased resident  means  his  OR  HER  federal  gross
   23  estate as defined in the internal revenue code (whether or not a federal
   24  estate tax return is required to be filed) modified as follows:
   25    (1)  Reduced by the value of real or tangible personal property having
   26  an actual situs outside New York state.
   27    (2) Increased by the amount  determined  under  section  nine  hundred
   28  fifty-seven  OF  THIS  PART  (relating  to limited powers of appointment
   29  created prior to September first, nineteen hundred thirty).
   30    (3) INCREASED BY THE AMOUNT OF ANY TAXABLE GIFT UNDER SECTION 2503  OF
   31  THE  INTERNAL  REVENUE CODE, ON OR AFTER APRIL FIRST, TWO THOUSAND FOUR-
   32  TEEN, IF THE DECEDENT WAS A RESIDENT OF NEW YORK STATE AT THE TIME  SUCH
   33  GIFT WAS MADE.
   34    (b)  Valuation. -- (1) The New York gross estate shall be valued as of
   35  the TIME OF THE DECEDENT'S DEATH, EXCEPT THAT IF A  FEDERAL  ESTATE  TAX
   36  RETURN  IS  FILED  AND THE ALTERNATE VALUATION UNDER SECTION 2032 OF THE
   37  INTERNAL REVENUE CODE IS ELECTED FOR FEDERAL ESTATE  TAX  PURPOSES,  THE
   38  NEW YORK GROSS ESTATE SHALL BE VALUED AS OF THE applicable federal valu-
   39  ation date or dates. Any real property qualified under section two thou-
   40  sand thirty-two-A of the internal revenue code shall have the same value
   41  for  purposes  of the New York gross estate as it has for federal estate
   42  tax purposes.
   43    (2) IF SUCH ALTERNATE VALUATION COULD HAVE BEEN  ELECTED  PURSUANT  TO
   44  PARAGRAPH  ONE  OF  THIS  SUBSECTION,  BUT  FOR THE ABSENCE OF AN ESTATE
   45  SUFFICIENT TO REQUIRE THE FILING OF A FEDERAL RETURN, THE NEW YORK GROSS
   46  ESTATE MAY, UPON THE ELECTION OF THE  EXECUTOR,  BE  VALUED  AS  OF  THE
   47  FEDERAL  VALUATION  DATE  OR DATES WHICH WOULD HAVE APPLIED IF A FEDERAL
   48  RETURN HAD BEEN FILED. HOWEVER, NO ELECTION MAY BE MADE UNDER THIS PARA-
   49  GRAPH UNLESS SUCH ELECTION WILL DECREASE THE VALUE OF THE NEW YORK GROSS
   50  ESTATE AND THE AMOUNT OF TAX IMPOSED BY THIS ARTICLE (REDUCED BY CREDITS
   51  ALLOWABLE AGAINST SUCH TAX). ANY  ELECTION  MADE  UNDER  THIS  PARAGRAPH
   52  SHALL  BE  IRREVOCABLE.  THE ELECTION ALLOWED BY THIS PARAGRAPH SHALL BE
   53  MADE NO LATER THAN THE DATE PRESCRIBED FOR  THE  FILING  OF  THE  RETURN
   54  UNDER  THIS ARTICLE (INCLUDING EXTENSIONS) OR ANY TIME THEREAFTER AS THE
   55  COMMISSIONER MAY PRESCRIBE.
       S. 6359                            248                           A. 8559
    1    (c) Cross references.-- (1) For provisions  of  the  internal  revenue
    2  code defining the federal gross estate, see:
    3    Sec. 2031. Definition of gross estate.
    4    Sec. 2032. Alternate valuation.
    5    Sec. 2032A. Valuation of certain farm, etc., real property.
    6    Sec. 2033. Property in which the decedent had an interest.
    7    Sec. 2034. Dower or curtesy interest.
    8    Sec. 2035. Adjustments for gifts made within three years of decedent's
    9  death.
   10    Sec. 2036. Transfers with retained life estate.
   11    Sec. 2037. Transfers taking effect at death.
   12    Sec. 2038. Revocable transfers.
   13    Sec. 2039. Annuities.
   14    Sec. 2040. Joint interests.
   15    Sec. 2041. Powers of appointment.
   16    Sec. 2042. Proceeds of life insurance.
   17    Sec. 2043. Transfers for insufficient consideration.
   18    Sec. 2044. Certain property for which marital deduction was previously
   19  allowed.
   20    Sec. 2045. Prior interests.
   21    Sec. 2046. Disclaimers.
   22    (2)  FOR  PROVISIONS OF THE INTERNAL REVENUE CODE WHICH, EXCEPT TO THE
   23  EXTENT THEY ARE INCONSISTENT WITH THE PROVISIONS OF  THIS  ARTICLE,  ARE
   24  PERTINENT  TO  THE  COMPUTATION  OF TAXABLE GIFTS AND THE TAX UNDER THIS
   25  ARTICLE, SEE:
   26    SEC. 2503. TAXABLE GIFTS.
   27    SEC. 2511. TRANSFERS IN GENERAL.
   28    SEC. 2512. VALUATION OF GIFTS.
   29    SEC. 2513. GIFT BY HUSBAND OR WIFE TO THIRD PARTY.
   30    SEC. 2514. POWERS OF APPOINTMENT.
   31    SEC. 2516. CERTAIN PROPERTY SETTLEMENTS.
   32    SEC. 2518. DISCLAIMERS.
   33    SEC. 2519. DISPOSITIONS OF CERTAIN LIFE ESTATES.
   34    SEC. 2522. CHARITABLE AND SIMILAR GIFTS.
   35    SEC. 2523. GIFT TO SPOUSE.
   36    SEC. 2524. EXTENT OF DEDUCTIONS.
   37    SEC. 2701. SPECIAL VALUATION RULES IN CASE  OF  TRANSFERS  OF  CERTAIN
   38  INTERESTS IN CORPORATIONS OR PARTNERSHIPS.
   39    SEC.  2702.  SPECIAL VALUATION RULES IN CASE OF TRANSFERS OF INTERESTS
   40  IN TRUSTS.
   41    SEC. 2703. CERTAIN RIGHTS AND RESTRICTIONS DISREGARDED.
   42    SEC. 2704. TREATMENT OF CERTAIN LAPSING RIGHTS AND RESTRICTIONS.
   43    SEC. 7872. TREATMENT OF LOANS WITH BELOW-MARKET INTEREST RATES.
   44    (3) For effect of federal estate tax determinations, see section  nine
   45  hundred sixty-one of this article.
   46    S  4.  The  tax  law is amended by adding a new section 955 to read as
   47  follows:
   48    S 955. RESIDENT'S NEW YORK TAXABLE ESTATE.  (A) GENERAL.--THE  TAXABLE
   49  ESTATE OF A NEW YORK RESIDENT SHALL BE HIS OR HER NEW YORK GROSS ESTATE,
   50  MINUS  THE DEDUCTIONS ALLOWABLE FOR DETERMINING HIS OR HER FEDERAL TAXA-
   51  BLE ESTATE UNDER THE INTERNAL REVENUE CODE (WHETHER  OR  NOT  A  FEDERAL
   52  ESTATE  TAX  RETURN  IS REQUIRED TO BE FILED), EXCEPT TO THE EXTENT THAT
   53  SUCH DEDUCTIONS RELATE TO REAL OR  TANGIBLE  PERSONAL  PROPERTY  SITUSED
   54  OUTSIDE NEW YORK STATE.
       S. 6359                            249                           A. 8559
    1    (B)  WAIVER  OF  DEDUCTIONS.-- IF THE RIGHT TO ANY DEDUCTION OTHERWISE
    2  ALLOWABLE IS WAIVED FOR FEDERAL ESTATE TAX PURPOSES, IT SHALL BE CONSID-
    3  ERED WAIVED FOR NEW YORK ESTATE TAX PURPOSES.
    4    (C)  QUALIFIED  TERMINABLE  INTEREST  PROPERTY  ELECTION.--  EXCEPT AS
    5  OTHERWISE PROVIDED IN THIS SUBSECTION, THE ELECTION REFERRED TO IN PARA-
    6  GRAPH (7) OF SUBSECTION (B) OF SECTION 2056 OF THE INTERNAL REVENUE CODE
    7  SHALL NOT BE ALLOWED UNDER THIS ARTICLE UNLESS SUCH  ELECTION  WAS  MADE
    8  WITH RESPECT TO THE FEDERAL ESTATE TAX RETURN REQUIRED TO BE FILED UNDER
    9  THE  PROVISIONS  OF THE INTERNAL REVENUE CODE. IF SUCH ELECTION WAS MADE
   10  FOR THE PURPOSES OF THE FEDERAL ESTATE TAX, THEN SUCH ELECTION MUST ALSO
   11  BE MADE BY THE EXECUTOR ON THE RETURN OF THE TAX IMPOSED BY  THIS  ARTI-
   12  CLE.  WHERE  NO  FEDERAL  ESTATE TAX RETURN IS REQUIRED TO BE FILED, THE
   13  EXECUTOR MAY MAKE THE ELECTION REFERRED TO IN SUCH  PARAGRAPH  (7)  WITH
   14  RESPECT  TO  THE  TAX  IMPOSED  BY THIS ARTICLE ON THE RETURN OF THE TAX
   15  IMPOSED BY THIS ARTICLE. ANY ELECTION MADE UNDER THIS  SUBSECTION  SHALL
   16  BE IRREVOCABLE.
   17    (D)  CROSS  REFERENCES.--  FOR PROVISIONS OF THE INTERNAL REVENUE CODE
   18  SPECIFYING THE DEDUCTIONS ALLOWABLE FOR  FEDERAL  ESTATE  TAX  PURPOSES,
   19  SEE:
   20    SEC.2032(B). ALTERNATE VALUATION--SPECIAL RULE FOR DEDUCTIONS.
   21    SEC.2046. DISCLAIMERS.
   22    SEC.2053. EXPENSES, INDEBTEDNESS, AND TAXES.
   23    SEC.2054. LOSSES.
   24    SEC.2055. TRANSFERS FOR PUBLIC, CHARITABLE, AND RELIGIOUS USES.
   25    SEC.2056. BEQUESTS, ETC., TO SURVIVING SPOUSE.
   26    S 5. Subsections (b) and (d) of section 960 of the tax law, subsection
   27  (b)  as amended by section 4 of part I of chapter 60 of the laws of 2004
   28  and subsection (d) as added by section 190  of  the  laws  of  1980  and
   29  relettered  by  section 15 of part A of chapter 389 of the laws of 1997,
   30  are amended to read as follows:
   31    (b) Computation of tax.--The tax imposed under subsection (a) shall be
   32  the same as the tax that would be due, if the decedent had died a  resi-
   33  dent,  under  subsection  (a)  of section nine hundred fifty-two, except
   34  that for purposes of [allocating] COMPUTING the tax under subsection (b)
   35  of section nine hundred fifty-two, "New York [gross]  TAXABLE  estate"[,
   36  in  the  numerator in subsection (b) of section nine hundred fifty-two,]
   37  shall not include the value of any intangible personal  property  other-
   38  wise  includible in the deceased individual's New York gross estate, AND
   39  SHALL NOT INCLUDE THE AMOUNT OF ANY GIFT UNLESS SUCH  GIFT  CONSISTS  OF
   40  REAL  OR  TANGIBLE  PERSONAL PROPERTY HAVING AN ACTUAL SITUS IN NEW YORK
   41  STATE OR INTANGIBLE PERSONAL PROPERTY EMPLOYED IN A BUSINESS,  TRADE  OR
   42  PROFESSION CARRIED ON IN THIS STATE.
   43    (d)  Works  of art on loan for exhibition. Notwithstanding the forego-
   44  ing, the tax imposed under subsection (a) OF THIS SECTION on the  trans-
   45  fer,  from  any  deceased  individual  who at his OR HER death was not a
   46  resident of the state of New York, of works  of  art  having  an  actual
   47  situs  in  the state of New York and either (i) includible in his OR HER
   48  federal gross estate or (ii) which would be includible in his OR HER New
   49  York gross estate pursuant to section nine hundred fifty-seven (relating
   50  to certain limited powers of appointment) if he OR SHE were  a  resident
   51  of  the  state  of  New  York, shall [be an amount equal to the transfer
   52  taxes or death taxes of every character in respect of personal  property
   53  which  would  be  imposed  on  such transfer or such works of art if the
   54  actual situs of such works of art were the state  or  territory  of  the
   55  United States of residence of such individual] NOT BE SUBJECT TO THE TAX
   56  IMPOSED  BY THIS SECTION if such works of art are [sited in the state of
       S. 6359                            250                           A. 8559
    1  New York solely for exhibition purposes,] loaned [for such] TO A  PUBLIC
    2  GALLERY  LOCATED  WITHIN  THE  STATE  OF  NEW YORK SOLELY FOR EXHIBITION
    3  purposes [to a public gallery or museum (] BUT ONLY IF no  part  of  the
    4  net earnings of [which] SUCH PUBLIC GALLERY OR MUSEUM inure to the bene-
    5  fit of any private stockholder or individual[)], and [(], at the time of
    6  the  death  of such individual[)] SUCH WORKS OF ART ARE on exhibition or
    7  en route to or from exhibition in  such  a  public  gallery  or  museum.
    8  [Provided  however,  that if the state or territory of the United States
    9  of residence of such individual imposes transfer taxes or death taxes on
   10  such works of art which are sited in the  state  of  New  York  for  the
   11  purposes  herein  specified, then such works of art shall not be subject
   12  to the tax imposed by this section.]
   13    S 6. Subsection (a) of section 971 of the tax law, as added by section
   14  17 of part A of chapter 389 of the laws of 1997, is amended to  read  as
   15  follows:
   16    (a)  Returns  by executor. (1) Residents. In the case of the estate of
   17  every individual dying on or after [February first, two thousand]  APRIL
   18  FIRST,  TWO THOUSAND FOURTEEN, who at his or her death was a resident of
   19  New York state, [if] his or her executor [is required to file  a  return
   20  with  respect to the federal estate tax (determined as if the limitation
   21  contained in subsection (a) of section nine hundred  fifty-one  of  this
   22  article were applicable in determining whether such executor is required
   23  to  file  such  federal  return), the executor] shall make a return with
   24  respect to the estate tax imposed by section nine hundred  fifty-two  of
   25  this  article  IF  THE DECEDENT'S FEDERAL GROSS ESTATE, INCREASED BY THE
   26  AMOUNT OF ANY GIFT INCLUDIBLE IN HIS  OR  HER  NEW  YORK  GROSS  ESTATE,
   27  EXCEEDS  THE BASIC EXCLUSION AMOUNT APPLICABLE TO THE DECEDENT'S DATE OF
   28  DEATH IN PARAGRAPH TWO OF SUBSECTION (C) OF SECTION NINE HUNDRED  FIFTY-
   29  TWO OF THIS ARTICLE.
   30    (2)  Nonresidents. In the case of the estate of every individual DYING
   31  ON OR AFTER APRIL FIRST, TWO THOUSAND FOURTEEN, who at his or her  death
   32  was  not  a  resident  of  New  York  state,  [if his or her executor is
   33  required to file a return with respect to the federal estate tax (deter-
   34  mined as if the limitation contained in subsection (a) of  section  nine
   35  hundred fifty-one of this article were applicable in determining whether
   36  such  executor  is  required  to  file such federal return) and] if such
   37  individual's federal gross estate includes  real  or  tangible  personal
   38  property  having  an  actual situs in New York state, the executor shall
   39  make a return with respect to the estate tax  imposed  by  section  nine
   40  hundred  sixty  of  this article IF THE DECEDENT'S FEDERAL GROSS ESTATE,
   41  INCREASED BY THE AMOUNT OF ANY GIFT INCLUDIBLE IN HIS OR  HER  NEW  YORK
   42  GROSS  ESTATE,  EXCEEDS  THE  BASIC  EXCLUSION  AMOUNT APPLICABLE TO THE
   43  DECEDENT'S DATE OF DEATH IN PARAGRAPH TWO OF SUBSECTION (C)  OF  SECTION
   44  NINE HUNDRED FIFTY-TWO OF THIS ARTICLE.
   45    S  7.  Subsection  (a)  of  section  997 of the tax law, as amended by
   46  section 27 of part A of chapter 389 of the laws of 1997, is  amended  to
   47  read as follows:
   48    (a)  The  phrase  "adjusted  gross  estate" shall be read as "adjusted
   49  federal gross estate determined  without  reference  to  paragraphs  (1)
   50  [and], (2) AND (3) of subsection (a) of section nine hundred fifty-four"
   51  of this article.
   52    S 8. Article 26-B of the tax law is REPEALED.
   53    S  9.  Section  2 of chapter 1013 of the laws of 1962 amending the tax
   54  law relating to imposing a tax on the transfer of estates  of  decedents
   55  dying on or after April first, nineteen hundred sixty-three is REPEALED.
       S. 6359                            251                           A. 8559
    1    S  10. The tax law is amended by adding a new section 999-a to read as
    2  follows:
    3    S  999-A. APPENDIX TO ARTICLE TWENTY-SIX.  THE FOLLOWING PROVISIONS OF
    4  THE UNITED STATES INTERNAL REVENUE CODE OF  1986,  WITH  ALL  AMENDMENTS
    5  ENACTED  ON  OR BEFORE JANUARY FIRST, TWO THOUSAND FOURTEEN, SHALL APPLY
    6  TO THE TAX IMPOSED BY THIS ARTICLE, TO  THE  EXTENT  SPECIFIED  IN  THIS
    7  ARTICLE.
    8    S 2031. DEFINITION OF GROSS ESTATE.
    9    (A)  GENERAL.--THE  VALUE OF THE GROSS ESTATE OF THE DECEDENT SHALL BE
   10  DETERMINED BY INCLUDING TO THE EXTENT PROVIDED FOR  IN  THIS  PART,  THE
   11  VALUE AT THE TIME OF HIS DEATH OF ALL PROPERTY, REAL OR PERSONAL, TANGI-
   12  BLE OR INTANGIBLE, WHEREVER SITUATED.
   13    (B)  VALUATION OF UNLISTED STOCK AND SECURITIES.--IN THE CASE OF STOCK
   14  AND SECURITIES OF A CORPORATION THE VALUE OF WHICH, BY REASON  OF  THEIR
   15  NOT  BEING  LISTED  ON AN EXCHANGE AND BY REASON OF THE ABSENCE OF SALES
   16  THEREOF, CANNOT BE DETERMINED WITH REFERENCE TO BID AND ASKED PRICES  OR
   17  WITH REFERENCE TO SALES PRICES, THE VALUE THEREOF SHALL BE DETERMINED BY
   18  TAKING  INTO  CONSIDERATION, IN ADDITION TO ALL OTHER FACTORS, THE VALUE
   19  OF STOCK OR SECURITIES OF CORPORATIONS ENGAGED IN THE SAME OR A  SIMILAR
   20  LINE OF BUSINESS WHICH ARE LISTED ON AN EXCHANGE.
   21    (C)  ESTATE  TAX WITH RESPECT TO LAND SUBJECT TO A QUALIFIED CONSERVA-
   22  TION EASEMENT.--
   23    (1) IN GENERAL.--IF THE EXECUTOR MAKES THE ELECTION DESCRIBED IN PARA-
   24  GRAPH (6), THEN, EXCEPT AS OTHERWISE PROVIDED IN THIS SUBSECTION,  THERE
   25  SHALL BE EXCLUDED FROM THE GROSS ESTATE THE LESSER OF--
   26    (A) THE APPLICABLE PERCENTAGE OF THE VALUE OF LAND SUBJECT TO A QUALI-
   27  FIED CONSERVATION EASEMENT, REDUCED BY THE AMOUNT OF ANY DEDUCTION UNDER
   28  SECTION 2055(F) WITH RESPECT TO SUCH LAND, OR
   29    (B) THE EXCLUSION LIMITATION.
   30    (2)  APPLICABLE  PERCENTAGE.--FOR  PURPOSES OF PARAGRAPH (1), THE TERM
   31  "APPLICABLE PERCENTAGE" MEANS 40 PERCENT REDUCED (BUT NOT BELOW ZERO) BY
   32  2 PERCENTAGE POINTS FOR EACH PERCENTAGE POINT (OR FRACTION  THEREOF)  BY
   33  WHICH  THE  VALUE OF THE QUALIFIED CONSERVATION EASEMENT IS LESS THAN 30
   34  PERCENT OF THE VALUE OF THE LAND (DETERMINED WITHOUT REGARD TO THE VALUE
   35  OF SUCH EASEMENT AND REDUCED BY THE VALUE OF  ANY  RETAINED  DEVELOPMENT
   36  RIGHT (AS DEFINED IN PARAGRAPH (5)). THE VALUES TAKEN INTO ACCOUNT UNDER
   37  THE  PRECEDING  SENTENCE  SHALL  BE  SUCH  VALUES  AS OF THE DATE OF THE
   38  CONTRIBUTION REFERRED TO IN PARAGRAPH (8)(B).
   39    (3) EXCLUSION LIMITATION.--FOR PURPOSES OF PARAGRAPH (1),  THE  EXCLU-
   40  SION  LIMITATION  IS  THE  LIMITATION  DETERMINED IN ACCORDANCE WITH THE
   41  FOLLOWING TABLE:
   42  IN THE CASE OF ESTATES OF DECEDENTS DYING THE EXCLUSION LIMITATION
   43  DURING:                                   IS:
   44  1998..................................... 100,000
   45  1999..................................... 200,000
   46  2000..................................... 300,000
   47  2001..................................... 400,000
   48  2002 OR THEREAFTER....................... 500,000
   49    (4) TREATMENT OF CERTAIN INDEBTEDNESS.--
   50    (A) IN GENERAL.--THE EXCLUSION PROVIDED IN  PARAGRAPH  (1)  SHALL  NOT
   51  APPLY TO THE EXTENT THAT THE LAND IS DEBT-FINANCED PROPERTY.
   52    (B) DEFINITIONS.--FOR PURPOSES OF THIS PARAGRAPH--
   53    (I)  DEBT-FINANCED  PROPERTY.--THE TERM "DEBT-FINANCED PROPERTY" MEANS
   54  ANY PROPERTY WITH RESPECT TO WHICH THERE IS AN ACQUISITION  INDEBTEDNESS
   55  (AS DEFINED IN CLAUSE (II)) ON THE DATE OF THE DECEDENT'S DEATH.
       S. 6359                            252                           A. 8559
    1    (II)  ACQUISITION  INDEBTEDNESS.--THE  TERM "ACQUISITION INDEBTEDNESS"
    2  MEANS, WITH RESPECT TO DEBT-FINANCED PROPERTY, THE UNPAID AMOUNT OF--
    3    (I) THE INDEBTEDNESS INCURRED BY THE DONOR IN ACQUIRING SUCH PROPERTY,
    4    (II) THE INDEBTEDNESS INCURRED BEFORE THE ACQUISITION OF SUCH PROPERTY
    5  IF  SUCH INDEBTEDNESS WOULD NOT HAVE BEEN INCURRED BUT FOR SUCH ACQUISI-
    6  TION,
    7    (III) THE INDEBTEDNESS INCURRED AFTER THE ACQUISITION OF SUCH PROPERTY
    8  IF SUCH INDEBTEDNESS WOULD NOT HAVE BEEN INCURRED BUT FOR SUCH  ACQUISI-
    9  TION  AND THE INCURRENCE OF SUCH INDEBTEDNESS WAS REASONABLY FORESEEABLE
   10  AT THE TIME OF SUCH ACQUISITION, AND
   11    (IV) THE EXTENSION, RENEWAL, OR REFINANCING OF AN ACQUISITION  INDEBT-
   12  EDNESS.
   13    (5) TREATMENT OF RETAINED DEVELOPMENT RIGHT.--
   14    (A)  IN  GENERAL.--PARAGRAPH  (1)  SHALL NOT APPLY TO THE VALUE OF ANY
   15  DEVELOPMENT RIGHT RETAINED BY THE DONOR IN THE CONVEYANCE OF A QUALIFIED
   16  CONSERVATION EASEMENT.
   17    (B) TERMINATION OF RETAINED DEVELOPMENT  RIGHT.--IF  EVERY  PERSON  IN
   18  BEING  WHO  HAS  AN  INTEREST (WHETHER OR NOT IN POSSESSION) IN THE LAND
   19  EXECUTES AN AGREEMENT TO EXTINGUISH  PERMANENTLY  SOME  OR  ALL  OF  ANY
   20  DEVELOPMENT  RIGHTS  (AS  DEFINED  IN  SUBPARAGRAPH (D)) RETAINED BY THE
   21  DONOR ON OR BEFORE THE DATE FOR FILING THE RETURN OF THE TAX IMPOSED  BY
   22  SECTION  2001,  THEN  ANY  TAX  IMPOSED BY SECTION 2001 SHALL BE REDUCED
   23  ACCORDINGLY. SUCH AGREEMENT SHALL BE FILED WITH THE RETURN  OF  THE  TAX
   24  IMPOSED  BY  SECTION  2001.  THE  AGREEMENT SHALL BE IN SUCH FORM AS THE
   25  SECRETARY SHALL PRESCRIBE.
   26    (C) ADDITIONAL TAX.--ANY FAILURE TO IMPLEMENT THE AGREEMENT  DESCRIBED
   27  IN SUBPARAGRAPH (B) NOT LATER THAN THE EARLIER OF--
   28    (I)  THE DATE WHICH IS 2 YEARS AFTER THE DATE OF THE DECEDENT'S DEATH,
   29  OR
   30    (II) THE DATE OF THE SALE  OF  SUCH  LAND  SUBJECT  TO  THE  QUALIFIED
   31  CONSERVATION EASEMENT,
   32    SHALL  RESULT  IN THE IMPOSITION OF AN ADDITIONAL TAX IN THE AMOUNT OF
   33  THE TAX WHICH WOULD HAVE BEEN DUE ON  THE  RETAINED  DEVELOPMENT  RIGHTS
   34  SUBJECT  TO SUCH AGREEMENT. SUCH ADDITIONAL TAX SHALL BE DUE AND PAYABLE
   35  ON THE LAST DAY OF THE 6TH MONTH FOLLOWING SUCH DATE.
   36    (D) DEVELOPMENT RIGHT DEFINED.--FOR PURPOSES OF  THIS  PARAGRAPH,  THE
   37  TERM  "DEVELOPMENT RIGHT" MEANS ANY RIGHT TO USE THE LAND SUBJECT TO THE
   38  QUALIFIED CONSERVATION EASEMENT IN WHICH SUCH RIGHT IS RETAINED FOR  ANY
   39  COMMERCIAL  PURPOSE  WHICH IS NOT SUBORDINATE TO AND DIRECTLY SUPPORTIVE
   40  OF THE USE OF SUCH LAND AS A FARM FOR FARMING PURPOSES (WITHIN THE MEAN-
   41  ING OF SECTION 2032A(E)(5)).
   42    (6) ELECTION.--THE ELECTION UNDER THIS SUBSECTION SHALL BE MADE ON  OR
   43  BEFORE  THE DUE DATE (INCLUDING EXTENSIONS) FOR FILING THE RETURN OF TAX
   44  IMPOSED BY SECTION 2001 AND SHALL  BE  MADE  ON  SUCH  RETURN.  SUCH  AN
   45  ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
   46    (7)  CALCULATION  OF  ESTATE TAX DUE.--AN EXECUTOR MAKING THE ELECTION
   47  DESCRIBED IN PARAGRAPH (6) SHALL, FOR PURPOSES OF CALCULATING THE AMOUNT
   48  OF TAX IMPOSED BY SECTION 2001, INCLUDE THE  VALUE  OF  ANY  DEVELOPMENT
   49  RIGHT (AS DEFINED IN PARAGRAPH (5)) RETAINED BY THE DONOR IN THE CONVEY-
   50  ANCE  OF SUCH QUALIFIED CONSERVATION EASEMENT. THE COMPUTATION OF TAX ON
   51  ANY RETAINED DEVELOPMENT RIGHT PRESCRIBED IN  THIS  PARAGRAPH  SHALL  BE
   52  DONE IN SUCH MANNER AND ON SUCH FORMS AS THE SECRETARY SHALL PRESCRIBE.
   53    (8) DEFINITIONS.--FOR PURPOSES OF THIS SUBSECTION--
   54    (A) LAND SUBJECT TO A QUALIFIED CONSERVATION EASEMENT.--THE TERM "LAND
   55  SUBJECT TO A QUALIFIED CONSERVATION EASEMENT" MEANS LAND--
       S. 6359                            253                           A. 8559
    1    (I)  WHICH  IS  LOCATED  IN THE UNITED STATES OR ANY POSSESSION OF THE
    2  UNITED STATES,
    3    (II)  WHICH  WAS  OWNED  BY THE DECEDENT OR A MEMBER OF THE DECEDENT'S
    4  FAMILY AT ALL TIMES DURING THE 3-YEAR PERIOD ENDING ON THE DATE  OF  THE
    5  DECEDENT'S DEATH, AND
    6    (III) WITH RESPECT TO WHICH A QUALIFIED CONSERVATION EASEMENT HAS BEEN
    7  MADE  BY  AN INDIVIDUAL DESCRIBED IN SUBPARAGRAPH (C), AS OF THE DATE OF
    8  THE ELECTION DESCRIBED IN PARAGRAPH (6).
    9    (B) QUALIFIED CONSERVATION EASEMENT.--THE TERM "QUALIFIED CONSERVATION
   10  EASEMENT" MEANS A QUALIFIED CONSERVATION  CONTRIBUTION  (AS  DEFINED  IN
   11  SECTION  170(H)(1)) OF A QUALIFIED REAL PROPERTY INTEREST (AS DEFINED IN
   12  SECTION 170(H)(2)(C)), EXCEPT THAT CLAUSE (IV) OF  SECTION  170(H)(4)(A)
   13  SHALL  NOT  APPLY,  AND  THE  RESTRICTION  ON  THE  USE OF SUCH INTEREST
   14  DESCRIBED IN SECTION 170(H)(2)(C) SHALL INCLUDE A  PROHIBITION  ON  MORE
   15  THAN A DE MINIMIS USE FOR A COMMERCIAL RECREATIONAL ACTIVITY.
   16    (C) INDIVIDUAL DESCRIBED.--AN INDIVIDUAL IS DESCRIBED IN THIS SUBPARA-
   17  GRAPH IF SUCH INDIVIDUAL IS--
   18    (I) THE DECEDENT,
   19    (II) A MEMBER OF THE DECEDENT'S FAMILY,
   20    (III) THE EXECUTOR OF THE DECEDENT'S ESTATE, OR
   21    (IV)  THE  TRUSTEE OF A TRUST THE CORPUS OF WHICH INCLUDES THE LAND TO
   22  BE SUBJECT TO THE QUALIFIED CONSERVATION EASEMENT.
   23    (D) MEMBER OF FAMILY.--THE TERM  "MEMBER  OF  THE  DECEDENT'S  FAMILY"
   24  MEANS  ANY  MEMBER  OF THE FAMILY (AS DEFINED IN SECTION 2032A(E)(2)) OF
   25  THE DECEDENT.
   26    (9) TREATMENT OF EASEMENTS GRANTED AFTER DEATH.--IN ANY CASE IN  WHICH
   27  THE  QUALIFIED  CONSERVATION  EASEMENT  IS GRANTED AFTER THE DATE OF THE
   28  DECEDENT'S DEATH AND ON OR BEFORE THE DUE  DATE  (INCLUDING  EXTENSIONS)
   29  FOR  FILING  THE  RETURN  OF  TAX IMPOSED BY SECTION 2001, THE DEDUCTION
   30  UNDER SECTION 2055(F) WITH RESPECT TO SUCH EASEMENT SHALL BE ALLOWED  TO
   31  THE  ESTATE BUT ONLY IF NO CHARITABLE DEDUCTION IS ALLOWED UNDER CHAPTER
   32  1 TO ANY PERSON WITH RESPECT TO THE GRANT OF SUCH EASEMENT.
   33    (10) APPLICATION OF THIS SECTION TO INTERESTS IN PARTNERSHIPS,  CORPO-
   34  RATIONS, AND TRUSTS.--THIS SECTION SHALL APPLY TO AN INTEREST IN A PART-
   35  NERSHIP,  CORPORATION,  OR TRUST IF AT LEAST 30 PERCENT OF THE ENTITY IS
   36  OWNED (DIRECTLY OR INDIRECTLY) BY THE DECEDENT, AS DETERMINED UNDER  THE
   37  RULES DESCRIBED IN SECTION 2057(E)(3).
   38    (D) CROSS REFERENCE.--
   39    FOR  EXECUTOR'S RIGHT TO BE FURNISHED ON REQUEST A STATEMENT REGARDING
   40  ANY VALUATION MADE BY THE SECRETARY WITHIN THE GROSS ESTATE, SEE SECTION
   41  7517.
   42    S 2032. ALTERNATE VALUATION.
   43    (A) GENERAL.--THE VALUE OF THE GROSS ESTATE MAY BE DETERMINED, IF  THE
   44  EXECUTOR  SO  ELECTS,  BY VALUING ALL THE PROPERTY INCLUDED IN THE GROSS
   45  ESTATE AS FOLLOWS:
   46    (1) IN THE CASE OF PROPERTY DISTRIBUTED, SOLD, EXCHANGED, OR OTHERWISE
   47  DISPOSED OF, WITHIN 6 MONTHS AFTER THE DECEDENT'S  DEATH  SUCH  PROPERTY
   48  SHALL BE VALUED AS OF THE DATE OF DISTRIBUTION, SALE, EXCHANGE, OR OTHER
   49  DISPOSITION.
   50    (2)  IN  THE  CASE  OF  PROPERTY  NOT DISTRIBUTED, SOLD, EXCHANGED, OR
   51  OTHERWISE DISPOSED OF, WITHIN 6 MONTHS AFTER THE DECEDENT'S  DEATH  SUCH
   52  PROPERTY  SHALL  BE  VALUED AS OF THE DATE 6 MONTHS AFTER THE DECEDENT'S
   53  DEATH.
   54    (3) ANY INTEREST OR ESTATE WHICH IS AFFECTED BY  MERE  LAPSE  OF  TIME
   55  SHALL  BE  INCLUDED AT ITS VALUE AS OF THE TIME OF DEATH (INSTEAD OF THE
       S. 6359                            254                           A. 8559
    1  LATER DATE) WITH ADJUSTMENT FOR ANY DIFFERENCE IN ITS VALUE  AS  OF  THE
    2  LATER DATE NOT DUE TO MERE LAPSE OF TIME.
    3    (B)  SPECIAL RULES.--NO DEDUCTION UNDER THIS CHAPTER OF ANY ITEM SHALL
    4  BE ALLOWED IF ALLOWANCE FOR SUCH ITEMS IS IN EFFECT GIVEN BY THE  ALTER-
    5  NATE   VALUATION  PROVIDED  BY  THIS  SECTION.  WHEREVER  IN  ANY  OTHER
    6  SUBSECTION OR SECTION OF THIS CHAPTER REFERENCE IS MADE TO THE VALUE  OF
    7  PROPERTY  AT  THE  TIME OF THE DECEDENT'S DEATH, SUCH REFERENCE SHALL BE
    8  DEEMED TO REFER TO THE VALUE OF SUCH PROPERTY USED  IN  DETERMINING  THE
    9  VALUE  OF  THE GROSS ESTATE. IN CASE OF AN ELECTION MADE BY THE EXECUTOR
   10  UNDER THIS SECTION, THEN--
   11    (1) FOR PURPOSES OF THE CHARITABLE DEDUCTION  UNDER  SECTION  2055  OR
   12  2106(A)(2), ANY BEQUEST, LEGACY, DEVISE, OR TRANSFER ENUMERATED THEREIN,
   13  AND
   14    (2)  FOR  THE PURPOSE OF THE MARITAL DEDUCTION UNDER SECTION 2056, ANY
   15  INTEREST IN PROPERTY PASSING TO THE SURVIVING SPOUSE,
   16    SHALL BE VALUED AS OF THE DATE OF THE DECEDENT'S DEATH WITH ADJUSTMENT
   17  FOR ANY DIFFERENCE IN VALUE (NOT DUE TO MERE LAPSE OF TIME OR THE OCCUR-
   18  RENCE OR NONOCCURRENCE OF A CONTINGENCY) OF THE PROPERTY AS OF THE  DATE
   19  6  MONTHS AFTER THE DECEDENT'S DEATH (SUBSTITUTING, IN THE CASE OF PROP-
   20  ERTY DISTRIBUTED BY THE EXECUTOR OR  TRUSTEE,  OR  SOLD,  EXCHANGED,  OR
   21  OTHERWISE DISPOSED OF, DURING SUCH 6-MONTH PERIOD, THE DATE THEREOF).
   22    (C)  ELECTION  MUST DECREASE GROSS ESTATE AND ESTATE TAX.--NO ELECTION
   23  MAY BE MADE UNDER THIS SECTION WITH RESPECT TO  AN  ESTATE  UNLESS  SUCH
   24  ELECTION WILL DECREASE--
   25    (1) THE VALUE OF THE GROSS ESTATE, AND
   26    (2)  THE SUM OF THE TAX IMPOSED BY THIS CHAPTER AND THE TAX IMPOSED BY
   27  CHAPTER 13 WITH RESPECT TO PROPERTY INCLUDIBLE IN THE  DECEDENT'S  GROSS
   28  ESTATE (REDUCED BY CREDITS ALLOWABLE AGAINST SUCH TAXES).
   29    (D) ELECTION.--
   30    (1)  IN  GENERAL.--THE  ELECTION PROVIDED FOR IN THIS SECTION SHALL BE
   31  MADE BY THE EXECUTOR ON THE RETURN OF THE TAX IMPOSED BY  THIS  CHAPTER.
   32  SUCH ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
   33    (2)  EXCEPTION.--NO  ELECTION  MAY  BE MADE UNDER THIS SECTION IF SUCH
   34  RETURN IS FILED MORE THAN 1  YEAR  AFTER  THE  TIME  PRESCRIBED  BY  LAW
   35  (INCLUDING EXTENSIONS) FOR FILING SUCH RETURN.
   36    S 2032A. VALUATION OF CERTAIN FARM, ETC., REAL PROPERTY.
   37    (A) VALUE BASED ON USE UNDER WHICH PROPERTY QUALIFIES.--
   38    (1) GENERAL RULE.--IF--
   39    (A)  THE DECEDENT WAS (AT THE TIME OF HIS DEATH) A CITIZEN OR RESIDENT
   40  OF THE UNITED STATES, AND
   41    (B) THE EXECUTOR ELECTS THE APPLICATION OF THIS SECTION AND FILES  THE
   42  AGREEMENT REFERRED TO IN SUBSECTION (D)(2),
   43    THEN,  FOR PURPOSES OF THIS CHAPTER, THE VALUE OF QUALIFIED REAL PROP-
   44  ERTY SHALL BE ITS VALUE FOR THE USE  UNDER  WHICH  IT  QUALIFIES,  UNDER
   45  SUBSECTION (B), AS QUALIFIED REAL PROPERTY.
   46    (2)  LIMITATION  ON  AGGREGATE  REDUCTION  IN  FAIR MARKET VALUE.--THE
   47  AGGREGATE DECREASE IN THE VALUE OF QUALIFIED REAL  PROPERTY  TAKEN  INTO
   48  ACCOUNT  FOR PURPOSES OF THIS CHAPTER WHICH RESULTS FROM THE APPLICATION
   49  OF PARAGRAPH (1) WITH RESPECT TO ANY DECEDENT SHALL NOT EXCEED $750,000.
   50    (3) INFLATION ADJUSTMENT.--IN THE CASE OF ESTATES OF  DECEDENTS  DYING
   51  IN  A  CALENDAR  YEAR AFTER 1998, THE $750,000 AMOUNT CONTAINED IN PARA-
   52  GRAPH (2) SHALL BE INCREASED BY AN AMOUNT EQUAL TO--
   53    (A) $750,000, MULTIPLIED BY
   54    (B) THE COST-OF-LIVING ADJUSTMENT DETERMINED UNDER SECTION 1(F)(3) FOR
   55  SUCH CALENDAR YEAR BY SUBSTITUTING "CALENDAR YEAR  1997"  FOR  "CALENDAR
   56  YEAR 1992" IN SUBPARAGRAPH (B) THEREOF.
       S. 6359                            255                           A. 8559
    1    IF ANY AMOUNT AS ADJUSTED UNDER THE PRECEDING SENTENCE IS NOT A MULTI-
    2  PLE OF $10,000, SUCH AMOUNT SHALL BE ROUNDED TO THE NEXT LOWEST MULTIPLE
    3  OF $10,000.
    4    (B) QUALIFIED REAL PROPERTY.--
    5    (1)  IN  GENERAL.--FOR  PURPOSES  OF THIS SECTION, THE TERM "QUALIFIED
    6  REAL PROPERTY" MEANS REAL PROPERTY LOCATED IN THE  UNITED  STATES  WHICH
    7  WAS ACQUIRED FROM OR PASSED FROM THE DECEDENT TO A QUALIFIED HEIR OF THE
    8  DECEDENT  AND WHICH, ON THE DATE OF THE DECEDENT'S DEATH, WAS BEING USED
    9  FOR A QUALIFIED USE BY THE DECEDENT OR A MEMBER OF THE DECEDENT'S  FAMI-
   10  LY, BUT ONLY IF--
   11    (A)  50  PERCENT  OR  MORE  OF  THE ADJUSTED VALUE OF THE GROSS ESTATE
   12  CONSISTS OF THE ADJUSTED VALUE OF REAL OR PERSONAL PROPERTY WHICH--
   13    (I) ON THE DATE OF THE DECEDENT'S DEATH, WAS BEING USED FOR  A  QUALI-
   14  FIED USE BY THE DECEDENT OR A MEMBER OF THE DECEDENT'S FAMILY, AND
   15    (II) WAS ACQUIRED FROM OR PASSED FROM THE DECEDENT TO A QUALIFIED HEIR
   16  OF THE DECEDENT.
   17    (B)  25  PERCENT  OR  MORE  OF  THE ADJUSTED VALUE OF THE GROSS ESTATE
   18  CONSISTS OF THE ADJUSTED VALUE OF REAL PROPERTY WHICH MEETS THE REQUIRE-
   19  MENTS OF SUBPARAGRAPHS (A)(II) AND (C),
   20    (C) DURING THE 8-YEAR PERIOD ENDING ON  THE  DATE  OF  THE  DECEDENT'S
   21  DEATH THERE HAVE BEEN PERIODS AGGREGATING 5 YEARS OR MORE DURING WHICH--
   22    (I)  SUCH  REAL  PROPERTY WAS OWNED BY THE DECEDENT OR A MEMBER OF THE
   23  DECEDENT'S FAMILY AND USED FOR A QUALIFIED USE  BY  THE  DECEDENT  OR  A
   24  MEMBER OF THE DECEDENT'S FAMILY, AND
   25    (II)  THERE  WAS MATERIAL PARTICIPATION BY THE DECEDENT OR A MEMBER OF
   26  THE DECEDENT'S FAMILY IN THE OPERATION OF THE FARM  OR  OTHER  BUSINESS,
   27  AND
   28    (D)  SUCH  REAL PROPERTY IS DESIGNATED IN THE AGREEMENT REFERRED TO IN
   29  SUBSECTION (D)(2).
   30    (2) QUALIFIED USE.--FOR PURPOSES OF THIS SECTION, THE TERM  "QUALIFIED
   31  USE" MEANS THE DEVOTION OF THE PROPERTY TO ANY OF THE FOLLOWING:
   32    (A) USE AS A FARM FOR FARMING PURPOSES, OR
   33    (B)  USE  IN  A  TRADE OR BUSINESS OTHER THAN THE TRADE OR BUSINESS OF
   34  FARMING.
   35    (3) ADJUSTED VALUE.--FOR PURPOSES OF PARAGRAPH (1), THE TERM "ADJUSTED
   36  VALUE" MEANS--
   37    (A) IN THE CASE OF THE GROSS ESTATE, THE VALUE OF THE GROSS ESTATE FOR
   38  PURPOSES OF THIS CHAPTER (DETERMINED WITHOUT REGARD  TO  THIS  SECTION),
   39  REDUCED  BY  ANY AMOUNTS ALLOWABLE AS A DEDUCTION UNDER PARAGRAPH (4) OF
   40  SECTION 2053(A), OR
   41    (B) IN THE CASE OF ANY REAL OR PERSONAL PROPERTY, THE  VALUE  OF  SUCH
   42  PROPERTY FOR PURPOSES OF THIS CHAPTER (DETERMINED WITHOUT REGARD TO THIS
   43  SECTION),  REDUCED BY ANY AMOUNTS ALLOWABLE AS A DEDUCTION IN RESPECT OF
   44  SUCH PROPERTY UNDER PARAGRAPH (4) OF SECTION 2053(A).
   45    (4) DECEDENTS WHO ARE RETIRED OR DISABLED.--
   46    (A) IN GENERAL.--IF, ON THE DATE OF THE DECEDENT'S DEATH, THE REQUIRE-
   47  MENTS OF PARAGRAPH (1)(C)(II) WITH RESPECT TO THE DECEDENT FOR ANY PROP-
   48  ERTY ARE NOT MET, AND THE DECEDENT--
   49    (I) WAS RECEIVING OLD-AGE BENEFITS UNDER TITLE II OF THE SOCIAL  SECU-
   50  RITY ACT FOR A CONTINUOUS PERIOD ENDING ON SUCH DATE, OR
   51    (II) WAS DISABLED FOR A CONTINUOUS PERIOD ENDING ON SUCH DATE,
   52    THEN  PARAGRAPH (1)(C)(II) SHALL BE APPLIED WITH RESPECT TO SUCH PROP-
   53  ERTY BY SUBSTITUTING "THE DATE ON WHICH THE LONGER  OF  SUCH  CONTINUOUS
   54  PERIODS  BEGAN"  FOR  "THE  DATE  OF  THE DECEDENT'S DEATH" IN PARAGRAPH
   55  (1)(C).
       S. 6359                            256                           A. 8559
    1    (B) DISABLED DEFINED.--FOR PURPOSES OF SUBPARAGRAPH (A), AN INDIVIDUAL
    2  SHALL BE DISABLED IF SUCH INDIVIDUAL HAS A MENTAL OR PHYSICAL IMPAIRMENT
    3  WHICH RENDERS HIM UNABLE TO MATERIALLY PARTICIPATE IN THE  OPERATION  OF
    4  THE FARM OR OTHER BUSINESS.
    5    (C)   COORDINATION   WITH   RECAPTURE.--FOR   PURPOSES  OF  SUBSECTION
    6  (C)(6)(B)(I), IF THE REQUIREMENTS OF PARAGRAPH (1)(C)(II) ARE  MET  WITH
    7  RESPECT TO ANY DECEDENT BY REASON OF SUBPARAGRAPH (A), THE PERIOD ENDING
    8  ON  THE  DATE  ON  WHICH  THE CONTINUOUS PERIOD TAKEN INTO ACCOUNT UNDER
    9  SUBPARAGRAPH (A) BEGAN SHALL BE TREATED AS THE PERIOD IMMEDIATELY BEFORE
   10  THE DECEDENT'S DEATH.
   11    (5) SPECIAL RULES FOR SURVIVING SPOUSES.--
   12    (A) IN GENERAL.--IF PROPERTY IS QUALIFIED REAL PROPERTY  WITH  RESPECT
   13  TO  A  DECEDENT (HEREINAFTER IN THIS PARAGRAPH REFERRED TO AS THE "FIRST
   14  DECEDENT") AND SUCH PROPERTY WAS ACQUIRED FROM OR PASSED FROM THE  FIRST
   15  DECEDENT  TO THE SURVIVING SPOUSE OF THE FIRST DECEDENT, FOR PURPOSES OF
   16  APPLYING THIS SUBSECTION AND SUBSECTION (C) IN THE CASE OF THE ESTATE OF
   17  SUCH SURVIVING SPOUSE, ACTIVE MANAGEMENT OF THE FARM OR  OTHER  BUSINESS
   18  BY  THE  SURVIVING  SPOUSE SHALL BE TREATED AS MATERIAL PARTICIPATION BY
   19  SUCH SURVIVING SPOUSE IN THE OPERATION OF SUCH FARM OR BUSINESS.
   20    (B) SPECIAL RULE.--FOR THE PURPOSES OF SUBPARAGRAPH (A), THE  DETERMI-
   21  NATION  OF  WHETHER  PROPERTY IS QUALIFIED REAL PROPERTY WITH RESPECT TO
   22  THE FIRST DECEDENT SHALL BE MADE WITHOUT REGARD TO SUBPARAGRAPH  (D)  OF
   23  PARAGRAPH  (1)  AND  WITHOUT  REGARD  TO  WHETHER AN ELECTION UNDER THIS
   24  SECTION WAS MADE.
   25    (C) COORDINATION WITH PARAGRAPH (4).--IN ANY CASE IN WHICH  TO  DO  SO
   26  WILL  ENABLE  THE  REQUIREMENTS  OF  PARAGRAPH (1)(C)(II) TO BE MET WITH
   27  RESPECT TO THE SURVIVING SPOUSE,  THIS  SUBSECTION  AND  SUBSECTION  (C)
   28  SHALL  BE  APPLIED  BY  TAKING INTO ACCOUNT ANY APPLICATION OF PARAGRAPH
   29  (4).
   30    (C) TAX TREATMENT OF DISPOSITIONS AND FAILURES TO  USE  FOR  QUALIFIED
   31  USE.--
   32    (1)  IMPOSITION  OF  ADDITIONAL ESTATE TAX.--IF, WITHIN 10 YEARS AFTER
   33  THE DECEDENT'S DEATH AND BEFORE THE DEATH OF THE QUALIFIED HEIR--
   34    (A) THE QUALIFIED HEIR DISPOSES OF  ANY  INTEREST  IN  QUALIFIED  REAL
   35  PROPERTY (OTHER THAN BY A DISPOSITION TO A MEMBER OF HIS FAMILY), OR
   36    (B)  THE QUALIFIED HEIR CEASES TO USE FOR THE QUALIFIED USE THE QUALI-
   37  FIED REAL PROPERTY WHICH WAS ACQUIRED (OR PASSED) FROM THE DECEDENT,
   38    THEN, THERE IS HEREBY IMPOSED AN ADDITIONAL ESTATE TAX.
   39    (2) AMOUNT OF ADDITIONAL TAX.--
   40    (A) IN GENERAL.--THE AMOUNT OF THE ADDITIONAL TAX IMPOSED BY PARAGRAPH
   41  (1) WITH RESPECT TO ANY INTEREST SHALL BE THE AMOUNT EQUAL TO THE LESSER
   42  OF--
   43    (I) THE ADJUSTED TAX DIFFERENCE ATTRIBUTABLE TO SUCH INTEREST, OR
   44    (II) THE EXCESS OF THE AMOUNT REALIZED WITH RESPECT  TO  THE  INTEREST
   45  (OR, IN ANY CASE OTHER THAN A SALE OR EXCHANGE AT ARM'S LENGTH, THE FAIR
   46  MARKET  VALUE OF THE INTEREST) OVER THE VALUE OF THE INTEREST DETERMINED
   47  UNDER SUBSECTION (A).
   48    (B) ADJUSTED TAX DIFFERENCE ATTRIBUTABLE TO INTEREST.--FOR PURPOSES OF
   49  SUBPARAGRAPH (A), THE ADJUSTED TAX DIFFERENCE ATTRIBUTABLE TO AN  INTER-
   50  EST IS THE AMOUNT WHICH BEARS THE SAME RATIO TO THE ADJUSTED TAX DIFFER-
   51  ENCE WITH RESPECT TO THE ESTATE (DETERMINED UNDER SUBPARAGRAPH (C)) AS--
   52    (I)  THE  EXCESS  OF  THE  VALUE OF SUCH INTEREST FOR PURPOSES OF THIS
   53  CHAPTER (DETERMINED WITHOUT REGARD TO SUBSECTION (A)) OVER THE VALUE  OF
   54  SUCH INTEREST DETERMINED UNDER SUBSECTION (A), BEARS TO
   55    (II) A SIMILAR EXCESS DETERMINED FOR ALL QUALIFIED REAL PROPERTY.
       S. 6359                            257                           A. 8559
    1    (C)  ADJUSTED TAX DIFFERENCE WITH RESPECT TO THE ESTATE.--FOR PURPOSES
    2  OF SUBPARAGRAPH (B), THE TERM "ADJUSTED TAX DIFFERENCE WITH  RESPECT  TO
    3  THE  ESTATE"  MEANS  THE  EXCESS  OF WHAT WOULD HAVE BEEN THE ESTATE TAX
    4  LIABILITY BUT FOR SUBSECTION (A) OVER  THE  ESTATE  TAX  LIABILITY.  FOR
    5  PURPOSES OF THIS SUBPARAGRAPH, THE TERM "ESTATE TAX LIABILITY" MEANS THE
    6  TAX  IMPOSED  BY  SECTION  2001 REDUCED BY THE CREDITS ALLOWABLE AGAINST
    7  SUCH TAX.
    8    (D) PARTIAL DISPOSITIONS.--FOR PURPOSES OF THIS PARAGRAPH,  WHERE  THE
    9  QUALIFIED  HEIR  DISPOSES  OF  A PORTION OF THE INTEREST ACQUIRED BY (OR
   10  PASSING TO) SUCH HEIR (OR A PREDECESSOR QUALIFIED HEIR) OR  THERE  IS  A
   11  CESSATION OF USE OF SUCH A PORTION--
   12    (I) THE VALUE DETERMINED UNDER SUBSECTION (A) TAKEN INTO ACCOUNT UNDER
   13  SUBPARAGRAPH  (A)(II) WITH RESPECT TO SUCH PORTION SHALL BE ITS PRO RATA
   14  SHARE OF SUCH VALUE OF SUCH INTEREST, AND
   15    (II) THE ADJUSTED TAX DIFFERENCE ATTRIBUTABLE TO  THE  INTEREST  TAKEN
   16  INTO ACCOUNT WITH RESPECT TO THE TRANSACTION INVOLVING THE SECOND OR ANY
   17  SUCCEEDING  PORTION SHALL BE REDUCED BY THE AMOUNT OF THE TAX IMPOSED BY
   18  THIS  SUBSECTION  WITH  RESPECT  TO  ALL  PRIOR  TRANSACTIONS  INVOLVING
   19  PORTIONS OF SUCH INTEREST.
   20    (E)  SPECIAL RULE FOR DISPOSITION OF TIMBER.--IN THE CASE OF QUALIFIED
   21  WOODLAND TO WHICH AN ELECTION UNDER SUBSECTION  (E)(13)(A)  APPLIES,  IF
   22  THE  QUALIFIED  HEIR DISPOSES OF (OR SEVERS) ANY STANDING TIMBER ON SUCH
   23  QUALIFIED WOODLAND--
   24    (I) SUCH DISPOSITION (OR SEVERANCE) SHALL BE TREATED AS A  DISPOSITION
   25  OF A PORTION OF THE INTEREST OF THE QUALIFIED HEIR IN SUCH PROPERTY, AND
   26    (II)  THE  AMOUNT  OF THE ADDITIONAL TAX IMPOSED BY PARAGRAPH (1) WITH
   27  RESPECT TO SUCH DISPOSITION SHALL BE AN AMOUNT EQUAL TO THE LESSER OF--
   28    (I) THE AMOUNT REALIZED ON SUCH DISPOSITION (OR,  IN  ANY  CASE  OTHER
   29  THAN  A  SALE  OR EXCHANGE AT ARM'S LENGTH, THE FAIR MARKET VALUE OF THE
   30  PORTION OF THE INTEREST DISPOSED OR SEVERED), OR
   31    (II) THE AMOUNT OF ADDITIONAL  TAX  DETERMINED  UNDER  THIS  PARAGRAPH
   32  (WITHOUT  REGARD  TO  THIS  SUBPARAGRAPH)  IF THE ENTIRE INTEREST OF THE
   33  QUALIFIED HEIR IN THE QUALIFIED WOODLAND HAD BEEN DISPOSED OF, LESS  THE
   34  SUM  OF  THE  AMOUNT  OF  THE ADDITIONAL TAX IMPOSED WITH RESPECT TO ALL
   35  PRIOR TRANSACTIONS INVOLVING SUCH WOODLAND TO  WHICH  THIS  SUBPARAGRAPH
   36  APPLIED.
   37    FOR  PURPOSES OF THE PRECEDING SENTENCE, THE DISPOSITION OF A RIGHT TO
   38  SEVER SHALL BE TREATED AS THE DISPOSITION OF THE  STANDING  TIMBER.  THE
   39  AMOUNT  OF  ADDITIONAL  TAX  IMPOSED  UNDER PARAGRAPH (1) IN ANY CASE IN
   40  WHICH A QUALIFIED HEIR DISPOSES OF HIS ENTIRE INTEREST IN THE  QUALIFIED
   41  WOODLAND  SHALL  BE REDUCED BY ANY AMOUNT DETERMINED UNDER THIS SUBPARA-
   42  GRAPH WITH RESPECT TO SUCH WOODLAND.
   43    (3) ONLY 1 ADDITIONAL TAX IMPOSED WITH RESPECT TO ANY  1  PORTION.--IN
   44  THE CASE OF AN INTEREST ACQUIRED FROM (OR PASSING FROM) ANY DECEDENT, IF
   45  SUBPARAGRAPH  (A)  OR  (B) OF PARAGRAPH (1) APPLIES TO ANY PORTION OF AN
   46  INTEREST, SUBPARAGRAPH (B) OR (A), AS THE CASE MAY BE, OF PARAGRAPH  (1)
   47  SHALL NOT APPLY WITH RESPECT TO THE SAME PORTION OF SUCH INTEREST.
   48    (4)  DUE  DATE.--THE  ADDITIONAL  TAX IMPOSED BY THIS SUBSECTION SHALL
   49  BECOME DUE AND PAYABLE ON THE DAY WHICH IS 6 MONTHS AFTER  THE  DATE  OF
   50  THE DISPOSITION OR CESSATION REFERRED TO IN PARAGRAPH (1).
   51    (5)  LIABILITY  FOR TAX; FURNISHING OF BOND.--THE QUALIFIED HEIR SHALL
   52  BE PERSONALLY LIABLE FOR THE ADDITIONAL TAX IMPOSED BY  THIS  SUBSECTION
   53  WITH  RESPECT  TO  HIS INTEREST UNLESS THE HEIR HAS FURNISHED BOND WHICH
   54  MEETS THE REQUIREMENTS OF SUBSECTION (E)(11).
   55    (6) CESSATION OF QUALIFIED USE.--FOR  PURPOSES  OF  PARAGRAPH  (1)(B),
   56  REAL PROPERTY SHALL CEASE TO BE USED FOR THE QUALIFIED USE IF--
       S. 6359                            258                           A. 8559
    1    (A) SUCH PROPERTY CEASES TO BE USED FOR THE QUALIFIED USE SET FORTH IN
    2  SUBPARAGRAPH  (A)  OR  (B) OF SUBSECTION (B)(2) UNDER WHICH THE PROPERTY
    3  QUALIFIED UNDER SUBSECTION (B), OR
    4    (B)  DURING  ANY  PERIOD  OF  8  YEARS  ENDING  AFTER  THE DATE OF THE
    5  DECEDENT'S DEATH AND BEFORE THE DATE OF THE DEATH OF THE QUALIFIED HEIR,
    6  THERE HAD BEEN PERIODS AGGREGATING MORE THAN 3 YEARS DURING WHICH--
    7    (I) IN THE CASE OF PERIODS DURING WHICH THE PROPERTY WAS HELD  BY  THE
    8  DECEDENT,  THERE  WAS  NO  MATERIAL PARTICIPATION BY THE DECEDENT OR ANY
    9  MEMBER OF HIS FAMILY IN THE OPERATION OF THE FARM OR OTHER BUSINESS, AND
   10    (II) IN THE CASE OF PERIODS DURING WHICH THE PROPERTY WAS HELD BY  ANY
   11  QUALIFIED  HEIR,  THERE  WAS NO MATERIAL PARTICIPATION BY SUCH QUALIFIED
   12  HEIR OR ANY MEMBER OF HIS FAMILY IN THE OPERATION OF THE FARM  OR  OTHER
   13  BUSINESS.
   14    (7) SPECIAL RULES.--
   15    (A)  NO  TAX  IF  USE BEGINS WITHIN 2 YEARS.--IF THE DATE ON WHICH THE
   16  QUALIFIED HEIR BEGINS TO USE THE QUALIFIED REAL PROPERTY (HEREINAFTER IN
   17  THIS SUBPARAGRAPH REFERRED TO AS THE COMMENCEMENT DATE)  IS  BEFORE  THE
   18  DATE 2 YEARS AFTER THE DECEDENT'S DEATH--
   19    (I) NO TAX SHALL BE IMPOSED UNDER PARAGRAPH (1) BY REASON OF THE FAIL-
   20  URE  BY  THE QUALIFIED HEIR TO SO USE SUCH PROPERTY BEFORE THE COMMENCE-
   21  MENT DATE, AND
   22    (II) THE 10-YEAR PERIOD UNDER PARAGRAPH (1) SHALL BE EXTENDED  BY  THE
   23  PERIOD AFTER THE DECEDENT'S DEATH AND BEFORE THE COMMENCEMENT DATE.
   24    (B)  ACTIVE  MANAGEMENT BY ELIGIBLE QUALIFIED HEIR TREATED AS MATERIAL
   25  PARTICIPATION.--FOR PURPOSES OF PARAGRAPH (6)(B)(II), THE ACTIVE MANAGE-
   26  MENT OF A FARM OR OTHER BUSINESS BY--
   27    (I) AN ELIGIBLE QUALIFIED HEIR, OR
   28    (II) A FIDUCIARY OF AN ELIGIBLE QUALIFIED  HEIR  DESCRIBED  IN  CLAUSE
   29  (II) OR (III) OF SUBPARAGRAPH (C),
   30    SHALL  BE TREATED AS MATERIAL PARTICIPATION BY SUCH ELIGIBLE QUALIFIED
   31  HEIR IN THE OPERATION OF SUCH FARM OR BUSINESS. IN THE CASE OF AN ELIGI-
   32  BLE QUALIFIED HEIR DESCRIBED IN CLAUSE (II), (III), OR (IV) OF  SUBPARA-
   33  GRAPH (C), THE PRECEDING SENTENCE SHALL APPLY ONLY DURING PERIODS DURING
   34  WHICH SUCH HEIR MEETS THE REQUIREMENTS OF SUCH CLAUSE.
   35    (C) ELIGIBLE QUALIFIED HEIR.--FOR PURPOSES OF THIS PARAGRAPH, THE TERM
   36  "ELIGIBLE QUALIFIED HEIR" MEANS A QUALIFIED HEIR WHO--
   37    (I) IS THE SURVIVING SPOUSE OF THE DECEDENT,
   38    (II) HAS NOT ATTAINED THE AGE OF 21,
   39    (III) IS DISABLED (WITHIN THE MEANING OF SUBSECTION (B)(4)(B)), OR
   40    (IV) IS A STUDENT.
   41    (D) STUDENT.--FOR PURPOSES OF SUBPARAGRAPH (C), AN INDIVIDUAL SHALL BE
   42  TREATED AS A STUDENT WITH RESPECT TO PERIODS DURING ANY CALENDAR YEAR IF
   43  (AND  ONLY  IF)  SUCH  INDIVIDUAL  IS  A  STUDENT (WITHIN THE MEANING OF
   44  SECTION 152(F)(2)) FOR SUCH CALENDAR YEAR.
   45    (E) CERTAIN RENTS TREATED AS  QUALIFIED  USE.--FOR  PURPOSES  OF  THIS
   46  SUBSECTION,  A  SURVIVING  SPOUSE  OR  LINEAL DESCENDANT OF THE DECEDENT
   47  SHALL NOT BE TREATED AS FAILING TO USE  QUALIFIED  REAL  PROPERTY  IN  A
   48  QUALIFIED  USE SOLELY BECAUSE SUCH SPOUSE OR DESCENDANT RENTS SUCH PROP-
   49  ERTY TO A MEMBER OF THE FAMILY OF SUCH SPOUSE OR  DESCENDANT  ON  A  NET
   50  CASH  BASIS.  FOR  PURPOSES OF THE PRECEDING SENTENCE, A LEGALLY ADOPTED
   51  CHILD OF AN INDIVIDUAL SHALL BE TREATED AS THE CHILD OF SUCH  INDIVIDUAL
   52  BY BLOOD.
   53    (8) QUALIFIED CONSERVATION CONTRIBUTION IS NOT A DISPOSITION.--A QUAL-
   54  IFIED  CONSERVATION  CONTRIBUTION (AS DEFINED IN SECTION 170(H)) BY GIFT
   55  OR  OTHERWISE  SHALL  NOT  BE  DEEMED  A  DISPOSITION  UNDER  SUBSECTION
   56  (C)(1)(A).
       S. 6359                            259                           A. 8559
    1    (D) ELECTION; AGREEMENT.--
    2    (1)  ELECTION.--THE  ELECTION  UNDER THIS SECTION SHALL BE MADE ON THE
    3  RETURN OF THE TAX IMPOSED BY SECTION 2001. SUCH ELECTION SHALL  BE  MADE
    4  IN  SUCH MANNER AS THE SECRETARY SHALL BY REGULATIONS PRESCRIBE. SUCH AN
    5  ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
    6    (2) AGREEMENT.--THE AGREEMENT REFERRED TO IN THIS PARAGRAPH IS A WRIT-
    7  TEN AGREEMENT SIGNED BY EACH PERSON IN BEING WHO HAS AN INTEREST (WHETH-
    8  ER OR NOT IN POSSESSION) IN ANY PROPERTY DESIGNATED  IN  SUCH  AGREEMENT
    9  CONSENTING  TO  THE  APPLICATION  OF SUBSECTION (C) WITH RESPECT TO SUCH
   10  PROPERTY.
   11    (3) MODIFICATION OF  ELECTION  AND  AGREEMENT  TO  BE  PERMITTED.--THE
   12  SECRETARY  SHALL  PRESCRIBE PROCEDURES WHICH PROVIDE THAT IN ANY CASE IN
   13  WHICH THE EXECUTOR MAKES AN ELECTION UNDER PARAGRAPH  (1)  (AND  SUBMITS
   14  THE  AGREEMENT  REFERRED TO IN PARAGRAPH (2)) WITHIN THE TIME PRESCRIBED
   15  THEREFOR, BUT--
   16    (A) THE NOTICE OF ELECTION, AS FILED, DOES NOT  CONTAIN  ALL  REQUIRED
   17  INFORMATION, OR
   18    (B)  SIGNATURES OF 1 OR MORE PERSONS REQUIRED TO ENTER INTO THE AGREE-
   19  MENT DESCRIBED IN PARAGRAPH (2) ARE NOT INCLUDED  ON  THE  AGREEMENT  AS
   20  FILED, OR THE AGREEMENT DOES NOT CONTAIN ALL REQUIRED INFORMATION,
   21    THE  EXECUTOR  WILL HAVE A REASONABLE PERIOD OF TIME (NOT EXCEEDING 90
   22  DAYS) AFTER NOTIFICATION OF SUCH FAILURES TO PROVIDE SUCH INFORMATION OR
   23  SIGNATURES.
   24    (E) DEFINITIONS; SPECIAL RULES.--FOR PURPOSES OF THIS SECTION--
   25    (1) QUALIFIED HEIR.--THE TERM "QUALIFIED HEIR" MEANS, WITH RESPECT  TO
   26  ANY  PROPERTY, A MEMBER OF THE DECEDENT'S FAMILY WHO ACQUIRED SUCH PROP-
   27  ERTY (OR TO WHOM SUCH PROPERTY PASSED) FROM THE DECEDENT. IF A QUALIFIED
   28  HEIR DISPOSES OF ANY INTEREST IN QUALIFIED REAL PROPERTY TO  ANY  MEMBER
   29  OF  HIS FAMILY, SUCH MEMBER SHALL THEREAFTER BE TREATED AS THE QUALIFIED
   30  HEIR WITH RESPECT TO SUCH INTEREST.
   31    (2) MEMBER OF FAMILY.--THE TERM "MEMBER OF  THE  FAMILY"  MEANS,  WITH
   32  RESPECT TO ANY INDIVIDUAL, ONLY--
   33    (A) AN ANCESTOR OF SUCH INDIVIDUAL,
   34    (B) THE SPOUSE OF SUCH INDIVIDUAL,
   35    (C)  A  LINEAL  DESCENDANT  OF  SUCH  INDIVIDUAL, OF SUCH INDIVIDUAL'S
   36  SPOUSE, OR OF A PARENT OF SUCH INDIVIDUAL, OR
   37    (D) THE SPOUSE OF ANY LINEAL DESCENDANT DESCRIBED IN SUBPARAGRAPH (C).
   38    FOR PURPOSES OF THE PRECEDING SENTENCE, A LEGALLY ADOPTED CHILD OF  AN
   39  INDIVIDUAL SHALL BE TREATED AS THE CHILD OF SUCH INDIVIDUAL BY BLOOD.
   40    (3)  CERTAIN  REAL  PROPERTY  INCLUDED.--IN  THE CASE OF REAL PROPERTY
   41  WHICH MEETS THE REQUIREMENTS OF SUBPARAGRAPH (C) OF  SUBSECTION  (B)(1),
   42  RESIDENTIAL  BUILDINGS  AND  RELATED  IMPROVEMENTS ON SUCH REAL PROPERTY
   43  OCCUPIED ON A REGULAR BASIS BY THE OWNER OR LESSEE OF SUCH REAL PROPERTY
   44  OR BY PERSONS EMPLOYED BY SUCH OWNER OR LESSEE FOR THE PURPOSE OF  OPER-
   45  ATING OR MAINTAINING SUCH REAL PROPERTY, AND ROADS, BUILDINGS, AND OTHER
   46  STRUCTURES  AND  IMPROVEMENTS  FUNCTIONALLY RELATED TO THE QUALIFIED USE
   47  SHALL BE TREATED AS REAL PROPERTY DEVOTED TO THE QUALIFIED USE.
   48    (4) FARM.--THE TERM "FARM"  INCLUDES  STOCK,  DAIRY,  POULTRY,  FRUIT,
   49  FURBEARING  ANIMAL,  AND  TRUCK  FARMS, PLANTATIONS, RANCHES, NURSERIES,
   50  RANGES, GREENHOUSES OR OTHER SIMILAR STRUCTURES USED PRIMARILY  FOR  THE
   51  RAISING  OF  AGRICULTURAL OR HORTICULTURAL COMMODITIES, AND ORCHARDS AND
   52  WOODLANDS.
   53    (5) FARMING PURPOSES.--THE TERM "FARMING PURPOSES" MEANS-
   54    (A) CULTIVATING THE SOIL OR RAISING OR HARVESTING ANY AGRICULTURAL  OR
   55  HORTICULTURAL  COMMODITY  (INCLUDING  THE  RAISING,  SHEARING,  FEEDING,
   56  CARING FOR, TRAINING, AND MANAGEMENT OF ANIMALS) ON A FARM;
       S. 6359                            260                           A. 8559
    1    (B) HANDLING, DRYING, PACKING, GRADING, OR STORING ON A FARM ANY AGRI-
    2  CULTURAL OR HORTICULTURAL COMMODITY IN  ITS  UNMANUFACTURED  STATE,  BUT
    3  ONLY  IF  THE  OWNER, TENANT, OR OPERATOR OF THE FARM REGULARLY PRODUCES
    4  MORE THAN ONE-HALF OF THE COMMODITY SO TREATED; AND
    5    (C)(I) THE PLANTING, CULTIVATING, CARING FOR, OR CUTTING OF TREES, OR
    6    (II) THE PREPARATION (OTHER THAN MILLING) OF TREES FOR MARKET.
    7    (6)  MATERIAL  PARTICIPATION.--MATERIAL  PARTICIPATION SHALL BE DETER-
    8  MINED IN A MANNER SIMILAR TO THE MANNER USED FOR PURPOSES  OF  PARAGRAPH
    9  (1) OF SECTION 1402(A) (RELATING TO NET EARNINGS FROM SELF-EMPLOYMENT).
   10    (7) METHOD OF VALUING FARMS.--
   11    (A)  IN GENERAL.--EXCEPT AS PROVIDED IN SUBPARAGRAPH (B), THE VALUE OF
   12  A FARM FOR FARMING PURPOSES SHALL BE DETERMINED BY DIVIDING--
   13    (I) THE EXCESS OF THE AVERAGE ANNUAL GROSS CASH RENTAL FOR  COMPARABLE
   14  LAND  USED FOR FARMING PURPOSES AND LOCATED IN THE LOCALITY OF SUCH FARM
   15  OVER THE AVERAGE ANNUAL STATE AND  LOCAL  REAL  ESTATE  TAXES  FOR  SUCH
   16  COMPARABLE LAND, BY
   17    (II)  THE  AVERAGE  ANNUAL EFFECTIVE INTEREST RATE FOR ALL NEW FEDERAL
   18  LAND BANK LOANS.
   19    FOR PURPOSES OF THE PRECEDING SENTENCE, EACH AVERAGE  ANNUAL  COMPUTA-
   20  TION  SHALL  BE  MADE  ON  THE BASIS OF THE 5 MOST RECENT CALENDAR YEARS
   21  ENDING BEFORE THE DATE OF THE DECEDENT'S DEATH.
   22    (B) VALUE BASED ON NET SHARE RENTAL IN CERTAIN CASES.--
   23    (I) IN GENERAL.--IF THERE IS NO COMPARABLE LAND FROM WHICH THE AVERAGE
   24  ANNUAL GROSS CASH RENTAL MAY BE DETERMINED BUT THERE IS COMPARABLE  LAND
   25  FROM  WHICH THE AVERAGE NET SHARE RENTAL MAY BE DETERMINED, SUBPARAGRAPH
   26  (A)(I) SHALL BE  APPLIED  BY  SUBSTITUTING  "AVERAGE  ANNUAL  NET  SHARE
   27  RENTAL" FOR "AVERAGE ANNUAL GROSS CASH RENTAL".
   28    (II)  NET SHARE RENTAL.--FOR PURPOSES OF THIS PARAGRAPH, THE TERM "NET
   29  SHARE RENTAL" MEANS THE EXCESS OF--
   30    (I) THE VALUE OF THE PRODUCE RECEIVED BY THE LESSOR  OF  THE  LAND  ON
   31  WHICH SUCH PRODUCE IS GROWN, OVER
   32    (II)  THE CASH OPERATING EXPENSES OF GROWING SUCH PRODUCE WHICH, UNDER
   33  THE LEASE, ARE PAID BY THE LESSOR.
   34    (C) EXCEPTION.--THE FORMULA PROVIDED BY SUBPARAGRAPH (A) SHALL NOT  BE
   35  USED--
   36    (I)  WHERE  IT  IS  ESTABLISHED  THAT THERE IS NO COMPARABLE LAND FROM
   37  WHICH THE AVERAGE ANNUAL GROSS CASH RENTAL MAY BE DETERMINED, OR
   38    (II) WHERE THE EXECUTOR ELECTS TO HAVE THE VALUE OF THE FARM FOR FARM-
   39  ING PURPOSES DETERMINED AND THAT THERE IS NO COMPARABLE LAND FROM  WHICH
   40  THE AVERAGE NET SHARE RENTAL MAY BE DETERMINED UNDER PARAGRAPH (8).
   41    (8)  METHOD  OF  VALUING CLOSELY HELD BUSINESS INTERESTS, ETC.--IN ANY
   42  CASE TO WHICH PARAGRAPH (7)(A) DOES NOT  APPLY,  THE  FOLLOWING  FACTORS
   43  SHALL APPLY IN DETERMINING THE VALUE OF ANY QUALIFIED REAL PROPERTY:
   44    (A) THE CAPITALIZATION OF INCOME WHICH THE PROPERTY CAN BE EXPECTED TO
   45  YIELD  FOR  FARMING  OR CLOSELY HELD BUSINESS PURPOSES OVER A REASONABLE
   46  PERIOD OF TIME  UNDER  PRUDENT  MANAGEMENT  USING  TRADITIONAL  CROPPING
   47  PATTERNS  FOR  THE  AREA,  TAKING  INTO  ACCOUNT  SOIL CAPACITY, TERRAIN
   48  CONFIGURATION, AND SIMILAR FACTORS,
   49    (B) THE CAPITALIZATION OF THE FAIR RENTAL VALUE OF THE LAND FOR  FARM-
   50  LAND OR CLOSELY HELD BUSINESS PURPOSES,
   51    (C)  ASSESSED  LAND VALUES IN A STATE WHICH PROVIDES A DIFFERENTIAL OR
   52  USE VALUE ASSESSMENT LAW FOR FARMLAND OR CLOSELY HELD BUSINESS,
   53    (D) COMPARABLE SALES OF OTHER FARM OR CLOSELY HELD  BUSINESS  LAND  IN
   54  THE  SAME  GEOGRAPHICAL  AREA  FAR ENOUGH REMOVED FROM A METROPOLITAN OR
   55  RESORT AREA SO THAT NONAGRICULTURAL USE IS NOT A SIGNIFICANT  FACTOR  IN
   56  THE SALES PRICE, AND
       S. 6359                            261                           A. 8559
    1    (E)  ANY  OTHER  FACTOR  WHICH  FAIRLY VALUES THE FARM OR CLOSELY HELD
    2  BUSINESS VALUE OF THE PROPERTY.
    3    (9)  PROPERTY ACQUIRED FROM DECEDENT.--PROPERTY SHALL BE CONSIDERED TO
    4  HAVE BEEN ACQUIRED FROM OR TO HAVE PASSED FROM THE DECEDENT IF--
    5    (A) SUCH PROPERTY IS SO CONSIDERED UNDER SECTION 1014(B) (RELATING  TO
    6  BASIS OF PROPERTY ACQUIRED FROM A DECEDENT),
    7    (B) SUCH PROPERTY IS ACQUIRED BY ANY PERSON FROM THE ESTATE, OR
    8    (C)  SUCH  PROPERTY  IS  ACQUIRED  BY  ANY PERSON FROM A TRUST (TO THE
    9  EXTENT SUCH PROPERTY IS INCLUDIBLE IN THE GROSS ESTATE OF THE DECEDENT).
   10    (10) COMMUNITY PROPERTY.--IF THE DECEDENT AND HIS SURVIVING SPOUSE  AT
   11  ANY  TIME HELD QUALIFIED REAL PROPERTY AS COMMUNITY PROPERTY, THE INTER-
   12  EST OF THE SURVIVING SPOUSE IN SUCH PROPERTY SHALL BE TAKEN INTO ACCOUNT
   13  UNDER THIS SECTION TO THE EXTENT NECESSARY TO  PROVIDE  A  RESULT  UNDER
   14  THIS  SECTION WITH RESPECT TO SUCH PROPERTY WHICH IS CONSISTENT WITH THE
   15  RESULT WHICH WOULD HAVE OBTAINED UNDER THIS SECTION IF SUCH PROPERTY HAD
   16  NOT BEEN COMMUNITY PROPERTY.
   17    (11) BOND IN LIEU OF PERSONAL LIABILITY.--IF THE QUALIFIED HEIR  MAKES
   18  WRITTEN  APPLICATION  TO  THE SECRETARY FOR DETERMINATION OF THE MAXIMUM
   19  AMOUNT OF THE ADDITIONAL TAX WHICH MAY BE IMPOSED BY SUBSECTION (C) WITH
   20  RESPECT TO THE QUALIFIED HEIR'S INTEREST,  THE  SECRETARY  (AS  SOON  AS
   21  POSSIBLE, AND IN ANY EVENT WITHIN 1 YEAR AFTER THE MAKING OF SUCH APPLI-
   22  CATION)  SHALL  NOTIFY  THE  HEIR  OF SUCH MAXIMUM AMOUNT. THE QUALIFIED
   23  HEIR, ON FURNISHING A BOND IN SUCH AMOUNT AND FOR SUCH PERIOD AS MAY  BE
   24  REQUIRED, SHALL BE DISCHARGED FROM PERSONAL LIABILITY FOR ANY ADDITIONAL
   25  TAX  IMPOSED  BY  SUBSECTION  (C)  AND SHALL BE ENTITLED TO A RECEIPT OR
   26  WRITING SHOWING SUCH DISCHARGE.
   27    (12) ACTIVE MANAGEMENT.--THE TERM "ACTIVE MANAGEMENT" MEANS THE MAKING
   28  OF THE MANAGEMENT DECISIONS OF A BUSINESS (OTHER THAN THE DAILY  OPERAT-
   29  ING DECISIONS).
   30    (13) SPECIAL RULES FOR WOODLANDS.--
   31    (A) IN GENERAL.--IN THE CASE OF ANY QUALIFIED WOODLAND WITH RESPECT TO
   32  WHICH THE EXECUTOR ELECTS TO HAVE THIS SUBPARAGRAPH APPLY, TREES GROWING
   33  ON SUCH WOODLAND SHALL NOT BE TREATED AS A CROP.
   34    (B)  QUALIFIED WOODLAND.--THE TERM "QUALIFIED WOODLAND" MEANS ANY REAL
   35  PROPERTY WHICH--
   36    (I) IS USED IN TIMBER OPERATIONS, AND
   37    (II) IS AN IDENTIFIABLE AREA OF LAND SUCH AS AN ACRE OR OTHER AREA FOR
   38  WHICH RECORDS ARE NORMALLY MAINTAINED IN CONDUCTING TIMBER OPERATIONS.
   39    (C) TIMBER OPERATIONS.--THE TERM "TIMBER OPERATIONS" MEANS--
   40    (I) THE PLANTING, CULTIVATING, CARING FOR, OR CUTTING OF TREES, OR
   41    (II) THE PREPARATION (OTHER THAN MILLING) OF TREES FOR MARKET.
   42    (D) ELECTION.--AN ELECTION UNDER SUBPARAGRAPH (A) SHALL BE MADE ON THE
   43  RETURN OF THE TAX IMPOSED BY SECTION 2001. SUCH ELECTION SHALL  BE  MADE
   44  IN  SUCH MANNER AS THE SECRETARY SHALL BY REGULATIONS PRESCRIBE. SUCH AN
   45  ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
   46    (14) TREATMENT OF REPLACEMENT PROPERTY ACQUIRED  IN  SECTION  1031  OR
   47  1033 TRANSACTIONS.--
   48    (A)  IN  GENERAL.--IN  THE CASE OF ANY QUALIFIED REPLACEMENT PROPERTY,
   49  ANY PERIOD DURING WHICH THERE WAS OWNERSHIP, QUALIFIED USE, OR  MATERIAL
   50  PARTICIPATION  WITH  RESPECT TO THE REPLACED PROPERTY BY THE DECEDENT OR
   51  ANY MEMBER OF HIS FAMILY SHALL BE TREATED AS A PERIOD DURING WHICH THERE
   52  WAS SUCH OWNERSHIP, USE, OR MATERIAL PARTICIPATION (AS THE CASE MAY  BE)
   53  WITH RESPECT TO THE QUALIFIED REPLACEMENT PROPERTY.
   54    (B)  LIMITATION.--SUBPARAGRAPH  (A) SHALL NOT APPLY TO THE EXTENT THAT
   55  THE FAIR MARKET VALUE OF THE QUALIFIED REPLACEMENT PROPERTY (AS  OF  THE
       S. 6359                            262                           A. 8559
    1  DATE  OF  ITS ACQUISITION) EXCEEDS THE FAIR MARKET VALUE OF THE REPLACED
    2  PROPERTY (AS OF THE DATE OF ITS DISPOSITION).
    3    (C) DEFINITIONS.--FOR PURPOSES OF THIS PARAGRAPH--
    4    (I)  QUALIFIED  REPLACEMENT PROPERTY.--THE TERM "QUALIFIED REPLACEMENT
    5  PROPERTY" MEANS ANY REAL PROPERTY WHICH IS--
    6    (I) ACQUIRED IN AN EXCHANGE WHICH QUALIFIES UNDER SECTION 1031, OR
    7    (II) THE ACQUISITION OF WHICH RESULTS IN THE  NONRECOGNITION  OF  GAIN
    8  UNDER SECTION 1033.
    9    SUCH TERM SHALL ONLY INCLUDE PROPERTY WHICH IS USED FOR THE SAME QUAL-
   10  IFIED USE AS THE REPLACED PROPERTY WAS BEING USED BEFORE THE EXCHANGE.
   11    (II) REPLACED PROPERTY.--THE TERM "REPLACED PROPERTY" MEANS--
   12    (I)  THE  PROPERTY  TRANSFERRED  IN THE EXCHANGE WHICH QUALIFIES UNDER
   13  SECTION 1031, OR
   14    (II) THE PROPERTY COMPULSORILY OR INVOLUNTARILY CONVERTED (WITHIN  THE
   15  MEANING OF SECTION 1033).
   16    (F) STATUTE OF LIMITATIONS.--IF QUALIFIED REAL PROPERTY IS DISPOSED OF
   17  OR CEASES TO BE USED FOR A QUALIFIED USE, THEN--
   18    (1)  THE  STATUTORY  PERIOD  FOR  THE ASSESSMENT OF ANY ADDITIONAL TAX
   19  UNDER SUBSECTION (C) ATTRIBUTABLE TO SUCH DISPOSITION OR CESSATION SHALL
   20  NOT EXPIRE BEFORE THE EXPIRATION OF 3 YEARS FROM THE DATE THE  SECRETARY
   21  IS  NOTIFIED  (IN  SUCH  MANNER  AS  THE  SECRETARY  MAY  BY REGULATIONS
   22  PRESCRIBE) OF SUCH DISPOSITION OR CESSATION (OR IF LATER IN THE CASE  OF
   23  AN  INVOLUNTARY  CONVERSION  OR  EXCHANGE TO WHICH SUBSECTION (H) OR (I)
   24  APPLIES, 3 YEARS FROM THE DATE THE SECRETARY IS NOTIFIED OF THE REPLACE-
   25  MENT OF THE CONVERTED PROPERTY OR OF AN INTENTION NOT TO REPLACE  OR  OF
   26  THE EXCHANGE OF PROPERTY), AND
   27    (2)  SUCH ADDITIONAL TAX MAY BE ASSESSED BEFORE THE EXPIRATION OF SUCH
   28  3-YEAR PERIOD NOTWITHSTANDING THE PROVISIONS OF ANY OTHER LAW OR RULE OF
   29  LAW WHICH WOULD OTHERWISE PREVENT SUCH ASSESSMENT.
   30    (G) APPLICATION OF THIS SECTION AND  SECTION  6324B  TO  INTERESTS  IN
   31  PARTNERSHIPS,  CORPORATIONS,  AND TRUSTS.--THE SECRETARY SHALL PRESCRIBE
   32  REGULATIONS SETTING FORTH THE APPLICATION OF THIS  SECTION  AND  SECTION
   33  6324B IN THE CASE OF AN INTEREST IN A PARTNERSHIP, CORPORATION, OR TRUST
   34  WHICH,  WITH  RESPECT  TO THE DECEDENT, IS AN INTEREST IN A CLOSELY HELD
   35  BUSINESS (WITHIN THE MEANING OF PARAGRAPH (1) OF SECTION  6166(B)).  FOR
   36  PURPOSES OF THE PRECEDING SENTENCE, AN INTEREST IN A DISCRETIONARY TRUST
   37  ALL THE BENEFICIARIES OF WHICH ARE QUALIFIED HEIRS SHALL BE TREATED AS A
   38  PRESENT INTEREST.
   39    (H)  SPECIAL RULES FOR INVOLUNTARY CONVERSIONS OF QUALIFIED REAL PROP-
   40  ERTY.--
   41    (1) TREATMENT OF CONVERTED PROPERTY.--
   42    (A) IN GENERAL.--IF THERE IS AN INVOLUNTARY CONVERSION OF AN  INTEREST
   43  IN QUALIFIED REAL PROPERTY--
   44    (I)  NO  TAX  SHALL BE IMPOSED BY SUBSECTION (C) ON SUCH CONVERSION IF
   45  THE COST OF THE QUALIFIED REPLACEMENT PROPERTY  EQUALS  OR  EXCEEDS  THE
   46  AMOUNT REALIZED ON SUCH CONVERSION, OR
   47    (II)  IF  CLAUSE  (I) DOES NOT APPLY, THE AMOUNT OF THE TAX IMPOSED BY
   48  SUBSECTION (C) ON SUCH CONVERSION SHALL BE THE AMOUNT  DETERMINED  UNDER
   49  SUBPARAGRAPH (B).
   50    (B)  AMOUNT  OF  TAX  WHERE  THERE  IS NOT COMPLETE REINVESTMENT.--THE
   51  AMOUNT DETERMINED UNDER THIS SUBPARAGRAPH WITH RESPECT TO  ANY  INVOLUN-
   52  TARY CONVERSION IS THE AMOUNT OF THE TAX WHICH (BUT FOR THIS SUBSECTION)
   53  WOULD HAVE BEEN IMPOSED ON SUCH CONVERSION REDUCED BY AN AMOUNT WHICH--
   54    (I) BEARS THE SAME RATIO TO SUCH TAX, AS
   55    (II)  THE  COST  OF  THE  QUALIFIED  REPLACEMENT PROPERTY BEARS TO THE
   56  AMOUNT REALIZED ON THE CONVERSION.
       S. 6359                            263                           A. 8559
    1    (2) TREATMENT OF REPLACEMENT  PROPERTY.--FOR  PURPOSES  OF  SUBSECTION
    2  (C)--
    3    (A)  ANY  QUALIFIED  REPLACEMENT PROPERTY SHALL BE TREATED IN THE SAME
    4  MANNER AS IF IT WERE A PORTION OF THE INTEREST IN QUALIFIED REAL PROPER-
    5  TY WHICH WAS INVOLUNTARILY CONVERTED; EXCEPT THAT WITH RESPECT  TO  SUCH
    6  QUALIFIED REPLACEMENT PROPERTY THE 10-YEAR PERIOD UNDER PARAGRAPH (1) OF
    7  SUBSECTION (C) SHALL BE EXTENDED BY ANY PERIOD, BEYOND THE 2-YEAR PERIOD
    8  REFERRED TO IN SECTION 1033(A)(2)(B)(I), DURING WHICH THE QUALIFIED HEIR
    9  WAS ALLOWED TO REPLACE THE QUALIFIED REAL PROPERTY,
   10    (B)  ANY  TAX  IMPOSED BY SUBSECTION (C) ON THE INVOLUNTARY CONVERSION
   11  SHALL BE TREATED AS A TAX IMPOSED ON A PARTIAL DISPOSITION, AND
   12    (C) PARAGRAPH (6) OF SUBSECTION (C) SHALL BE APPLIED--
   13    (I) BY NOT TAKING INTO ACCOUNT PERIODS AFTER THE  INVOLUNTARY  CONVER-
   14  SION  AND  BEFORE THE ACQUISITION OF THE QUALIFIED REPLACEMENT PROPERTY,
   15  AND
   16    (II) BY TREATING MATERIAL PARTICIPATION WITH RESPECT TO THE  CONVERTED
   17  PROPERTY  AS  MATERIAL  PARTICIPATION  WITH  RESPECT  TO  THE  QUALIFIED
   18  REPLACEMENT PROPERTY.
   19    (3) DEFINITIONS AND SPECIAL RULES.--FOR PURPOSES OF THIS SUBSECTION--
   20    (A) INVOLUNTARY CONVERSION.--THE TERM "INVOLUNTARY CONVERSION" MEANS A
   21  COMPULSORY OR INVOLUNTARY CONVERSION WITHIN THE MEANING OF SECTION 1033.
   22    (B) QUALIFIED REPLACEMENT PROPERTY.--THE TERM  "QUALIFIED  REPLACEMENT
   23  PROPERTY" MEANS--
   24    (I)  IN  THE  CASE  OF  AN INVOLUNTARY CONVERSION DESCRIBED IN SECTION
   25  1033(A)(1), ANY REAL PROPERTY INTO WHICH THE QUALIFIED REAL PROPERTY  IS
   26  CONVERTED, OR
   27    (II)  IN  THE  CASE  OF AN INVOLUNTARY CONVERSION DESCRIBED IN SECTION
   28  1033(A)(2), ANY REAL PROPERTY PURCHASED BY THE QUALIFIED HEIR DURING THE
   29  PERIOD SPECIFIED IN SECTION 1033(A)(2)(B) FOR PURPOSES OF REPLACING  THE
   30  QUALIFIED REAL PROPERTY.
   31    SUCH TERM ONLY INCLUDES PROPERTY WHICH IS TO BE USED FOR THE QUALIFIED
   32  USE  SET  FORTH  IN  SUBPARAGRAPH  (A) OR (B) OF SUBSECTION (B)(2) UNDER
   33  WHICH THE QUALIFIED REAL PROPERTY QUALIFIED UNDER SUBSECTION (A).
   34    (4) CERTAIN RULES MADE APPLICABLE.--THE RULES OF THE LAST SENTENCE  OF
   35  SECTION 1033(A)(2)(A) SHALL APPLY FOR PURPOSES OF PARAGRAPH (3)(B)(II).
   36    (I) EXCHANGES OF QUALIFIED REAL PROPERTY.--
   37    (1) TREATMENT OF PROPERTY EXCHANGED.--
   38    (A)  EXCHANGES SOLELY FOR QUALIFIED EXCHANGE PROPERTY.--IF AN INTEREST
   39  IN QUALIFIED REAL PROPERTY IS EXCHANGED SOLELY FOR AN INTEREST IN QUALI-
   40  FIED EXCHANGE PROPERTY IN A TRANSACTION WHICH  QUALIFIES  UNDER  SECTION
   41  1031,  NO  TAX  SHALL  BE  IMPOSED  BY  SUBSECTION (C) BY REASON OF SUCH
   42  EXCHANGE.
   43    (B) EXCHANGES WHERE OTHER PROPERTY RECEIVED.--IF AN INTEREST IN QUALI-
   44  FIED REAL PROPERTY IS EXCHANGED FOR AN INTEREST  IN  QUALIFIED  EXCHANGE
   45  PROPERTY  AND  OTHER  PROPERTY  IN  A  TRANSACTION WHICH QUALIFIES UNDER
   46  SECTION 1031, THE AMOUNT OF THE TAX IMPOSED BY SUBSECTION (C) BY  REASON
   47  OF SUCH EXCHANGE SHALL BE THE AMOUNT OF TAX WHICH (BUT FOR THIS SUBPARA-
   48  GRAPH) WOULD HAVE BEEN IMPOSED ON SUCH EXCHANGE UNDER SUBSECTION (C)(1),
   49  REDUCED BY AN AMOUNT WHICH--
   50    (I) BEARS THE SAME RATIO TO SUCH TAX, AS
   51    (II) THE FAIR MARKET VALUE OF THE QUALIFIED EXCHANGE PROPERTY BEARS TO
   52  THE FAIR MARKET VALUE OF THE QUALIFIED REAL PROPERTY EXCHANGED.
   53    FOR  PURPOSES  OF  CLAUSE  (II) OF THE PRECEDING SENTENCE, FAIR MARKET
   54  VALUE SHALL BE DETERMINED AS OF THE TIME OF THE EXCHANGE.
   55    (2)  TREATMENT  OF  QUALIFIED  EXCHANGE  PROPERTY.--FOR  PURPOSES   OF
   56  SUBSECTION (C)--
       S. 6359                            264                           A. 8559
    1    (A)  ANY  INTEREST  IN QUALIFIED EXCHANGE PROPERTY SHALL BE TREATED IN
    2  THE SAME MANNER AS IF IT WERE A PORTION OF  THE  INTEREST  IN  QUALIFIED
    3  REAL PROPERTY WHICH WAS EXCHANGED,
    4    (B)  ANY TAX IMPOSED BY SUBSECTION (C) BY REASON OF THE EXCHANGE SHALL
    5  BE TREATED AS A TAX IMPOSED ON A PARTIAL DISPOSITION, AND
    6    (C) PARAGRAPH (6) OF SUBSECTION (C) SHALL BE APPLIED BY TREATING MATE-
    7  RIAL PARTICIPATION WITH RESPECT TO THE EXCHANGED  PROPERTY  AS  MATERIAL
    8  PARTICIPATION WITH RESPECT TO THE QUALIFIED EXCHANGE PROPERTY.
    9    (3) QUALIFIED EXCHANGE PROPERTY.--FOR PURPOSES OF THIS SUBSECTION, THE
   10  TERM  "QUALIFIED  EXCHANGE  PROPERTY" MEANS REAL PROPERTY WHICH IS TO BE
   11  USED FOR THE QUALIFIED USE SET FORTH  IN  SUBPARAGRAPH  (A)  OR  (B)  OF
   12  SUBSECTION  (B)(2)  UNDER  WHICH  THE  REAL  PROPERTY EXCHANGED THEREFOR
   13  ORIGINALLY QUALIFIED UNDER SUBSECTION (A).
   14    S 2033. PROPERTY IN WHICH THE DECEDENT HAD AN INTEREST. THE  VALUE  OF
   15  THE  GROSS  ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY TO THE EXTENT
   16  OF THE INTEREST THEREIN OF THE DECEDENT AT THE TIME OF HIS DEATH.
   17    S 2034. DOWER OR CURTESY INTERESTS. THE  VALUE  OF  THE  GROSS  ESTATE
   18  SHALL  INCLUDE  THE  VALUE OF ALL PROPERTY TO THE EXTENT OF ANY INTEREST
   19  THEREIN OF THE SURVIVING SPOUSE, EXISTING AT THE TIME OF THE  DECEDENT'S
   20  DEATH  AS DOWER OR CURTESY, OR BY VIRTUE OF A STATUTE CREATING AN ESTATE
   21  IN LIEU OF DOWER OR CURTESY.
   22    S 2035. ADJUSTMENTS FOR CERTAIN  GIFTS  MADE  WITHIN  THREE  YEARS  OF
   23  DECEDENT'S   DEATH.   (A)   INCLUSION   OF  CERTAIN  PROPERTY  IN  GROSS
   24  ESTATE.--IF--
   25    (1) THE DECEDENT MADE A TRANSFER (BY TRUST OR OTHERWISE) OF AN  INTER-
   26  EST IN ANY PROPERTY, OR RELINQUISHED A POWER WITH RESPECT TO ANY PROPER-
   27  TY, DURING THE 3-YEAR PERIOD ENDING ON THE DATE OF THE DECEDENT'S DEATH,
   28  AND
   29    (2)  THE  VALUE  OF  SUCH PROPERTY (OR AN INTEREST THEREIN) WOULD HAVE
   30  BEEN INCLUDED IN THE DECEDENT'S GROSS ESTATE UNDER SECTION  2036,  2037,
   31  2038,  OR  2042  IF  SUCH TRANSFERRED INTEREST OR RELINQUISHED POWER HAD
   32  BEEN RETAINED BY THE DECEDENT ON THE DATE OF HIS DEATH,
   33    THE VALUE OF THE GROSS ESTATE SHALL INCLUDE THE VALUE OF ANY  PROPERTY
   34  (OR INTEREST THEREIN) WHICH WOULD HAVE BEEN SO INCLUDED.
   35    (B)  INCLUSION  OF  GIFT  TAX  ON  GIFTS  MADE  DURING  3 YEARS BEFORE
   36  DECEDENT'S DEATH.--THE AMOUNT OF THE GROSS  ESTATE  (DETERMINED  WITHOUT
   37  REGARD  TO  THIS SUBSECTION) SHALL BE INCREASED BY THE AMOUNT OF ANY TAX
   38  PAID UNDER CHAPTER 12 BY THE DECEDENT OR HIS ESTATE ON ANY GIFT MADE  BY
   39  THE  DECEDENT  OR HIS SPOUSE DURING THE 3-YEAR PERIOD ENDING ON THE DATE
   40  OF THE DECEDENT'S DEATH.
   41    (C) OTHER RULES RELATING TO TRANSFERS WITHIN 3 YEARS OF DEATH.--
   42    (1) IN GENERAL.--FOR PURPOSES OF--
   43    (A) SECTION 303(B) (RELATING TO DISTRIBUTIONS IN REDEMPTION  OF  STOCK
   44  TO PAY DEATH TAXES),
   45    (B)  SECTION  2032A  (RELATING  TO SPECIAL VALUATION OF CERTAIN FARMS,
   46  ETC., REAL PROPERTY), AND
   47    (C) SUBCHAPTER C OF CHAPTER 64 (RELATING TO LIEN FOR TAXES),
   48    THE VALUE OF THE GROSS ESTATE SHALL INCLUDE THE VALUE OF ALL  PROPERTY
   49  TO  THE  EXTENT OF ANY INTEREST THEREIN OF WHICH THE DECEDENT HAS AT ANY
   50  TIME MADE A TRANSFER, BY TRUST OR OTHERWISE, DURING  THE  3-YEAR  PERIOD
   51  ENDING ON THE DATE OF THE DECEDENT'S DEATH.
   52    (2)  COORDINATION  WITH  SECTION  6166.--AN ESTATE SHALL BE TREATED AS
   53  MEETING THE 35 PERCENT OF ADJUSTED GROSS ESTATE REQUIREMENT  OF  SECTION
   54  6166(A)(1) ONLY IF THE ESTATE MEETS SUCH REQUIREMENT BOTH WITH AND WITH-
   55  OUT THE APPLICATION OF SUBSECTION (A).
       S. 6359                            265                           A. 8559
    1    (3) MARITAL AND SMALL TRANSFERS.--PARAGRAPH (1) SHALL NOT APPLY TO ANY
    2  TRANSFER (OTHER THAN A TRANSFER WITH RESPECT TO A LIFE INSURANCE POLICY)
    3  MADE  DURING  A  CALENDAR  YEAR  TO  ANY  DONEE  IF THE DECEDENT WAS NOT
    4  REQUIRED BY SECTION 6019 (OTHER THAN BY REASON OF  SECTION  6019(2))  TO
    5  FILE ANY GIFT TAX RETURN FOR SUCH YEAR WITH RESPECT TO TRANSFERS TO SUCH
    6  DONEE.
    7    (D)  EXCEPTION.--SUBSECTION  (A)  AND  PARAGRAPH (1) OF SUBSECTION (C)
    8  SHALL NOT APPLY TO ANY BONA FIDE SALE FOR AN ADEQUATE AND FULL CONSIDER-
    9  ATION IN MONEY OR MONEY'S WORTH.
   10    (E)  TREATMENT  OF  CERTAIN  TRANSFERS  FROM  REVOCABLE   TRUSTS.--FOR
   11  PURPOSES OF THIS SECTION AND SECTION 2038, ANY TRANSFER FROM ANY PORTION
   12  OF A TRUST DURING ANY PERIOD THAT SUCH PORTION WAS TREATED UNDER SECTION
   13  676 AS OWNED BY THE DECEDENT BY REASON OF A POWER IN THE GRANTOR (DETER-
   14  MINED  WITHOUT  REGARD TO SECTION 672(E)) SHALL BE TREATED AS A TRANSFER
   15  MADE DIRECTLY BY THE DECEDENT.
   16    S 2036. TRANSFERS WITH RETAINED LIFE ESTATE.  (A)  GENERAL  RULE.--THE
   17  VALUE OF THE GROSS ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY TO THE
   18  EXTENT  OF  ANY  INTEREST  THEREIN OF WHICH THE DECEDENT HAS AT ANY TIME
   19  MADE A TRANSFER (EXCEPT IN CASE OF A BONA FIDE SALE FOR AN ADEQUATE  AND
   20  FULL  CONSIDERATION  IN  MONEY OR MONEY'S WORTH), BY TRUST OR OTHERWISE,
   21  UNDER WHICH HE HAS RETAINED FOR HIS LIFE OR FOR ANY  PERIOD  NOT  ASCER-
   22  TAINABLE WITHOUT REFERENCE TO HIS DEATH OR FOR ANY PERIOD WHICH DOES NOT
   23  IN FACT END BEFORE HIS DEATH--
   24    (1)  THE  POSSESSION OR ENJOYMENT OF, OR THE RIGHT TO THE INCOME FROM,
   25  THE PROPERTY, OR
   26    (2) THE RIGHT, EITHER ALONE OR IN  CONJUNCTION  WITH  ANY  PERSON,  TO
   27  DESIGNATE  THE  PERSONS  WHO  SHALL POSSESS OR ENJOY THE PROPERTY OR THE
   28  INCOME THEREFROM.
   29    (B) VOTING RIGHTS.--
   30    (1) IN GENERAL.--FOR PURPOSES OF SUBSECTION (A)(1), THE  RETENTION  OF
   31  THE  RIGHT  TO  VOTE  (DIRECTLY  OR  INDIRECTLY)  SHARES  OF  STOCK OF A
   32  CONTROLLED CORPORATION SHALL BE CONSIDERED TO  BE  A  RETENTION  OF  THE
   33  ENJOYMENT OF TRANSFERRED PROPERTY.
   34    (2)  CONTROLLED  CORPORATION.--FOR PURPOSES OF PARAGRAPH (1), A CORPO-
   35  RATION SHALL BE TREATED AS A CONTROLLED  CORPORATION  IF,  AT  ANY  TIME
   36  AFTER  THE  TRANSFER OF THE PROPERTY AND DURING THE 3-YEAR PERIOD ENDING
   37  ON THE DATE OF THE DECEDENT'S DEATH, THE DECEDENT OWNED (WITH THE APPLI-
   38  CATION OF SECTION 318), OR HAD THE RIGHT (EITHER ALONE OR IN CONJUNCTION
   39  WITH ANY PERSON) TO VOTE, STOCK POSSESSING AT LEAST 20  PERCENT  OF  THE
   40  TOTAL COMBINED VOTING POWER OF ALL CLASSES OF STOCK.
   41    (3)  COORDINATION WITH SECTION 2035.--FOR PURPOSES OF APPLYING SECTION
   42  2035 WITH RESPECT TO PARAGRAPH (1), THE RELINQUISHMENT OR  CESSATION  OF
   43  VOTING  RIGHTS  SHALL  BE  TREATED AS A TRANSFER OF PROPERTY MADE BY THE
   44  DECEDENT.
   45    (C) LIMITATION ON APPLICATION OF GENERAL RULE.--THIS SECTION SHALL NOT
   46  APPLY TO A TRANSFER MADE BEFORE MARCH 4, 1931; NOR TO  A  TRANSFER  MADE
   47  AFTER MARCH 3, 1931, AND BEFORE JUNE 7, 1932, UNLESS THE PROPERTY TRANS-
   48  FERRED  WOULD  HAVE  BEEN  INCLUDIBLE  IN THE DECEDENT'S GROSS ESTATE BY
   49  REASON OF THE AMENDATORY LANGUAGE OF THE JOINT RESOLUTION  OF  MARCH  3,
   50  1931 (46 STAT. 1516).
   51    S 2037. TRANSFERS TAKING EFFECT AT DEATH. (A) GENERAL RULE.--THE VALUE
   52  OF  THE  GROSS  ESTATE  SHALL  INCLUDE  THE VALUE OF ALL PROPERTY TO THE
   53  EXTENT OF ANY INTEREST THEREIN OF WHICH THE DECEDENT  HAS  AT  ANY  TIME
   54  AFTER  SEPTEMBER 7, 1916, MADE A TRANSFER (EXCEPT IN CASE OF A BONA FIDE
   55  SALE FOR AN ADEQUATE AND FULL CONSIDERATION IN MONEY OR MONEY'S  WORTH),
   56  BY TRUST OR OTHERWISE, IF--
       S. 6359                            266                           A. 8559
    1    (1)  POSSESSION OR ENJOYMENT OF THE PROPERTY CAN, THROUGH OWNERSHIP OF
    2  SUCH INTEREST, BE OBTAINED ONLY BY SURVIVING THE DECEDENT, AND
    3    (2)  THE DECEDENT HAS RETAINED A REVERSIONARY INTEREST IN THE PROPERTY
    4  (BUT IN THE CASE OF A TRANSFER MADE BEFORE OCTOBER 8, 1949, ONLY IF SUCH
    5  REVERSIONARY INTEREST AROSE BY THE EXPRESS TERMS OF  THE  INSTRUMENT  OF
    6  TRANSFER),  AND  THE  VALUE  OF  SUCH  REVERSIONARY INTEREST IMMEDIATELY
    7  BEFORE THE DEATH OF THE DECEDENT EXCEEDS 5 PERCENT OF THE VALUE OF  SUCH
    8  PROPERTY.
    9    (B) SPECIAL RULES.--FOR PURPOSES OF THIS SECTION, THE TERM "REVERSION-
   10  ARY  INTEREST"  INCLUDES  A POSSIBILITY THAT PROPERTY TRANSFERRED BY THE
   11  DECEDENT--
   12    (1) MAY RETURN TO HIM OR HIS ESTATE, OR
   13    (2) MAY BE SUBJECT TO A POWER OF DISPOSITION BY HIM,
   14    BUT SUCH TERM DOES NOT INCLUDE A POSSIBILITY  THAT  THE  INCOME  ALONE
   15  FROM  SUCH  PROPERTY  MAY  RETURN TO HIM OR BECOME SUBJECT TO A POWER OF
   16  DISPOSITION BY HIM. THE VALUE OF  A  REVERSIONARY  INTEREST  IMMEDIATELY
   17  BEFORE  THE DEATH OF THE DECEDENT SHALL BE DETERMINED (WITHOUT REGARD TO
   18  THE FACT OF THE DECEDENT'S DEATH) BY USUAL METHODS OF VALUATION, INCLUD-
   19  ING THE USE OF TABLES OF MORTALITY AND ACTUARIAL PRINCIPLES, UNDER REGU-
   20  LATIONS PRESCRIBED BY THE SECRETARY.  IN  DETERMINING  THE  VALUE  OF  A
   21  POSSIBILITY  THAT  PROPERTY  MAY BE SUBJECT TO A POWER OF DISPOSITION BY
   22  THE DECEDENT, SUCH POSSIBILITY SHALL BE VALUED AS IF IT WERE A POSSIBIL-
   23  ITY THAT SUCH PROPERTY  MAY  RETURN  TO  THE  DECEDENT  OR  HIS  ESTATE.
   24  NOTWITHSTANDING  THE  FOREGOING, AN INTEREST SO TRANSFERRED SHALL NOT BE
   25  INCLUDED IN THE DECEDENT'S GROSS ESTATE UNDER THIS SECTION IF POSSESSION
   26  OR ENJOYMENT OF THE PROPERTY COULD HAVE BEEN OBTAINED BY ANY BENEFICIARY
   27  DURING THE DECEDENT'S LIFE THROUGH THE EXERCISE OF A  GENERAL  POWER  OF
   28  APPOINTMENT  (AS  DEFINED IN SECTION 2041) WHICH IN FACT WAS EXERCISABLE
   29  IMMEDIATELY BEFORE THE DECEDENT'S DEATH.
   30    S 2038. REVOCABLE TRANSFERS. (A) IN GENERAL.--THE VALUE OF  THE  GROSS
   31  ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY--
   32    (1)  TRANSFERS  AFTER  JUNE  22,  1936.--TO THE EXTENT OF ANY INTEREST
   33  THEREIN OF WHICH THE DECEDENT HAS AT ANY TIME MADE A TRANSFER (EXCEPT IN
   34  CASE OF A BONA FIDE SALE FOR AN ADEQUATE AND FULL CONSIDERATION IN MONEY
   35  OR MONEY'S WORTH), BY TRUST OR OTHERWISE, WHERE  THE  ENJOYMENT  THEREOF
   36  WAS  SUBJECT AT THE DATE OF HIS DEATH TO ANY CHANGE THROUGH THE EXERCISE
   37  OF A POWER (IN WHATEVER CAPACITY EXERCISABLE) BY THE DECEDENT  ALONE  OR
   38  BY  THE DECEDENT IN CONJUNCTION WITH ANY OTHER PERSON (WITHOUT REGARD TO
   39  WHEN OR FROM WHAT SOURCE THE DECEDENT ACQUIRED SUCH  POWER),  TO  ALTER,
   40  AMEND,  REVOKE,  OR  TERMINATE,  OR WHERE ANY SUCH POWER IS RELINQUISHED
   41  DURING THE 3-YEAR PERIOD ENDING ON THE DATE OF THE DECEDENT'S DEATH.
   42    (2) TRANSFERS ON OR BEFORE JUNE 22, 1936.--TO THE EXTENT OF ANY INTER-
   43  EST THEREIN OF WHICH THE DECEDENT  HAS  AT  ANY  TIME  MADE  A  TRANSFER
   44  (EXCEPT  IN  CASE OF A BONA FIDE SALE FOR AN ADEQUATE AND FULL CONSIDER-
   45  ATION IN MONEY OR MONEY'S WORTH),  BY  TRUST  OR  OTHERWISE,  WHERE  THE
   46  ENJOYMENT  THEREOF  WAS  SUBJECT  AT THE DATE OF HIS DEATH TO ANY CHANGE
   47  THROUGH THE EXERCISE OF A POWER, EITHER BY  THE  DECEDENT  ALONE  OR  IN
   48  CONJUNCTION  WITH  ANY  PERSON, TO ALTER, AMEND, OR REVOKE, OR WHERE THE
   49  DECEDENT RELINQUISHED ANY SUCH POWER DURING THE 3-YEAR PERIOD ENDING  ON
   50  THE  DATE  OF THE DECEDENT'S DEATH. EXCEPT IN THE CASE OF TRANSFERS MADE
   51  AFTER JUNE 22, 1936, NO INTEREST OF THE DECEDENT OF WHICH HE HAS MADE  A
   52  TRANSFER  SHALL  BE  INCLUDED  IN  THE  GROSS ESTATE UNDER PARAGRAPH (1)
   53  UNLESS IT IS INCLUDIBLE UNDER THIS PARAGRAPH.
   54    (B) DATE OF EXISTENCE OF POWER.--FOR PURPOSES  OF  THIS  SECTION,  THE
   55  POWER TO ALTER, AMEND, REVOKE, OR TERMINATE SHALL BE CONSIDERED TO EXIST
   56  ON  THE  DATE  OF  THE  DECEDENT'S DEATH EVEN THOUGH THE EXERCISE OF THE
       S. 6359                            267                           A. 8559
    1  POWER IS SUBJECT TO A PRECEDENT GIVING OF  NOTICE  OR  EVEN  THOUGH  THE
    2  ALTERATION,  AMENDMENT,  REVOCATION, OR TERMINATION TAKES EFFECT ONLY ON
    3  THE EXPIRATION OF A STATED PERIOD  AFTER  THE  EXERCISE  OF  THE  POWER,
    4  WHETHER  OR NOT ON OR BEFORE THE DATE OF THE DECEDENT'S DEATH NOTICE HAS
    5  BEEN GIVEN OR THE POWER HAS BEEN EXERCISED. IN SUCH CASES PROPER ADJUST-
    6  MENT SHALL BE MADE REPRESENTING THE  INTERESTS  WHICH  WOULD  HAVE  BEEN
    7  EXCLUDED FROM THE POWER IF THE DECEDENT HAD LIVED, AND FOR SUCH PURPOSE,
    8  IF  THE NOTICE HAS NOT BEEN GIVEN OR THE POWER HAS NOT BEEN EXERCISED ON
    9  OR BEFORE THE DATE OF HIS DEATH, SUCH NOTICE SHALL BE CONSIDERED TO HAVE
   10  BEEN GIVEN, OR THE POWER EXERCISED, ON THE DATE OF HIS DEATH.
   11    S 2039. ANNUITIES. (A) GENERAL.--THE GROSS ESTATE  SHALL  INCLUDE  THE
   12  VALUE  OF  AN  ANNUITY OR OTHER PAYMENT RECEIVABLE BY ANY BENEFICIARY BY
   13  REASON OF SURVIVING THE DECEDENT UNDER ANY FORM OF CONTRACT OR AGREEMENT
   14  ENTERED INTO AFTER MARCH 3, 1931 (OTHER THAN AS INSURANCE UNDER POLICIES
   15  ON THE LIFE OF THE DECEDENT), IF, UNDER SUCH CONTRACT OR  AGREEMENT,  AN
   16  ANNUITY  OR  OTHER  PAYMENT WAS PAYABLE TO THE DECEDENT, OR THE DECEDENT
   17  POSSESSED THE RIGHT TO RECEIVE SUCH ANNUITY OR PAYMENT, EITHER ALONE  OR
   18  IN  CONJUNCTION  WITH  ANOTHER FOR HIS LIFE OR FOR ANY PERIOD NOT ASCER-
   19  TAINABLE WITHOUT REFERENCE TO HIS DEATH OR FOR ANY PERIOD WHICH DOES NOT
   20  IN FACT END BEFORE HIS DEATH.
   21    (B) AMOUNT INCLUDIBLE.--SUBSECTION (A) SHALL APPLY TO ONLY  SUCH  PART
   22  OF  THE  VALUE  OF  THE  ANNUITY  OR OTHER PAYMENT RECEIVABLE UNDER SUCH
   23  CONTRACT OR AGREEMENT AS IS PROPORTIONATE TO THAT PART OF  THE  PURCHASE
   24  PRICE  THEREFOR  CONTRIBUTED  BY  THE  DECEDENT.  FOR  PURPOSES  OF THIS
   25  SECTION, ANY CONTRIBUTION BY THE DECEDENT'S EMPLOYER OR FORMER  EMPLOYER
   26  TO  THE  PURCHASE PRICE OF SUCH CONTRACT OR AGREEMENT (WHETHER OR NOT TO
   27  AN EMPLOYEE'S TRUST OR FUND FORMING PART OF A PENSION, ANNUITY,  RETIRE-
   28  MENT,  BONUS  OR PROFIT SHARING PLAN) SHALL BE CONSIDERED TO BE CONTRIB-
   29  UTED BY THE DECEDENT IF MADE BY REASON OF HIS EMPLOYMENT.
   30    S 2040. JOINT INTERESTS. (A) GENERAL RULE.--THE  VALUE  OF  THE  GROSS
   31  ESTATE  SHALL  INCLUDE  THE  VALUE  OF ALL PROPERTY TO THE EXTENT OF THE
   32  INTEREST THEREIN HELD AS JOINT TENANTS WITH RIGHT OF SURVIVORSHIP BY THE
   33  DECEDENT AND ANY OTHER PERSON, OR AS TENANTS  BY  THE  ENTIRETY  BY  THE
   34  DECEDENT AND SPOUSE, OR DEPOSITED, WITH ANY PERSON CARRYING ON THE BANK-
   35  ING  BUSINESS,  IN THEIR JOINT NAMES AND PAYABLE TO EITHER OR THE SURVI-
   36  VOR, EXCEPT SUCH PART  THEREOF  AS  MAY  BE  SHOWN  TO  HAVE  ORIGINALLY
   37  BELONGED  TO  SUCH  OTHER  PERSON  AND  NEVER  TO  HAVE BEEN RECEIVED OR
   38  ACQUIRED BY THE LATTER FROM THE DECEDENT FOR LESS THAN AN  ADEQUATE  AND
   39  FULL  CONSIDERATION IN MONEY OR MONEY'S WORTH: PROVIDED, THAT WHERE SUCH
   40  PROPERTY OR ANY PART THEREOF, OR PART OF THE  CONSIDERATION  WITH  WHICH
   41  SUCH  PROPERTY  WAS ACQUIRED, IS SHOWN TO HAVE BEEN AT ANY TIME ACQUIRED
   42  BY SUCH OTHER PERSON FROM THE DECEDENT FOR LESS  THAN  AN  ADEQUATE  AND
   43  FULL  CONSIDERATION  IN  MONEY OR MONEY'S WORTH, THERE SHALL BE EXCEPTED
   44  ONLY SUCH PART OF THE VALUE OF SUCH PROPERTY AS IS PROPORTIONATE TO  THE
   45  CONSIDERATION  FURNISHED  BY  SUCH  OTHER PERSON: PROVIDED FURTHER, THAT
   46  WHERE ANY PROPERTY HAS BEEN ACQUIRED BY GIFT, BEQUEST, DEVISE, OR INHER-
   47  ITANCE, AS A TENANCY BY THE ENTIRETY BY THE DECEDENT AND SPOUSE, THEN TO
   48  THE EXTENT OF ONE-HALF OF THE VALUE THEREOF, OR, WHERE  SO  ACQUIRED  BY
   49  THE  DECEDENT AND ANY OTHER PERSON AS JOINT TENANTS WITH RIGHT OF SURVI-
   50  VORSHIP AND THEIR INTERESTS ARE NOT OTHERWISE SPECIFIED OR FIXED BY LAW,
   51  THEN TO THE EXTENT OF THE VALUE OF A FRACTIONAL PART TO BE DETERMINED BY
   52  DIVIDING THE VALUE OF THE PROPERTY BY THE NUMBER OF JOINT  TENANTS  WITH
   53  RIGHT OF SURVIVORSHIP.
   54    (B) CERTAIN JOINT INTERESTS OF HUSBAND AND WIFE.--
   55    (1)  INTERESTS  OF SPOUSE EXCLUDED FROM GROSS ESTATE.--NOTWITHSTANDING
   56  SUBSECTION (A), IN THE CASE OF ANY QUALIFIED JOINT INTEREST,  THE  VALUE
       S. 6359                            268                           A. 8559
    1  INCLUDED  IN THE GROSS ESTATE WITH RESPECT TO SUCH INTEREST BY REASON OF
    2  THIS SECTION IS ONE-HALF OF THE VALUE OF SUCH QUALIFIED JOINT INTEREST.
    3    (2)  QUALIFIED JOINT INTEREST DEFINED.--FOR PURPOSES OF PARAGRAPH (1),
    4  THE TERM "QUALIFIED JOINT INTEREST" MEANS ANY INTEREST IN PROPERTY  HELD
    5  BY THE DECEDENT AND THE DECEDENT'S SPOUSE AS--
    6    (A) TENANTS BY THE ENTIRETY, OR
    7    (B) JOINT TENANTS WITH RIGHT OF SURVIVORSHIP, BUT ONLY IF THE DECEDENT
    8  AND THE SPOUSE OF THE DECEDENT ARE THE ONLY JOINT TENANTS.
    9    S 2041. POWERS OF APPOINTMENT. (A) IN GENERAL.--THE VALUE OF THE GROSS
   10  ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY--
   11    (1)  POWERS  OF APPOINTMENT CREATED ON OR BEFORE OCTOBER 21, 1942.--TO
   12  THE EXTENT OF ANY PROPERTY WITH RESPECT TO  WHICH  A  GENERAL  POWER  OF
   13  APPOINTMENT  CREATED  ON OR BEFORE OCTOBER 21, 1942, IS EXERCISED BY THE
   14  DECEDENT--
   15    (A) BY WILL, OR
   16    (B) BY A DISPOSITION WHICH IS OF SUCH NATURE THAT IF IT WERE A  TRANS-
   17  FER OF PROPERTY OWNED BY THE DECEDENT, SUCH PROPERTY WOULD BE INCLUDIBLE
   18  IN THE DECEDENT'S GROSS ESTATE UNDER SECTIONS 2035 TO 2038, INCLUSIVE;
   19    BUT  THE  FAILURE  TO EXERCISE SUCH A POWER OR THE COMPLETE RELEASE OF
   20  SUCH A POWER SHALL NOT BE DEEMED AN EXERCISE THEREOF. IF A GENERAL POWER
   21  OF APPOINTMENT CREATED ON OR BEFORE OCTOBER 21, 1942, HAS BEEN PARTIALLY
   22  RELEASED SO THAT IT IS NO LONGER A GENERAL  POWER  OF  APPOINTMENT,  THE
   23  EXERCISE  OF  SUCH  POWER  SHALL  NOT  BE DEEMED TO BE THE EXERCISE OF A
   24  GENERAL POWER OF APPOINTMENT IF--
   25    (I) SUCH PARTIAL RELEASE OCCURRED BEFORE NOVEMBER 1, 1951, OR
   26    (II) THE DONEE OF SUCH POWER WAS UNDER A LEGAL DISABILITY  TO  RELEASE
   27  SUCH  POWER  ON  OCTOBER 21, 1942, AND SUCH PARTIAL RELEASE OCCURRED NOT
   28  LATER THAN 6 MONTHS AFTER THE TERMINATION OF SUCH LEGAL DISABILITY.
   29    (2) POWERS CREATED AFTER OCTOBER 21, 1942.--TO THE EXTENT OF ANY PROP-
   30  ERTY WITH RESPECT TO WHICH THE DECEDENT HAS AT THE TIME OF HIS  DEATH  A
   31  GENERAL  POWER  OF  APPOINTMENT  CREATED AFTER OCTOBER 21, 1942, OR WITH
   32  RESPECT TO WHICH THE DECEDENT HAS AT ANY TIME EXERCISED OR RELEASED SUCH
   33  A POWER OF APPOINTMENT BY A DISPOSITION WHICH IS OF SUCH NATURE THAT  IF
   34  IT  WERE  A  TRANSFER  OF  PROPERTY OWNED BY THE DECEDENT, SUCH PROPERTY
   35  WOULD BE INCLUDIBLE IN THE DECEDENT'S GROSS ESTATE UNDER  SECTIONS  2035
   36  TO  2038,  INCLUSIVE.  FOR  PURPOSES OF THIS PARAGRAPH (2), THE POWER OF
   37  APPOINTMENT SHALL BE CONSIDERED TO EXIST ON THE DATE OF  THE  DECEDENT'S
   38  DEATH  EVEN  THOUGH  THE EXERCISE OF THE POWER IS SUBJECT TO A PRECEDENT
   39  GIVING OF NOTICE OR EVEN THOUGH THE EXERCISE OF THE POWER  TAKES  EFFECT
   40  ONLY ON THE EXPIRATION OF A STATED PERIOD AFTER ITS EXERCISE, WHETHER OR
   41  NOT  ON OR BEFORE THE DATE OF THE DECEDENT'S DEATH NOTICE HAS BEEN GIVEN
   42  OR THE POWER HAS BEEN EXERCISED.
   43    (3) CREATION OF ANOTHER POWER IN CERTAIN CASES.--TO THE EXTENT OF  ANY
   44  PROPERTY WITH RESPECT TO WHICH THE DECEDENT--
   45    (A) BY WILL, OR
   46    (B)  BY A DISPOSITION WHICH IS OF SUCH NATURE THAT IF IT WERE A TRANS-
   47  FER OF PROPERTY OWNED BY THE DECEDENT SUCH PROPERTY WOULD BE  INCLUDIBLE
   48  IN THE DECEDENT'S GROSS ESTATE UNDER SECTION 2035, 2036, OR 2037,
   49    EXERCISES  A  POWER  OF APPOINTMENT CREATED AFTER OCTOBER 21, 1942, BY
   50  CREATING ANOTHER POWER OF APPOINTMENT WHICH UNDER THE  APPLICABLE  LOCAL
   51  LAW CAN BE VALIDLY EXERCISED SO AS TO POSTPONE THE VESTING OF ANY ESTATE
   52  OR INTEREST IN SUCH PROPERTY, OR SUSPEND THE ABSOLUTE OWNERSHIP OR POWER
   53  OF  ALIENATION  OF  SUCH  PROPERTY,  FOR  A PERIOD ASCERTAINABLE WITHOUT
   54  REGARD TO THE DATE OF THE CREATION OF THE FIRST POWER.
   55    (B) DEFINITIONS.--FOR PURPOSES OF SUBSECTION (A)--
       S. 6359                            269                           A. 8559
    1    (1) GENERAL POWER OF APPOINTMENT.--THE TERM "GENERAL POWER OF APPOINT-
    2  MENT" MEANS A POWER WHICH IS EXERCISABLE IN FAVOR OF THE  DECEDENT,  HIS
    3  ESTATE, HIS CREDITORS, OR THE CREDITORS OF HIS ESTATE; EXCEPT THAT--
    4    (A)  A POWER TO CONSUME, INVADE, OR APPROPRIATE PROPERTY FOR THE BENE-
    5  FIT OF THE DECEDENT WHICH IS LIMITED BY AN ASCERTAINABLE STANDARD RELAT-
    6  ING TO THE HEALTH, EDUCATION, SUPPORT, OR MAINTENANCE  OF  THE  DECEDENT
    7  SHALL NOT BE DEEMED A GENERAL POWER OF APPOINTMENT.
    8    (B)  A  POWER  OF  APPOINTMENT  CREATED ON OR BEFORE OCTOBER 21, 1942,
    9  WHICH IS EXERCISABLE BY THE DECEDENT ONLY IN  CONJUNCTION  WITH  ANOTHER
   10  PERSON SHALL NOT BE DEEMED A GENERAL POWER OF APPOINTMENT.
   11    (C)  IN  THE  CASE OF A POWER OF APPOINTMENT CREATED AFTER OCTOBER 21,
   12  1942, WHICH IS EXERCISABLE BY THE  DECEDENT  ONLY  IN  CONJUNCTION  WITH
   13  ANOTHER PERSON--
   14    (I) IF THE POWER IS NOT EXERCISABLE BY THE DECEDENT EXCEPT IN CONJUNC-
   15  TION  WITH  THE  CREATOR  OF THE POWER--SUCH POWER SHALL NOT BE DEEMED A
   16  GENERAL POWER OF APPOINTMENT.
   17    (II) IF THE POWER  IS  NOT  EXERCISABLE  BY  THE  DECEDENT  EXCEPT  IN
   18  CONJUNCTION WITH A PERSON HAVING A SUBSTANTIAL INTEREST IN THE PROPERTY,
   19  SUBJECT TO THE POWER, WHICH IS ADVERSE TO EXERCISE OF THE POWER IN FAVOR
   20  OF  THE  DECEDENT--SUCH  POWER  SHALL  NOT  BE DEEMED A GENERAL POWER OF
   21  APPOINTMENT. FOR THE PURPOSES OF THIS CLAUSE A  PERSON  WHO,  AFTER  THE
   22  DEATH  OF THE DECEDENT, MAY BE POSSESSED OF A POWER OF APPOINTMENT (WITH
   23  RESPECT TO THE PROPERTY SUBJECT TO THE DECEDENT'S POWER)  WHICH  HE  MAY
   24  EXERCISE  IN  HIS OWN FAVOR SHALL BE DEEMED AS HAVING AN INTEREST IN THE
   25  PROPERTY AND SUCH INTEREST SHALL BE DEEMED ADVERSE TO SUCH  EXERCISE  OF
   26  THE DECEDENT'S POWER.
   27    (III)  IF (AFTER THE APPLICATION OF CLAUSES (I) AND (II)) THE POWER IS
   28  A GENERAL POWER OF APPOINTMENT AND IS EXERCISABLE IN FAVOR OF SUCH OTHER
   29  PERSON--SUCH POWER SHALL BE DEEMED A GENERAL POWER OF  APPOINTMENT  ONLY
   30  IN  RESPECT  OF A FRACTIONAL PART OF THE PROPERTY SUBJECT TO SUCH POWER,
   31  SUCH PART TO BE DETERMINED BY DIVIDING THE VALUE OF SUCH PROPERTY BY THE
   32  NUMBER OF SUCH PERSONS (INCLUDING THE DECEDENT) IN FAVOR  OF  WHOM  SUCH
   33  POWER IS EXERCISABLE.
   34    FOR  PURPOSES OF CLAUSES (II) AND (III), A POWER SHALL BE DEEMED TO BE
   35  EXERCISABLE IN FAVOR OF A PERSON IF IT IS EXERCISABLE IN FAVOR  OF  SUCH
   36  PERSON, HIS ESTATE, HIS CREDITORS, OR THE CREDITORS OF HIS ESTATE.
   37    (2) LAPSE OF POWER.--THE LAPSE OF A POWER OF APPOINTMENT CREATED AFTER
   38  OCTOBER 21, 1942, DURING THE LIFE OF THE INDIVIDUAL POSSESSING THE POWER
   39  SHALL  BE  CONSIDERED  A  RELEASE  OF SUCH POWER. THE PRECEDING SENTENCE
   40  SHALL APPLY WITH RESPECT TO THE LAPSE OF POWERS DURING ANY CALENDAR YEAR
   41  ONLY TO THE EXTENT THAT THE PROPERTY, WHICH COULD HAVE BEEN APPOINTED BY
   42  EXERCISE OF SUCH LAPSED POWERS, EXCEEDED IN VALUE, AT THE TIME  OF  SUCH
   43  LAPSE, THE GREATER OF THE FOLLOWING AMOUNTS:
   44    (A) $5,000, OR
   45    (B)  5  PERCENT  OF THE AGGREGATE VALUE, AT THE TIME OF SUCH LAPSE, OF
   46  THE ASSETS OUT OF WHICH, OR THE PROCEEDS OF WHICH, THE EXERCISE  OF  THE
   47  LAPSED POWERS COULD HAVE BEEN SATISFIED.
   48    (3)  DATE OF CREATION OF POWER.--FOR PURPOSES OF THIS SECTION, A POWER
   49  OF APPOINTMENT CREATED BY A WILL EXECUTED ON OR BEFORE OCTOBER 21, 1942,
   50  SHALL BE CONSIDERED A POWER CREATED ON OR BEFORE SUCH DATE IF THE PERSON
   51  EXECUTING SUCH WILL DIES BEFORE JULY 1, 1949, WITHOUT HAVING REPUBLISHED
   52  SUCH WILL, BY CODICIL OR OTHERWISE, AFTER OCTOBER 21, 1942.
   53    S 2042. PROCEEDS OF LIFE INSURANCE. THE  VALUE  OF  THE  GROSS  ESTATE
   54  SHALL INCLUDE THE VALUE OF ALL PROPERTY--
       S. 6359                            270                           A. 8559
    1    (1)  RECEIVABLE  BY THE EXECUTOR.--TO THE EXTENT OF THE AMOUNT RECEIV-
    2  ABLE BY THE EXECUTOR AS INSURANCE UNDER POLICIES  ON  THE  LIFE  OF  THE
    3  DECEDENT.
    4    (2)  RECEIVABLE  BY  OTHER BENEFICIARIES.--TO THE EXTENT OF THE AMOUNT
    5  RECEIVABLE BY ALL OTHER BENEFICIARIES AS INSURANCE UNDER POLICIES ON THE
    6  LIFE OF THE DECEDENT WITH RESPECT TO WHICH THE DECEDENT POSSESSED AT HIS
    7  DEATH ANY OF THE INCIDENTS OF OWNERSHIP, EXERCISABLE EITHER ALONE OR  IN
    8  CONJUNCTION  WITH  ANY  OTHER  PERSON.  FOR  PURPOSES  OF  THE PRECEDING
    9  SENTENCE, THE TERM  "INCIDENT  OF  OWNERSHIP"  INCLUDES  A  REVERSIONARY
   10  INTEREST  (WHETHER  ARISING  BY THE EXPRESS TERMS OF THE POLICY OR OTHER
   11  INSTRUMENT OR BY OPERATION OF LAW) ONLY IF THE VALUE OF SUCH  REVERSION-
   12  ARY  INTEREST  EXCEEDED 5 PERCENT OF THE VALUE OF THE POLICY IMMEDIATELY
   13  BEFORE THE DEATH OF THE DECEDENT. AS USED IN THIS  PARAGRAPH,  THE  TERM
   14  "REVERSIONARY  INTEREST"  INCLUDES A POSSIBILITY THAT THE POLICY, OR THE
   15  PROCEEDS OF THE POLICY, MAY RETURN TO THE DECEDENT OR HIS ESTATE, OR MAY
   16  BE SUBJECT TO A POWER OF DISPOSITION BY HIM. THE VALUE OF A REVERSIONARY
   17  INTEREST AT ANY TIME SHALL BE DETERMINED (WITHOUT REGARD TO THE FACT  OF
   18  THE  DECEDENT'S  DEATH) BY USUAL METHODS OF VALUATION, INCLUDING THE USE
   19  OF TABLES OF MORTALITY AND ACTUARIAL PRINCIPLES, PURSUANT TO REGULATIONS
   20  PRESCRIBED BY THE SECRETARY. IN DETERMINING THE VALUE OF  A  POSSIBILITY
   21  THAT  THE POLICY OR PROCEEDS THEREOF MAY BE SUBJECT TO A POWER OF DISPO-
   22  SITION BY THE DECEDENT, SUCH POSSIBILITY SHALL BE VALUED AS IF IT WERE A
   23  POSSIBILITY THAT SUCH POLICY OR PROCEEDS MAY RETURN TO THE  DECEDENT  OR
   24  HIS ESTATE.
   25    S  2043. TRANSFERS FOR INSUFFICIENT CONSIDERATION. (A) IN GENERAL.--IF
   26  ANY ONE OF THE TRANSFERS, TRUSTS, INTERESTS, RIGHTS, OR  POWERS  ENUMER-
   27  ATED AND DESCRIBED IN SECTIONS 2035 TO 2038, INCLUSIVE, AND SECTION 2041
   28  IS  MADE,  CREATED,  EXERCISED,  OR  RELINQUISHED FOR A CONSIDERATION IN
   29  MONEY OR MONEY'S WORTH, BUT IS NOT A BONA FIDE SALE FOR AN ADEQUATE  AND
   30  FULL CONSIDERATION IN MONEY OR MONEY'S WORTH, THERE SHALL BE INCLUDED IN
   31  THE GROSS ESTATE ONLY THE EXCESS OF THE FAIR MARKET VALUE AT THE TIME OF
   32  DEATH OF THE PROPERTY OTHERWISE TO BE INCLUDED ON ACCOUNT OF SUCH TRANS-
   33  ACTION,  OVER  THE  VALUE  OF THE CONSIDERATION RECEIVED THEREFOR BY THE
   34  DECEDENT.
   35    (B) MARITAL RIGHTS NOT TREATED AS CONSIDERATION.--
   36    (1) IN GENERAL.--FOR PURPOSES OF THIS  CHAPTER,  A  RELINQUISHMENT  OR
   37  PROMISED  RELINQUISHMENT  OF  DOWER OR CURTESY, OR OF A STATUTORY ESTATE
   38  CREATED IN LIEU OF DOWER OR CURTESY, OR OF OTHER MARITAL RIGHTS  IN  THE
   39  DECEDENT'S  PROPERTY  OR ESTATE, SHALL NOT BE CONSIDERED TO ANY EXTENT A
   40  CONSIDERATION "IN MONEY OR MONEY'S WORTH".
   41    (2) EXCEPTION.--FOR PURPOSES OF SECTION 2053  (RELATING  TO  EXPENSES,
   42  INDEBTEDNESS,  AND  TAXES),  A  TRANSFER OF PROPERTY WHICH SATISFIES THE
   43  REQUIREMENTS OF PARAGRAPH (1) OF SECTION 2516 (RELATING TO CERTAIN PROP-
   44  ERTY SETTLEMENTS) SHALL BE CONSIDERED TO BE MADE  FOR  AN  ADEQUATE  AND
   45  FULL CONSIDERATION IN MONEY OR MONEY'S WORTH.
   46    S  2044.  CERTAIN  PROPERTY FOR WHICH MARITAL DEDUCTION WAS PREVIOUSLY
   47  ALLOWED. (A) GENERAL RULE.--THE VALUE OF THE GROSS ESTATE SHALL  INCLUDE
   48  THE  VALUE  OF  ANY  PROPERTY TO WHICH THIS SECTION APPLIES IN WHICH THE
   49  DECEDENT HAD A QUALIFYING INCOME INTEREST FOR LIFE.
   50    (B) PROPERTY TO WHICH THIS SECTION APPLIES.--THIS SECTION  APPLIES  TO
   51  ANY PROPERTY IF--
   52    (1) A DEDUCTION WAS ALLOWED WITH RESPECT TO THE TRANSFER OF SUCH PROP-
   53  ERTY TO THE DECEDENT--
   54    (A) UNDER SECTION 2056 BY REASON OF SUBSECTION (B)(7) THEREOF, OR
   55    (B) UNDER SECTION 2523 BY REASON OF SUBSECTION (F) THEREOF, AND
       S. 6359                            271                           A. 8559
    1    (2)  SECTION  2519  (RELATING TO DISPOSITIONS OF CERTAIN LIFE ESTATES)
    2  DID NOT APPLY WITH RESPECT TO A DISPOSITION BY THE DECEDENT OF  PART  OR
    3  ALL OF SUCH PROPERTY.
    4    (C)  PROPERTY TREATED AS HAVING PASSED FROM DECEDENT.--FOR PURPOSES OF
    5  THIS CHAPTER AND CHAPTER 13, PROPERTY INCLUDIBLE IN THE GROSS ESTATE  OF
    6  THE  DECEDENT  UNDER SUBSECTION (A) SHALL BE TREATED AS PROPERTY PASSING
    7  FROM THE DECEDENT.
    8    S 2045. PRIOR INTERESTS. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED  BY
    9  LAW,  SECTIONS  2034  TO  2042, INCLUSIVE, SHALL APPLY TO THE TRANSFERS,
   10  TRUSTS,  ESTATES,  INTERESTS,  RIGHTS,  POWERS,  AND  RELINQUISHMENT  OF
   11  POWERS,  AS  SEVERALLY  ENUMERATED AND DESCRIBED THEREIN, WHENEVER MADE,
   12  CREATED, ARISING, EXISTING, EXERCISED, OR RELINQUISHED.
   13    S 2046. DISCLAIMERS. FOR PROVISIONS RELATING TO THE EFFECT OF A QUALI-
   14  FIED DISCLAIMER FOR PURPOSES OF THIS CHAPTER, SEE SECTION 2518.
   15    S 2053. EXPENSES, INDEBTEDNESS,  AND  TAXES.  (A)  GENERAL  RULE.--FOR
   16  PURPOSES  OF  THE  TAX IMPOSED BY SECTION 2001, THE VALUE OF THE TAXABLE
   17  ESTATE SHALL BE DETERMINED BY DEDUCTING FROM  THE  VALUE  OF  THE  GROSS
   18  ESTATE SUCH AMOUNTS--
   19    (1) FOR FUNERAL EXPENSES,
   20    (2) FOR ADMINISTRATION EXPENSES,
   21    (3) FOR CLAIMS AGAINST THE ESTATE, AND
   22    (4)  FOR UNPAID MORTGAGES ON, OR ANY INDEBTEDNESS IN RESPECT OF, PROP-
   23  ERTY WHERE THE VALUE OF THE DECEDENT'S INTEREST THEREIN, UNDIMINISHED BY
   24  SUCH MORTGAGE OR INDEBTEDNESS, IS INCLUDED IN THE  VALUE  OF  THE  GROSS
   25  ESTATE,
   26    AS  ARE  ALLOWABLE  BY THE LAWS OF THE JURISDICTION, WHETHER WITHIN OR
   27  WITHOUT THE UNITED STATES, UNDER WHICH THE ESTATE IS BEING ADMINISTERED.
   28    (B) OTHER ADMINISTRATION  EXPENSES.--SUBJECT  TO  THE  LIMITATIONS  IN
   29  PARAGRAPH  (1) OF SUBSECTION (C), THERE SHALL BE DEDUCTED IN DETERMINING
   30  THE TAXABLE ESTATE AMOUNTS REPRESENTING EXPENSES INCURRED IN ADMINISTER-
   31  ING PROPERTY NOT SUBJECT TO CLAIMS WHICH IS INCLUDED IN THE GROSS ESTATE
   32  TO THE SAME EXTENT SUCH AMOUNTS WOULD BE ALLOWABLE AS A DEDUCTION  UNDER
   33  SUBSECTION (A) IF SUCH PROPERTY WERE SUBJECT TO CLAIMS, AND SUCH AMOUNTS
   34  ARE  PAID  BEFORE THE EXPIRATION OF THE PERIOD OF LIMITATION FOR ASSESS-
   35  MENT PROVIDED IN SECTION 6501.
   36    (C) LIMITATIONS.--
   37    (1) LIMITATIONS APPLICABLE TO SUBSECTIONS (A) AND (B).--
   38    (A) CONSIDERATION FOR CLAIMS.--THE DEDUCTION ALLOWED BY  THIS  SECTION
   39  IN  THE  CASE  OF  CLAIMS  AGAINST  THE ESTATE, UNPAID MORTGAGES, OR ANY
   40  INDEBTEDNESS SHALL, WHEN FOUNDED ON A PROMISE OR AGREEMENT,  BE  LIMITED
   41  TO  THE  EXTENT  THAT THEY WERE CONTRACTED BONA FIDE AND FOR AN ADEQUATE
   42  AND FULL CONSIDERATION IN MONEY OR MONEY'S WORTH;  EXCEPT  THAT  IN  ANY
   43  CASE IN WHICH ANY SUCH CLAIM IS FOUNDED ON A PROMISE OR AGREEMENT OF THE
   44  DECEDENT  TO  MAKE A CONTRIBUTION OR GIFT TO OR FOR THE USE OF ANY DONEE
   45  DESCRIBED IN SECTION  2055  FOR  THE  PURPOSES  SPECIFIED  THEREIN,  THE
   46  DEDUCTION  FOR SUCH CLAIMS SHALL NOT BE SO LIMITED, BUT SHALL BE LIMITED
   47  TO THE EXTENT THAT IT WOULD BE ALLOWABLE AS A  DEDUCTION  UNDER  SECTION
   48  2055 IF SUCH PROMISE OR AGREEMENT CONSTITUTED A BEQUEST.
   49    (B)  CERTAIN  TAXES.--ANY  INCOME  TAXES  ON INCOME RECEIVED AFTER THE
   50  DEATH OF THE DECEDENT, OR PROPERTY TAXES NOT ACCRUED BEFORE  HIS  DEATH,
   51  OR  ANY  ESTATE,  SUCCESSION, LEGACY, OR INHERITANCE TAXES, SHALL NOT BE
   52  DEDUCTIBLE UNDER THIS SECTION.
   53    (C) CERTAIN CLAIMS BY REMAINDERMEN.--NO  DEDUCTION  SHALL  BE  ALLOWED
   54  UNDER  THIS  SECTION  FOR  A  CLAIM AGAINST THE ESTATE BY A REMAINDERMAN
   55  RELATING TO ANY PROPERTY DESCRIBED IN SECTION 2044.
       S. 6359                            272                           A. 8559
    1    (D) SECTION 6166 INTEREST.--NO DEDUCTION SHALL BE ALLOWED  UNDER  THIS
    2  SECTION  FOR  ANY  INTEREST  PAYABLE  UNDER  SECTION  6601 ON ANY UNPAID
    3  PORTION OF THE TAX IMPOSED BY SECTION 2001 FOR THE PERIOD  DURING  WHICH
    4  AN  EXTENSION OF TIME FOR PAYMENT OF SUCH TAX IS IN EFFECT UNDER SECTION
    5  6166.
    6    (2) LIMITATIONS APPLICABLE ONLY TO SUBSECTION (A).--IN THE CASE OF THE
    7  AMOUNTS  DESCRIBED  IN  SUBSECTION  (A),  THERE  SHALL BE DISALLOWED THE
    8  AMOUNT BY WHICH THE DEDUCTIONS SPECIFIED THEREIN EXCEED  THE  VALUE,  AT
    9  THE  TIME OF THE DECEDENT'S DEATH, OF PROPERTY SUBJECT TO CLAIMS, EXCEPT
   10  TO THE EXTENT THAT SUCH DEDUCTIONS REPRESENT  AMOUNTS  PAID  BEFORE  THE
   11  DATE PRESCRIBED FOR THE FILING OF THE ESTATE TAX RETURN. FOR PURPOSES OF
   12  THIS  SECTION,  THE  TERM  "PROPERTY  SUBJECT  TO CLAIMS" MEANS PROPERTY
   13  INCLUDIBLE IN THE GROSS ESTATE OF THE DECEDENT WHICH, OR THE  AVAILS  OF
   14  WHICH, WOULD UNDER THE APPLICABLE LAW, BEAR THE BURDEN OF THE PAYMENT OF
   15  SUCH  DEDUCTIONS  IN  THE FINAL ADJUSTMENT AND SETTLEMENT OF THE ESTATE,
   16  EXCEPT THAT THE VALUE OF THE PROPERTY SHALL BE REDUCED BY THE AMOUNT  OF
   17  THE DEDUCTION UNDER SECTION 2054 ATTRIBUTABLE TO SUCH PROPERTY.
   18    (D) CERTAIN FOREIGN DEATH TAXES.--
   19    (1)   IN   GENERAL.--NOTWITHSTANDING   THE  PROVISIONS  OF  SUBSECTION
   20  (C)(1)(B), FOR PURPOSES OF THE TAX IMPOSED BY SECTION 2001, THE VALUE OF
   21  THE TAXABLE ESTATE MAY BE DETERMINED, IF THE EXECUTOR SO  ELECTS  BEFORE
   22  THE  EXPIRATION  OF  THE PERIOD OF LIMITATION FOR ASSESSMENT PROVIDED IN
   23  SECTION 6501, BY DEDUCTING FROM THE VALUE OF THE GROSS ESTATE THE AMOUNT
   24  (AS DETERMINED IN ACCORDANCE WITH REGULATIONS PRESCRIBED BY  THE  SECRE-
   25  TARY)  OF  ANY ESTATE, SUCCESSION, LEGACY, OR INHERITANCE TAX IMPOSED BY
   26  AND ACTUALLY PAID TO ANY FOREIGN COUNTRY, IN  RESPECT  OF  ANY  PROPERTY
   27  SITUATED WITHIN SUCH FOREIGN COUNTRY AND INCLUDED IN THE GROSS ESTATE OF
   28  A CITIZEN OR RESIDENT OF THE UNITED STATES, UPON A TRANSFER BY THE DECE-
   29  DENT  FOR  PUBLIC,  CHARITABLE,  OR  RELIGIOUS USES DESCRIBED IN SECTION
   30  2055. THE DETERMINATION UNDER THIS PARAGRAPH OF THE COUNTRY WITHIN WHICH
   31  PROPERTY IS SITUATED SHALL BE MADE IN ACCORDANCE WITH THE RULES APPLICA-
   32  BLE UNDER SUBCHAPTER B (SEC. 2101 AND FOLLOWING) IN DETERMINING  WHETHER
   33  PROPERTY  IS SITUATED WITHIN OR WITHOUT THE UNITED STATES.  ANY ELECTION
   34  UNDER THIS PARAGRAPH SHALL BE EXERCISED IN ACCORDANCE  WITH  REGULATIONS
   35  PRESCRIBED BY THE SECRETARY.
   36    (2)  CONDITION  FOR  ALLOWANCE  OF  DEDUCTION.--NO  DEDUCTION SHALL BE
   37  ALLOWED UNDER PARAGRAPH (1) FOR A FOREIGN DEATH  TAX  SPECIFIED  THEREIN
   38  UNLESS  THE  DECREASE  IN  THE TAX IMPOSED BY SECTION 2001 WHICH RESULTS
   39  FROM THE DEDUCTION PROVIDED IN PARAGRAPH (1) WILL INURE SOLELY  FOR  THE
   40  BENEFIT OF THE PUBLIC, CHARITABLE, OR RELIGIOUS TRANSFEREES DESCRIBED IN
   41  SECTION  2055  OR SECTION 2106(A)(2).  IN ANY CASE WHERE THE TAX IMPOSED
   42  BY SECTION 2001 IS EQUITABLY APPORTIONED AMONG ALL  THE  TRANSFEREES  OF
   43  PROPERTY  INCLUDED  IN  THE  GROSS  ESTATE, INCLUDING THOSE DESCRIBED IN
   44  SECTIONS 2055 AND 2106(A)(2) (TAKING INTO ACCOUNT ANY EXEMPTIONS,  CRED-
   45  ITS,  OR  DEDUCTIONS  ALLOWED  BY  THIS  CHAPTER),  IN  DETERMINING SUCH
   46  DECREASE, THERE SHALL BE DISREGARDED ANY DECREASE IN THE FEDERAL  ESTATE
   47  TAX  WHICH  ANY  TRANSFEREES OTHER THAN THOSE DESCRIBED IN SECTIONS 2055
   48  AND 2106(A)(2) ARE REQUIRED TO PAY.
   49    (3) EFFECT ON CREDIT FOR FOREIGN DEATH TAXES OF DEDUCTION  UNDER  THIS
   50  SUBSECTION.--
   51    (A)  ELECTION.--AN  ELECTION  UNDER  THIS SUBSECTION SHALL BE DEEMED A
   52  WAIVER OF THE RIGHT TO CLAIM A CREDIT, AGAINST THE FEDERAL  ESTATE  TAX,
   53  UNDER  A  DEATH  TAX  CONVENTION WITH ANY FOREIGN COUNTRY FOR ANY TAX OR
   54  PORTION THEREOF IN RESPECT OF WHICH A  DEDUCTION  IS  TAKEN  UNDER  THIS
   55  SUBSECTION.
   56    (B) CROSS REFERENCE.--
       S. 6359                            273                           A. 8559
    1    SEE  SECTION  2011(D)  FOR  THE EFFECT OF A DEDUCTION TAKEN UNDER THIS
    2  PARAGRAPH ON THE CREDIT FOR FOREIGN DEATH TAXES.
    3    (E) MARITAL RIGHTS.--
    4    FOR  PROVISIONS  TREATING CERTAIN RELINQUISHMENTS OF MARITAL RIGHTS AS
    5  CONSIDERATION IN MONEY OR MONEY'S WORTH, SEE SECTION 2043(B)(2).
    6    S 2054. LOSSES. FOR PURPOSES OF THE TAX IMPOSED BY SECTION  2001,  THE
    7  VALUE  OF  THE  TAXABLE ESTATE SHALL BE DETERMINED BY DEDUCTING FROM THE
    8  VALUE OF THE GROSS ESTATE  LOSSES  INCURRED  DURING  THE  SETTLEMENT  OF
    9  ESTATES  ARISING FROM FIRES, STORMS, SHIPWRECKS, OR OTHER CASUALTIES, OR
   10  FROM THEFT, WHEN SUCH LOSSES ARE NOT COMPENSATED  FOR  BY  INSURANCE  OR
   11  OTHERWISE.
   12    S 2055. TRANSFERS FOR PUBLIC, CHARITABLE, AND RELIGIOUS USES.
   13    (A)  IN GENERAL.--FOR PURPOSES OF THE TAX IMPOSED BY SECTION 2001, THE
   14  VALUE OF THE TAXABLE ESTATE SHALL BE DETERMINED BY  DEDUCTING  FROM  THE
   15  VALUE OF THE GROSS ESTATE THE AMOUNT OF ALL BEQUESTS, LEGACIES, DEVISES,
   16  OR TRANSFERS--
   17    (1)  TO  OR FOR THE USE OF THE UNITED STATES, ANY STATE, ANY POLITICAL
   18  SUBDIVISION THEREOF, OR THE DISTRICT OF COLUMBIA, FOR EXCLUSIVELY PUBLIC
   19  PURPOSES;
   20    (2) TO OR FOR THE USE OF ANY CORPORATION ORGANIZED AND OPERATED EXCLU-
   21  SIVELY FOR RELIGIOUS, CHARITABLE, SCIENTIFIC, LITERARY,  OR  EDUCATIONAL
   22  PURPOSES,  INCLUDING  THE ENCOURAGEMENT OF ART, OR TO FOSTER NATIONAL OR
   23  INTERNATIONAL AMATEUR SPORTS COMPETITION (BUT ONLY IF  NO  PART  OF  ITS
   24  ACTIVITIES  INVOLVE  THE PROVISION OF ATHLETIC FACILITIES OR EQUIPMENT),
   25  AND THE PREVENTION OF CRUELTY TO CHILDREN OR ANIMALS, NO PART OF THE NET
   26  EARNINGS OF WHICH INURES TO THE BENEFIT OF ANY  PRIVATE  STOCKHOLDER  OR
   27  INDIVIDUAL,  WHICH  IS  NOT DISQUALIFIED FOR TAX EXEMPTION UNDER SECTION
   28  501(C)(3) BY REASON OF ATTEMPTING TO INFLUENCE  LEGISLATION,  AND  WHICH
   29  DOES  NOT  PARTICIPATE  IN, OR INTERVENE IN (INCLUDING THE PUBLISHING OR
   30  DISTRIBUTING OF STATEMENTS), ANY POLITICAL CAMPAIGN ON BEHALF OF (OR  IN
   31  OPPOSITION TO) ANY CANDIDATE FOR PUBLIC OFFICE;
   32    (3)  TO A TRUSTEE OR TRUSTEES, OR A FRATERNAL SOCIETY, ORDER, OR ASSO-
   33  CIATION OPERATING UNDER THE LODGE SYSTEM, BUT ONLY IF SUCH CONTRIBUTIONS
   34  OR GIFTS ARE TO BE USED BY SUCH TRUSTEE OR TRUSTEES, OR BY SUCH  FRATER-
   35  NAL  SOCIETY, ORDER, OR ASSOCIATION, EXCLUSIVELY FOR RELIGIOUS, CHARITA-
   36  BLE,  SCIENTIFIC,  LITERARY,  OR  EDUCATIONAL  PURPOSES,  OR   FOR   THE
   37  PREVENTION  OF  CRUELTY  TO  CHILDREN  OR ANIMALS, SUCH TRUST, FRATERNAL
   38  SOCIETY, ORDER,  OR  ASSOCIATION  WOULD  NOT  BE  DISQUALIFIED  FOR  TAX
   39  EXEMPTION  UNDER  SECTION 501(C)(3) BY REASON OF ATTEMPTING TO INFLUENCE
   40  LEGISLATION, AND SUCH TRUSTEE OR TRUSTEES, OR  SUCH  FRATERNAL  SOCIETY,
   41  ORDER, OR ASSOCIATION, DOES NOT PARTICIPATE IN, OR INTERVENE IN (INCLUD-
   42  ING  THE  PUBLISHING  OR  DISTRIBUTING  OF  STATEMENTS),  ANY  POLITICAL
   43  CAMPAIGN ON BEHALF OF (OR IN OPPOSITION TO)  ANY  CANDIDATE  FOR  PUBLIC
   44  OFFICE;
   45    (4)  TO  OR  FOR THE USE OF ANY VETERANS' ORGANIZATION INCORPORATED BY
   46  ACT OF CONGRESS, OR OF ITS DEPARTMENTS OR LOCAL CHAPTERS  OR  POSTS,  NO
   47  PART  OF  THE NET EARNINGS OF WHICH INURES TO THE BENEFIT OF ANY PRIVATE
   48  SHAREHOLDER OR INDIVIDUAL; OR
   49    (5) TO AN EMPLOYEE STOCK OWNERSHIP PLAN IF SUCH TRANSFER QUALIFIES  AS
   50  A  QUALIFIED GRATUITOUS TRANSFER OF QUALIFIED EMPLOYER SECURITIES WITHIN
   51  THE MEANING OF SECTION 664(G).
   52    FOR PURPOSES OF THIS SUBSECTION, THE COMPLETE TERMINATION  BEFORE  THE
   53  DATE  PRESCRIBED  FOR  THE FILING OF THE ESTATE TAX RETURN OF A POWER TO
   54  CONSUME, INVADE, OR APPROPRIATE PROPERTY FOR THE BENEFIT OF AN  INDIVID-
   55  UAL  BEFORE SUCH POWER HAS BEEN EXERCISED BY REASON OF THE DEATH OF SUCH
   56  INDIVIDUAL OR FOR ANY OTHER REASON SHALL BE CONSIDERED AND DEEMED TO  BE
       S. 6359                            274                           A. 8559
    1  A  QUALIFIED DISCLAIMER WITH THE SAME FULL FORCE AND EFFECT AS THOUGH HE
    2  HAD FILED SUCH QUALIFIED DISCLAIMER.   RULES SIMILAR  TO  THE  RULES  OF
    3  SECTION 501(J) SHALL APPLY FOR PURPOSES OF PARAGRAPH (2).
    4    (B)  POWERS  OF  APPOINTMENT.--PROPERTY  INCLUDIBLE  IN THE DECEDENT'S
    5  GROSS ESTATE UNDER SECTION 2041  (RELATING  TO  POWERS  OF  APPOINTMENT)
    6  RECEIVED  BY  A  DONEE  DESCRIBED IN THIS SECTION SHALL, FOR PURPOSES OF
    7  THIS SECTION, BE CONSIDERED A BEQUEST OF SUCH DECEDENT.
    8    (C) DEATH TAXES PAYABLE  OUT  OF  BEQUESTS.--IF  THE  TAX  IMPOSED  BY
    9  SECTION  2001,  OR ANY ESTATE, SUCCESSION, LEGACY, OR INHERITANCE TAXES,
   10  ARE, EITHER BY THE TERMS OF THE WILL, BY THE  LAW  OF  THE  JURISDICTION
   11  UNDER  WHICH  THE ESTATE IS ADMINISTERED, OR BY THE LAW OF THE JURISDIC-
   12  TION IMPOSING THE PARTICULAR TAX, PAYABLE IN WHOLE OR IN PART OUT OF THE
   13  BEQUESTS, LEGACIES, OR DEVISES OTHERWISE DEDUCTIBLE UNDER THIS  SECTION,
   14  THEN  THE  AMOUNT  DEDUCTIBLE  UNDER THIS SECTION SHALL BE THE AMOUNT OF
   15  SUCH BEQUESTS, LEGACIES, OR DEVISES REDUCED BY THE AMOUNT OF SUCH TAXES.
   16    (D) LIMITATION ON DEDUCTION.--THE AMOUNT OF THE DEDUCTION  UNDER  THIS
   17  SECTION  FOR  ANY TRANSFER SHALL NOT EXCEED THE VALUE OF THE TRANSFERRED
   18  PROPERTY REQUIRED TO BE INCLUDED IN THE GROSS ESTATE.
   19    (E) DISALLOWANCE OF DEDUCTIONS IN CERTAIN CASES.--
   20    (1) NO DEDUCTION SHALL BE ALLOWED UNDER THIS SECTION FOR A TRANSFER TO
   21  OR FOR THE USE OF AN ORGANIZATION OR TRUST DESCRIBED IN  SECTION  508(D)
   22  OR 4948(C)(4) SUBJECT TO THE CONDITIONS SPECIFIED IN SUCH SECTIONS.
   23    (2) WHERE AN INTEREST IN PROPERTY (OTHER THAN AN INTEREST DESCRIBED IN
   24  SECTION  170(F)(3)(B))  PASSES  OR  HAS  PASSED  FROM  THE DECEDENT TO A
   25  PERSON, OR FOR A USE, DESCRIBED  IN  SUBSECTION  (A),  AND  AN  INTEREST
   26  (OTHER THAN AN INTEREST WHICH IS EXTINGUISHED UPON THE DECEDENT'S DEATH)
   27  IN THE SAME PROPERTY PASSES OR HAS PASSED (FOR LESS THAN AN ADEQUATE AND
   28  FULL  CONSIDERATION  IN  MONEY  OR MONEY'S WORTH) FROM THE DECEDENT TO A
   29  PERSON, OR FOR A USE, NOT DESCRIBED  IN  SUBSECTION  (A),  NO  DEDUCTION
   30  SHALL BE ALLOWED UNDER THIS SECTION FOR THE INTEREST WHICH PASSES OR HAS
   31  PASSED  TO  THE  PERSON,  OR  FOR  THE  USE, DESCRIBED IN SUBSECTION (A)
   32  UNLESS--
   33    (A) IN THE CASE OF A REMAINDER INTEREST, SUCH INTEREST IS IN  A  TRUST
   34  WHICH  IS A CHARITABLE REMAINDER ANNUITY TRUST OR A CHARITABLE REMAINDER
   35  UNITRUST (DESCRIBED IN SECTION 664) OR A POOLED INCOME  FUND  (DESCRIBED
   36  IN SECTION 642(C)(5)), OR
   37    (B) IN THE CASE OF ANY OTHER INTEREST, SUCH INTEREST IS IN THE FORM OF
   38  A  GUARANTEED ANNUITY OR IS A FIXED PERCENTAGE DISTRIBUTED YEARLY OF THE
   39  FAIR MARKET VALUE OF THE PROPERTY (TO BE DETERMINED YEARLY).
   40    (3) REFORMATIONS TO COMPLY WITH PARAGRAPH (2).--
   41    (A) IN GENERAL.--A DEDUCTION SHALL BE ALLOWED UNDER SUBSECTION (A)  IN
   42  RESPECT OF ANY QUALIFIED REFORMATION.
   43    (B)  QUALIFIED  REFORMATION.--FOR PURPOSES OF THIS PARAGRAPH, THE TERM
   44  "QUALIFIED REFORMATION" MEANS A CHANGE  OF  A  GOVERNING  INSTRUMENT  BY
   45  REFORMATION,  AMENDMENT,  CONSTRUCTION,  OR  OTHERWISE  WHICH  CHANGES A
   46  REFORMABLE INTEREST INTO A QUALIFIED INTEREST BUT ONLY IF--
   47    (I) ANY DIFFERENCE BETWEEN--
   48    (I) THE ACTUARIAL VALUE (DETERMINED AS OF THE DATE OF  THE  DECEDENT'S
   49  DEATH) OF THE QUALIFIED INTEREST, AND
   50    (II)  THE  ACTUARIAL VALUE (AS SO DETERMINED) OF THE REFORMABLE INTER-
   51  EST,
   52    DOES NOT EXCEED 5 PERCENT OF THE ACTUARIAL VALUE (AS SO DETERMINED) OF
   53  THE REFORMABLE INTEREST,
   54    (II) IN THE CASE OF--
   55    (I) A CHARITABLE REMAINDER INTEREST, THE NONREMAINDER INTEREST (BEFORE
   56  AND AFTER THE QUALIFIED REFORMATION) TERMINATED AT THE SAME TIME, OR
       S. 6359                            275                           A. 8559
    1    (II) ANY OTHER INTEREST, THE REFORMABLE  INTEREST  AND  THE  QUALIFIED
    2  INTEREST ARE FOR THE SAME PERIOD, AND
    3    (III) SUCH CHANGE IS EFFECTIVE AS OF THE DATE OF THE DECEDENT'S DEATH.
    4    A  NONREMAINDER  INTEREST  (BEFORE REFORMATION) FOR A TERM OF YEARS IN
    5  EXCESS OF 20 YEARS SHALL BE  TREATED  AS  SATISFYING  SUBCLAUSE  (I)  OF
    6  CLAUSE  (II)  IF  SUCH  INTEREST (AFTER REFORMATION) IS FOR A TERM OF 20
    7  YEARS.
    8    (C) REFORMABLE INTEREST.--FOR PURPOSES OF THIS PARAGRAPH--
    9    (I) IN GENERAL.--THE TERM "REFORMABLE INTEREST" MEANS ANY INTEREST FOR
   10  WHICH A DEDUCTION WOULD BE ALLOWABLE UNDER SUBSECTION (A) AT THE TIME OF
   11  THE DECEDENT'S DEATH BUT FOR PARAGRAPH (2).
   12    (II) BENEFICIARY'S  INTEREST  MUST  BE  FIXED.--THE  TERM  "REFORMABLE
   13  INTEREST"  DOES  NOT  INCLUDE  ANY INTEREST UNLESS, BEFORE THE REMAINDER
   14  VESTS IN POSSESSION, ALL PAYMENTS TO PERSONS OTHER THAN AN  ORGANIZATION
   15  DESCRIBED  IN  SUBSECTION  (A)  ARE EXPRESSED EITHER IN SPECIFIED DOLLAR
   16  AMOUNTS OR A FIXED PERCENTAGE OF THE FAIR MARKET VALUE OF THE  PROPERTY.
   17  FOR PURPOSES OF DETERMINING WHETHER ALL SUCH PAYMENTS ARE EXPRESSED AS A
   18  FIXED  PERCENTAGE  OF  THE  FAIR  MARKET  VALUE OF THE PROPERTY, SECTION
   19  664(D)(3) SHALL BE TAKEN INTO ACCOUNT.
   20    (III) SPECIAL RULE WHERE TIMELY COMMENCEMENT  OF  REFORMATION.--CLAUSE
   21  (II)  SHALL  NOT  APPLY  TO  ANY  INTEREST  IF  A JUDICIAL PROCEEDING IS
   22  COMMENCED TO CHANGE SUCH INTEREST INTO A QUALIFIED  INTEREST  NOT  LATER
   23  THAN THE 90TH DAY AFTER--
   24    (I) IF AN ESTATE TAX RETURN IS REQUIRED TO BE FILED, THE LAST DATE
   25  (INCLUDING EXTENSIONS) FOR FILING SUCH RETURN, OR
   26    (II)  IF  NO  ESTATE TAX RETURN IS REQUIRED TO BE FILED, THE LAST DATE
   27  (INCLUDING EXTENSIONS) FOR FILING THE INCOME  TAX  RETURN  FOR  THE  1ST
   28  TAXABLE  YEAR  FOR  WHICH  SUCH  A RETURN IS REQUIRED TO BE FILED BY THE
   29  TRUST.
   30    (IV) SPECIAL RULE FOR WILL EXECUTED BEFORE JANUARY 1,  1979,  ETC.--IN
   31  THE CASE OF ANY INTEREST PASSING UNDER A WILL EXECUTED BEFORE JANUARY 1,
   32  1979,  OR  UNDER A TRUST CREATED BEFORE SUCH DATE, CLAUSE (II) SHALL NOT
   33  APPLY.
   34    (D) QUALIFIED INTEREST.--FOR PURPOSES  OF  THIS  PARAGRAPH,  THE  TERM
   35  "QUALIFIED  INTEREST"  MEANS AN INTEREST FOR WHICH A DEDUCTION IS ALLOW-
   36  ABLE UNDER SUBSECTION (A).
   37    (E) LIMITATION.--THE DEDUCTION REFERRED TO IN SUBPARAGRAPH  (A)  SHALL
   38  NOT  EXCEED  THE AMOUNT OF THE DEDUCTION WHICH WOULD HAVE BEEN ALLOWABLE
   39  FOR THE REFORMABLE INTEREST BUT FOR PARAGRAPH (2).
   40    (F) SPECIAL RULE WHERE INCOME BENEFICIARY DIES.--IF (BY REASON OF  THE
   41  DEATH OF ANY INDIVIDUAL, OR BY TERMINATION OR DISTRIBUTION OF A TRUST IN
   42  ACCORDANCE  WITH  THE TERMS OF THE TRUST INSTRUMENT) BY THE DUE DATE FOR
   43  FILING THE ESTATE TAX RETURN (INCLUDING ANY EXTENSION THEREOF) A REFORM-
   44  ABLE INTEREST IS IN A WHOLLY CHARITABLE TRUST OR PASSES  DIRECTLY  TO  A
   45  PERSON  OR  FOR  A USE DESCRIBED IN SUBSECTION (A), A DEDUCTION SHALL BE
   46  ALLOWED FOR SUCH REFORMABLE INTEREST AS IF IT HAD MET  THE  REQUIREMENTS
   47  OF  PARAGRAPH  (2)  ON THE DATE OF THE DECEDENT'S DEATH. FOR PURPOSES OF
   48  THE PRECEDING SENTENCE, THE TERM "WHOLLY CHARITABLE TRUST" MEANS A CHAR-
   49  ITABLE TRUST  WHICH,  UPON  THE  ALLOWANCE  OF  A  DEDUCTION,  WOULD  BE
   50  DESCRIBED IN SECTION 4947(A)(1).
   51    (G)  STATUTE  OF LIMITATIONS.--THE PERIOD FOR ASSESSING ANY DEFICIENCY
   52  OF ANY TAX ATTRIBUTABLE TO THE APPLICATION OF THIS PARAGRAPH  SHALL  NOT
   53  EXPIRE  BEFORE  THE DATE 1 YEAR AFTER THE DATE ON WHICH THE SECRETARY IS
   54  NOTIFIED THAT SUCH REFORMATION (OR OTHER PROCEEDING PURSUANT TO SUBPARA-
   55  GRAPH (J)1 HAS OCCURRED.
       S. 6359                            276                           A. 8559
    1    (H) REGULATIONS.--THE SECRETARY SHALL PRESCRIBE  SUCH  REGULATIONS  AS
    2  MAY  BE NECESSARY TO CARRY OUT THE PURPOSES OF THIS PARAGRAPH, INCLUDING
    3  REGULATIONS  PROVIDING  SUCH  ADJUSTMENTS  IN  THE  APPLICATION  OF  THE
    4  PROVISIONS OF SECTION 508 (RELATING TO SPECIAL RULES RELATING TO SECTION
    5  501(C)(3)  ORGANIZATIONS),  SUBCHAPTER  J  (RELATING TO ESTATES, TRUSTS,
    6  BENEFICIARIES, AND DECEDENTS), AND CHAPTER 42 (RELATING TO PRIVATE FOUN-
    7  DATIONS) AS MAY BE NECESSARY BY REASON OF THE QUALIFIED REFORMATION.
    8    (I) REFORMATIONS PERMITTED IN CASE OF REMAINDER INTERESTS IN RESIDENCE
    9  OR FARM, POOLED INCOME FUNDS, ETC.--THE SECRETARY SHALL PRESCRIBE  REGU-
   10  LATIONS  (CONSISTENT  WITH  THE PROVISIONS OF THIS PARAGRAPH) PERMITTING
   11  REFORMATIONS IN THE CASE OF ANY FAILURE--
   12    (I) TO MEET THE REQUIREMENTS  OF  SECTION  170(F)(3)(B)  (RELATING  TO
   13  REMAINDER INTERESTS IN PERSONAL RESIDENCE OR FARM, ETC.), OR
   14    (II) TO MEET THE REQUIREMENTS OF SECTION 642(C)(5).
   15    (J)  VOID  OR REFORMED TRUST IN CASES OF INSUFFICIENT REMAINDER INTER-
   16  ESTS.--IN THE CASE OF A TRUST THAT WOULD QUALIFY (OR COULD  BE  REFORMED
   17  TO  QUALIFY PURSUANT TO SUBPARAGRAPH (B)) BUT FOR FAILURE TO SATISFY THE
   18  REQUIREMENT OF PARAGRAPH (1)(D) OR (2)(D) OF SECTION 664(D), SUCH  TRUST
   19  MAY BE--
   20    (I) DECLARED NULL AND VOID AB INITIO, OR
   21    (II)  CHANGED  BY  REFORMATION,  AMENDMENT,  OR OTHERWISE TO MEET SUCH
   22  REQUIREMENT BY REDUCING THE PAYOUT RATE OR THE DURATION (OR BOTH) OF ANY
   23  NONCHARITABLE BENEFICIARY'S INTEREST TO THE EXTENT NECESSARY TO  SATISFY
   24  SUCH REQUIREMENT,
   25    PURSUANT  TO A PROCEEDING THAT IS COMMENCED WITHIN THE PERIOD REQUIRED
   26  IN SUBPARAGRAPH  (C)(III).  IN  A  CASE  DESCRIBED  IN  CLAUSE  (I),  NO
   27  DEDUCTION  SHALL  BE  ALLOWED  UNDER  THIS TITLE FOR ANY TRANSFER TO THE
   28  TRUST AND ANY TRANSACTIONS ENTERED INTO BY  THE  TRUST  PRIOR  TO  BEING
   29  DECLARED VOID SHALL BE TREATED AS ENTERED INTO BY THE TRANSFEROR.
   30    (4)  WORKS  OF ART AND THEIR COPYRIGHTS TREATED AS SEPARATE PROPERTIES
   31  IN CERTAIN CASES.--
   32    (A) IN GENERAL.--IN THE CASE OF A QUALIFIED CONTRIBUTION OF A WORK  OF
   33  ART,  THE  WORK  OF  ART  AND THE COPYRIGHT ON SUCH WORK OF ART SHALL BE
   34  TREATED AS SEPARATE PROPERTIES FOR PURPOSES OF PARAGRAPH (2).
   35    (B) WORK OF ART DEFINED.--FOR PURPOSES OF  THIS  PARAGRAPH,  THE  TERM
   36  "WORK OF ART" MEANS ANY TANGIBLE PERSONAL PROPERTY WITH RESPECT TO WHICH
   37  THERE IS A COPYRIGHT UNDER FEDERAL LAW.
   38    (C)  QUALIFIED  CONTRIBUTION DEFINED.--FOR PURPOSES OF THIS PARAGRAPH,
   39  THE TERM "QUALIFIED CONTRIBUTION" MEANS ANY TRANSFER OF  PROPERTY  TO  A
   40  QUALIFIED ORGANIZATION IF THE USE OF THE PROPERTY BY THE ORGANIZATION IS
   41  RELATED  TO  THE  PURPOSE  OR  FUNCTION  CONSTITUTING  THE BASIS FOR ITS
   42  EXEMPTION UNDER SECTION 501.
   43    (D) QUALIFIED ORGANIZATION DEFINED.--FOR PURPOSES OF  THIS  PARAGRAPH,
   44  THE  TERM  "QUALIFIED  ORGANIZATION" MEANS ANY ORGANIZATION DESCRIBED IN
   45  SECTION 501(C)(3) OTHER THAN A PRIVATE FOUNDATION (AS DEFINED IN SECTION
   46  509).  FOR PURPOSES OF THE PRECEDING SENTENCE, A PRIVATE OPERATING FOUN-
   47  DATION (AS DEFINED IN SECTION 4942(J)(3)) SHALL  NOT  BE  TREATED  AS  A
   48  PRIVATE FOUNDATION.
   49    (5)  CONTRIBUTIONS  TO  DONOR  ADVISED  FUNDS.--A  DEDUCTION OTHERWISE
   50  ALLOWED UNDER SUBSECTION (A) FOR ANY CONTRIBUTION  TO  A  DONOR  ADVISED
   51  FUND (AS DEFINED IN SECTION 4966(D)(2)) SHALL ONLY BE ALLOWED IF--
   52    (A)  THE  SPONSORING  ORGANIZATION  (AS DEFINED IN SECTION 4966(D)(1))
   53  WITH RESPECT TO SUCH DONOR ADVISED FUND IS NOT--
   54    (I) DESCRIBED IN PARAGRAPH (3) OR (4) OF SUBSECTION (A), OR
       S. 6359                            277                           A. 8559
    1    (II) A  TYPE  III  SUPPORTING  ORGANIZATION  (AS  DEFINED  IN  SECTION
    2  4943(F)(5)(A))  WHICH IS NOT A FUNCTIONALLY INTEGRATED TYPE III SUPPORT-
    3  ING ORGANIZATION (AS DEFINED IN SECTION 4943(F)(5)(B)), AND
    4    (B)  THE  TAXPAYER  OBTAINS  A  CONTEMPORANEOUS WRITTEN ACKNOWLEDGMENT
    5  (DETERMINED UNDER RULES SIMILAR TO THE RULES  OF  SECTION  170(F)(8)(C))
    6  FROM  THE  SPONSORING ORGANIZATION (AS SO DEFINED) OF SUCH DONOR ADVISED
    7  FUND THAT SUCH ORGANIZATION HAS EXCLUSIVE LEGAL CONTROL OVER THE  ASSETS
    8  CONTRIBUTED.
    9    (F)  SPECIAL  RULE  FOR  IRREVOCABLE  TRANSFERS  OF  EASEMENTS IN REAL
   10  PROPERTY.--A DEDUCTION SHALL BE ALLOWED UNDER SUBSECTION (A) IN  RESPECT
   11  OF  ANY  TRANSFER  OF  A QUALIFIED REAL PROPERTY INTEREST (AS DEFINED IN
   12  SECTION 170(H)(2)(C)) WHICH MEETS THE  REQUIREMENTS  OF  SECTION  170(H)
   13  (WITHOUT REGARD TO PARAGRAPH (4)(A) THEREOF).
   14    (G) CROSS REFERENCES.--
   15    (1) FOR OPTION AS TO TIME FOR VALUATION FOR PURPOSE OF DEDUCTION UNDER
   16  THIS SECTION, SEE SECTION 2032.
   17    (2)  FOR  TREATMENT OF CERTAIN ORGANIZATIONS PROVIDING CHILD CARE, SEE
   18  SECTION 501(K).
   19    (3) FOR EXEMPTION OF GIFTS AND BEQUESTS  TO  OR  FOR  THE  BENEFIT  OF
   20  LIBRARY  OF  CONGRESS,  SEE  SECTION  5  OF THE ACT OF MARCH 3, 1925, AS
   21  AMENDED (2 U.S.C. 161).
   22    (4) FOR TREATMENT OF GIFTS AND BEQUESTS FOR THE BENEFIT OF  THE  NAVAL
   23  HISTORICAL  CENTER  AS GIFTS OR BEQUESTS TO OR FOR THE USE OF THE UNITED
   24  STATES, SEE SECTION 7222 OF TITLE 10, UNITED STATES CODE.
   25    (5) FOR TREATMENT OF GIFTS AND BEQUESTS  TO  OR  FOR  THE  BENEFIT  OF
   26  NATIONAL  PARK  FOUNDATION AS GIFTS OR BEQUESTS TO OR FOR THE USE OF THE
   27  UNITED STATES, SEE SECTION 8 OF THE ACT OF DECEMBER 18, 1967 (16  U.S.C.
   28  191).
   29    (6)  FOR  TREATMENT  OF  GIFTS,  DEVISES,  OR BEQUESTS ACCEPTED BY THE
   30  SECRETARY OF STATE, THE  DIRECTOR  OF  THE  INTERNATIONAL  COMMUNICATION
   31  AGENCY,  OR  THE DIRECTOR OF THE UNITED STATES INTERNATIONAL DEVELOPMENT
   32  COOPERATION AGENCY AS GIFTS, DEVISES, OR BEQUESTS TO OR FOR THE  USE  OF
   33  THE UNITED STATES, SEE SECTION 25 OF THE STATE DEPARTMENT BASIC AUTHORI-
   34  TIES ACT OF 1956.
   35    (7) FOR TREATMENT OF GIFTS OR BEQUESTS OF MONEY ACCEPTED BY THE ATTOR-
   36  NEY  GENERAL  FOR CREDIT TO "COMMISSARY FUNDS, FEDERAL PRISONS" AS GIFTS
   37  OR BEQUESTS TO OR FOR THE USE OF THE UNITED STATES, SEE SECTION 4043  OF
   38  TITLE 18, UNITED STATES CODE.
   39    (8)  FOR  PAYMENT  OF TAX ON GIFTS AND BEQUESTS OF UNITED STATES OBLI-
   40  GATIONS TO THE UNITED STATES, SEE SECTION 3113(E) OF  TITLE  31,  UNITED
   41  STATES CODE.
   42    (9) FOR TREATMENT OF GIFTS AND BEQUESTS FOR BENEFIT OF THE NAVAL ACAD-
   43  EMY  AS  GIFTS  OR  BEQUESTS TO OR FOR THE USE OF THE UNITED STATES, SEE
   44  SECTION 6973 OF TITLE 10, UNITED STATES CODE.
   45    (10) FOR TREATMENT OF GIFTS AND BEQUESTS  FOR  BENEFIT  OF  THE  NAVAL
   46  ACADEMY  MUSEUM  AS  GIFTS  OR  BEQUESTS TO OR FOR THE USE OF THE UNITED
   47  STATES, SEE SECTION 6974 OF TITLE 10, UNITED STATES CODE.
   48    (11) FOR EXEMPTION OF GIFTS AND BEQUESTS RECEIVED BY NATIONAL ARCHIVES
   49  TRUST FUND BOARD, SEE SECTION 2308 OF TITLE 44, UNITED STATES CODE.
   50    (12) FOR TREATMENT OF GIFTS AND BEQUESTS TO OR FOR THE USE  OF  INDIAN
   51  TRIBAL GOVERNMENTS (OR THEIR SUBDIVISIONS), SEE SECTION 7871.
   52    S  2056. BEQUESTS, ETC., TO SURVIVING SPOUSE. (A) ALLOWANCE OF MARITAL
   53  DEDUCTION.--FOR PURPOSES OF THE TAX IMPOSED BY SECTION 2001,  THE  VALUE
   54  OF  THE  TAXABLE  ESTATE  SHALL, EXCEPT AS LIMITED BY SUBSECTION (B), BE
   55  DETERMINED BY DEDUCTING FROM THE VALUE OF THE  GROSS  ESTATE  AN  AMOUNT
   56  EQUAL  TO  THE  VALUE  OF  ANY  INTEREST IN PROPERTY WHICH PASSES OR HAS
       S. 6359                            278                           A. 8559
    1  PASSED FROM THE DECEDENT TO HIS SURVIVING SPOUSE, BUT ONLY TO THE EXTENT
    2  THAT SUCH INTEREST IS INCLUDED IN DETERMINING THE  VALUE  OF  THE  GROSS
    3  ESTATE.
    4    (B)  LIMITATION  IN THE CASE OF LIFE ESTATE OR OTHER TERMINABLE INTER-
    5  EST.--
    6    (1) GENERAL RULE.--WHERE, ON THE LAPSE OF TIME, ON THE  OCCURRENCE  OF
    7  AN EVENT OR CONTINGENCY, OR ON THE FAILURE OF AN EVENT OR CONTINGENCY TO
    8  OCCUR,  AN  INTEREST  PASSING  TO THE SURVIVING SPOUSE WILL TERMINATE OR
    9  FAIL, NO DEDUCTION SHALL BE ALLOWED UNDER THIS SECTION WITH  RESPECT  TO
   10  SUCH INTEREST--
   11    (A)  IF  AN  INTEREST  IN SUCH PROPERTY PASSES OR HAS PASSED (FOR LESS
   12  THAN AN ADEQUATE AND FULL CONSIDERATION IN MONEY OR MONEY'S WORTH)  FROM
   13  THE  DECEDENT  TO  ANY  PERSON  OTHER THAN SUCH SURVIVING SPOUSE (OR THE
   14  ESTATE OF SUCH SPOUSE); AND
   15    (B) IF BY REASON OF SUCH PASSING SUCH PERSON (OR HIS HEIRS OR ASSIGNS)
   16  MAY POSSESS OR ENJOY ANY PART OF SUCH PROPERTY AFTER SUCH TERMINATION OR
   17  FAILURE OF THE INTEREST SO PASSING TO THE SURVIVING SPOUSE;
   18    AND NO DEDUCTION SHALL BE ALLOWED WITH RESPECT TO SUCH INTEREST  (EVEN
   19  IF SUCH DEDUCTION IS NOT DISALLOWED UNDER SUBPARAGRAPHS (A) AND (B))--
   20    (C)  IF  SUCH  INTEREST  IS  TO  BE ACQUIRED FOR THE SURVIVING SPOUSE,
   21  PURSUANT TO DIRECTIONS OF THE DECEDENT, BY HIS EXECUTOR OR BY THE  TRUS-
   22  TEE OF A TRUST.
   23    FOR PURPOSES OF THIS PARAGRAPH, AN INTEREST SHALL NOT BE CONSIDERED AS
   24  AN INTEREST WHICH WILL TERMINATE OR FAIL MERELY BECAUSE IT IS THE OWNER-
   25  SHIP  OF  A BOND, NOTE, OR SIMILAR CONTRACTUAL OBLIGATION, THE DISCHARGE
   26  OF WHICH WOULD NOT HAVE THE EFFECT OF AN ANNUITY FOR LIFE OR FOR A TERM.
   27    (2) INTEREST IN UNIDENTIFIED ASSETS.--WHERE THE  ASSETS  (INCLUDED  IN
   28  THE  DECEDENT'S GROSS ESTATE) OUT OF WHICH, OR THE PROCEEDS OF WHICH, AN
   29  INTEREST PASSING TO THE SURVIVING SPOUSE  MAY  BE  SATISFIED  INCLUDE  A
   30  PARTICULAR  ASSET  OR ASSETS WITH RESPECT TO WHICH NO DEDUCTION WOULD BE
   31  ALLOWED IF SUCH ASSET OR ASSETS PASSED FROM THE DECEDENT TO SUCH SPOUSE,
   32  THEN THE VALUE OF SUCH  INTEREST  PASSING  TO  SUCH  SPOUSE  SHALL,  FOR
   33  PURPOSES  OF  SUBSECTION  (A), BE REDUCED BY THE AGGREGATE VALUE OF SUCH
   34  PARTICULAR ASSETS.
   35    (3)  INTEREST  OF  SPOUSE  CONDITIONAL   ON   SURVIVAL   FOR   LIMITED
   36  PERIOD.--FOR  PURPOSES  OF  THIS  SUBSECTION, AN INTEREST PASSING TO THE
   37  SURVIVING SPOUSE SHALL NOT BE  CONSIDERED  AS  AN  INTEREST  WHICH  WILL
   38  TERMINATE OR FAIL ON THE DEATH OF SUCH SPOUSE IF--
   39    (A)  SUCH  DEATH  WILL CAUSE A TERMINATION OR FAILURE OF SUCH INTEREST
   40  ONLY IF IT OCCURS WITHIN A PERIOD  NOT  EXCEEDING  6  MONTHS  AFTER  THE
   41  DECEDENT'S  DEATH, OR ONLY IF IT OCCURS AS A RESULT OF A COMMON DISASTER
   42  RESULTING IN THE DEATH OF THE DECEDENT AND THE SURVIVING SPOUSE, OR ONLY
   43  IF IT OCCURS IN THE CASE OF EITHER SUCH EVENT; AND
   44    (B) SUCH TERMINATION OR FAILURE DOES NOT IN FACT OCCUR.
   45    (4) VALUATION OF INTEREST PASSING TO SURVIVING SPOUSE.--IN DETERMINING
   46  FOR PURPOSES OF SUBSECTION (A) THE VALUE OF  ANY  INTEREST  IN  PROPERTY
   47  PASSING TO THE SURVIVING SPOUSE FOR WHICH A DEDUCTION IS ALLOWED BY THIS
   48  SECTION--
   49    (A) THERE SHALL BE TAKEN INTO ACCOUNT THE EFFECT WHICH THE TAX IMPOSED
   50  BY  SECTION 2001, OR ANY ESTATE, SUCCESSION, LEGACY, OR INHERITANCE TAX,
   51  HAS ON THE NET VALUE TO THE SURVIVING SPOUSE OF SUCH INTEREST; AND
   52    (B) WHERE SUCH INTEREST OR PROPERTY IS ENCUMBERED IN  ANY  MANNER,  OR
   53  WHERE THE SURVIVING SPOUSE INCURS ANY OBLIGATION IMPOSED BY THE DECEDENT
   54  WITH  RESPECT TO THE PASSING OF SUCH INTEREST, SUCH ENCUMBRANCE OR OBLI-
   55  GATION SHALL BE TAKEN INTO ACCOUNT IN THE SAME MANNER AS IF  THE  AMOUNT
   56  OF A GIFT TO SUCH SPOUSE OF SUCH INTEREST WERE BEING DETERMINED.
       S. 6359                            279                           A. 8559
    1    (5) LIFE ESTATE WITH POWER OF APPOINTMENT IN SURVIVING SPOUSE.--IN THE
    2  CASE  OF  AN  INTEREST  IN  PROPERTY  PASSING  FROM THE DECEDENT, IF HIS
    3  SURVIVING SPOUSE IS ENTITLED FOR LIFE TO ALL THE INCOME FROM THE  ENTIRE
    4  INTEREST,  OR  ALL  THE  INCOME FROM A SPECIFIC PORTION THEREOF, PAYABLE
    5  ANNUALLY  OR  AT  MORE  FREQUENT  INTERVALS, WITH POWER IN THE SURVIVING
    6  SPOUSE TO APPOINT THE ENTIRE INTEREST, OR SUCH SPECIFIC  PORTION  (EXER-
    7  CISABLE  IN  FAVOR  OF  SUCH  SURVIVING SPOUSE, OR OF THE ESTATE OF SUCH
    8  SURVIVING SPOUSE, OR IN FAVOR OF EITHER, WHETHER OR NOT IN EACH CASE THE
    9  POWER IS EXERCISABLE IN FAVOR OF OTHERS), AND WITH NO POWER IN ANY OTHER
   10  PERSON TO APPOINT ANY PART OF THE INTEREST, OR SUCH SPECIFIC PORTION, TO
   11  ANY PERSON OTHER THAN THE SURVIVING SPOUSE--
   12    (A) THE INTEREST  OR  SUCH  PORTION  THEREOF  SO  PASSING  SHALL,  FOR
   13  PURPOSES  OF  SUBSECTION  (A), BE CONSIDERED AS PASSING TO THE SURVIVING
   14  SPOUSE, AND
   15    (B) NO PART OF THE INTEREST SO PASSING SHALL, FOR  PURPOSES  OF  PARA-
   16  GRAPH  (1)(A),  BE  CONSIDERED  AS  PASSING TO ANY PERSON OTHER THAN THE
   17  SURVIVING SPOUSE.
   18    THIS PARAGRAPH SHALL APPLY ONLY IF SUCH POWER IN THE SURVIVING  SPOUSE
   19  TO APPOINT THE ENTIRE INTEREST, OR SUCH SPECIFIC PORTION THEREOF, WHETH-
   20  ER  EXERCISABLE  BY  WILL  OR DURING LIFE, IS EXERCISABLE BY SUCH SPOUSE
   21  ALONE AND IN ALL EVENTS.
   22    (6) LIFE INSURANCE OR ANNUITY PAYMENTS WITH POWER  OF  APPOINTMENT  IN
   23  SURVIVING  SPOUSE.--IN  THE CASE OF AN INTEREST IN PROPERTY PASSING FROM
   24  THE DECEDENT CONSISTING OF PROCEEDS UNDER A LIFE  INSURANCE,  ENDOWMENT,
   25  OR  ANNUITY  CONTRACT,  IF UNDER THE TERMS OF THE CONTRACT SUCH PROCEEDS
   26  ARE PAYABLE IN INSTALLMENTS OR ARE HELD BY THE  INSURER  SUBJECT  TO  AN
   27  AGREEMENT  TO  PAY INTEREST THEREON (WHETHER THE PROCEEDS, ON THE TERMI-
   28  NATION OF ANY INTEREST PAYMENTS, ARE PAYABLE IN A LUMP SUM OR IN  ANNUAL
   29  OR  MORE  FREQUENT  INSTALLMENTS),  AND  SUCH  INSTALLMENT  OR  INTEREST
   30  PAYMENTS ARE PAYABLE ANNUALLY OR AT MORE FREQUENT INTERVALS,  COMMENCING
   31  NOT LATER THAN 13 MONTHS AFTER THE DECEDENT'S DEATH, AND ALL AMOUNTS, OR
   32  A  SPECIFIC  PORTION OF ALL SUCH AMOUNTS, PAYABLE DURING THE LIFE OF THE
   33  SURVIVING SPOUSE ARE PAYABLE ONLY TO SUCH SPOUSE, AND  SUCH  SPOUSE  HAS
   34  THE  POWER  TO  APPOINT  ALL  AMOUNTS, OR SUCH SPECIFIC PORTION, PAYABLE
   35  UNDER SUCH CONTRACT (EXERCISABLE IN FAVOR OF SUCH SURVIVING  SPOUSE,  OR
   36  OF  THE  ESTATE OF SUCH SURVIVING SPOUSE, OR IN FAVOR OF EITHER, WHETHER
   37  OR NOT IN EACH CASE THE POWER IS EXERCISABLE IN FAVOR OF  OTHERS),  WITH
   38  NO POWER IN ANY OTHER PERSON TO APPOINT SUCH AMOUNTS TO ANY PERSON OTHER
   39  THAN THE SURVIVING SPOUSE--
   40    (A)  SUCH AMOUNTS SHALL, FOR PURPOSES OF SUBSECTION (A), BE CONSIDERED
   41  AS PASSING TO THE SURVIVING SPOUSE, AND
   42    (B) NO PART OF SUCH AMOUNTS SHALL, FOR PURPOSES OF  PARAGRAPH  (1)(A),
   43  BE CONSIDERED AS PASSING TO ANY PERSON OTHER THAN THE SURVIVING SPOUSE.
   44    THIS  PARAGRAPH  SHALL APPLY ONLY IF, UNDER THE TERMS OF THE CONTRACT,
   45  SUCH POWER IN THE SURVIVING SPOUSE  TO  APPOINT  SUCH  AMOUNTS,  WHETHER
   46  EXERCISABLE  BY WILL OR DURING LIFE, IS EXERCISABLE BY SUCH SPOUSE ALONE
   47  AND IN ALL EVENTS.
   48    (7) ELECTION WITH RESPECT TO LIFE ESTATE FOR SURVIVING SPOUSE.--
   49    (A) IN GENERAL.--IN THE CASE OF QUALIFIED TERMINABLE INTEREST  PROPER-
   50  TY--
   51    (I)  FOR PURPOSES OF SUBSECTION (A), SUCH PROPERTY SHALL BE TREATED AS
   52  PASSING TO THE SURVIVING SPOUSE, AND
   53    (II) FOR PURPOSES OF PARAGRAPH (1)(A), NO PART OF SUCH PROPERTY  SHALL
   54  BE TREATED AS PASSING TO ANY PERSON OTHER THAN THE SURVIVING SPOUSE.
   55    (B)  QUALIFIED  TERMINABLE INTEREST PROPERTY DEFINED.--FOR PURPOSES OF
   56  THIS PARAGRAPH--
       S. 6359                            280                           A. 8559
    1    (I) IN GENERAL.--THE TERM  "QUALIFIED  TERMINABLE  INTEREST  PROPERTY"
    2  MEANS PROPERTY--
    3    (I) WHICH PASSES FROM THE DECEDENT,
    4    (II)  IN  WHICH  THE SURVIVING SPOUSE HAS A QUALIFYING INCOME INTEREST
    5  FOR LIFE, AND
    6    (III) TO WHICH AN ELECTION UNDER THIS PARAGRAPH APPLIES.
    7    (II) QUALIFYING INCOME INTEREST FOR LIFE.--THE SURVIVING SPOUSE HAS  A
    8  QUALIFYING INCOME INTEREST FOR LIFE IF--
    9    (I)  THE SURVIVING SPOUSE IS ENTITLED TO ALL THE INCOME FROM THE PROP-
   10  ERTY, PAYABLE ANNUALLY OR AT MORE FREQUENT INTERVALS, OR HAS A  USUFRUCT
   11  INTEREST FOR LIFE IN THE PROPERTY, AND
   12    (II)  NO PERSON HAS A POWER TO APPOINT ANY PART OF THE PROPERTY TO ANY
   13  PERSON OTHER THAN THE SURVIVING SPOUSE.
   14    SUBCLAUSE (II) SHALL NOT APPLY TO A POWER EXERCISABLE ONLY AT OR AFTER
   15  THE DEATH OF THE SURVIVING SPOUSE.  TO  THE  EXTENT  PROVIDED  IN  REGU-
   16  LATIONS,  AN  ANNUITY  SHALL BE TREATED IN A MANNER SIMILAR TO AN INCOME
   17  INTEREST IN PROPERTY (REGARDLESS OF WHETHER THE PROPERTY FROM WHICH  THE
   18  ANNUITY IS PAYABLE CAN BE SEPARATELY IDENTIFIED).
   19    (III)   PROPERTY   INCLUDES  INTEREST  THEREIN.--THE  TERM  "PROPERTY"
   20  INCLUDES AN INTEREST IN PROPERTY.
   21    (IV)  SPECIFIC  PORTION  TREATED  AS  SEPARATE  PROPERTY.--A  SPECIFIC
   22  PORTION OF PROPERTY SHALL BE TREATED AS SEPARATE PROPERTY.
   23    (V)  ELECTION.--AN  ELECTION  UNDER THIS PARAGRAPH WITH RESPECT TO ANY
   24  PROPERTY SHALL BE MADE BY THE EXECUTOR ON THE RETURN OF TAX  IMPOSED  BY
   25  SECTION 2001. SUCH AN ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
   26    (C)  TREATMENT  OF  SURVIVOR  ANNUITIES.--IN  THE  CASE  OF AN ANNUITY
   27  INCLUDED IN THE GROSS ESTATE OF THE DECEDENT UNDER SECTION 2039 (OR,  IN
   28  THE  CASE OF AN INTEREST IN AN ANNUITY ARISING UNDER THE COMMUNITY PROP-
   29  ERTY LAWS OF A STATE, INCLUDED IN THE GROSS ESTATE OF THE DECEDENT UNDER
   30  SECTION 2033) WHERE ONLY THE SURVIVING SPOUSE HAS THE RIGHT  TO  RECEIVE
   31  PAYMENTS BEFORE THE DEATH OF SUCH SURVIVING SPOUSE--
   32    (I) THE INTEREST OF SUCH SURVIVING SPOUSE SHALL BE TREATED AS A QUALI-
   33  FYING INCOME INTEREST FOR LIFE, AND
   34    (II)  THE  EXECUTOR  SHALL BE TREATED AS HAVING MADE AN ELECTION UNDER
   35  THIS SUBSECTION WITH RESPECT TO SUCH ANNUITY UNLESS THE EXECUTOR  OTHER-
   36  WISE ELECTS ON THE RETURN OF TAX IMPOSED BY SECTION 2001.
   37    AN ELECTION UNDER CLAUSE (II), ONCE MADE, SHALL BE IRREVOCABLE.
   38    (8) SPECIAL RULE FOR CHARITABLE REMAINDER TRUSTS.--
   39    (A)  IN  GENERAL.--IF THE SURVIVING SPOUSE OF THE DECEDENT IS THE ONLY
   40  BENEFICIARY OF A QUALIFIED CHARITABLE REMAINDER TRUST WHO IS NOT A CHAR-
   41  ITABLE BENEFICIARY NOR AN ESOP  BENEFICIARY,  PARAGRAPH  (1)  SHALL  NOT
   42  APPLY  TO ANY INTEREST IN SUCH TRUST WHICH PASSES OR HAS PASSED FROM THE
   43  DECEDENT TO SUCH SURVIVING SPOUSE.
   44    (B) DEFINITIONS.--FOR PURPOSES OF SUBPARAGRAPH (A)--
   45    (I) CHARITABLE BENEFICIARY.--THE TERM "CHARITABLE  BENEFICIARY"  MEANS
   46  ANY BENEFICIARY WHICH IS AN ORGANIZATION DESCRIBED IN SECTION 170(C).
   47    (II)  ESOP BENEFICIARY.--THE TERM "ESOP BENEFICIARY" MEANS ANY BENEFI-
   48  CIARY WHICH IS AN EMPLOYEE STOCK OWNERSHIP PLAN (AS DEFINED  IN  SECTION
   49  4975(E)(7))  THAT HOLDS A REMAINDER INTEREST IN QUALIFIED EMPLOYER SECU-
   50  RITIES (AS DEFINED IN SECTION 664(G)(4)) TO BE TRANSFERRED TO SUCH  PLAN
   51  IN A QUALIFIED GRATUITOUS TRANSFER (AS DEFINED IN SECTION 664(G)(1)).
   52    (III) QUALIFIED CHARITABLE REMAINDER TRUST.--THE TERM "QUALIFIED CHAR-
   53  ITABLE  REMAINDER TRUST" MEANS A CHARITABLE REMAINDER ANNUITY TRUST OR A
   54  CHARITABLE REMAINDER UNITRUST (DESCRIBED IN SECTION 664).
   55    (9) DENIAL OF DOUBLE DEDUCTION.--NOTHING IN THIS SECTION OR ANY  OTHER
   56  PROVISION OF THIS CHAPTER SHALL ALLOW THE VALUE OF ANY INTEREST IN PROP-
       S. 6359                            281                           A. 8559
    1  ERTY  TO  BE  DEDUCTED UNDER THIS CHAPTER MORE THAN ONCE WITH RESPECT TO
    2  THE SAME DECEDENT.
    3    (10)  SPECIFIC  PORTION.--FOR  PURPOSES  OF  PARAGRAPHS  (5), (6), AND
    4  (7)(B)(IV), THE TERM "SPECIFIC PORTION" ONLY INCLUDES A  PORTION  DETER-
    5  MINED ON A FRACTIONAL OR PERCENTAGE BASIS.
    6    (C) DEFINITION.--FOR PURPOSES OF THIS SECTION, AN INTEREST IN PROPERTY
    7  SHALL  BE  CONSIDERED  AS PASSING FROM THE DECEDENT TO ANY PERSON IF AND
    8  ONLY IF--
    9    (1) SUCH INTEREST IS BEQUEATHED OR DEVISED TO SUCH PERSON BY THE DECE-
   10  DENT;
   11    (2) SUCH INTEREST IS INHERITED BY SUCH PERSON FROM THE DECEDENT;
   12    (3) SUCH INTEREST IS THE  DOWER  OR  CURTESY  INTEREST  (OR  STATUTORY
   13  INTEREST  IN  LIEU  THEREOF)  OF  SUCH PERSON AS SURVIVING SPOUSE OF THE
   14  DECEDENT;
   15    (4) SUCH INTEREST HAS BEEN TRANSFERRED TO SUCH PERSON BY THE  DECEDENT
   16  AT ANY TIME;
   17    (5)  SUCH  INTEREST  WAS, AT THE TIME OF THE DECEDENT'S DEATH, HELD BY
   18  SUCH PERSON AND THE DECEDENT (OR BY THEM AND ANY OTHER PERSON) IN  JOINT
   19  OWNERSHIP WITH RIGHT OF SURVIVORSHIP;
   20    (6)  THE DECEDENT HAD A POWER (EITHER ALONE OR IN CONJUNCTION WITH ANY
   21  PERSON) TO APPOINT SUCH INTEREST AND IF HE  APPOINTS  OR  HAS  APPOINTED
   22  SUCH  INTEREST  TO SUCH PERSON, OR IF SUCH PERSON TAKES SUCH INTEREST IN
   23  DEFAULT ON THE RELEASE OR NONEXERCISE OF SUCH POWER; OR
   24    (7) SUCH INTEREST CONSISTS OF PROCEEDS OF INSURANCE ON THE LIFE OF THE
   25  DECEDENT RECEIVABLE BY SUCH PERSON.
   26    EXCEPT AS PROVIDED IN PARAGRAPH (5) OR (6) OF SUBSECTION (B), WHERE AT
   27  THE TIME OF THE DECEDENT'S DEATH IT IS NOT  POSSIBLE  TO  ASCERTAIN  THE
   28  PARTICULAR  PERSON  OR  PERSONS TO WHOM AN INTEREST IN PROPERTY MAY PASS
   29  FROM THE DECEDENT, SUCH INTEREST SHALL, FOR  PURPOSES  OF  SUBPARAGRAPHS
   30  (A)  AND  (B)  OF  SUBSECTION  (B)(1), BE CONSIDERED AS PASSING FROM THE
   31  DECEDENT TO A PERSON OTHER THAN THE SURVIVING SPOUSE.
   32    S 2103. DEFINITION OF GROSS ESTATE. FOR THE PURPOSE OF THE TAX IMPOSED
   33  BY SECTION 2101, THE VALUE OF THE GROSS ESTATE OF EVERY DECEDENT NONRES-
   34  IDENT NOT A CITIZEN OF THE UNITED STATES SHALL BE THAT PART OF HIS GROSS
   35  ESTATE (DETERMINED AS PROVIDED IN SECTION 2031) WHICH AT THE TIME OF HIS
   36  DEATH IS SITUATED IN THE UNITED STATES.
   37    S 2104. PROPERTY WITHIN THE  UNITED  STATES.  (A)  STOCK  IN  CORPORA-
   38  TION.--FOR PURPOSES OF THIS SUBCHAPTER SHARES OF STOCK OWNED AND HELD BY
   39  A NONRESIDENT NOT A CITIZEN OF THE UNITED STATES SHALL BE DEEMED PROPER-
   40  TY WITHIN THE UNITED STATES ONLY IF ISSUED BY A DOMESTIC CORPORATION.
   41    (B)  REVOCABLE  TRANSFERS  AND TRANSFERS WITHIN 3 YEARS OF DEATH.--FOR
   42  PURPOSES OF THIS SUBCHAPTER, ANY PROPERTY OF WHICH THE DECEDENT HAS MADE
   43  A TRANSFER, BY TRUST OR OTHERWISE, WITHIN THE MEANING OF  SECTIONS  2035
   44  TO 2038, INCLUSIVE, SHALL BE DEEMED TO BE SITUATED IN THE UNITED STATES,
   45  IF  SO SITUATED EITHER AT THE TIME OF THE TRANSFER OR AT THE TIME OF THE
   46  DECEDENT'S DEATH.
   47    (C) DEBT OBLIGATIONS.--FOR PURPOSES OF  THIS  SUBCHAPTER,  DEBT  OBLI-
   48  GATIONS OF-
   49    (1) A UNITED STATES PERSON, OR
   50    (2)  THE  UNITED STATES, A STATE OR ANY POLITICAL SUBDIVISION THEREOF,
   51  OR THE DISTRICT OF COLUMBIA,
   52    OWNED AND HELD BY A NONRESIDENT NOT A CITIZEN  OF  THE  UNITED  STATES
   53  SHALL  BE  DEEMED  PROPERTY  WITHIN  THE  UNITED STATES. WITH RESPECT TO
   54  ESTATES OF DECEDENTS DYING AFTER DECEMBER  31,  1969,  DEPOSITS  WITH  A
   55  DOMESTIC  BRANCH  OF A FOREIGN CORPORATION, IF SUCH BRANCH IS ENGAGED IN
   56  THE COMMERCIAL BANKING BUSINESS, SHALL, FOR PURPOSES OF THIS SUBCHAPTER,
       S. 6359                            282                           A. 8559
    1  BE DEEMED PROPERTY WITHIN THE UNITED STATES. THIS SUBSECTION  SHALL  NOT
    2  APPLY TO A DEBT OBLIGATION TO WHICH SECTION 2105(B) APPLIES.
    3    S 2105. PROPERTY WITHOUT THE UNITED STATES. (A) PROCEEDS OF LIFE INSU-
    4  RANCE.--FOR PURPOSES OF THIS SUBCHAPTER, THE AMOUNT RECEIVABLE AS INSUR-
    5  ANCE  ON  THE  LIFE  OF A NONRESIDENT NOT A CITIZEN OF THE UNITED STATES
    6  SHALL NOT BE DEEMED PROPERTY WITHIN THE UNITED STATES.
    7    (B) BANK DEPOSITS AND CERTAIN OTHER DEBT OBLIGATIONS.--FOR PURPOSES OF
    8  THIS SUBCHAPTER, THE FOLLOWING SHALL NOT BE DEEMED PROPERTY  WITHIN  THE
    9  UNITED STATES--
   10    (1)  AMOUNTS  DESCRIBED  IN SECTION 871(I)(3), IF ANY INTEREST THEREON
   11  WOULD NOT BE SUBJECT TO TAX BY REASON OF  SECTION  871(I)(1)  WERE  SUCH
   12  INTEREST RECEIVED BY THE DECEDENT AT THE TIME OF HIS DEATH,
   13    (2) DEPOSITS WITH A FOREIGN BRANCH OF A DOMESTIC CORPORATION OR DOMES-
   14  TIC  PARTNERSHIP,  IF  SUCH  BRANCH IS ENGAGED IN THE COMMERCIAL BANKING
   15  BUSINESS,
   16    (3) DEBT OBLIGATIONS, IF, WITHOUT REGARD TO WHETHER A STATEMENT  MEET-
   17  ING  THE REQUIREMENTS OF SECTION 871(H)(5) HAS BEEN RECEIVED, ANY INTER-
   18  EST THEREON WOULD BE ELIGIBLE FOR THE EXEMPTION FROM TAX  UNDER  SECTION
   19  871(H)(1) WERE SUCH INTEREST RECEIVED BY THE DECEDENT AT THE TIME OF HIS
   20  DEATH, AND
   21    (4)  OBLIGATIONS WHICH WOULD BE ORIGINAL ISSUE DISCOUNT OBLIGATIONS AS
   22  DEFINED IN SECTION 871(G)(1) BUT FOR SUBPARAGRAPH (B)(I) THEREOF, IF ANY
   23  INTEREST THEREON (WERE SUCH INTEREST RECEIVED BY  THE  DECEDENT  AT  THE
   24  TIME  OF  HIS DEATH) WOULD NOT BE EFFECTIVELY CONNECTED WITH THE CONDUCT
   25  OF A TRADE OR BUSINESS WITHIN THE UNITED STATES.
   26    NOTWITHSTANDING THE PRECEDING SENTENCE, IF ANY PORTION OF THE INTEREST
   27  ON AN OBLIGATION REFERRED TO IN PARAGRAPH (3) WOULD NOT BE ELIGIBLE  FOR
   28  THE  EXEMPTION  REFERRED  TO  IN  PARAGRAPH  (3)  BY  REASON  OF SECTION
   29  871(H)(4) IF THE INTEREST WERE RECEIVED BY THE DECEDENT AT THE  TIME  OF
   30  HIS  DEATH,  THEN  AN  APPROPRIATE  PORTION  (AS  DETERMINED IN A MANNER
   31  PRESCRIBED BY THE SECRETARY) OF THE VALUE (AS DETERMINED FOR PURPOSES OF
   32  THIS CHAPTER) OF SUCH DEBT OBLIGATION SHALL BE  DEEMED  PROPERTY  WITHIN
   33  THE UNITED STATES.
   34    (C)  WORKS  OF  ART  ON  LOAN  FOR  EXHIBITION.--FOR  PURPOSES OF THIS
   35  SUBCHAPTER, WORKS OF ART OWNED BY A NONRESIDENT NOT  A  CITIZEN  OF  THE
   36  UNITED  STATES  SHALL NOT BE DEEMED PROPERTY WITHIN THE UNITED STATES IF
   37  SUCH WORKS OF ART ARE--
   38    (1) IMPORTED INTO THE UNITED STATES SOLELY FOR EXHIBITION PURPOSES,
   39    (2) LOANED FOR SUCH PURPOSES, TO A PUBLIC GALLERY OR MUSEUM,  NO  PART
   40  OF THE NET EARNINGS OF WHICH INURES TO THE BENEFIT OF ANY PRIVATE STOCK-
   41  HOLDER OR INDIVIDUAL, AND
   42    (3)  AT  THE TIME OF THE DEATH OF THE OWNER, ON EXHIBITION, OR ENROUTE
   43  TO OR FROM EXHIBITION, IN SUCH A PUBLIC GALLERY OR MUSEUM.
   44    S 2503. (A) GENERAL DEFINITION - THE TERM "TAXABLE  GIFTS"  MEANS  THE
   45  TOTAL  AMOUNT  OF  GIFTS  MADE DURING THE CALENDAR YEAR, LESS DEDUCTIONS
   46  PROVIDED IN SUBCHAPTER C (SECTION 2522 AND FOLLOWING).
   47    (B) EXCLUSIONS FROM GIFTS. (1)  IN  GENERAL.--IN  THE  CASE  OF  GIFTS
   48  (OTHER THAN GIFTS OF FUTURE INTERESTS IN PROPERTY) MADE TO ANY PERSON BY
   49  THE  DONOR  DURING THE CALENDAR YEAR, THE FIRST $10,000 OF SUCH GIFTS TO
   50  SUCH PERSON SHALL NOT, FOR PURPOSES OF SUBSECTION (A),  BE  INCLUDED  IN
   51  THE  TOTAL AMOUNT OF GIFTS MADE DURING SUCH YEAR. WHERE THERE HAS BEEN A
   52  TRANSFER TO ANY PERSON OF A PRESENT INTEREST IN PROPERTY, THE  POSSIBIL-
   53  ITY  THAT  SUCH  INTEREST  MAY  BE DIMINISHED BY THE EXERCISE OF A POWER
   54  SHALL BE DISREGARDED IN APPLYING THIS SUBSECTION, IF  NO  PART  OF  SUCH
   55  INTEREST WILL AT ANY TIME PASS TO ANY OTHER PERSON.
       S. 6359                            283                           A. 8559
    1    (2)  INFLATION  ADJUSTMENT.--IN  THE  CASE OF GIFTS MADE IN A CALENDAR
    2  YEAR AFTER 1998, THE $10,000 AMOUNT CONTAINED IN PARAGRAPH (1) SHALL  BE
    3  INCREASED BY AN AMOUNT EQUAL TO--
    4    (A) $10,000, MULTIPLIED BY
    5    (B) THE COST-OF-LIVING ADJUSTMENT DETERMINED UNDER SECTION 1(F)(3) FOR
    6  SUCH  CALENDAR  YEAR  BY SUBSTITUTING "CALENDAR YEAR 1997" FOR "CALENDAR
    7  YEAR 1992" IN SUBPARAGRAPH (B) THEREOF.
    8    IF ANY AMOUNT AS ADJUSTED UNDER THE PRECEDING SENTENCE IS NOT A MULTI-
    9  PLE OF $1,000, SUCH AMOUNT SHALL BE ROUNDED TO THE NEXT LOWEST  MULTIPLE
   10  OF $1,000.
   11    (C)  TRANSFER  FOR  THE  BENEFIT  OF MINOR. -- NO PART OF A GIFT TO AN
   12  INDIVIDUAL WHO HAS NOT ATTAINED THE AGE OF 21 YEARS ON THE DATE OF  SUCH
   13  TRANSFER SHALL BE CONSIDERED A GIFT OF A FUTURE INTEREST IN PROPERTY FOR
   14  PURPOSES OF SUBSECTION (B) IF THE PROPERTY AND THE INCOME THEREFROM-
   15    (1)  MAY  BE  EXPENDED BY, OR FOR THE BENEFIT OF, THE DONEE BEFORE HIS
   16  ATTAINING THE AGE OF 21 YEARS, AND
   17    (2) WILL TO THE EXTENT NOT SO EXPENDED-
   18    (A) PASS TO THE DONEE ON HIS ATTAINING THE AGE OF 21 YEARS, AND
   19    (B) IN THE EVENT THE DONEE DIES BEFORE ATTAINING THE AGE OF 21  YEARS,
   20  BE  PAYABLE  TO  THE  ESTATE  OF  THE DONEE OR AS HE MAY APPOINT UNDER A
   21  GENERAL POWER OF APPOINTMENT AS DEFINED IN SECTION 2514(C).
   22    {(D) REPEALED. PUB. L. 97-34, TITLE III, S 311(H)(5), AUG.  13,  1981,
   23  95 STAT.  282}
   24    (E)  EXCLUSION  FOR  CERTAIN  TRANSFERS  FOR  EDUCATIONAL  EXPENSES OR
   25  MEDICAL EXPENSES. (1) IN GENERAL. ANY QUALIFIED TRANSFER  SHALL  NOT  BE
   26  TREATED AS A TRANSFER OF PROPERTY BY GIFT FOR PURPOSES OF THIS CHAPTER.
   27    (2)  QUALIFIED  TRANSFER.  FOR  PURPOSES  OF THIS SUBSECTION, THE TERM
   28  "QUALIFIED TRANSFER" MEANS ANY AMOUNT PAID ON BEHALF OF AN INDIVIDUAL-
   29    (A) AS TUITION TO AN EDUCATIONAL  ORGANIZATION  DESCRIBED  IN  SECTION
   30  170(B)(1)(A)(II) FOR THE EDUCATION OR TRAINING OF SUCH INDIVIDUAL, OR
   31    (B)  TO  ANY  PERSON  WHO PROVIDES MEDICAL CARE (AS DEFINED IN SECTION
   32  213(D)) WITH RESPECT TO SUCH INDIVIDUAL  AS  PAYMENT  FOR  SUCH  MEDICAL
   33  CARE.
   34    (F) WAIVER OF CERTAIN PENSION RIGHTS. IF ANY INDIVIDUAL WAIVES, BEFORE
   35  THE DEATH OF A PARTICIPANT, ANY SURVIVOR BENEFIT, OR RIGHT TO SUCH BENE-
   36  FIT,  UNDER  SECTION 401(A)(11) OR 417, SUCH WAIVER SHALL NOT BE TREATED
   37  AS A TRANSFER OF PROPERTY BY GIFT FOR PURPOSES OF THIS CHAPTER.
   38    (G) TREATMENT OF CERTAIN  LOANS  OF  ARTWORKS.  (1)  IN  GENERAL.  FOR
   39  PURPOSES OF THIS SUBTITLE, ANY LOAN OF A QUALIFIED WORK OF ART SHALL NOT
   40  BE  TREATED  AS  A TRANSFER (AND THE VALUE OF SUCH QUALIFIED WORK OF ART
   41  SHALL BE DETERMINED AS IF SUCH LOAN HAD NOT BEEN MADE) IF-
   42    (A) SUCH LOAN IS TO AN ORGANIZATION DESCRIBED IN SECTION 501(C)(3) AND
   43  EXEMPT FROM TAX UNDER SECTION 501(C) (OTHER THAN A PRIVATE  FOUNDATION),
   44  AND
   45    (B)  THE  USE  OF  SUCH  WORK  BY  SUCH ORGANIZATION IS RELATED TO THE
   46  PURPOSE OR FUNCTION CONSTITUTING  THE  BASIS  FOR  ITS  EXEMPTION  UNDER
   47  SECTION 501.
   48    (2) DEFINITIONS. FOR PURPOSES OF THIS SECTION-
   49    (A)  QUALIFIED WORK OF ART. THE TERM "QUALIFIED WORK OF ART" MEANS ANY
   50  ARCHAEOLOGICAL, HISTORIC, OR CREATIVE TANGIBLE PERSONAL PROPERTY.
   51    (B) PRIVATE FOUNDATION. THE TERM "PRIVATE FOUNDATION" HAS THE  MEANING
   52  GIVEN  SUCH TERM BY SECTION 509, EXCEPT THAT SUCH TERM SHALL NOT INCLUDE
   53  ANY PRIVATE OPERATING FOUNDATION (AS DEFINED IN SECTION 4942(J)(3)).
   54    S 2511. TRANSFERS IN GENERAL. (A) SCOPE. SUBJECT  TO  THE  LIMITATIONS
   55  CONTAINED  IN  THIS CHAPTER, THE TAX IMPOSED BY SECTION 2501 SHALL APPLY
   56  WHETHER THE TRANSFER IS IN TRUST  OR  OTHERWISE,  WHETHER  THE  GIFT  IS
       S. 6359                            284                           A. 8559
    1  DIRECT OR INDIRECT, AND WHETHER THE PROPERTY IS REAL OR PERSONAL, TANGI-
    2  BLE OR INTANGIBLE; BUT IN THE CASE OF A NONRESIDENT NOT A CITIZEN OF THE
    3  UNITED  STATES,  SHALL APPLY TO A TRANSFER ONLY IF THE PROPERTY IS SITU-
    4  ATED WITHIN THE UNITED STATES.
    5    (B)  INTANGIBLE PROPERTY. FOR PURPOSES OF THIS CHAPTER, IN THE CASE OF
    6  A NONRESIDENT NOT A CITIZEN OF THE UNITED STATES WHO  IS  EXCEPTED  FROM
    7  THE APPLICATION OF SECTION 2501(A)(2)-
    8    (1) SHARES OF STOCK ISSUED BY A DOMESTIC CORPORATION, AND
    9    (2) DEBT OBLIGATIONS OF-
   10  --(A) A UNITED STATES PERSON, OR
   11  --(B)  THE  UNITED STATES, A STATE OR ANY POLITICAL SUBDIVISION THEREOF,
   12  OR THE DISTRICT OF COLUMBIA,
   13  --WHICH ARE OWNED AND HELD BY SUCH NONRESIDENT SHALL  BE  DEEMED  TO  BE
   14  PROPERTY SITUATED WITHIN THE UNITED STATES.
   15    S  2512.  VALUATION OF GIFTS. (A) IF THE GIFT IS MADE IN PROPERTY, THE
   16  VALUE THEREOF AT THE DATE OF THE GIFT SHALL BE CONSIDERED THE AMOUNT  OF
   17  THE GIFT.
   18    (B)  WHERE  PROPERTY IS TRANSFERRED FOR LESS THAN AN ADEQUATE AND FULL
   19  CONSIDERATION IN MONEY OR MONEY'S WORTH, THEN THE AMOUNT  BY  WHICH  THE
   20  VALUE  OF  THE PROPERTY EXCEEDED THE VALUE OF THE CONSIDERATION SHALL BE
   21  DEEMED A GIFT, AND SHALL BE INCLUDED IN COMPUTING THE  AMOUNT  OF  GIFTS
   22  MADE DURING THE CALENDAR YEAR.
   23    S 2513. GIFT BY HUSBAND OR WIFE TO THIRD PARTY. (A) CONSIDERED AS MADE
   24  ONE-HALF  BY  EACH.  (1)  IN  GENERAL.  A GIFT MADE BY ONE SPOUSE TO ANY
   25  PERSON OTHER THAN HIS SPOUSE SHALL, FOR THE PURPOSES OF THIS CHAPTER, BE
   26  CONSIDERED AS MADE ONE-HALF BY HIM AND ONE-HALF BY HIS SPOUSE, BUT  ONLY
   27  IF  AT  THE TIME OF THE GIFT EACH SPOUSE IS A CITIZEN OR RESIDENT OF THE
   28  UNITED STATES. THIS PARAGRAPH SHALL NOT APPLY WITH RESPECT TO A GIFT  BY
   29  A SPOUSE OF AN INTEREST IN PROPERTY IF HE CREATES IN HIS SPOUSE A GENER-
   30  AL POWER OF APPOINTMENT, AS DEFINED IN SECTION 2514(C), OVER SUCH INTER-
   31  EST.  FOR PURPOSES OF THIS SECTION, AN INDIVIDUAL SHALL BE CONSIDERED AS
   32  THE SPOUSE OF ANOTHER INDIVIDUAL ONLY IF HE IS MARRIED TO SUCH  INDIVID-
   33  UAL AT THE TIME OF THE GIFT AND DOES NOT REMARRY DURING THE REMAINDER OF
   34  THE CALENDAR YEAR.
   35    (2)  CONSENT  OF  BOTH SPOUSES. PARAGRAPH (1) SHALL APPLY ONLY IF BOTH
   36  SPOUSES HAVE SIGNIFIED (UNDER THE REGULATIONS PROVIDED FOR IN SUBSECTION
   37  (B)) THEIR CONSENT TO THE APPLICATION OF PARAGRAPH (1) IN  THE  CASE  OF
   38  ALL  SUCH GIFTS MADE DURING THE CALENDAR YEAR BY EITHER WHILE MARRIED TO
   39  THE OTHER.
   40    (B) MANNER AND TIME OF SIGNIFYING CONSENT. (1) MANNER. A CONSENT UNDER
   41  THIS SECTION SHALL BE SIGNIFIED IN SUCH  MANNER  AS  IS  PROVIDED  UNDER
   42  REGULATIONS PRESCRIBED BY THE SECRETARY.
   43    (2) TIME. SUCH CONSENT MAY BE SO SIGNIFIED AT ANY TIME AFTER THE CLOSE
   44  OF  THE CALENDAR YEAR IN WHICH THE GIFT WAS MADE, SUBJECT TO THE FOLLOW-
   45  ING LIMITATIONS-
   46  --(A) THE CONSENT MAY NOT BE SIGNIFIED  AFTER  THE  15TH  DAY  OF  APRIL
   47  FOLLOWING  THE CLOSE OF SUCH YEAR, UNLESS BEFORE SUCH 15TH DAY NO RETURN
   48  HAS BEEN FILED FOR SUCH YEAR BY EITHER SPOUSE, IN WHICH CASE THE CONSENT
   49  MAY NOT BE SIGNIFIED AFTER A RETURN FOR SUCH YEAR  IS  FILED  BY  EITHER
   50  SPOUSE.
   51  --(B) THE CONSENT MAY NOT BE SIGNIFIED AFTER A NOTICE OF DEFICIENCY WITH
   52  RESPECT  TO  THE  TAX  FOR  SUCH  YEAR HAS BEEN SENT TO EITHER SPOUSE IN
   53  ACCORDANCE WITH SECTION 6212(A).
   54    (C) REVOCATION OF CONSENT. REVOCATION OF A CONSENT  PREVIOUSLY  SIGNI-
   55  FIED  SHALL  BE  MADE  IN  SUCH  MANNER AS IN PROVIDED UNDER REGULATIONS
       S. 6359                            285                           A. 8559
    1  PRESCRIBED BY THE SECRETARY, BUT THE RIGHT TO REVOKE A CONSENT PREVIOUS-
    2  LY SIGNIFIED WITH RESPECT TO A CALENDAR YEAR-
    3    (1) SHALL NOT EXIST AFTER THE 15TH DAY OF APRIL FOLLOWING THE CLOSE OF
    4  SUCH YEAR IF THE CONSENT WAS SIGNIFIED ON OR BEFORE SUCH 15TH DAY; AND
    5    (2)  SHALL NOT EXIST IF THE CONSENT WAS NOT SIGNIFIED UNTIL AFTER SUCH
    6  15TH DAY.
    7    (D) JOINT AND SEVERAL LIABILITY FOR TAX. IF THE  CONSENT  REQUIRED  BY
    8  SUBSECTION (A)(2) IS SIGNIFIED WITH RESPECT TO A GIFT MADE IN ANY CALEN-
    9  DAR  YEAR,  THE LIABILITY WITH RESPECT TO THE ENTIRE TAX IMPOSED BY THIS
   10  CHAPTER OF EACH SPOUSE FOR SUCH YEAR SHALL BE JOINT AND SEVERAL.
   11    S 2514. POWERS OF APPOINTMENT. (A) POWERS CREATED ON OR BEFORE OCTOBER
   12  21, 1942. AN EXERCISE OF A GENERAL POWER OF APPOINTMENT  CREATED  ON  OR
   13  BEFORE  OCTOBER  21, 1942, SHALL BE DEEMED A TRANSFER OF PROPERTY BY THE
   14  INDIVIDUAL POSSESSING SUCH POWER; BUT THE FAILURE  TO  EXERCISE  SUCH  A
   15  POWER  OR  THE  COMPLETE  RELEASE OF SUCH A POWER SHALL NOT BE DEEMED AN
   16  EXERCISE THEREOF. IF A GENERAL POWER OF APPOINTMENT CREATED ON OR BEFORE
   17  OCTOBER 21, 1942, HAS BEEN PARTIALLY RELEASED SO THAT IT IS NO LONGER  A
   18  GENERAL  POWER  OF  APPOINTMENT,  THE  SUBSEQUENT EXERCISE OF SUCH POWER
   19  SHALL NOT BE DEEMED TO BE THE EXERCISE OF A GENERAL POWER OF APPOINTMENT
   20  IF-
   21    (1) SUCH PARTIAL RELEASE OCCURRED BEFORE NOVEMBER 1, 1951, OR
   22    (2) THE DONEE OF SUCH POWER WAS UNDER A LEGAL  DISABILITY  TO  RELEASE
   23  SUCH  POWER  ON  OCTOBER 21, 1942, AND SUCH PARTIAL RELEASE OCCURRED NOT
   24  LATER THAN SIX MONTHS AFTER THE TERMINATION OF SUCH LEGAL DISABILITY.
   25    (B) POWERS CREATED AFTER OCTOBER 21, 1942. THE EXERCISE OR RELEASE  OF
   26  A  GENERAL POWER OF APPOINTMENT CREATED AFTER OCTOBER 21, 1942, SHALL BE
   27  DEEMED A TRANSFER OF PROPERTY BY THE INDIVIDUAL POSSESSING SUCH POWER.
   28    (C) DEFINITION OF GENERAL POWER OF APPOINTMENT. FOR PURPOSES  OF  THIS
   29  SECTION,  THE TERM "GENERAL POWER OF APPOINTMENT" MEANS A POWER WHICH IS
   30  EXERCISABLE IN FAVOR OF THE INDIVIDUAL POSSESSING THE  POWER  (HEREAFTER
   31  IN  THIS  SUBSECTION  REFERRED  TO  AS THE "POSSESSOR"), HIS ESTATE, HIS
   32  CREDITORS, OR THE CREDITORS OF HIS ESTATE; EXCEPT THAT-
   33    (1) A POWER TO CONSUME, INVADE, OR APPROPRIATE PROPERTY FOR THE  BENE-
   34  FIT  OF  THE  POSSESSOR  WHICH  IS  LIMITED BY AN ASCERTAINABLE STANDARD
   35  RELATING TO THE  HEALTH,  EDUCATION,  SUPPORT,  OR  MAINTENANCE  OF  THE
   36  POSSESSOR SHALL NOT BE DEEMED A GENERAL POWER OF APPOINTMENT.
   37    (2)  A  POWER  OF  APPOINTMENT  CREATED ON OR BEFORE OCTOBER 21, 1942,
   38  WHICH IS EXERCISABLE BY THE POSSESSOR ONLY IN CONJUNCTION  WITH  ANOTHER
   39  PERSON SHALL NOT BE DEEMED A GENERAL POWER OF APPOINTMENT.
   40    (3)  IN  THE  CASE OF A POWER OF APPOINTMENT CREATED AFTER OCTOBER 21,
   41  1942, WHICH IS EXERCISABLE BY THE POSSESSOR  ONLY  IN  CONJUNCTION  WITH
   42  ANOTHER PERSON-
   43  --(A)  IF  THE  POWER  IS  NOT  EXERCISABLE  BY  THE POSSESSOR EXCEPT IN
   44  CONJUNCTION WITH THE CREATOR OF THE POWER-SUCH POWER SHALL NOT BE DEEMED
   45  A GENERAL POWER OF APPOINTMENT;
   46  --(B) IF THE POWER  IS  NOT  EXERCISABLE  BY  THE  POSSESSOR  EXCEPT  IN
   47  CONJUNCTION WITH A PERSON HAVING A SUBSTANTIAL INTEREST, IN THE PROPERTY
   48  SUBJECT TO THE POWER, WHICH IS ADVERSE TO EXERCISE OF THE POWER IN FAVOR
   49  OF  THE  POSSESSOR-SUCH  POWER  SHALL  NOT  BE DEEMED A GENERAL POWER OF
   50  APPOINTMENT. FOR THE PURPOSES OF THIS SUBPARAGRAPH A PERSON  WHO,  AFTER
   51  THE  DEATH  OF THE POSSESSOR, MAY BE POSSESSED OF A POWER OF APPOINTMENT
   52  (WITH RESPECT TO THE PROPERTY SUBJECT TO THE POSSESSOR'S POWER) WHICH HE
   53  MAY EXERCISE IN HIS OWN FAVOR SHALL BE DEEMED AS HAVING AN  INTEREST  IN
   54  THE  PROPERTY AND SUCH INTEREST SHALL BE DEEMED ADVERSE TO SUCH EXERCISE
   55  OF THE POSSESSOR'S POWER;
       S. 6359                            286                           A. 8559
    1  --(C) IF (AFTER THE APPLICATION OF SUBPARAGRAPHS (A) AND (B)) THE  POWER
    2  IS  A  GENERAL  POWER OF APPOINTMENT AND IS EXERCISABLE IN FAVOR OF SUCH
    3  OTHER PERSON-SUCH POWER SHALL BE DEEMED A GENERAL POWER  OF  APPOINTMENT
    4  ONLY  IN  RESPECT  OF  A FRACTIONAL PART OF THE PROPERTY SUBJECT TO SUCH
    5  POWER, SUCH PART TO BE DETERMINED BY DIVIDING THE VALUE OF SUCH PROPERTY
    6  BY THE NUMBER OF SUCH PERSONS (INCLUDING THE POSSESSOR) IN FAVOR OF WHOM
    7  SUCH POWER IS EXERCISABLE.
    8  --FOR  PURPOSES OF SUBPARAGRAPHS (B) AND (C), A POWER SHALL BE DEEMED TO
    9  BE EXERCISABLE IN FAVOR OF A PERSON IF IT IS  EXERCISABLE  IN  FAVOR  OF
   10  SUCH PERSON, HIS ESTATE, HIS CREDITORS, OR THE CREDITORS OF HIS ESTATE.
   11    (D) CREATION OF ANOTHER POWER IN CERTAIN CASES. IF A POWER OF APPOINT-
   12  MENT  CREATED  AFTER  OCTOBER 21, 1942, IS EXERCISED BY CREATING ANOTHER
   13  POWER OF APPOINTMENT WHICH, UNDER  THE  APPLICABLE  LOCAL  LAW,  CAN  BE
   14  VALIDLY  EXERCISED SO AS TO POSTPONE THE VESTING OF ANY ESTATE OR INTER-
   15  EST IN THE PROPERTY WHICH WAS SUBJECT TO THE FIRST POWER, OR SUSPEND THE
   16  ABSOLUTE OWNERSHIP OR POWER OF ALIENATION OF SUCH PROPERTY, FOR A PERIOD
   17  ASCERTAINABLE WITHOUT REGARD TO THE DATE OF THE CREATION  OF  THE  FIRST
   18  POWER,  SUCH  EXERCISE  OF  THE  FIRST POWER SHALL, TO THE EXTENT OF THE
   19  PROPERTY SUBJECT TO THE SECOND POWER, BE DEEMED A TRANSFER  OF  PROPERTY
   20  BY THE INDIVIDUAL POSSESSING SUCH POWER.
   21    (E)  LAPSE OF POWER. THE LAPSE OF A POWER OF APPOINTMENT CREATED AFTER
   22  OCTOBER 21, 1942, DURING THE LIFE OF THE INDIVIDUAL POSSESSING THE POWER
   23  SHALL BE CONSIDERED A RELEASE OF SUCH POWER. THE RULE OF  THE  PRECEDING
   24  SENTENCE  SHALL  APPLY  WITH  RESPECT  TO THE LAPSE OF POWERS DURING ANY
   25  CALENDAR YEAR ONLY TO THE EXTENT THAT THE PROPERTY WHICH COULD HAVE BEEN
   26  APPOINTED BY EXERCISE OF SUCH LAPSED POWERS EXCEEDS IN VALUE THE GREATER
   27  OF THE FOLLOWING AMOUNTS:
   28    (1) $5,000, OR
   29    (2) 5 PERCENT OF THE AGGREGATE VALUE OF THE ASSETS OUT  OF  WHICH,  OR
   30  THE PROCEEDS OF WHICH, THE EXERCISE OF THE LAPSED POWERS COULD BE SATIS-
   31  FIED.
   32    (F) DATE OF CREATION OF POWER. FOR PURPOSES OF THIS SECTION A POWER OF
   33  APPOINTMENT  CREATED  BY  A WILL EXECUTED ON OR BEFORE OCTOBER 21, 1942,
   34  SHALL BE CONSIDERED A POWER CREATED ON OR BEFORE SUCH DATE IF THE PERSON
   35  EXECUTING SUCH WILL DIES BEFORE JULY 1, 1949, WITHOUT HAVING REPUBLISHED
   36  SUCH WILL, BY CODICIL OR OTHERWISE, AFTER OCTOBER 21, 1942.
   37    S 2516. CERTAIN PROPERTY SETTLEMENTS. WHERE A HUSBAND AND  WIFE  ENTER
   38  INTO  A  WRITTEN AGREEMENT RELATIVE TO THEIR MARITAL AND PROPERTY RIGHTS
   39  AND DIVORCE OCCURS WITHIN THE 3-YEAR PERIOD BEGINNING ON THE DATE 1 YEAR
   40  BEFORE SUCH AGREEMENT IS ENTERED INTO (WHETHER OR NOT SUCH AGREEMENT  IS
   41  APPROVED  BY THE DIVORCE DECREE), ANY TRANSFERS OF PROPERTY OR INTERESTS
   42  IN PROPERTY MADE PURSUANT TO SUCH AGREEMENT-
   43    (1) TO EITHER SPOUSE IN SETTLEMENT OF HIS OR HER MARITAL  OR  PROPERTY
   44  RIGHTS, OR
   45    (2)  TO PROVIDE A REASONABLE ALLOWANCE FOR THE SUPPORT OF ISSUE OF THE
   46  MARRIAGE DURING MINORITY,
   47    --SHALL BE DEEMED TO BE TRANSFERS MADE FOR A FULL AND ADEQUATE CONSID-
   48  ERATION IN MONEY OR MONEY'S WORTH.
   49    S 2518. DISCLAIMERS. (A) GENERAL RULE. - FOR PURPOSES OF  THIS  SUBTI-
   50  TLE, IF A PERSON MAKES A QUALIFIED DISCLAIMER WITH RESPECT TO ANY INTER-
   51  EST IN PROPERTY, THIS SUBTITLE SHALL APPLY WITH RESPECT TO SUCH INTEREST
   52  AS IF THE INTEREST HAD NEVER BEEN TRANSFERRED TO SUCH PERSON.
   53    (B)  QUALIFIED  DISCLAIMER  DEFINED. - FOR PURPOSES OF SUBSECTION (A),
   54  THE TERM "QUALIFIED DISCLAIMER" MEANS  AN  IRREVOCABLE  AND  UNQUALIFIED
   55  REFUSAL BY A PERSON TO ACCEPT AN INTEREST IN PROPERTY BUT ONLY IF -
   56    (1) SUCH REFUSAL IS IN WRITING,
       S. 6359                            287                           A. 8559
    1    (2)  SUCH  WRITING  IS RECEIVED BY THE TRANSFEROR OF THE INTEREST, HIS
    2  LEGAL REPRESENTATIVE, OR THE HOLDER OF THE LEGAL TITLE TO  THE  PROPERTY
    3  TO  WHICH THE INTEREST RELATES NOT LATER THAN THE DATE WHICH IS 9 MONTHS
    4  AFTER THE LATER OF -
    5    (A)  THE  DATE  ON  WHICH  THE  TRANSFER CREATING THE INTEREST IN SUCH
    6  PERSON IS MADE, OR
    7    (B) THE DAY ON WHICH SUCH PERSON ATTAINS AGE 21,
    8    (3) SUCH PERSON HAS NOT ACCEPTED THE INTEREST OR ANY OF ITS  BENEFITS,
    9  AND
   10    (4)  AS  A  RESULT  OF  SUCH  REFUSAL, THE INTEREST PASSES WITHOUT ANY
   11  DIRECTION ON THE PART OF THE PERSON MAKING  THE  DISCLAIMER  AND  PASSES
   12  EITHER -
   13    (A) TO THE SPOUSE OF THE DECEDENT, OR
   14    (B) TO A PERSON OTHER THAN THE PERSON MAKING THE DISCLAIMER.
   15    (C) OTHER RULES. FOR PURPOSES OF SUBSECTION (A)-
   16    (1)  DISCLAIMER  OF  UNDIVIDED  PORTION OF INTEREST. A DISCLAIMER WITH
   17  RESPECT TO AN UNDIVIDED PORTION OF AN INTEREST WHICH MEETS THE  REQUIRE-
   18  MENTS  OF  THE  PRECEDING  SENTENCE  SHALL  BE  TREATED  AS  A QUALIFIED
   19  DISCLAIMER OF SUCH PORTION OF THE INTEREST.
   20    (2) POWERS. A POWER WITH RESPECT TO PROPERTY SHALL BE  TREATED  AS  AN
   21  INTEREST IN SUCH PROPERTY.
   22    (3)  CERTAIN  TRANSFERS  TREATED AS DISCLAIMERS. A WRITTEN TRANSFER OF
   23  THE TRANSFEROR'S ENTIRE INTEREST IN THE PROPERTY-
   24    (A) WHICH MEETS REQUIREMENTS SIMILAR TO THE REQUIREMENTS OF PARAGRAPHS
   25  (2) AND (3) OF SUBSECTION (B), AND
   26    (B) WHICH IS TO A PERSON OR PERSONS WHO WOULD HAVE RECEIVED THE  PROP-
   27  ERTY  HAD THE TRANSFEROR MADE A QUALIFIED DISCLAIMER (WITHIN THE MEANING
   28  OF SUBSECTION (B)),
   29    --SHALL BE TREATED AS A QUALIFIED DISCLAIMER.
   30    S 2519. DISPOSITIONS OF CERTAIN LIFE ESTATES. (A) GENERAL RULE
   31    --FOR PURPOSES OF THIS CHAPTER AND CHAPTER 11, ANY DISPOSITION OF  ALL
   32  OR  PART  OF  A  QUALIFYING  INCOME INTEREST FOR LIFE IN ANY PROPERTY TO
   33  WHICH THIS SECTION APPLIES SHALL BE TREATED AS A TRANSFER OF ALL  INTER-
   34  ESTS IN SUCH PROPERTY OTHER THAN THE QUALIFYING INCOME INTEREST.
   35    (B) PROPERTY TO WHICH THIS SUBSECTION APPLIES. THIS SECTION APPLIES TO
   36  ANY  PROPERTY IF A DEDUCTION WAS ALLOWED WITH RESPECT TO THE TRANSFER OF
   37  SUCH PROPERTY TO THE DONOR-
   38    (1) UNDER SECTION 2056 BY REASON OF SUBSECTION (B)(7) THEREOF, OR
   39    (2) UNDER SECTION 2523 BY REASON OF SUBSECTION (F) THEREOF.
   40    (C) CROSS REFERENCE
   41  --FOR RIGHT OF RECOVERY FOR GIFT TAX IN THE CASE OF PROPERTY TREATED  AS
   42  TRANSFERRED UNDER THIS SECTION, SEE SECTION 2207A(B).
   43    S  2522.  CHARITABLE  AND SIMILAR GIFTS. (A) CITIZENS OR RESIDENTS. IN
   44  COMPUTING TAXABLE GIFTS FOR THE CALENDAR YEAR, THERE SHALL BE ALLOWED AS
   45  A DEDUCTION IN THE CASE OF A CITIZEN OR RESIDENT THE AMOUNT OF ALL GIFTS
   46  MADE DURING SUCH YEAR TO OR FOR THE USE OF-
   47    (1) THE UNITED STATES, ANY STATE, OR ANY POLITICAL SUBDIVISION  THERE-
   48  OF, OR THE DISTRICT OF COLUMBIA, FOR EXCLUSIVELY PUBLIC PURPOSES;
   49    (2)  A CORPORATION, OR TRUST, OR COMMUNITY CHEST, FUND, OR FOUNDATION,
   50  ORGANIZED AND OPERATED EXCLUSIVELY FOR RELIGIOUS, CHARITABLE,  SCIENTIF-
   51  IC, LITERARY, OR EDUCATIONAL PURPOSES, OR TO FOSTER NATIONAL OR INTERNA-
   52  TIONAL AMATEUR SPORTS COMPETITION (BUT ONLY IF NO PART OF ITS ACTIVITIES
   53  INVOLVE  THE  PROVISION  OF ATHLETIC FACILITIES OR EQUIPMENT), INCLUDING
   54  THE ENCOURAGEMENT OF ART AND THE PREVENTION OF CRUELTY  TO  CHILDREN  OR
   55  ANIMALS,  NO  PART OF THE NET EARNINGS OF WHICH INURES TO THE BENEFIT OF
   56  ANY PRIVATE SHAREHOLDER OR INDIVIDUAL, WHICH IS NOT DISQUALIFIED FOR TAX
       S. 6359                            288                           A. 8559
    1  EXEMPTION UNDER SECTION 501(C)(3) BY REASON OF ATTEMPTING  TO  INFLUENCE
    2  LEGISLATION, AND WHICH DOES NOT PARTICIPATE IN, OR INTERVENE IN (INCLUD-
    3  ING  THE  PUBLISHING  OR  DISTRIBUTING  OF  STATEMENTS),  ANY  POLITICAL
    4  CAMPAIGN  ON  BEHALF  OF  (OR IN OPPOSITION TO) ANY CANDIDATE FOR PUBLIC
    5  OFFICE;
    6    (3) A FRATERNAL SOCIETY, ORDER, OR ASSOCIATION,  OPERATING  UNDER  THE
    7  LODGE  SYSTEM,  BUT  ONLY  IF  SUCH GIFTS ARE TO BE USED EXCLUSIVELY FOR
    8  RELIGIOUS, CHARITABLE, SCIENTIFIC, LITERARY,  OR  EDUCATIONAL  PURPOSES,
    9  INCLUDING  THE  ENCOURAGEMENT  OF  ART  AND THE PREVENTION OF CRUELTY TO
   10  CHILDREN OR ANIMALS;
   11    (4) POSTS OR ORGANIZATIONS OF WAR  VETERANS,  OR  AUXILIARY  UNITS  OR
   12  SOCIETIES  OF  ANY SUCH POSTS OR ORGANIZATIONS, IF SUCH POSTS, ORGANIZA-
   13  TIONS, UNITS, OR SOCIETIES ARE ORGANIZED IN THE UNITED STATES OR ANY  OF
   14  ITS  POSSESSIONS,  AND  IF  NO PART OF THEIR NET EARNINGS INSURES TO THE
   15  BENEFIT OF ANY PRIVATE SHAREHOLDER OR INDIVIDUAL.
   16    RULES SIMILAR TO THE RULES OF SECTION 501(J) SHALL APPLY FOR  PURPOSES
   17  OF PARAGRAPH (2).
   18    (B)  NONRESIDENTS.  IN  THE CASE OF A NONRESIDENT NOT A CITIZEN OF THE
   19  UNITED STATES, THERE SHALL BE ALLOWED AS A DEDUCTION THE AMOUNT  OF  ALL
   20  GIFTS MADE DURING SUCH YEAR TO OR FOR THE USE OF-
   21    (1)  THE UNITED STATES, ANY STATE, OR ANY POLITICAL SUBDIVISION THERE-
   22  OF, OR THE DISTRICT OF COLUMBIA, FOR EXCLUSIVELY PUBLIC PURPOSES;
   23    (2) A DOMESTIC CORPORATION  ORGANIZED  AND  OPERATED  EXCLUSIVELY  FOR
   24  RELIGIOUS,  CHARITABLE,  SCIENTIFIC,  LITERARY, OR EDUCATIONAL PURPOSES,
   25  INCLUDING THE ENCOURAGEMENT OF ART AND  THE  PREVENTION  OF  CRUELTY  TO
   26  CHILDREN  OR ANIMALS, NO PART OF THE NET EARNINGS OF WHICH INURES TO THE
   27  BENEFIT OF ANY PRIVATE SHAREHOLDER OR INDIVIDUAL, WHICH IS NOT DISQUALI-
   28  FIED FOR TAX EXEMPTION UNDER SECTION 501(C)(3) BY REASON  OF  ATTEMPTING
   29  TO  INFLUENCE  LEGISLATION, AND WHICH DOES NOT PARTICIPATE IN, OR INTER-
   30  VENE IN (INCLUDING THE PUBLISHING OR DISTRIBUTING  OF  STATEMENTS),  ANY
   31  POLITICAL  CAMPAIGN ON BEHALF OF (OR IN OPPOSITION TO) ANY CANDIDATE FOR
   32  PUBLIC OFFICE;
   33    (3) A TRUST, OR COMMUNITY CHEST, FUND, OR  FOUNDATION,  ORGANIZED  AND
   34  OPERATED EXCLUSIVELY FOR RELIGIOUS, CHARITABLE, SCIENTIFIC, LITERARY, OR
   35  EDUCATIONAL  PURPOSES,  INCLUDING  THE  ENCOURAGEMENT  OF  ART  AND  THE
   36  PREVENTION OF CRUELTY TO CHILDREN OR ANIMALS, NO SUBSTANTIAL PART OF THE
   37  ACTIVITIES OF WHICH IS CARRYING ON PROPAGANDA, OR OTHERWISE  ATTEMPTING,
   38  TO  INFLUENCE  LEGISLATION, AND WHICH DOES NOT PARTICIPATE IN, OR INTER-
   39  VENE IN (INCLUDING THE PUBLISHING OR DISTRIBUTING  OF  STATEMENTS),  ANY
   40  POLITICAL  CAMPAIGN ON BEHALF OF (OR IN OPPOSITION TO) ANY CANDIDATE FOR
   41  PUBLIC OFFICE; BUT ONLY IF SUCH GIFTS ARE TO BE USED WITHIN  THE  UNITED
   42  STATES EXCLUSIVELY FOR SUCH PURPOSES;
   43    (4)  A  FRATERNAL  SOCIETY, ORDER, OR ASSOCIATION, OPERATING UNDER THE
   44  LODGE SYSTEM, BUT ONLY IF SUCH GIFTS ARE TO BE USED  WITHIN  THE  UNITED
   45  STATES  EXCLUSIVELY  FOR RELIGIOUS, CHARITABLE, SCIENTIFIC, LITERARY, OR
   46  EDUCATIONAL  PURPOSES,  INCLUDING  THE  ENCOURAGEMENT  OF  ART  AND  THE
   47  PREVENTION OF CRUELTY TO CHILDREN OR ANIMALS;
   48    (5)  POSTS  OR  ORGANIZATIONS  OF  WAR VETERANS, OR AUXILIARY UNITS OR
   49  SOCIETIES OF ANY SUCH POSTS OR ORGANIZATIONS, IF SUCH  POSTS,  ORGANIZA-
   50  TIONS,  UNITS, OR SOCIETIES ARE ORGANIZED IN THE UNITED STATES OR ANY OF
   51  ITS POSSESSIONS, AND IF NO PART OF THEIR  NET  EARNINGS  INURES  TO  THE
   52  BENEFIT OF ANY PRIVATE SHAREHOLDER OR INDIVIDUAL.
   53    (C)  DISALLOWANCE  OF  DEDUCTIONS  IN  CERTAIN CASES. (1) NO DEDUCTION
   54  SHALL BE ALLOWED UNDER THIS SECTION FOR A GIFT TO OF 1 FOR THE USE OF AN
   55  ORGANIZATION OR TRUST DESCRIBED IN SECTION 508(D) OR 4948(C)(4)  SUBJECT
   56  TO THE CONDITIONS SPECIFIED IN SUCH SECTIONS.
       S. 6359                            289                           A. 8559
    1    (2)  WHERE  A  DONOR  TRANSFERS AN INTEREST IN PROPERTY (OTHER THAN AN
    2  INTEREST DESCRIBED IN SECTION 170(F)(3)(B)) TO A PERSON, OR FOR  A  USE,
    3  DESCRIBED  IN SUBSECTION (A) OR (B) AND AN INTEREST IN THE SAME PROPERTY
    4  IS RETAINED BY THE DONOR, OR IS TRANSFERRED OR HAS BEEN TRANSFERRED (FOR
    5  LESS  THAN AN ADEQUATE AND FULL CONSIDERATION IN MONEY OR MONEY'S WORTH)
    6  FROM THE DONOR TO A PERSON, OR FOR A USE, NOT  DESCRIBED  IN  SUBSECTION
    7  (A)  OR  (B),  NO  DEDUCTION SHALL BE ALLOWED UNDER THIS SECTION FOR THE
    8  INTEREST WHICH IS, OR HAS BEEN TRANSFERRED TO THE  PERSON,  OR  FOR  THE
    9  USE, DESCRIBED IN SUBSECTION (A) OR (B), UNLESS-
   10    (A)  IN  THE CASE OF A REMAINDER INTEREST, SUCH INTEREST IS IN A TRUST
   11  WHICH IS A CHARITABLE REMAINDER ANNUITY TRUST OR A CHARITABLE  REMAINDER
   12  UNITRUST  (DESCRIBED  IN SECTION 664) OR A POOLED INCOME FUND (DESCRIBED
   13  IN SECTION 642(C)(5)), OR
   14    (B) IN THE CASE OF ANY OTHER INTEREST, SUCH INTEREST IS IN THE FORM OF
   15  A GUARANTEED ANNUITY OR IS A FIXED PERCENTAGE DISTRIBUTED YEARLY OF  THE
   16  FAIR MARKET VALUE OF THE PROPERTY (TO BE DETERMINED YEARLY).
   17    (3)  RULES  SIMILAR TO THE RULES OF SECTION 2055(E)(4) SHALL APPLY FOR
   18  PURPOSES OF PARAGRAPH (2).
   19    (4) REFORMATIONS TO COMPLY WITH PARAGRAPH (2). (A)  IN  GENERAL  --  A
   20  DEDUCTION SHALL BE ALLOWED UNDER SUBSECTION (A) IN RESPECT OF ANY QUALI-
   21  FIED REFORMATION (WITHIN THE MEANING OF SECTION 2055(E)(3)(B)).
   22    (B)  RULES  SIMILAR  TO SECTION 2055(E)(3) TO APPLY -- FOR PURPOSES OF
   23  THIS PARAGRAPH, RULES SIMILAR TO THE RULES OF SECTION  2055(E)(3)  SHALL
   24  APPLY.
   25    (5)  CONTRIBUTIONS  TO  DONOR  ADVISED  FUNDS.  A  DEDUCTION OTHERWISE
   26  ALLOWED UNDER SUBSECTION (A) FOR ANY CONTRIBUTION  TO  A  DONOR  ADVISED
   27  FUND (AS DEFINED IN SECTION 4966(D)(2)) SHALL ONLY BE ALLOWED IF-
   28  --(A)  THE  SPONSORING  ORGANIZATION  (AS DEFINED IN SECTION 4966(D)(1))
   29  WITH RESPECT TO SUCH DONOR ADVISED FUND IS NOT-
   30  --(I) DESCRIBED IN PARAGRAPH (3) OR (4) OF SUBSECTION (A), OR
   31  --(II) A  TYPE  III  SUPPORTING  ORGANIZATION  (AS  DEFINED  IN  SECTION
   32  4943(F)(5)(A))  WHICH IS NOT A FUNCTIONALLY INTEGRATED TYPE III SUPPORT-
   33  ING ORGANIZATION (AS DEFINED IN SECTION 4943(F)(5)(B)), AND
   34  --(B) THE TAXPAYER  OBTAINS  A  CONTEMPORANEOUS  WRITTEN  ACKNOWLEDGMENT
   35  (DETERMINED  UNDER  RULES  SIMILAR TO THE RULES OF SECTION 170(F)(8)(C))
   36  FROM THE SPONSORING ORGANIZATION (AS SO DEFINED) OF SUCH  DONOR  ADVISED
   37  FUND  THAT SUCH ORGANIZATION HAS EXCLUSIVE LEGAL CONTROL OVER THE ASSETS
   38  CONTRIBUTED.
   39    (D) SPECIAL RULE FOR IRREVOCABLE TRANSFERS OF EASEMENTS IN REAL  PROP-
   40  ERTY.  A  DEDUCTION  SHALL BE ALLOWED UNDER SUBSECTION (A) IN RESPECT OF
   41  ANY TRANSFER OF A  QUALIFIED  REAL  PROPERTY  INTEREST  (AS  DEFINED  IN
   42  SECTION  170(H)(2)(C))  WHICH  MEETS  THE REQUIREMENTS OF SECTION 170(H)
   43  (WITHOUT REGARD TO PARAGRAPH (4)(A) THEREOF).
   44    (E) SPECIAL RULES FOR FRACTIONAL GIFTS
   45    (1) DENIAL OF DEDUCTION IN CERTAIN CASES
   46    (A) IN GENERAL
   47  --NO DEDUCTION SHALL BE ALLOWED  FOR  A  CONTRIBUTION  OF  AN  UNDIVIDED
   48  PORTION  OF  A  TAXPAYER'S ENTIRE INTEREST IN TANGIBLE PERSONAL PROPERTY
   49  UNLESS ALL INTERESTS IN THE PROPERTY ARE HELD  IMMEDIATELY  BEFORE  SUCH
   50  CONTRIBUTION BY-
   51  --(I) THE TAXPAYER, OR
   52  --(II) THE TAXPAYER AND THE DONEE.
   53    (B) EXCEPTIONS
   54  --THE  SECRETARY  MAY, BY REGULATION, PROVIDE FOR EXCEPTIONS TO SUBPARA-
   55  GRAPH (A) IN CASES WHERE ALL PERSONS WHO HOLD AN INTEREST IN THE PROPER-
       S. 6359                            290                           A. 8559
    1  TY MAKE PROPORTIONAL CONTRIBUTIONS OF AN UNDIVIDED PORTION OF THE ENTIRE
    2  INTEREST HELD BY SUCH PERSONS.
    3    (2) RECAPTURE OF DEDUCTION IN CERTAIN CASES; ADDITION TO TAX
    4    (A)  IN  GENERAL.  THE SECRETARY SHALL PROVIDE FOR THE RECAPTURE OF AN
    5  AMOUNT EQUAL TO ANY DEDUCTION ALLOWED UNDER THIS SECTION (PLUS INTEREST)
    6  WITH RESPECT TO ANY CONTRIBUTION OF AN UNDIVIDED PORTION OF A TAXPAYER'S
    7  ENTIRE INTEREST IN TANGIBLE PERSONAL PROPERTY-
    8  --(I) IN ANY CASE IN WHICH THE DONOR DOES  NOT  CONTRIBUTE  ALL  OF  THE
    9  REMAINING  INTERESTS IN SUCH PROPERTY TO THE DONEE (OR, IF SUCH DONEE IS
   10  NO LONGER IN EXISTENCE, TO ANY PERSON DESCRIBED IN SECTION 170(C)) ON OR
   11  BEFORE THE EARLIER OF-
   12  --(I) THE DATE THAT IS 10 YEARS AFTER THE DATE OF THE INITIAL FRACTIONAL
   13  CONTRIBUTION, OR
   14  --(II) THE DATE OF THE DEATH OF THE DONOR, AND
   15  --(II) IN ANY CASE IN WHICH THE DONEE HAS NOT, DURING THE PERIOD  BEGIN-
   16  NING  ON  THE  DATE OF THE INITIAL FRACTIONAL CONTRIBUTION AND ENDING ON
   17  THE DATE DESCRIBED IN CLAUSE (I)-
   18  --(I) HAD SUBSTANTIAL PHYSICAL POSSESSION OF THE PROPERTY, AND
   19  --(II) USED THE PROPERTY IN A USE WHICH IS RELATED TO A PURPOSE OR FUNC-
   20  TION CONSTITUTING THE  BASIS  FOR  THE  ORGANIZATIONS'  EXEMPTION  UNDER
   21  SECTION 501.
   22    (B)  ADDITION TO TAX. THE TAX IMPOSED UNDER THIS CHAPTER FOR ANY TAXA-
   23  BLE YEAR FOR WHICH THERE IS A RECAPTURE UNDER SUBPARAGRAPH (A) SHALL  BE
   24  INCREASED BY 10 PERCENT OF THE AMOUNT SO RECAPTURED.
   25    (C)  INITIAL  FRACTIONAL CONTRIBUTION. FOR PURPOSES OF THIS PARAGRAPH,
   26  THE TERM "INITIAL FRACTIONAL CONTRIBUTION" MEANS, WITH  RESPECT  TO  ANY
   27  DONOR,  THE  FIRST  GIFT  OF  AN UNDIVIDED PORTION OF THE DONOR'S ENTIRE
   28  INTEREST IN ANY TANGIBLE PERSONAL PROPERTY  FOR  WHICH  A  DEDUCTION  IS
   29  ALLOWED UNDER SUBSECTION (A) OR (B).
   30    (F) CROSS REFERENCES
   31  --(1)  FOR  TREATMENT OF CERTAIN ORGANIZATIONS PROVIDING CHILD CARE, SEE
   32  SECTION 501(K).
   33  --(2) FOR EXEMPTION OF CERTAIN GIFTS TO OR FOR THE BENEFIT OF THE UNITED
   34  STATES AND FOR RULES OF CONSTRUCTION WITH RESPECT TO  CERTAIN  BEQUESTS,
   35  SEE SECTION 2055(F).
   36  --(3)  FOR TREATMENT OF GIFTS TO OR FOR THE USE OF INDIAN TRIBAL GOVERN-
   37  MENTS (OR THEIR SUBDIVISIONS), SEE SECTION 7871.
   38    S 2523. GIFT TO SPOUSE (A)  ALLOWANCE  OF  DEDUCTION.  WHERE  A  DONOR
   39  TRANSFERS  DURING THE CALENDAR YEAR BY GIFT AN INTEREST IN PROPERTY TO A
   40  DONEE WHO AT THE TIME OF THE GIFT IS THE DONOR'S SPOUSE, THERE SHALL  BE
   41  ALLOWED  AS A DEDUCTION IN COMPUTING TAXABLE GIFTS FOR THE CALENDAR YEAR
   42  AN AMOUNT WITH RESPECT TO SUCH INTEREST EQUAL TO ITS VALUE.
   43    (B) LIFE ESTATE OR OTHER TERMINABLE INTEREST. WHERE, ON THE  LAPSE  OF
   44  TIME, ON THE OCCURRENCE OF AN EVENT OR CONTINGENCY, OR ON THE FAILURE OF
   45  AN  EVENT  OR  CONTINGENCY  TO  OCCUR,  SUCH INTEREST TRANSFERRED TO THE
   46  SPOUSE WILL TERMINATE OR  FAIL,  NO  DEDUCTION  SHALL  BE  ALLOWED  WITH
   47  RESPECT TO SUCH INTEREST-
   48    (1)  IF  THE DONOR RETAINS IN HIMSELF, OR TRANSFERS OR HAS TRANSFERRED
   49  (FOR LESS THAN AN ADEQUATE AND FULL CONSIDERATION IN  MONEY  OR  MONEY'S
   50  WORTH) TO ANY PERSON OTHER THAN SUCH DONEE SPOUSE (OR THE ESTATE OF SUCH
   51  SPOUSE),  AN  INTEREST  IN  SUCH  PROPERTY,  AND  IF  BY  REASON OF SUCH
   52  RETENTION OR TRANSFER THE DONOR (OR HIS HEIRS OR ASSIGNS) OR SUCH PERSON
   53  (OR HIS HEIRS OR ASSIGNS) MAY POSSESS OR ENJOY ANY PART OF SUCH PROPERTY
   54  AFTER SUCH TERMINATION OR FAILURE OF THE  INTEREST  TRANSFERRED  TO  THE
   55  DONEE SPOUSE; OR
       S. 6359                            291                           A. 8559
    1    (2)  IF  THE  DONOR IMMEDIATELY AFTER THE TRANSFER TO THE DONEE SPOUSE
    2  HAS A POWER TO APPOINT AN INTEREST IN SUCH PROPERTY WHICH HE  CAN  EXER-
    3  CISE  (EITHER  ALONE  OR  IN CONJUNCTION WITH ANY PERSON) IN SUCH MANNER
    4  THAT THE APPOINTEE MAY POSSESS OR ENJOY ANY PART OF SUCH PROPERTY  AFTER
    5  SUCH  TERMINATION  OR  FAILURE  OF THE INTEREST TRANSFERRED TO THE DONEE
    6  SPOUSE. FOR PURPOSES OF THIS PARAGRAPH, THE DONOR SHALL BE CONSIDERED AS
    7  HAVING IMMEDIATELY AFTER THE TRANSFER TO THE DONEE SPOUSE SUCH POWER  TO
    8  APPOINT EVEN THOUGH SUCH POWER CANNOT BE EXERCISED UNTIL AFTER THE LAPSE
    9  OF TIME, UPON THE OCCURRENCE OF AN EVENT OR CONTINGENCY, OR ON THE FAIL-
   10  URE OF AN EVENT OR CONTINGENCY TO OCCUR.
   11    AN  EXERCISE  OR  RELEASE AT ANY TIME BY THE DONOR, EITHER ALONE OR IN
   12  CONJUNCTION WITH ANY PERSON, OF A POWER TO APPOINT AN INTEREST IN  PROP-
   13  ERTY, EVEN THOUGH NOT OTHERWISE A TRANSFER, SHALL, FOR PURPOSES OF PARA-
   14  GRAPH  (1),  BE  CONSIDERED  AS A TRANSFER BY HIM. EXCEPT AS PROVIDED IN
   15  SUBSECTION (E), WHERE AT THE TIME OF THE TRANSFER IT  IS  IMPOSSIBLE  TO
   16  ASCERTAIN  THE  PARTICULAR  PERSON  OR  PERSONS WHO MAY RECEIVE FROM THE
   17  DONOR AN INTEREST IN PROPERTY  SO  TRANSFERRED  BY  HIM,  SUCH  INTEREST
   18  SHALL,  FOR PURPOSES OF PARAGRAPH (1), BE CONSIDERED AS TRANSFERRED TO A
   19  PERSON OTHER THAN THE DONEE SPOUSE.
   20    (C) INTEREST IN UNIDENTIFIED ASSETS. WHERE THE ASSETS OUT OF WHICH, OR
   21  THE PROCEEDS OF WHICH, THE INTEREST TRANSFERRED TO THE DONEE SPOUSE  MAY
   22  BE  SATISFIED INCLUDE A PARTICULAR ASSET OR ASSETS WITH RESPECT TO WHICH
   23  NO DEDUCTION WOULD BE ALLOWED IF SUCH ASSET OR ASSETS  WERE  TRANSFERRED
   24  FROM  THE  DONOR  TO  SUCH SPOUSE, THEN THE VALUE OF THE INTEREST TRANS-
   25  FERRED TO SUCH SPOUSE SHALL, FOR PURPOSES OF SUBSECTION (A), BE  REDUCED
   26  BY THE AGGREGATE VALUE OF SUCH PARTICULAR ASSETS.
   27    (D)  JOINT  INTERESTS.  IF  THE  INTEREST  IS TRANSFERRED TO THE DONEE
   28  SPOUSE AS SOLE JOINT TENANT WITH THE DONOR OR AS TENANT BY THE ENTIRETY,
   29  THE INTEREST OF THE DONOR IN THE PROPERTY WHICH EXISTS SOLELY BY  REASON
   30  OF  THE POSSIBILITY THAT THE DONOR MAY SURVIVE THE DONEE SPOUSE, OR THAT
   31  THERE MAY OCCUR A SEVERANCE OF THE TENANCY, SHALL NOT BE CONSIDERED  FOR
   32  PURPOSES  OF  SUBSECTION  (B)  AS  AN  INTEREST RETAINED BY THE DONOR IN
   33  HIMSELF.
   34    (E) LIFE ESTATE WITH POWER OF APPOINTMENT IN DONEE SPOUSE.  WHERE  THE
   35  DONOR  TRANSFERS AN INTEREST IN PROPERTY, IF BY SUCH TRANSFER HIS SPOUSE
   36  IS ENTITLED FOR LIFE TO ALL OF THE INCOME FROM THE ENTIRE  INTEREST,  OR
   37  ALL  THE  INCOME FROM A SPECIFIC PORTION THEREOF, PAYABLE ANNUALLY OR AT
   38  MORE FREQUENT INTERVALS, WITH POWER IN THE DONEE SPOUSE TO  APPOINT  THE
   39  ENTIRE  INTEREST, OR SUCH SPECIFIC PORTION (EXERCISABLE IN FAVOR OF SUCH
   40  DONEE SPOUSE, OR OF THE ESTATE OF SUCH DONEE  SPOUSE,  OR  IN  FAVOR  OF
   41  EITHER, WHETHER OR NOT IN EACH CASE THE POWER IS EXERCISABLE IN FAVOR OF
   42  OTHERS),  AND  WITH  NO POWER IN ANY OTHER PERSON TO APPOINT ANY PART OF
   43  SUCH INTEREST, OR SUCH PORTION, TO  ANY  PERSON  OTHER  THAN  THE  DONEE
   44  SPOUSE-
   45    (1)  THE INTEREST, OR SUCH PORTION, SO TRANSFERRED SHALL, FOR PURPOSES
   46  OF SUBSECTION (A) BE CONSIDERED AS TRANSFERRED TO THE DONEE SPOUSE, AND
   47    (2) NO PART OF THE INTEREST, OR SUCH PORTION,  SO  TRANSFERRED  SHALL,
   48  FOR  PURPOSES  OF  SUBSECTION  (B)(1),  BE CONSIDERED AS RETAINED IN THE
   49  DONOR OR TRANSFERRED TO ANY PERSON OTHER THAN THE DONEE SPOUSE.
   50    THIS SUBSECTION SHALL APPLY ONLY IF, BY SUCH TRANSFER, SUCH  POWER  IN
   51  THE DONEE SPOUSE TO APPOINT THE INTEREST, OR SUCH PORTION, WHETHER EXER-
   52  CISABLE  BY WILL OR DURING LIFE, IS EXERCISABLE BY SUCH SPOUSE ALONE AND
   53  IN ALL EVENTS.   FOR PURPOSES OF THIS  SUBSECTION,  THE  TERM  "SPECIFIC
   54  PORTION"  ONLY INCLUDES A PORTION DETERMINED ON A FRACTIONAL OR PERCENT-
   55  AGE BASIS.
       S. 6359                            292                           A. 8559
    1    (F) ELECTION WITH RESPECT TO LIFE ESTATE  FOR  DONEE  SPOUSE.  (1)  IN
    2  GENERAL
    3    IN THE CASE OF QUALIFIED TERMINABLE INTEREST PROPERTY-
    4    (A)  FOR PURPOSES OF SUBSECTION (A), SUCH PROPERTY SHALL BE TREATED AS
    5  TRANSFERRED TO THE DONEE SPOUSE, AND
    6    (B) FOR PURPOSES OF SUBSECTION (B)(1), NO PART OF SUCH PROPERTY  SHALL
    7  BE  CONSIDERED  AS  RETAINED  IN  THE DONOR OR TRANSFERRED TO ANY PERSON
    8  OTHER THAN THE DONEE SPOUSE.
    9    (2) QUALIFIED TERMINABLE  INTEREST  PROPERTY.  FOR  PURPOSES  OF  THIS
   10  SUBSECTION,  THE TERM "QUALIFIED TERMINABLE INTEREST PROPERTY" MEANS ANY
   11  PROPERTY-
   12    (A) WHICH IS TRANSFERRED BY THE DONOR SPOUSE,
   13    (B) IN WHICH THE DONEE SPOUSE HAS A  QUALIFYING  INCOME  INTEREST  FOR
   14  LIFE, AND
   15    (C) TO WHICH AN ELECTION UNDER THIS SUBSECTION APPLIES.
   16    (3)  CERTAIN  RULES  MADE APPLICABLE. FOR PURPOSES OF THIS SUBSECTION,
   17  RULES SIMILAR TO THE RULES OF CLAUSES (II), (III), AND (IV)  OF  SECTION
   18  2056(B)(7)(B)  SHALL  APPLY  AND  THE RULES OF SECTION 2056(B)(10) SHALL
   19  APPLY.
   20    (4) ELECTION. (A) TIME AND MANNER. AN ELECTION UNDER  THIS  SUBSECTION
   21  WITH  RESPECT  TO  ANY  PROPERTY  SHALL  BE  MADE  ON OR BEFORE THE DATE
   22  PRESCRIBED BY SECTION 6075(B) FOR FILING A GIFT TAX RETURN WITH  RESPECT
   23  TO THE TRANSFER (DETERMINED WITHOUT REGARD TO SECTION 6019(2)) AND SHALL
   24  BE MADE IN SUCH MANNER AS THE SECRETARY SHALL BY REGULATIONS PRESCRIBE.
   25    (B)  ELECTION  IRREVOCABLE.  AN  ELECTION  UNDER THIS SUBSECTION, ONCE
   26  MADE, SHALL BE IRREVOCABLE.
   27    (5) TREATMENT OF INTEREST RETAINED BY DONOR SPOUSE. (A) IN GENERAL. IN
   28  THE CASE OF ANY QUALIFIED TERMINABLE INTEREST PROPERTY-
   29    (I) SUCH PROPERTY SHALL NOT BE INCLUDIBLE IN THE GROSS ESTATE  OF  THE
   30  DONOR SPOUSE, AND
   31    (II)  ANY  SUBSEQUENT  TRANSFER  BY THE DONOR SPOUSE OF AN INTEREST IN
   32  SUCH PROPERTY SHALL NOT BE TREATED AS A TRANSFER FOR  PURPOSES  OF  THIS
   33  CHAPTER.
   34    (B)  SUBPARAGRAPH  (A)  NOT  TO  APPLY AFTER TRANSFER BY DONEE SPOUSE.
   35  SUBPARAGRAPH (A) SHALL NOT APPLY WITH RESPECT TO ANY PROPERTY AFTER  THE
   36  DONEE  SPOUSE  IS  TREATED  AS  HAVING  TRANSFERRED  SUCH PROPERTY UNDER
   37  SECTION 2519, OR SUCH PROPERTY IS INCLUDIBLE IN THE DONEE SPOUSE'S GROSS
   38  ESTATE UNDER SECTION 2044.
   39    (6) TREATMENT OF JOINT AND SURVIVOR ANNUITIES. IN THE CASE OF A  JOINT
   40  AND  SURVIVOR  ANNUITY WHERE ONLY THE DONOR SPOUSE AND DONEE SPOUSE HAVE
   41  THE RIGHT TO RECEIVE PAYMENTS BEFORE THE DEATH OF  THE  LAST  SPOUSE  TO
   42  DIE-
   43  --(A)  THE  DONEE  SPOUSE'S  INTEREST  SHALL  BE TREATED AS A QUALIFYING
   44  INCOME INTEREST FOR LIFE,
   45  --(B) THE DONOR SPOUSE SHALL BE TREATED AS HAVING MADE AN ELECTION UNDER
   46  THIS SUBSECTION WITH RESPECT TO SUCH ANNUITY  UNLESS  THE  DONOR  SPOUSE
   47  OTHERWISE ELECTS ON OR BEFORE THE DATE SPECIFIED IN PARAGRAPH (4)(A),
   48  --(C)  PARAGRAPH  (5)  AND  SECTION  2519  SHALL  NOT APPLY TO THE DONOR
   49  SPOUSE'S INTEREST IN THE ANNUITY, AND
   50  --(D) IF THE DONEE SPOUSE DIES BEFORE THE DONOR SPOUSE, NO AMOUNT  SHALL
   51  BE INCLUDIBLE IN THE GROSS ESTATE OF THE DONEE SPOUSE UNDER SECTION 2044
   52  WITH RESPECT TO SUCH ANNUITY.
   53    AN ELECTION UNDER SUBPARAGRAPH (B), ONCE MADE, SHALL BE IRREVOCABLE.
   54    (G)  SPECIAL RULE FOR CHARITABLE REMAINDER TRUSTS. (1) IN GENERAL. IF,
   55  AFTER THE TRANSFER, THE DONEE SPOUSE IS THE ONLY NONCHARITABLE BENEFICI-
   56  ARY (OTHER THAN THE DONOR) OF A QUALIFIED  CHARITABLE  REMAINDER  TRUST,
       S. 6359                            293                           A. 8559
    1  SUBSECTION  (B)  SHALL  NOT APPLY TO THE INTEREST IN SUCH TRUST WHICH IS
    2  TRANSFERRED TO THE DONEE SPOUSE.
    3    (2)  DEFINITIONS. FOR PURPOSES OF PARAGRAPH (1), THE TERM "NONCHARITA-
    4  BLE BENEFICIARY" AND "QUALIFIED CHARITABLE  REMAINDER  TRUST"  HAVE  THE
    5  MEANINGS GIVEN TO SUCH TERMS BY SECTION 2056(B)(8)(B).
    6    (H)  DENIAL  OF DOUBLE DEDUCTION. NOTHING IN THIS SECTION OR ANY OTHER
    7  PROVISION OF THIS CHAPTER SHALL ALLOW THE VALUE OF ANY INTEREST IN PROP-
    8  ERTY TO BE DEDUCTED UNDER THIS CHAPTER MORE THAN ONCE  WITH  RESPECT  TO
    9  THE SAME DONOR.
   10    S 2524. EXTENT OF DEDUCTIONS. THE DEDUCTIONS PROVIDED IN SECTIONS 2522
   11  AND  2523  SHALL  BE  ALLOWED  ONLY TO THE EXTENT THAT THE GIFTS THEREIN
   12  SPECIFIED ARE INCLUDED  IN  THE  AMOUNT  OF  GIFTS  AGAINST  WHICH  SUCH
   13  DEDUCTIONS ARE APPLIED.
   14    S 2701. SPECIAL VALUATION RULES IN CASE OF TRANSFERS OF CERTAIN INTER-
   15  ESTS IN CORPORATIONS OR PARTNERSHIPS. (A) VALUATION RULES. (1) IN GENER-
   16  AL.   SOLELY FOR PURPOSES OF DETERMINING WHETHER A TRANSFER OF AN INTER-
   17  EST IN A CORPORATION OR PARTNERSHIP TO (OR FOR THE BENEFIT OF) A  MEMBER
   18  OF  THE  TRANSFEROR'S FAMILY IS A GIFT (AND THE VALUE OF SUCH TRANSFER),
   19  THE VALUE OF ANY RIGHT-
   20  --(A) WHICH IS DESCRIBED  IN  SUBPARAGRAPH  (A)  OR  (B)  OF  SUBSECTION
   21  (B)(1), AND
   22  --(B)  WHICH IS WITH RESPECT TO ANY APPLICABLE RETAINED INTEREST THAT IS
   23  HELD BY THE TRANSFEROR OR AN APPLICABLE FAMILY MEMBER IMMEDIATELY  AFTER
   24  THE TRANSFER,
   25    --SHALL  BE  DETERMINED  UNDER PARAGRAPH (3). THIS PARAGRAPH SHALL NOT
   26  APPLY TO THE TRANSFER OF ANY INTEREST FOR WHICH  MARKET  QUOTATIONS  ARE
   27  READILY AVAILABLE (AS OF THE DATE OF TRANSFER) ON AN ESTABLISHED SECURI-
   28  TIES MARKET.
   29    (2)  EXCEPTIONS FOR MARKETABLE RETAINED INTERESTS, ETC.  PARAGRAPH (1)
   30  SHALL NOT APPLY TO ANY RIGHT WITH  RESPECT  TO  AN  APPLICABLE  RETAINED
   31  INTEREST IF-
   32  --(A)  MARKET  QUOTATIONS  ARE  READILY AVAILABLE (AS OF THE DATE OF THE
   33  TRANSFER) FOR SUCH INTEREST ON AN ESTABLISHED SECURITIES MARKET,
   34  --(B) SUCH INTEREST IS OF THE SAME CLASS AS THE TRANSFERRED INTEREST, OR
   35  --(C) SUCH INTEREST IS PROPORTIONALLY THE SAME AS THE TRANSFERRED INTER-
   36  EST, WITHOUT REGARD TO NONLAPSING DIFFERENCES IN VOTING POWER (OR, FOR A
   37  PARTNERSHIP, NONLAPSING DIFFERENCES WITH RESPECT TO MANAGEMENT AND LIMI-
   38  TATIONS ON LIABILITY).
   39  --SUBPARAGRAPH (C) SHALL NOT APPLY TO ANY INTEREST IN A  PARTNERSHIP  IF
   40  THE TRANSFEROR OR AN APPLICABLE FAMILY MEMBER HAS THE RIGHT TO ALTER THE
   41  LIABILITY  OF  THE  TRANSFEREE  OF  THE  TRANSFERRED PROPERTY. EXCEPT AS
   42  PROVIDED BY THE SECRETARY, ANY DIFFERENCE DESCRIBED IN SUBPARAGRAPH  (C)
   43  WHICH LAPSES BY REASON OF ANY FEDERAL OR STATE LAW SHALL BE TREATED AS A
   44  NONLAPSING DIFFERENCE FOR PURPOSES OF SUCH SUBPARAGRAPH.
   45    (3)  VALUATION OF RIGHTS TO WHICH PARAGRAPH (1) APPLIES. (A) IN GENER-
   46  AL.  THE VALUE OF ANY RIGHT DESCRIBED IN PARAGRAPH  (1),  OTHER  THAN  A
   47  DISTRIBUTION  RIGHT  WHICH  CONSISTS  OF  A RIGHT TO RECEIVE A QUALIFIED
   48  PAYMENT, SHALL BE TREATED AS BEING ZERO.
   49    (B) VALUATION OF CERTAIN QUALIFIED PAYMENTS. IF-
   50  --(I) ANY APPLICABLE RETAINED  INTEREST  CONFERS  A  DISTRIBUTION  RIGHT
   51  WHICH CONSISTS OF THE RIGHT TO A QUALIFIED PAYMENT, AND
   52  --(II)  THERE ARE 1 OR MORE LIQUIDATION, PUT, CALL, OR CONVERSION RIGHTS
   53  WITH RESPECT TO SUCH INTEREST, THE VALUE OF ALL  SUCH  RIGHTS  SHALL  BE
   54  DETERMINED  AS  IF EACH LIQUIDATION, PUT, CALL, OR CONVERSION RIGHT WERE
   55  EXERCISED IN THE MANNER RESULTING IN THE LOWEST VALUE  BEING  DETERMINED
   56  FOR ALL SUCH RIGHTS.
       S. 6359                            294                           A. 8559
    1    (C)  VALUATION  OF  QUALIFIED  PAYMENTS  WHERE  NO  LIQUIDATION,  ETC.
    2  RIGHTS. IN  THE  CASE  OF  AN  APPLICABLE  RETAINED  INTEREST  WHICH  IS
    3  DESCRIBED IN SUBPARAGRAPH (B)(I) BUT NOT SUBPARAGRAPH (B)(II), THE VALUE
    4  OF  THE  DISTRIBUTION  RIGHT  SHALL BE DETERMINED WITHOUT REGARD TO THIS
    5  SECTION.
    6    (4) MINIMUM VALUATION OF JUNIOR EQUITY. (A) IN GENERAL. IN THE CASE OF
    7  A  TRANSFER  DESCRIBED IN PARAGRAPH (1) OF A JUNIOR EQUITY INTEREST IN A
    8  CORPORATION OR PARTNERSHIP, SUCH INTEREST SHALL IN NO EVENT BE VALUED AT
    9  AN AMOUNT LESS THAN THE VALUE WHICH WOULD BE  DETERMINED  IF  THE  TOTAL
   10  VALUE  OF ALL OF THE JUNIOR EQUITY INTERESTS IN THE ENTITY WERE EQUAL TO
   11  10 PERCENT OF THE SUM OF-
   12  --(I) THE TOTAL VALUE OF ALL OF THE EQUITY  INTERESTS  IN  SUCH  ENTITY,
   13  PLUS
   14  --(II) THE TOTAL AMOUNT OF INDEBTEDNESS OF SUCH ENTITY TO THE TRANSFEROR
   15  (OR AN APPLICABLE FAMILY MEMBER).
   16    (B) DEFINITIONS. FOR PURPOSES OF THIS PARAGRAPH-
   17    (I)  JUNIOR  EQUITY  INTEREST. THE TERM "JUNIOR EQUITY INTEREST" MEANS
   18  COMMON STOCK OR, IN THE CASE OF A PARTNERSHIP, ANY PARTNERSHIP  INTEREST
   19  UNDER  WHICH  THE  RIGHTS  AS  TO  INCOME AND CAPITAL (OR, TO THE EXTENT
   20  PROVIDED IN REGULATIONS, THE RIGHTS AS TO EITHER INCOME OR CAPITAL)  ARE
   21  JUNIOR TO THE RIGHTS OF ALL OTHER CLASSES OF EQUITY INTERESTS.
   22    (II)  EQUITY  INTEREST.  THE TERM "EQUITY INTEREST" MEANS STOCK OR ANY
   23  INTEREST AS A PARTNER, AS THE CASE MAY BE.
   24    (B) APPLICABLE RETAINED INTERESTS. FOR PURPOSES OF THIS SECTION-
   25    (1) IN GENERAL. THE TERM  "APPLICABLE  RETAINED  INTEREST"  MEANS  ANY
   26  INTEREST IN AN ENTITY WITH RESPECT TO WHICH THERE IS-
   27  --(A) A DISTRIBUTION RIGHT, BUT ONLY IF, IMMEDIATELY BEFORE THE TRANSFER
   28  DESCRIBED  IN  SUBSECTION  (A)(1),  THE TRANSFEROR AND APPLICABLE FAMILY
   29  MEMBERS HOLD (AFTER APPLICATION OF SUBSECTION  (E)(3))  CONTROL  OF  THE
   30  ENTITY, OR
   31  --(B) A LIQUIDATION, PUT, CALL, OR CONVERSION RIGHT.
   32    (2) CONTROL. FOR PURPOSES OF PARAGRAPH (1)-
   33    (A)  CORPORATIONS.  IN  THE  CASE OF A CORPORATION, THE TERM "CONTROL"
   34  MEANS THE HOLDING OF AT LEAST 50 PERCENT (BY VOTE OR VALUE) OF THE STOCK
   35  OF THE CORPORATION.
   36    (B) PARTNERSHIPS. IN THE CASE OF A  PARTNERSHIP,  THE  TERM  "CONTROL"
   37  MEANS-
   38  --(I)  THE  HOLDING  OF  AT  LEAST  50 PERCENT OF THE CAPITAL OR PROFITS
   39  INTERESTS IN THE PARTNERSHIP, OR
   40  --(II) IN THE CASE OF A LIMITED PARTNERSHIP, THE HOLDING OF ANY INTEREST
   41  AS A GENERAL PARTNER.
   42    (C) APPLICABLE FAMILY MEMBER. FOR PURPOSES  OF  THIS  SUBSECTION,  THE
   43  TERM  "APPLICABLE  FAMILY  MEMBER" INCLUDES ANY LINEAL DESCENDANT OF ANY
   44  PARENT OF THE TRANSFEROR OR THE TRANSFEROR'S SPOUSE.
   45    (C) DISTRIBUTION AND OTHER RIGHTS; QUALIFIED PAYMENTS. FOR PURPOSES OF
   46  THIS SECTION-
   47    (1) DISTRIBUTION RIGHT. (A) IN GENERAL. THE TERM "DISTRIBUTION  RIGHT"
   48  MEANS-
   49  --(I)  A  RIGHT  TO DISTRIBUTIONS FROM A CORPORATION WITH RESPECT TO ITS
   50  STOCK, AND
   51  --(II) A RIGHT TO DISTRIBUTIONS FROM A PARTNERSHIP  WITH  RESPECT  TO  A
   52  PARTNER'S INTEREST IN THE PARTNERSHIP.
   53    (B) EXCEPTIONS. THE TERM "DISTRIBUTION RIGHT" DOES NOT INCLUDE-
   54  --(I)  A  RIGHT  TO  DISTRIBUTIONS WITH RESPECT TO ANY INTEREST WHICH IS
   55  JUNIOR TO THE RIGHTS OF THE TRANSFERRED INTEREST,
   56  --(II) ANY LIQUIDATION, PUT, CALL, OR CONVERSION RIGHT, OR
       S. 6359                            295                           A. 8559
    1  --(III) ANY RIGHT TO RECEIVE ANY GUARANTEED PAYMENT DESCRIBED IN SECTION
    2  707(C) OF A FIXED AMOUNT.
    3    (2)  LIQUIDATION,  ETC. RIGHTS. (A) IN GENERAL. THE TERM "LIQUIDATION,
    4  PUT, CALL, OR CONVERSION RIGHT" MEANS ANY  LIQUIDATION,  PUT,  CALL,  OR
    5  CONVERSION  RIGHT,  OR ANY SIMILAR RIGHT, THE EXERCISE OR NONEXERCISE OF
    6  WHICH AFFECTS THE VALUE OF THE TRANSFERRED INTEREST.
    7    (B) EXCEPTION FOR FIXED RIGHTS. (I) IN GENERAL. THE TERM "LIQUIDATION,
    8  PUT, CALL, OR CONVERSION RIGHT" DOES NOT INCLUDE ANY RIGHT WHICH MUST BE
    9  EXERCISED AT A SPECIFIC TIME AND AT A SPECIFIC AMOUNT.
   10    (II) TREATMENT OF CERTAIN RIGHTS. IF A RIGHT IS ASSUMED  TO  BE  EXER-
   11  CISED  IN  A  PARTICULAR  MANNER  UNDER SUBSECTION (A)(3)(B), SUCH RIGHT
   12  SHALL BE TREATED AS SO EXERCISED FOR PURPOSES OF CLAUSE (I).
   13    (C) EXCEPTION FOR CERTAIN RIGHTS TO CONVERT.  THE  TERM  "LIQUIDATION,
   14  PUT, CALL, OR CONVERSION RIGHT" DOES NOT INCLUDE ANY RIGHT WHICH-
   15  --(I)  IS A RIGHT TO CONVERT INTO A FIXED NUMBER (OR A FIXED PERCENTAGE)
   16  OF SHARES OF THE SAME CLASS OF STOCK IN A CORPORATION AS THE TRANSFERRED
   17  STOCK IN SUCH CORPORATION UNDER SUBSECTION (A)(1) (OR STOCK WHICH  WOULD
   18  BE OF THE SAME CLASS BUT FOR NONLAPSING DIFFERENCES IN VOTING POWER),
   19  --(II) IS NONLAPSING,
   20  --(III)  IS  SUBJECT  TO  PROPORTIONATE ADJUSTMENTS FOR SPLITS, COMBINA-
   21  TIONS, RECLASSIFICATIONS, AND SIMILAR CHANGES IN THE CAPITAL STOCK, AND
   22  --(IV) IS SUBJECT  TO  ADJUSTMENTS  SIMILAR  TO  THE  ADJUSTMENTS  UNDER
   23  SUBSECTION (D) FOR ACCUMULATED BUT UNPAID DISTRIBUTIONS.
   24  --A  RULE  SIMILAR TO THE RULE OF THE PRECEDING SENTENCE SHALL APPLY FOR
   25  PARTNERSHIPS.
   26    (3) QUALIFIED PAYMENT. (A) IN GENERAL. EXCEPT AS OTHERWISE PROVIDED IN
   27  THIS PARAGRAPH, THE TERM "QUALIFIED PAYMENT" MEANS ANY DIVIDEND  PAYABLE
   28  ON  A PERIODIC BASIS UNDER ANY CUMULATIVE PREFERRED STOCK (OR A COMPARA-
   29  BLE PAYMENT UNDER ANY PARTNERSHIP INTEREST)  TO  THE  EXTENT  THAT  SUCH
   30  DIVIDEND (OR COMPARABLE PAYMENT) IS DETERMINED AT A FIXED RATE.
   31    (B)  TREATMENT OF VARIABLE RATE PAYMENTS. FOR PURPOSES OF SUBPARAGRAPH
   32  (A), A PAYMENT SHALL BE TREATED AS FIXED AS TO RATE IF SUCH  PAYMENT  IS
   33  DETERMINED  AT  A  RATE  WHICH BEARS A FIXED RELATIONSHIP TO A SPECIFIED
   34  MARKET INTEREST RATE.
   35    (C) ELECTIONS. (I) IN GENERAL. PAYMENTS UNDER ANY INTEREST HELD  BY  A
   36  TRANSFEROR  WHICH  (WITHOUT  REGARD  TO THIS SUBPARAGRAPH) ARE QUALIFIED
   37  PAYMENTS SHALL BE TREATED AS QUALIFIED PAYMENTS  UNLESS  THE  TRANSFEROR
   38  ELECTS  NOT  TO  TREAT  SUCH  PAYMENTS  AS  QUALIFIED PAYMENTS. PAYMENTS
   39  DESCRIBED IN THE PRECEDING SENTENCE WHICH  ARE  HELD  BY  AN  APPLICABLE
   40  FAMILY MEMBER SHALL BE TREATED AS QUALIFIED PAYMENTS ONLY IF SUCH MEMBER
   41  ELECTS TO TREAT SUCH PAYMENTS AS QUALIFIED PAYMENTS.
   42    (II)  ELECTION  TO  HAVE  INTEREST  TREATED  AS  QUALIFIED  PAYMENT. A
   43  TRANSFEROR OR APPLICABLE FAMILY MEMBER HOLDING  ANY  DISTRIBUTION  RIGHT
   44  WHICH  (WITHOUT  REGARD TO THIS SUBPARAGRAPH) IS NOT A QUALIFIED PAYMENT
   45  MAY ELECT TO TREAT SUCH RIGHT AS A QUALIFIED PAYMENT, TO BE PAID IN  THE
   46  AMOUNTS  AND  AT  THE  TIMES  SPECIFIED  IN SUCH ELECTION. THE PRECEDING
   47  SENTENCE SHALL APPLY ONLY TO THE EXTENT THAT THE AMOUNTS  AND  TIMES  SO
   48  SPECIFIED  ARE  NOT  INCONSISTENT  WITH  THE UNDERLYING LEGAL INSTRUMENT
   49  GIVING RISE TO SUCH RIGHT.
   50    (III) ELECTIONS IRREVOCABLE. ANY ELECTION UNDER THIS SUBPARAGRAPH WITH
   51  RESPECT TO AN INTEREST SHALL, ONCE MADE, BE IRREVOCABLE.
   52    (D) TRANSFER TAX TREATMENT OF CUMULATIVE BUT UNPAID DISTRIBUTIONS. (1)
   53  IN GENERAL. IF A TAXABLE EVENT OCCURS WITH RESPECT TO  ANY  DISTRIBUTION
   54  RIGHT  TO WHICH SUBSECTION (A)(3)(B) OR (C) APPLIED, THE FOLLOWING SHALL
   55  BE INCREASED BY THE AMOUNT DETERMINED UNDER PARAGRAPH (2):
       S. 6359                            296                           A. 8559
    1  --(A) THE TAXABLE ESTATE OF THE TRANSFEROR IN  THE  CASE  OF  A  TAXABLE
    2  EVENT DESCRIBED IN PARAGRAPH (3)(A)(I).
    3  --(B) THE TAXABLE GIFTS OF THE TRANSFEROR FOR THE CALENDAR YEAR IN WHICH
    4  THE  TAXABLE  EVENT  OCCURS  IN THE CASE OF A TAXABLE EVENT DESCRIBED IN
    5  PARAGRAPH (3)(A)(II) OR (III).
    6    (2) AMOUNT OF INCREASE. (A) IN GENERAL. THE  AMOUNT  OF  THE  INCREASE
    7  DETERMINED UNDER THIS PARAGRAPH SHALL BE THE EXCESS (IF ANY) OF-
    8  --(I)  THE  VALUE  OF  THE  QUALIFIED PAYMENTS PAYABLE DURING THE PERIOD
    9  BEGINNING ON THE DATE OF THE TRANSFER UNDER SUBSECTION (A)(1) AND ENDING
   10  ON THE DATE OF THE TAXABLE EVENT DETERMINED AS IF-
   11  --(I) ALL SUCH PAYMENTS WERE PAID ON THE DATE PAYMENT WAS DUE, AND
   12  --(II) ALL SUCH PAYMENTS WERE REINVESTED BY THE  TRANSFEROR  AS  OF  THE
   13  DATE  OF PAYMENT AT A YIELD EQUAL TO THE DISCOUNT RATE USED IN DETERMIN-
   14  ING  THE  VALUE  OF  THE  APPLICABLE  RETAINED  INTEREST  DESCRIBED   IN
   15  SUBSECTION (A)(1), OVER
   16    (II) THE VALUE OF SUCH PAYMENTS PAID DURING SUCH PERIOD COMPUTED UNDER
   17  CLAUSE  (I)  ON  THE  BASIS OF THE TIME WHEN SUCH PAYMENTS WERE ACTUALLY
   18  PAID.
   19    (B) LIMITATION ON AMOUNT OF INCREASE. (I) IN GENERAL.  THE  AMOUNT  OF
   20  THE  INCREASE  UNDER  SUBPARAGRAPH  (A)  SHALL NOT EXCEED THE APPLICABLE
   21  PERCENTAGE OF THE EXCESS (IF ANY) OF-
   22  --(I) THE VALUE (DETERMINED AS OF THE DATE OF THE TAXABLE EVENT) OF  ALL
   23  EQUITY  INTERESTS  IN  THE  ENTITY  WHICH  ARE  JUNIOR TO THE APPLICABLE
   24  RETAINED INTEREST, OVER
   25  --(II) THE VALUE OF SUCH INTERESTS (DETERMINED AS OF  THE  DATE  OF  THE
   26  TRANSFER TO WHICH SUBSECTION (A)(1) APPLIED).
   27    (II) APPLICABLE PERCENTAGE. FOR PURPOSES OF CLAUSE (I), THE APPLICABLE
   28  PERCENTAGE IS THE PERCENTAGE DETERMINED BY DIVIDING-
   29  --(I)  THE  NUMBER  OF SHARES IN THE CORPORATION HELD (AS OF THE DATE OF
   30  THE TAXABLE EVENT) BY  THE  TRANSFEROR  WHICH  ARE  APPLICABLE  RETAINED
   31  INTERESTS OF THE SAME CLASS, BY
   32  --(II)  THE TOTAL NUMBER OF SHARES IN SUCH CORPORATION (AS OF SUCH DATE)
   33  WHICH ARE OF THE SAME CLASS AS THE CLASS DESCRIBED IN SUBCLAUSE (I).
   34  --A SIMILAR PERCENTAGE SHALL BE DETERMINED IN THE CASE OF INTERESTS IN A
   35  PARTNERSHIP.
   36    (III) DEFINITION. FOR PURPOSES OF THIS SUBPARAGRAPH, THE TERM  "EQUITY
   37  INTEREST" HAS THE MEANING GIVEN SUCH TERM BY SUBSECTION (A)(4)(B).
   38    (C) GRACE PERIOD. FOR PURPOSES OF SUBPARAGRAPH (A), ANY PAYMENT OF ANY
   39  DISTRIBUTION DURING THE 4-YEAR PERIOD BEGINNING ON ITS DUE DATE SHALL BE
   40  TREATED AS HAVING BEEN MADE ON SUCH DUE DATE.
   41    (3) TAXABLE EVENTS. FOR PURPOSES OF THIS SUBSECTION-
   42    (A) IN GENERAL. THE TERM "TAXABLE EVENT" MEANS ANY OF THE FOLLOWING:
   43  --(I)  THE  DEATH  OF THE TRANSFEROR IF THE APPLICABLE RETAINED INTEREST
   44  CONFERRING THE DISTRIBUTION RIGHT IS INCLUDIBLE IN  THE  ESTATE  OF  THE
   45  TRANSFEROR.
   46  --(II) THE TRANSFER OF SUCH APPLICABLE RETAINED INTEREST.
   47  --(III)  AT  THE  ELECTION OF THE TAXPAYER, THE PAYMENT OF ANY QUALIFIED
   48  PAYMENT AFTER THE PERIOD DESCRIBED IN PARAGRAPH (2)(C),  BUT  ONLY  WITH
   49  RESPECT TO SUCH PAYMENT.
   50    (B) EXCEPTION WHERE SPOUSE IS TRANSFEREE. (I) DEATHTIME TRANSFERS
   51  --SUBPARAGRAPH  (A)(I) SHALL NOT APPLY TO ANY INTEREST INCLUDIBLE IN THE
   52  GROSS ESTATE OF THE TRANSFEROR IF  A  DEDUCTION  WITH  RESPECT  TO  SUCH
   53  INTEREST IS ALLOWABLE UNDER SECTION 2056 OR 2106(A)(3).
   54    (II)  LIFETIME  TRANSFERS.  A TRANSFER TO THE SPOUSE OF THE TRANSFEROR
   55  SHALL NOT BE TREATED AS A TAXABLE EVENT UNDER  SUBPARAGRAPH  (A)(II)  IF
   56  SUCH TRANSFER DOES NOT RESULT IN A TAXABLE GIFT BY REASON OF-
       S. 6359                            297                           A. 8559
    1  --(I)  ANY  DEDUCTION ALLOWED UNDER SECTION 2523, OR THE EXCLUSION UNDER
    2  SECTION 2503(B), OR
    3  --(II) CONSIDERATION FOR THE TRANSFER PROVIDED BY THE SPOUSE.
    4    (III)  SPOUSE  SUCCEEDS TO TREATMENT OF TRANSFEROR. IF AN EVENT IS NOT
    5  TREATED AS A TAXABLE EVENT BY REASON OF THIS SUBPARAGRAPH, THE TRANSFER-
    6  EE SPOUSE OR SURVIVING SPOUSE (AS THE CASE MAY BE) SHALL BE  TREATED  IN
    7  THE  SAME  MANNER  AS  THE  TRANSFEROR  IN APPLYING THIS SUBSECTION WITH
    8  RESPECT TO THE INTEREST INVOLVED.
    9    (4) SPECIAL RULES FOR APPLICABLE FAMILY  MEMBERS.  (A)  FAMILY  MEMBER
   10  TREATED  IN  SAME MANNER AS TRANSFEROR. FOR PURPOSES OF THIS SUBSECTION,
   11  AN APPLICABLE FAMILY MEMBER SHALL BE TREATED IN THE SAME MANNER  AS  THE
   12  TRANSFEROR WITH RESPECT TO ANY DISTRIBUTION RIGHT RETAINED BY SUCH FAMI-
   13  LY MEMBER TO WHICH SUBSECTION (A)(3)(B) OR (C) APPLIED.
   14    (B)  TRANSFER  TO  APPLICABLE  FAMILY MEMBER. IN THE CASE OF A TAXABLE
   15  EVENT DESCRIBED IN PARAGRAPH (3)(A)(II) INVOLVING  THE  TRANSFER  OF  AN
   16  APPLICABLE  RETAINED INTEREST TO AN APPLICABLE FAMILY MEMBER (OTHER THAN
   17  THE SPOUSE OF THE TRANSFEROR), THE APPLICABLE  FAMILY  MEMBER  SHALL  BE
   18  TREATED IN THE SAME MANNER AS THE TRANSFEROR IN APPLYING THIS SUBSECTION
   19  TO  DISTRIBUTIONS  ACCUMULATING WITH RESPECT TO SUCH INTEREST AFTER SUCH
   20  TAXABLE EVENT.
   21    (C) TRANSFER TO TRANSFERORS. IN THE CASE OF A TAXABLE EVENT  DESCRIBED
   22  IN  PARAGRAPH  (3)(A)(II) INVOLVING A TRANSFER OF AN APPLICABLE RETAINED
   23  INTEREST  FROM  AN  APPLICABLE  FAMILY  MEMBER  TO  A  TRANSFEROR,  THIS
   24  SUBSECTION  SHALL  CONTINUE TO APPLY TO THE TRANSFEROR DURING ANY PERIOD
   25  THE TRANSFEROR HOLDS SUCH INTEREST.
   26    (5) TRANSFER TO INCLUDE TERMINATION. FOR PURPOSES OF THIS  SUBSECTION,
   27  ANY TERMINATION OF AN INTEREST SHALL BE TREATED AS A TRANSFER.
   28    (E) OTHER DEFINITIONS AND RULES. FOR PURPOSES OF THIS SECTION-
   29    (1)  MEMBER OF THE FAMILY. THE TERM "MEMBER OF THE FAMILY" MEANS, WITH
   30  RESPECT TO ANY TRANSFEROR-
   31  --(A) THE TRANSFEROR'S SPOUSE,
   32  --(B) A LINEAL DESCENDANT OF THE TRANSFEROR OR THE TRANSFEROR'S  SPOUSE,
   33  AND
   34  --(C) THE SPOUSE OF ANY SUCH DESCENDANT.
   35    (2)  APPLICABLE  FAMILY  MEMBER.  THE  TERM "APPLICABLE FAMILY MEMBER"
   36  MEANS, WITH RESPECT TO ANY TRANSFEROR-
   37  --(A) THE TRANSFEROR'S SPOUSE,
   38  --(B) AN ANCESTOR OF THE TRANSFEROR OR THE TRANSFEROR'S SPOUSE, AND
   39  --(C) THE SPOUSE OF ANY SUCH ANCESTOR.
   40    (3) ATTRIBUTION OF INDIRECT  HOLDINGS  AND  TRANSFERS.  AN  INDIVIDUAL
   41  SHALL  BE TREATED AS HOLDING ANY INTEREST TO THE EXTENT SUCH INTEREST IS
   42  HELD INDIRECTLY BY SUCH INDIVIDUAL THROUGH A  CORPORATION,  PARTNERSHIP,
   43  TRUST,  OR  OTHER  ENTITY.  IF  ANY INDIVIDUAL IS TREATED AS HOLDING ANY
   44  INTEREST BY REASON OF THE PRECEDING SENTENCE, ANY TRANSFER WHICH RESULTS
   45  IN SUCH INTEREST BEING TREATED AS NO  LONGER  HELD  BY  SUCH  INDIVIDUAL
   46  SHALL BE TREATED AS A TRANSFER OF SUCH INTEREST.
   47    (4)  EFFECT  OF  ADOPTION.  A  RELATIONSHIP BY LEGAL ADOPTION SHALL BE
   48  TREATED AS A RELATIONSHIP BY BLOOD.
   49    (5) CERTAIN CHANGES TREATED AS TRANSFERS. EXCEPT AS PROVIDED IN  REGU-
   50  LATIONS, A CONTRIBUTION TO CAPITAL OR A REDEMPTION, RECAPITALIZATION, OR
   51  OTHER  CHANGE  IN  THE CAPITAL STRUCTURE OF A CORPORATION OR PARTNERSHIP
   52  SHALL BE TREATED AS A TRANSFER OF AN INTEREST IN SUCH  ENTITY  TO  WHICH
   53  THIS SECTION APPLIES IF THE TAXPAYER OR AN APPLICABLE FAMILY MEMBER-
   54  --(A)  RECEIVES  AN APPLICABLE RETAINED INTEREST IN SUCH ENTITY PURSUANT
   55  TO SUCH TRANSACTION, OR
       S. 6359                            298                           A. 8559
    1  --(B) UNDER REGULATIONS, OTHERWISE HOLDS, IMMEDIATELY AFTER SUCH  TRANS-
    2  ACTION, AN APPLICABLE RETAINED INTEREST IN SUCH ENTITY.
    3  --THIS  PARAGRAPH  SHALL  NOT  APPLY  TO  ANY  TRANSACTION (OTHER THAN A
    4  CONTRIBUTION TO CAPITAL) IF THE INTERESTS IN  THE  ENTITY  HELD  BY  THE
    5  TRANSFEROR,  APPLICABLE  FAMILY MEMBERS, AND MEMBERS OF THE TRANSFEROR'S
    6  FAMILY BEFORE AND AFTER THE TRANSACTION ARE SUBSTANTIALLY IDENTICAL.
    7    (6) ADJUSTMENTS. UNDER REGULATIONS PRESCRIBED  BY  THE  SECRETARY,  IF
    8  THERE  IS  ANY SUBSEQUENT TRANSFER, OR INCLUSION IN THE GROSS ESTATE, OF
    9  ANY APPLICABLE RETAINED INTEREST WHICH WAS VALUED  UNDER  THE  RULES  OF
   10  SUBSECTION  (A),  APPROPRIATE  ADJUSTMENTS SHALL BE MADE FOR PURPOSES OF
   11  CHAPTER 11, 12, OR 13 TO REFLECT THE INCREASE IN THE AMOUNT OF ANY PRIOR
   12  TAXABLE GIFT MADE BY THE TRANSFEROR OR DECEDENT BY REASON OF SUCH  VALU-
   13  ATION OR TO REFLECT THE APPLICATION OF SUBSECTION (D).
   14    (7)  TREATMENT  AS SEPARATE INTERESTS. THE SECRETARY MAY BY REGULATION
   15  PROVIDE THAT ANY APPLICABLE RETAINED INTEREST SHALL BE TREATED AS  2  OR
   16  MORE SEPARATE INTERESTS FOR PURPOSES OF THIS SECTION.
   17    S  2702.  SPECIAL VALUATION RULES IN CASE OF TRANSFERS OF INTERESTS IN
   18  TRUSTS.  (A) VALUATION RULES. (1) IN GENERAL.  SOLELY  FOR  PURPOSES  OF
   19  DETERMINING  WHETHER  A  TRANSFER OF AN INTEREST IN TRUST TO (OR FOR THE
   20  BENEFIT OF) A MEMBER OF THE TRANSFEROR'S FAMILY IS A GIFT (AND THE VALUE
   21  OF SUCH TRANSFER), THE VALUE OF ANY INTEREST IN SUCH TRUST  RETAINED  BY
   22  THE  TRANSFEROR  OR  ANY APPLICABLE FAMILY MEMBER (AS DEFINED IN SECTION
   23  2701(E)(2)) SHALL BE DETERMINED AS PROVIDED IN PARAGRAPH (2).
   24    (2) VALUATION OF RETAINED INTERESTS. (A) IN GENERAL. THE VALUE OF  ANY
   25  RETAINED  INTEREST WHICH IS NOT A QUALIFIED INTEREST SHALL BE TREATED AS
   26  BEING ZERO.
   27    (B) VALUATION OF QUALIFIED INTEREST. THE VALUE OF ANY RETAINED  INTER-
   28  EST  WHICH  IS  A  QUALIFIED  INTEREST SHALL BE DETERMINED UNDER SECTION
   29  7520.
   30    (3) EXCEPTIONS. (A) IN GENERAL. THIS SUBSECTION SHALL NOT APPLY TO ANY
   31  TRANSFER-
   32  --(I) IF SUCH TRANSFER IS AN INCOMPLETE GIFT,
   33  --(II) IF SUCH TRANSFER INVOLVES THE TRANSFER OF AN  INTEREST  IN  TRUST
   34  ALL  THE  PROPERTY  IN  WHICH  CONSISTS  OF  A RESIDENCE TO BE USED AS A
   35  PERSONAL RESIDENCE BY PERSONS HOLDING TERM INTERESTS IN SUCH TRUST, OR
   36  --(III) TO THE EXTENT THAT REGULATIONS PROVIDE THAT SUCH TRANSFER IS NOT
   37  INCONSISTENT WITH THE PURPOSES OF THIS SECTION.
   38    (B) INCOMPLETE GIFT.  FOR  PURPOSES  OF  SUBPARAGRAPH  (A),  THE  TERM
   39  "INCOMPLETE  GIFT"  MEANS  ANY  TRANSFER WHICH WOULD NOT BE TREATED AS A
   40  GIFT WHETHER OR NOT CONSIDERATION WAS RECEIVED FOR SUCH TRANSFER.
   41    (B) QUALIFIED INTEREST. FOR PURPOSES OF THIS SECTION, THE TERM "QUALI-
   42  FIED INTEREST" MEANS-
   43    (1) ANY INTEREST WHICH CONSISTS OF THE RIGHT TO RECEIVE FIXED  AMOUNTS
   44  PAYABLE NOT LESS FREQUENTLY THAN ANNUALLY,
   45    (2)  ANY INTEREST WHICH CONSISTS OF THE RIGHT TO RECEIVE AMOUNTS WHICH
   46  ARE PAYABLE NOT LESS FREQUENTLY THAN ANNUALLY AND ARE A FIXED PERCENTAGE
   47  OF THE FAIR MARKET VALUE OF THE PROPERTY IN THE TRUST (DETERMINED  ANNU-
   48  ALLY), AND
   49    (3) ANY NONCONTINGENT REMAINDER INTEREST IF ALL OF THE OTHER INTERESTS
   50  IN THE TRUST CONSIST OF INTERESTS DESCRIBED IN PARAGRAPH (1) OR (2).
   51    (C)  CERTAIN  PROPERTY  TREATED AS HELD IN TRUST. FOR PURPOSES OF THIS
   52  SECTION- (1) IN GENERAL. THE TRANSFER OF AN INTEREST  IN  PROPERTY  WITH
   53  RESPECT TO WHICH THERE IS 1 OR MORE TERM INTERESTS SHALL BE TREATED AS A
   54  TRANSFER OF AN INTEREST IN A TRUST.
   55    (2)  JOINT  PURCHASES. IF 2 OR MORE MEMBERS OF THE SAME FAMILY ACQUIRE
   56  INTERESTS IN ANY PROPERTY DESCRIBED IN PARAGRAPH (1) IN THE SAME  TRANS-
       S. 6359                            299                           A. 8559
    1  ACTION  (OR  A  SERIES OF RELATED TRANSACTIONS), THE PERSON (OR PERSONS)
    2  ACQUIRING THE TERM INTERESTS IN SUCH PROPERTY SHALL BE TREATED AS HAVING
    3  ACQUIRED THE ENTIRE PROPERTY AND THEN TRANSFERRED TO THE  OTHER  PERSONS
    4  THE  INTERESTS  ACQUIRED  BY  SUCH  OTHER PERSONS IN THE TRANSACTION (OR
    5  SERIES OF TRANSACTIONS). SUCH TRANSFER  SHALL  BE  TREATED  AS  MADE  IN
    6  EXCHANGE  FOR  THE CONSIDERATION (IF ANY) PROVIDED BY SUCH OTHER PERSONS
    7  FOR THE ACQUISITION OF THEIR INTERESTS IN SUCH PROPERTY.
    8    (3) TERM INTEREST. THE TERM "TERM INTEREST" MEANS-
    9    (A) A LIFE INTEREST IN PROPERTY, OR
   10    (B) AN INTEREST IN PROPERTY FOR A TERM OF YEARS.
   11    (4) VALUATION RULE FOR CERTAIN TERM INTERESTS. IF THE  NONEXERCISE  OF
   12  RIGHTS  UNDER  A  TERM  INTEREST  IN  TANGIBLE PROPERTY WOULD NOT HAVE A
   13  SUBSTANTIAL EFFECT ON THE VALUATION OF THE REMAINDER  INTEREST  IN  SUCH
   14  PROPERTY-
   15    (A) SUBPARAGRAPH (A) OF SUBSECTION (A)(2) SHALL NOT APPLY TO SUCH TERM
   16  INTEREST, AND
   17    (B)  THE  VALUE  OF  SUCH  TERM  INTEREST  FOR  PURPOSES  OF  APPLYING
   18  SUBSECTION (A)(1) SHALL BE THE AMOUNT  WHICH  THE  HOLDER  OF  THE  TERM
   19  INTEREST ESTABLISHES AS THE AMOUNT FOR WHICH SUCH INTEREST COULD BE SOLD
   20  TO AN UNRELATED THIRD PARTY.
   21    (D)  TREATMENT  OF TRANSFERS OF INTERESTS IN PORTION OF TRUST.  IN THE
   22  CASE OF A TRANSFER OF AN INCOME OR REMAINDER INTEREST WITH RESPECT TO  A
   23  SPECIFIED PORTION OF THE PROPERTY IN A TRUST, ONLY SUCH PORTION SHALL BE
   24  TAKEN INTO ACCOUNT IN APPLYING THIS SECTION TO SUCH TRANSFER.
   25    (E)  MEMBER  OF  THE  FAMILY.  FOR  PURPOSES OF THIS SECTION, THE TERM
   26  "MEMBER OF THE FAMILY" SHALL HAVE THE MEANING GIVEN SUCH TERM BY SECTION
   27  2704(C)(2).
   28    S 2703. CERTAIN RIGHTS AND RESTRICTIONS DISREGARDED
   29    (A) GENERAL RULE. FOR PURPOSES OF THIS  SUBTITLE,  THE  VALUE  OF  ANY
   30  PROPERTY SHALL BE DETERMINED WITHOUT REGARD TO-
   31    (1)  ANY OPTION, AGREEMENT, OR OTHER RIGHT TO ACQUIRE OR USE THE PROP-
   32  ERTY AT A PRICE LESS THAN THE FAIR MARKET VALUE OF THE PROPERTY (WITHOUT
   33  REGARD TO SUCH OPTION, AGREEMENT, OR RIGHT), OR
   34    (2) ANY RESTRICTION ON THE RIGHT TO SELL OR USE SUCH PROPERTY.
   35    (B) EXCEPTIONS. SUBSECTION (A) SHALL NOT APPLY TO ANY  OPTION,  AGREE-
   36  MENT,  RIGHT,  OR RESTRICTION WHICH MEETS EACH OF THE FOLLOWING REQUIRE-
   37  MENTS:
   38    (1) IT IS A BONA FIDE BUSINESS ARRANGEMENT.
   39    (2) IT IS NOT A DEVICE TO TRANSFER SUCH PROPERTY  TO  MEMBERS  OF  THE
   40  DECEDENT'S FAMILY FOR LESS THAN FULL AND ADEQUATE CONSIDERATION IN MONEY
   41  OR MONEY'S WORTH.
   42    (3)  ITS  TERMS ARE COMPARABLE TO SIMILAR ARRANGEMENTS ENTERED INTO BY
   43  PERSONS IN AN ARMS' LENGTH TRANSACTION
   44    S 2704. TREATMENT OF CERTAIN LAPSING RIGHTS  AND  RESTRICTIONS.    (A)
   45  TREATMENT  OF  LAPSED  VOTING OR LIQUIDATION RIGHTS. (1) IN GENERAL. FOR
   46  PURPOSES OF THIS SUBTITLE, IF-
   47  --(A) THERE IS A LAPSE OF ANY VOTING OR LIQUIDATION RIGHT  IN  A  CORPO-
   48  RATION OR PARTNERSHIP, AND
   49  --(B) THE INDIVIDUAL HOLDING SUCH RIGHT IMMEDIATELY BEFORE THE LAPSE AND
   50  MEMBERS  OF  SUCH  INDIVIDUAL'S  FAMILY  HOLD, BOTH BEFORE AND AFTER THE
   51  LAPSE, CONTROL OF THE ENTITY,
   52    SUCH LAPSE SHALL BE TREATED AS A TRANSFER BY SUCH INDIVIDUAL BY  GIFT,
   53  OR  A  TRANSFER WHICH IS INCLUDIBLE IN THE GROSS ESTATE OF THE DECEDENT,
   54  WHICHEVER IS APPLICABLE, IN THE AMOUNT DETERMINED UNDER PARAGRAPH (2).
   55    (2) AMOUNT OF TRANSFER. FOR PURPOSES  OF  PARAGRAPH  (1),  THE  AMOUNT
   56  DETERMINED UNDER THIS PARAGRAPH IS THE EXCESS (IF ANY) OF-
       S. 6359                            300                           A. 8559
    1  --(A)  THE  VALUE  OF ALL INTERESTS IN THE ENTITY HELD BY THE INDIVIDUAL
    2  DESCRIBED IN PARAGRAPH (1) IMMEDIATELY BEFORE THE LAPSE  (DETERMINED  AS
    3  IF THE VOTING AND LIQUIDATION RIGHTS WERE NONLAPSING), OVER
    4  --(B) THE VALUE OF SUCH INTERESTS IMMEDIATELY AFTER THE LAPSE.
    5    (3)  SIMILAR  RIGHTS.  THE  SECRETARY  MAY  BY  REGULATIONS APPLY THIS
    6  SUBSECTION TO RIGHTS SIMILAR TO VOTING AND LIQUIDATION RIGHTS.
    7    (B) CERTAIN RESTRICTIONS ON LIQUIDATION DISREGARDED. (1)  IN  GENERAL.
    8  FOR PURPOSES OF THIS SUBTITLE, IF-
    9  --(A) THERE IS A TRANSFER OF AN INTEREST IN A CORPORATION OR PARTNERSHIP
   10  TO (OR FOR THE BENEFIT OF) A MEMBER OF THE TRANSFEROR'S FAMILY, AND
   11  --(B)  THE TRANSFEROR AND MEMBERS OF THE TRANSFEROR'S FAMILY HOLD, IMME-
   12  DIATELY BEFORE THE TRANSFER, CONTROL OF THE ENTITY,
   13    --ANY APPLICABLE RESTRICTION SHALL BE DISREGARDED IN  DETERMINING  THE
   14  VALUE OF THE TRANSFERRED INTEREST.
   15    (2)  APPLICABLE RESTRICTION. FOR PURPOSES OF THIS SUBSECTION, THE TERM
   16  "APPLICABLE RESTRICTION" MEANS ANY RESTRICTION-
   17    (A) WHICH EFFECTIVELY LIMITS THE ABILITY OF THE CORPORATION  OR  PART-
   18  NERSHIP TO LIQUIDATE, AND
   19    (B) WITH RESPECT TO WHICH EITHER OF THE FOLLOWING APPLIES:
   20  --(I)  THE  RESTRICTION  LAPSES, IN WHOLE OR IN PART, AFTER THE TRANSFER
   21  REFERRED TO IN PARAGRAPH (1).
   22  --(II) THE TRANSFEROR OR ANY MEMBER OF THE TRANSFEROR'S  FAMILY,  EITHER
   23  ALONE  OR  COLLECTIVELY, HAS THE RIGHT AFTER SUCH TRANSFER TO REMOVE, IN
   24  WHOLE OR IN PART, THE RESTRICTION.
   25    (3) EXCEPTIONS. THE TERM "APPLICABLE RESTRICTION" SHALL NOT INCLUDE-
   26  --(A) ANY COMMERCIALLY REASONABLE RESTRICTION WHICH ARISES  AS  PART  OF
   27  ANY FINANCING BY THE CORPORATION OR PARTNERSHIP WITH A PERSON WHO IS NOT
   28  RELATED  TO  THE  TRANSFEROR OR TRANSFEREE, OR A MEMBER OF THE FAMILY OF
   29  EITHER, OR
   30  --(B) ANY RESTRICTION IMPOSED, OR REQUIRED TO BE IMPOSED, BY ANY FEDERAL
   31  OR STATE LAW.
   32    (4) OTHER RESTRICTIONS. THE SECRETARY MAY BY REGULATIONS PROVIDE  THAT
   33  OTHER  RESTRICTIONS SHALL BE DISREGARDED IN DETERMINING THE VALUE OF THE
   34  TRANSFER OF ANY INTEREST IN A CORPORATION OR PARTNERSHIP TO A MEMBER  OF
   35  THE  TRANSFEROR'S  FAMILY IF SUCH RESTRICTION HAS THE EFFECT OF REDUCING
   36  THE VALUE OF THE TRANSFERRED INTEREST FOR PURPOSES OF THIS SUBTITLE  BUT
   37  DOES NOT ULTIMATELY REDUCE THE VALUE OF SUCH INTEREST TO THE TRANSFEREE.
   38    (C) DEFINITIONS AND SPECIAL RULES. FOR PURPOSES OF THIS SECTION-
   39    (1)  CONTROL.  THE  TERM  "CONTROL" HAS THE MEANING GIVEN SUCH TERM BY
   40  SECTION 2701(B)(2).
   41    (2) MEMBER OF THE FAMILY. THE TERM "MEMBER OF THE FAMILY" MEANS,  WITH
   42  RESPECT TO ANY INDIVIDUAL-
   43    (A) SUCH INDIVIDUAL'S SPOUSE,
   44    (B) ANY ANCESTOR OR LINEAL DESCENDANT OF SUCH INDIVIDUAL OR SUCH INDI-
   45  VIDUAL'S SPOUSE,
   46    (C) ANY BROTHER OR SISTER OF THE INDIVIDUAL, AND
   47    (D) ANY SPOUSE OF ANY INDIVIDUAL DESCRIBED IN SUBPARAGRAPH (B) OR
   48  (C).
   49    (3)  ATTRIBUTION.  THE  RULE  OF  SECTION  2701(E)(3)  SHALL APPLY FOR
   50  PURPOSES OF DETERMINING THE INTERESTS HELD BY ANY INDIVIDUAL.
   51    S 7872. TREATMENT OF LOANS WITH BELOW-MARKET INTEREST RATES
   52    (A) TREATMENT OF GIFT LOANS AND DEMAND LOANS. (1)  IN  GENERAL.    FOR
   53  PURPOSES  OF  THIS  TITLE, IN THE CASE OF ANY BELOW-MARKET LOAN TO WHICH
   54  THIS SECTION APPLIES AND WHICH IS A GIFT LOAN  OR  A  DEMAND  LOAN,  THE
   55  FORGONE INTEREST SHALL BE TREATED AS-
   56  --(A) TRANSFERRED FROM THE LENDER TO THE BORROWER, AND
       S. 6359                            301                           A. 8559
    1  --(B) RETRANSFERRED BY THE BORROWER TO THE LENDER AS INTEREST.
    2    (2)  TIME  WHEN  TRANSFERS MADE. EXCEPT AS OTHERWISE PROVIDED IN REGU-
    3  LATIONS PRESCRIBED BY THE SECRETARY, ANY FORGONE  INTEREST  ATTRIBUTABLE
    4  TO PERIODS DURING ANY CALENDAR YEAR SHALL BE TREATED AS TRANSFERRED (AND
    5  RETRANSFERRED)  UNDER  PARAGRAPH  (1)  ON  THE LAST DAY OF SUCH CALENDAR
    6  YEAR.
    7    (B) TREATMENT OF OTHER  BELOW-MARKET  LOANS.  (1)  IN  GENERAL.    FOR
    8  PURPOSES  OF  THIS  TITLE, IN THE CASE OF ANY BELOW-MARKET LOAN TO WHICH
    9  THIS SECTION APPLIES AND TO WHICH SUBSECTION (A)(1) DOES NOT APPLY,  THE
   10  LENDER  SHALL  BE TREATED AS HAVING TRANSFERRED ON THE DATE THE LOAN WAS
   11  MADE (OR, IF LATER, ON THE FIRST DAY ON WHICH THIS  SECTION  APPLIES  TO
   12  SUCH LOAN), AND THE BORROWER SHALL BE TREATED AS HAVING RECEIVED ON SUCH
   13  DATE, CASH IN AN AMOUNT EQUAL TO THE EXCESS OF-
   14  --(A) THE AMOUNT LOANED, OVER
   15  --(B)  THE  PRESENT  VALUE OF ALL PAYMENTS WHICH ARE REQUIRED TO BE MADE
   16  UNDER THE TERMS OF THE LOAN.
   17    (2) OBLIGATION TREATED AS HAVING ORIGINAL ISSUE DISCOUNT. FOR PURPOSES
   18  OF THIS TITLE-
   19    (A) IN GENERAL. ANY BELOW-MARKET LOAN TO WHICH PARAGRAPH  (1)  APPLIES
   20  SHALL BE TREATED AS HAVING ORIGINAL ISSUE DISCOUNT IN AN AMOUNT EQUAL TO
   21  THE EXCESS DESCRIBED IN PARAGRAPH (1).
   22    (B)  AMOUNT IN ADDITION TO OTHER ORIGINAL ISSUE DISCOUNT. ANY ORIGINAL
   23  ISSUE DISCOUNT WHICH A LOAN IS TREATED AS HAVING BY REASON  OF  SUBPARA-
   24  GRAPH  (A)  SHALL BE IN ADDITION TO ANY OTHER ORIGINAL ISSUE DISCOUNT ON
   25  SUCH LOAN (DETERMINED WITHOUT REGARD TO SUBPARAGRAPH (A)).
   26    (C) BELOW-MARKET LOANS TO  WHICH  SECTION  APPLIES.  (1)  IN  GENERAL.
   27  EXCEPT AS OTHERWISE PROVIDED IN THIS SUBSECTION AND SUBSECTION (G), THIS
   28  SECTION SHALL APPLY TO-
   29    (A) GIFTS. ANY BELOW-MARKET LOAN WHICH IS A GIFT LOAN.
   30    (B)  COMPENSATION-RELATED  LOANS.  ANY  BELOW-MARKET  LOAN DIRECTLY OR
   31  INDIRECTLY BETWEEN-
   32  --(I) AN EMPLOYER AND AN EMPLOYEE, OR
   33  --(II) AN INDEPENDENT CONTRACTOR AND A PERSON FOR WHOM SUCH  INDEPENDENT
   34  CONTRACTOR PROVIDES SERVICES.
   35    (C)  CORPORATION-SHAREHOLDER  LOANS. ANY BELOW-MARKET LOAN DIRECTLY OR
   36  INDIRECTLY BETWEEN A CORPORATION AND  ANY  SHAREHOLDER  OF  SUCH  CORPO-
   37  RATION.
   38    (D)  TAX  AVOIDANCE  LOANS.  ANY  BELOW-MARKET LOAN 1 OF THE PRINCIPAL
   39  PURPOSES OF THE INTEREST ARRANGEMENTS OF WHICH IS THE AVOIDANCE  OF  ANY
   40  FEDERAL TAX.
   41    (E)  OTHER  BELOW-MARKET LOANS. TO THE EXTENT PROVIDED IN REGULATIONS,
   42  ANY BELOW-MARKET LOAN WHICH IS NOT DESCRIBED IN SUBPARAGRAPH  (A),  (B),
   43  (C), OR (F) IF THE INTEREST ARRANGEMENTS OF SUCH LOAN HAVE A SIGNIFICANT
   44  EFFECT ON ANY FEDERAL TAX LIABILITY OF THE LENDER OR THE BORROWER.
   45    (F)  LOANS  TO  QUALIFIED  CONTINUING CARE FACILITIES. ANY LOAN TO ANY
   46  QUALIFIED  CONTINUING  CARE  FACILITY  PURSUANT  TO  A  CONTINUING  CARE
   47  CONTRACT.
   48    (2)  $10,000  DE MINIMIS EXCEPTION FOR GIFT LOANS BETWEEN INDIVIDUALS.
   49  (A) IN GENERAL. IN THE CASE OF ANY GIFT LOAN DIRECTLY  BETWEEN  INDIVID-
   50  UALS,  THIS  SECTION  SHALL  NOT APPLY TO ANY DAY ON WHICH THE AGGREGATE
   51  OUTSTANDING AMOUNT OF LOANS BETWEEN SUCH  INDIVIDUALS  DOES  NOT  EXCEED
   52  $10,000.
   53    (B)  DE MINIMIS EXCEPTION NOT TO APPLY TO LOANS ATTRIBUTABLE TO ACQUI-
   54  SITION OF INCOME-PRODUCING ASSETS.
   55  --SUBPARAGRAPH (A) SHALL NOT APPLY TO ANY GIFT LOAN  DIRECTLY  ATTRIBUT-
   56  ABLE TO THE PURCHASE OR CARRYING OF INCOME-PRODUCING ASSETS.
       S. 6359                            302                           A. 8559
    1    (C)  CROSS  REFERENCE.  FOR  LIMITATION  ON AMOUNT TREATED AS INTEREST
    2  WHERE LOANS DO NOT EXCEED $100,000, SEE SUBSECTION (D)(1).
    3    (3)  $10,000  DE MINIMIS EXCEPTION FOR COMPENSATION-RELATED AND CORPO-
    4  RATE-SHAREHOLDER LOANS.  (A)  IN  GENERAL.  IN  THE  CASE  OF  ANY  LOAN
    5  DESCRIBED  IN  SUBPARAGRAPH  (B)  OR  (C) OF PARAGRAPH (1), THIS SECTION
    6  SHALL NOT APPLY TO ANY DAY ON WHICH THE AGGREGATE OUTSTANDING AMOUNT  OF
    7  LOANS BETWEEN THE BORROWER AND LENDER DOES NOT EXCEED $10,000.
    8    (B) EXCEPTION NOT TO APPLY WHERE 1 OF PRINCIPAL PURPOSES IS TAX AVOID-
    9  ANCE.    SUBPARAGRAPH  (A)  SHALL  NOT  APPLY  TO  ANY LOAN THE INTEREST
   10  ARRANGEMENTS OF WHICH HAVE AS 1 OF THEIR PRINCIPAL PURPOSES  THE  AVOID-
   11  ANCE OF ANY FEDERAL TAX.
   12    (D)  SPECIAL  RULES FOR GIFT LOANS. (1) LIMITATION ON INTEREST ACCRUAL
   13  FOR PURPOSES OF INCOME TAXES WHERE LOANS DO NOT EXCEED $100,000. (A)  IN
   14  GENERAL. FOR PURPOSES OF SUBTITLE A, IN THE CASE OF A GIFT LOAN DIRECTLY
   15  BETWEEN INDIVIDUALS, THE AMOUNT TREATED AS RETRANSFERRED BY THE BORROWER
   16  TO  THE  LENDER AS OF THE CLOSE OF ANY YEAR SHALL NOT EXCEED THE BORROW-
   17  ER'S NET INVESTMENT INCOME FOR SUCH YEAR.
   18    (B) LIMITATION NOT TO APPLY WHERE  1  OF  PRINCIPAL  PURPOSES  IS  TAX
   19  AVOIDANCE.    SUBPARAGRAPH  (A) SHALL NOT APPLY TO ANY LOAN THE INTEREST
   20  ARRANGEMENTS OF WHICH HAVE AS 1 OF THEIR PRINCIPAL PURPOSES  THE  AVOID-
   21  ANCE OF ANY FEDERAL TAX.
   22    (C) SPECIAL RULE WHERE MORE THAN 1 GIFT LOAN OUTSTANDING. FOR PURPOSES
   23  OF  SUBPARAGRAPH  (A),  IN  ANY CASE IN WHICH A BORROWER HAS OUTSTANDING
   24  MORE THAN 1 GIFT LOAN, THE NET INVESTMENT INCOME OF SUCH BORROWER  SHALL
   25  BE  ALLOCATED  AMONG  SUCH LOANS IN PROPORTION TO THE RESPECTIVE AMOUNTS
   26  WHICH WOULD BE TREATED AS RETRANSFERRED BY THE BORROWER  WITHOUT  REGARD
   27  TO THIS PARAGRAPH.
   28    (D)  LIMITATION  NOT  TO  APPLY WHERE AGGREGATE AMOUNT OF LOANS EXCEED
   29  $100,000.  THIS PARAGRAPH SHALL NOT APPLY TO ANY LOAN MADE BY  A  LENDER
   30  TO  A  BORROWER FOR ANY DAY ON WHICH THE AGGREGATE OUTSTANDING AMOUNT OF
   31  LOANS BETWEEN THE BORROWER AND LENDER EXCEEDS $100,000.
   32    (E) NET INVESTMENT INCOME. FOR PURPOSES OF THIS PARAGRAPH-
   33    (I) IN GENERAL. THE TERM "NET INVESTMENT INCOME" HAS THE MEANING GIVEN
   34  SUCH TERM BY SECTION 163(D)(4).
   35    (II) DE MINIMIS RULE. IF THE NET INVESTMENT INCOME OF ANY BORROWER FOR
   36  ANY YEAR DOES NOT EXCEED $1,000,  THE  NET  INVESTMENT  INCOME  OF  SUCH
   37  BORROWER FOR SUCH YEAR SHALL BE TREATED AS ZERO.
   38    (III)  ADDITIONAL  AMOUNTS TREATED AS INTEREST. IN DETERMINING THE NET
   39  INVESTMENT INCOME OF A PERSON FOR ANY YEAR, ANY AMOUNT  WHICH  WOULD  BE
   40  INCLUDED  IN  THE GROSS INCOME OF SUCH PERSON FOR SUCH YEAR BY REASON OF
   41  SECTION 1272 IF SUCH SECTION APPLIED TO ALL DEFERRED PAYMENT OBLIGATIONS
   42  SHALL BE TREATED AS INTEREST RECEIVED BY SUCH PERSON FOR SUCH YEAR.
   43    (IV) DEFERRED PAYMENT OBLIGATIONS. THE TERM  "DEFERRED  PAYMENT  OBLI-
   44  GATION" INCLUDES ANY MARKET DISCOUNT BOND, SHORT-TERM OBLIGATION, UNITED
   45  STATES SAVINGS BOND, ANNUITY, OR SIMILAR OBLIGATION.
   46    (2) SPECIAL RULE FOR GIFT TAX. IN THE CASE OF ANY GIFT LOAN WHICH IS A
   47  TERM  LOAN,  SUBSECTION  (B)(1) (AND NOT SUBSECTION (A)) SHALL APPLY FOR
   48  PURPOSES OF CHAPTER 12.
   49    (E)  DEFINITIONS  OF  BELOW-MARKET  LOAN  AND  FORGONE  INTEREST.  FOR
   50  PURPOSES OF THIS SECTION-
   51    (1) BELOW-MARKET LOAN. THE TERM "BELOW-MARKET LOAN" MEANS ANY LOAN IF-
   52  --(A) IN THE CASE OF A DEMAND LOAN, INTEREST IS PAYABLE ON THE LOAN AT A
   53  RATE LESS THAN THE APPLICABLE FEDERAL RATE, OR
   54  --(B)  IN THE CASE OF A TERM LOAN, THE AMOUNT LOANED EXCEEDS THE PRESENT
   55  VALUE OF ALL PAYMENTS DUE UNDER THE LOAN.
       S. 6359                            303                           A. 8559
    1    (2) FORGONE INTEREST. THE TERM "FORGONE INTEREST" MEANS, WITH  RESPECT
    2  TO ANY PERIOD DURING WHICH THE LOAN IS OUTSTANDING, THE EXCESS OF-
    3  --(A)  THE  AMOUNT OF INTEREST WHICH WOULD HAVE BEEN PAYABLE ON THE LOAN
    4  FOR THE PERIOD IF INTEREST ACCRUED ON THE LOAN AT THE APPLICABLE FEDERAL
    5  RATE AND WERE PAYABLE ANNUALLY ON THE  DAY  REFERRED  TO  IN  SUBSECTION
    6  (A)(2), OVER
    7  --(B)  ANY INTEREST PAYABLE ON THE LOAN PROPERLY ALLOCABLE TO SUCH PERI-
    8  OD.
    9    (F) OTHER DEFINITIONS AND SPECIAL RULES. FOR PURPOSES OF THIS SECTION-
   10    (1) PRESENT VALUE. THE PRESENT VALUE OF ANY PAYMENT  SHALL  BE  DETER-
   11  MINED IN THE MANNER PROVIDED BY REGULATIONS PRESCRIBED BY THE SECRETARY-
   12  --(A) AS OF THE DATE OF THE LOAN, AND
   13  --(B) BY USING A DISCOUNT RATE EQUAL TO THE APPLICABLE FEDERAL RATE.
   14    (2)  APPLICABLE  FEDERAL RATE. (A) TERM LOANS. IN THE CASE OF ANY TERM
   15  LOAN, THE APPLICABLE FEDERAL RATE SHALL BE THE APPLICABLE  FEDERAL  RATE
   16  IN  EFFECT  UNDER  SECTION  1274(D) (AS OF THE DAY ON WHICH THE LOAN WAS
   17  MADE), COMPOUNDED SEMIANNUALLY.
   18    (B) DEMAND LOANS. IN THE CASE OF A DEMAND LOAN, THE APPLICABLE FEDERAL
   19  RATE SHALL BE THE  FEDERAL  SHORT-TERM  RATE  IN  EFFECT  UNDER  SECTION
   20  1274(D) FOR THE PERIOD FOR WHICH THE AMOUNT OF FORGONE INTEREST IS BEING
   21  DETERMINED, COMPOUNDED SEMIANNUALLY.
   22    (3)  GIFT LOAN. THE TERM "GIFT LOAN" MEANS ANY BELOW-MARKET LOAN WHERE
   23  THE FORGOING OF INTEREST IS IN THE NATURE OF A GIFT.
   24    (4) AMOUNT LOANED. THE TERM "AMOUNT LOANED" MEANS THE AMOUNT  RECEIVED
   25  BY THE BORROWER.
   26    (5)  DEMAND LOAN. THE TERM "DEMAND LOAN" MEANS ANY LOAN WHICH IS PAYA-
   27  BLE IN FULL AT ANY TIME ON THE DEMAND OF  THE  LENDER.  SUCH  TERM  ALSO
   28  INCLUDES  (FOR  PURPOSES  OTHER  THAN DETERMINING THE APPLICABLE FEDERAL
   29  RATE UNDER PARAGRAPH (2)) ANY LOAN  IF  THE  BENEFITS  OF  THE  INTEREST
   30  ARRANGEMENTS  OF  SUCH  LOAN ARE NOT TRANSFERABLE AND ARE CONDITIONED ON
   31  THE FUTURE PERFORMANCE OF SUBSTANTIAL SERVICES BY AN INDIVIDUAL. TO  THE
   32  EXTENT PROVIDED IN REGULATIONS, SUCH TERM ALSO INCLUDES ANY LOAN WITH AN
   33  INDEFINITE MATURITY.
   34    (6)  TERM  LOAN.  THE  TERM  "TERM LOAN" MEANS ANY LOAN WHICH IS NOT A
   35  DEMAND LOAN.
   36    (7) HUSBAND AND WIFE TREATED AS 1 PERSON. A HUSBAND AND WIFE SHALL  BE
   37  TREATED AS 1 PERSON.
   38    (8)  LOANS TO WHICH SECTION 483, 643(I), OR 1274 APPLIES. THIS SECTION
   39  SHALL NOT APPLY TO ANY LOAN  TO  WHICH  SECTION  483,  643(I),  OR  1274
   40  APPLIES.
   41    (9)  NO WITHHOLDING. NO AMOUNT SHALL BE WITHHELD UNDER CHAPTER 24 WITH
   42  RESPECT TO-
   43  --(A)  ANY  AMOUNT  TREATED  AS  TRANSFERRED  OR   RETRANSFERRED   UNDER
   44  SUBSECTION (A), AND
   45  --(B) ANY AMOUNT TREATED AS RECEIVED UNDER SUBSECTION (B).
   46    (10)  SPECIAL RULE FOR TERM LOANS. IF THIS SECTION APPLIES TO ANY TERM
   47  LOAN ON ANY DAY, THIS SECTION SHALL  CONTINUE  TO  APPLY  TO  SUCH  LOAN
   48  NOTWITHSTANDING PARAGRAPHS (2) AND (3) OF SUBSECTION (C). IN THE CASE OF
   49  A  GIFT  LOAN,  THE  PRECEDING SENTENCE SHALL ONLY APPLY FOR PURPOSES OF
   50  CHAPTER 12.
   51    (11) TIME FOR  DETERMINING  RATE  APPLICABLE  TO  EMPLOYEE  RELOCATION
   52  LOANS.  (A) IN GENERAL. IN THE CASE OF ANY TERM LOAN MADE BY AN EMPLOYER
   53  TO AN EMPLOYEE THE PROCEEDS  OF  WHICH  ARE  USED  BY  THE  EMPLOYEE  TO
   54  PURCHASE  A PRINCIPAL RESIDENCE (WITHIN THE MEANING OF SECTION 121), THE
   55  DETERMINATION OF THE APPLICABLE FEDERAL RATE SHALL BE  MADE  AS  OF  THE
   56  DATE THE WRITTEN CONTRACT TO PURCHASE SUCH RESIDENCE WAS ENTERED INTO.
       S. 6359                            304                           A. 8559
    1    (B)  PARAGRAPH  ONLY  TO  APPLY TO CASES TO WHICH SECTION 217 APPLIES.
    2  SUBPARAGRAPH (A) SHALL ONLY APPLY TO THE PURCHASE OF A  PRINCIPAL  RESI-
    3  DENCE  IN  CONNECTION  WITH THE COMMENCEMENT OF WORK BY AN EMPLOYEE OR A
    4  CHANGE IN THE PRINCIPAL PLACE OF WORK OF AN EMPLOYEE  TO  WHICH  SECTION
    5  217 APPLIES.
    6    (G)  EXCEPTION  FOR CERTAIN LOANS TO QUALIFIED CONTINUING CARE FACILI-
    7  TIES.  (1) IN GENERAL. THIS SECTION SHALL NOT  APPLY  FOR  ANY  CALENDAR
    8  YEAR TO ANY BELOW-MARKET LOAN MADE BY A LENDER TO A QUALIFIED CONTINUING
    9  CARE  FACILITY  PURSUANT TO A CONTINUING CARE CONTRACT IF THE LENDER (OR
   10  THE LENDER'S SPOUSE) ATTAINS AGE 65 BEFORE THE CLOSE OF SUCH YEAR.
   11    (2) $90,000 LIMIT. PARAGRAPH (1) SHALL APPLY ONLY TO THE  EXTENT  THAT
   12  THE  AGGREGATE  OUTSTANDING  AMOUNT  OF ANY LOAN TO WHICH SUCH PARAGRAPH
   13  APPLIES (DETERMINED WITHOUT REGARD TO THIS PARAGRAPH), WHEN ADDED TO THE
   14  AGGREGATE OUTSTANDING AMOUNT OF ALL OTHER  PREVIOUS  LOANS  BETWEEN  THE
   15  LENDER (OR THE LENDER'S SPOUSE) AND ANY QUALIFIED CONTINUING CARE FACIL-
   16  ITY TO WHICH PARAGRAPH (1) APPLIES, DOES NOT EXCEED $90,000.
   17    (3)  CONTINUING  CARE CONTRACT. FOR PURPOSES OF THIS SECTION, THE TERM
   18  "CONTINUING CARE CONTRACT" MEANS A WRITTEN CONTRACT BETWEEN AN  INDIVID-
   19  UAL AND A QUALIFIED CONTINUING CARE FACILITY UNDER WHICH-
   20  --(A) THE INDIVIDUAL OR INDIVIDUAL'S SPOUSE MAY USE A QUALIFIED CONTINU-
   21  ING CARE FACILITY FOR THEIR LIFE OR LIVES,
   22  --(B) THE INDIVIDUAL OR INDIVIDUAL'S SPOUSE-
   23  --(I) WILL FIRST-
   24  --(I)  RESIDE  IN  A  SEPARATE,  INDEPENDENT LIVING UNIT WITH ADDITIONAL
   25  FACILITIES OUTSIDE SUCH UNIT  FOR  THE  PROVIDING  OF  MEALS  AND  OTHER
   26  PERSONAL CARE, AND
   27  --(II) NOT REQUIRE LONG-TERM NURSING CARE, AND
   28  --(II)  THEN  WILL BE PROVIDED LONG-TERM AND SKILLED NURSING CARE AS THE
   29  HEALTH OF SUCH INDIVIDUAL OR INDIVIDUAL'S SPOUSE REQUIRES, AND
   30  --(C) NO ADDITIONAL SUBSTANTIAL PAYMENT IS REQUIRED IF  SUCH  INDIVIDUAL
   31  OR  INDIVIDUAL'S  SPOUSE  REQUIRES  INCREASED  PERSONAL CARE SERVICES OR
   32  LONG-TERM AND SKILLED NURSING CARE.
   33    (4) QUALIFIED CONTINUING CARE FACILITY. (A) IN GENERAL.  FOR  PURPOSES
   34  OF  THIS  SECTION, THE TERM "QUALIFIED CONTINUING CARE FACILITY" MEANS 1
   35  OR MORE FACILITIES-
   36  --(I) WHICH ARE DESIGNED  TO  PROVIDE  SERVICES  UNDER  CONTINUING  CARE
   37  CONTRACTS, AND
   38  --(II)  SUBSTANTIALLY  ALL  OF  THE  RESIDENTS  OF  WHICH ARE COVERED BY
   39  CONTINUING CARE CONTRACTS.
   40    (B) SUBSTANTIALLY ALL FACILITIES MUST BE OWNED OR OPERATED BY  BORROW-
   41  ER.  A  FACILITY  SHALL  NOT  BE  TREATED AS A QUALIFIED CONTINUING CARE
   42  FACILITY UNLESS SUBSTANTIALLY ALL FACILITIES WHICH ARE USED  TO  PROVIDE
   43  SERVICES  WHICH  ARE  REQUIRED  TO  BE  PROVIDED UNDER A CONTINUING CARE
   44  CONTRACT ARE OWNED OR OPERATED BY THE BORROWER.
   45    (C) NURSING HOMES EXCLUDED. THE TERM "QUALIFIED CONTINUING CARE FACIL-
   46  ITY" SHALL NOT INCLUDE ANY FACILITY WHICH IS OF A TYPE WHICH  IS  TRADI-
   47  TIONALLY CONSIDERED A NURSING HOME.
   48    (5)  ADJUSTMENT OF LIMIT FOR INFLATION. (A) IN GENERAL. IN THE CASE OF
   49  ANY LOAN MADE DURING ANY CALENDAR YEAR AFTER 1986 TO WHICH PARAGRAPH (1)
   50  APPLIES, THE DOLLAR AMOUNT IN PARAGRAPH (2) SHALL BE  INCREASED  BY  THE
   51  INFLATION  ADJUSTMENT  FOR  SUCH  CALENDAR  YEAR. ANY INCREASE UNDER THE
   52  PRECEDING SENTENCE SHALL BE ROUNDED TO THE NEAREST MULTIPLE OF $100 (OR,
   53  IF SUCH INCREASE IS A MULTIPLE OF $50, SUCH INCREASE SHALL BE  INCREASED
   54  TO THE NEAREST MULTIPLE OF $100).
       S. 6359                            305                           A. 8559
    1    (B)  INFLATION  ADJUSTMENT.  FOR  PURPOSES  OF  SUBPARAGRAPH  (A), THE
    2  INFLATION ADJUSTMENT FOR ANY CALENDAR YEAR IS THE PERCENTAGE (IF ANY) BY
    3  WHICH-
    4  --(I) THE CPI FOR THE PRECEDING CALENDAR YEAR EXCEEDS
    5  --(II) THE CPI FOR CALENDAR YEAR 1985.
    6    1.  FOR  PURPOSES  OF THE PRECEDING SENTENCE, THE CPI FOR ANY CALENDAR
    7  YEAR IS THE AVERAGE OF THE CONSUMER PRICE INDEX AS OF THE CLOSE  OF  THE
    8  12-MONTH PERIOD ENDING ON SEPTEMBER 30 OF SUCH CALENDAR YEAR.
    9    (6)  SUSPENSION  OF APPLICATION. PARAGRAPH (1) SHALL NOT APPLY FOR ANY
   10  CALENDAR YEAR TO WHICH SUBSECTION (H) APPLIES.
   11    (H) EXCEPTION FOR LOANS TO QUALIFIED CONTINUING CARE  FACILITIES.  (1)
   12  IN  GENERAL.  THIS  SECTION SHALL NOT APPLY FOR ANY CALENDAR YEAR TO ANY
   13  BELOW-MARKET LOAN OWED BY A FACILITY WHICH ON THE LAST DAY OF SUCH  YEAR
   14  IS  A QUALIFIED CONTINUING CARE FACILITY, IF SUCH LOAN WAS MADE PURSUANT
   15  TO A CONTINUING CARE CONTRACT AND IF THE LENDER (OR THE LENDER'S SPOUSE)
   16  ATTAINS AGE 62 BEFORE THE CLOSE OF SUCH YEAR.
   17    (2) CONTINUING CARE CONTRACT. FOR PURPOSES OF THIS SECTION,  THE  TERM
   18  "CONTINUING  CARE CONTRACT" MEANS A WRITTEN CONTRACT BETWEEN AN INDIVID-
   19  UAL AND A QUALIFIED CONTINUING CARE FACILITY UNDER WHICH-
   20  --(A) THE INDIVIDUAL OR INDIVIDUAL'S SPOUSE MAY USE A QUALIFIED CONTINU-
   21  ING CARE FACILITY FOR THEIR LIFE OR LIVES,
   22  --(B) THE INDIVIDUAL OR INDIVIDUAL'S SPOUSE WILL BE PROVIDED WITH  HOUS-
   23  ING,  AS  APPROPRIATE  FOR THE HEALTH OF SUCH INDIVIDUAL OR INDIVIDUAL'S
   24  SPOUSE-
   25  --(I) IN AN INDEPENDENT LIVING  UNIT  (WHICH  HAS  ADDITIONAL  AVAILABLE
   26  FACILITIES  OUTSIDE  SUCH  UNIT  FOR  THE  PROVISION  OF MEALS AND OTHER
   27  PERSONAL CARE), AND
   28  --(II) IN AN ASSISTED LIVING FACILITY  OR  A  NURSING  FACILITY,  AS  IS
   29  AVAILABLE IN THE CONTINUING CARE FACILITY, AND
   30  --(C)  THE  INDIVIDUAL  OR INDIVIDUAL'S SPOUSE WILL BE PROVIDED ASSISTED
   31  LIVING OR NURSING CARE AS THE HEALTH OF SUCH INDIVIDUAL OR  INDIVIDUAL'S
   32  SPOUSE REQUIRES, AND AS IS AVAILABLE IN THE CONTINUING CARE FACILITY.
   33  --THE SECRETARY SHALL ISSUE GUIDANCE WHICH LIMITS SUCH TERM TO CONTRACTS
   34  WHICH  PROVIDE  ONLY  FACILITIES,  CARE,  AND SERVICES DESCRIBED IN THIS
   35  PARAGRAPH.
   36    (3) QUALIFIED CONTINUING CARE FACILITY. (A) IN GENERAL.  FOR  PURPOSES
   37  OF  THIS  SECTION, THE TERM "QUALIFIED CONTINUING CARE FACILITY" MEANS 1
   38  OR MORE FACILITIES-
   39  --(I) WHICH ARE DESIGNED  TO  PROVIDE  SERVICES  UNDER  CONTINUING  CARE
   40  CONTRACTS,
   41  --(II) WHICH INCLUDE AN INDEPENDENT LIVING UNIT, PLUS AN ASSISTED LIVING
   42  OR NURSING FACILITY, OR BOTH, AND
   43  --(III)  SUBSTANTIALLY  ALL  OF THE INDEPENDENT LIVING UNIT RESIDENTS OF
   44  WHICH ARE COVERED BY CONTINUING CARE CONTRACTS.
   45    (B) NURSING HOMES EXCLUDED. THE TERM "QUALIFIED CONTINUING CARE FACIL-
   46  ITY" SHALL NOT INCLUDE ANY FACILITY WHICH IS OF A TYPE WHICH  IS  TRADI-
   47  TIONALLY CONSIDERED A NURSING HOME.
   48    (I)  REGULATIONS.  (1)  IN GENERAL. THE SECRETARY SHALL PRESCRIBE SUCH
   49  REGULATIONS AS MAY BE NECESSARY OR APPROPRIATE TO CARRY OUT THE PURPOSES
   50  OF THIS SECTION, INCLUDING-
   51  --(A) REGULATIONS PROVIDING THAT WHERE, BY REASON OF  VARYING  RATES  OF
   52  INTEREST,  CONDITIONAL  INTEREST PAYMENTS, WAIVERS OF INTEREST, DISPOSI-
   53  TION OF THE LENDER'S OR  BORROWER'S  INTEREST  IN  THE  LOAN,  OR  OTHER
   54  CIRCUMSTANCES,  THE  PROVISIONS  OF  THIS  SECTION  DO NOT CARRY OUT THE
   55  PURPOSES OF THIS SECTION, ADJUSTMENTS TO THE PROVISIONS OF THIS  SECTION
       S. 6359                            306                           A. 8559
    1  WILL  BE  MADE TO THE EXTENT NECESSARY TO CARRY OUT THE PURPOSES OF THIS
    2  SECTION,
    3  --(B)  REGULATIONS FOR THE PURPOSE OF ASSURING THAT THE POSITIONS OF THE
    4  BORROWER AND LENDER ARE CONSISTENT AS TO THE APPLICATION (OR NONAPPLICA-
    5  TION) OF THIS SECTION, AND
    6  --(C) REGULATIONS EXEMPTING FROM THE APPLICATION  OF  THIS  SECTION  ANY
    7  CLASS OF TRANSACTIONS THE INTEREST ARRANGEMENTS OF WHICH HAVE NO SIGNIF-
    8  ICANT EFFECT ON ANY FEDERAL TAX LIABILITY OF THE LENDER OR THE BORROWER.
    9    (2)  ESTATE  TAX  COORDINATION.  UNDER  REGULATIONS  PRESCRIBED BY THE
   10  SECRETARY, ANY LOAN WHICH IS MADE WITH DONATIVE INTENT AND  WHICH  IS  A
   11  TERM  LOAN  SHALL  BE TAKEN INTO ACCOUNT FOR PURPOSES OF CHAPTER 11 IN A
   12  MANNER CONSISTENT WITH THE PROVISIONS OF SUBSECTION (B).
   13    S 6166. EXTENSION OF TIME FOR  PAYMENT  OF  ESTATE  TAX  WHERE  ESTATE
   14  CONSISTS LARGELY OF INTEREST IN CLOSELY HELD BUSINESS. (A) 5-YEAR DEFER-
   15  RAL; 10-YEAR INSTALLMENT PAYMENT.--
   16    (1)  IN  GENERAL.--IF THE VALUE OF AN INTEREST IN A CLOSELY HELD BUSI-
   17  NESS WHICH IS INCLUDED IN DETERMINING THE GROSS ESTATE OF A DECEDENT WHO
   18  WAS (AT THE DATE OF HIS DEATH) A  CITIZEN  OR  RESIDENT  OF  THE  UNITED
   19  STATES EXCEEDS 35 PERCENT OF THE ADJUSTED GROSS ESTATE, THE EXECUTOR MAY
   20  ELECT TO PAY PART OR ALL OF THE TAX IMPOSED BY SECTION 2001 IN 2 OR MORE
   21  (BUT NOT EXCEEDING 10) EQUAL INSTALLMENTS.
   22    (2)  LIMITATION.--THE  MAXIMUM  AMOUNT  OF  TAX  WHICH  MAY BE PAID IN
   23  INSTALLMENTS UNDER THIS SUBSECTION SHALL BE AN AMOUNT  WHICH  BEARS  THE
   24  SAME  RATIO  TO  THE TAX IMPOSED BY SECTION 2001 (REDUCED BY THE CREDITS
   25  AGAINST SUCH TAX) AS--
   26    (A) THE CLOSELY HELD BUSINESS AMOUNT, BEARS TO
   27    (B) THE AMOUNT OF THE ADJUSTED GROSS ESTATE.
   28    (3) DATE FOR PAYMENT OF INSTALLMENTS.--IF AN ELECTION  IS  MADE  UNDER
   29  PARAGRAPH (1), THE FIRST INSTALLMENT SHALL BE PAID ON OR BEFORE THE DATE
   30  SELECTED  BY  THE EXECUTOR WHICH IS NOT MORE THAN 5 YEARS AFTER THE DATE
   31  PRESCRIBED BY SECTION 6151(A) FOR PAYMENT OF THE TAX, AND EACH  SUCCEED-
   32  ING  INSTALLMENT  SHALL  BE  PAID  ON OR BEFORE THE DATE WHICH IS 1 YEAR
   33  AFTER THE DATE PRESCRIBED BY THIS PARAGRAPH FOR PAYMENT OF THE PRECEDING
   34  INSTALLMENT.
   35    (B) DEFINITIONS AND SPECIAL RULES.--
   36    (1) INTEREST IN CLOSELY HELD BUSINESS.--FOR PURPOSES OF THIS  SECTION,
   37  THE TERM "INTEREST IN A CLOSELY HELD BUSINESS" MEANS--
   38    (A) AN INTEREST AS A PROPRIETOR IN A TRADE OR BUSINESS CARRIED ON AS A
   39  PROPRIETORSHIP;
   40    (B)  AN  INTEREST AS A PARTNER IN A PARTNERSHIP CARRYING ON A TRADE OR
   41  BUSINESS, IF--
   42    (I) 20 PERCENT OR MORE OF THE TOTAL CAPITAL INTEREST IN SUCH  PARTNER-
   43  SHIP IS INCLUDED IN DETERMINING THE GROSS ESTATE OF THE DECEDENT, OR
   44    (II) SUCH PARTNERSHIP HAD 45 OR FEWER PARTNERS; OR
   45    (C) STOCK IN A CORPORATION CARRYING ON A TRADE OR BUSINESS IF--
   46    (I)  20  PERCENT  OR  MORE IN VALUE OF THE VOTING STOCK OF SUCH CORPO-
   47  RATION IS INCLUDED IN DETERMINING THE GROSS ESTATE OF THE DECEDENT, OR
   48    (II) SUCH CORPORATION HAD 45 OR FEWER SHAREHOLDERS.
   49    (2) RULES FOR APPLYING PARAGRAPH (1).--FOR PURPOSES OF PARAGRAPH (1)--
   50    (A) TIME FOR TESTING.--DETERMINATIONS SHALL BE MADE  AS  OF  THE  TIME
   51  IMMEDIATELY BEFORE THE DECEDENT'S DEATH.
   52    (B)  CERTAIN  INTERESTS HELD BY HUSBAND AND WIFE.--STOCK OR A PARTNER-
   53  SHIP INTEREST WHICH--
   54    (I) IS COMMUNITY PROPERTY OF A HUSBAND AND WIFE (OR  THE  INCOME  FROM
   55  WHICH  IS  COMMUNITY INCOME) UNDER THE APPLICABLE COMMUNITY PROPERTY LAW
   56  OF A STATE, OR
       S. 6359                            307                           A. 8559
    1    (II) IS HELD BY A HUSBAND AND WIFE AS JOINT TENANTS,  TENANTS  BY  THE
    2  ENTIRETY,  OR TENANTS IN COMMON, SHALL BE TREATED AS OWNED BY ONE SHARE-
    3  HOLDER OR ONE PARTNER, AS THE CASE MAY BE.
    4    (C) INDIRECT OWNERSHIP.--PROPERTY OWNED, DIRECTLY OR INDIRECTLY, BY OR
    5  FOR  A CORPORATION, PARTNERSHIP, ESTATE, OR TRUST SHALL BE CONSIDERED AS
    6  BEING OWNED PROPORTIONATELY BY OR FOR  ITS  SHAREHOLDERS,  PARTNERS,  OR
    7  BENEFICIARIES. FOR PURPOSES OF THE PRECEDING SENTENCE, A PERSON SHALL BE
    8  TREATED  AS A BENEFICIARY OF ANY TRUST ONLY IF SUCH PERSON HAS A PRESENT
    9  INTEREST IN THE TRUST.
   10    (D) CERTAIN INTERESTS HELD BY MEMBERS OF DECEDENT'S FAMILY.--ALL STOCK
   11  AND ALL PARTNERSHIP INTERESTS HELD BY THE DECEDENT OR BY ANY  MEMBER  OF
   12  HIS FAMILY (WITHIN THE MEANING OF SECTION 267(C)(4)) SHALL BE TREATED AS
   13  OWNED BY THE DECEDENT.
   14    (3)  FARMHOUSES  AND CERTAIN OTHER STRUCTURES TAKEN INTO ACCOUNT.--FOR
   15  PURPOSES OF THE 35-PERCENT REQUIREMENT OF SUBSECTION (A)(1), AN INTEREST
   16  IN A CLOSELY HELD BUSINESS WHICH IS THE BUSINESS OF FARMING INCLUDES  AN
   17  INTEREST  IN  RESIDENTIAL BUILDINGS AND RELATED IMPROVEMENTS ON THE FARM
   18  WHICH ARE OCCUPIED ON A REGULAR BASIS BY THE OWNER OR LESSEE OF THE FARM
   19  OR BY PERSONS EMPLOYED BY SUCH OWNER OR LESSEE FOR PURPOSES OF OPERATING
   20  OR MAINTAINING THE FARM.
   21    (4) VALUE.--FOR PURPOSES OF THIS SECTION, VALUE SHALL BE VALUE  DETER-
   22  MINED FOR PURPOSES OF CHAPTER 11 (RELATING TO ESTATE TAX).
   23    (5)  CLOSELY  HELD BUSINESS AMOUNT.--FOR PURPOSES OF THIS SECTION, THE
   24  TERM "CLOSELY HELD BUSINESS AMOUNT" MEANS THE VALUE OF THE INTEREST IN A
   25  CLOSELY HELD BUSINESS WHICH QUALIFIES UNDER SUBSECTION (A)(1).
   26    (6) ADJUSTED GROSS ESTATE.--FOR PURPOSES OF THIS  SECTION,  THE  TERM,
   27  "ADJUSTED  GROSS  ESTATE" MEANS THE VALUE OF THE GROSS ESTATE REDUCED BY
   28  THE SUM OF THE AMOUNTS ALLOWABLE AS A DEDUCTION UNDER  SECTION  2053  OR
   29  2054. SUCH SUM SHALL BE DETERMINED ON THE BASIS OF THE FACTS AND CIRCUM-
   30  STANCES  IN  EXISTENCE ON THE DATE (INCLUDING EXTENSIONS) FOR FILING THE
   31  RETURN OF TAX IMPOSED BY SECTION 2001 (OR, IF EARLIER, THE DATE ON WHICH
   32  SUCH RETURN IS FILED).
   33    (7) PARTNERSHIP INTERESTS AND STOCK WHICH IS NOT READILY TRADABLE.--
   34    (A) IN GENERAL.--IF THE EXECUTOR ELECTS THE BENEFITS OF THIS PARAGRAPH
   35  (AT SUCH TIME AND IN SUCH MANNER AS THE SECRETARY SHALL  BY  REGULATIONS
   36  PRESCRIBE), THEN--
   37    (I)  FOR  PURPOSES  OF  PARAGRAPH (1)(B)(I) OR (1)(C)(I) (WHICHEVER IS
   38  APPROPRIATE) AND FOR PURPOSES OF SUBSECTION (C), ANY CAPITAL INTEREST IN
   39  A PARTNERSHIP AND ANY NON-READILY-TRADABLE STOCK WHICH (AFTER THE APPLI-
   40  CATION OF PARAGRAPH (2)) IS TREATED AS OWNED BY THE  DECEDENT  SHALL  BE
   41  TREATED  AS  INCLUDED  IN  DETERMINING THE VALUE OF THE DECEDENT'S GROSS
   42  ESTATE,
   43    (II) THE EXECUTOR SHALL BE TREATED AS HAVING SELECTED UNDER SUBSECTION
   44  (A)(3) THE DATE PRESCRIBED BY SECTION 6151(A), AND
   45    (III) FOR PURPOSES OF APPLYING SECTION 6601(J), THE 2-PERCENT  PORTION
   46  (AS DEFINED IN SUCH SECTION) SHALL BE TREATED AS BEING ZERO.
   47    (B)  NON-READILY-TRADABLE  STOCK  DEFINED.--FOR PURPOSES OF THIS PARA-
   48  GRAPH, THE TERM "NON-READILY-TRADABLE STOCK" MEANS STOCK FOR  WHICH,  AT
   49  THE  TIME  OF  THE  DECEDENT'S  DEATH,  THERE  WAS  NO MARKET ON A STOCK
   50  EXCHANGE OR IN AN OVER-THE-COUNTER MARKET.
   51    (8) STOCK IN HOLDING COMPANY TREATED  AS  BUSINESS  COMPANY  STOCK  IN
   52  CERTAIN CASES.--
   53    (A)  IN  GENERAL.--IF  THE  EXECUTOR ELECTS THE BENEFITS OF THIS PARA-
   54  GRAPH, THEN--
   55    (I) HOLDING COMPANY STOCK  TREATED  AS  BUSINESS  COMPANY  STOCK.--FOR
   56  PURPOSES OF THIS SECTION, THE PORTION OF THE STOCK OF ANY HOLDING COMPA-
       S. 6359                            308                           A. 8559
    1  NY WHICH REPRESENTS DIRECT OWNERSHIP (OR INDIRECT OWNERSHIP THROUGH 1 OR
    2  MORE  OTHER  HOLDING  COMPANIES)  BY  SUCH COMPANY IN A BUSINESS COMPANY
    3  SHALL BE DEEMED TO BE STOCK IN SUCH BUSINESS COMPANY.
    4    (II)  5-YEAR  DEFERRAL FOR PRINCIPAL NOT TO APPLY.--THE EXECUTOR SHALL
    5  BE  TREATED  AS  HAVING  SELECTED  UNDER  SUBSECTION  (A)(3)  THE   DATE
    6  PRESCRIBED BY SECTION 6151(A).
    7    (III)  2-PERCENT INTEREST RATE NOT TO APPLY.--FOR PURPOSES OF APPLYING
    8  SECTION 6601(J), THE 2-PERCENT PORTION  (AS  DEFINED  IN  SUCH  SECTION)
    9  SHALL BE TREATED AS BEING ZERO.
   10    (B) ALL STOCK MUST BE NON-READILY-TRADABLE STOCK.--
   11    (I)  IN GENERAL.--NO STOCK SHALL BE TAKEN INTO ACCOUNT FOR PURPOSES OF
   12  APPLYING THIS PARAGRAPH UNLESS IT IS NON-READILY-TRADABLE STOCK
   13    (WITHIN THE MEANING OF PARAGRAPH (7)(B)).
   14    (II) SPECIAL APPLICATION WHERE ONLY HOLDING COMPANY STOCK IS NON-READ-
   15  ILY-TRADABLE STOCK.--IF THE REQUIREMENTS OF CLAUSE (I) ARE NOT MET,  BUT
   16  ALL OF THE STOCK OF EACH HOLDING COMPANY TAKEN INTO ACCOUNT IS NON-READ-
   17  ILY-TRADABLE,  THEN  THIS  PARAGRAPH  SHALL APPLY, BUT SUBSECTION (A)(1)
   18  SHALL BE APPLIED BY SUBSTITUTING "5" FOR "10".
   19    (C)   APPLICATION   OF   VOTING   STOCK   REQUIREMENT   OF   PARAGRAPH
   20  (1)(C)(I).--FOR  PURPOSES  OF CLAUSE (I) OF PARAGRAPH (1)(C), THE DEEMED
   21  STOCK RESULTING FROM THE APPLICATION OF SUBPARAGRAPH (A) SHALL BE TREAT-
   22  ED AS VOTING STOCK TO THE EXTENT THAT VOTING STOCK IN THE HOLDING COMPA-
   23  NY OWNS DIRECTLY (OR THROUGH THE VOTING STOCK OF 1 OR MORE OTHER HOLDING
   24  COMPANIES) VOTING STOCK IN THE BUSINESS COMPANY.
   25    (D) DEFINITIONS.--FOR PURPOSES OF THIS PARAGRAPH--
   26    (I) HOLDING COMPANY.--THE TERM "HOLDING COMPANY" MEANS ANY CORPORATION
   27  HOLDING STOCK IN ANOTHER CORPORATION.
   28    (II) BUSINESS COMPANY.--THE TERM "BUSINESS COMPANY" MEANS  ANY  CORPO-
   29  RATION CARRYING ON A TRADE OR BUSINESS.
   30    (9) DEFERRAL NOT AVAILABLE FOR PASSIVE ASSETS.--
   31    (A) IN GENERAL.--FOR PURPOSES OF SUBSECTION (A)(1) AND DETERMINING THE
   32  CLOSELY  HELD  BUSINESS AMOUNT (BUT NOT FOR PURPOSES OF SUBSECTION (G)),
   33  THE VALUE OF ANY INTEREST IN A CLOSELY HELD BUSINESS SHALL  NOT  INCLUDE
   34  THE  VALUE  OF  THAT  PORTION  OF SUCH INTEREST WHICH IS ATTRIBUTABLE TO
   35  PASSIVE ASSETS HELD BY THE BUSINESS.
   36    (B) PASSIVE ASSET DEFINED.--FOR PURPOSES OF THIS PARAGRAPH--
   37    (I) IN GENERAL.--THE TERM "PASSIVE ASSET" MEANS ANY ASSET  OTHER  THAN
   38  AN ASSET USED IN CARRYING ON A TRADE OR BUSINESS.
   39    (II)  STOCK  TREATED  AS  PASSIVE  ASSET.--THE  TERM  "PASSIVE  ASSET"
   40  INCLUDES ANY STOCK IN ANOTHER CORPORATION UNLESS--
   41    (I) SUCH STOCK IS TREATED AS HELD BY THE  DECEDENT  BY  REASON  OF  AN
   42  ELECTION UNDER PARAGRAPH (8), AND
   43    (II) SUCH STOCK QUALIFIED UNDER SUBSECTION (A)(1).
   44    (III) EXCEPTION FOR ACTIVE CORPORATIONS.--IF--
   45    (I) A CORPORATION OWNS 20 PERCENT OR MORE IN VALUE OF THE VOTING STOCK
   46  OF ANOTHER CORPORATION, OR SUCH OTHER CORPORATION HAS 45 OR FEWER SHARE-
   47  HOLDERS, AND
   48    (II) 80 PERCENT OR MORE OF THE VALUE OF THE ASSETS OF EACH SUCH CORPO-
   49  RATION  IS  ATTRIBUTABLE  TO ASSETS USED IN CARRYING ON A TRADE OR BUSI-
   50  NESS, THEN SUCH CORPORATIONS SHALL  BE  TREATED  AS  1  CORPORATION  FOR
   51  PURPOSES  OF CLAUSE (II). FOR PURPOSES OF APPLYING SUBCLAUSE (II) TO THE
   52  CORPORATION HOLDING THE STOCK OF THE OTHER CORPORATION, SUCH STOCK SHALL
   53  NOT BE TAKEN INTO ACCOUNT.
   54    (10) STOCK IN QUALIFYING LENDING AND FINANCE BUSINESS TREATED AS STOCK
   55  IN AN ACTIVE TRADE OR BUSINESS COMPANY.--
       S. 6359                            309                           A. 8559
    1    (A) IN GENERAL.--IF THE EXECUTOR ELECTS THE  BENEFITS  OF  THIS  PARA-
    2  GRAPH, THEN--
    3    (I)  STOCK IN QUALIFYING LENDING AND FINANCE BUSINESS TREATED AS STOCK
    4  IN AN ACTIVE TRADE OR BUSINESS COMPANY.--FOR PURPOSES OF  THIS  SECTION,
    5  ANY  ASSET  USED  IN  A QUALIFYING LENDING AND FINANCE BUSINESS SHALL BE
    6  TREATED AS AN ASSET WHICH IS USED IN CARRYING ON A TRADE OR BUSINESS.
    7    (II) 5-YEAR DEFERRAL FOR PRINCIPAL NOT TO APPLY.--THE  EXECUTOR  SHALL
    8  BE   TREATED  AS  HAVING  SELECTED  UNDER  SUBSECTION  (A)(3)  THE  DATE
    9  PRESCRIBED BY SECTION 6151(A).
   10    (III)  5  EQUAL  INSTALLMENTS  ALLOWED.--FOR  PURPOSES   OF   APPLYING
   11  SUBSECTION
   12    (A)(1), "5" SHALL BE SUBSTITUTED FOR "10".
   13    (B) DEFINITIONS.--FOR PURPOSES OF THIS PARAGRAPH--
   14    (I)  QUALIFYING  LENDING  AND  FINANCE BUSINESS.--THE TERM "QUALIFYING
   15  LENDING AND FINANCE BUSINESS" MEANS A LENDING AND FINANCE BUSINESS, IF--
   16    (I) BASED ON ALL THE FACTS AND CIRCUMSTANCES  IMMEDIATELY  BEFORE  THE
   17  DATE  OF  THE  DECEDENT'S  DEATH,  THERE  WAS  SUBSTANTIAL ACTIVITY WITH
   18  RESPECT TO THE LENDING AND FINANCE BUSINESS, OR
   19    (II) DURING AT LEAST 3 OF THE 5 TAXABLE YEARS ENDING BEFORE  THE  DATE
   20  OF THE DECEDENT'S DEATH, SUCH BUSINESS HAD AT LEAST 1 FULL-TIME EMPLOYEE
   21  SUBSTANTIALLY  ALL  OF WHOSE SERVICES WERE THE ACTIVE MANAGEMENT OF SUCH
   22  BUSINESS, 10 FULL-TIME, NONOWNER EMPLOYEES SUBSTANTIALLY  ALL  OF  WHOSE
   23  SERVICES WERE DIRECTLY RELATED TO SUCH BUSINESS, AND $5,000,000 IN GROSS
   24  RECEIPTS FROM ACTIVITIES DESCRIBED IN CLAUSE (II).
   25    (II)  LENDING  AND  FINANCE  BUSINESS.--THE  TERM "LENDING AND FINANCE
   26  BUSINESS" MEANS A TRADE OR BUSINESS OF--
   27    (I) MAKING LOANS,
   28    (II) PURCHASING OR DISCOUNTING ACCOUNTS RECEIVABLE, NOTES, OR INSTALL-
   29  MENT OBLIGATIONS,
   30    (III) ENGAGING IN RENTAL AND LEASING OF  REAL  AND  TANGIBLE  PERSONAL
   31  PROPERTY,  INCLUDING ENTERING INTO LEASES AND PURCHASING, SERVICING, AND
   32  DISPOSING OF LEASES AND LEASED ASSETS,
   33    (IV) RENDERING SERVICES OR MAKING FACILITIES AVAILABLE IN THE ORDINARY
   34  COURSE OF A LENDING OR FINANCE BUSINESS, AND
   35    (V) RENDERING SERVICES OR MAKING FACILITIES  AVAILABLE  IN  CONNECTION
   36  WITH  ACTIVITIES  DESCRIBED IN SUBCLAUSES (I) THROUGH (IV) CARRIED ON BY
   37  THE CORPORATION RENDERING SERVICES OR MAKING  FACILITIES  AVAILABLE,  OR
   38  ANOTHER  CORPORATION  WHICH IS A MEMBER OF THE SAME AFFILIATED GROUP (AS
   39  DEFINED IN SECTION 1504 WITHOUT REGARD TO SECTION 1504(B)(3)).
   40    (III) LIMITATION.--THE TERM "QUALIFYING LENDING AND FINANCE  BUSINESS"
   41  SHALL  NOT  INCLUDE  ANY  INTEREST IN AN ENTITY, IF THE STOCK OR DEBT OF
   42  SUCH ENTITY OR A CONTROLLED GROUP (AS DEFINED IN SECTION  267(F)(1))  OF
   43  WHICH  SUCH  ENTITY  WAS A MEMBER WAS READILY TRADABLE ON AN ESTABLISHED
   44  SECURITIES MARKET OR SECONDARY MARKET (AS DEFINED BY THE  SECRETARY)  AT
   45  ANY TIME WITHIN 3 YEARS BEFORE THE DATE OF THE DECEDENT'S DEATH.
   46    (C)  SPECIAL  RULE  FOR  INTEREST  IN 2 OR MORE CLOSELY HELD BUSINESS-
   47  ES.--FOR PURPOSES OF THIS SECTION, INTEREST IN 2 OR  MORE  CLOSELY  HELD
   48  BUSINESSES, WITH RESPECT TO EACH OF WHICH THERE IS INCLUDED IN DETERMIN-
   49  ING  THE  VALUE OF THE DECEDENT'S GROSS ESTATE 20 PERCENT OR MORE OF THE
   50  TOTAL VALUE OF EACH SUCH BUSINESS, SHALL BE TREATED AS AN INTEREST IN  A
   51  SINGLE CLOSELY HELD BUSINESS. FOR PURPOSES OF THE 20-PERCENT REQUIREMENT
   52  OF  THE PRECEDING SENTENCE, AN INTEREST IN A CLOSELY HELD BUSINESS WHICH
   53  REPRESENTS THE SURVIVING SPOUSE'S INTEREST IN PROPERTY HELD BY THE DECE-
   54  DENT AND THE SURVIVING SPOUSE AS COMMUNITY PROPERTY OR AS JOINT TENANTS,
   55  TENANTS BY THE ENTIRETY, OR TENANTS IN COMMON SHALL BE TREATED AS HAVING
   56  BEEN INCLUDED IN DETERMINING THE VALUE OF THE DECEDENT'S GROSS ESTATE.
       S. 6359                            310                           A. 8559
    1    (D) ELECTION.--ANY ELECTION UNDER SUBSECTION (A)  SHALL  BE  MADE  NOT
    2  LATER  THAN THE TIME PRESCRIBED BY SECTION 6075(A) FOR FILING THE RETURN
    3  OF TAX IMPOSED BY SECTION 2001 (INCLUDING EXTENSIONS THEREOF), AND SHALL
    4  BE MADE IN SUCH MANNER AS THE SECRETARY SHALL BY REGULATIONS  PRESCRIBE.
    5  IF  AN  ELECTION  UNDER  SUBSECTION  (A) IS MADE, THE PROVISIONS OF THIS
    6  SUBTITLE SHALL APPLY AS THOUGH THE SECRETARY WERE EXTENDING THE TIME FOR
    7  PAYMENT OF THE TAX.
    8    (E) PRORATION OF DEFICIENCY TO INSTALLMENTS.--IF AN ELECTION  IS  MADE
    9  UNDER  SUBSECTION (A) TO PAY ANY PART OF THE TAX IMPOSED BY SECTION 2001
   10  IN INSTALLMENTS AND A DEFICIENCY HAS BEEN ASSESSED, THE DEFICIENCY SHALL
   11  (SUBJECT TO THE LIMITATION PROVIDED BY SUBSECTION (A)(2)) BE PRORATED TO
   12  THE INSTALLMENTS PAYABLE UNDER SUBSECTION (A). THE PART OF THE DEFICIEN-
   13  CY SO PRORATED TO ANY INSTALLMENT THE DATE FOR PAYMENT OF WHICH HAS  NOT
   14  ARRIVED  SHALL  BE COLLECTED AT THE SAME TIME AS, AND AS A PART OF, SUCH
   15  INSTALLMENT. THE PART OF THE DEFICIENCY SO PRORATED TO  ANY  INSTALLMENT
   16  THE  DATE FOR PAYMENT OF WHICH HAS ARRIVED SHALL BE PAID UPON NOTICE AND
   17  DEMAND FROM THE SECRETARY. THIS SUBSECTION SHALL NOT APPLY IF THE  DEFI-
   18  CIENCY IS DUE TO NEGLIGENCE, TO INTENTIONAL DISREGARD OF RULES AND REGU-
   19  LATIONS, OR TO FRAUD WITH INTENT TO EVADE TAX.
   20    (F)  TIME  FOR  PAYMENT  OF  INTEREST.--IF THE TIME FOR PAYMENT OF ANY
   21  AMOUNT OF TAX HAS BEEN EXTENDED UNDER THIS SECTION--
   22    (1) INTEREST FOR FIRST 5 YEARS.--INTEREST PAYABLE UNDER  SECTION  6601
   23  OF  ANY  UNPAID PORTION OF SUCH AMOUNT ATTRIBUTABLE TO THE FIRST 5 YEARS
   24  AFTER THE DATE PRESCRIBED BY SECTION 6151(A)  FOR  PAYMENT  OF  THE  TAX
   25  SHALL BE PAID ANNUALLY.
   26    (2)  INTEREST FOR PERIODS AFTER FIRST 5 YEARS.--INTEREST PAYABLE UNDER
   27  SECTION 6601 ON ANY UNPAID PORTION OF SUCH AMOUNT  ATTRIBUTABLE  TO  ANY
   28  PERIOD  AFTER  THE  5-YEAR  PERIOD REFERRED TO IN PARAGRAPH (1) SHALL BE
   29  PAID ANNUALLY AT THE SAME TIME AS, AND AS A PART  OF,  EACH  INSTALLMENT
   30  PAYMENT OF THE TAX.
   31    (3)  INTEREST  IN  THE CASE OF CERTAIN DEFICIENCIES.--IN THE CASE OF A
   32  DEFICIENCY TO WHICH SUBSECTION (E) APPLIES WHICH IS ASSESSED  AFTER  THE
   33  CLOSE  OF  THE  5-YEAR  PERIOD  REFERRED  TO  IN PARAGRAPH (1), INTEREST
   34  ATTRIBUTABLE TO SUCH 5-YEAR PERIOD, AND INTEREST  ASSIGNED  UNDER  PARA-
   35  GRAPH  (2)  TO ANY INSTALLMENT THE DATE FOR PAYMENT OF WHICH HAS ARRIVED
   36  ON OR BEFORE THE DATE OF THE ASSESSMENT OF THE DEFICIENCY, SHALL BE PAID
   37  UPON NOTICE AND DEMAND FROM THE SECRETARY.
   38    (4) SELECTION OF SHORTER PERIOD.--IF THE EXECUTOR HAS SELECTED A PERI-
   39  OD SHORTER THAN 5 YEARS UNDER SUBSECTION  (A)(3),  SUCH  SHORTER  PERIOD
   40  SHALL BE SUBSTITUTED FOR 5 YEARS IN PARAGRAPHS (1), (2), AND (3) OF THIS
   41  SUBSECTION.
   42    (G) ACCELERATION OF PAYMENT.--
   43    (1) DISPOSITION OF INTEREST; WITHDRAWAL OF FUNDS FROM BUSINESS.--
   44    (A) IF--
   45    (I)(I)  ANY  PORTION  OF  AN INTEREST IN A CLOSELY HELD BUSINESS WHICH
   46  QUALIFIES UNDER SUBSECTION (A)(1) IS DISTRIBUTED,  SOLD,  EXCHANGED,  OR
   47  OTHERWISE DISPOSED OF, OR
   48    (II)  MONEY  AND  OTHER  PROPERTY  ATTRIBUTABLE TO SUCH AN INTEREST IS
   49  WITHDRAWN FROM SUCH TRADE OR BUSINESS, AND
   50    (II) THE AGGREGATE OF SUCH DISTRIBUTIONS, SALES, EXCHANGES,  OR  OTHER
   51  DISPOSITIONS  AND  WITHDRAWALS EQUALS OR EXCEEDS 50 PERCENT OF THE VALUE
   52  OF SUCH INTEREST, THEN THE EXTENSION OF TIME FOR PAYMENT OF TAX PROVIDED
   53  IN SUBSECTION (A) SHALL CEASE TO APPLY, AND THE UNPAID  PORTION  OF  THE
   54  TAX  PAYABLE  IN  INSTALLMENTS SHALL BE PAID UPON NOTICE AND DEMAND FROM
   55  THE SECRETARY.
       S. 6359                            311                           A. 8559
    1    (B) IN THE CASE OF A DISTRIBUTION IN  REDEMPTION  OF  STOCK  TO  WHICH
    2  SECTION  303  (OR  SO  MUCH  OF  SECTION  304 AS RELATES TO SECTION 303)
    3  APPLIES--
    4    (I)  THE  REDEMPTION  OF  SUCH  STOCK, AND THE WITHDRAWAL OF MONEY AND
    5  OTHER PROPERTY DISTRIBUTED IN SUCH REDEMPTION, SHALL NOT BE TREATED AS A
    6  DISTRIBUTION OR WITHDRAWAL FOR PURPOSES OF SUBPARAGRAPH (A), AND
    7    (II) FOR PURPOSES OF SUBPARAGRAPH (A), THE VALUE OF  THE  INTEREST  IN
    8  THE  CLOSELY  HELD BUSINESS SHALL BE CONSIDERED TO BE SUCH VALUE REDUCED
    9  BY THE VALUE OF THE STOCK REDEEMED.
   10    THIS  SUBPARAGRAPH  SHALL  APPLY  ONLY  IF,  ON  OR  BEFORE  THE  DATE
   11  PRESCRIBED BY SUBSECTION (A)(3) FOR THE PAYMENT OF THE FIRST INSTALLMENT
   12  WHICH BECOMES DUE AFTER THE DATE OF THE DISTRIBUTION (OR, IF EARLIER, ON
   13  OR  BEFORE  THE DAY WHICH IS 1 YEAR AFTER THE DATE OF THE DISTRIBUTION),
   14  THERE IS PAID AN AMOUNT OF THE TAX IMPOSED BY SECTION 2001 NOT LESS THAN
   15  THE AMOUNT OF MONEY AND OTHER PROPERTY DISTRIBUTED.
   16    (C) SUBPARAGRAPH (A)(I) DOES NOT APPLY TO AN EXCHANGE OF STOCK  PURSU-
   17  ANT  TO  A PLAN OF REORGANIZATION DESCRIBED IN SUBPARAGRAPH (D), (E), OR
   18  (F) OF SECTION 368(A)(1) NOR TO AN EXCHANGE TO WHICH SECTION 355 (OR  SO
   19  MUCH  OF  SECTION  356 AS RELATES TO SECTION 355) APPLIES; BUT ANY STOCK
   20  RECEIVED IN SUCH AN EXCHANGE SHALL BE TREATED FOR PURPOSES  OF  SUBPARA-
   21  GRAPH (A)(I) AS AN INTEREST QUALIFYING UNDER SUBSECTION (A)(1).
   22    (D)  SUBPARAGRAPH  (A)(I)  DOES NOT APPLY TO A TRANSFER OF PROPERTY OF
   23  THE DECEDENT TO A PERSON ENTITLED BY REASON OF THE DECEDENT'S  DEATH  TO
   24  RECEIVE  SUCH  PROPERTY UNDER THE DECEDENT'S WILL, THE APPLICABLE LAW OF
   25  DESCENT AND DISTRIBUTION, OR A TRUST CREATED BY THE DECEDENT. A  SIMILAR
   26  RULE  SHALL APPLY IN THE CASE OF A SERIES OF SUBSEQUENT TRANSFERS OF THE
   27  PROPERTY BY REASON OF DEATH SO LONG AS EACH TRANSFER IS TO A  MEMBER  OF
   28  THE  FAMILY  (WITHIN THE MEANING OF SECTION 267(C)(4)) OF THE TRANSFEROR
   29  IN SUCH TRANSFER.
   30    (E) CHANGES IN INTEREST IN HOLDING COMPANY.--IF ANY STOCK IN A HOLDING
   31  COMPANY IS  TREATED  AS  STOCK  IN  A  BUSINESS  COMPANY  BY  REASON  OF
   32  SUBSECTION (B)(8)(A)--
   33    (I)  ANY  DISPOSITION  OF  ANY  INTEREST IN SUCH STOCK IN SUCH HOLDING
   34  COMPANY WHICH WAS INCLUDED IN DETERMINING THE GROSS ESTATE OF THE  DECE-
   35  DENT, OR
   36    (II)  ANY  WITHDRAWAL OF ANY MONEY OR OTHER PROPERTY FROM SUCH HOLDING
   37  COMPANY ATTRIBUTABLE TO ANY INTEREST INCLUDED IN DETERMINING  THE  GROSS
   38  ESTATE OF THE DECEDENT,
   39    SHALL  BE TREATED FOR PURPOSES OF SUBPARAGRAPH (A) AS A DISPOSITION OF
   40  (OR A WITHDRAWAL WITH RESPECT TO) THE STOCK QUALIFYING UNDER  SUBSECTION
   41  (A)(1).
   42    (F)  CHANGES IN INTEREST IN BUSINESS COMPANY.--IF ANY STOCK IN A HOLD-
   43  ING COMPANY IS TREATED AS STOCK IN  A  BUSINESS  COMPANY  BY  REASON  OF
   44  SUBSECTION (B)(8)(A)--
   45    (I)  ANY  DISPOSITION  OF  ANY  INTEREST IN SUCH STOCK IN THE BUSINESS
   46  COMPANY BY SUCH HOLDING COMPANY, OR
   47    (II) ANY WITHDRAWAL OF ANY MONEY OR OTHER PROPERTY FROM SUCH  BUSINESS
   48  COMPANY  ATTRIBUTABLE  TO SUCH STOCK BY SUCH HOLDING COMPANY OWNING SUCH
   49  STOCK,
   50    SHALL BE TREATED FOR PURPOSES OF SUBPARAGRAPH (A) AS A DISPOSITION  OF
   51  (OR  A WITHDRAWAL WITH RESPECT TO) THE STOCK QUALIFYING UNDER SUBSECTION
   52  (A)(1).
   53    (2) UNDISTRIBUTED INCOME OF ESTATE.--
   54    (A) IF AN ELECTION IS MADE UNDER  THIS  SECTION  AND  THE  ESTATE  HAS
   55  UNDISTRIBUTED NET INCOME FOR ANY TAXABLE YEAR ENDING ON OR AFTER THE DUE
   56  DATE  FOR  THE  FIRST  INSTALLMENT, THE EXECUTOR SHALL, ON OR BEFORE THE
       S. 6359                            312                           A. 8559
    1  DATE PRESCRIBED BY LAW FOR FILING THE INCOME TAX RETURN FOR SUCH TAXABLE
    2  YEAR (INCLUDING EXTENSIONS THEREOF), PAY AN AMOUNT EQUAL TO SUCH  UNDIS-
    3  TRIBUTED  NET  INCOME  IN  LIQUIDATION  OF THE UNPAID PORTION OF THE TAX
    4  PAYABLE IN INSTALLMENTS.
    5    (B)  FOR PURPOSES OF SUBPARAGRAPH (A), THE UNDISTRIBUTED NET INCOME OF
    6  THE ESTATE FOR ANY TAXABLE YEAR IS THE AMOUNT BY WHICH THE DISTRIBUTABLE
    7  NET INCOME OF THE ESTATE FOR SUCH TAXABLE YEAR (AS  DEFINED  IN  SECTION
    8  643) EXCEEDS THE SUM OF--
    9    (I)  THE AMOUNTS FOR SUCH TAXABLE YEAR SPECIFIED IN PARAGRAPHS (1) AND
   10  (2) OF SECTION 661(A) (RELATING TO DEDUCTIONS FOR DISTRIBUTIONS, ETC.);
   11    (II) THE AMOUNT OF TAX IMPOSED FOR THE  TAXABLE  YEAR  ON  THE  ESTATE
   12  UNDER CHAPTER 1; AND
   13    (III)  THE AMOUNT OF THE TAX IMPOSED BY SECTION 2001 (INCLUDING INTER-
   14  EST) PAID BY THE EXECUTOR DURING THE TAXABLE YEAR (OTHER THAN ANY AMOUNT
   15  PAID PURSUANT TO THIS PARAGRAPH).
   16    (C) FOR PURPOSES OF THIS PARAGRAPH, IF ANY STOCK IN A  CORPORATION  IS
   17  TREATED  AS  STOCK  IN  ANOTHER  CORPORATION  BY  REASON  OF  SUBSECTION
   18  (B)(8)(A), ANY DIVIDENDS PAID BY SUCH OTHER CORPORATION  TO  THE  CORPO-
   19  RATION  SHALL  BE  TREATED  AS PAID TO THE ESTATE OF THE DECEDENT TO THE
   20  EXTENT ATTRIBUTABLE TO THE STOCK QUALIFYING UNDER SUBSECTION (A)(1).
   21    (3) FAILURE TO MAKE PAYMENT OF PRINCIPAL OR INTEREST.--
   22    (A) IN GENERAL.--EXCEPT  AS  PROVIDED  IN  SUBPARAGRAPH  (B),  IF  ANY
   23  PAYMENT  OF  PRINCIPAL  OR INTEREST UNDER THIS SECTION IS NOT PAID ON OR
   24  BEFORE THE DATE FIXED FOR ITS PAYMENT BY  THIS  SECTION  (INCLUDING  ANY
   25  EXTENSION  OF  TIME),  THE UNPAID PORTION OF THE TAX PAYABLE IN INSTALL-
   26  MENTS SHALL BE PAID UPON NOTICE AND DEMAND FROM THE SECRETARY.
   27    (B) PAYMENT WITHIN 6 MONTHS.--IF ANY PAYMENT OF PRINCIPAL OR  INTEREST
   28  UNDER  THIS  SECTION  IS NOT PAID ON OR BEFORE THE DATE DETERMINED UNDER
   29  SUBPARAGRAPH (A) BUT IS PAID WITHIN 6 MONTHS OF SUCH DATE--
   30    (I) THE PROVISIONS OF SUBPARAGRAPH (A) SHALL NOT APPLY WITH RESPECT TO
   31  SUCH PAYMENT,
   32    (II) THE PROVISIONS OF SECTION 6601(J) SHALL NOT APPLY WITH RESPECT TO
   33  THE DETERMINATION OF INTEREST ON SUCH PAYMENT, AND
   34    (III) THERE IS IMPOSED A PENALTY IN AN AMOUNT  EQUAL  TO  THE  PRODUCT
   35  OF--
   36    (I) 5 PERCENT OF THE AMOUNT OF SUCH PAYMENT, MULTIPLIED BY
   37    (II)  THE  NUMBER OF MONTHS (OR FRACTIONS THEREOF) AFTER SUCH DATE AND
   38  BEFORE PAYMENT IS MADE.  THE PENALTY IMPOSED UNDER CLAUSE (III) SHALL BE
   39  TREATED IN THE SAME MANNER AS A PENALTY IMPOSED UNDER  SUBCHAPTER  B  OF
   40  CHAPTER 68.
   41    (H) ELECTION IN CASE OF CERTAIN DEFICIENCIES.--
   42    (1) IN GENERAL.--IF--
   43    (A) A DEFICIENCY IN THE TAX IMPOSED BY SECTION 2001 IS ASSESSED,
   44    (B) THE ESTATE QUALIFIES UNDER SUBSECTION (A)(1), AND
   45    (C)  THE  EXECUTOR  HAS NOT MADE AN ELECTION UNDER SUBSECTION (A), THE
   46  EXECUTOR MAY  ELECT  TO  PAY  THE  DEFICIENCY  IN  INSTALLMENTS.    THIS
   47  SUBSECTION  SHALL  NOT  APPLY IF THE DEFICIENCY IS DUE TO NEGLIGENCE, TO
   48  INTENTIONAL DISREGARD OF RULES AND REGULATIONS, OR TO FRAUD WITH  INTENT
   49  TO EVADE TAX.
   50    (2) TIME OF ELECTION.--AN ELECTION UNDER THIS SUBSECTION SHALL BE MADE
   51  NOT LATER THAN 60 DAYS AFTER ISSUANCE OF NOTICE AND DEMAND BY THE SECRE-
   52  TARY FOR THE PAYMENT OF THE DEFICIENCY, AND SHALL BE MADE IN SUCH MANNER
   53  AS THE SECRETARY SHALL BY REGULATIONS PRESCRIBE.
   54    (3)  EFFECT OF ELECTION ON PAYMENT.--IF AN ELECTION IS MADE UNDER THIS
   55  SUBSECTION, THE DEFICIENCY SHALL (SUBJECT TO THE LIMITATION PROVIDED  BY
   56  SUBSECTION (A)(2)) BE PRORATED TO THE INSTALLMENTS WHICH WOULD HAVE BEEN
       S. 6359                            313                           A. 8559
    1  DUE IF AN ELECTION HAD BEEN TIMELY MADE UNDER SUBSECTION (A) AT THE TIME
    2  THE  ESTATE TAX RETURN WAS FILED. THE PART OF THE DEFICIENCY SO PRORATED
    3  TO ANY INSTALLMENT THE DATE FOR PAYMENT  OF  WHICH  WOULD  HAVE  ARRIVED
    4  SHALL  BE  PAID  AT  THE  TIME  OF THE MAKING OF THE ELECTION UNDER THIS
    5  SUBSECTION. THE PORTION OF THE DEFICIENCY SO  PRORATED  TO  INSTALLMENTS
    6  THE DATE FOR PAYMENT OF WHICH WOULD NOT HAVE SO ARRIVED SHALL BE PAID AT
    7  THE  TIME  SUCH INSTALLMENTS WOULD HAVE BEEN DUE IF SUCH AN ELECTION HAD
    8  BEEN MADE.
    9    (I) SPECIAL RULE FOR CERTAIN DIRECT  SKIPS.--TO  THE  EXTENT  THAT  AN
   10  INTEREST  IN  A  CLOSELY  HELD  BUSINESS IS THE SUBJECT OF A DIRECT SKIP
   11  (WITHIN THE MEANING OF SECTION 2612(C)) OCCURRING AT THE  SAME  TIME  AS
   12  AND  AS  A  RESULT  OF  THE  DECEDENT'S DEATH, THEN FOR PURPOSES OF THIS
   13  SECTION ANY TAX IMPOSED BY SECTION 2601 ON THE TRANSFER OF SUCH INTEREST
   14  SHALL BE TREATED AS IF IT WERE ADDITIONAL TAX IMPOSED BY SECTION 2001.
   15    (J) REGULATIONS.--THE SECRETARY SHALL PRESCRIBE  SUCH  REGULATIONS  AS
   16  MAY BE NECESSARY TO THE APPLICATION OF THIS SECTION.
   17    (K) CROSS REFERENCES.--
   18    (1)  SECURITY.-- FOR AUTHORITY OF THE SECRETARY TO REQUIRE SECURITY IN
   19  THE CASE OF AN EXTENSION UNDER THIS SECTION, SEE SECTION 6165.
   20    (2) LIEN.--FOR SPECIAL LIEN (IN LIEU OF BOND) IN THE CASE OF AN EXTEN-
   21  SION UNDER THIS SECTION, SEE SECTION 6324A.
   22    (3) PERIOD OF LIMITATION.--FOR EXTENSION OF THE PERIOD  OF  LIMITATION
   23  IN THE CASE OF AN EXTENSION UNDER THIS SECTION, SEE SECTION 6503(D).
   24    (4)  INTEREST.--FOR  PROVISIONS RELATING TO INTEREST ON TAX PAYABLE IN
   25  INSTALLMENTS UNDER THIS SECTION, SEE SUBSECTION (J) OF SECTION 6601.
   26    (5) TRANSFERS WITHIN 3 YEARS OF DEATH.--FOR SPECIAL RULE FOR  QUALIFY-
   27  ING  AN  ESTATE  UNDER  THIS SECTION WHERE PROPERTY HAS BEEN TRANSFERRED
   28  WITHIN 3 YEARS OF DECEDENT'S DEATH, SEE SECTION 2035(C)(2).
   29    S 11. This act shall take effect April 1,  2014  and  shall  apply  to
   30  estates  of  decedents  dying on and after that date; provided, however,
   31  that the amendments to subsection (c) of section 951 of the tax law made
   32  by section one  of  this  act  shall  not  affect  the  repeal  of  such
   33  subsection and shall be deemed repealed therewith.
   34                                   PART Y
   35    Section 1. Article 19 of the tax law is REPEALED.
   36    S 2. Section 1820 of the tax law is REPEALED.
   37    S  3.  Subdivision  1  of  section 171-a of the tax law, as amended by
   38  section 1 of part R of chapter 60 of the laws of  2004,  is  amended  to
   39  read as follows:
   40    1.  All  taxes,  interest, penalties and fees collected or received by
   41  the commissioner or the commissioner's duly authorized agent under arti-
   42  cles nine (except section one hundred eighty-two-a thereof and except as
   43  otherwise  provided  in  section  two  hundred  five  thereof),  nine-A,
   44  twelve-A  (except  as  otherwise provided in section two hundred eighty-
   45  four-d thereof), thirteen, thirteen-A (except as otherwise  provided  in
   46  section  three  hundred  twelve  thereof),  eighteen, [nineteen,] twenty
   47  (except as otherwise provided in section four hundred eighty-two  there-
   48  of),  twenty-one,  twenty-two,  twenty-six,  twenty-six-B,  twenty-eight
   49  (except as otherwise provided in section eleven hundred  two  or  eleven
   50  hundred  three thereof), twenty-eight-A, thirty-one (except as otherwise
   51  provided in section fourteen hundred  twenty-one  thereof),  thirty-two,
   52  thirty-three and thirty-three-A of this chapter shall be deposited daily
   53  in  one  account  with  such  responsible banks, banking houses or trust
   54  companies as may be designated by the comptroller, to the credit of  the
       S. 6359                            314                           A. 8559
    1  comptroller.  Such  an account may be established in one or more of such
    2  depositories. Such deposits shall be kept separate and  apart  from  all
    3  other  money in the possession of the comptroller. The comptroller shall
    4  require  adequate  security  from  all  such  depositories. Of the total
    5  revenue collected or received under such articles of this  chapter,  the
    6  comptroller  shall  retain in the comptroller's hands such amount as the
    7  commissioner may determine to be necessary for refunds or reimbursements
    8  under such articles of this chapter and article ten thereof out of which
    9  amount the comptroller shall pay any refunds or reimbursements to  which
   10  taxpayers  shall  be  entitled  under the provisions of such articles of
   11  this chapter and article ten thereof. The  commissioner  and  the  comp-
   12  troller shall maintain a system of accounts showing the amount of reven-
   13  ue  collected  or  received from each of the taxes imposed by such arti-
   14  cles. The comptroller, after reserving the amount to pay such refunds or
   15  reimbursements, shall, on or before the tenth day  of  each  month,  pay
   16  into  the  state  treasury to the credit of the general fund all revenue
   17  deposited under this section during the  preceding  calendar  month  and
   18  remaining  to the comptroller's credit on the last day of such preceding
   19  month, (i) except that the comptroller shall pay to the state department
   20  of social services that amount of overpayments of tax imposed by article
   21  twenty-two of this chapter and the interest  on  such  amount  which  is
   22  certified  to  the  comptroller  by the commissioner as the amount to be
   23  credited against past-due support pursuant to subdivision six of section
   24  one hundred seventy-one-c of this [chapter]  ARTICLE,  (ii)  and  except
   25  that  the  comptroller  shall pay to the New York state higher education
   26  services corporation and the state university of New York  or  the  city
   27  university  of  New York respectively that amount of overpayments of tax
   28  imposed by article twenty-two of this chapter and the interest  on  such
   29  amount  which is certified to the comptroller by the commissioner as the
   30  amount to be credited against the amount of  defaults  in  repayment  of
   31  guaranteed  student  loans and state university loans or city university
   32  loans pursuant to subdivision five of section one hundred  seventy-one-d
   33  and  subdivision six of section one hundred seventy-one-e of this [chap-
   34  ter] ARTICLE, (iii) and except further that,  notwithstanding  any  law,
   35  the  comptroller shall credit to the revenue arrearage account, pursuant
   36  to section ninety-one-a of the state finance law, that amount  of  over-
   37  payment  of  tax  imposed  by  article nine, nine-A, twenty-two, thirty,
   38  thirty-A, thirty-B, thirty-two or thirty-three of this chapter, and  any
   39  interest  thereon,  which is certified to the comptroller by the commis-
   40  sioner as the amount to be credited against a past-due legally enforcea-
   41  ble debt owed to a state agency pursuant to paragraph (a) of subdivision
   42  six of section one hundred  seventy-one-f  of  this  article,  provided,
   43  however, he shall credit to the special offset fiduciary account, pursu-
   44  ant  to  section  ninety-one-c of the state finance law, any such amount
   45  creditable as a liability as set forth in paragraph (b)  of  subdivision
   46  six  of  section  one  hundred  seventy-one-f  of this article, (iv) and
   47  except further that the comptroller shall pay to the city  of  New  York
   48  that amount of overpayment of tax imposed by article nine, nine-A, twen-
   49  ty-two,  thirty, thirty-A, thirty-B, thirty-two, or thirty-three of this
   50  chapter and any interest thereon that is certified to the comptroller by
   51  the commissioner as the amount to be credited against city of  New  York
   52  tax  warrant judgment debt pursuant to section one hundred seventy-one-l
   53  of this article, (v) and except further that the comptroller  shall  pay
   54  to  a  non-obligated spouse that amount of overpayment of tax imposed by
   55  article twenty-two of this chapter and the interest on such amount which
   56  has been credited pursuant to section  one  hundred  seventy-one-c,  one
       S. 6359                            315                           A. 8559
    1  hundred  seventy-one-d,  one hundred seventy-one-e, one hundred seventy-
    2  one-f or one hundred seventy-one-l of this article and which  is  certi-
    3  fied  to the comptroller by the commissioner as the amount due such non-
    4  obligated  spouse pursuant to paragraph six of subsection (b) of section
    5  six hundred fifty-one of this chapter; and (vi)  the  comptroller  shall
    6  deduct  a  like amount which the comptroller shall pay into the treasury
    7  to the credit of the general fund from amounts subsequently  payable  to
    8  the department of social services, the state university of New York, the
    9  city  university  of  New  York, or the higher education services corpo-
   10  ration, or the revenue arrearage account  or  special  offset  fiduciary
   11  account  pursuant  to  section ninety-one-a or ninety-one-c of the state
   12  finance law, as the case may be, whichever had been credited the  amount
   13  originally  withheld  from  such  overpayment, and (vii) with respect to
   14  amounts originally withheld from such overpayment  pursuant  to  section
   15  one  hundred  seventy-one-l  of this article and paid to the city of New
   16  York, the comptroller shall collect a like amount from the city  of  New
   17  York.
   18    S  4.  Section  29  of chapter 912 of the laws of 1920 relating to the
   19  regulation of boxing, sparring and  wrestling  matches,  as  amended  by
   20  chapter  833  of the laws of 1987, the section heading and subdivision 1
   21  as amended by chapter 437 of the laws of 2002, is  amended  to  read  as
   22  follows:
   23    S 29.  Notice of contest or exhibition[; collection of tax].  1. Every
   24  individual, corporation, association or club holding any professional or
   25  amateur  boxing, sparring or professional wrestling match or exhibition,
   26  for which an admission fee is charged  or  received,  shall  notify  the
   27  athletic  commission ten days in advance of the holding of such contest.
   28  All tickets of admission to any such boxing,  sparring  or  professional
   29  wrestling  match  or  exhibition  shall  be procured from a printer duly
   30  authorized by the state athletic commission to print  such  tickets  and
   31  shall bear clearly upon the face thereof the purchase price and location
   32  of  same.  Any  individual,  corporation, association or club failing to
   33  fully comply with this section shall be subject to a  penalty  of  fifty
   34  dollars  to  be  collected  by  and paid to the department of state. Any
   35  individual, corporation, association or club is prohibited from  operat-
   36  ing  any  shows  or exhibitions until all penalties due pursuant to this
   37  section [and taxes, interest and penalties due pursuant to article nine-
   38  teen of the tax law] have been paid.
   39    2.   [Pursuant to  direction  by  the  commissioner  of  taxation  and
   40  finance,  employees  or officers of the athletic commission shall act as
   41  agents of the commissioner of taxation and finance to  collect  the  tax
   42  imposed  by  article  nineteen  of the tax law.] The athletic commission
   43  shall provide the commissioner of taxation and finance with such  infor-
   44  mation  and  technical  assistance  as  may  be necessary for the proper
   45  administration of [such tax] STATE AND  LOCAL  SALES  TAXES  IMPOSED  ON
   46  CHARGES  FOR  ADMISSION  TO A PLACE OF AMUSEMENT WHERE ANY SUCH MATCH OR
   47  EXHIBITION WILL BE HELD.
   48    S 5. Section 30 of chapter 912 of the laws of  1920  relating  to  the
   49  regulation  of  boxing,  sparring  and  wrestling matches, as amended by
   50  chapter 833 of the laws of 1987, is amended to read as follows:
   51    S 30. Disposition of receipts. All receipts of the commission shall be
   52  paid into the state treasury. [Provided, however, that receipts from the
   53  tax imposed by article nineteen of the tax law  shall  be  deposited  as
   54  provided by section one hundred seventy-one-a of the tax law.]
   55    S  6. Notwithstanding the repeal of article 19 and section 1820 of the
   56  tax law by this act, all provisions of such article 19 and section 1820,
       S. 6359                            316                           A. 8559
    1  in respect to the imposition, exemption,  assessment,  payment,  payment
    2  over,  determination,  collection,  and  credit or refund of tax imposed
    3  thereunder, the filing of forms and returns, the preservation of records
    4  for the purposes of such tax, the secrecy of returns, the disposition of
    5  revenues,  and  the  civil  and  criminal  penalties  applicable  to the
    6  violation of the provisions of such article 19, shall continue  in  full
    7  force and effect with respect to all such tax accrued up to September 1,
    8  2014;  all  actions  and  proceedings,  civil  or criminal, commenced or
    9  authorized to be commenced under or by virtue of any provision  of  such
   10  article 19 so repealed, and pending or able to be commenced prior to the
   11  effective date of this act, may be commenced, prosecuted and defended to
   12  final  effect  in  the same manner as they might if such provisions were
   13  not so repealed.
   14    S 7. This act shall take effect September 1, 2014 and  the  state  and
   15  local  sales  taxes arising on the date this act shall have taken effect
   16  shall apply to any admission to or the use of facilities of a  place  of
   17  amusement  occurring on or after that date, whether or not the admission
   18  charge has been paid prior to such date, unless the tickets were actual-
   19  ly sold and delivered prior to such date to a person entering such place
   20  of amusement on or after such date.
   21                                   PART Z
   22    Section 1. Clause (F) of subparagraph (ii) of paragraph 1 of  subdivi-
   23  sion  b of section 1612 of the tax law, as amended by chapter 174 of the
   24  laws of 2013, is amended to read as follows:
   25    (F) notwithstanding clauses (A), (B), (C), (D) and (E) of this subpar-
   26  agraph, when a vendor track, is located in Sullivan  county  and  within
   27  sixty  miles  from any gaming facility in a contiguous state such vendor
   28  fee shall, for a period of [six] SEVEN years commencing April first, two
   29  thousand eight, be at a rate of forty-one percent of the  total  revenue
   30  wagered  at  the  vendor  track after payout for prizes pursuant to this
   31  chapter, after which time such rate shall be as for all tracks in clause
   32  (C) of this subparagraph.
   33    S 2. This act shall take effect immediately and  shall  be  deemed  to
   34  have been in full force and effect on and after April 1, 2014.
   35                                   PART AA
   36    Section  1.  Paragraph  (a)  of  subdivision  1 of section 1003 of the
   37  racing, pari-mutuel wagering and breeding law, as amended by chapter 174
   38  of the laws of 2013, is amended to read as follows:
   39    (a) Any  racing  association  or  corporation  or  regional  off-track
   40  betting  corporation,  authorized  to conduct pari-mutuel wagering under
   41  this chapter, desiring to display the simulcast of horse races on  which
   42  pari-mutuel  betting shall be permitted in the manner and subject to the
   43  conditions provided for in this article may apply to the commission  for
   44  a  license so to do.  Applications for licenses shall be in such form as
   45  may be prescribed by the commission and shall contain  such  information
   46  or  other material or evidence as the commission may require. No license
   47  shall be issued by the commission authorizing the simulcast transmission
   48  of thoroughbred races from a track located in Suffolk  county.  The  fee
   49  for  such  licenses shall be five hundred dollars per simulcast facility
   50  and for account wagering licensees that do not operate either  a  simul-
   51  cast facility that is open to the public within the state of New York or
   52  a  licensed racetrack within the state, twenty thousand dollars per year
       S. 6359                            317                           A. 8559
    1  payable by the licensee to the commission for deposit into  the  general
    2  fund.  Except  as  provided  in  this  section, the commission shall not
    3  approve any application to conduct simulcasting into individual or group
    4  residences,  homes  or  other areas for the purposes of or in connection
    5  with pari-mutuel wagering. The [board] COMMISSION may approve simulcast-
    6  ing into residences, homes or other areas to be conducted jointly by one
    7  or more regional off-track betting corporations and one or more  of  the
    8  following:  a franchised corporation, thoroughbred racing corporation or
    9  a harness racing corporation or association; provided (i) the simulcast-
   10  ing consists only of those races on which pari-mutuel betting is author-
   11  ized by this chapter at one or more simulcast facilities for each of the
   12  contracting off-track betting corporations which  shall  include  wagers
   13  made  in  accordance  with  section  one  thousand fifteen, one thousand
   14  sixteen and one thousand seventeen of  this  article;  provided  further
   15  that  the  contract  provisions or other simulcast arrangements for such
   16  simulcast facility shall be no less favorable than those  in  effect  on
   17  January  first,  two  thousand  five;  (ii)  that each off-track betting
   18  corporation having within its  geographic  boundaries  such  residences,
   19  homes  or  other  areas  technically  capable of receiving the simulcast
   20  signal shall be a contracting party; (iii) the distribution of  revenues
   21  shall  be  subject  to  contractual agreement of the parties except that
   22  statutory payments to  non-contracting  parties,  if  any,  may  not  be
   23  reduced;  provided,  however,  that nothing herein to the contrary shall
   24  prevent a track from televising its races on an irregular basis primari-
   25  ly for promotional or marketing purposes as found by the [board] COMMIS-
   26  SION.  For purposes of this paragraph, the  provisions  of  section  one
   27  thousand thirteen of this article shall not apply. Any agreement author-
   28  izing  an  in-home  simulcasting  experiment  commencing  prior  to  May
   29  fifteenth, nineteen hundred ninety-five, may,  and  all  its  terms,  be
   30  extended   until   June  thirtieth,  two  thousand  [fourteen]  FIFTEEN;
   31  provided, however, that any party to such agreement may elect to  termi-
   32  nate  such  agreement upon conveying written notice to all other parties
   33  of such agreement at least forty-five days prior to the  effective  date
   34  of  the  termination,  via  registered  mail.  Any party to an agreement
   35  receiving such notice of an intent to terminate, may request the [board]
   36  COMMISSION to mediate between the parties new terms and conditions in  a
   37  replacement agreement between the parties as will permit continuation of
   38  an  in-home  experiment  until  June  thirtieth, two thousand [fourteen]
   39  FIFTEEN; and (iv) no in-home simulcasting in  the  thoroughbred  special
   40  betting  district  shall  occur  without  the  approval  of the regional
   41  thoroughbred track.
   42    S 2. Subparagraph (iii) of paragraph d of  subdivision  3  of  section
   43  1007 of the racing, pari-mutuel wagering and breeding law, as amended by
   44  section  2  of  part  U of chapter 59 of the laws of 2013, is amended to
   45  read as follows:
   46    (iii) Of the sums retained by a receiving track located in Westchester
   47  county on races received from a franchised corporation, for  the  period
   48  commencing January first, two thousand eight and continuing through June
   49  thirtieth,  two thousand [fourteen] FIFTEEN, the amount used exclusively
   50  for purses to be awarded at races  conducted  by  such  receiving  track
   51  shall  be computed as follows: of the sums so retained, two and one-half
   52  percent of the total pools. Such amount shall be increased or  decreased
   53  in  the  amount  of fifty percent of the difference in total commissions
   54  determined by comparing the total commissions available after July twen-
   55  ty-first, nineteen hundred ninety-five to  the  total  commissions  that
       S. 6359                            318                           A. 8559
    1  would  have  been  available  to  such track prior to July twenty-first,
    2  nineteen hundred ninety-five.
    3    S  3.  The  opening  paragraph of subdivision 1 of section 1014 of the
    4  racing, pari-mutuel wagering and breeding law, as amended by  section  3
    5  of  part  U  of  chapter  59  of the laws of 2013, is amended to read as
    6  follows:
    7    The provisions of this section shall govern the simulcasting of  races
    8  conducted  at thoroughbred tracks located in another state or country on
    9  any day during which a franchised corporation is conducting a race meet-
   10  ing in Saratoga county at Saratoga  thoroughbred  racetrack  until  June
   11  thirtieth,  two thousand [fourteen] FIFTEEN and on any day regardless of
   12  whether or not a franchised corporation is conducting a race meeting  in
   13  Saratoga county at Saratoga thoroughbred racetrack after June thirtieth,
   14  two  thousand  [fourteen]  FIFTEEN.    On  any day on which a franchised
   15  corporation has not scheduled a racing program but a thoroughbred racing
   16  corporation located within the state is conducting  racing,  every  off-
   17  track  betting corporation branch office and every simulcasting facility
   18  licensed in accordance  with  section  one  thousand  seven  (that  have
   19  entered  into  a  written  agreement with such facility's representative
   20  horsemen's organization, as approved by  the  [board]  COMMISSION),  one
   21  thousand eight, or one thousand nine of this article shall be authorized
   22  to accept wagers and display the live simulcast signal from thoroughbred
   23  tracks  located  in  another  state  or  foreign  country subject to the
   24  following provisions:
   25    S 4. Subdivision 1 of section 1015 of the racing, pari-mutuel wagering
   26  and breeding law, as amended by section 4 of part U of chapter 59 of the
   27  laws of 2013, is amended to read as follows:
   28    1. The provisions of this section shall  govern  the  simulcasting  of
   29  races  conducted  at  harness tracks located in another state or country
   30  during the period July first, nineteen hundred ninety-four through  June
   31  thirtieth,  two  thousand [fourteen] FIFTEEN.  This section shall super-
   32  sede all inconsistent provisions of this chapter.
   33    S 5. The opening paragraph of subdivision 1 of  section  1016  of  the
   34  racing,  pari-mutuel  wagering and breeding law, as amended by section 5
   35  of part U of chapter 59 of the laws of  2013,  is  amended  to  read  as
   36  follows:
   37    The  provisions of this section shall govern the simulcasting of races
   38  conducted at thoroughbred tracks located in another state or country  on
   39  any  day  during which a franchised corporation is not conducting a race
   40  meeting in Saratoga county at Saratoga thoroughbred racetrack until June
   41  thirtieth, two thousand [fourteen] FIFTEEN.    Every  off-track  betting
   42  corporation  branch  office  and every simulcasting facility licensed in
   43  accordance with section one thousand seven  that  have  entered  into  a
   44  written  agreement with such facility's representative horsemen's organ-
   45  ization as approved by the [board] COMMISSION, one thousand eight or one
   46  thousand nine of this article shall be authorized to accept  wagers  and
   47  display  the  live  full-card  simulcast  signal  of thoroughbred tracks
   48  (which may include quarter horse or mixed  meetings  provided  that  all
   49  such wagering on such races shall be construed to be thoroughbred races)
   50  located  in  another  state or foreign country, subject to the following
   51  provisions; provided,  however,  no  such  written  agreement  shall  be
   52  required of a franchised corporation licensed in accordance with section
   53  one thousand seven of this article:
   54    S  6. The opening paragraph of section 1018 of the racing, pari-mutuel
   55  wagering and breeding law, as amended by section 6 of part U of  chapter
   56  59 of the laws of 2013, is amended to read as follows:
       S. 6359                            319                           A. 8559
    1    Notwithstanding  any  other  provision of this chapter, for the period
    2  July twenty-fifth, two thousand one through September eighth, two  thou-
    3  sand  [thirteen] FOURTEEN, when a franchised corporation is conducting a
    4  race meeting within the state at Saratoga Race Course,  every  off-track
    5  betting  corporation  branch  office  and  every  simulcasting  facility
    6  licensed in accordance with section one thousand seven (that has entered
    7  into a written agreement with such facility's representative  horsemen's
    8  organization  as approved by the [board] COMMISSION), one thousand eight
    9  or one thousand nine of this  article  shall  be  authorized  to  accept
   10  wagers  and  display  the live simulcast signal from thoroughbred tracks
   11  located in another state,  provided  that  such  facility  shall  accept
   12  wagers  on  races  run  at  all  in-state  thoroughbred tracks which are
   13  conducting  racing  programs  subject  to  the   following   provisions;
   14  provided,  however,  no  such  written  agreement shall be required of a
   15  franchised corporation licensed in accordance with section one  thousand
   16  seven of this article.
   17    S  7.  Section  32  of  chapter  281 of the laws of 1994, amending the
   18  racing, pari-mutuel wagering and breeding law  and other  laws  relating
   19  to  simulcasting, as amended by section 7 of part U of chapter 59 of the
   20  laws of 2013, is amended to read as follows:
   21    S 32. This act shall take effect immediately and the  pari-mutuel  tax
   22  reductions  in  section  six  of  this  act  shall  expire and be deemed
   23  repealed on  July  1,  [2014]  2015;  provided,  however,  that  nothing
   24  contained  herein  shall be deemed to affect the application, qualifica-
   25  tion, expiration, or repeal of any  provision  of  law  amended  by  any
   26  section  of  this act, and such provisions shall be applied or qualified
   27  or shall expire or be deemed repealed in the same manner,  to  the  same
   28  extent  and on the same date as the case may be as otherwise provided by
   29  law; provided further, however, that sections twenty-three  and  twenty-
   30  five of this act shall remain in full force and effect only until May 1,
   31  1997 and at such time shall be deemed to be repealed.
   32    S  8.  Section  54  of  chapter  346 of the laws of 1990, amending the
   33  racing, pari-mutuel wagering and breeding law and other laws relating to
   34  simulcasting and the imposition of certain taxes, as amended by  section
   35  8  of  part  U  of chapter 59 of the laws of 2013, is amended to read as
   36  follows:
   37    S 54. This act  shall  take  effect  immediately;  provided,  however,
   38  sections  three  through twelve of this act shall take effect on January
   39  1, 1991, and section 1013 of the racing, pari-mutuel wagering and breed-
   40  ing law, as added by section thirty-eight of this act, shall expire  and
   41  be  deemed repealed on July 1, [2014] 2015; and section eighteen of this
   42  act shall take effect on July 1, 2008 and sections fifty-one and  fifty-
   43  two  of this act shall take effect as of the same date as chapter 772 of
   44  the laws of 1989 took effect.
   45    S 9. Paragraph (a) of subdivision 1 of  section  238  of  the  racing,
   46  pari-mutuel wagering and breeding law, as amended by section 9 of part U
   47  of chapter 59 of the laws of 2013, is amended to read as follows:
   48    (a)  The  franchised  corporation  authorized  under  this  chapter to
   49  conduct pari-mutuel betting at a race meeting or races run thereat shall
   50  distribute all sums deposited in any pari-mutuel pool to the holders  of
   51  winning  tickets therein, provided such tickets be presented for payment
   52  before April first of the year following the  year  of  their  purchase,
   53  less  an  amount  which  shall be established and retained by such fran-
   54  chised corporation of between twelve to  seventeen  per  centum  of  the
   55  total  deposits in pools resulting from on-track regular bets, and four-
   56  teen to twenty-one per centum of the total deposits in  pools  resulting
       S. 6359                            320                           A. 8559
    1  from on-track multiple bets and fifteen to twenty-five per centum of the
    2  total  deposits in pools resulting from on-track exotic bets and fifteen
    3  to thirty-six per centum of the total deposits in pools  resulting  from
    4  on-track  super  exotic  bets, plus the breaks. The retention rate to be
    5  established is subject to the prior approval of the [racing and wagering
    6  board] GAMING COMMISSION. Such rate may not be changed  more  than  once
    7  per  calendar  quarter  to be effective on the first day of the calendar
    8  quarter. "Exotic bets" and "multiple bets" shall have the  meanings  set
    9  forth  in  section five hundred nineteen of this chapter.  "Super exotic
   10  bets" shall have the meaning set forth in section three hundred  one  of
   11  this  chapter. For purposes of this section, a "pick six bet" shall mean
   12  a single bet or wager on the outcomes of six races. The breaks are here-
   13  by defined as the odd cents over any multiple of five for payoffs great-
   14  er than one dollar five cents but  less  than  five  dollars,  over  any
   15  multiple  of  ten  for  payoffs  greater than five dollars but less than
   16  twenty-five dollars, over any multiple of twenty-five for payoffs great-
   17  er than twenty-five dollars but less than two hundred fifty dollars,  or
   18  over  any  multiple of fifty for payoffs over two hundred fifty dollars.
   19  Out of the amount so retained there shall be  paid  by  such  franchised
   20  corporation to the commissioner of taxation and finance, as a reasonable
   21  tax  by the state for the privilege of conducting pari-mutuel betting on
   22  the races run at the race meetings held by such franchised  corporation,
   23  the  following  percentages  of  the total pool for regular and multiple
   24  bets five per centum of regular bets and four  per  centum  of  multiple
   25  bets  plus  twenty per centum of the breaks; for exotic wagers seven and
   26  one-half per centum plus twenty per centum of the breaks, and for  super
   27  exotic  bets  seven and one-half per centum plus fifty per centum of the
   28  breaks. For the period June first, nineteen hundred ninety-five  through
   29  September  ninth,  nineteen  hundred  ninety-nine,  such  tax on regular
   30  wagers shall be three per centum and such tax on multiple  wagers  shall
   31  be  two  and  one-half per centum, plus twenty per centum of the breaks.
   32  For the period September tenth,  nineteen  hundred  ninety-nine  through
   33  March  thirty-first,  two  thousand one, such tax on all wagers shall be
   34  two and six-tenths per centum and for the period April first, two  thou-
   35  sand one through December thirty-first, two thousand [fourteen] FIFTEEN,
   36  such  tax on all wagers shall be one and six-tenths per centum, plus, in
   37  each such period, twenty per centum of the breaks. Payment  to  the  New
   38  York state thoroughbred breeding and development fund by such franchised
   39  corporation  shall be one-half of one per centum of total daily on-track
   40  pari-mutuel pools resulting from regular, multiple and exotic  bets  and
   41  three  per  centum  of super exotic bets provided, however, that for the
   42  period September tenth, nineteen hundred ninety-nine through March thir-
   43  ty-first, two thousand one, such payment shall be six-tenths of one  per
   44  centum  of  regular,  multiple and exotic pools and for the period April
   45  first, two thousand one  through  December  thirty-first,  two  thousand
   46  [fourteen] FIFTEEN, such payment shall be seven-tenths of one per centum
   47  of such pools.
   48    S 10. This act shall take effect immediately.
   49                                   PART BB
   50    Section  1. Clause (H) of subparagraph (ii) of paragraph 1 of subdivi-
   51  sion b of section 1612 of the tax law, as separately amended by chapters
   52  174 and 175 of the laws of 2013, is amended to read as follows:
   53    (H) notwithstanding clauses (A), (B), (C), (D), (E), (F)  and  (G)  of
   54  this  subparagraph, the track operator of a vendor track shall be eligi-
       S. 6359                            321                           A. 8559
    1  ble for a vendor's capital award of up to  four  percent  of  the  total
    2  revenue  wagered at the vendor track after payout for prizes pursuant to
    3  this chapter, which  shall  be  used  exclusively  for  capital  project
    4  investments  to improve the facilities of the vendor track which promote
    5  or encourage increased attendance at the video lottery  gaming  facility
    6  including,  but  not limited to hotels, other lodging facilities, enter-
    7  tainment  facilities,  retail  facilities,  dining  facilities,   events
    8  arenas,  parking  garages  and  other improvements that enhance facility
    9  amenities; provided that such capital investments shall be  approved  by
   10  the  division, in consultation with the state racing and wagering board,
   11  and that such vendor track demonstrates that such  capital  expenditures
   12  will  increase  patronage at such vendor track's facilities and increase
   13  the amount of revenue generated to support state education programs. The
   14  annual amount of such vendor's capital awards that a vendor track  shall
   15  be  eligible  to  receive  shall  be limited to two million five hundred
   16  thousand dollars, except for Aqueduct racetrack, for which  there  shall
   17  be  no  vendor's  capital awards. Except for tracks having less than one
   18  thousand one hundred video gaming machines,  and  except  for  a  vendor
   19  track  located west of State Route 14 from Sodus Point to the Pennsylva-
   20  nia border within New York, each track operator  shall  be  required  to
   21  co-invest  an  amount  of  capital  expenditure  equal to its cumulative
   22  vendor's capital award. For all tracks, except for  Aqueduct  racetrack,
   23  the amount of any vendor's capital award that is not used during any one
   24  year  period  may  be  carried  over into subsequent years ending before
   25  April first, two thousand [fourteen] FIFTEEN.   Any amount  attributable
   26  to  a  capital  expenditure  approved prior to April first, two thousand
   27  [fourteen] FIFTEEN  and  completed  before  April  first,  two  thousand
   28  [sixteen]  SEVENTEEN;  or  approved  prior  to April first, two thousand
   29  [eighteen] NINETEEN and  completed  before  April  first,  two  thousand
   30  [twenty]  TWENTY-ONE  for  a vendor track located west of State Route 14
   31  from Sodus Point to the Pennsylvania border within New  York,  shall  be
   32  eligible  to  receive  the  vendor's  capital award. In the event that a
   33  vendor track's capital expenditures, approved by the division  prior  to
   34  April  first,  two  thousand  [fourteen]  FIFTEEN and completed prior to
   35  April first, two thousand [sixteen] SEVENTEEN, exceed the vendor track's
   36  cumulative capital award during the five year period ending April first,
   37  two thousand [fourteen] FIFTEEN, the vendor shall  continue  to  receive
   38  the  capital  award  after  April first, two thousand [fourteen] FIFTEEN
   39  until such approved capital expenditures are paid to  the  vendor  track
   40  subject  to  any  required  co-investment.  In no event shall any vendor
   41  track that receives a vendor fee pursuant to clause (F) or (G)  of  this
   42  subparagraph  be  eligible  for  a  vendor's  capital  award  under this
   43  section. Any operator of a vendor track which has  received  a  vendor's
   44  capital  award,  choosing to divest the capital improvement toward which
   45  the award was applied, prior to the full  depreciation  of  the  capital
   46  improvement in accordance with generally accepted accounting principles,
   47  shall  reimburse  the  state  in  amounts equal to the total of any such
   48  awards. Any capital award not approved for a capital  expenditure  at  a
   49  video  lottery  gaming  facility by April first, two thousand [fourteen]
   50  FIFTEEN shall be deposited into the state  lottery  fund  for  education
   51  aid; and
   52    S 2. This act shall take effect immediately.
   53                                   PART CC
   54    Section 1. Article 12 of the tax law is REPEALED.
       S. 6359                            322                           A. 8559
    1    S 2. Subdivision fourth of section 171 of the tax law is REPEALED.
    2    S  3.  Subparagraph (iii) of paragraph (b) of subdivision 1 of section
    3  173-a of the tax law is REPEALED.
    4    S 4. Section 176 of the tax law, as amended by chapter 267 of the laws
    5  of 1987, is amended to read as follows:
    6    S 176. Transfer of  the  powers  and  duties  of  the  comptroller  in
    7  relation  to the assessment or collection of certain taxes. On and after
    8  July first, nineteen hundred twenty-one, all the powers and  duties  now
    9  conferred or imposed upon the state comptroller in relation to the taxa-
   10  tion  of corporations under articles nine and nine-A of this chapter, in
   11  relation to the taxation of transfers of property, under article ten  of
   12  this  chapter, [in relation to the taxation of transfers of stock, under
   13  article twelve of this chapter,] and in relation to  taxation  upon  and
   14  with  respect  to personal income, under article sixteen of this chapter
   15  (as such article was in effect on December thirtieth,  nineteen  hundred
   16  sixty),  shall  be  transferred to and thereafter shall be exercised and
   17  performed by the commissioner, except as powers  and  duties  under  any
   18  such  article  are  expressly  conferred  upon or continued in the state
   19  comptroller by acts of the legislature of nineteen  hundred  twenty-one,
   20  enacted  subsequent  to  chapter  ninety of the laws of nineteen hundred
   21  twenty-one.
   22    S 5. Subparagraph 5 of paragraph (a) and subparagraph 4-a of paragraph
   23  (b) of subdivision 9 of section 208 of the tax law,  subparagraph  5  of
   24  paragraph  (a)  as amended by chapter 61 of the laws of 1989, clause (i)
   25  of subparagraph 5 as amended by section 2 of part C of chapter 25 of the
   26  laws of 2009, and subparagraph 4-a of paragraph (b) of subdivision 9  of
   27  section  208  of  the  tax law, as amended by chapter 760 of the laws of
   28  1992, are amended to read as follows:
   29    (5) (i) any refund or credit of a  tax  imposed  under  this  article,
   30  article  twenty-three,  or article thirty-two of this chapter, for which
   31  tax no exclusion or deduction was allowed in determining the  taxpayer's
   32  entire  net  income under this article, article twenty-three, or article
   33  thirty-two of this chapter for any prior year,  OR  (ii)  [a  refund  or
   34  credit  of  general  corporation  tax  allowed  by subdivision eleven of
   35  section 11-604 of the administrative code of the city of  New  York,  or
   36  (iii)]  any refund or credit of a tax imposed under sections one hundred
   37  eighty-three, one hundred eighty-three-a, one hundred eighty-four or one
   38  hundred eighty-four-a of this chapter, and
   39    (4-a)(A) [the entire amount allowable as an exclusion or deduction for
   40  stock transfer taxes imposed by article twelve of this chapter in deter-
   41  mining the entire taxable income  which  the  taxpayer  is  required  to
   42  report  to  the United States treasury department but only to the extent
   43  that such taxes are incurred and paid  in  market  making  transactions,
   44  (B)]  in those instances where a credit for the special additional mort-
   45  gage recording tax credit is allowed under paragraph (a) of  subdivision
   46  seventeen of section two hundred ten of this article, the amount allowed
   47  as an exclusion or deduction for the special additional mortgage record-
   48  ing  tax imposed by subdivision one-a of section two hundred fifty-three
   49  of this chapter in determining  the  entire  taxable  income  which  the
   50  taxpayer is required to report to the United States treasury department,
   51  and  [(C)]  (B) unless the credit allowed pursuant to subdivision seven-
   52  teen of section two hundred ten of this  article  is  reflected  in  the
   53  computation  of  the gain or loss so as to result in an increase in such
   54  gain or decrease of such loss, for federal income tax purposes, from the
   55  sale or other disposition of the property  with  respect  to  which  the
   56  special  additional  mortgage recording tax imposed pursuant to subdivi-
       S. 6359                            323                           A. 8559
    1  sion one-a of section two hundred fifty-three of this chapter was  paid,
    2  the  amount  of the special additional mortgage recording tax imposed by
    3  subdivision one-a of section two hundred  fifty-three  of  this  chapter
    4  which was paid and which is reflected in the computation of the basis of
    5  the  property  so as to result in a decrease in such gain or increase in
    6  such loss for federal income tax purposes from the sale or other  dispo-
    7  sition of the property with respect to which such tax was paid.
    8    S  6. Subdivision 1 of section 472 of the tax law, as amended by chap-
    9  ter 629 of the laws of 1996, and as further amended by  section  104  of
   10  part A of chapter 62 of the laws of 2011, is amended to read as follows:
   11    1.  The  commissioner  shall  prescribe, prepare and furnish stamps of
   12  such denominations and quantities as may be necessary for the payment of
   13  the tax on cigarettes imposed by this article, and may from time to time
   14  and as often as he deems advisable provide for the issuance  and  exclu-
   15  sive  use  of stamps of a new design and forbid the use of stamps of any
   16  other design[, in the manner and with the effect provided in section two
   17  hundred seventy-four of this chapter]. THE COMMISSIONER MAY MAKE,  ENTER
   18  INTO  AND  EXECUTE  FOR  AND  IN  BEHALF  OF  THE STATE SUCH CONTRACT OR
   19  CONTRACTS FOR DIES, PLATES AND PRINTING NECESSARY FOR THE MANUFACTURE OF
   20  THE STAMPS PROVIDED FOR BY THIS ARTICLE, AND HIRE STAFF AND PROVIDE SUCH
   21  STATIONARY TOGETHER WITH  SUCH  BOOKS  AND  BLANKS  AS  IN  HIS  OR  HER
   22  DISCRETION MAY BE NECESSARY FOR PUTTING INTO OPERATION THE PROVISIONS OF
   23  THIS  ARTICLE;  THE  COMMISSIONER  SHALL BE THE CUSTODIAN OF ALL STAMPS,
   24  DIES, PLATES OR OTHER MATERIAL OR THING FURNISHED AND USED IN THE  MANU-
   25  FACTURE  OF  SUCH  STATE TAX STAMPS, AND ALL EXPENSES INCURRED UNDER THE
   26  COMMISSIONER'S DIRECTION IN CARRYING OUT THE PROVISIONS OF THIS  ARTICLE
   27  SHALL BE PAID TO THE COMMISSIONER BY THE STATE TREASURER FROM ANY MONEYS
   28  APPROPRIATED  FOR  SUCH  PURPOSE. The commissioner shall make provisions
   29  for the sale of such stamps at such places and at such times as  he  may
   30  deem necessary and may license agents for such purpose. The commissioner
   31  may  license  dealers  in  cigarettes, who maintain separate warehousing
   32  facilities for the purpose of receiving and distributing cigarettes  and
   33  conducting  their  business, who have received commitments from at least
   34  two cigarette manufacturers whose aggregate market  share  is  at  least
   35  forty  percent  of  the  New York state cigarette market, and importers,
   36  exporters and manufacturers of cigarettes, and other persons  within  or
   37  without  the state as agents to buy or affix stamps to be used in paying
   38  the tax herein imposed, but an agent shall at all times have  the  right
   39  to  appoint  the  person in his employ who is to affix the stamps to any
   40  cigarettes under the agent's control. The fee for filing  such  applica-
   41  tion  for an agent's license shall be one thousand five hundred dollars,
   42  unless such fee has been paid during the  preceding  twelve  months,  in
   43  which case, the fee for a new license shall be one thousand dollars. All
   44  of  the  provisions of section four hundred eighty relating to wholesale
   45  dealers' licenses, including the procedure for  suspension,  revocation,
   46  refusal  to  license and for hearings, except for paragraphs (c) and (g)
   47  of subdivision one of such  section,  shall  be  applicable  to  agents'
   48  licenses  applied  for  or  granted pursuant to this section, as if such
   49  provisions had been set forth  in  full  in  this  subdivision  and  had
   50  expressly  referred  to  the applicant for, or the holder of, an agent's
   51  license. Whenever the commissioner shall sell and deliver  to  any  such
   52  agent  any  such  stamps,  such  agent  shall  be entitled to receive as
   53  compensation for his services and expenses as such agent in  selling  or
   54  affixing  such stamps, and to retain out of the moneys to be paid by him
   55  for such stamps, a commission on the par value thereof. The commissioner
   56  is hereby authorized to prescribe a schedule of commissions, not exceed-
       S. 6359                            324                           A. 8559
    1  ing five per centum, allowable to such agent  for  buying  and  affixing
    2  such  stamps. Such schedule shall be uniform with respect to the differ-
    3  ent types of stamps used, and may be on a graduated scale  with  respect
    4  to  the  number  of  stamps  purchased.  The  commissioner  may,  in his
    5  discretion, permit an agent to pay for such stamps  within  thirty  days
    6  after  the  date of purchase and may require any such agent to file with
    7  the department of taxation and finance a bond issued by a surety company
    8  approved by the superintendent of financial services as to solvency  and
    9  responsibility and authorized to transact business in the state or other
   10  security  acceptable  to the commissioner, in such amount as the commis-
   11  sioner may fix, to secure the payment of any sums due  from  such  agent
   12  pursuant  to this article. If securities are deposited as security under
   13  this subdivision, such securities shall be kept in the  custody  of  the
   14  commissioner and may be sold by the commissioner if it becomes necessary
   15  so  to  do  in order to recover any sums due from such agent pursuant to
   16  this article, but no such sale shall be had until after such agent shall
   17  have had opportunity to litigate the validity of any tax if it elects so
   18  to do. Upon any such sale, the surplus, if any, above the sums due under
   19  this article shall be returned to such agent.
   20    S 7. Section 463 of the banking law, as added by chapter  608  of  the
   21  laws of 1996, is amended to read as follows:
   22    S  463. [Exemptions and individual] INDIVIDUAL liability of sharehold-
   23  ers.  [The transfer of the shares of any credit union shall not be taxa-
   24  ble under the provisions of article twelve of the tax law.]
   25    The shareholders of a credit union shall not  be  individually  liable
   26  for the payment of the credit union's debts.
   27    S  8.  Subdivision 6 of section 3012 of the public authorities law, as
   28  amended by chapter 868 of the laws  of  1975,  is  amended  to  read  as
   29  follows:
   30    6.  Anything  in this article ten to the contrary notwithstanding, any
   31  agreement or agreements with the holders of notes or bonds issued by any
   32  municipal assistance corporation created by or pursuant to any title  of
   33  this  article  shall  contain  a  clause  stating  in substance that any
   34  provision in this article or in any such agreement or  agreements  which
   35  relate  to  taxes  imposed  under  [article  twelve  or] sections eleven
   36  hundred seven or eleven hundred eight of the tax law of the state or  to
   37  the funds created by sections ninety-two-b, ninety-two-d or ninety-two-e
   38  of the state finance law shall be deemed executory only to the extent of
   39  the moneys available to the state in such funds from time to time and no
   40  liability  on  account thereof shall be incurred by the state beyond the
   41  moneys available in such funds.
   42    S 9. Section 92-b of the state finance law is REPEALED.
   43    S 10. Section 92-i of the state finance law is REPEALED.
   44    S 11. Subparagraph 6 of paragraph j of subdivision 1 of section 54  of
   45  the state finance law is REPEALED.
   46    S  12. Subdivision (c) of section 11-503 of the administrative code of
   47  the city of New York is REPEALED.
   48    S 13. Paragraph 4 of subdivision (b) of section 11-506 of the adminis-
   49  trative code of the city of New York is REPEALED.
   50    S 14. Subdivision (g) of section 11-512 of the administrative code  of
   51  the city of New York is REPEALED.
   52    S  15. Subdivision (g) of section 11-514 of the administrative code of
   53  the city of New York is REPEALED.
   54    S 16. Clause (A) of subparagraph 4-a of paragraph (b) of subdivision 8
   55  of section 11-602 of the administrative code of the city of New York  is
   56  REPEALED.
       S. 6359                            325                           A. 8559
    1    S  17.  Subdivision 11 of section 11-604 of the administrative code of
    2  the city of New York is REPEALED.
    3    S  18. Paragraph (a) of subdivision 12 of section 11-604 of the admin-
    4  istrative code of the city of New York is amended to read as follows:
    5    (a) [In addition to the credit allowed by subdivision eleven  of  this
    6  section, a] A taxpayer shall be allowed a credit against the tax imposed
    7  by  this subchapter to be credited or refunded in the manner hereinafter
    8  provided in this section. The amount of such credit shall be the  excess
    9  of (A) the amount of sales and compensating use taxes imposed by section
   10  eleven  hundred  seven of the tax law during the taxpayer's taxable year
   11  which became legally due on or after and  was  paid  on  or  after  July
   12  first,  nineteen  hundred  seventy-seven, less any credits or refunds of
   13  such taxes, with respect to the purchase  or  use  by  the  taxpayer  of
   14  machinery or equipment for use or consumption directly and predominantly
   15  in  the  production  of  tangible  personal  property, gas, electricity,
   16  refrigeration or steam for sale, by manufacturing, processing,  generat-
   17  ing,  assembling,  refining,  mining or extracting, or telephone central
   18  office equipment or station apparatus or comparable telegraph  equipment
   19  for use directly and predominantly in receiving at destination or initi-
   20  ating  and  switching  telephone  or  telegraph  communication,  but not
   21  including parts with a useful life of one  year  or  less  or  tools  or
   22  supplies  used in connection with such machinery, equipment or apparatus
   23  over (B) the amount of any credit for such sales  and  compensating  use
   24  taxes  allowed  or allowable against the taxes imposed by subchapter two
   25  of chapter eleven of this title for  any  periods  embraced  within  the
   26  taxable year of the taxpayer under this subchapter.
   27    S  19.  Subdivision  3 of section 11-606 of the administrative code of
   28  the city of New York is REPEALED.
   29    S 20. Subdivision 11 of section 11-608 of the administrative  code  of
   30  the city of New York is REPEALED.
   31    S  21.  (a) Notwithstanding the repeal of article 12 of the tax law by
   32  this act, all provisions of such article 12 and any regulations  adopted
   33  thereunder,  in respect to the assessment, payment, payment over, deter-
   34  mination, collection and refund of tax imposed thereunder,  the  rebates
   35  provided  for  in  section 280-a of the tax law, the filing of forms and
   36  returns and the preservation of records for  the  purposes  of  the  tax
   37  imposed by article 12, the secrecy of returns, the disposition of reven-
   38  ues, and the civil and criminal penalties applicable to the violation of
   39  the  provisions  of  such  article  12, shall continue in full force and
   40  effect with respect to all such tax accrued up  to  the  date  this  act
   41  takes  effect; all actions and proceedings, civil or criminal, commenced
   42  or authorized to be commenced under or by virtue  of  any  provision  of
   43  such  article  12 so repealed, and pending or able to be commenced prior
   44  to the taking effect of such repeal, may be  commenced,  prosecuted  and
   45  defended  to  final  effect  in  the  same  manner as they might if such
   46  provisions were not so repealed.
   47    (b) Notwithstanding any provision of law in article 12 of the tax  law
   48  or  subdivision (a) of this section to the contrary, any application for
   49  a rebate of tax paid under such article 12  must  be  filed  within  two
   50  years from the effective date of this act.
   51    S  22.  This act shall take effect June 1, 2014; provided that section
   52  ten of this act shall take effect January 1, 2016.
   53                                   PART DD
       S. 6359                            326                           A. 8559
    1    Section 1. Subsection (b) of section 804 of the tax law, as  added  by
    2  section  1  of  part  C of chapter 25 of the laws of 2009, is amended to
    3  read as follows:
    4    (b)  Individuals  with  net earnings from self-employment. Individuals
    5  with earnings from self-employment must make estimated tax  payments  of
    6  the  tax  imposed by this article for the taxable year on the same dates
    7  specified in [subsection (a) of this section for the quarterly  payments
    8  of the tax imposed on the payroll expense of employers] PARAGRAPH ONE OF
    9  SUBSECTION  (C)  OF SECTION SIX HUNDRED EIGHTY-FIVE OF THIS CHAPTER.  In
   10  addition, these self-employed individuals must file  a  return  for  the
   11  taxable  year  by  the  [thirtieth]  FIFTEENTH  day  of the fourth month
   12  following the close of the taxable year. Paragraph one of subsection (d)
   13  of section six hundred eighty-five of this chapter shall  not  apply  to
   14  the estimated tax payments required by this subsection.
   15    S  2.  Section  806 of the tax law, as added by section 1 of part C of
   16  chapter 25 of the laws of 2009, is amended to read as follows:
   17    S 806. Procedural provisions. (A) GENERAL. All provisions  of  article
   18  twenty-two  of this chapter will apply to the provisions of this article
   19  in the same manner and with the same force and effect as if the language
   20  of article twenty-two of this chapter had been incorporated in full into
   21  this article and  had  been  specifically  adjusted  for  and  expressly
   22  referred  to  the tax imposed by this article, except to the extent that
   23  any provision is either inconsistent with a provision of this article or
   24  is not relevant to this article. Notwithstanding the preceding sentence,
   25  no credit against tax in article twenty-two of this chapter can be  used
   26  to offset the tax due under this article.
   27    (B)  COMBINED  FILINGS.  NOTWITHSTANDING  ANY OTHER PROVISIONS OF THIS
   28  ARTICLE:
   29    (1) THE COMMISSIONER MAY REQUIRE  THE  FILING  OF  A  COMBINED  RETURN
   30  WHICH,  IN  ADDITION  TO  THE  RETURN  PROVIDED FOR IN SUBSECTION (B) OF
   31  SECTION EIGHT HUNDRED FOUR OF THIS ARTICLE, MAY ALSO INCLUDE ANY OF  THE
   32  RETURNS  REQUIRED TO BE FILED BY A RESIDENT INDIVIDUAL OF NEW YORK STATE
   33  PURSUANT TO THE PROVISIONS OF SECTION  SIX  HUNDRED  FIFTY-ONE  OF  THIS
   34  CHAPTER  AND WHICH MAY BE REQUIRED TO BE FILED BY SUCH INDIVIDUAL PURSU-
   35  ANT TO ANY LOCAL LAW ENACTED PURSUANT TO THE AUTHORITY OF ARTICLE  THIR-
   36  TY, THIRTY-A OR THIRTY-B OF THIS CHAPTER.
   37    (2)  WHERE  A  COMBINED  RETURN  IS  REQUIRED, AND WITH RESPECT TO THE
   38  PAYMENT OF ESTIMATED TAX, THE COMMISSIONER MAY ALSO REQUIRE THE  PAYMENT
   39  TO  IT  OF  A  SINGLE  AMOUNT WHICH SHALL EQUAL THE TOTAL OF THE AMOUNTS
   40  (TOTAL TAXES LESS ANY CREDITS OR REFUNDS) WHICH WOULD HAVE BEEN REQUIRED
   41  TO BE PAID WITH THE RETURNS OR IN PAYMENT OF ESTIMATED TAX  PURSUANT  TO
   42  THE  PROVISIONS OF THIS ARTICLE, THE PROVISIONS OF ARTICLE TWENTY-TWO OF
   43  THIS CHAPTER, AND THE PROVISIONS OF LOCAL LAWS ENACTED UNDER THE AUTHOR-
   44  ITY OF ARTICLE THIRTY, THIRTY-A OR THIRTY-B OF THIS CHAPTER.
   45    (3) Notwithstanding any other law to the  contrary,  the  commissioner
   46  may require that all filings of forms or returns under this article must
   47  be  filed  electronically and all payments of tax must be paid electron-
   48  ically.
   49    S 3. The tax law is amended by adding a new section  807  to  read  as
   50  follows:
   51    S 807. ENFORCEMENT WITH OTHER TAXES. (A) JOINT ASSESSMENT. IF THERE IS
   52  ASSESSED  A  TAX  UNDER  THIS  ARTICLE  AND THERE IS ALSO ASSESSED A TAX
   53  AGAINST THE SAME TAXPAYER PURSUANT TO ARTICLE TWENTY-TWO OF THIS CHAPTER
   54  OR UNDER A LOCAL LAW ENACTED PURSUANT TO THE AUTHORITY OF ARTICLE  THIR-
   55  TY,  ARTICLE  THIRTY-A, OR ARTICLE THIRTY-B OF THIS CHAPTER, AND PAYMENT
   56  OF A SINGLE AMOUNT IS REQUIRED UNDER THE  PROVISIONS  OF  THIS  ARTICLE,
       S. 6359                            327                           A. 8559
    1  SUCH PAYMENT SHALL BE DEEMED TO HAVE BEEN MADE WITH RESPECT TO THE TAXES
    2  SO  ASSESSED  IN  PROPORTION TO THE AMOUNTS OF SUCH TAXES DUE, INCLUDING
    3  TAX, PENALTIES, INTERESTED AND ADDITIONS TO TAX.
    4    (B)  JOINT ACTION. IF THE COMMISSIONER TAKES ACTION UNDER SUCH ARTICLE
    5  TWENTY-TWO OR UNDER A LOCAL LAW ENACTED PURSUANT  TO  THE  AUTHORITY  OF
    6  ARTICLE  THIRTY,  THIRTY-A,  OR THIRTY-B OF THIS CHAPTER WITH RESPECT TO
    7  THE ENFORCEMENT AND COLLECTION OF THE TAX OR TAXES ASSESSED  UNDER  SUCH
    8  ARTICLES,  THE  COMMISSIONER  SHALL,  WHENEVER  POSSIBLE  AND NECESSARY,
    9  ACCOMPANY SUCH ACTION WITH A SIMILAR ACTION  UNDER  SIMILAR  ENFORCEMENT
   10  AND COLLECTION PROVISIONS OF THE TAX IMPOSED BY THIS ARTICLE.
   11    (C)  APPORTIONMENT  OF  MONEYS  COLLECTED  BY JOINT ACTION. ANY MONEYS
   12  COLLECTED AS A RESULT OF SUCH JOINT ACTION SHALL BE DEEMED TO HAVE  BEEN
   13  COLLECTED  IN  PROPORTION  TO THE AMOUNTS DUE, INCLUDING TAX, PENALTIES,
   14  INTEREST AND ADDITIONS TO TAX, UNDER ARTICLE TWENTY-TWO OF THIS  CHAPTER
   15  OR  UNDER A LOCAL LAW ENACTED PURSUANT TO THE AUTHORITY OF ARTICLE THIR-
   16  TY, THIRTY-A, OR THIRTY-B OF THIS CHAPTER AND THE TAX  IMPOSED  BY  THIS
   17  ARTICLE.
   18    (D)  JOINT  DEFICIENCY  ACTION.  WHENEVER  THE  COMMISSIONER TAKES ANY
   19  ACTION WITH RESPECT TO A DEFICIENCY OF INCOME TAX UNDER ARTICLE  TWENTY-
   20  TWO OF THIS CHAPTER OR UNDER A LOCAL LAW ENACTED PURSUANT TO THE AUTHOR-
   21  ITY OF ARTICLE THIRTY, THIRTY-A, OR THIRTY-B OF THIS CHAPTER, OTHER THAN
   22  THE ACTION SET FORTH IN SUBSECTION (A) OF THIS SECTION, THE COMMISSIONER
   23  MAY IN HIS OR HER DISCRETION ACCOMPANY SUCH ACTION WITH A SIMILAR ACTION
   24  UNDER THIS ARTICLE.
   25    S 4. This act shall take effect immediately and apply to taxable years
   26  beginning on or after January 1, 2015.
   27                                   PART EE
   28    Section  1. Subdivision 4 of section 97-nnnn of the state finance law,
   29  as added by chapter 174 of the laws of  2013,  is  amended  to  read  as
   30  follows:
   31    4.  a.  As  used  in this section, the term "base year gaming revenue"
   32  shall mean the sum of all revenue generated to  support  education  from
   33  video  lottery  gaming as defined by section sixteen hundred seventeen-a
   34  of the tax law in the twelve  months  preceding  the  operation  of  any
   35  gaming facility pursuant to either article thirteen of the racing, pari-
   36  mutuel wagering and breeding law or pursuant to paragraph four of SUBDI-
   37  VISION  A  OF  section [one thousand six] SIXTEEN hundred seventeen-a of
   38  the tax law.
   39    b. Amounts APPROPRIATED OR transferred in any year to support  elemen-
   40  tary and secondary education shall be calculated as follows:
   41    (i)  an  amount  equal to the positive difference, if any, between the
   42  base year gaming revenue amount and the sum of all revenue generated  to
   43  support  education  from  video  lottery  gaming  as  defined by section
   44  sixteen hundred seventeen-a of the tax law in the  current  fiscal  year
   45  provided  that such positive amount, if any, shall be transferred to the
   46  state lottery fund[;]. FOR THE PURPOSES OF THIS  PARAGRAPH,  THE  CALCU-
   47  LATION  OF  THIS  POSITIVE DIFFERENCE SHALL BE ESTIMATED AND TRANSFERRED
   48  MONTHLY BASED ON THE CUMULATIVE POSITIVE DIFFERENCE, IF ANY, IN THE SAME
   49  CUMULATIVE MONTHS OF THE BASE YEAR AND  THE  CUMULATIVE  MONTHS  OF  THE
   50  CURRENT  FISCAL YEAR TO DATE, LESS AMOUNTS PREVIOUSLY TRANSFERRED IN THE
   51  CURRENT FISCAL YEAR. PROVIDED, HOWEVER, IF THE AMOUNT PREVIOUSLY  TRANS-
   52  FERRED  IN  THE  CURRENT  FISCAL  YEAR  EXCEEDS  THE CUMULATIVE POSITIVE
   53  DIFFERENCE, AN AMOUNT EQUAL TO THE EXCESS TRANSFERRED MAY BE TRANSFERRED
   54  BACK FROM THE STATE LOTTERY FUND; and
       S. 6359                            328                           A. 8559
    1    (ii) the amount of revenue collected [in the prior state fiscal year,]
    2  to be distributed pursuant to paragraph a of subdivision three  of  this
    3  section,  and  in excess of any amounts transferred pursuant to subpara-
    4  graph (i) of this paragraph [in such prior fiscal year], if any.
    5    c.  Notwithstanding  any  provision  of  law  to the contrary, amounts
    6  appropriated or transferred from  the  commercial  gaming  revenue  fund
    7  pursuant  to  subparagraph  (ii) of this paragraph shall not be included
    8  in: (i) the allowable growth amount computed pursuant to paragraph dd of
    9  subdivision one of section thirty-six hundred two of the education  law,
   10  (ii)  the preliminary growth amount computed pursuant to paragraph ff of
   11  subdivision one of section thirty-six hundred two of the education  law,
   12  and  (iii) the allocable growth amount computed pursuant to paragraph gg
   13  of subdivision one of section thirty-six hundred two  of  the  education
   14  law.
   15    S  2.  Subdivision  5  of section 97-nnnn of the state finance law, as
   16  added by chapter 174 of the laws of 2013, is amended to read as follows:
   17    5. Notwithstanding the foregoing, monies received pursuant to:
   18    a. sections one thousand three hundred  forty-five  and  one  thousand
   19  three  hundred  forty-eight  of  [this  article] THE RACING, PARI-MUTUEL
   20  WAGERING AND BREEDING LAW  shall  be  exclusively  appropriated  to  the
   21  office of alcoholism and substance abuse services to be used for problem
   22  gambling education and treatment purposes.
   23    b. section one thousand three hundred forty-nine of [this article] THE
   24  RACING,  PARI-MUTUEL  WAGERING  AND  BREEDING  LAW  shall be exclusively
   25  appropriated to the commission for regulatory investigations.
   26    c. section one thousand three hundred  fifty  of  [this  article]  THE
   27  RACING,  PARI-MUTUEL  WAGERING  AND  BREEDING  LAW  shall be exclusively
   28  appropriated to the commission for costs regulation.
   29    S 3. Subdivisions (b) and (c) of section 52 of chapter 174 of the laws
   30  of 2013 enacting the upstate New York gaming economic development act of
   31  2013, are amended to read as follows:
   32    (b) sections six, seven, fourteen and sixteen of this act  shall  take
   33  effect  on  the  same date as the agreement between the Oneida Nation of
   34  New York and the state of New York entered into on the sixteenth day  of
   35  May, 2013 takes effect; provided, further, that the amendments to subdi-
   36  vision 2 of section 99-h of the state finance law made by section six of
   37  this  act  shall  take  effect on the same date as the reversion of such
   38  section as provided in section 2 of chapter 747 of the laws of 2006,  as
   39  amended;  provided,  further,  that  the  amendments to subdivision 3 of
   40  section 99-h of the state finance law made by section seven of this  act
   41  shall  be subject to the expiration and reversion of such subdivision as
   42  provided in section 3 of part W of chapter 60 of the laws  of  2011,  as
   43  amended  when  upon  such date the provisions of section seven-a of this
   44  act shall take effect; provided, further, that the amendments to  subdi-
   45  vision  3  of  section  99-h  of  the  state finance law made by section
   46  seven-a of this act shall be subject to the the expiration and reversion
   47  of such section as provided in section 2 of chapter 747 of the  laws  of
   48  2006,  as amended when upon such date the provisions of section eight of
   49  this act shall take effect; [provided, further, however, that the amend-
   50  ment to section 99-h of the state finance law made by  section  nine  of
   51  this  act  shall  not affect the expiration of such section and shall be
   52  deemed repealed therewith;] provided, further,  that  the  state  gaming
   53  commission  shall  notify  the legislative bill drafting commission upon
   54  the occurrence of such agreement between the Oneida Nation and the state
   55  of New York becoming effective in order that the commission may maintain
   56  an accurate and timely effective data base of the official text  of  the
       S. 6359                            329                           A. 8559
    1  laws of the state of New York in furtherance of effecting the provisions
    2  of  section  44  of  the  legislative law and section 70-b of the public
    3  officers law;
    4    (c) section [1368] 1367 of the racing, pari-mutuel wagering and breed-
    5  ing  law,  as added by section two of this act, shall take effect upon a
    6  change in federal law authorizing the activity permitted by such section
    7  or upon a ruling by a court of competent jurisdiction that such activity
    8  is lawful. The state gaming commission shall notify the legislative bill
    9  drafting commission upon the occurrence of the change in federal law  or
   10  upon  the  ruling of a court of competent jurisdiction in order that the
   11  commission may maintain an accurate and timely effective  data  base  of
   12  the official text of the laws of the state of New York in furtherance of
   13  effecting  the  provisions  of  section  44  of  the legislative law and
   14  section 70-b of the public officers law;
   15    S 4. Subdivision 3-a of section 99-h of  the  state  finance  law,  as
   16  added by chapter 174 of the laws of 2013, is amended to read as follows:
   17    3-a.  Ten  percent  of any of the funds actually received by the state
   18  pursuant to the tribal-state compacts and agreements described in subdi-
   19  vision two of this section [that are retained  in  the  fund  after  the
   20  distributions  required by subdivision three of this section, but] prior
   21  to the transfer of unsegregated moneys to the general fund  required  by
   22  such  subdivision,  shall  be distributed to counties in each respective
   23  exclusivity zone provided they do not otherwise receive a share of  said
   24  revenues pursuant to this section. Such distribution shall be made among
   25  such  counties  on  a  per capita basis, excluding the population of any
   26  municipality that receives a distribution pursuant to subdivision  three
   27  of this section.
   28    S 5. Subdivision g of section 1617-a of the tax law, as added by chap-
   29  ter 174 of the laws of 2013, is amended to read as follows:
   30    g.  Every  video  lottery  gaming  license, and every renewal license,
   31  shall be valid for a period of five  years,  except  that  video  gaming
   32  licenses  issued  before the effective date of this subdivision shall be
   33  for a term expiring on THE  APPLICANT'S  NEXT  BIRTHDAY  FOLLOWING  June
   34  thirtieth, two thousand fourteen.
   35    The  gaming  commission  may decline to renew any license after notice
   36  and an opportunity for hearing if it determines that:
   37    (1) the licensee has violated section one thousand six  hundred  seven
   38  of this article;
   39    (2)  the  licensee  has  violated any rule, regulation or order of the
   40  gaming commission;
   41    (3) the applicant or its officers, directors or significant stockhold-
   42  ers, as determined by the gaming commission, have been  convicted  of  a
   43  crime involving moral turpitude; or
   44    (4)  that  the  character or fitness of the licensee and its officers,
   45  directors, and significant stockholders, as  determined  by  the  gaming
   46  commission  is  such  that  the  participation of the applicant in video
   47  lottery gaming or related activities  would  be  inconsistent  with  the
   48  public  interest, convenience or necessity or with the best interests of
   49  video gaming generally.
   50    S 6. This act shall take effect immediately;  provided,  that  section
   51  one of this act shall take effect April 1, 2015; provided, further, that
   52  the amendments made to section three of this act shall be deemed to have
   53  taken  effect  on the same date and in the same manner as chapter 174 of
   54  the laws of 2013.
   55                                   PART FF
       S. 6359                            330                           A. 8559
    1    Section 1. Subsections (yy) and (zz) of section 606 of the tax law, as
    2  relettered by section 5 of part H of chapter 1 of the laws of 2003,  are
    3  relettered  (yyy)  and (zzz) and a new subsection (bbb) is added to read
    4  as follows:
    5    (BBB) REAL PROPERTY TAX FREEZE CREDIT. (1) AS USED IN THIS SUBSECTION:
    6    (A)  THE  TERM  "FREEZE-COMPLIANT  BUDGET"  MEANS A BUDGET OF A TAXING
    7  JURISDICTION THAT HAS MET THE REQUIREMENTS OF SECTION TWO THOUSAND TWEN-
    8  TY-THREE-B OF THE EDUCATION LAW OR SECTION THREE-D OF THE GENERAL MUNIC-
    9  IPAL LAW, WHICHEVER IS APPLICABLE.
   10    (B) THE TERMS "INDEPENDENT SPECIAL  DISTRICT"  AND  "DEPENDENT  SCHOOL
   11  DISTRICT"  HAVE  THE SAME MEANING AS SET FORTH IN SECTION THREE-D OF THE
   12  GENERAL MUNICIPAL LAW.
   13    (C) THE TERM "STAR EXEMPTION" MEANS THE SCHOOL  TAX  RELIEF  EXEMPTION
   14  AUTHORIZED  BY SECTION FOUR HUNDRED TWENTY-FIVE OF THE REAL PROPERTY TAX
   15  LAW.
   16    (D) THE  TERM  "TAXING  JURISDICTION"  MEANS  A  COUNTY,  CITY,  TOWN,
   17  VILLAGE, SCHOOL DISTRICT OR AN INDEPENDENT SPECIAL DISTRICT, EXCEPT THAT
   18  SUCH  TERM  SHALL NOT INCLUDE A CITY WITH A POPULATION OF ONE MILLION OR
   19  MORE, NOR SHALL IT INCLUDE A COUNTY WHOLLY LOCATED WITHIN SUCH A CITY.
   20    (2) AN INDIVIDUAL TAXPAYER WHO MEETS  THE  ELIGIBILITY  STANDARDS  SET
   21  FORTH  IN PARAGRAPH THREE OF THIS SUBSECTION AND WHOSE PRIMARY RESIDENCE
   22  IS LOCATED IN A TAXING JURISDICTION THAT HAS A  FREEZE-COMPLIANT  BUDGET
   23  FOR  THE  FISCAL  YEAR  STARTING  IN TWO THOUSAND FOURTEEN, TWO THOUSAND
   24  FIFTEEN OR TWO THOUSAND  SIXTEEN,  WHICHEVER  IS  APPLICABLE,  SHALL  BE
   25  ALLOWED  A  CREDIT AGAINST THE TAXES IMPOSED BY THIS ARTICLE. SUBJECT TO
   26  THE PROVISIONS OF PARAGRAPH SIX OF THIS SUBSECTION, SUCH CREDIT SHALL BE
   27  DETERMINED AS FOLLOWS:
   28    (A) IF A SCHOOL DISTRICT OTHER THAN A DEPENDENT SCHOOL DISTRICT HAS  A
   29  FREEZE-COMPLIANT  BUDGET  FOR  ITS  FISCAL YEAR STARTING IN TWO THOUSAND
   30  FOURTEEN, A CREDIT SHALL BE ALLOWED  FOR  THE  ELIGIBLE  TAXPAYER'S  TWO
   31  THOUSAND  FOURTEEN TAXABLE YEAR IN THE AMOUNT BY WHICH THE REAL PROPERTY
   32  TAXES IMPOSED UPON SUCH  RESIDENCE  BY  OR  ON  BEHALF  OF  THAT  SCHOOL
   33  DISTRICT  FOR  THE FISCAL YEAR STARTING IN TWO THOUSAND FOURTEEN EXCEEDS
   34  THE REAL PROPERTY TAXES SO IMPOSED FOR THE FISCAL YEAR STARTING  IN  TWO
   35  THOUSAND THIRTEEN.
   36    (B)  IF  A TAXING JURISDICTION, OTHER THAN A SCHOOL DISTRICT OR A CITY
   37  WITH A DEPENDENT SCHOOL DISTRICT, HAS A FREEZE-COMPLIANT BUDGET FOR  ITS
   38  FISCAL  YEAR STARTING IN TWO THOUSAND FIFTEEN, A CREDIT SHALL BE ALLOWED
   39  FOR THE ELIGIBLE TAXPAYER'S TWO THOUSAND FIFTEEN  TAXABLE  YEAR  IN  THE
   40  AMOUNT  BY  WHICH THE REAL PROPERTY TAXES IMPOSED UPON SUCH RESIDENCE BY
   41  OR ON BEHALF OF THAT TAXING JURISDICTION FOR THE FISCAL YEAR STARTING IN
   42  TWO THOUSAND FIFTEEN EXCEEDS THE REAL PROPERTY TAXES SO IMPOSED FOR  THE
   43  FISCAL YEAR STARTING IN TWO THOUSAND FOURTEEN.
   44    (C)  IF A SCHOOL DISTRICT OTHER THAN A DEPENDENT SCHOOL DISTRICT HAS A
   45  FREEZE-COMPLIANT BUDGET FOR ITS FISCAL YEAR  STARTING  IN  TWO  THOUSAND
   46  FIFTEEN, A CREDIT SHALL BE ALLOWED FOR THE ELIGIBLE TAXPAYER'S TWO THOU-
   47  SAND FIFTEEN TAXABLE YEAR IN THE AMOUNT BY WHICH THE REAL PROPERTY TAXES
   48  IMPOSED  UPON SUCH RESIDENCE BY OR ON BEHALF OF SUCH SCHOOL DISTRICT FOR
   49  THE FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN EXCEEDS THE REAL  PROP-
   50  ERTY TAXES SO IMPOSED FOR THE FISCAL YEAR IDENTIFIED AS FOLLOWS:
   51    (I)  IF  THE  SCHOOL DISTRICT'S BUDGET FOR THE FISCAL YEAR STARTING IN
   52  TWO THOUSAND FOURTEEN WAS FREEZE-COMPLIANT, THE EXCESS SHALL  BE  DETER-
   53  MINED WITH RESPECT TO THE FISCAL YEAR STARTING IN TWO THOUSAND THIRTEEN.
   54    (II)  IF  THE SCHOOL DISTRICT'S BUDGET FOR THE FISCAL YEAR STARTING IN
   55  TWO THOUSAND FOURTEEN WAS NOT  FREEZE-COMPLIANT,  THE  EXCESS  SHALL  BE
       S. 6359                            331                           A. 8559
    1  DETERMINED  WITH  RESPECT  TO  THE  FISCAL YEAR STARTING IN TWO THOUSAND
    2  FOURTEEN.
    3    (D)  IF  A TAXING JURISDICTION, OTHER THAN A SCHOOL DISTRICT OR A CITY
    4  WITH A DEPENDENT SCHOOL DISTRICT, HAS A FREEZE-COMPLIANT BUDGET FOR  ITS
    5  FISCAL  YEAR STARTING IN TWO THOUSAND SIXTEEN, A CREDIT SHALL BE ALLOWED
    6  FOR THE ELIGIBLE TAXPAYER'S TWO THOUSAND SIXTEEN  TAXABLE  YEAR  IN  THE
    7  AMOUNT  BY  WHICH THE REAL PROPERTY TAXES IMPOSED UPON SUCH RESIDENCE BY
    8  OR ON BEHALF OF THAT TAXING JURISDICTION FOR THE FISCAL YEAR STARTING IN
    9  TWO THOUSAND SIXTEEN EXCEEDS THE REAL PROPERTY TAXES SO IMPOSED FOR  THE
   10  FISCAL YEAR IDENTIFIED AS FOLLOWS:
   11    (I)  IF  THE TAXING JURISDICTION'S BUDGET FOR THE FISCAL YEAR STARTING
   12  IN TWO THOUSAND FIFTEEN WAS FREEZE-COMPLIANT, THE EXCESS SHALL BE DETER-
   13  MINED WITH RESPECT TO THE FISCAL YEAR STARTING IN TWO THOUSAND FOURTEEN.
   14    (II) IF THE TAXING JURISDICTION'S BUDGET FOR THE FISCAL YEAR  STARTING
   15  IN  TWO  THOUSAND  FIFTEEN WAS NOT FREEZE-COMPLIANT, THE EXCESS SHALL BE
   16  DETERMINED WITH RESPECT TO THE FISCAL  YEAR  STARTING  IN  TWO  THOUSAND
   17  FIFTEEN.
   18    (E)  IF A CITY WITH A DEPENDENT SCHOOL DISTRICT HAS A FREEZE-COMPLIANT
   19  BUDGET FOR ITS FISCAL YEAR STARTING IN  TWO  THOUSAND  FOURTEEN,  A  TAX
   20  CREDIT  SHALL  BE ALLOWED FOR THE ELIGIBLE TAXPAYER'S TWO THOUSAND FOUR-
   21  TEEN TAXABLE YEAR IN THE AMOUNT EQUIVALENT TO SIXTY-SEVEN PERCENT OF THE
   22  AMOUNT BY WHICH THE REAL PROPERTY TAXES IMPOSED UPON SUCH  RESIDENCE  BY
   23  OR  ON  BEHALF OF THAT CITY FOR THE FISCAL YEAR STARTING IN TWO THOUSAND
   24  FOURTEEN EXCEEDS THE REAL PROPERTY TAXES SO IMPOSED FOR THE FISCAL  YEAR
   25  STARTING IN TWO THOUSAND THIRTEEN.
   26    (F)  IF A CITY WITH A DEPENDENT SCHOOL DISTRICT HAS A FREEZE-COMPLIANT
   27  BUDGET FOR ITS FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN, A TAX CRED-
   28  IT SHALL BE ALLOWED FOR THE ELIGIBLE  TAXPAYER'S  TWO  THOUSAND  FIFTEEN
   29  TAXABLE YEAR AS FOLLOWS:
   30    (I)  IF THE CITY'S BUDGET FOR THE FISCAL YEAR STARTING IN TWO THOUSAND
   31  FOURTEEN WAS FREEZE-COMPLIANT, A CREDIT SHALL BE ALLOWED FOR THE  ELIGI-
   32  BLE TAXPAYER'S TWO THOUSAND FIFTEEN TAXABLE YEAR IN AN AMOUNT EQUIVALENT
   33  TO  THIRTY-THREE  PERCENT OF THE AMOUNT BY WHICH THE REAL PROPERTY TAXES
   34  IMPOSED UPON SUCH RESIDENCE BY THAT CITY FOR THE FISCAL YEAR STARTING IN
   35  TWO THOUSAND FOURTEEN EXCEEDS THE REAL PROPERTY TAXES SO IMPOSED FOR THE
   36  FISCAL YEAR STARTING IN TWO THOUSAND THIRTEEN, TOGETHER WITH  AN  AMOUNT
   37  EQUIVALENT  TO SIXTY-SEVEN PERCENT OF THE AMOUNT BY WHICH THE REAL PROP-
   38  ERTY TAXES IMPOSED UPON SUCH RESIDENCE BY THAT CITY FOR THE FISCAL  YEAR
   39  STARTING  IN  TWO  THOUSAND  FIFTEEN  EXCEEDS THE REAL PROPERTY TAXES SO
   40  IMPOSED FOR THE FISCAL YEAR STARTING IN TWO  THOUSAND  THIRTEEN;  AND  A
   41  CREDIT SHALL BE ALLOWED FOR THE ELIGIBLE TAXPAYER'S TWO THOUSAND SIXTEEN
   42  TAXABLE  YEAR  IN  AN  AMOUNT  EQUIVALENT TO THIRTY-THREE PERCENT OF THE
   43  AMOUNT BY WHICH THE REAL PROPERTY TAXES IMPOSED UPON SUCH  RESIDENCE  BY
   44  THAT  CITY  FOR THE FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN EXCEEDS
   45  THE REAL PROPERTY TAXES SO IMPOSED FOR THE FISCAL YEAR STARTING  IN  TWO
   46  THOUSAND THIRTEEN.
   47    (II) IF THE CITY'S BUDGET FOR THE FISCAL YEAR STARTING IN TWO THOUSAND
   48  FOURTEEN  WAS  NOT  FREEZE-COMPLIANT,  A CREDIT SHALL BE ALLOWED FOR THE
   49  ELIGIBLE TAXPAYER'S TWO THOUSAND  FIFTEEN  TAXABLE  YEAR  IN  AN  AMOUNT
   50  EQUIVALENT  TO SIXTY-SEVEN PERCENT OF THE AMOUNT BY WHICH THE REAL PROP-
   51  ERTY TAXES IMPOSED UPON SUCH RESIDENCE BY THAT CITY FOR THE FISCAL  YEAR
   52  STARTING  IN  TWO  THOUSAND  FIFTEEN  EXCEEDS THE REAL PROPERTY TAXES SO
   53  IMPOSED FOR THE FISCAL YEAR STARTING IN TWO  THOUSAND  FOURTEEN;  AND  A
   54  CREDIT SHALL BE ALLOWED FOR THE ELIGIBLE TAXPAYER'S TWO THOUSAND SIXTEEN
   55  TAXABLE  YEAR  IN  AN  AMOUNT  EQUIVALENT TO THIRTY-THREE PERCENT OF THE
   56  AMOUNT BY WHICH THE REAL PROPERTY TAXES IMPOSED UPON SUCH  RESIDENCE  BY
       S. 6359                            332                           A. 8559
    1  THAT  CITY  FOR THE FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN EXCEEDS
    2  THE REAL PROPERTY TAXES SO IMPOSED FOR THE FISCAL YEAR STARTING  IN  TWO
    3  THOUSAND FOURTEEN.
    4    (G)  IF A CITY WITH A DEPENDENT SCHOOL DISTRICT HAS A FREEZE-COMPLIANT
    5  BUDGET FOR ITS FISCAL YEAR STARTING IN TWO THOUSAND  FOURTEEN  BUT  DOES
    6  NOT  HAVE  A FREEZE-COMPLIANT BUDGET FOR ITS FISCAL YEAR STARTING IN TWO
    7  THOUSAND FIFTEEN, A TAX CREDIT SHALL BE ALLOWED FOR THE ELIGIBLE TAXPAY-
    8  ER'S  TWO  THOUSAND  FIFTEEN  TAXABLE  YEAR   AN   AMOUNT   REPRESENTING
    9  THIRTY-THREE  PERCENT  OF  THE  AMOUNT  BY WHICH THE REAL PROPERTY TAXES
   10  IMPOSED UPON SUCH RESIDENCE BY THAT CITY FOR THE FISCAL YEAR STARTING IN
   11  TWO THOUSAND FOURTEEN EXCEEDS THE REAL PROPERTY TAXES SO IMPOSED FOR THE
   12  FISCAL YEAR STARTING IN TWO THOUSAND THIRTEEN.
   13    (3) TO BE ELIGIBLE FOR SUCH CREDIT, THE TAXPAYER (OR TAXPAYERS  FILING
   14  JOINT RETURNS) MUST MEET THE FOLLOWING CRITERIA:
   15    (A) FOR THE TWO THOUSAND FOURTEEN TAXABLE YEAR, THE TAXPAYER'S PRIMARY
   16  RESIDENCE  MUST  HAVE QUALIFIED FOR THE STAR EXEMPTION FOR THE TWO THOU-
   17  SAND FOURTEEN--TWO THOUSAND FIFTEEN SCHOOL YEAR, OR WOULD HAVE SO QUALI-
   18  FIED IF AN APPLICATION FOR SUCH EXEMPTION HAD BEEN SUBMITTED IN A TIMELY
   19  MANNER.
   20    (B) FOR THE TWO THOUSAND FIFTEEN TAXABLE YEAR, THE TAXPAYER'S  PRIMARY
   21  RESIDENCE  MUST  HAVE QUALIFIED FOR THE STAR EXEMPTION FOR THE TWO THOU-
   22  SAND FIFTEEN--TWO THOUSAND SIXTEEN SCHOOL YEAR, OR WOULD HAVE SO  QUALI-
   23  FIED IF AN APPLICATION FOR SUCH EXEMPTION HAD BEEN SUBMITTED IN A TIMELY
   24  MANNER.
   25    (C)  FOR THE TWO THOUSAND SIXTEEN TAXABLE YEAR, THE TAXPAYER'S PRIMARY
   26  RESIDENCE MUST HAVE QUALIFIED FOR THE STAR EXEMPTION FOR THE  TWO  THOU-
   27  SAND SIXTEEN--TWO THOUSAND SEVENTEEN SCHOOL YEAR, OR WOULD HAVE SO QUAL-
   28  IFIED IF AN APPLICATION FOR SUCH EXEMPTION HAD BEEN SUBMITTED IN A TIME-
   29  LY MANNER.
   30    (4)  FOR  EACH  YEAR  THIS  CREDIT  IS ALLOWED, THE COMMISSIONER SHALL
   31  DETERMINE THE TAXPAYER'S  ELIGIBILITY  FOR  THIS  CREDIT  UTILIZING  THE
   32  INFORMATION  AVAILABLE  TO  THE  COMMISSIONER. WHEN THE COMMISSIONER HAS
   33  DETERMINED A TAXPAYER TO BE ELIGIBLE FOR THIS CREDIT,  THE  COMMISSIONER
   34  SHALL ADVANCE A PAYMENT OF THE AMOUNT DETERMINED IN ACCORDANCE WITH THIS
   35  SUBSECTION.  THE TAXPAYER SHALL NOT APPLY FOR SUCH CREDIT IN CONJUNCTION
   36  WITH  THE  FILING  OF  HIS  OR  HER RETURN. A TAXPAYER WHO HAS FAILED TO
   37  RECEIVE AN ADVANCE PAYMENT THAT HE OR SHE BELIEVES WAS  DUE  TO  HIM  OR
   38  HER,  OR  WHO HAS RECEIVED AN ADVANCE PAYMENT THAT HE OR SHE BELIEVES IS
   39  LESS THAN THE AMOUNT THAT WAS DUE TO HIM OR HER, MAY REQUEST PAYMENT  OF
   40  THE CLAIMED DEFICIENCY IN A MANNER PRESCRIBED BY THE COMMISSIONER.
   41    (5) IF THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBSECTION, IF ANY,
   42  SHALL  EXCEED  THE TAXPAYER'S TAX FOR THE TAXABLE YEAR, THE EXCESS SHALL
   43  BE TREATED AS AN OVERPAYMENT OF  TAX  TO  BE  CREDITED  OR  REFUNDED  IN
   44  ACCORDANCE WITH THE PROVISIONS OF SECTION SIX HUNDRED EIGHTY-SIX OF THIS
   45  ARTICLE, PROVIDED, HOWEVER, THAT NO INTEREST SHALL BE PAID THEREON.
   46    (6)  THE  FOLLOWING  PROVISIONS  SHALL APPLY TO THE CALCULATION OF THE
   47  CREDIT PURSUANT TO PARAGRAPH TWO OF THIS SUBSECTION:
   48    (A) IF THE TAX BILL PERTAINING  TO  THE  ELIGIBLE  TAXPAYER'S  PRIMARY
   49  RESIDENCE  INCLUDES  TAXES  LEVIED  BY  OR  ON BEHALF OF MULTIPLE TAXING
   50  JURISDICTIONS, THE CREDIT SHALL BE BASED UPON THE CHANGE IN  THE  AGGRE-
   51  GATE TAX LIABILITY OF SUCH RESIDENCE, PROVIDED THAT ANY TAX APPEARING ON
   52  THE TAX BILL THAT IS NOT ATTRIBUTABLE TO A FREEZE-COMPLIANT BUDGET SHALL
   53  BE  DISREGARDED  WHEN  DETERMINING  THE  AGGREGATE TAX LIABILITY OF SUCH
   54  RESIDENCE.
   55    (B) IF THE TAX BILL PERTAINING  TO  THE  ELIGIBLE  TAXPAYER'S  PRIMARY
   56  RESIDENCE  INCLUDES  RELEVIED  TAXES OR OTHER TAXES THAT WERE PREVIOUSLY
       S. 6359                            333                           A. 8559
    1  BILLED BUT NOT PAID, THOSE TAXES SHALL BE DISREGARDED  WHEN  DETERMINING
    2  THE AGGREGATE TAX LIABILITY OF SUCH RESIDENCE.
    3    (C)  IF  THE  TAX  BILL  PERTAINING TO THE ELIGIBLE TAXPAYER'S PRIMARY
    4  RESIDENCE INCLUDES USAGE CHARGES, UNIT CHARGES OR OTHER CHARGES THAT ARE
    5  BASED UPON THE CONSUMPTION OF A SERVICE, THOSE CHARGES SHALL  BE  DISRE-
    6  GARDED WHEN DETERMINING THE AGGREGATE TAX LIABILITY OF SUCH RESIDENCE.
    7    (D)  NOTWITHSTANDING  THE  FOREGOING PROVISIONS OF THIS SUBSECTION, NO
    8  CREDIT SHALL BE ALLOWED TO THE EXTENT THAT  THE  TAX  LIABILITY  OF  THE
    9  ELIGIBLE  TAXPAYER'S  PRIMARY  RESIDENCE INCREASED DUE TO ONE OR MORE OF
   10  THE FOLLOWING EVENTS:
   11    (I) A PHYSICAL IMPROVEMENT TO THE ELIGIBLE  TAXPAYER'S  PRIMARY  RESI-
   12  DENCE.
   13    (II) A REMOVAL OR REDUCTION OF AN EXEMPTION ON THE ELIGIBLE TAXPAYER'S
   14  PRIMARY  RESIDENCE,  INCLUDING  A  REDUCTION  OF  THE STAR EXEMPT AMOUNT
   15  CALCULATED  PURSUANT  TO  SUBDIVISION  TWO  OF  SECTION   FOUR   HUNDRED
   16  TWENTY-FIVE OF THE REAL PROPERTY TAX LAW.
   17    (III) A REVALUATION THAT CAUSED THE ASSESSMENT OF THE ELIGIBLE TAXPAY-
   18  ER'S  PRIMARY RESIDENCE TO INCREASE BY A PERCENTAGE THAT IS GREATER THAN
   19  THE APPLICABLE CHANGE IN LEVEL OF ASSESSMENT. AS USED HEREIN, THE  TERMS
   20  "REVALUATION"  AND  "CHANGE  IN LEVEL OF ASSESSMENT" SHALL HAVE THE SAME
   21  MEANINGS AS SET FORTH IN SECTIONS ONE HUNDRED  TWO  AND  TWELVE  HUNDRED
   22  TWENTY OF THE REAL PROPERTY TAX LAW, RESPECTIVELY.
   23    (E)  IN  THE  CASE  OF  PROPERTY CONSISTING OF A COOPERATIVE APARTMENT
   24  CORPORATION THAT IS DESCRIBED BY PARAGRAPH (K)  OF  SUBDIVISION  TWO  OF
   25  SECTION FOUR HUNDRED TWENTY-FIVE OF THE REAL PROPERTY TAX LAW, AN ELIGI-
   26  BLE OWNER SHALL BE ALLOWED A CREDIT IN THE AMOUNT EQUAL TO SIXTY PERCENT
   27  OF  THE  AVERAGE  TAX CREDIT IN THAT TAXING JURISDICTION FOR THAT FISCAL
   28  YEAR, AS DETERMINED BY THE COMMISSIONER, OR IN THE CASE OF A COOPERATIVE
   29  APARTMENT CORPORATION THAT IS DESCRIBED BY SUBPARAGRAPH  (IV)  OF  PARA-
   30  GRAPH  (K) OF SUBDIVISION TWO OF SECTION FOUR HUNDRED TWENTY-FIVE OF THE
   31  REAL PROPERTY TAX LAW, A CREDIT OF TWENTY PERCENT OF  SUCH  AVERAGE  TAX
   32  CREDIT.
   33    (F)  IN  THE  CASE  OF  PROPERTY  CONSISTING  OF A MOBILE HOME THAT IS
   34  DESCRIBED BY PARAGRAPH (L) OF SUBDIVISION TWO OF  SECTION  FOUR  HUNDRED
   35  TWENTY-FIVE  OF  THE  REAL  PROPERTY TAX LAW, AN ELIGIBLE OWNER SHALL BE
   36  ALLOWED A CREDIT IN THE AMOUNT EQUAL TO TWENTY-FIVE PERCENT OF THE AVER-
   37  AGE TAX CREDIT IN THAT TAXING JURISDICTION  FOR  THAT  FISCAL  YEAR,  AS
   38  DETERMINED BY THE COMMISSIONER.
   39    (G)  IN  THE CASE OF A CITY WITH A DEPENDENT SCHOOL DISTRICT, IT SHALL
   40  BE PRESUMED THAT SIXTY-SEVEN PERCENT OF THE CITY TAX BILL IS FOR  SCHOOL
   41  DISTRICT  PURPOSES  AND  THAT  THIRTY-THREE  PERCENT IS FOR GENERAL CITY
   42  PURPOSES.
   43    (H) THE AMOUNT OF THE CREDIT SHALL BE ROUNDED TO THE  NEAREST  DOLLAR,
   44  EXCEPT  WHERE  SUCH AMOUNT IS GREATER THAN ZERO AND LESS THAN ONE DOLLAR
   45  AND FIFTY CENTS, IN WHICH CASE THE AMOUNT OF THE CREDIT SHALL BE ROUNDED
   46  UP TO TWO DOLLARS.
   47    (7) NO CREDIT SHALL BE ALLOWED UNDER THIS SUBSECTION  IN  RELATION  TO
   48  PROPERTY LOCATED WITHIN A CITY WITH A POPULATION OF ONE MILLION OR MORE.
   49    S  2.  The  education law is amended by adding a new section 2023-b to
   50  read as follows:
   51    S  2023-B.  CERTIFICATION  OF  COMPLIANCE  WITH  PROPERTY  TAX  FREEZE
   52  REQUIREMENTS.  A  SCHOOL  DISTRICT  THAT IS SUBJECT TO THE PROVISIONS OF
   53  SECTION TWO THOUSAND TWENTY-THREE-A OF THIS PART MUST  COMPLY  WITH  THE
   54  REQUIREMENTS  OF  SUBDIVISION TWO OF THIS SECTION IN ORDER TO RENDER ITS
   55  TAXPAYERS ELIGIBLE FOR THE REAL PROPERTY TAX FREEZE CREDIT AUTHORIZED BY
   56  SUBSECTION (BBB) OF SECTION SIX HUNDRED SIX OF THE TAX LAW FOR A  FISCAL
       S. 6359                            334                           A. 8559
    1  YEAR  STARTING  IN  TWO  THOUSAND  FOURTEEN.  A  SCHOOL DISTRICT THAT IS
    2  SUBJECT TO THE PROVISIONS OF SECTION TWO THOUSAND TWENTY-THREE-A OF THIS
    3  PART MUST COMPLY WITH THE REQUIREMENTS OF SUBDIVISIONS TWO AND THREE  OF
    4  THIS  SECTION  IN  ORDER  TO  RENDER ITS TAXPAYERS ELIGIBLE FOR THE REAL
    5  PROPERTY TAX FREEZE CREDIT AUTHORIZED BY SUBSECTION (BBB) OF SECTION SIX
    6  HUNDRED SIX OF THE TAX LAW FOR A FISCAL YEAR STARTING  IN  TWO  THOUSAND
    7  FIFTEEN.
    8    1. DEFINITIONS.  AS USED IN THIS SECTION:
    9    A.  "CONSOLIDATION  ACTIONS" MEANS: REORGANIZATIONS OF ELIGIBLE SCHOOL
   10  DISTRICTS PURSUANT TO SECTIONS FIFTEEN  HUNDRED  FIVE,  FIFTEEN  HUNDRED
   11  ELEVEN  THROUGH  FIFTEEN  HUNDRED THIRTEEN, FIFTEEN HUNDRED TWENTY-FOUR,
   12  FIFTEEN HUNDRED TWENTY-SIX, SEVENTEEN HUNDRED FIVE, EIGHTEEN HUNDRED ONE
   13  THROUGH EIGHTEEN HUNDRED THREE, OR TWENTY-TWO HUNDRED  EIGHTEEN  OF  THE
   14  EDUCATION  LAW;  OR  REORGANIZATIONS, CONSOLIDATIONS, OR DISSOLUTIONS OF
   15  ELIGIBLE SCHOOL DISTRICTS IN WHICH ONE OR MORE ELIGIBLE SCHOOL DISTRICTS
   16  ARE TERMINATED AND ANOTHER ELIGIBLE SCHOOL DISTRICT ASSUMES JURISDICTION
   17  OVER THE TERMINATED SCHOOL DISTRICT OR DISTRICTS PURSUANT TO  ANY  OTHER
   18  PROVISION OF LAW.
   19    B.  "ELIGIBLE SCHOOL DISTRICT" MEANS A SCHOOL DISTRICT THAT IS SUBJECT
   20  TO SECTION TWO THOUSAND TWENTY-THREE-A OF THIS PART, BUT SHALL NOT  MEAN
   21  A SCHOOL DISTRICT THAT IS SUBJECT TO ARTICLE FIFTY-TWO OF THIS CHAPTER.
   22    C.  "EFFICIENCY  PLAN"  MEANS  A  PLAN THAT IDENTIFIES SHARED SERVICES
   23  ACTIONS AND/OR CONSOLIDATION ACTIONS TO  BE  FULLY  IMPLEMENTED  BY  ALL
   24  ELIGIBLE SCHOOL DISTRICTS IN A BOARD OF COOPERATIVE EDUCATIONAL SERVICES
   25  DISTRICT THAT ARE SIGNATORIES TO THE PLAN.
   26    D. "LEAD DISTRICT" MEANS THE INDEPENDENT SCHOOL DISTRICT IN EACH BOARD
   27  OF  COOPERATIVE  EDUCATIONAL  SERVICES  DISTRICT  WITH THE HIGHEST PUPIL
   28  ENROLLMENT AS REPORTED TO THE STATE EDUCATION  DEPARTMENT  FOR  THE  TWO
   29  THOUSAND THIRTEEN--TWO THOUSAND FOURTEEN SCHOOL YEAR THAT HAS ELECTED TO
   30  PARTICIPATE IN THE PREPARATION OF AN EFFICIENCY PLAN.
   31    E.  "SHARED SERVICES ACTIONS" MEANS FUNCTIONAL CONSOLIDATIONS BY WHICH
   32  ONE ELIGIBLE SCHOOL DISTRICT COMPLETELY PROVIDES A SERVICE  OR  FUNCTION
   33  FOR  ANOTHER  ELIGIBLE  SCHOOL DISTRICT, WHICH NO LONGER ENGAGES IN THAT
   34  FUNCTION OR SERVICE; SHARED OR COOPERATIVE SERVICES  BETWEEN  AND  AMONG
   35  ELIGIBLE SCHOOL DISTRICTS; AND REGIONALIZED DELIVERY OF SERVICES BETWEEN
   36  AND  AMONG  ELIGIBLE SCHOOL DISTRICTS. THESE SHARED SERVICES ACTIONS MAY
   37  BE FOR SERVICES OR FUNCTIONS INCLUDING BUT NOT LIMITED TO:  PROCUREMENT,
   38  REAL  ESTATE  AND  FACILITY  MANAGEMENT,  FLEET MANAGEMENT, BUSINESS AND
   39  FINANCIAL SERVICES,  ADMINISTRATIVE  SERVICES,  PAYROLL  ADMINISTRATION,
   40  TIME  AND  ATTENDANCE,  BENEFITS  ADMINISTRATION AND OTHER TRANSACTIONAL
   41  HUMAN  RESOURCES  FUNCTIONS,  CONTRACT  MANAGEMENT,  GRANTS  MANAGEMENT,
   42  TRANSPORTATION SERVICES, FACILITIES AND FUNCTIONS, HUMAN SERVICES FACIL-
   43  ITIES  AND  FUNCTIONS,  CUSTOMER  SERVICE  FACILITIES  AND FUNCTIONS AND
   44  INFORMATION TECHNOLOGY INFRASTRUCTURE,  PROCESSES,  SERVICES  AND  FUNC-
   45  TIONS.
   46    2.  CERTIFICATION  OF  COMPLIANCE  WITH  TAX  LEVY  LIMIT. A. UPON THE
   47  ADOPTION OF THE BUDGET OF AN ELIGIBLE SCHOOL DISTRICT, THE CHIEF  EXECU-
   48  TIVE  OFFICER  OF  SUCH SCHOOL DISTRICT SHALL CERTIFY TO THE STATE COMP-
   49  TROLLER, THE COMMISSIONER OF TAXATION AND FINANCE AND  THE  COMMISSIONER
   50  THAT THE BUDGET SO ADOPTED DOES NOT EXCEED THE TAX LEVY LIMIT PRESCRIBED
   51  BY  SECTION TWO THOUSAND TWENTY-THREE-A OF THIS PART. SUCH CERTIFICATION
   52  SHALL BE MADE IN A FORM AND MANNER PRESCRIBED BY THE  STATE  COMPTROLLER
   53  IN  CONSULTATION  WITH  THE COMMISSIONER OF TAXATION AND FINANCE AND THE
   54  COMMISSIONER.
   55    B. IN ORDER FOR SUCH CERTIFICATION TO GIVE RISE TO A REAL PROPERTY TAX
   56  FREEZE CREDIT UNDER SUBSECTION (BBB) OF SECTION SIX HUNDRED SIX  OF  THE
       S. 6359                            335                           A. 8559
    1  TAX LAW, SUCH CERTIFICATION SHALL BE MADE NO LATER THAN THE TWENTY-FIRST
    2  DAY OF THE FISCAL YEAR TO WHICH IT APPLIES.
    3    C.  IF  SUCH  A CERTIFICATION HAS BEEN MADE AND THE ACTUAL TAX LEVY OF
    4  THE SCHOOL DISTRICT EXCEEDS THE APPLICABLE TAX LEVY  LIMIT,  THE  EXCESS
    5  AMOUNT  SHALL  BE PLACED IN RESERVE AND USED IN THE MANNER PRESCRIBED BY
    6  SUBDIVISION FIVE OF SECTION TWO THOUSAND TWENTY-THREE-A  OF  THIS  PART,
    7  EVEN IF A TAX LEVY IN EXCESS OF THE TAX LEVY LIMIT HAD BEEN DULY AUTHOR-
    8  IZED FOR THE APPLICABLE FISCAL YEAR BY THE SCHOOL DISTRICT VOTERS.
    9    D.  NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY, EVERY SCHOOL
   10  DISTRICT THAT IS SUBJECT TO THE PROVISIONS OF SECTION TWO THOUSAND TWEN-
   11  TY-THREE-A OF THIS PART SHALL REPORT BOTH ITS PROPOSED  BUDGET  AND  ITS
   12  ADOPTED  BUDGET  TO  THE OFFICE OF THE STATE COMPTROLLER AND THE COMMIS-
   13  SIONER AT THE TIME AND IN THE MANNER AS THEY MAY PRESCRIBE,  WHETHER  OR
   14  NOT SUCH BUDGET HAS BEEN OR WILL BE CERTIFIED AS PROVIDED BY THIS SUBDI-
   15  VISION.
   16    3.  SCHOOL  DISTRICT  EFFICIENCY  PLANS. A. THE SUPERINTENDENT OF EACH
   17  LEAD DISTRICT SHALL SUBMIT TO THE SECRETARY OF STATE BY JUNE FIRST,  TWO
   18  THOUSAND  FIFTEEN,  AN  EFFICIENCY  PLAN  THAT IF FULLY IMPLEMENTED WILL
   19  RESULT IN SAVINGS OVER THE AGGREGATE TWO THOUSAND FOURTEEN--TWO THOUSAND
   20  FIFTEEN SCHOOL YEAR TAX LEVIES FOR ALL ELIGIBLE  SCHOOL  DISTRICTS  THAT
   21  ARE  SIGNATORIES  TO  SUCH  PLAN  OF (1) AT LEAST ONE PERCENT IN THE TWO
   22  THOUSAND SIXTEEN--TWO THOUSAND SEVENTEEN SCHOOL YEAR; (2) AT  LEAST  TWO
   23  PERCENT  IN  THE  TWO  THOUSAND  SEVENTEEN--TWO THOUSAND EIGHTEEN SCHOOL
   24  YEAR; AND (3) AT LEAST THREE PERCENT IN THE TWO  THOUSAND  EIGHTEEN--TWO
   25  THOUSAND NINETEEN SCHOOL YEAR.
   26    (I)  THE  SUPERINTENDENT  OF  EACH  ELIGIBLE SCHOOL DISTRICT THAT IS A
   27  SIGNATORY TO AN EFFICIENCY PLAN SHALL SUBMIT TO  THE  SUPERINTENDENT  OF
   28  THE LEAD DISTRICT BY JUNE FIRST, TWO THOUSAND FIFTEEN, A WRITTEN CERTIF-
   29  ICATION  THAT  THE ELIGIBLE SCHOOL DISTRICT AGREES TO UNDERTAKE ITS BEST
   30  EFFORTS TO FULLY IMPLEMENT BY THE END OF THE TWO  THOUSAND  SIXTEEN--TWO
   31  THOUSAND  SEVENTEEN  SCHOOL YEAR THE CONSOLIDATION ACTIONS AND/OR SHARED
   32  SERVICES ACTIONS SPECIFIED FOR THE  ELIGIBLE  SCHOOL  DISTRICT  IN  SUCH
   33  PLAN.
   34    (II) THE CHIEF FINANCIAL OFFICER OF A SCHOOL DISTRICT THAT IS A SIGNA-
   35  TORY  TO  AN  EFFICIENCY  PLAN SHALL SUBMIT TO THE SUPERINTENDENT OF THE
   36  LEAD DISTRICT BY JUNE FIRST, TWO THOUSAND  FIFTEEN,  A  WRITTEN  CERTIF-
   37  ICATION  THAT IN HIS OR HER PROFESSIONAL OPINION, FULL IMPLEMENTATION BY
   38  THE END OF THE TWO THOUSAND SIXTEEN--TWO THOUSAND SEVENTEEN SCHOOL  YEAR
   39  OF THE CONSOLIDATION AND/OR SHARED SERVICES ACTIONS THAT ARE TO BE TAKEN
   40  BY  SUCH SCHOOL DISTRICT ITSELF AS SPECIFIED IN SUCH PLAN WILL RESULT IN
   41  THE SAVINGS SET FORTH IN SUCH PLAN ATTRIBUTABLE TO SUCH SCHOOL DISTRICT.
   42    (III) THE CHIEF FINANCIAL OFFICER OF  EACH  ELIGIBLE  SCHOOL  DISTRICT
   43  THAT  IS  A  SIGNATORY  TO  AN  EFFICIENCY PLAN SHALL SUBMIT TO THE LEAD
   44  DISTRICT BY JUNE FIRST, TWO THOUSAND FIFTEEN,  A  WRITTEN  CERTIFICATION
   45  THAT  IN  HIS  OR  HER  PROFESSIONAL OPINION, FULL IMPLEMENTATION OF THE
   46  CONSOLIDATION AND/OR SHARED SERVICES ACTIONS AS SPECIFIED FOR ALL OF THE
   47  ELIGIBLE SCHOOL DISTRICTS THAT ARE SIGNATORIES TO SUCH PLAN WILL  RESULT
   48  IN  SAVINGS  OVER  THE  AGGREGATE  TWO  THOUSAND  FOURTEEN--TWO THOUSAND
   49  FIFTEEN SCHOOL YEAR TAX LEVIES FOR ALL ELIGIBLE  SCHOOL  DISTRICTS  THAT
   50  ARE  SIGNATORIES  TO  SUCH  PLAN  OF (1) AT LEAST ONE PERCENT IN THE TWO
   51  THOUSAND SIXTEEN--TWO THOUSAND SEVENTEEN SCHOOL YEAR; (2) AT  LEAST  TWO
   52  PERCENT  IN  THE  TWO  THOUSAND  SEVENTEEN--TWO THOUSAND EIGHTEEN SCHOOL
   53  YEAR; AND (3) AT LEAST THREE PERCENT IN THE TWO  THOUSAND  EIGHTEEN--TWO
   54  THOUSAND NINETEEN SCHOOL YEAR.
   55    B.  THE CHIEF FINANCIAL OFFICER OF EACH LEAD DISTRICT SHALL SUBMIT THE
   56  FOLLOWING DOCUMENTS TO THE SECRETARY OF STATE ON OR BEFORE  JULY  FIRST,
       S. 6359                            336                           A. 8559
    1  TWO  THOUSAND  FIFTEEN:    (I)  THE  EFFICIENCY PLAN; (II) A LIST OF ALL
    2  ELIGIBLE SCHOOL DISTRICTS THAT ARE SIGNATORIES TO SUCH PLAN;  (III)  ALL
    3  OF  THE  CERTIFICATIONS REQUIRED BY PARAGRAPH A OF THIS SUBDIVISION; AND
    4  (IV)  AN  ANALYSIS  OF THE AGGREGATE AMOUNT OF SAVINGS SET FORTH IN SUCH
    5  PLAN ATTRIBUTABLE TO ALL ELIGIBLE SCHOOL DISTRICTS THAT ARE  SIGNATORIES
    6  TO SUCH PLAN THAT WILL BE ACHIEVED IF THE SHARED SERVICES ACTIONS AND/OR
    7  CONSOLIDATION  ACTIONS  IDENTIFIED IN SUCH PLAN ARE FULLY IMPLEMENTED BY
    8  THE END OF THE TWO THOUSAND SIXTEEN--TWO THOUSAND SEVENTEEN SCHOOL YEAR.
    9  THE SECRETARY OF STATE SHALL REVIEW SUCH DOCUMENTS TO DETERMINE  WHETHER
   10  THE  REQUIREMENTS OF THIS SUBDIVISION HAVE BEEN MET WITH RESPECT TO EACH
   11  ELIGIBLE SCHOOL DISTRICT THAT IS A SIGNATORY TO THE EFFICIENCY PLAN  AND
   12  SHALL  NOTIFY  THE COMMISSIONER OF TAXATION AND FINANCE OF SUCH DETERMI-
   13  NATIONS NO LATER THAN JULY THIRTY-FIRST, TWO THOUSAND FIFTEEN.
   14    S 3. The general municipal law is amended by adding a new section  3-d
   15  to read as follows:
   16    S  3-D.  CERTIFICATION OF COMPLIANCE WITH PROPERTY TAX FREEZE REQUIRE-
   17  MENTS. A MUNICIPAL CORPORATION OR AN INDEPENDENT SPECIAL  DISTRICT  THAT
   18  IS  SUBJECT  TO  THE  PROVISIONS OF SECTION THREE-C OF THIS ARTICLE MUST
   19  COMPLY WITH THE REQUIREMENTS OF SUBDIVISION TWO OF THIS SECTION IN ORDER
   20  TO RENDER ITS TAXPAYERS ELIGIBLE FOR THE REAL PROPERTY TAX FREEZE CREDIT
   21  AUTHORIZED BY SUBSECTION (BBB) OF SECTION SIX HUNDRED SIX OF THE TAX LAW
   22  FOR A FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN. A  MUNICIPAL  CORPO-
   23  RATION  OR  AN  INDEPENDENT  SPECIAL  DISTRICT  THAT  IS  SUBJECT TO THE
   24  PROVISIONS OF SECTION THREE-C OF  THIS  ARTICLE  MUST  COMPLY  WITH  THE
   25  REQUIREMENTS  OF  SUBDIVISIONS TWO AND THREE OF THIS SECTION IN ORDER TO
   26  RENDER ITS TAXPAYERS ELIGIBLE FOR THE REAL PROPERTY  TAX  FREEZE  CREDIT
   27  AUTHORIZED BY SUBSECTION (BBB) OF SECTION SIX HUNDRED SIX OF THE TAX LAW
   28  FOR  A  FISCAL  YEAR STARTING IN TWO THOUSAND SIXTEEN. PROVIDED HOWEVER,
   29  THAT A CITY WITH A  DEPENDENT  SCHOOL  DISTRICT  MUST  COMPLY  WITH  THE
   30  REQUIREMENTS  OF  SUBDIVISION TWO OF THIS SECTION IN ORDER TO RENDER ITS
   31  TAXPAYERS ELIGIBLE FOR THE REAL PROPERTY TAX FREEZE CREDIT AUTHORIZED BY
   32  SUBSECTION (BBB) OF SECTION SIX HUNDRED SIX OF THE TAX LAW FOR A  FISCAL
   33  YEAR  STARTING IN TWO THOUSAND FOURTEEN AND COMPLY WITH THE REQUIREMENTS
   34  OF SUBDIVISION TWO OF THIS SECTION, AND BOTH THE CITY AND ITS  DEPENDENT
   35  SCHOOL  DISTRICT  MUST COMPLY WITH THE REQUIREMENTS OF SUBDIVISION THREE
   36  OF THIS SECTION, IN ORDER TO RENDER ITS TAXPAYERS ELIGIBLE FOR THE  REAL
   37  PROPERTY TAX FREEZE CREDIT AUTHORIZED BY SUBSECTION (BBB) OF SECTION SIX
   38  HUNDRED  SIX  OF  THE TAX LAW FOR A FISCAL YEAR STARTING IN TWO THOUSAND
   39  FIFTEEN OR TWO THOUSAND SIXTEEN.
   40    1. DEFINITIONS.  AS USED IN THIS SECTION:
   41    (A) "CONSOLIDATION ACTIONS" MEANS: CONSOLIDATIONS OR  DISSOLUTIONS  OF
   42  LOCAL  GOVERNMENT  UNITS  IN ACCORDANCE WITH ARTICLE SEVENTEEN-A OF THIS
   43  ARTICLE OR REORGANIZATIONS, CONSOLIDATIONS,  OR  DISSOLUTIONS  OF  LOCAL
   44  GOVERNMENT  UNITS IN WHICH ONE OR MORE LOCAL GOVERNMENT UNITS ARE TERMI-
   45  NATED AND ANOTHER LOCAL GOVERNMENT UNIT ASSUMES  JURISDICTION  OVER  THE
   46  TERMINATED  LOCAL  GOVERNMENT  UNIT    OR  UNITS  PURSUANT  TO ANY OTHER
   47  PROVISION OF LAW.
   48    (B) "DEPENDENT SCHOOL  DISTRICT"  MEANS  A  SCHOOL  DISTRICT  THAT  IS
   49  SUBJECT  TO  ARTICLE FIFTY-TWO OF THE EDUCATION LAW AND THAT HAS A POPU-
   50  LATION OF LESS THAN ONE MILLION.
   51    (C) "EFFICIENCY PLAN" MEANS A PLAN  THAT  IDENTIFIES  SHARED  SERVICES
   52  ACTIONS  AND/OR  CONSOLIDATION  ACTIONS  TO  BE FULLY IMPLEMENTED BY ALL
   53  LOCAL GOVERNMENT UNITS IN A COUNTY THAT ARE SIGNATORIES TO THE PLAN.
   54    (D) "INDEPENDENT SPECIAL DISTRICT" MEANS A SPECIAL DISTRICT AS DEFINED
   55  BY SECTION ONE HUNDRED TWO OF THE REAL PROPERTY TAX LAW THAT EITHER  (I)
   56  HAS  A  SEPARATE INDEPENDENT ELECTED BOARD, AND EITHER HAS THE AUTHORITY
       S. 6359                            337                           A. 8559
    1  TO LEVY A TAX, OR CAN REQUIRE A MUNICIPAL CORPORATION TO LEVY A  TAX  ON
    2  ITS  BEHALF,  OR  (II) HAS A SEPARATE INDEPENDENT BOARD APPOINTED BY THE
    3  GOVERNING BODY OF ANOTHER  MUNICIPAL  CORPORATION  AND  EITHER  HAS  THE
    4  AUTHORITY TO LEVY A TAX OR CAN REQUIRE A MUNICIPAL CORPORATION TO LEVY A
    5  TAX ON ITS BEHALF.
    6    (E)  "LEAD  LOCAL  GOVERNMENT UNIT" MEANS THE COUNTY, OR IF THE COUNTY
    7  HAS ELECTED NOT TO PARTICIPATE IN THE PREPARATION OF AN EFFICIENCY PLAN,
    8  THE CITY, TOWN, OR VILLAGE WITHIN THE COUNTY WITH THE LARGEST POPULATION
    9  AS OF THE TWO THOUSAND TEN FEDERAL CENSUS THAT HAS  ELECTED  TO  PARTIC-
   10  IPATE IN THE PREPARATION OF AN EFFICIENCY PLAN.
   11    (F)  "LOCAL GOVERNMENT UNIT" MEANS A MUNICIPAL CORPORATION OR AN INDE-
   12  PENDENT SPECIAL DISTRICT THAT IS SUBJECT TO THE  PROVISIONS  OF  SECTION
   13  THREE-C OF THIS ARTICLE.
   14    (G) "SHARED SERVICES ACTIONS" MEANS FUNCTIONAL CONSOLIDATIONS BY WHICH
   15  ONE  LOCAL GOVERNMENT UNIT COMPLETELY PROVIDES A SERVICE OR FUNCTION FOR
   16  ANOTHER LOCAL GOVERNMENT UNIT, WHICH NO LONGER ENGAGES IN THAT  FUNCTION
   17  OR  SERVICE;  SHARED  OR  COOPERATIVE  SERVICES  BETWEEN AND AMONG LOCAL
   18  GOVERNMENT UNITS; AND REGIONALIZED  DELIVERY  OF  SERVICES  BETWEEN  AND
   19  AMONG  LOCAL GOVERNMENT UNITS.  THESE SHARED SERVICES ACTIONS MAY BE FOR
   20  SERVICES OR FUNCTIONS INCLUDING BUT NOT LIMITED TO:   PROCUREMENT,  REAL
   21  ESTATE AND FACILITY MANAGEMENT, FLEET MANAGEMENT, BUSINESS AND FINANCIAL
   22  SERVICES,  ADMINISTRATIVE  SERVICES,  PAYROLL  ADMINISTRATION,  TIME AND
   23  ATTENDANCE,  BENEFITS  ADMINISTRATION  AND  OTHER  TRANSACTIONAL   HUMAN
   24  RESOURCES FUNCTIONS, CONTRACT MANAGEMENT, GRANTS MANAGEMENT, TRANSPORTA-
   25  TION  SERVICES,  FACILITIES AND FUNCTIONS, HUMAN SERVICES FACILITIES AND
   26  FUNCTIONS, CUSTOMER SERVICE FACILITIES  AND  FUNCTIONS  AND  INFORMATION
   27  TECHNOLOGY INFRASTRUCTURE, PROCESSES, SERVICES AND FUNCTIONS.
   28    2.  CERTIFICATION  OF  COMPLIANCE  WITH  TAX  LEVY LIMIT. (A) UPON THE
   29  ADOPTION OF THE BUDGET OF A LOCAL GOVERNMENT UNIT, THE  CHIEF  EXECUTIVE
   30  OFFICER OR BUDGET OFFICER OF SUCH LOCAL GOVERNMENT UNIT SHALL CERTIFY TO
   31  THE  STATE COMPTROLLER AND THE COMMISSIONER OF TAXATION AND FINANCE THAT
   32  THE BUDGET SO ADOPTED DOES NOT EXCEED THE TAX LEVY LIMIT  PRESCRIBED  IN
   33  SECTION  THREE-C OF THIS ARTICLE AND, IF THE GOVERNING BODY OF THE LOCAL
   34  GOVERNMENT UNIT DID ENACT A LOCAL LAW OR APPROVE A RESOLUTION  TO  OVER-
   35  RIDE  THE  TAX  LEVY LIMIT, THAT SUCH LOCAL LAW OR RESOLUTION WAS SUBSE-
   36  QUENTLY REPEALED. SUCH CERTIFICATION SHALL BE MADE IN A FORM AND  MANNER
   37  PRESCRIBED BY THE STATE COMPTROLLER IN CONSULTATION WITH THE COMMISSION-
   38  ER OF TAXATION AND FINANCE.
   39    (B)  IN  ORDER  FOR SUCH CERTIFICATION TO GIVE RISE TO A REAL PROPERTY
   40  TAX FREEZE CREDIT UNDER SUBSECTION (BBB) OF SECTION SIX HUNDRED  SIX  OF
   41  THE  TAX LAW, SUCH CERTIFICATION SHALL BE MADE NO LATER THAN THE TWENTY-
   42  FIRST DAY OF THE FISCAL YEAR TO WHICH IT APPLIES.
   43    (C) NOTWITHSTANDING ANY OTHER LAW TO THE CONTRARY, IF SUCH  A  CERTIF-
   44  ICATION  HAS  BEEN  MADE AND THE ACTUAL TAX LEVY OF THE LOCAL GOVERNMENT
   45  UNIT EXCEEDS THE APPLICABLE TAX LEVY LIMIT, THE EXCESS AMOUNT  SHALL  BE
   46  PLACED  IN  RESERVE AND USED IN THE MANNER PRESCRIBED BY SUBDIVISION SIX
   47  OF SECTION THREE-C OF THIS ARTICLE, EVEN IF A TAX LEVY IN EXCESS OF  THE
   48  TAX  LEVY  LIMIT HAD BEEN AUTHORIZED FOR THE APPLICABLE FISCAL YEAR BY A
   49  DULY ADOPTED LOCAL LAW OR RESOLUTION.
   50    (D) NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY, EVERY  LOCAL
   51  GOVERNMENT  UNIT  SHALL  REPORT BOTH ITS PROPOSED BUDGET AND ITS ADOPTED
   52  BUDGET TO THE OFFICE OF THE STATE COMPTROLLER AT THE  TIME  AND  IN  THE
   53  MANNER  AS  HE OR SHE MAY PRESCRIBE, WHETHER OR NOT SUCH BUDGET HAS BEEN
   54  OR WILL BE CERTIFIED AS PROVIDED BY THIS SUBDIVISION.
   55    3. LOCAL GOVERNMENT EFFICIENCY PLANS. (A) THE CHIEF EXECUTIVE  OFFICER
   56  OR BUDGET OFFICER OF EACH LEAD LOCAL GOVERNMENT UNIT SHALL SUBMIT TO THE
       S. 6359                            338                           A. 8559
    1  SECRETARY  OF  STATE  BY JUNE FIRST, TWO THOUSAND FIFTEEN, AN EFFICIENCY
    2  PLAN THAT IF FULLY IMPLEMENTED WILL RESULT IN SAVINGS OVER THE AGGREGATE
    3  TAX LEVIES FOR FISCAL YEARS BEGINNING IN TWO THOUSAND FOURTEEN  FOR  ALL
    4  LOCAL GOVERNMENT UNITS THAT ARE SIGNATORIES TO SUCH PLAN OF (1) AT LEAST
    5  ONE  PERCENT IN FISCAL YEARS BEGINNING IN TWO THOUSAND SEVENTEEN; (2) AT
    6  LEAST TWO PERCENT IN FISCAL YEARS BEGINNING IN  TWO  THOUSAND  EIGHTEEN;
    7  AND (3) AT LEAST THREE PERCENT IN FISCAL YEARS BEGINNING IN TWO THOUSAND
    8  NINETEEN.
    9    (I)  THE  CHIEF  EXECUTIVE  OFFICER  OR  BUDGET  OFFICER OF EACH LOCAL
   10  GOVERNMENT UNIT AND DEPENDENT SCHOOL DISTRICT THAT IS A SIGNATORY TO  AN
   11  EFFICIENCY  PLAN  SHALL  SUBMIT TO THE CHIEF EXECUTIVE OFFICER OR BUDGET
   12  OFFICER OF THE LEAD LOCAL GOVERNMENT UNIT BY JUNE  FIRST,  TWO  THOUSAND
   13  FIFTEEN,  A  WRITTEN  CERTIFICATION  THAT  THE  LOCAL GOVERNMENT UNIT OR
   14  DEPENDENT SCHOOL DISTRICT AGREES TO UNDERTAKE ITS BEST EFFORTS TO  FULLY
   15  IMPLEMENT  BY THE END OF THE LOCAL FISCAL YEAR BEGINNING IN TWO THOUSAND
   16  SEVENTEEN THE CONSOLIDATION ACTIONS AND/OR SHARED SERVICES ACTIONS SPEC-
   17  IFIED FOR THE LOCAL GOVERNMENT UNIT OR DEPENDENT SCHOOL DISTRICT IN SUCH
   18  PLAN.
   19    (II) THE CHIEF FINANCIAL OFFICER OF A LOCAL GOVERNMENT  UNIT  AND  THE
   20  CHIEF  FISCAL OFFICER OF THE DEPENDENT SCHOOL DISTRICT, THAT IS A SIGNA-
   21  TORY TO AN EFFICIENCY PLAN SHALL SUBMIT TO THE CHIEF  EXECUTIVE  OFFICER
   22  OF THE LEAD LOCAL GOVERNMENT UNIT BY JUNE FIRST, TWO THOUSAND FIFTEEN, A
   23  WRITTEN  CERTIFICATION  THAT  IN  HIS  OR HER PROFESSIONAL OPINION, FULL
   24  IMPLEMENTATION BY THE END OF THE LOCAL  FISCAL  YEAR  BEGINNING  IN  TWO
   25  THOUSAND  SEVENTEEN, OF THE CONSOLIDATION AND/OR SHARED SERVICES ACTIONS
   26  THAT ARE TO BE TAKEN BY SUCH LOCAL GOVERNMENT UNIT ITSELF  AS  SPECIFIED
   27  IN SUCH PLAN WILL RESULT IN THE SAVINGS SET FORTH IN THE EFFICIENCY PLAN
   28  ATTRIBUTABLE TO SUCH LOCAL GOVERNMENT UNIT OR DEPENDENT SCHOOL DISTRICT.
   29    (III)  THE  CHIEF  FINANCIAL OFFICER OF EACH LOCAL GOVERNMENT UNIT AND
   30  DEPENDENT SCHOOL DISTRICT THAT IS A  SIGNATORY  TO  AN  EFFICIENCY  PLAN
   31  SHALL  SUBMIT TO THE LEAD LOCAL GOVERNMENT UNIT BY JUNE FIRST, TWO THOU-
   32  SAND FIFTEEN, A WRITTEN CERTIFICATION THAT IN HIS  OR  HER  PROFESSIONAL
   33  OPINION, FULL IMPLEMENTATION OF THE CONSOLIDATION AND/OR SHARED SERVICES
   34  ACTIONS AS SPECIFIED FOR ALL OF THE LOCAL GOVERNMENT UNITS AND DEPENDENT
   35  SCHOOL  DISTRICTS  THAT  ARE  SIGNATORIES  TO  SUCH  PLAN WILL RESULT IN
   36  SAVINGS OVER THE AGGREGATE TAX LEVIES FOR FISCAL YEARS BEGINNING IN  TWO
   37  THOUSAND FOURTEEN FOR ALL LOCAL GOVERNMENT UNITS THAT ARE SIGNATORIES TO
   38  SUCH  PLAN  OF (1) AT LEAST ONE PERCENT IN FISCAL YEARS BEGINNING IN TWO
   39  THOUSAND SEVENTEEN; (2) AT LEAST TWO PERCENT IN FISCAL  YEARS  BEGINNING
   40  IN TWO THOUSAND EIGHTEEN; AND (3) AT LEAST THREE PERCENT IN FISCAL YEARS
   41  BEGINNING IN TWO THOUSAND NINETEEN.
   42    (B)  THE  CHIEF  FINANCIAL  OFFICER OF EACH LEAD LOCAL GOVERNMENT UNIT
   43  SHALL SUBMIT THE FOLLOWING DOCUMENTS TO THE SECRETARY  OF  STATE  ON  OR
   44  BEFORE  JULY FIRST, TWO THOUSAND FIFTEEN:  (I) THE EFFICIENCY PLAN; (II)
   45  A LIST OF ALL LOCAL GOVERNMENT UNITS AND DEPENDENT SCHOOL DISTRICTS THAT
   46  ARE SIGNATORIES TO SUCH PLAN; (III) ALL OF THE  CERTIFICATIONS  REQUIRED
   47  BY PARAGRAPH (A) OF THIS SUBDIVISION; AND (IV) AN ANALYSIS OF THE AGGRE-
   48  GATE  AMOUNT OF SAVINGS SET FORTH IN SUCH PLAN ATTRIBUTABLE TO ALL LOCAL
   49  GOVERNMENT UNITS AND DEPENDENT SCHOOL DISTRICTS THAT ARE SIGNATORIES  TO
   50  SUCH  PLAN  THAT  WILL BE ACHIEVED IF THE SHARED SERVICES ACTIONS AND/OR
   51  CONSOLIDATION ACTIONS IDENTIFIED IN SUCH PLAN ARE FULLY  IMPLEMENTED  BY
   52  THE  END  OF  THE LOCAL FISCAL YEAR BEGINNING IN TWO THOUSAND SEVENTEEN.
   53  THE SECRETARY OF STATE SHALL REVIEW SUCH DOCUMENTS TO DETERMINE  WHETHER
   54  THE  REQUIREMENTS OF THIS SUBDIVISION HAVE BEEN MET WITH RESPECT TO EACH
   55  LOCAL GOVERNMENT UNIT AND DEPENDENT SCHOOL DISTRICT THAT IS A  SIGNATORY
   56  TO THE EFFICIENCY PLAN AND SHALL NOTIFY THE COMMISSIONER OF TAXATION AND
       S. 6359                            339                           A. 8559
    1  FINANCE  OF  SUCH  DETERMINATIONS  NO  LATER THAN JULY THIRTY-FIRST, TWO
    2  THOUSAND FIFTEEN.
    3    S  4. Section 1590 of the real property tax law is amended by adding a
    4  new subdivision 3 to read as follows:
    5    3. EACH MUNICIPAL CORPORATION SHALL SUBMIT  TO  THE  COMMISSIONER  THE
    6  DATA FILES USED TO PREPARE ITS TAX ROLLS AND TAX BILLS NO LATER THAN TEN
    7  DAYS AFTER THE ANNEXATION OF THE WARRANT FOR THE COLLECTION OF TAXES FOR
    8  THE  APPLICABLE  FISCAL  YEAR,  OR  WHERE NO SUCH WARRANT IS ANNEXED, NO
    9  LATER THAN TEN DAYS AFTER THE LAST DATE PRESCRIBED BY LAW FOR  THE  LEVY
   10  OF  TAXES  OF THE APPLICABLE FISCAL YEAR, PROVIDED THAT IF ITS TAX ROLLS
   11  OR TAX BILLS, OR BOTH, ARE PREPARED BY A DIFFERENT GOVERNMENTAL  ENTITY,
   12  THAT  ENTITY  SHALL BE JOINTLY RESPONSIBLE FOR SUBMITTING THE APPLICABLE
   13  DATA FILES TO THE COMMISSIONER.
   14    S 5. Notwithstanding any other law to the contrary,  the  director  of
   15  the  budget  may  direct the state comptroller to withhold any state aid
   16  payments due to a school district that failed to fully implement by  the
   17  end  of  the 2016--2017 school year or local government unit that failed
   18  to fully implement by the end of the  local  fiscal  year  beginning  in
   19  2017, the consolidation actions and/or shared services actions specified
   20  for  such school district or local government unit in an efficiency plan
   21  prepared pursuant to section 2023-b of the education law or section  3-d
   22  of the general municipal law.
   23    S  6.  This  act  shall  take  effect  immediately,  provided that the
   24  provisions of subdivision 3 of section 1590 of the real property tax law
   25  as added by section four of this act shall apply to tax  rolls  and  tax
   26  bills  of  school  districts  and cities with a population of 125,000 or
   27  more for fiscal years starting on or after July  1,  2013,  and  to  tax
   28  rolls  and  tax  bills for other municipal corporations for fiscal years
   29  starting on or after January 1, 2014, except that in  the  case  of  tax
   30  rolls and tax bills for fiscal years that started prior to the effective
   31  date of this act, the data files used to prepare tax rolls and tax bills
   32  shall  be submitted to the commissioner of taxation and finance no later
   33  than 60 days after the effective date of this act.
   34    S 2. Severability clause. If any clause, sentence, paragraph, subdivi-
   35  sion, section or part of this act shall be  adjudged  by  any  court  of
   36  competent  jurisdiction  to  be invalid, such judgment shall not affect,
   37  impair, or invalidate the remainder thereof, but shall  be  confined  in
   38  its  operation  to the clause, sentence, paragraph, subdivision, section
   39  or part thereof directly involved in the controversy in which such judg-
   40  ment shall have been rendered. It is hereby declared to be the intent of
   41  the legislature that this act would  have  been  enacted  even  if  such
   42  invalid provisions had not been included herein.
   43    S  3.  This  act shall take effect immediately provided, however, that
   44  the applicable effective date of Parts A through FF of this act shall be
   45  as specifically set forth in the last section of such Parts.