N.Y. TAX. LAW § 208 : NY Code - Section 208: Definitions

Search N.Y. TAX. LAW § 208 : NY Code - Section 208: Definitions

As used in this article: 1. The term "corporation"
  includes  (a)  an  association  within the meaning of paragraph three of
  subsection (a) of section seventy-seven  hundred  one  of  the  internal
  revenue  code (including a limited liability company), (b) a joint-stock
  company or association, (c) a publicly traded partnership treated  as  a
  corporation  for  purposes  of  the  internal  revenue  code pursuant to
  section  seventy-seven  hundred  four  thereof  and  (d)  any   business
  conducted  by  a  trustee  or  trustees wherein interest or ownership is
  evidenced by certificate or other written instrument. "DISC" and "former
  DISC" mean any corporation which meets the  requirements  of  subsection
  (a) of section nine hundred ninety-two of the internal revenue code;
    1-A.  The  term  "New  York  S corporation" means, with respect to any
  taxable year, a corporation subject to tax under this article for  which
  an  election  is  in  effect  pursuant  to subsection (a) of section six
  hundred sixty of this chapter for such year,  any  such  year  shall  be
  denominated  a "New York S year", and such election shall be denominated
  a "New York S election". The term "New York C corporation"  means,  with
  respect  to  any  taxable  year, a corporation subject to tax under this
  article which is not a New York S corporation, and any such  year  shall
  be  denominated  a  "New York C year". The term "termination year" means
  any taxable year of a corporation during which the New York  S  election
  terminates  on  a day other than the first day of such year. The portion
  of the  taxable  year  ending  before  the  first  day  for  which  such
  termination  is  effective  shall be denominated the "S short year", and
  the  portion  of  such  year  beginning  on  such  first  day  shall  be
  denominated  the  "C short year". The term "New York S termination year"
  means any termination year which is not also an S termination  year  for
  federal purposes.
    1-B.  The  term  "QSSS"  means  a  corporation  which  is  a qualified
  subchapter S subsidiary as defined  in  subparagraph  (B)  of  paragraph
  three  of  subsection  (b)  of section thirteen hundred sixty-one of the
  internal revenue code. The term "exempt QSSS" means a QSSS  exempt  from
  tax  under this article as provided in paragraph (k) of subdivision nine
  of this section, or a QSSS described in subclause (i) of clause  (B)  of
  subparagraph  two  of paragraph (k) of subdivision nine of this section,
  wherein the parent corporation of the QSSS is subject to tax under  this
  article,  and the assets, liabilities, income and deductions of the QSSS
  are treated as the assets, liabilities, income  and  deductions  of  the
  parent  corporation.  Where  a  QSSS  is  an  exempt  QSSS, then for all
  purposes under this article:
    (a) the assets, liabilities, income,  deductions,  property,  payroll,
  receipts, capital, credits, and all other tax attributes and elements of
  economic  activity of the QSSS shall be deemed to be those of the parent
  corporation,
    (b) the  stocks,  bonds  and  other  securities  issued  by,  and  any
  indebtedness  from,  the  QSSS  shall  not  be subsidiary, investment or
  business capital of the parent corporation,
    (c)  transactions  between  the  parent  corporation  and  the   QSSS,
  including the payment of interest and dividends, shall not be taken into
  account, and
    (d)  general  executive  officers  of  the  QSSS shall be deemed to be
  general executive officers of the parent corporation.
    2. The term "taxpayer" means any corporation subject to tax under this
  article;
    3. The term "subsidiary" means  a  corporation  of  which  over  fifty
  percent  of  the number of shares of stock entitling the holders thereof
  to vote for the election of  directors  or  trustees  is  owned  by  the
  taxpayer;

    * 4.  The  term "subsidiary capital" means investments in the stock of
  subsidiaries  and  any  indebtedness  from  subsidiaries,  exclusive  of
  accounts receivable acquired in the ordinary course of trade or business
  for  services  rendered or for sales of property held primarily for sale
  to  customers,  whether or not evidenced by written instrument, on which
  interest is not claimed and deducted by the subsidiary for  purposes  of
  taxation  under  article  nine-a,  thirty-two  or  thirty-three  of this
  chapter,  provided,  however,  that,  in  the  discretion  of  the   tax
  commission,   there  shall  be  deducted  from  subsidiary  capital  any
  liabilities payable by their terms on demand or within one year from the
  date incurred, other than loans or advances outstanding for more than  a
  year  as  of  any  date during the year covered by the report, which are
  attributable to subsidiary capital;
    * NB Applies to taxable years prior to December 31, 1986
    * 4. (a) The term "subsidiary capital" means investments in the  stock
  of subsidiaries and any indebtedness from subsidiaries, exclusive of
    accounts  receivable  acquired  in  the  ordinary  course  of trade or
  business for services rendered or for sales of property  held  primarily
  for  sale  to customers, whether or not evidenced by written instrument,
  on which interest is not claimed and  deducted  by  the  subsidiary  for
  purposes of taxation under article nine-a, thirty-two or thirty-three of
  this  chapter,  provided,  however,  that,  in  the  discretion  of  the
  commissioner of taxation and  finance,  there  shall  be  deducted  from
  subsidiary  capital  any  liabilities  which  are directly or indirectly
  attributable to subsidiary capital;
    (b) If, within eighteen months of a corporate acquisition wherein  the
  taxpayer  is  the  acquiring  person,  the  taxpayer  sells or otherwise
  disposes (including by redemption) of stock of a target corporation such
  that immediately prior to such disposition the taxpayer owned more  than
  fifty percent, and immediately thereafter owned fifty percent or less of
  the  number  of shares of stock entitling the holder thereof to vote for
  the election of directors, then stock of the  target  corporation  shall
  not constitute subsidiary capital of the taxpayer for the entire taxable
  year in which such disposition occurs.
    (c)  If, within eighteen months of a corporate acquisition wherein the
  taxpayer is the acquiring corporation, the target corporation  sells  or
  otherwise  disposes  of  an  asset  or assets (excluding cash and assets
  disposed of by such target corporation in  the  regular  course  of  its
  business)  held  by  the target corporation on the acquisition date such
  that immediately prior to such disposition such target corporation  owns
  more  than  fifty percent of the total of such assets held by the target
  corporation on the acquisition date (by value, such value determined  in
  the  manner  in  which  assets are valued pursuant to subdivision two of
  section two hundred ten of this  chapter,  whether  or  not  the  target
  corporation  is subject to this article) and immediately thereafter owns
  fifty percent or less, then for the period starting on the first day  of
  the  taxable year in which the disposition occurs and ending on the date
  eighteen months after the date of such disposition  the  stock  of  such
  target  corporation  shall  not  constitute  subsidiary  capital  of the
  taxpayer.
    * NB Applies to taxable years beginning after December 31, 1986
    * 4. The term "subsidiary capital" means investments in the  stock  of
  subsidiaries  and  any  indebtedness  from  subsidiaries,  exclusive  of
  accounts receivable acquired in the ordinary course of trade or business
  for services rendered or for sales of property held primarily  for  sale
  to  customers,  whether or not evidenced by written instrument, on which
  interest is not claimed and deducted by the subsidiary for  purposes  of
  taxation  under  article  nine-A,  thirty-two  or  thirty-three  of this

  chapter, provided, however, that, in the discretion of the commissioner,
  there shall be deducted from subsidiary capital  any  liabilities  which
  are directly or indirectly attributable to subsidiary capital.
    * NB Applicable to taxable years beginning on or after January 1, 1997
    * 5.  The term "investment capital" means investments in stocks, bonds
  and other securities, corporate and governmental, not held for  sale  to
  customers  in  the  regular  course of business, exclusive of subsidiary
  capital and stock issued by the taxpayer, provided,  however,  that,  in
  the  discretion  of  the  tax  commission,  there shall be deducted from
  investment capital any liabilities payable by their terms on  demand  or
  within  one  year  from  the date incurred, other than loans or advances
  outstanding for more than a year as of any date during the year  covered
  by the report, which are attributable to investment capital;
    * NB Applies to taxable years prior to December 31, 1986
    * 5.  The term "investment capital" means investments in stocks, bonds
  and other securities, corporate and governmental, not held for  sale  to
  customers  in  the  regular  course of business, exclusive of subsidiary
  capital and stock issued by the taxpayer, provided,  however,  that,  in
  the  discretion  of  the  commissioner,  there  shall  be  deducted from
  investment capital any liabilities  which  are  directly  or  indirectly
  attributable   to   investment  capital;  and  provided,  further,  that
  investment capital shall not include any  such  investments  the  income
  from which is excluded from entire net income pursuant to the provisions
  of  paragraph  (c-1)  of  subdivision  nine  of  this  section, and that
  investment capital shall  be  computed  without  regard  to  liabilities
  directly or indirectly attributable to such investments, but only if air
  carriers  organized  in  the  United States and operating in the foreign
  country or countries in  which  the  taxpayer  has  its  major  base  of
  operations  and  in which it is organized, resident or headquartered (if
  not in the same country as its major base of operations) are not subject
  to any tax based on or measured  by  capital  imposed  by  such  foreign
  country  or countries or any political subdivision thereof, or if taxed,
  are provided an exemption, equivalent to that provided for herein,  from
  any  tax based on or measured by capital imposed by such foreign country
  or countries and from any such tax imposed by any political  subdivision
  thereof;
    * NB Applies to taxable years beginning after December 31, 1986
    * 6.  The  term  "investment  income"  means income, including capital
  gains in excess of capital  losses,  from  investment  capital,  to  the
  extent  included  in  computing  entire  net  income,  less,  (a) in the
  discretion of the tax commission, any deductions allowable in  computing
  entire  net  income  which  are  attributable  to  investment capital or
  investment income, and (b)  such  portion  of  any  net  operating  loss
  deduction  allowable  in  computing entire net income, as the investment
  income, before such deduction, bears to entire net income,  before  such
  deduction,  provided,  however,  that in no case shall investment income
  exceed entire net income;
    * NB Applies to taxable years prior to December 31, 1986
    * 6. The term  "investment  income"  means  the  sum  of  (a)  income,
  including  capital  gains  in  excess of capital losses, from investment
  capital, and (b) the amounts described in subparagraphs twelve, thirteen
  and fourteen of paragraph (b) of subdivision nine of  this  section,  to
  the  extent  included  in  computing entire net income, less, (c) in the
  discretion of the commissioner, any deductions  allowable  in  computing
  entire  net  income  which  are  directly  or indirectly attributable to
  investment capital or investment income, and (d) such portion of any net
  operating loss deduction allowable in computing entire  net  income,  as
  the  investment  income,  before  such  deduction,  bears  to entire net

  income, before such deduction, provided, however, that in no case  shall
  investment income exceed entire net income;
    * NB Applies to taxable years beginning after December 31, 1986
    * 6.  The  term  "investment  income"  means income, including capital
  gains in excess of capital  losses,  from  investment  capital,  to  the
  extent  included  in  computing  entire  net  income,  less,  (a) in the
  discretion of the commissioner, any deductions  allowable  in  computing
  entire  net  income  which  are  directly  or indirectly attributable to
  investment capital or investment income, and (b) such portion of any net
  operating loss deduction allowable in computing entire  net  income,  as
  the  investment  income,  before  such  deduction,  bears  to entire net
  income, before such deduction, provided, however, that in no case  shall
  investment income exceed entire net income;
    * NB Applicable to taxable years beginning on or after January 1, 1997
    * 7.  The  term  "business  capital"  means  all  assets,  other  than
  subsidiary capital, investment capital and stock issued by the taxpayer,
  less liabilities not deducted  from  subsidiary  or  investment  capital
  which  are  payable by their terms on demand or within one year from the
  date incurred, other than loans or advances outstanding for more than  a
  year  as of any date during the year covered by the report, except that,
  subject to the provisions of subdivision six of section two hundred  ten
  of  this  chapter,  cash  on  hand  and  on  deposit shall be treated as
  investment capital or as business capital as the taxpayer may elect;
    * NB Applies to taxable years prior to December 31, 1986
    * 7. (a) The term "business capital"  means  all  assets,  other  than
  subsidiary capital, investment capital and stock issued by the taxpayer,
  less  liabilities  not  deducted  from  subsidiary or investment capital
  except that cash on hand and on deposit shall be treated  as  investment
  capital or as business capital as the taxpayer may elect.
    (b)  Provided, however, "business capital" shall not include assets to
  the extent employed for  the  purpose  of  generating  income  which  is
  excluded  from entire net income pursuant to the provisions of paragraph
  (c-1) of subdivision nine of this section and shall be computed  without
  regard  to  liabilities  directly  or  indirectly  attributable  to such
  assets, but only if air carriers organized  in  the  United  States  and
  operating  in the foreign country or countries in which the taxpayer has
  its major base of operations and in which it is organized,  resident  or
  headquartered  (if  not  in  the  same  country  as  its  major  base of
  operations) are not subject to any tax based on or measured  by  capital
  imposed   by   such  foreign  country  or  countries  or  any  political
  subdivision thereof, or if taxed, are provided an exemption,  equivalent
  to  that  provided  for  herein,  from  any  tax based on or measured by
  capital imposed by such foreign country or countries and from  any  such
  tax imposed by any political subdivision thereof;
    * NB Applies to taxable years beginning after December 31, 1986
    8. The term "business income" means entire net income minus investment
  income;
    8-A.  Provided, however, that with respect to a DISC or a former DISC,
  the following provisions shall apply:
    (a) investments in the stocks, bonds or other securities of a DISC  or
  any  indebtedness  from a DISC shall not be treated as either subsidiary
  capital or investment capital under subdivisions four or  five  of  this
  section,
    (b)  any amounts deemed distributed from a DISC or a former DISC which
  are taxable as dividends pursuant to  subsection  (b)  of  section  nine
  hundred  ninety-five  of  the  internal revenue code of nineteen hundred
  fifty-four shall be treated as business income, except any such  amounts
  from  a  former  DISC attributable to amounts includible in a taxpayer's

  entire net income for a prior taxable year  under  subparagraph  (B)  of
  paragraph (i) of subdivision nine of this section shall be excluded from
  entire net income,
    (c)  any  gain  recognized  for  federal  income  tax  purposes on the
  disposition of  stock  in  a  DISC,  and  any  gain  recognized  on  the
  disposition  of  stock in a former DISC, includible in gross income as a
  dividend pursuant to subsection (c) of section nine hundred  ninety-five
  of  the  internal  revenue code of nineteen hundred fifty-four, shall be
  treated as business income, and
    (d) except as provided in paragraph (i) of subdivision  nine  of  this
  section,  any  actual distribution from a DISC or a former DISC shall be
  treated as business income  except  an  actual  distribution  which  for
  federal  income  tax  purposes is treated as made out of "other earnings
  and profits" under section  nine  hundred  ninety-six  of  the  internal
  revenue  code  of nineteen hundred fifty-four, in which case such actual
  distribution shall be treated as either subsidiary income or  investment
  income under this article.
    * 8-B. (a) The term "minimum taxable income" shall mean the entire net
  income of the taxpayer for the taxable year:
    (1) increased by the amount of the federal items of tax preference set
  forth  in  section  fifty-seven  of  the internal revenue code (with the
  modifications set forth in paragraph (b)  of  this  subdivision),  which
  items  of  tax preference shall have the same meaning and be computed in
  the same manner as under section fifty-seven  of  the  internal  revenue
  code,
    (2) determined with the federal adjustments described in paragraph (c)
  of  this  subdivision, which adjustments shall have the same meaning and
  be  computed  in  the  same  manner  as  under  sections  fifty-six  and
  fifty-eight of the internal revenue code,
    (3)  increased  by  the net operating loss deduction otherwise allowed
  under paragraph (f) of subdivision nine of this section, and
    (4) reduced,  for  taxable  years  beginning  after  nineteen  hundred
  ninety-three,  by  the  alternative  net  operating  loss  deduction, as
  defined in paragraph (d) of this subdivision.
    (b) The federal items of tax preference referred to hereinabove  shall
  be   modified   by  deducting  "tax-exempt  interest"  and  "accelerated
  depreciation or amortization  on  certain  property  placed  in  service
  before  January  1, 1987", as determined under paragraphs five and seven
  of subsection (a) of section fifty-seven of the internal revenue code.
    (c) The adjustments referred to hereinabove shall be:
    (1) "Depreciation" as determined under paragraph one of subsection (a)
  of section fifty-six of the internal revenue code. For purposes of  this
  subparagraph,  the  depreciation  item  of  adjustment provided for here
  shall not include any amount attributable to property for which the  tax
  benefits of the accelerated cost recovery system are not available under
  this  article  by  reason  of  subparagraph  ten  of  paragraph  (b)  of
  subdivision nine of this section;
    (2) "Mining exploration and development  costs"  as  determined  under
  paragraph  two  of  subsection  (a) of section fifty-six of the internal
  revenue code;
    (3) "Treatment of certain long-term  contracts"  as  determined  under
  paragraph  three  of subsection (a) of section fifty-six of the internal
  revenue code;
    (4) "Installment  sales  of  certain  property"  as  determined  under
  paragraph  six  of  subsection  (a) of section fifty-six of the internal
  revenue code;

    (5)  "Circulation  expenditures  of  personal  holding  companies"  as
  determined  under subparagraph (C) of paragraph two of subsection (b) of
  section fifty-six of the internal revenue code;
    (6)  "Merchant  marine capital construction funds" as determined under
  paragraph two of subsection (c) of section  fifty-six  of  the  internal
  revenue code;
    (7)  "Disallowance  of  passive  activity  loss"  as  determined under
  subsection (b) of section fifty-eight of the internal revenue code; and
    (8) "Adjusted basis", as it appears in paragraph seven  of  subsection
  (a)  of  section  fifty-six  of  the  internal revenue code, but without
  taking  into  account  the  references  therein  to  paragraph  five  of
  subsection (a) of section fifty-six of the internal revenue code.
    (d)  The term "alternative net operating loss deduction" means the net
  operating loss deduction allowed for the taxable  year  under  paragraph
  (f) of subdivision nine of this section, except as provided herein.
    (1)(A)  The  net  operating loss for any year beginning after nineteen
  hundred eighty-nine which is  included  in  determining  such  deduction
  shall be determined with the adjustments provided in subparagraph two of
  paragraph  (a) of this subdivision, and shall be reduced by the items of
  tax preference determined under subparagraph one  of  paragraph  (a)  of
  this  subdivision,  attributable to such year. An item of tax preference
  shall be taken into account only to the extent such item  increased  the
  amount  of  the  net operating loss for the taxable year under paragraph
  (f) of subdivision nine of this section.
    (B) In the case  of  loss  years  beginning  before  nineteen  hundred
  ninety,  the  amount of the net operating loss which may be carried over
  to taxable years beginning after nineteen hundred eighty-nine  shall  be
  equal  to an amount which may be carried from the loss year to the first
  taxable  year  of  the  taxpayer  beginning   after   nineteen   hundred
  eighty-nine.
    (2)  In  determining  the amount of such deduction, loss carryforwards
  and carrybacks shall, subject to the provisions of subparagraph five  of
  paragraph  (f)  of  subdivision nine of this section, be computed in the
  manner set forth in paragraph two  of  subsection  (b)  of  section  one
  hundred  seventy-two  of the internal revenue code, except that, for the
  reference therein to taxable income,  there  shall  be  substituted  the
  phrase  "ninety  percent  of  minimum  taxable income determined without
  regard to the alternative net operating loss deduction".
    (3) The amount of such deduction shall not exceed  ninety  percent  of
  minimum  taxable  income  determined  without  regard to such deduction,
  provided,  however,  the  term  "ninety  percent"  shall  be   read   as
  "forty-five percent" with respect to taxable years beginning in nineteen
  hundred ninety-four.
    (e)  The  tax  commission may, whenever necessary in order to properly
  reflect the minimum taxable income of any taxpayer, determine  the  year
  or  period  in  which any item of income or deduction shall be included,
  without regard to the method of accounting employed by the taxpayer.
    (f) If the period covered by a report under this article is other than
  the  period  covered  by  the  report  to  the  United  States  treasury
  department,  the  minimum taxable income shall be appropriately modified
  pursuant to regulations promulgated by the tax commission.
    * NB Applies to taxable years beginning after December 31, 1986
    9. * The term "entire net income" means  total  net  income  from  all
  sources, which shall be presumably the same as the entire taxable income
  which  the  taxpayer is required to report to the United States treasury
  department, or which the taxpayer would have been required to report, if
  it had not made an election under subchapter s of  chapter  one  of  the
  internal  revenue  code,  except as hereinafter provided, and subject to

  any modification required by paragraphs (d) and (e) of subdivision three
  of section two hundred ten of this article.
    * NB Applies to taxable years prior to December 31, 1986
    * The  term  "entire  net  income"  means  total  net  income from all
  sources, which shall be presumably the same as the entire taxable income
  (but not alternative minimum taxable income),
    (i) which the taxpayer is required to  report  to  the  United  States
  treasury department, or
    (ii)  which  the  taxpayer  would  have been required to report to the
  United States treasury department if it had not made an  election  under
  subchapter s of chapter one of the internal revenue code, or
    (iii) which the taxpayer, in the case of a corporation which is exempt
  from  federal  income tax (other than the tax on unrelated business tax-
  able income imposed under section 511 of the internal revenue code)  but
  which  is subject to tax under this article, would have been required to
  report to the United States treasury department but for such  exemption,
  except as hereinafter provided, and subject to any modification required
  by  paragraphs  (d)  and (e) of subdivision three of section two hundred
  ten of this article.
    * NB Applies to taxable years beginning after December 31, 1986
    (a) Entire net income shall not include:
    (1) income, gains and losses from  subsidiary  capital  which  do  not
  include  the  amount of a recovery in respect of any war loss except for
  such amounts from a former DISC which are  treated  as  business  income
  under subdivision eight-A of this section,
    * (2) fifty percent of dividends (A) other than from subsidiaries, and
  (B)  other  than  amounts  treated  as business income under subdivision
  eight-A of this section,  on  shares  of  stock  which  conform  to  the
  requirements  of  subsection (c) of section two hundred forty-six of the
  internal revenue code.
    * NB Applicable to taxable years beginning on or after January 1, 2000
    (3) bona fide gifts,
    (4) income and deductions with respect to amounts received from school
  districts and from corporations and associations, organized and operated
  exclusively for religious, charitable or educational purposes,  no  part
  of  the  net  earnings  of  which  inures  to the benefit of any private
  shareholder or individual, for the operation of school buses,
    (5) (i) any refund or credit of a  tax  imposed  under  this  article,
  article  twenty-three,  or article thirty-two of this chapter, for which
  tax no exclusion or deduction was allowed in determining the  taxpayer's
  entire  net  income under this article, article twenty-three, or article
  thirty-two of this chapter for any prior year, (ii) a refund  or  credit
  of  general  corporation  tax  allowed  by subdivision eleven of section
  11-604 of the administrative code of the city of New York, or (iii)  any
  refund   or   credit  of  a  tax  imposed  under  sections  one  hundred
  eighty-three, one hundred eighty-three-a, one hundred eighty-four or one
  hundred eighty-four-a of this chapter, and
    (6) any amount treated as dividends pursuant to section  seventy-eight
  of  the  internal  revenue  code  and  not  otherwise  deductible  under
  subparagraphs one and two of this paragraph;
    (7) that portion of wages  and  salaries  paid  or  incurred  for  the
  taxable  year  for  which  a  deduction  is  not allowed pursuant to the
  provisions of section two hundred eighty-C of the internal revenue code.
    (8) in the case of a taxpayer who is separately or as a partner  of  a
  partnership  doing  an  insurance  business  as a member of the New York
  insurance exchange described in section six thousand two hundred one  of
  the  insurance  law, any item of income, gain, loss or deduction of such
  business which is the taxpayer's distributive  or  pro  rata  share  for

  federal  income  tax  purposes or which the taxpayer is required to take
  into account separately for federal income tax purposes.
    (9)  for taxable years beginning after December thirty-first, nineteen
  hundred eighty-one, except with respect to property which is a qualified
  mass commuting vehicle described in subparagraph (D) of paragraph  eight
  of  subsection  (f)  of  section one hundred sixty-eight of the internal
  revenue  code  (relating  to  qualified  mass  commuting  vehicles)  and
  property  of  a  taxpayer principally engaged in the conduct of aviation
  (other than air freight forwarders acting as principal and like indirect
  air carriers) which is placed in service before taxable years  beginning
  in  nineteen  hundred  eighty-nine,  any amount which is included in the
  taxpayer's federal taxable income solely as a result of an election made
  pursuant to the provisions of such paragraph eight as it was  in  effect
  for  agreements  entered  into  prior to January first, nineteen hundred
  eighty-four;
    (10) for taxable years beginning after December thirty-first, nineteen
  hundred eighty-one, except with respect to property which is a qualified
  mass commuting vehicle described in subparagraph (D) of paragraph  eight
  of  subsection  (f)  of  section one hundred sixty-eight of the internal
  revenue  code  (relating  to  qualified  mass  commuting  vehicles)  and
  property  of  a  taxpayer principally engaged in the conduct of aviation
  (other than air freight forwarders acting as principal and like indirect
  air carriers) which is placed in service before taxable years  beginning
  in  nineteen  hundred  eighty-nine,  any amount which the taxpayer could
  have excluded from federal taxable income had it not made  the  election
  provided  for in such paragraph eight as it was in effect for agreements
  entered into prior to January first, nineteen hundred eighty-four;
    (11)  the  amount  deductible  pursuant  to  paragraph  (j)  of   this
  subdivision; and
    * (12)  upon  the  disposition of recovery property to which paragraph
  (j) of this subdivision applies,  the  amount,  if  any,  by  which  the
  aggregate  of the amounts described in subparagraph ten of paragraph (b)
  of this subdivision attributable to such property exceeds the  aggregate
  of   the   amounts  described  in  paragraph  (j)  of  this  subdivision
  attributable to such property.
    * NB Does not apply to  property  to  which  the  amendments  made  by
  section two hundred one of Public Law 99-514 apply.
    * (12) upon the disposition of property to which paragraph (j) of this
  subdivision  applies,  the amount, if any, by which the aggregate of the
  amounts  described  in  subparagraph  ten  of  paragraph  (b)  of   this
  subdivision  attributable  to such property exceeds the aggregate of the
  amounts described in paragraph (j) of this subdivision  attributable  to
  such property; and
    * NB  Applies  to property to which the amendments made by section two
  hundred one of Public Law 99-514 apply.
    (13) if the added tax provided for in either  (i)  former  subdivision
  two  of section one hundred eighty-two of this chapter (relating to real
  estate corporations) or (ii) former subdivision  one-a  of  section  two
  hundred  nine of this chapter (relating to real estate corporations) has
  been imposed upon the taxpayer,  any  income  which  has  been  used  in
  computing such tax.
    (14)   The  amount  deductible  pursuant  to  paragraph  (l)  of  this
  subsection.
    (15) In the case of an  attorney-in-fact,  with  respect  to  which  a
  mutual  insurance  company,  which  is  an  interinsurer or a reciprocal
  insurer and is subject to tax under subdivision (a) of  section  fifteen
  hundred  ten  of  this chapter, has made the election provided for under
  section eight hundred thirty-five  of  the  Internal  Revenue  Code,  an

  amount  equal  to the excess, if any, of the amounts paid or incurred by
  such interinsurer or reciprocal insurer  in  the  taxable  year  to  the
  attorney-in-fact  over  the  deduction  allowed  to such interinsurer or
  reciprocal  insurer  with  respect  to  amounts  paid or incurred in the
  taxable year to  the  attorney-in-fact  under  subsection  (b)  of  such
  section eight hundred thirty-five of the Internal Revenue Code.
    (16) In the case of a taxpayer subject to the modification provided by
  subparagraph  sixteen  of  paragraph (b) of this subdivision, the amount
  required to be recaptured pursuant to subsection (d) of section  179  of
  the  internal  revenue  code  with  respect  to property upon which such
  modification was based.
    (17) for taxable years  beginning  after  December  thirty-first,  two
  thousand  two,  the  amount deductible pursuant to paragraph (o) of this
  subdivision.
    (b) Entire net income  shall  be  determined  without  the  exclusion,
  deduction or credit of:
    (1)  the amount of any specific exemption or credit allowed in any law
  of the United States imposing any tax on or measured by  the  income  of
  corporations,
    (2)  any  part of any income from dividends or interest on any kind of
  stock, securities or indebtedness, except as provided in clauses (1) and
  (2) of paragraph (a) hereof,
    (3) taxes on or measured by profits or income paid or accrued  to  the
  United  States,  any  of  its  possessions  or  to  any foreign country,
  including taxes  in  lieu  of  any  of  the  foregoing  taxes  otherwise
  generally  imposed  by  any  foreign country or by any possession of the
  United States,
    * (3-a) taxes on or measured by profits or income,  or  which  include
  profits  or  income  as a measure, paid or accrued to any other state of
  the United States, or any  political  subdivision  thereof,  or  to  the
  District  of  Columbia,  including taxes expressly in lieu of any of the
  foregoing taxes otherwise generally imposed by any other  state  of  the
  United  States, or any political subdivision thereof, or the District of
  Columbia;
    * NB Applies to taxable years beginning after December 31, 1986
    * (4)  taxes  imposed  under  this  article,  article  thirteen-A  and
  sections  one  hundred  eighty-two,  one  hundred  eighty-two-a  and one
  hundred eighty-two-b of this chapter,
    * NB Applies to taxable years prior to December 31, 1986
    * (4) taxes imposed under this  article  and  article  thirty-two  and
  sections  one  hundred  eighty-three,  one  hundred  eighty-three-a, one
  hundred eighty-four and one hundred eighty-four-a of this chapter,
    * NB Applies to taxable years beginning after December 31, 1986
    (4-a)(A) the entire amount allowable as an exclusion or deduction  for
  stock  transfer  taxes  imposed  by  article  twelve  of this chapter in
  determining the entire taxable income which the taxpayer is required  to
  report  to  the United States treasury department but only to the extent
  that such taxes are incurred and paid in market making transactions, (B)
  in those instances where a credit for the  special  additional  mortgage
  recording  tax  credit  is  allowed  under  paragraph (a) of subdivision
  seventeen of section two hundred ten of this article, the amount allowed
  as an  exclusion  or  deduction  for  the  special  additional  mortgage
  recording  tax  imposed  by  subdivision  one-a  of  section two hundred
  fifty-three of this chapter in determining  the  entire  taxable  income
  which  the  taxpayer is required to report to the United States treasury
  department, and (C) unless the credit allowed  pursuant  to  subdivision
  seventeen of section two hundred ten of this article is reflected in the
  computation  of  the gain or loss so as to result in an increase in such

  gain or decrease of such loss, for federal income tax purposes, from the
  sale or other disposition of the property  with  respect  to  which  the
  special   additional   mortgage   recording   tax  imposed  pursuant  to
  subdivision one-a of section two hundred fifty-three of this chapter was
  paid,  the  amount  of  the  special  additional  mortgage recording tax
  imposed by subdivision one-a of section two hundred fifty-three of  this
  chapter  which was paid and which is reflected in the computation of the
  basis of the property so as to result in a  decrease  in  such  gain  or
  increase  in  such loss for federal income tax purposes from the sale or
  other disposition of the property with respect to  which  such  tax  was
  paid.
    ** (5)  ninety  per  centum  of  interest  on indebtedness directly or
  indirectly  owed  to   any   stockholder   or   shareholder   (including
  subsidiaries  of  a corporate stockholder or shareholder), or members of
  the immediate family of an individual stockholder or shareholder, owning
  in the aggregate in excess of five per  centum  of  the  issued  capital
  stock  of  the taxpayer, except that such interest may, in any event, be
  deducted
    * (i) up to an amount not exceeding one thousand dollars,
    * NB Applies to taxable years prior to December 31, 1986
    * (i) up to an amount not exceeding ten thousand dollars,
    * NB Applies to taxable years beginning after December  31,  1986  but
  before January 1, 1989
    (ii) in full to the extent that it relates to bonds or other evidences
  of  indebtedness  issued,  with  stock,  pursuant to a bona fide plan of
  reorganization, to persons, who, prior to such reorganization, were bona
  fide creditors of the corporation or  its  predecessors,  but  were  not
  stockholders or shareholders thereof,
    (iii) in full where the investment allocation percentage is applied to
  entire  net  income, and (iv) in full to the extent that it is paid to a
  federally licensed small business investment company;
    ** NB Subparagraph (5) repealed for  taxable  years  beginning  on  or
  after January 1, 1989
    * (6)  in the discretion of the tax commission, any amount of interest
  directly or indirectly and any other amount directly attributable  as  a
  carrying  charge  or otherwise to subsidiary capital or to income, gains
  or losses from subsidiary capital.
    * NB Applies to taxable years prior to December 31, 1986
    * (6) in the discretion of the tax commission, any amount of  interest
  directly  or  indirectly  and  any  other  amount directly or indirectly
  attributable as a carrying charge or otherwise to subsidiary capital  or
  to income, gains or losses from subsidiary capital.
    * NB Applies to taxable years beginning after December 31, 1986
    * (6-a)  (A) Five percent of the amount of interest paid or accrued by
  a taxpayer during the taxable  year  (to  the  extent  deducted  in  the
  computation  of  entire net income without regard to this subparagraph),
  provided, however, such amount shall not exceed the  limitation  amount.
  The  limitation  amount shall be computed as the product of two factors.
  The first of these  factors  shall  be  the  taxpayer's  total  interest
  deducted  in the computation of entire net income without regard to this
  subparagraph. The second factor shall be a fraction.  The  numerator  of
  such  fraction  is  the sum of: in the case of subclause one hereof, the
  taxpayer's total cost of any target corporation or corporations acquired
  in a corporate acquisition during the  taxable  year  or  in  the  three
  immediately  preceding  taxable  years;  in  the  case  of subclause two
  hereof, the value of the assets acquired during the taxable year  or  in
  the  three  immediately  preceding  taxable  years,  but  only  if  such
  acquisition  took  place  on  or  after  the  effective  date  of   this

  subparagraph;  and  in  the  case  of  subclause three hereof, the total
  business, investment and subsidiary capital of target corporations which
  were  constituent  corporations  in  corporate  mergers   or   corporate
  consolidations  during  the  taxable  year  or  in the three immediately
  preceding taxable years. For purposes of the  preceding  sentence  there
  shall  be  included  only: the cost of target corporations acquired in a
  taxable year with respect to which none of the conditions set  forth  in
  clause  (B)  of  this  subparagraph  are  satisfied; the value of assets
  acquired in an asset acquisition taking place during such  a  year;  and
  the   total  business,  investment  and  subsidiary  capital  of  target
  corporations which are constituent corporations in corporate mergers and
  corporate consolidations taking place in such a year. The denominator of
  the fraction is the taxpayer's average total debt for the taxable  year.
  This subparagraph shall only apply where the taxpayer during the taxable
  year or within the three immediately preceding taxable years:
    (1)  was  an acquiring person in a corporate acquisition and the value
  based on cost of the taxpayer's total interest (at any time  during  the
  year  in  which  such acquisition occurred) in any target corporation so
  acquired exceeds five million dollars;
    (2) has acquired (i) all or substantially all of the assets of another
  corporation (other than assets disposed  of  in  the  usual  or  regular
  course of business actually conducted by such corporation) pursuant to a
  vote  by  the  shareholders of such corporation pursuant to section nine
  hundred nine of the business corporation law or any similar  statute  of
  any  other  state  or  foreign  nation, or (ii) in the absence of such a
  statutory  requirement,  an  asset  of  another  corporation  such  that
  immediately  prior  to the acquisition date the taxpayer owned less than
  eighty percent of the assets of such other corporation (as of  the  date
  eighteen   months  prior  to  such  acquisition  date)  and  immediately
  thereafter owned eighty percent or  more  of  such  assets  (other  than
  assets  disposed  of  by  such other corporation in the usual or regular
  course of business actually conducted by  such  corporation)  but  (iii)
  only  where  the  value of the assets (valued at cost) so acquired is in
  excess of five million dollars and only where such acquisition  occurred
  on or after the effective date of this subparagraph;
    (3)  was a surviving corporation with respect to a corporate merger or
  a consolidated corporation with respect to  a  corporate  consolidation,
  where  the  total  business, investment and subsidiary capital (computed
  pursuant to subdivision two of section two hundred ten  whether  or  not
  subject to this article), of any target corporation immediately prior to
  such merger or consolidation exceeded five million dollars; or
    (4)  is  a  member of an affiliated group which includes a corporation
  described in subclause one, two or three of this clause.
    (B) This subparagraph shall not apply if the taxpayer can  demonstrate
  that:
    (1)  the  ratio of average aggregate debt to average aggregate equity,
  for the taxable year in which one or more of  the  events  described  in
  subclause one, two or three of clause (A) of this subparagraph occurred,
  does  not  increase by more than one hundred percent over such ratio for
  the immediately preceding taxable year, or
    (2) the ratio of average aggregate debt to average  aggregate  assets,
  for  the  taxable  year  in which one or more of the events described in
  subclause one, two or three of clause (A) of this subparagraph occurred,
  does not increase by more than sixty percent over  such  ratio  for  the
  immediately preceding taxable year, or
    (3)  where  the  taxpayer  is not a member of an affiliated group, the
  total of the taxpayer's interest paid or accrued during the taxable year
  is less than one million dollars, or

    (4) where the taxpayer is a member of an affiliated group, the sum  of
  the  interest  paid or accrued by the taxpayer during a taxable year and
  the interest paid or accrued by each  member  of  the  affiliated  group
  during  its  taxable  year ending within the taxpayer's taxable year, is
  less than one million dollars.
    (C) For purposes of this subparagraph:
    (1)  Average aggregate debt for a given taxable year means: (i) In the
  case of an event described in subclause one or two of clause (A) of this
  subparagraph, the sum of (I) the average debt of the taxpayer plus  (II)
  the   average   debt  of  the  target  corporation  (unless  the  target
  corporation is a member  of  an  affiliated  group  which  includes  the
  taxpayer).  In computing average aggregate debt, intercompany debt shall
  be eliminated.
    (ii) In the case of an event described in subclause  three  of  clause
  (A) of this subparagraph, (I) the average debt of the taxpayer plus (II)
  the  sum of the average debt of each of the constituent corporations. In
  computing aggregate debt, intercompany debt shall be eliminated.
    (2) Average aggregate equity for a given taxable year  means:  (i)  In
  the  case of an event described in subclause one or two of clause (A) of
  this subparagraph, the sum of (I) the average  equity  of  the  taxpayer
  plus  (II)  the  average  equity  of  the target corporation (unless the
  target corporation is a member of an affiliated group which includes the
  taxpayer). In computing average aggregate  equity,  intercompany  equity
  shall be eliminated.
    (ii)  In  the  case of an event described in subclause three of clause
  (A) of this subparagraph, the sum of  (I)  the  average  equity  of  the
  taxpayer  plus  (II)  the  sum  of  the  average  equity  of each of the
  constituent  corporations.  In  computing  average   aggregate   equity,
  intercompany equity shall be eliminated.
    (3)  Average  aggregate  assets for a given taxable year means: (i) In
  the case of an event described in subclause one or two of clause (A)  of
  this  subparagraph,  the  sum  of (I) the average assets of the taxpayer
  plus (II) the average assets  of  the  target  corporation  (unless  the
  target corporation is a member of an affiliated group which includes the
  taxpayer).  In  computing  average aggregate assets, intercompany assets
  shall be eliminated.
    (ii) In the case of an event described in subclause  three  of  clause
  (A)  of  this  subparagraph,  the  sum  of (I) the average assets of the
  taxpayer plus (II) the  sum  of  the  average  assets  of  each  of  the
  constituent   corporations.   In  computing  average  aggregate  assets,
  intercompany assets shall be eliminated.
    (4) The value of assets shall be the value  shown  on  the  books  and
  records  of  a corporation using the method of accounting regularly used
  by the corporation.
    (5) (i) For purposes of subclause one, two and three of  this  clause,
  where  the  taxpayer  is a member of an affiliated group, all members of
  the affiliated group shall be treated in the aggregate as the taxpayer.
    (ii) Where in applying clauses one, two and three of this clause to  a
  year  in which one or more of the events described in subclause one, two
  or three of clause (A) of  this  subparagraph  occurred,  the  ratio  is
  determined  for  an affiliated group, then the ratio for the immediately
  preceding taxable year shall be determined for a group comprised of  the
  corporations which were members of such affiliated group.
    (6)  The term affiliated group shall have the meaning ascribed thereto
  in section 1504  of  the  internal  revenue  code,  with  the  following
  exceptions.
    (i) References to "at least eighty percent" in such section 1504 shall
  be read as "more than fifty percent".

    (ii)  Such  section 1504 shall be read without regard to the exclusion
  of foreign corporations in section 1504(b)(3)  (except  that  the  debt,
  equity and assets of such foreign corporations shall be included only to
  the  extent  that  they  are effectively connected with the conduct of a
  trade of business within the United States).
    (iii)  Such section 1504 shall be read without regard to the exclusion
  provided for in section 1504(b)(4).
    (7) For purposes of this subparagraph, in  the  case  of  a  corporate
  consolidation,  references  to  the  taxable year in which the corporate
  consolidation occurs shall be deemed  to  be  references  to  the  first
  taxable year of the consolidated corporation.
    * NB Repealed for taxable years beginning on or after January 1, 1997
    (7)  in  the case of a taxpayer who is separately or as a partner of a
  partnership doing an insurance business as a  member  of  the  New  York
  insurance  exchange described in section six thousand two hundred one of
  the insurance law, such taxpayer's distributive or pro rata share of the
  allocated entire  net  income  of  such  business  as  determined  under
  sections fifteen hundred three and fifteen hundred four of this chapter,
  provided  however,  in  the  event such allocated entire net income is a
  loss, such taxpayer's distributive or pro rata share of such loss  shall
  not  be  subtracted  from federal taxable income in computing entire net
  income under this subdivision.
    (8) for taxable years beginning after December thirty-first,  nineteen
  hundred eighty-one, except with respect to property which is a qualified
  mass  commuting vehicle described in subparagraph (D) of paragraph eight
  of subsection (f) of section one hundred  sixty-eight  of  the  internal
  revenue  code  (relating  to  qualified  mass  commuting  vehicles)  and
  property of a taxpayer principally engaged in the  conduct  of  aviation
  (other than air freight forwarders acting as principal and like indirect
  air  carriers) which is placed in service before taxable years beginning
  in nineteen hundred eighty-nine, any amount which the  taxpayer  claimed
  as  a  deduction  in  computing  its  federal taxable income solely as a
  result of an election made pursuant to the provisions of such  paragraph
  eight  as  it was in effect for agreements entered into prior to January
  first, nineteen hundred eighty-four;
    (9) for taxable years beginning after December thirty-first,  nineteen
  hundred eighty-one, except with respect to property which is a qualified
  mass  commuting vehicle described in subparagraph (D) of paragraph eight
  of subsection (f) of section one hundred  sixty-eight  of  the  internal
  revenue  code  (relating  to  qualified  mass  commuting  vehicles)  and
  property of a taxpayer principally engaged in the  conduct  of  aviation
  (other than air freight forwarders acting as principal and like indirect
  air  carriers) which is placed in service before taxable years beginning
  in nineteen hundred eighty-nine, any amount  which  the  taxpayer  would
  have  been required to include in the computation of its federal taxable
  income had it not made the election permitted pursuant to such paragraph
  eight as it was in effect for agreements entered into prior  to  January
  first, nineteen hundred eighty-four;
    * (10)  for  taxable  years  beginning  after  December  thirty-first,
  nineteen hundred eighty-one, except with respect  to  recovery  property
  subject  to  the  provisions  of  section  two  hundred  eighty-F of the
  internal revenue code and recovery property placed in  service  in  this
  state  in  taxable years beginning after December thirty-first, nineteen
  hundred eighty-four, the amount allowable as a deduction  under  section
  one hundred sixty-eight of the internal revenue code;
    * NB  Does  not  apply  to  property  to  which the amendments made by
  section two hundred one of Public Law 99-514 apply.

    * (10) in the case of property placed  in  service  in  taxable  years
  beginning   before  nineteen  hundred  ninety-four,  for  taxable  years
  beginning after  December  thirty-first,  nineteen  hundred  eighty-one,
  except with respect to property subject to the provisions of section two
  hundred  eighty-F  of the internal revenue code, property subject to the
  provisions of section one hundred sixty-eight of  the  internal  revenue
  code which is placed in service in this state in taxable years beginning
  after  December  thirty-first, nineteen hundred eighty-four and property
  of a taxpayer principally engaged in the conduct of aviation (other than
  air freight  forwarders  acting  as  principal  and  like  indirect  air
  carriers)  which  is placed in service before taxable years beginning in
  nineteen  hundred  eight-nine,  the  amount  allowable  as  a  deduction
  determined under section one hundred sixty-eight of the internal revenue
  code;
    * NB  Applies  to property to which the amendments made by section two
  hundred one of Public Law 99-514 apply.
    * (11) upon the disposition of recovery property  to  which  paragraph
  (j)  of  this  subdivision  applies,  the  amount,  if any, by which the
  aggregate of the amounts described in such paragraph (j) attributable to
  such  property  exceeds  the  aggregate  of  the  amounts  described  in
  subparagraph ten of this paragraph attributable to such property.
    * NB  Does  not  apply  to  property  to  which the amendments made by
  section two hundred one of Public Law 99-514 apply.
    * (11) upon the disposition of property to which paragraph (j) of this
  subdivision applies, the amount, if any, by which the aggregate  of  the
  amounts  described  in  such paragraph (j) attributable to such property
  exceeds the aggregate of the amounts described in  subparagraph  ten  of
  this paragraph attributable to such property.
    * NB  Applies  to property to which the amendments made by section two
  hundred one of Public Law 99-514 apply.
    * (12) dividends from a target corporation referred  to  in  paragraph
  (b)  of  subdivision four of this section which are received on or after
  the acquisition date and prior to the first day of the taxable  year  in
  which the dispostion described in such paragraph occurred.
    * NB Repealed for taxable years beginning on or after January 1, 2000
    * (13)  (A)  income  (other  than dividends) from a target corporation
  described in paragraph (b) of subdivision four of this section which  is
  received  during  the  period extending from the acquisition date to the
  day immediately preceding the first day of the taxable year in which the
  disposition described in such paragraph  occurred,  which  was  excluded
  from  entire net income pursuant to subparagraph one of paragraph (a) of
  this subdivision or would have been so excluded but for  the  fact  that
  the  taxpayer  and  the  target  corporation were included on a combined
  report.
    (B) gains and losses from subsidiary capital consisting  of  stock  or
  indebtedness  of  a  target  corporation referred to in paragraph (b) of
  subdivision four of this section which arose during the period extending
  from the acquisition date to the day immediately preceding the first day
  of the taxable year in which the disposition described in such paragraph
  occurred.
    * NB Repealed for taxable years beginning on or after January 1, 2000
    * (14) If, within eighteen months of a corporate  acquisition  wherein
  the  taxpayer is the acquiring corporation, the target corporation sells
  or otherwise disposes of an asset or assets (excluding cash  and  assets
  disposed  of  by  such  target  corporation in the regular course of its
  business) held by the target corporation on the  acquisition  date  such
  that  immediately prior to such disposition such target corporation owns
  more than fifty percent of the total of such assets held by  the  target

  corporation  on the acquisition date (by value, such value determined in
  the manner in which assets are valued pursuant  to  subdivision  two  of
  section  two  hundred  ten  of  this  chapter,  whether  or not a target
  corporation  is subject to this article) and immediately thereafter owns
  fifty percent or less, dividends paid to the  taxpayer  by  such  target
  corporation  on or after the acquisition date and prior to the first day
  of the taxable year in which such disposition occurred.
    * NB Repealed for taxable years beginning on or after January 1, 2000
    * (15) Real property taxes paid on qualified agricultural property and
  deducted in determining federal taxable income, to  the  extent  of  the
  amount of the agricultural property tax credit allowed under subdivision
  twenty-two of section two hundred ten of this article.
    * NB Applies to taxable years beginning on or after January 1, 1997
    (16)  In  the  case  of  a taxpayer which is not an eligible farmer as
  defined in paragraph  (b)  of  subdivision  twenty-two  of  section  two
  hundred  ten  of  this  article,  the  amount  of  any deduction claimed
  pursuant to section 179 of the internal revenue code with respect  to  a
  sport  utility vehicle which is not a passenger automobile as defined in
  paragraph 5 of subsection (d) of section 280F of  the  internal  revenue
  code.
    (17)  for  taxable  years  beginning  after December thirty-first, two
  thousand two, in the case of qualified property described  in  paragraph
  two  of  subsection k of section 168 of the internal revenue code, other
  than qualified resurgence zone property described in  paragraph  (q)  of
  this  subdivision,  and  other  than  qualified  New  York  Liberty Zone
  property described in paragraph two of subsection b of section 1400L  of
  the  internal revenue code (without regard to clause (i) of subparagraph
  (C) of such paragraph), which was placed in service  on  or  after  June
  first,  two  thousand  three,  the amount allowable as a deduction under
  section 167 of the internal revenue code.
    * (18) Premiums  paid  for  environmental  remediation  insurance,  as
  defined  in  section  twenty-three  of  this  chapter,  and  deducted in
  determining federal taxable income, to the extent of the amount  of  the
  environmental  remediation  insurance  credit allowed under such section
  twenty-three and subdivision thirty-five of section two hundred  ten  of
  this article.
    * NB Applies to taxable years beginning on or after April 1, 2005
    (19)  The  amount  of  any  deduction  allowed pursuant to section one
  hundred ninety-nine of the internal revenue code.
    (20) The amount of any  federal  deduction  for  taxes  imposed  under
  article twenty-three of this chapter.
    (c)  Entire  net  income  shall  include income within and without the
  United States;
    (c-1)(1) Notwithstanding any other provision of this article,  in  the
  case  of a taxpayer which is a foreign air carrier holding a foreign air
  carrier permit issued by the United States department of  transportation
  pursuant  to  section  four  hundred  two of the federal aviation act of
  nineteen hundred fifty-eight, as amended, and which is  qualified  under
  subparagraph two of this paragraph, entire net income shall not include,
  and  shall  be  computed  without  the deduction of, amounts directly or
  indirectly  attributable  to,  (i)   any   income   derived   from   the
  international  operation  of aircraft as described in and subject to the
  provisions of section eight hundred eighty-three of the internal revenue
  code, (ii) income without the United States which is  derived  from  the
  operation  of aircraft, and (iii) income without the United States which
  is of a type described in  subdivision  (a)  of  section  eight  hundred
  eighty-one  of  the internal revenue code except that it is derived from
  sources without the United  States.  Entire  net  income  shall  include

  income  described in clauses (i), (ii) and (iii) of this subparagraph in
  the case of taxpayers not described in the previous sentence.
    (2)  A  taxpayer  is qualified under this subparagraph if air carriers
  organized in the United States and operating in the foreign  country  or
  countries  in which the taxpayer has its major base of operations and in
  which it is organized, resident or headquartered (if  not  in  the  same
  country  as  its major base of operations) are not subject to any income
  tax or other tax based on or measured by income or receipts  imposed  by
  such  foreign country or countries or any political subdivision thereof,
  or if so subject to such tax, are provided an exemption  from  such  tax
  equivalent to that provided for herein.
    (c-2)  Adjustments by qualified public utilities. (1) In the case of a
  taxpayer which is a qualified public utility, entire net income shall be
  computed with the adjustments set forth in this paragraph.
    (2) Definitions. (A) Qualified public  utility.  The  term  "qualified
  public  utility"  means  a taxpayer which: (i) on December thirty-first,
  nineteen hundred ninety-nine, was subject to the ratemaking  supervision
  of  the state department of public service, and (ii) for the year ending
  on December thirty-first, nineteen hundred ninety-nine, was  subject  to
  tax under former section one hundred eighty-six of this chapter.
    (B) Transition property. The term "transition property" means property
  placed  in  service  by the taxpayer before January first, two thousand,
  for which a depreciation deduction is allowed under section one  hundred
  sixty-seven of the internal revenue code.
    (3)  Federal  depreciation  disallowed.  With  respect  to  transition
  property, the deduction for federal income tax purposes for depreciation
  shall not be allowed.
    (4) New York depreciation. With  respect  to  transition  property,  a
  deduction  shall  be  allowed  for the depreciation expense shown on the
  books and records of the taxpayer for the taxable year and determined in
  accordance with generally accepted accounting principles.
    (5) Regulatory assets.  A  deduction  shall  be  allowed  for  amounts
  recognized  as  expense on the books and records of the taxpayer for the
  taxable year, which amounts  were  recognized  as  expense  for  federal
  income  tax  purposes  in  a  taxable  year ending on or before December
  thirty-first, nineteen hundred  ninety-nine,  where:  (A)  such  amounts
  represent  expenditures  which,  when  made,  were charged to a deferred
  debit account or similar asset account on the books and records  of  the
  taxpayer,  and  where  (B)  the  recognition of expense on the books and
  records of the taxpayer is matched by revenue stemming from a  procedure
  or  adjustment allowing the recovery of such expenditures, and where (C)
  such revenue is recognized  for  federal  income  tax  purposes  in  the
  taxable year.
    (6)  Basis for gain or loss. (A) Recognition transactions. (i) General
  rule - book basis. Except as provided in subclause (ii) of this  clause,
  where  transition  property  is  sold  or  otherwise  disposed of in the
  taxable year in a transaction of the type requiring recognition of  gain
  or  loss  for federal income tax purposes, the basis for determining the
  amount of such gain or loss under this article shall be the cost of  the
  property less the accumulated depreciation on the property determined on
  the  books  and  records  of  the  taxpayer in accordance with generally
  accepted accounting principles.
    (ii) Qualified gain - New York basis.  Where  a  sale  or  disposition
  described in subclause (i) of this clause results in recognition of gain
  for  federal  income tax purposes, and where either (I) such recognition
  occurs in a taxable year ending after nineteen hundred  ninety-nine  and
  before  two  thousand ten, or (II) such recognition is with respect to a
  nuclear electric generating facility,  the  basis  for  determining  the

  amount of such gain under this article shall be the cost of the property
  less  the  aggregate  of  the  New  York  depreciation deductions on the
  property determined under subparagraph four of this paragraph.
    (iii)  No  conversion  of  gain  to  loss. In the event that the basis
  determined under subclause (ii) of this clause results in  determination
  of  a  loss  on the sale or disposition of the property, no gain or loss
  shall be recognized under this article with  respect  to  such  sale  or
  disposition.
    (B)  Nonrecognition  transactions.  (i)  Carryover  basis.  (I)  where
  transition  property  is  disposed  of  ("original  disposition")  in  a
  transaction  of a type requiring deferral of recognition of gain or loss
  for federal income tax purposes, and where (II) there  is  a  subsequent
  recognition  of  gain or loss for federal income tax purposes ("clause B
  gain or loss"), the amount of which is determined by reference, in whole
  or in part, to  the  basis  of  such  transition  property  ("underlying
  transition  property"),  then  (III) the amount of such clause B gain or
  loss under this article shall be adjusted as provided in subclause  (ii)
  or (iii) of this clause.
    (ii)  General  rule  -  book  basis  adjustment. Except as provided in
  subclause (iii) of this clause, the amount of clause  B  gain  shall  be
  reduced,  or  the  amount  of  clause B loss increased, by the amount by
  which the book basis of the underlying transition property on  the  date
  of  original  disposition  (determined using the provisions of subclause
  (i) of clause (A) of this subparagraph) exceeds the federal  income  tax
  basis of such property on such date.
    (iii)  Qualified gain - New York basis adjustment. Where clause B gain
  either (I) occurs in  a  taxable  year  ending  after  nineteen  hundred
  ninety-nine  and  before  two thousand ten, or (II) is with respect to a
  nuclear electric generating facility, the amount of such gain under this
  article shall be reduced, but not below zero, by the amount by which the
  New York basis of the underlying transition  property  on  the  date  of
  original  disposition (determined using the provisions of subclause (ii)
  of clause (A) of this subparagraph) exceeds the federal income tax basis
  of such property on such date.
    (iv) Application to replacement  property  and  transferee  taxpayers.
  This  clause  shall apply whether the clause B gain or loss: (I) is with
  respect to either transition property or depreciable property the  basis
  of  which  is determined by reference to transition property, or (II) is
  recognized by either a qualified public utility or by a  taxpayer  which
  is  a  transferee of transition property (whether or not such transferee
  is a qualified public utility, notwithstanding subparagraph one of  this
  paragraph).
    (c-3)  Depreciation  adjustments  by  qualified  power  producers  and
  pipeline companies. (1) In the case of a qualified taxpayer, entire  net
  income  shall be computed with the depreciation adjustments set forth in
  this paragraph.
    (2) Definitions. (A) Qualified taxpayer. The term "qualified taxpayer"
  means a qualified power producer or a qualified pipeline.
    (B) Qualified power producer.  The  term  "qualified  power  producer"
  means  a  taxpayer which: (i) on December thirty-first, nineteen hundred
  ninety-nine, was not subject to the ratemaking supervision of the  state
  department  of  public service, and (ii) for the year ending on December
  thirty-first, nineteen hundred ninety-nine, was  subject  to  tax  under
  former  section one hundred eighty-six of this chapter on account of its
  being principally engaged in the business of supplying electricity.
    (C) Qualified pipeline. The term "qualified pipeline" means a taxpayer
  which: (i) on December thirty-first, nineteen hundred  ninety-nine,  was
  subject  to  the  ratemaking  supervision  of  either the federal energy

  regulatory commission or the state department  of  public  service,  and
  (ii)  for  the  year  ending  on December thirty-first, nineteen hundred
  ninety-nine, was subject to tax under sections one hundred  eighty-three
  and  one  hundred  eighty-four  of  this chapter on account of its being
  principally engaged in the business of pipeline transmission.
    (D) Transition property. The term "transition property" means property
  placed in service by a qualified  taxpayer  before  January  first,  two
  thousand,  for  which  a depreciation deduction is allowed under section
  one hundred sixty-seven of the internal revenue code.
    (3)  Federal  depreciation  disallowed.  With  respect  to  transition
  property, the deduction for federal income tax purposes for depreciation
  shall not be allowed.
    (4)  New  York  depreciation.  With  respect to transition property, a
  deduction shall be allowed for  the  depreciation  expense  computed  as
  provided  in this subparagraph. (A) All transition property shown on the
  books and records of the taxpayer on January first, two  thousand  shall
  be  treated  as  a  single asset placed in service on such date. The New
  York basis for purposes of computing the depreciation deduction on  such
  single  asset  shall  be  the net book value of such transition property
  determined on the first day of the federal taxable year  ending  in  two
  thousand  (or  on  the  date  any such property is placed in service, if
  later) adjusted as provided in clause (B) of this subparagraph.
    (B) If transition property is sold or otherwise disposed of,  the  New
  York basis of the single asset shall be reduced on the date of such sale
  or  disposition  by the amount of the adjusted federal tax basis of such
  property on such date.
    (C) The New York depreciation deduction allowed for any  taxable  year
  with   respect  to  such  single  asset  shall  be  computed  using  the
  straight-line method, a twenty-year life, and a salvage value of zero.
    (D) For purposes of this subparagraph, the term "net book value" means
  cost reduced by accumulated depreciation shown on the books and  records
  of  the  taxpayer  and  determined,  in  the  case  of a qualified power
  producer, in accordance with generally accepted  accounting  principles;
  and  in  the  case  of  a  qualified  pipeline,  in  accordance with the
  taxpayer's regulatory reports filed with the federal  energy  regulatory
  commission or state department of public service.
    (d)  The  tax  commission may, whenever necessary in order properly to
  reflect the entire net income of any taxpayer,  determine  the  year  or
  period  in  which  any  item  of  income or deduction shall be included,
  without regard to the method of accounting employed by the taxpayer;
    (e) The entire net income of any bridge commission created by  act  of
  congress  to  construct  a bridge across an international boundary means
  its gross income less the  expense  of  maintaining  and  operating  its
  properties,  the  annual  interest upon its bonds and other obligations,
  and the annual charge for the retirement of such bonds or obligations at
  maturity;
    (f) A net operating loss deduction shall be  allowed  which  shall  be
  presumably  the  same  as the net operating loss deduction allowed under
  section one hundred seventy-two of the internal revenue code,  or  which
  would  have  been allowed if the taxpayer had not made an election under
  subchapter s of chapter one of the internal revenue code, except that in
  every instance where such deduction is allowed under this article:
    (1) any net operating loss  included  in  determining  such  deduction
  shall  be  adjusted to reflect the inclusions and exclusions from entire
  net income required by paragraphs (a), (b) and (g) hereof,
    (2) such deduction shall not include any net operating loss  sustained
  during  any  taxable  year  beginning  prior  to January first, nineteen

  hundred sixty-one, or during any taxable year in which the taxpayer  was
  not subject to the tax imposed by this article,
    * (2-a) such deduction, for a taxable year in which the taxpayer was a
  target  corporation  in a subdivision seventeen corporate acquisition or
  any subsequent taxable year, shall not include any  net  operating  loss
  sustained  by  the  target  corporation in its taxable year during which
  such acquisition occurred or in any prior taxable year.
    * NB Repealed for taxable years beginning on or after January 1, 1997
    * (2-b) such deduction, for a taxable year in which the taxpayer was a
  surviving corporation in a subdivision eighteen corporate merger or  any
  subsequent  taxable  year,  shall  not  include  any  net operating loss
  sustained by any target corporation in its  taxable  year  during  which
  such  merger  occurred  or  in  any prior taxable year. Where the target
  corporation is merged into another corporation, its "taxable year during
  which such merger occurred" means its taxable  year  ending  immediately
  prior to such merger.
    * NB Repealed for taxable years beginning on or after January 1, 1997
    * (2-c) such deduction, for a taxable year in which the taxpayer was a
  consolidated   corporation   in   a   subdivision   eighteen   corporate
  consolidation or any subsequent taxable year, shall not include any  net
  operating  loss  sustained by any target corporation in its taxable year
  ending immediately prior to such consolidation or in any  prior  taxable
  year.
    * NB Repealed for taxable years beginning on or after January 1, 1997
    (3) such deduction shall not exceed the deduction for the taxable year
  allowed  under  section  one hundred seventy-two of the internal revenue
  code, or the deduction for  the  taxable  year  which  would  have  been
  allowed  if  the taxpayer had not made an election under subchapter s of
  chapter one of the internal revenue code,
    (4) in the case of a New York S corporation, such deduction shall  not
  include  any  net  operating  loss sustained during a New York C year or
  during a New York S year beginning prior to nineteen hundred ninety, and
  in the case of a New  York  C  corporation,  such  deduction  shall  not
  include  any  net  operating  loss  sustained  during a New York S year,
  provided, however, a New York S year shall be treated as a taxable  year
  for  purposes  of determining the number of taxable years to which a net
  operating loss may be carried back or carried forward, and
    (5) the net operating loss deduction allowed under section one hundred
  seventy-two of the internal revenue code  shall  for  purposes  of  this
  paragraph  be  determined  as  if  the  taxpayer  had elected under such
  section to relinquish the entire carryback period with  respect  to  net
  operating  losses, except with respect to the first ten thousand dollars
  of each of such losses, sustained during taxable years ending after June
  thirtieth, nineteen hundred eighty-nine.
    (g) For taxable years commencing  prior  to  January  first,  nineteen
  hundred eighty-seven, at the election of the taxpayer, a deduction shall
  be allowed for expenditures paid or incurred during the taxable year for
  the  construction,  reconstruction,  erection  or  improvement of either
  industrial  waste  treatment  facilities  or   air   pollution   control
  facilities,  or,  with  respect  to  taxable years beginning on or after
  January first, nineteen hundred seventy-seven and before January  first,
  nineteen  hundred  eighty-one,  industrial  waste  treatment  controlled
  process facilities or air pollution controlled process facilities.
    (1) (A) (1) The term "industrial  waste  treatment  facilities"  shall
  mean  facilities  for  the treatment, neutralization or stabilization of
  industrial waste and other wastes (as the terms "industrial  waste"  and
  "other  wastes"  are  defined  in  section  17-0105 of the environmental
  conservation law) from a point immediately preceding the point  of  such

  treatment,  neutralization  or  stabilization  to the point of disposal,
  including the necessary pumping and transmitting facilities.
    (2)  The term "industrial waste treatment controlled process facility"
  shall mean such portion of the cost of an industrial production facility
  designed for the purpose of obviating  the  need  for  industrial  waste
  treatment  facilities  as  defined  in  item one of this clause as shall
  exceed the cost of an industrial production facility of equal production
  capacity which if constructed would require industrial  waste  treatment
  facilities  to meet emission standards in compliance with the provisions
  of the environmental conservation law and the codes, rules, regulations,
  permits or orders issued pursuant thereto but only to the extent of  the
  cost of such industrial waste treatment facilities.
    (B)  (1)  The  term  "air  pollution  control  facilities"  shall mean
  facilities which remove, reduce, or render less noxious air contaminants
  emitted from an air contamination source (as the terms "air contaminant"
  and "air contamination source" are defined in  section  19-0107  of  the
  environmental  conservation  law) from a point immediately preceding the
  point of such removal, reduction or rendering to the point of  discharge
  of  air,  meeting emission standards as established by the department of
  environmental conservation, but excluding such facilities installed  for
  the  primary  purpose  of  salvaging  materials  which are usable in the
  manufacturing process or are marketable and excluding  those  facilities
  which rely for their efficacy on dilution, dispersion or assimilation of
  air  contaminants  in  the  ambient  air after emission. Such term shall
  further include flue gas desulfurization equipment and attendant  sludge
  disposal  facilities, fluidized bed boilers, precombustion coal cleaning
  facilities or other facilities that conform with  this  subdivision  and
  which  comply  with  the provisions of the state acid deposition control
  act set forth in title nine of article  nineteen  of  the  environmental
  conservation law.
    (2)  The  term  "air pollution controlled process facility" shall mean
  such portion of the cost of an industrial production  facility  designed
  for  the  purpose  of  obviating  the  need  for  air  pollution control
  facilities as defined in item one of this clause  as  shall  exceed  the
  cost  of  an industrial production facility of equal productive capacity
  which if constructed would require air pollution control  facilities  to
  inert  emission  standards  as  established  pursuant  to title three of
  article nineteen of the environmental conservation law but only  to  the
  extent of the cost of such air pollution control facilities.
    (2) However, such deduction shall be allowed only
    (A)  with  respect to tangible property which is depreciable, pursuant
  to section one hundred sixty-seven of the internal revenue code,  having
  a  situs in this state and used in the taxpayer's trade or business, the
  construction, reconstruction, erection or improvement of which,  in  the
  case  of industrial waste treatment facilities, is initiated on or after
  January first, nineteen hundred sixty-five or which, in the case of  air
  pollution  control  facilities,  is initiated on or after January first,
  nineteen hundred sixty-six, or which in the  case  of  industrial  waste
  treatment  controlled  process  facilities  or  air pollution controlled
  process facilities is initiated on and  after  January  first,  nineteen
  hundred seventy-seven, and
    (B) on condition that such facilities have been certified by the state
  commissioner   of   environmental   conservation   or   his   designated
  representative,  pursuant  to  section  19-0309  of  the   environmental
  conservation  law,  as  complying  with  applicable  provisions  of  the
  environmental  conservation  law,  the  public  health  law,  the  state
  sanitary  code  and  codes, rules, regulations, permits or orders issued
  pursuant thereto, and

    (C) on condition that entire net income for the taxable year  and  all
  succeeding  taxable  years  be  computed without any deductions for such
  expenditures or for depreciation or amortization of  the  same  property
  other  than  the deductions allowed by this paragraph (g), except to the
  extent  that  the  basis  of the property may be attributable to factors
  other than such expenditures,  or  in  case  a  deduction  is  allowable
  pursuant  to  this  paragraph  for  only a part of such expenditures, on
  condition that any deduction allowed for federal income tax purposes for
  such expenditures or  for  depreciation  or  amortization  of  the  same
  property  be  proportionately reduced in computing entire net income for
  the taxable year and all succeeding taxable years, and
    (D) where the election provided for in paragraph  (d)  of  subdivision
  three  of section two hundred ten of this chapter has not been exercised
  in respect to the same property.
    (3) (A) If expenditures in respect to an  industrial  waste  treatment
  facility,  an  air  pollution  control  facility,  an  industrial  waste
  treatment controlled process facility or  an  air  pollution  controlled
  process facility have been deducted as provided herein and if within ten
  years  from  the  end  of  the  taxable year in which such deduction was
  allowed such property or any  part  thereof  is  used  for  the  primary
  purpose  of  salvaging  materials  which are usable in the manufacturing
  process or are marketable, the taxpayer shall report such change of  use
  in its report for the first taxable year during which it occurs, and the
  tax  commission  may  recompute  the tax for the year or years for which
  such deduction was allowed and any carryback or carryover year, and  may
  assess  any  additional tax resulting from such recomputation within the
  time fixed by paragraph nine of subsection (c) of  section  ten  hundred
  eighty-three of this chapter.
    (B) If a deduction is allowed as herein provided for expenditures paid
  or  incurred  during  any  taxable  year  on  the  basis  of a temporary
  certificate  of  compliance  issued  pursuant   to   the   environmental
  conservation  law  and  if  the  taxpayer  fails  to  obtain a permanent
  certificate of compliance upon completion of the facilities with respect
  to which such temporary  certificate  was  issued,  the  taxpayer  shall
  report such failure in its report for the taxable year during which such
  facilities  are  completed, and the tax commission may recompute the tax
  for the year or years for which  such  deduction  was  allowed  and  any
  carryback or carryover year, and may assess any additional tax resulting
  from  in  such  recomputation within the time fixed by paragraph nine of
  subsection (c) of section ten hundred eighty-three.
    (C) If a deduction is allowed as herein provided for expenditures paid
  or incurred during any taxable year  in  respect  to  an  air  pollution
  control  facility  on  the  basis  of a certificate of compliance issued
  pursuant to the environmental conservation law and  the  certificate  is
  revoked  pursuant  to  subdivision  three  of  section  19-0309  of  the
  environmental conservation law, the tax commission may recompute the tax
  for the year or years for which the  facility  is  not  or  was  not  in
  compliance   with   the   applicable  provisions  of  the  environmental
  conservation law, the state sanitary code or codes, rules,  regulations,
  permits  or  orders  promulgated  pursuant  thereto,  and  for  which  a
  deduction was allowed, as well as for any carryback or carryover year to
  which such deduction was carried, and  may  assess  any  additional  tax
  resulting  from  such  recomputation  within the time fixed by paragraph
  nine of subsection (c) of section ten hundred eighty-three.
    (4) In any taxable year when property is sold  or  otherwise  disposed
  of,  with respect to which a deduction has been allowed pursuant to this
  paragraph, such deduction shall be  disregarded  in  computing  gain  or
  loss,  and  the  gain  or  loss on the sale or other disposition of such

  property shall be the gain or loss  entering  into  the  computation  of
  entire  taxable  income  which the taxpayer is required to report to the
  United States treasury department for such taxable year.
    (h) If the period covered by a report under this article is other than
  the  period  covered  by  the  report  to  the  United  States  treasury
  department,
    (1) except as provided in subparagraph two hereof, entire  net  income
  shall  be  determined by multiplying the taxable income reported to such
  department (as adjusted pursuant to the provisions of this  article)  by
  the  number  of  calendar  months  or major parts thereof covered by the
  report under this article and dividing by the number of calendar  months
  or  major  parts thereof covered by the report to such department. If it
  shall appear that such method of determining entire net income does  not
  properly  reflect the taxpayer's income during the period covered by the
  report under this article, the tax commission shall be authorized in its
  discretion to determine such entire net income solely on  the  basis  of
  the taxpayer's income during the period covered by its report under this
  article;
    (2)  in the case of a New York S termination year, an equal portion of
  entire net income shall be assigned  to  each  day  of  such  year.  The
  portion  of  such entire net income thereby assigned to the S short year
  and the C short year shall be included in the respective reports for the
  S short year and the C short year under  this  article.  However,  where
  paragraph  three of subsection (s) of section six hundred twelve of this
  chapter applies, the portion of such entire net income assigned to the S
  short year and the C short year shall be  determined  under  normal  tax
  accounting rules.
    (i)  With respect to a DISC which during any taxable year or reporting
  year (1) received more than five percent of its  gross  sales  from  the
  sale  of  inventory  or  other  property  which  it  purchased  from its
  stockholders, (2) received more than five percent of its  gross  rentals
  from  the  rental  of  property  which  it  purchased or rented from its
  stockholders or (3)  received  more  than  five  percent  of  its  total
  receipts  other  than  sales  and  rentals  from  its  stockholders, the
  following provisions shall apply.
    (A) For any taxable year in which sub-paragraph (B) of this  paragraph
  is  in  effect  and  not rendered invalid, a DISC meeting the above test
  shall be exempt from all taxes imposed by this article.
    (B) Supplemental to the provisions of subdivision five of section  two
  hundred  eleven  of this article, any taxpayer required to compute a tax
  under this article, which during the taxable year being reported  was  a
  stockholder  in  any DISC meeting the test prescribed in this paragraph,
  shall for any taxable year ending after December thirty-first,  nineteen
  hundred  seventy-one  adjust each item of its receipts, expenses, assets
  and liabilities, as otherwise computed under  this  article,  by  adding
  thereto  its  attributable share of each such DISC's receipts, expenses,
  assets and liabilities as reportable by each such  DISC  to  the  United
  States Treasury Department for its annual reporting period ending during
  the  current  taxable year of such taxpayer; provided, however, (1) that
  all transactions between the  taxpayer  and  each  such  DISC  shall  be
  eliminated  from  the taxpayer's adjusted receipts, expenses, assets and
  liabilities; (2) that the taxpayer's  entire  net  income  as  otherwise
  computed  under this section, shall be reduced by subtracting the amount
  of the deemed distribution of current income, if  any,  from  each  such
  DISC  already  included  in  the  entire  net income of such taxpayer by
  virtue of having been included in its entire  taxable  income  for  that
  taxable  year  as reported to the United States Treasury Department; and
  (3) that in the event this paragraph should  be  rendered  invalid,  all

  DISC's  and  their stockholders taxable hereunder shall be taxed instead
  under the remaining portions of this article.
    * (j)   for  taxable  years  beginning  after  December  thirty-first,
  nineteen hundred eighty-one, except with respect  to  recovery  property
  subject  to  the  provisions  of  section  two  hundred  eighty-F of the
  internal revenue code and recovery property placed in  service  in  this
  state  in  taxable years beginning after December thirty-first, nineteen
  hundred eighty-four, and provided a deduction has not been excluded from
  entire net income pursuant to subparagraph eight  of  paragraph  (b)  of
  this  subdivision,  a taxpayer shall be allowed with respect to recovery
  property the depreciation deduction allowable under section one  hundred
  sixty-seven  of  the  internal  revenue  code as such section would have
  applied to property placed in service on December thirty-first, nineteen
  hundred eighty.
    * NB Does not apply to  property  to  which  the  amendments  made  by
  section two hundred one of Public Law 99-514 apply.
    * (j)  in  the  case  of  property  placed in service in taxable years
  beginning  before  nineteen  hundred  ninety-four,  for  taxable   years
  beginning  after  December  thirty-first,  nineteen  hundred eighty-one,
  except with respect to property subject to the provisions of section two
  hundred eighty-F of the internal revenue code and  property  subject  to
  the  provisions  of  section  one  hundred  sixty-eight  of the internal
  revenue code which is placed in service in this state in  taxable  years
  beginning after December thirty-first, nineteen hundred eighty-four, and
  provided  a  deduction  has  not  been  excluded  from entire net income
  pursuant to subparagraph eight of paragraph (b) of this  subdivision,  a
  taxpayer  shall  be allowed with respect to property which is subject to
  the provisions of  section  one  hundred  sixty-eight  of  the  internal
  revenue  code  the  depreciation  deduction  allowable under section one
  hundred sixty-seven of the internal revenue code as such  section  would
  have  applied  to  property  placed in service on December thirty-first,
  nineteen hundred eighty. This paragraph shall not apply to property of a
  taxpayer principally engaged in the conduct of aviation (other than  air
  freight  forwarders  acting as principal and like indirect air carriers)
  which is placed in service before taxable years  beginning  in  nineteen
  hundred eighty-nine.
    * NB  Applies  to property to which the amendments made by section two
  hundred one of Public Law 99-514 apply.
    (k) QSSS. (1) New York S corporation. In the case  of  a  New  York  S
  corporation  which  is the parent of a qualified subchapter S subsidiary
  (QSSS) with respect to a taxable year:
    (A) where the QSSS is not an excluded corporation,
    (i) in determining the entire net income of such  parent  corporation,
  all  assets,  liabilities,  income  and  deductions of the QSSS shall be
  treated as assets, liabilities, income  and  deductions  of  the  parent
  corporation, and
    (ii)  the QSSS shall be exempt from all taxes imposed by this article,
  and
    (B) where the QSSS is an excluded corporation, the entire  net  income
  of  the  parent  corporation  shall be determined as if the federal QSSS
  election had not been made.
    (2) New York C corporation. In the case of a New  York  C  corporation
  which is the parent of a QSSS with respect to a taxable year:
    (A) where the QSSS is a taxpayer,
    (i)  in  determining the entire net income of such parent corporation,
  all assets, liabilities, income and deductions  of  the  QSSS  shall  be
  treated  as  assets,  liabilities,  income  and deductions of the parent
  corporation, and

    (ii) the QSSS shall be exempt from all taxes imposed by this  article,
  and
    (B) where the QSSS is not a taxpayer,
    (i) if the QSSS is not an excluded corporation, the parent corporation
  may  make  a QSSS inclusion election to include all assets, liabilities,
  income and deductions of the QSSS as  assets,  liabilities,  income  and
  deductions of the parent corporation, and
    (ii) in the absence of such election, or where the QSSS is an excluded
  corporation,  the  entire  net income of the parent corporation shall be
  determined as if the federal QSSS election had not been made.
    (3) Non-New York S corporation not excluded.  In  the  case  of  an  S
  corporation which is not a taxpayer and not an excluded corporation, and
  which  is  the parent of a QSSS which is a taxpayer, the shareholders of
  the parent corporation shall be entitled to make the New York S election
  under subsection (a) of section six hundred sixty of this chapter.
    (A) For any taxable year for which such election  is  in  effect,  the
  parent  corporation  shall be subject to tax under this article as a New
  York S corporation, and the provisions of clause (A) of subparagraph one
  of this paragraph shall apply.
    (B) For any taxable year for which such election is not in effect, the
  QSSS shall be a New York C corporation, and the entire net income of the
  QSSS shall be determined as if the federal QSSS election  had  not  been
  made. For purposes of such determination, the taxable year of the parent
  corporation  shall  constitute  the taxable year of the QSSS, excluding,
  however, any portion of such  year  during  which  the  QSSS  is  not  a
  taxpayer.
    (4)  S  corporation excluded. In the case of an S corporation which is
  an excluded corporation and which is the parent of a  QSSS  which  is  a
  taxpayer,  the QSSS shall be a New York C corporation and the provisions
  of clause (B) of subparagraph three of this paragraph shall apply.
    (5) Excluded corporation. The  term  "excluded  corporation"  means  a
  corporation  subject  to  tax  under  sections  one hundred eighty-three
  through one hundred eighty-six,  inclusive,  or  article  thirty-two  or
  thirty-three  of  this  chapter, or a foreign corporation not taxable by
  this state which, if it were taxable, would be subject to tax under  any
  of such sections or articles.
    (6)  Taxpayer.  For  purposes  of  this paragraph, the term "taxpayer"
  means a parent corporation or QSSS subject to tax  under  this  article,
  determined without regard to the provisions of this paragraph.
    (7)  QSSS  inclusion  election.  The  election  under subclause (i) of
  clause (B) of subparagraph two of this paragraph shall be effective  for
  the  taxable year for which made and for all succeeding taxable years of
  the corporation until  such  election  is  terminated.  An  election  or
  termination  shall  be  made  on  such  form  and  in such manner as the
  commissioner may prescribe by regulation or instruction.
    (l) Emerging technology investment deferral. In the case of  any  sale
  of  a  qualified  emerging  technologies  investment  held for more than
  thirty-six months and with respect to  which  the  taxpayer  elects  the
  application  of  this paragraph, gain from such sale shall be recognized
  only to the extent that the amount realized on  such  sale  exceeds  the
  cost  of any qualified emerging technologies investment purchased by the
  taxpayer during the three hundred sixty-five-day period beginning on the
  date of such sale, reduced by any portion of such cost previously  taken
  into  account  under  this paragraph. For purposes of this paragraph the
  following shall apply:
    (1) A qualified investment is stock of a corporation or  an  interest,
  other  than as a creditor, in a partnership or limited liability company
  that was acquired by the taxpayer as provided in Internal Revenue Code §
  1202(c)(1)(B), except that the reference to the  term  "stock"  in  such
  section  shall be read as "investment," or by the taxpayer from a person
  who had acquired such stock or interest in such a manner.
    (2)   A  qualified  emerging  technology  investment  is  a  qualified
  investment, that was held  by  the  taxpayer  for  at  least  thirty-six
  months,  in  a  company  defined  in paragraph (c) of subdivision one of
  section thirty-one hundred two-e of the public  authorities  law  or  an
  investment  in  a partnership or limited liability company that is taxed
  as a  partnership  to  the  extent  that  such  partnership  or  limited
  liability company invests in qualified emerging technology companies.
    (3)  For  purposes  of  determining whether the nonrecognition of gain
  under this subsection  applies  to  a  qualified  emerging  technologies
  investment  that  is  sold,  the  taxpayer's  holding  period  for  such
  investment and the qualified emerging technologies  investment  that  is
  purchased  shall be determined without regard to Internal Revenue Code §
  1223.
    (m) Amounts deferred. The amount deferred under paragraph (l) of  this
  subdivision shall be added to entire net income when the reinvestment in
  the  New  York  qualified  emerging technology company which qualified a
  taxpayer for such deferral is sold.
    * (n) Qualified gas transportation contracts.
    (1) Any tax paid under this article allocable to receipts attributable
  to a "qualified gas transportation contract" shall  be  deemed  to  have
  been paid under article nine of this chapter for all purposes of law for
  taxable  years  commencing  on  or  after  January  first, two thousand,
  computed as hereinafter provided, if all of the following conditions are
  met:
    (i) For periods ending prior  to  January  first,  two  thousand,  the
  taxpayer   paid   the  franchise  tax  due  under  section  one  hundred
  eighty-four of this chapter.
    (ii) For the taxable year, all  of  the  receipts  from  the  pipeline
  transportation  of natural gas attributable to the taxpayer and included
  in the taxpayer's entire net income (without regard to  this  paragraph)
  are  solely  from  the  transportation  of  natural  gas  for  wholesale
  customers and commercial retail customers.
    (iii) The taxpayer's franchise tax liability under  this  article  for
  the  taxable  year  (computed  without  regard  to  this  paragraph)  is
  determined under paragraph (a) of subdivision one of section two hundred
  ten of this article, and such tax  liability  (without  regard  to  this
  paragraph)  is  greater  than  the  liability  the  taxpayer  would have
  incurred  under  sections  one  hundred  eighty-three  and  one  hundred
  eighty-four  of  this  chapter  (as  such  sections  existed on December
  thirty-first, nineteen hundred ninety-nine) based on  the  same  taxable
  period.
    (iv)  The  taxpayer  is  a  party  to  a "qualified gas transportation
  contract," as defined herein.
    (2) The provisions of this paragraph shall apply only for the  taxable
  years during which such qualified gas transportation contract is in full
  force  and  effect, and shall apply only to the receipts of the taxpayer
  less any expenses of the taxpayer (but not less than zero),  during  the
  taxable  year,  to  the  extent included in entire net income, which are
  attributable  to  any  such  qualified  gas  transportation   contracts.
  Provided,  further,  in  any event, the characterization hereunder shall
  expire and  be  of  no  further  force  and  effect  for  taxable  years
  commencing on or after January first, two thousand fifteen.
    (3)  The  term  "qualified  gas  transportation contract" shall mean a
  service agreement for the transportation of natural gas for an  end-user
  which  is a qualified cogeneration facility with a rated capacity of one

  thousand megawatts or more, which (i) was entered  into  before  January
  first, two thousand, and was in full force and effect and binding on the
  parties  thereto as of such date, (ii) as originally executed, was for a
  term of at least twenty years, and (iii) the terms of which prohibit the
  pass-through  to  such  customer of the franchise tax imposed under this
  article, while allowing the recovery of the gross earnings  tax  imposed
  under  section one hundred eighty-four of this chapter. A contract shall
  not qualify as a qualified gas transportation contract if there is:  (i)
  any  renewal  or  extension of an otherwise qualified gas transportation
  contract occurring on or after January first, two thousand, or (ii)  any
  material amendment to, or supplementation of, an otherwise qualified gas
  transportation  contract on or after such date. Such renewal, extension,
  or material amendment or supplementation shall have the same  force  and
  effect   of   terminating  the  characterization  hereunder  as  if  the
  qualifying contract had expired by its own terms.
    * NB Deemed repealed for taxable years commencing on or after  January
  1, 2015
    * (o)  For  taxable  years  beginning after December thirty-first, two
  thousand two, in the case of qualified property described  in  paragraph
  two  of  subsection k of section 168 of the internal revenue code, other
  than qualified resurgence zone property described in  paragraph  (q)  of
  this  subdivision,  and  other  than  qualified  New  York  Liberty Zone
  property described in paragraph two of subsection b of section 1400L  of
  the  internal revenue code (without regard to clause (i) of subparagraph
  (C) of such paragraph), which was placed in service  on  or  after  June
  first,  two  thousand three, a taxpayer shall be allowed with respect to
  such property the depreciation deduction allowable under section 167  of
  the  internal  revenue  code  as such section would have applied to such
  property had it been acquired by the taxpayer on  September  tenth,  two
  thousand one.
    * NB There are 2 par (o)'s
    * (o)  Related  members  expense  add  back  and income exclusion. (1)
  Definitions. (A)  Related  member  or  members.  For  purposes  of  this
  paragraph,   the   term  related  member  or  members  means  a  person,
  corporation, or other entity, including an entity that is treated  as  a
  partnership  or  other  pass-through  vehicle  for  purposes  of federal
  taxation, whether such person, corporation or entity is  a  taxpayer  or
  not,  where  one  such person, corporation, or entity, or set of related
  persons, corporations  or  entities,  directly  or  indirectly  owns  or
  controls  a  controlling  interest  in  another  entity.  Such entity or
  entities  may  include  all  taxpayers  under  articles  nine,   nine-A,
  thirteen, twenty-two, thirty-two, thirty-three or thirty-three-A of this
  chapter.
    (B) Controlling interest. A controlling interest shall mean (i) in the
  case  of  a  corporation,  either  thirty  percent  or more of the total
  combined voting power of all classes of stock of  such  corporation,  or
  thirty percent or more of the capital, profits or beneficial interest in
  such  voting  stock  of  such  corporation,  and  (ii)  in the case of a
  partnership, association, trust or other entity, thirty percent or  more
  of  the  capital,  profits  or  beneficial interest in such partnership,
  association, trust or other entity.
    (C) Royalty payments. Royalty payments are payments directly connected
  to the acquisition, use, maintenance  or  management,  ownership,  sale,
  exchange,  or any other disposition of licenses, trademarks, copyrights,
  trade names, trade dress, service  marks,  mask  works,  trade  secrets,
  patents  and  any other similar types of intangible assets as determined
  by  the  commissioner,  and  includes  amounts  allowable  as   interest
  deductions under section one hundred sixty-three of the internal revenue

  code  to the extent such amounts are directly or indirectly for, related
  to  or  in  connection  with  the  acquisition,  use,   maintenance   or
  management,  ownership, sale, exchange or disposition of such intangible
  assets.
    (D)  Valid  Business  Purpose. A valid business purpose is one or more
  business purposes, other than the avoidance or  reduction  of  taxation,
  which alone or in combination constitute the primary motivation for some
  business  activity or transaction, which activity or transaction changes
  in a meaningful way, apart from tax effects, the  economic  position  of
  the taxpayer. The economic position of the taxpayer includes an increase
  in  the  market share of the taxpayer, or the entry by the taxpayer into
  new business markets.
    (2) Royalty expense add backs. (A) Except where a taxpayer is included
  in a combined report with a related member pursuant to subdivision  four
  of  section  two  hundred  eleven  of  this  article, for the purpose of
  computing entire  net  income  or  other  applicable  taxable  basis,  a
  taxpayer  must  add back royalty payments to a related member during the
  taxable year to the extent deductible  in  calculating  federal  taxable
  income.
    (B)  The  add back of royalty payments shall not be required if and to
  the extent that such payments meet either of the following conditions:
    (i) the related member  during  the  same  taxable  year  directly  or
  indirectly paid or incurred the amount to a person or entity that is not
  a  related  member,  and  such transaction was done for a valid business
  purpose and the payments are made at arm's length;
    (ii) the royalty payments are paid or incurred  to  a  related  member
  organized  under the laws of a country other than the United States, are
  subject to a comprehensive income tax treaty between  such  country  and
  the  United States, and are taxed in such country at a tax rate at least
  equal to that imposed by this state.
    (3) Royalty income exclusions. For the purpose of computing entire net
  income or other taxable basis, a taxpayer shall  be  allowed  to  deduct
  royalty  payments  directly or indirectly received from a related member
  during the taxable year to the extent included in the taxpayer's federal
  taxable income unless such royalty payments would not be required to  be
  added  back  under  subparagraph  two of this paragraph or other similar
  provision in this chapter.
    * NB Applicable to taxable years beginning on or after January 1, 2003
    * NB There are 2 par (o)'s
    (p) For taxable  years  beginning  after  December  thirty-first,  two
  thousand two, upon the disposition of property to which paragraph (o) of
  this  subdivision  applies, the amount of any gain or loss includible in
  entire net income shall  be  adjusted  to  reflect  the  inclusions  and
  exclusions  from entire net income pursuant to subparagraph seventeen of
  paragraph (a) and  subparagraph  seventeen  of  paragraph  (b)  of  this
  subdivision attributable to such property.
    (q)  For  purposes  of  paragraphs  (o)  and  (p) of this subdivision,
  qualified  resurgence  zone  property  shall  mean  qualified   property
  described  in  paragraph  two  of  subsection  k  of  section 168 of the
  internal revenue code substantially all of the use of which  is  in  the
  resurgence  zone,  as  defined  below, and is in the active conduct of a
  trade or business by the taxpayer in such zone, and the original use  of
  which  in the resurgence zone commences with the taxpayer after December
  thirty-first, two thousand two. The resurgence zone shall mean the  area
  of  New  York  county  bounded  on  the south by a line running from the
  intersection of the Hudson River with the Holland  Tunnel,  and  running
  thence  east to Canal Street, then running along the centerline of Canal
  Street to the intersection of  the  Bowery  and  Canal  Street,  running

  thence  in  a southeasterly direction diagonally across Manhattan Bridge
  Plaza, to the Manhattan Bridge and thence along the  centerline  of  the
  Manhattan  Bridge  to  the  point  where the centerline of the Manhattan
  Bridge  would  intersect  with  the easterly bank of the East River, and
  bounded on the north by a line running  from  the  intersection  of  the
  Hudson River with the Holland Tunnel and running thence north along West
  Avenue  to  the  intersection of Clarkson Street then running east along
  the centerline of Clarkson Street  to  the  intersection  of  Washington
  Avenue,  then running south along the centerline of Washington Avenue to
  the intersection of West Houston Street, then east along the  centerline
  of  West  Houston  Street, then at the intersection of the Avenue of the
  Americas continuing east along the centerline of East Houston Street  to
  the easterly bank of the East River.
    10.  The term "calendar year" means a period of twelve calendar months
  (or any shorter period  beginning  on  the  date  the  taxpayer  becomes
  subject  to  the tax imposed by this article) ending on the thirty-first
  day of December, provided the taxpayer keeps its books on the  basis  of
  such  period  or on the basis of any period ending on any day other than
  the last day of a calendar month, or provided the taxpayer does not keep
  books, and includes, in case the taxpayer  changes  the  period  on  the
  basis of which it keeps its books from a fiscal year to a calendar year,
  the  period  from  the  close  of  its  last  old  fiscal year up to and
  including the following December thirty-first. The  term  "fiscal  year"
  means  a  period  of  twelve  calendar  months  (or  any  shorter period
  beginning on the date the taxpayer becomes subject to the tax imposed by
  this article) ending on the last day of any month other  than  December,
  provided  the  taxpayer keeps its books on the basis of such period, and
  includes, in case the taxpayer changes the period on the basis of  which
  it  keeps  it  books  from  a calendar year to a fiscal year or from one
  fiscal year to another fiscal year, the period from  the  close  of  its
  last  old calendar or fiscal year up to the date designated as the close
  of its new fiscal year.
    11. The term "tangible personal  property"  means  corporeal  personal
  property,  such  as  machinery,  tools,  implements,  goods,  wares  and
  merchandise, and does not mean  money,  deposits  in  banks,  shares  of
  stock, bonds, notes, credits or evidences of an interest in property and
  evidences of debt.
    12.  The term elected or appointed officer shall include the chairman,
  president, vice-president, secretary,  assistant  secretary,  treasurer,
  assistant   treasurer,   comptroller,   and   also  any  other  officer,
  irrespective of his title, who is charged with and performs any  of  the
  regular  functions of any such officer, unless the total compensation of
  such officer is derived exclusively from the receipt of  commissions.  A
  director  shall be considered an elected or appointed officer only if he
  performs duties ordinarily performed by an officer.
    * 13. A "corporate merger" means a procedure comprised of the  merging
  of  two or more constituent corporations into a single corporation which
  is one of the  constituent  corporations,  under  article  nine  of  the
  business  corporation  law,  the  corresponding statutes of other states
  and/or the corresponding statutes of foreign nations. In the case  of  a
  corporate  merger,  "acquiring person" means the constituent corporation
  the stockholders of which, after the merger, own the largest  proportion
  of  the  total  voting  power  in the surviving corporation, and "target
  corporation" means  all  other  constituent  corporations.  A  corporate
  merger   does   not  include  an  excluded  transaction  as  defined  in
  subdivision sixteen of this section or a procedure described hereinabove
  which was completed prior to the effective date of this subdivision.
    * NB Repealed for taxable years beginning on or after January 1, 1997

    * 14. A "corporate consolidation" means a procedure comprised  of  the
  consolidation  of  two  or  more  corporations into a single corporation
  which is a new corporation to be formed pursuant to  the  consolidation,
  under  article  nine  of the business corporation law, the corresponding
  statutes  of  other  states and/or the corresponding statutes of foreign
  nations. In the case of a corporate  consolidation,  "acquiring  person"
  means  the  constituent corporation the stockholders of which, after the
  consolidation, own the largest proportion of the total voting  power  in
  the  consolidated  corporation, and "target corporation" means all other
  constituent corporations. A corporate consolidation does not include  an
  excluded  transaction  as defined in subdivision sixteen of this section
  or a procedure described hereinabove which was completed  prior  to  the
  effective date of this subdivision.
    * NB Repealed for taxable years beginning on or after January 1, 1997
    * 15.   A   "corporate   acquisition"  means  the  acquisition  on  an
  "acquisition date" by purchase and/or otherwise (including  redemption),
  by  a  person (the "acquiring person"), as the term person is defined in
  section  7701(a)(1)  of  the  internal  revenue  code,  of  stock  of  a
  corporation  (the  "target corporation"), such that immediately prior to
  such  acquisition  such  person  owned  fifty  percent  or   less,   and
  immediately thereafter owned more than fifty percent of the total voting
  power  in  the  target  corporation.  A  corporate  acquisition does not
  include an excluded transaction as defined  in  subdivision  sixteen  of
  this  section  or  an  acquisition  described hereinabove which occurred
  prior to the effective date of this subdivision.
    * NB Repealed for taxable years beginning on or after January 1, 1997
    * 16. An "excluded transaction" means: (a) an  acquisition  (i)  which
  occurs solely by reason of a redemption of stock to the extent that such
  redemption qualifies under section 303 of the internal revenue code;
    (ii)  where a corporation and the corporation acquiring it are members
  of an affiliated group as  defined  in  section  1504  of  the  internal
  revenue  code, except that the term "common parent corporation" shall be
  deemed to mean any person, as  defined  in  section  7701(a)(1)  of  the
  internal  revenue  code,  and except that references to "at least eighty
  percent" in such  section  1504  shall  be  read  as  "more  than  fifty
  percent"; or
    (iii)  by  a  person, as defined in section 7701(a)(1) of the internal
  revenue code, which is controlled by a majority of the employees of  the
  target corporation or which is a trust for the exclusive benefit of such
  employees  or their beneficiaries. Control in this context refers (1) in
  the case of a corporation, to ownership of more than  fifty  percent  of
  the  total  voting  power  in such corporation, and (2) in the case of a
  partnership,  where  the  sum  of  the  employees'  interests   in   the
  partnership,  within  the  meaning  of  section  704(b)  of the internal
  revenue code, exceeds fifty percent;
    (b) a merger or consolidation where all the  constituent  corporations
  are  members  of  an  affiliated group as defined in section 1504 of the
  internal revenue code, except that the term "common parent  corporation"
  shall be deemed to mean any person, as defined in section 7701 (a)(1) of
  the  internal  revenue  code,  and  except  that references to "at least
  eighty percent" in such section 1504 shall be read as "more  than  fifty
  percent".
    * NB Repealed for taxable years beginning on or after January 1, 1997
    * 17.  (a)  A  "subdivision  seventeen  corporate acquisition" means a
  corporate acquisition wherein the taxpayer  is  the  target  corporation
  and:
    (1)  where  the  ratio  of average aggregate debt to average aggregate
  equity, for  the  taxable  year  in  which  such  acquisition  occurred,

  increases  by  more  than  one  hundred  percent over such ratio for the
  immediately preceding taxable year, and (2) where the ratio  of  average
  aggregate  debt  to  average  aggregate  assets, for the taxable year in
  which  such  acquisition  occurred, increases by more than sixty percent
  over such ratio for the immediately preceding taxable year, and
    (3) where the total of the acquiring person's interest paid or accrued
  during its taxable year in which such acquisition occurred is more  than
  one million dollars.
    (b) For purposes of this subdivision:
    (1)  Average  aggregate debt for a given taxable year means the sum of
  (i) the average debt of the acquiring person plus (ii) the average  debt
  of  the taxpayer (unless the taxpayer is a member of an affiliated group
  which includes the acquiring person).  In  computing  average  aggregate
  debt, intercompany debt shall be eliminated.
    (2) Average aggregate equity for a given taxable year means the sum of
  (i)  the  average  equity  of the acquiring person plus (ii) the average
  equity of the taxpayer (unless the taxpayer is a member of an affiliated
  group  which  includes  the  acquiring  person).  In  computing  average
  aggregate equity, intercompany equity shall be eliminated.
    (3) Average aggregate assets for a given taxable year means the sum of
  (i)  the  average  assets  of the acquiring person plus (ii) the average
  assets of the taxpayer (unless the taxpayer is a member of an affiliated
  group  which  includes  the  acquiring  person).  In  computing  average
  aggregate assets, intercompany assets shall be eliminated.
    (4)  The  value  of  assets  shall be the value shown on the books and
  records of a corporation using the method of accounting  regularly  used
  by the corporation.
    (5)  In  any  case  in  which  the  acquiring person is a member of an
  affiliated group, all members of the affiliated group shall  be  treated
  in the aggregate as the acquiring person.
    (6)  The term affiliated group shall have the meaning ascribed thereto
  in section 1504  of  the  internal  revenue  code,  with  the  following
  exceptions:
    (i) References to "at least eighty percent" in such section 1504 shall
  be read as "more than fifty percent".
    (ii)  Such  section 1504 shall be read without regard to the exclusion
  of foreign corporations provided for  in  section  1504(b)(3)  (provided
  that  the  debt, equity and assets of such foreign corporations shall be
  included only to the extent that they are effectively connected with the
  conduct of a trade or business within the United States).
    (iii) Such section 1504 shall be read without regard to the  exclusion
  provided for in section 1504(b)(4).
    * NB Repealed for taxable years beginning on or after January 1, 1997
    * 18.  (a)  A  subdivision  eighteen  corporate  merger  or  corporate
  consolidation is a corporate merger or corporate  consolidation  wherein
  the taxpayer is the surviving or consolidated corporation and:
    (1)  where  the  ratio  of average aggregate debt to average aggregate
  equity, for the taxable year  in  which  such  merger  or  consolidation
  occurred, increases by more than one hundred percent over such ratio for
  the immediately preceding taxable year, and
    (2)  where  the  ratio  of average aggregate debt to average aggregate
  assets, for the taxable year  in  which  such  merger  or  consolidation
  occurred,  increases  by more than sixty percent over such ratio for the
  immediately preceding taxable year, and
    (3) where the total interest paid  or  accrued  by  the  surviving  or
  consolidated corporation during its taxable year in which such merger or
  consolidation occurred is more than one million dollars.
    (b) For purposes of this subdivision:

    (1)  Average  aggregate debt for a given taxable year means the sum of
  (i) the average debt of the surviving or consolidated  corporation  plus
  (ii)  the  average  debt  of  the  constituents.  In  computing  average
  aggregate debt, intercompany debt shall be eliminated.
    (2) Average aggregate equity for a given taxable year means the sum of
  (i) the average equity of the surviving or consolidated corporation plus
  (ii)  the  average  equity  of  the  constituents.  In computing average
  aggregate equity, intercompany equity shall be eliminated.
    (3) Average aggregate assets for a given taxable year means the sum of
  (i) the average assets of the surviving or consolidated corporation plus
  (ii) the average  assets  of  the  constituents.  In  computing  average
  aggregate assets, intercompany assets shall be eliminated.
    (4)  The  value  of  assets  shall be the value shown on the books and
  records of a corporation using the method of accounting  regularly  used
  by the corporation.
    (5)  (i)  For  purposes  of  subparagraph  one,  two  or three of this
  paragraph, where the surviving or consolidated corporation is  a  member
  of  an  affiliated  group,  all members of the affiliated group shall be
  treated in the aggregate as the surviving or consolidated corporation.
    (ii) Where in applying  subparagraphs  one,  two  and  three  of  this
  paragraph   to   a  year  in  which  a  corporate  merger  or  corporate
  consolidation occurred, the ratio is determined for an affiliated group,
  then the ratio for the  immediately  preceding  taxable  year  shall  be
  determined  for  a group comprised of the corporations which are members
  of such affiliated group.
    (6) The term affiliated group shall have the meaning ascribed  thereto
  in  section  1504  of  the  internal  revenue  code,  with the following
  exceptions:
    (i) References to "at least eighty percent" in such section 1504 shall
  be read as "more than fifty percent".
    (ii) Such section 1504 shall be read without regard to  the  exclusion
  of  foreign  corporations  provided  for in section 1504(b)(3) (provided
  that the debt, equity and assets of such foreign corporations  shall  be
  included only to the extent that they are effectively connected with the
  conduct of a trade or business within the United States).
    (iii)  Such section 1504 shall be read without regard to the exclusion
  provided for in section 1504(b)(4).
    (7) For purposes of this subparagraph, in  the  case  of  a  corporate
  consolidation,  references  to  the  taxable year in which the corporate
  consolidation occurs shall be deemed  to  be  references  to  the  first
  taxable year of the consolidated corporation.
    * NB Repealed for taxable years beginning on or after January 1, 1997
    19.  The  term  "fulfillment services" shall mean any of the following
  services performed  by  an  entity  on  its  premises  on  behalf  of  a
  purchaser:
    (a)  the  acceptance  of  orders electronically or by mail, telephone,
  telefax or internet;
    (b) responses to consumer correspondence or  inquiries  electronically
  or by mail, telephone, telefax or internet;
    (c) billing and collection activities; or
    (d)  the  shipment of orders from an inventory of products offered for
  sale by the purchaser.