Sec. 2-3.1. Cessation period

Tax Law, § 209(1)

(a) The franchise tax is imposed for all or any part of each taxable year during which a taxpayer exercises its corporate franchise, or does business, or employs capital, or owns or leases property in a corporate or organized capacity or maintains an office in New York State. Accordingly, every taxpayer is required to pay a tax measured by entire net income (or other applicable basis) up to the date on which it ceases to possess a franchise if a domestic corporation, or ceases to do business, employ capital, own or lease property in a corporate or organized capacity or maintain an office in New York State if a foreign corporation.

(b) A domestic corporation may cease to possess a franchise as a result of its dissolution, merger or consolidation into another corporation, or the revocation or annulment of its charter.

(c) A taxpayer may cease to be subject to tax under article 9-A of the Tax Law because of a change in the nature of its activities or a change in classification. In such event, the taxpayer must pay a tax measured by entire net income (or other applicable basis) up to the date of such change. In some cases, a corporation may then become subject to tax under some other article of the Tax Law. (See section 1-3.5 of this Title—Change of classification.)

(d) A corporation which is a member of a group taxed on the basis of a combined report, and which ceases to be subject to tax under article 9-A, may, in the discretion of the Commissioner of Taxation and Finance, be permitted to be included in the next combined report of the group. Application for permission to report in such manner must be mailed to the Commissioner of Taxation and Finance. The corporation which ceases to be subject to tax under article 9-A must, at the time of such application, pay a tax of no less than the fixed dollar minimum described in section 3-5.2 of this Title.