Sec. 3-12.1. Treatment of regulated investment companies

Tax Law, § 209(7)

(a) For any taxable year beginning on or after January 1, 1980, a corporation which is a regulated investment company as defined in section 851 of the Internal Revenue Code and subject to Federal income tax under section 852 of the Internal Revenue Code will be treated as a regulated investment company for purposes of article 9-A of the Tax Law. For purposes of article 9-A, a regulated investment company is subject to tax computed on its entire net income (see subdivision [b] of this section) or the minimum tax, whichever is greater.

(b) In the case of a regulated investment company as described in subdivision (a) of this section, the term entire net income means investment company taxable income as defined in section 852(b)(2) (as modified by section 855) of the Internal Revenue Code plus any amount taxable under section 852(b)(3) of the Internal Revenue Code. The amount computed under the preceding sentence is subject to the adjustments required by sections 3-2.3 and 3-2.4 of this Part, but a deduction for 50 percent of dividends other than from subsidiaries and a net operating loss deduction are not allowed. The regulated investment company's entire net income must be modified as required by section 4-8.6 of this Title relating to optional deductions for depreciation.

(c) For information relating to the inclusion of a regulated investment company in a combined report, see section 211.4 of the Tax Law.

(d) In the event a regulated investment company pays dividends after the close of a taxable year and such dividends were declared before the date its report for such year must be filed (including extensions), it may treat the dividends as having been paid during the taxable year.

(e) For any taxable year during which a regulated investment company does not qualify for taxation under section 852 of the Internal Revenue Code, it will be treated in the same manner as any other taxpayer subject to tax under article 9-A of the Tax Law.

(f) For rules relating to corporate partners, see Subpart 3-13 of this Part—Corporate Partners.