Sec. 3-2.2. Definition of entire net income

Tax Law, § 208(9)

(a) Entire net income means total net income from all sources. It is presumed to be the same as the taxable income (but not alternative minimum 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 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 which the taxpayer, in the case of a corporation which is exempt from Federal income tax (other than the tax on unrelated business taxable income imposed under section 511 of the Internal Revenue Code) but which is subject to tax under article 9-A of the Tax Law, would have been required to report to the United States Treasury Department but for such exemption. Federal taxable income is subject to the adjustments, deductions and modifications provided in this Subpart. However, the income actually reported or the income actually determined for Federal income tax purposes is not necessarily the same as the taxable income which was required to be reported for Federal income tax purposes under the provisions of the Internal Revenue Code. Generally, the determination of the Commissioner of Internal Revenue as to Federal taxable income is followed, but it is not binding on the Commissioner.

(b) Federal taxable income is the starting point in computing entire net income. Generally, Federal taxable income means taxable income as defined in section 63 of the Internal Revenue Code. After determining Federal taxable income, it must be adjusted as required by sections 53-2.3, 3-2.4, 3-2.5 and 3-2.6 of this Subpart. See Subparts 3-11 and 3-12 of this Part for treatment of qualified real estate investment trusts and regulated investment companies.

(c) Each corporation included in a Federal consolidated group must compute its Federal taxable income for purposes of article 9-A of the Tax Law as if such corporation had computed its Federal taxable income on a separate basis for Federal income tax purposes. Provided, however, in the case of a member of a selling consolidated group, as defined in section 338(h)(10) of the Internal Revenue Code, with respect to which an election under such section 338(h)(10) has been made, Federal taxable income shall not include any gain or loss on the sale or exchange of stock of a target corporation which is not recognized by virtue of such election, but only if such member files on a combined report with such target corporation for the period including the acquisition date, as such term is defined in section 338(h)(2) of the Internal Revenue Code.

(d) 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 is not allowed in computing entire net income.