Sec. 3-2.4. Adjustments: items to be deducted from Federal taxable income

Tax Law, §§ 208(9)(a), 211(3)

(a) In computing entire net income, Federal taxable income is adjusted by subtracting from it:

(1) all dividends, interest, and gains from subsidiary capital (but not any other income from subsidiaries) which do not include the amount of a recovery in respect of any war loss, except that dividends and gains from a DISC or a former DISC which are treated as business income pursuant to section 3-9.5 of this Part, which were taken into account in computing Federal taxable income are not subtracted;

(2) 50 percent of the dividends from corporations on shares of stock which conform to the requirements of section 246(c) of the Internal Revenue Code and which were included in computing Federal taxable income, other than:

(i) from subsidiaries;

(ii) amounts treated as business income pursuant to section 3-9.5 of this Part from DISCs or former DISCs;

(iii) amounts described in section 3-2.6(b)(1) and (c) of this Subpart; and

(iv) dividends from stock described in section 3-6.3(e) and (f) of this Part;

(3) all amounts received for the operation of school buses from school districts and from nonprofit corporations and associations, organized and operated exclusively for religious, charitable, or educational purposes, less any deductions allowed in computing Federal taxable income which are directly or indirectly attributable to such receipts;

(4) any refund or credit of:

(i) a tax imposed under article 9-A or article 32 of the Tax Law for which tax no exclusion or deduction was allowed in determining the taxpayer's entire net income under such article 9-A or article 32 for any prior year;

(ii) a tax imposed under sections 183, 183-a, 184 or 184-a of the Tax Law; or

(iii) general corporation tax allowed by section 11-604(11) of the Administrative Code of the City of New York;

(5) a net operating loss deduction (see section 3-8.2 of this Part — Amount of net operating loss deduction allowed);

(6) any amount treated as dividends pursuant to section 78 of the Internal Revenue Code and not otherwise deductible under paragraphs (1) and (2) of this subdivision;

(7) the portion of wages and salaries paid or incurred for the taxable year for which a deduction is not allowed pursuant to section 280C of the Internal Revenue Code;

(8) in the case of a taxpayer who is doing an insurance business as a member of the New York Insurance Exchange created under section 425-a of the Insurance Law:

(i) any item of income or gain of such business which such taxpayer is required to take into account separately for Federal income tax purposes; and

(ii) such taxpayer's distributive or pro rata share of the income or gain of such business for Federal income tax purposes;

(9) for taxable years beginning after December 31, 1981, except with respect to property which is a qualified mass commuting vehicle described in section 168(f)(8) of the Internal Revenue Code 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 was placed in service before taxable years beginning in 1989, any amount which is included in the taxpayer's Federal taxable income solely as a result of an election made pursuant to such section 168(f)(8) as it was in effect for safe harbor lease agreements entered into prior to January 1, 1984;

(10) for taxable years beginning after December 31, 1981, except with respect to property which is a qualified mass commuting vehicle described in section 168(f)(8) of the Internal Revenue Code 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 was placed in service before taxable years beginning in 1989, any amount which the taxpayer could have excluded from Federal taxable income had it not made the election provided for in such section 168(f)(8) as it was in effect for safe harbor lease agreements entered into prior to January 1, 1984;

(11) for taxable years beginning after December 31, 1981, with respect to property for which the accelerated cost recovery system deduction is determined pursuant to section 168 of the Internal Revenue Code, the amount allowable as the depreciation deduction pursuant to section 167 of the Internal Revenue Code as such section would have applied to property placed in service on December 31, 1980, except:

(i) property subject to section 280F of the Internal Revenue Code (regarding luxury automobiles and certain property used for personal purposes);

(ii) property placed in service in New York State in taxable years beginning after December 31, 1984;

(iii) property to which the adjustment required by section 3-2.3(a)(15) of this Subpart applies; or

(iv) 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 was placed in service before taxable years beginning in 1989;

(12) upon the disposition of property to which paragraph (11) of this subdivision applies, the amount, if any, by which the aggregate of the accelerated cost recovery system deductions attributable to such property, described in section 3-2.3(a)(17) of this Subpart, exceeds the aggregate of the deductions for depreciation attributable to such property deducted in computing entire net income pursuant to paragraph (11) of this subdivision; and

(13) any income which has been included in the computation of the taxes imposed under former sections 182(2) or 209(1-a) of the Tax Law (relating to real estate corporations).

(b) For purposes of computing entire net income, receipts for the operation of school buses means receipts for the transportation of pupils, teachers, and other persons acting in a supervisory capacity, to and from school or school activities in omnibuses subject to the requirements of subdivision 20 of section 375 of the Vehicle and Traffic Law. Deductions attributable to school bus receipts may be determined from the corporate books, if, in the opinion of the Commissioner, the books properly disclose the deductions attributable to school bus receipts. Otherwise, the deductions attributable to school bus receipts may be determined by applying to total allowable deductions the percentage which school bus receipts bear to total receipts from transportation by omnibus, or by any other method approved by the Commissioner. If an activity is sponsored by a private nonprofit or public school, a school district or a board of education, for the benefit of its pupils and is supervised by school officials or persons acting for such school officials, it is a school activity regardless of the time of year such activity is conducted. Activities conducted by a charitable, religious or educational organization other than school activities or extra-curricular activities for its pupils do not qualify as school activities. Receipts from transportation to child care centers or camps are not allowed to be deducted.

Example 1:

A school participates in a preseason or unscheduled football game prior to the commencement of the school year as part of the team's training program. This qualifies as a school activity. Also, a trip taken during a holiday recess by students as part of a regular school-sponsored extra-curricular activity, such as a visit to a museum by an art club qualifies as a school activity.

Example 2:

A picnic or field trip for all children as a church group is held. It is not limited to the students of the group's school. This does not qualify as a school activity.