Sec. 3-2.8. Taxable year in which income or deduction is included in entire net income

Tax Law, § 208(9)(d)

In general, the method of accounting used in computing taxable income for Federal income tax purposes is used in computing entire net income. However, whenever the Commissioner deems it necessary in order properly to reflect the entire net income of the taxpayer, the Commissioner may determine the taxable year or period in which any item of income or deduction shall be included, without regard to the method of accounting used by the taxpayer for Federal income tax purposes.

Example 1:

A taxpayer has a contract for the construction of a building or the installation of equipment in a building covering a period in excess of one taxable year. The taxpayer keeps its books so as to reflect the total income derived from the contract in the taxable year in which the contract is finally completed, and reports its Federal taxable income accordingly. The Commissioner may require the taxpayer to report the income from the contract on the basis of the percentage of completion in each taxable year, or some other appropriate basis.

Example 2:

A foreign corporation sells its New York State real estate on an installment basis, and terminates its taxable status in New York State in the year of the sale. The full profit on the sale must be included in entire net income in the year of the sale.

Example 3:

A foreign corporation sells its New York State real estate on an installment basis, and terminates its taxable status in New York State in a subsequent taxable year prior to the receipt of all of its installment payments. The full profit or the remaining profit on the sale must be included in entire net income in the year it terminates its taxable status in New York State.