Sec. 3-9.4. Corporate stockholders of tax exempt DISC

Tax Law, §§ 208(9)(i) and 210(3)(a)

(a) Any taxpayer subject to tax under article 9-A which is a stockholder of a tax exempt DISC must file its own report and a consolidated report with the DISC. The stockholder taxpayer (hereinafter referred to in this Subpart as “stockholder”) is required to report in its consolidated report its attributable share (based on percentage of stock ownership) of the receipts, expenses, assets and liabilities of the DISC as well as the property, receipts, and wages of the DISC eligible for use in the computation of the business allocation percentage. These items must be adjusted as described in subdivision (b) of this section.

(b) A stockholder of a tax exempt DISC must do the following:

(1) adjust its receipts, expenses, assets and liabilities to include its attributable share of the DISC's receipts, expenses, assets and liabilities;

(2) eliminate any deemed or actual distributions received from the DISC to the extent already included in entire net income;

(3) eliminate intercorporate transactions between the stockholder and the tax exempt DISC.

(c) The consolidated report must be filed for the accounting period of the stockholder. If the accounting period of the DISC does not coincide with that of the stockholder, activities of the DISC for its entire accounting period ending during the stockholder's accounting period must be included in the consolidated report.

Example:

Assume a stockholder reports on a calendar year basis and its tax exempt DISC on the basis of a June 30th fiscal year. The stockholder must include in its report for the calendar year 1973 its attributable share of the receipts, expenses, assets and liabilities shown on the DISC's report for the period ending June 30, 1973.

(d) On a consolidated report, each stockholder must submit the separate amounts on which the tax is computed. The adjusted receipts, expenses, asset and liability amounts as computed in subdivision (b) of this section are used in determining the stockholder's tax base and business allocation percentage.