Sec. 18-3.11. Floor amount

Tax Law, § 1453(f)(6)

(a) The floor amount is computed by multiplying the amount remaining, after reducing eligible net income (see section 18-3.3[a] of this Subpart) by the ineligible funding amount (see section 18-3.10[a] of this Subpart) by a fraction not greater than one. The fraction is determined as follows:

(1) The numerator is the amount determined in subparagraph (i) of this paragraph multiplied by the applicable percentage stated in subparagraph (ii) minus the amount determined in subparagraph (iii).

(i) Determine the average aggregate amount of loans and deposits, as described in subdivision (b) of this section, which were properly recorded in the financial accounts of the taxpayer's branches, agencies and offices within New York State for taxable years beginning in 1975, 1976 and 1977. Loans and deposits related to net income reassigned to New York State by the New York State Tax Commission are not includible for purposes of this subparagraph. The average aggregate amount of such loans and deposits may be determined by reference to the monthly or quarterly reports of the taxpayer to the Federal Reserve Bank of New York, as appropriately modified.

(ii) The average aggregate amount determined in subparagraph (i) of this paragraph is multiplied by the following percentages:

(a) 100 percent for the first taxable year the taxpayer established the IBF, and for the next succeeding four taxable years;

(b) 80 percent for the sixth taxable year;

(c) 60 percent for the seventh taxable year;

(d) 40 percent for the eighth taxable year;

(e) 20 percent for the ninth taxable year; and

(f) zero percent for the 10th taxable year and thereafter.

(iii) The product obtained in subparagraph (ii) of this paragraph is reduced by the average aggregate amount of loans and deposits as described in subdivision (b) of this section which were properly recorded in the financial accounts of the taxpayer's branches, agencies and offices within New York State (other than the IBF) for the current taxable year. If the amount determined in this subparagraph is greater than the amount determined in subparagraph (ii) of this paragraph, the numerator is zero.

(2) The denominator is the average aggregate amount of loans and deposits as described in subdivision (b) of this section which were properly recorded in the financial accounts of the IBF for the taxable year.

(b) For purposes of this section, the average aggregate amount of the loans described in paragraph (1) of this subdivision and the average aggregate amount of deposits described in paragraph (2) must be computed on a quarterly basis or, at the option of the taxpayer, on a more frequent basis such as monthly, weekly or daily. When the taxpayer's usual accounting practice does not permit a quarterly or more frequent computation of the average aggregate of such loans and such deposits, a semiannual or annual computation may be allowed when it appears that no distortion of the average aggregate of such loans and such deposits will result. If, because of variations in the amount or value of such loans and such deposits, it appears to the Tax Commission that averaging on an annual, semiannual or quarterly basis does not properly reflect the average aggregate of such loans and such deposits, the Tax Commission may require averaging on a more frequent basis. Any method of determining the average aggregate of such loans and such deposits may not be changed on any subsequent return without the written consent of the Tax Commission.

(1) Loans means loans to foreign persons. The term foreign person is defined in subdivision (g) of section 18-3.2 of this Subpart.

(2) Deposits means deposits with foreign persons which are:

(i) banks;

(ii) foreign branches of a bank, including foreign branches of the taxpayer; or

(iii) foreign banks which are subsidiaries of a bank, including foreign banks which are subsidiaries of the taxpayer.

(c) For purposes of this section, loans and deposits that were recorded in the financial accounts for a taxable year include those loans which were issued during such taxable year and those deposits which were made or placed during such taxable year and any other loan or deposit in the financial accounts for such taxable year. If the IBF purchases or acquires loans or deposits that were recorded in the financial accounts within New York State of a related corporation for taxable years 1975, 1976 and 1977, such loans and deposits are deemed to be recorded in the financial accounts of the taxpayer's branches, agencies and offices within New York State for taxable years beginning in 1975, 1976 and 1977, and must be included in the numerator when computing the floor amount. A corporation is related to another corporation when such corporation owns or controls, either directly or indirectly, more than 50 percent of the capital stock of the other corporation, or more than 50 percent of the capital stock of such corporation is owned or controlled, either directly or indirectly, by the other corporation, or more than 50 percent of the capital stock of both corporations is owned or controlled, either directly or indirectly, by the same interests. A taxpayer which, pursuant to section 1462(f) of the Tax Law, made a consolidated return with corporations affiliated with it for any of the taxable years 1975, 1976 and 1977, or makes a combined return for the taxable year, shall compute the floor amount as if it had filed separate returns for the taxable years 1975, 1976 and 1977 and as if it were filing a separate return for the taxable year.