Sec. 18-3.5. Direct expenses of the IBF

Tax Law, § 1453(f)(3)

(a) Expenses or other deductions which can be specifically identified with the gross income, gains, losses, deductions, assets, liabilities or other activities of the IBF are direct expenses, regardless of where such expenses or other deductions are recorded. Direct expenses may include such items as interest, bad debts, rents, depreciation, taxes, insurance, supplies, compensation of officers, salaries, wages, travel expenses, pension plans, charitable contributions, training, servicing, etc.

(b) Employee expenses incurred at places other than the IBF are allocated to the IBF when the employee is regularly connected with the IBF, regardless of where the services of such employee were actually performed.

(c) If the IBF incurs an expense which can be specifically identified with one or more places of business of the taxpayer, such expense must be directly allocated to such place or places of business.

(d) Head office expenses that can be specifically identified with the gross income, gains, losses, deductions, assets, liabilities or other activities of the IBF are directly allocated to the IBF.

(e) If a portion of an expense can be specifically identified with the IBF, that portion of the expense must be directly allocated to the IBF. The portion of such expense that cannot be directly allocated to one or more places of business of the taxpayer must be indirectly allocated to the IBF pursuant to section 18-3.8 of this Subpart.