Sec. 19-2.2. Computation of entire net income allocation percentage

Tax Law, § 1454

(a) The taxpayer's entire net income allocation percentage is computed by (1) adding the taxpayer's payroll factor, receipts factor, deposits factor, an additional factor equal to the receipts factor and an additional factor equal to the deposits factor, and (2) dividing the total by five. If the payroll factor is missing, the receipts factor, deposits factor, an additional factor equal to the receipts factor and an additional factor equal to the deposits factor are added together and the sum is divided by four. If the receipts factor is missing, the remaining three factors are added together and the sum is divided by three. If the deposits factor is missing, the remaining three factors are added together and the sum is divided by three. If all but one factor are missing, that factor is the entire net income allocation percentage. A factor is missing if both its numerator and denominator are zero, but it is not missing merely because its numerator is zero.

(b) The taxpayer's payroll factor, receipts factor and deposits factor are expressed as percentages and are determined as follows:

(1) The payroll factor is computed by dividing 80 percent of the wages, salaries and other personal service compensation of the taxpayer's employees, except general executive officers, within New York State by the total wages, salaries and other personal service compensation of the taxpayer's employees, except general executive officers, within and without New York State. (See Subpart 19-5 of this Part.)

(2) The receipts factor is computed by dividing the amount of receipts of the taxpayer from loans, financing leases and all other business receipts earned within New York State by the total amount of receipts of the taxpayer from loans, financing leases and all other business receipts earned within and without New York State. (See Subpart 19-6 of this Part.)

(3) The deposits factor is computed by dividing the average value of deposits maintained at branches of the taxpayer within New York State by the average value of deposits maintained at branches of the taxpayer within and without New York State. (See Subpart 19-7 of this Part.)

(c) The receipts factor includes only receipts which are included in the computation of alternative entire net income (as defined in section 18-4.1[b] of this Title) for the taxable year. The payroll factor includes only the wages, salaries and other personal service compensation of the taxpayer's employees, except general executive officers, the expenses of which are included in the computation of alternative entire net income for the taxable year. The deposits factor includes only deposits the expenses of which are included in the computation of alternative entire net income for the taxable year. Where the taxpayer includes in its Federal income tax return interbranch transactions between the taxpayer's places of business, such interbranch receipts, payroll and deposits are not included in either the numerators or denominators of the factors in computing the entire net income allocation percentage. For taxpayers that have an IBF, see section 19-2.3 of this Subpart for special allocation rules.

(d) If it appears that the entire net income allocation percentage, computed on the basis of all or any of the payroll, receipts or deposits factors, does not properly reflect the activity, business or income of the taxpayer in New York State, the Tax Commission may adjust the entire net income allocation percentage as set forth in section 19-8.4 of this Part.

(e) For computation of the entire net income allocation percentage when a taxpayer is subject to tax for a period less than its taxable period for Federal income tax purposes, see section 19-8.1 of this Part -Allocation of entire net income for a short period.