A technical memorandum issued by the New York State Department of Taxation and Finance outlines the identification requirements for Article 9-A taxpayers with investment capital.
Under New York’s recent corporate tax reform (effective for tax years beginning on or after 1 January 2015) net investment income from qualifying investment capital is excluded from a taxpayer’s business income.
Similarly, investment capital (net of liabilities attributable to such investment capital) is excluded from a taxpayer’s business capital tax base. “Investment capital” means those investments in stock of non-unitary corporations that satisfy a five-part test:
To qualify, investments in non-unitary stock must:
The technical memorandum TSB-M-15(4)C, (5)I [PDF 639 KB] sets forth the procedures required to satisfy the identification requirement for investment capital.
Read a July 2015 report [PDF 48 KB] prepared by KPMG LLP.
Corporations and partnerships that hold stock for investment need to consider the identification requirements and begin to implement procedures to comply with the requirements outlined in the memorandum. In most cases, stock or options currently held that may qualify as investment capital must be identified as such before October 1, 2015. Taxpayers also need to consider procedures that allow for proper identification of stock acquired on or after October 1, 2015, as investment capital before the close of the day on which such stock was acquired.
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