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.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.