19 RCNY § 3-01 Imposition of Tax.
§ 3-01 Imposition of Tax.
(a) Introduction.
(1) Nature of tax. (Administrative Code, § 11-639(a); § 11-646(f)) Part 4 of Subchapter 3 of Chapter 6 of Title 11 of the Administrative Code of the City of New York (referred to hereinafter in these regulations as the "banking corporation tax law") imposes a tax on every banking corporation, as defined in 19 RCNY § 3-01(b), for the privilege of doing business in New York City in a corporate or organized capacity for all or any part of each of its fiscal or calendar years. (See: 19 RCNY § 3-01(c) – Corporations subject to tax.) Also, certain corporations, including bank holding companies, are required or in the discretion of the Commissioner of Finance may be required or permitted to make a combined return with related corporations taxable under the banking corporation tax law. (See: 19 RCNY § 3-05(b) of these regulations – Combined returns.)
(2) Amount of tax. (Administrative Code, § 11-641; § 11-643.5)
(i) The banking corporation tax law imposes a tax which is the greater of the "basic tax" or the "alternative minimum tax." The basic tax is measured by "entire net income," which is the same as the Federal taxable income which the taxpayer is required to report to the United States Treasury Department, with certain adjustments, and is imposed at the rate of nine percent on entire net income, or portion thereof allocated to New York City. (See: 19 RCNY § 3-03(b) of these regulations – Basic tax – measured by entire net income.) The alternative minimum tax is measured by the greatest of three bases and is the tax when such alternative minimum tax results in a tax greater than the basic tax. The bases for computing the alternative minimum tax are:
(A) (a) except for a corporation organized under the laws of a country other than the United States, and except as provided in subparagraph (ii) of this paragraph, 0.1 of a mill upon each dollar of taxable assets, or portion thereof allocated to New York City (See: 19 RCNY § 3-03(e) of these regulations – Alternative minimum tax measured by taxable assets); or (b) for a corporation organized under the laws of a country other than the United States, 2.6 mills upon each dollar of the taxpayer's issued capital stock or portion thereof allocated to New York City, on the last day of its taxable year (See: 19 RCNY § 3-03(f) of these regulations – Alternative minimum tax measured by issued capital stock);
(B) three percent of alternative entire net income, or portion thereof allocated to New York City. (See: 19 RCNY § 3-03(d) of these regulations – Alternative minimum tax measured by alternative entire net income.); and
(C) $125 (See: 19 RCNY § 3-03(g) of these regulations – Alternative minimum tax measured by the fixed minimum amount.)
(ii) A taxpayer which has an outstanding net worth certificate issued to the Federal Deposit Insurance Corporation or to the Federal Savings and Loan Insurance Corporation and which meets certain other requirements is not subject to the alternative minimum tax measured by taxable assets for that portion of the taxable year in which such certificate is outstanding and such requirements are met. (See: 19 RCNY § 3-03(e)(1) of these regulations – Computation of the alternative minimum tax measured by taxable assets.)
(b) Definitions.
General. Generally, any term used in these regulations, unless defined specifically herein or a different meaning is clearly required, shall have the same meaning as when used in a comparable context in:
(i) the laws of the United States relating to Federal income taxes and the Federal income tax regulations promulgated thereunder, or
(ii) Subchapter 5 of Chapter 6 of Title 11 of the Administrative Code and the regulations promulgated thereunder. Any reference herein to the laws of the United States shall mean the provisions of the Internal Revenue Code, and amendments thereto, and other provisions of the laws of the United States relating to Federal income taxes, as the same are effective for the taxable year.
Automated teller machine.
(i) The term "automated teller machine" means an electronic device, either on-line or off-line, that is not manned, except as provided in subparagraph (ii) of this definition, and which permits one or more of the following:
(A) deposits;
(B) withdrawals;
(C) transfers of funds from one account to another;
(D) loan repayments;
(E) disbursements of funds pursuant to prearranged lines of credit; or
(F) balance inquiries.
(ii) An electronic device may be manned by employees of the bank for the following purposes:
(A) to demonstrate equipment;
(B) to provide information;
(C) to repair and service the electronic equipment; or
(D) to act as security guards.
Bank. The term "bank" means a banking corporation as defined in subparagraph (i), (ii), (iii), (iv), (v), (vi), (vii), or (ix) of 19 RCNY § 3-01(b) "Banking Corporation."
Bank holding company. (Administrative Code, § 11-646(f)(1)). The term "bank holding company" means any corporation subject to Article 3-A of the New York State Banking Law, or registered under the Federal Bank Holding Company Act of 1956, as amended, or registered as a savings and loan holding company (but excluding a diversified savings and loan holding company) under the Federal National Housing Act, as amended. For purposes of these regulations the term "bank holding company" does not include a bank.
Banking business. (Administrative Code, § 11-640(b))
(i) The term "banking business" means the business a corporation may be created to do under Article 3 (Banks and Trust Companies), Article 3-B (Subsidiary Trust Companies), Article 5 (Foreign Banking Corporations and National Banks), Article 5-A (New York Business Development Corporation), Article 6 (Savings Banks) or Article 10 (Savings and Loan Associations) of the New York State Banking Law or the business a corporation is authorized to do by such article. With respect to a national banking association, Federal savings bank, Federal savings and loan association or production credit association, the term "banking business" means the business a national banking association, Federal savings bank, Federal savings and loan association or production credit association may be created to do under the laws of the United States or the business a national banking association, Federal savings bank, Federal savings and loan association or production credit association is authorized to do by the laws of the United States or the laws of New York State.
(ii) the term "banking business" also means such business as any corporation organized under the authority of the United States or organized under the laws of any other state or country has authority to do which is substantially similar to the business which a corporation may be created to do under Article 3, 3-B, 5, 5-A, 6 or 10 of the New York State Banking Law or any business which a corporation is authorized to do by such article.
Banking Corporation. (Administrative Code, § 11-640(a) and (d))
(i) Every corporation organized under the laws of New York State which is authorized to do a banking business or a corporation organized under the laws of New York State which is doing a banking business is a banking corporation. Banking corporations organized in New York State include commercial banks, trust companies, limited purpose trust companies, subsidiary trust companies, savings banks, savings and loan associations, Agreement corporations having an agreement or undertaking with the Federal Reserve Board under § 25 of the Federal Reserve Act and the New York Business Development Corporation.
(ii) Every corporation organized under the laws of any other state which is doing a banking business is a banking corporation. Banking corporations organized in any other state include commercial banks, trust companies, savings banks, savings and loan associations and Agreement corporations having an agreement or undertaking with the Federal Reserve Board under § 25 of the Federal Reserve Act.
(iii) Every corporation organized under the laws of any other country which is doing a banking business is a banking corporation. Banking corporations organized in any other country include commercial banks and trust companies.
(iv) Every national banking association organized under the authority of the United States which is doing a banking business is a banking corporation.
(v) Every Federal savings bank which is doing a banking business is a banking corporation.
(vi) Every Federal savings and loan association which is doing a banking business is a banking corporation.
(vii) Every production credit association created under the Federal Farm Credit Act of 1933, all of whose stock held by the Federal Production Credit Corporation has been retired, which is doing a banking business is a banking corporation.
(viii) The Mortgage Facilities Corporation created by Chapter 564 of the Laws of 1956 of New York State is a banking corporation.
(ix) Every other corporation organized under the authority of the United States, including an Edge Act Corporation organized under § 25(a) of the Federal Reserve Act, which is doing a banking business is a banking corporation.
(x) (A) (a) Any corporation whose voting stock is 65 percent or more owned or controlled, directly or indirectly, by a bank holding company or by a corporation described in any of the foregoing subparagraphs of this definition is a banking corporation if the requirements set forth in this subparagraph (x)(A)(a) are met. The corporation whose voting stock is so owned or controlled must be principally engaged in a business which:
(1) might be lawfully conducted by a corporation subject to Article 3 of the New York State Banking Law or by a national banking association, or
(2) is so closely related to banking or managing or controlling banks as to be a proper incident thereto, as set forth in paragraph (8) of subsection (c) of Section (4) of the Federal Bank Holding Company Act of 1956, as amended (12 U.S.C. § 1843(c)(8)).
(b) For purposes of subparagraph (x)(A)(a) of this definition, the phrase "business which might be lawfully conducted" means the nature of business, regardless of where such business is conducted, that a corporation organized pursuant to Article 3 of the New York State Banking Law or a national banking association having its principal office in New York State may conduct:
(1) without the need for a specific grant of authorization by the appropriate regulatory authorities or
(2) with a specific grant of authorization if such corporation or association has in fact received such authorization from the appropriate regulatory authority.
(c) The test of ownership for purposes of this subparagraph (x)(A) is actual beneficial ownership rather than mere record title as shown by the stock books of the issuing corporation. A corporation may be the actual beneficial owner of voting stock of another corporation even though it has conferred the right to vote such stock on others, by means of a proxy, voting trust or otherwise. The term "control" for purposes of this subparagraph (x)(A) refers to all cases where one corporation directly or indirectly possesses the power to dictate or influence the management and policies of another corporation, whether through the ownership of the voting stock of such corporation or the ownership of the voting stock of another corporation which possesses that power. The decision as to whether or not a corporation is controlled by another corporation will be determined by the facts in each case.
Example: Corporation X owns 60 percent of the voting stock of Corporation Y. The remaining stock of Corporation Y is owned by three employees of Corporation X. These employees have agreed in writing to sell their stock to Corporation X when they leave the corporation. As part of the agreement, the employees have given Corporation X their voting proxy. Corporation X owns or controls 65 percent or more of the voting stock of Corporation Y.
(d) The provision of this subparagraph (x)(A) are illustrated in the following examples.
Example 1: A federal bank holding company doing business in New York City own 100% of the voting stock of Bank A and 60% of Bank B. The bank holding company also owns 100% of the voting stock of Corporation C. Corporation C owns 70% of the voting stock of Corporation D. Bank A owns 80% of the voting stock of Corporation E. Bank B owns 100% of the voting stock of Corporation F. Corporation E owns 70% of the voting stock of Corporation G and Corporation F owns 30% of the voting stock of Corporation G. This can be diagrammed as follows:
Both Banks A and B are commercial banks organized under the laws of New York State and subject to Article 3 of the New York State Banking Law. Corporations D, E and F are principally engaged in New York City in a business which might be lawfully conducted by Bank A or B. Corporation G is principally engaged in New Jersey in a business which might be lawfully conducted by Bank A or B. Corporation C is not principally engaged in a business which might be lawfully conducted by Bank A or B or by a national banking association or is so closely related to banking or managing or controlling banks as to be a proper incident thereto, as set forth in Section 4(c)(8) of the Federal Bank Holding Company Act of 1956. The bank holding company owns or controls, directly or indirectly:
100% of Bank A
60% of Bank B
100% of Corporation C
70% of Corporation D (100% of C x 70% of D)
80% of Corporation E (100% of A x 80% of E)
60% of Corporation F (60% of B 0 100% of F)
74% of Corporation G (100% of A x 80% of E x 70% of G) (60% of B x 100% of F x 30% of G)
Banks A and B are banking corporations because they are commercial banks organized under the laws of New York State. Corporations D, E and G are banking corporations because 65% or more of their voting stock is owned or controlled, directly or indirectly by the bank holding company and they are principally engaged in a business which might be lawfully conducted by a corporation subject to Article 3 of the New York State Banking Law. Although the bank holding company owns 100% of the voting stock of Corporation C, it is not a banking corporation because it is not principally engaged in a business which might be lawfully conducted by a corporation subject to Article 3 of the New York State Banking Law or by a national banking association or which is so closely related to banking or managing or controlling banks as to be a proper incident thereto, as set forth in Section 4(c)(8) of the Federal Bank Holding Company Act of 1956. Corporation F is a banking corporation because Bank B owns 100% of its voting stock and it is principally engaged in a business which might be lawfully conducted by a corporation subject to Article 3 of the New York State Banking Law.
Example 2: A savings and loan holding company registered under the Federal National Housing Act owns 100% of the voting stock of Corporation L, 80% of the voting stock of Corporation M and 100% of the voting stock of Savings and Loan Association N. This can be diagrammed as follows:
Corporation L is principally engaged in a business which might be lawfully conducted by a corporation subject to Article 3 of the New York State Banking Law and is therefore a banking corporation. Corporation M is principally engaged in a business which might be lawfully conducted by a savings bank but is not a business which might be lawfully conducted by a corporation subject to Article 3 of the New York State Banking Law or by a national banking association or is so closely related to banking or managing or controlling banks as to be a proper incident thereto, as set forth in Section 4(c)(8) of the Federal Bank Holding Company Act of 1956. Accordingly, Corporation M is not a banking corporation.
(B) Any corporation described in subparagraph (x)(A) of this definition which was subject to the tax imposed by Subchapter 2 of Chapter 6 of Title 11 of the Administrative Code (the general corporation tax) for its taxable year ending during 1984 may, on or before the due date for filing its return (determined with regard to extensions of time for filing) for its taxable year ending during 1985, make a one-time election to continue to be taxable under Subchapter 2. Such election shall continue to be in effect until revoked by the taxpayer. In no event shall such election or revocation be for a part of a taxable year. The election is made by the filing of a tax return pursuant to Subchapter 2 of Chapter 6 of Title 11 of the Administrative Code, and the revocation is made by the filing of a return pursuant to such Code.
(C) For purposes of this subparagraph, the phrase "principally engaged in a business" means that a corporation derives more than 50 percent of its gross receipts from such business during its taxable year for Federal income tax purposes. Gross receipts from various aspects of a corporation's business may be aggregated to determine what business the corporation is principally engaged in. For example, Corporation P derives 40 percent of its gross receipts from a business which might be lawfully conducted by a corporation subject to Article 3 of the New York State Banking Law, 40 percent of its gross receipts from a business which is so closely related to banking or managing or controlling banks as to be a proper incident thereto and 20 percent of its gross receipts from a business which may not be lawfully conducted by a corporation subject to Article 3 of the New York State Banking Law and is not so closely related to banking or managing or controlling banks as to be a proper incident thereto. Since corporation P derives more than 50 percent of its total gross receipts from a business which might be lawfully conducted by a corporation subject to Article 3 of the New York State Banking Law or is so closely related to banking or managing or controlling banks as to be a proper incident thereto, the "principally engaged in a business" requirement set forth in subparagraph (x)(A)(a) of this definition is met.
Bona fide office.
(i) A "bona fide office" is an office at which the taxpayer is carrying on its business in a regular and systematic manner and which is continuously maintained, occupied and used by one or more employees of the taxpayer. For a taxpayer to be carrying on its business in a regular and systematic manner, its business must be conducted through its own employees who are regularly in attendance at such office during normal business hours. The occasional consummation of a transaction does not constitute the carrying on of a business in a regular and systematic manner.
(ii) In determining whether the taxpayer has a bona fide office, consideration is given to such things as:
(A) the nature and location of the business;
(B) the nature of the activity engaged in at each location; and
(C) the regularity, continuity and permanency of the activity at each location.
Branch.
(i) A "branch" is a bona fide office, as defined in 19 RCNY § 3-01(b) "Bona fide office," which is used by the taxpayer on a regular and systematic basis to:
(A) approve loans (regardless of whether the approval of certain classes of loans, such as loans over a set dollar amount, requires review for final approval or final approval by another office of the taxpayer);
(B) accept loan repayments;
(C) disburse funds; and
(D) conduct one or more of the other functions of a banking business, such as: (a) paying withdrawals; (b) cashing checks, drafts and other similar items; (c) accepting deposits; (d) issuing cashier's checks, treasurer's checks, money orders or other similar items; (e) buying, selling, paying or collecting bills of exchange; (f) issuing letters of credit; (g) receiving money for transmission or transmitting the same by draft, check, cable or otherwise; or (h) exercising fiduciary powers.
(ii) The following do not constitute a branch:
(A) a loan production office;
(B) a representative office;
(C) a public accommodation office;
(D) an automated teller machine or point-of-sale terminal;
(E) a bona fide office, all of whose loans, pursuant to the taxpayer's business policies or practices, require on a regular and systematic basis review for final approval or final approval by another office or all of whose loans in fact receive on a regular and systematic basis review for final approval or final approval by another office;
(F) an office or any other facility of an agent or correspondent of the taxpayer; or
(G) any combination of the foregoing.
(iii) For purposes of this section, "approval" shall mean "final approval" and "final approval" shall have the same meaning as set forth in 19 RCNY § 3-04(f)(2)(iv)(D).
(iv) Example: In 1982, a New York City office of a German bank was established. The New York City office does not have authority to give final approval to loans over $50 million. Prior to 1985 and 1986, the New York City office was involved with loans of less than $50 million as well as loans in excess of $50 million and gave final approval to those loans of less than $50 million. In 1985, the New York City office did not give final approval to any loans since it was only involved with loans in excess of $50 million. The New York City office has accepted loan repayments, disbursed funds and conducted one or more of the other functions of a banking business since it was established. The New York City office is a branch because it has been used on a regular and systematic basis to conduct all the functions required to qualify as a branch even though it did not approve any loans in 1985.
Calendar year. The term "calendar year" means a period of 12 calendar months ending on December 31, or a period of less than 12 calendar months beginning on the date a taxpayer becomes subject to tax and ending on December 31. (See: 19 RCNY § 3-02(a)(2) – Calendar year taxpayers.)
Corporation. The term "corporation" includes associations and joint stock companies.
Doing business.
(i) The term "doing business" is used in a comprehensive sense and includes all activities which occupy the time or labor of people for profit. Every corporation organized for profit and carrying out any of the purposes of its organization is deemed to be doing business for purposes of the tax. In determining whether a corporation is doing business, it is immaterial whether its activities actually result in a profit or a loss.
(ii) Whether a corporation is doing business in New York City is determined by the facts in each case. Consideration is given to such factors as:
(A) the nature, continuity, frequency and regularity of the activities of the corporation in New York City;
(B) the purposes for which the corporation was organized;
(C) the location of its offices and other places of business;
(D) he employment in New York City of agents, officers and employees; and
(E) the location of the actual seat of management or control of the corporation.
(iii) Examples of activities of a corporation which would constitute doing business in New York City include the following:
(A) operating a branch in New York City;
(B) operating a loan production office in New York City;
(C) operating a representative office in New York City;
(D) operating a bona fide office in New York City.
(iv) A corporation will not be deemed to be doing business in New York City because of:
(A) the maintenance of cash balances with banks or trust companies in New York City;
(B) The ownership of shares of stock or securities kept in New York City in a safe deposit box, safe, vault or other receptacle rented for this purpose, or if pledged as collateral security, of if deposited in safekeeping or custody accounts with one or more banks or trust companies, or brokers who are members of a recognized securities exchange;
(C) the taking of any action by any such bank or trust company or broker, which is incidental to the rendering of safekeeping or custodian service to such corporation;
(D) the maintenance of an office in New York City by one or more officers or directors of the corporation who are not employees of the corporation if the corporation is not otherwise doing business in New York City;
(E) The keeping of books or records of a corporation in New York City, if such books or records are not kept by employees of such corporation and such corporation does not otherwise do business in New York City; or
(F) any combination of the foregoing activities.
(v) A corporation will not be deemed to be doing business in New York City if its activities in New York City are limited to such things as:
(A) the mere acquisition of one or more security interests in real or personal property located in New York City without otherwise doing business;
(B) the mere acquisition of title to property located in New York City through the foreclosure of a security interest without otherwise doing business; or
(C) the mere holding of meetings of the board of directors in New York City.
Fiscal year. The term "fiscal year" means any period not longer than 12 calendar months, or any shorter period beginning on the date the taxpayer becomes subject to tax and ending on the last day of any month other than December. (See: 19 RCNY § 3-02(a)(3) – Fiscal year taxpayers.) The term "fiscal year" also includes the 52-53 week accounting period if such period has been elected by the taxpayer. (See: 19 RCNY § 3-02(a)(4) – 52-53 week fiscal year taxpayers.)
International banking facility. (Administrative Code, § 11-638(c)) The term "international banking facility" (hereinafter referred to in these regulations as "IBF") means an international banking facility located in New York State. The term has the same meaning as is set forth in the New York State Banking Law or regulations promulgated thereunder or as is set forth in the laws of the United States or regulations of the Board of Governors of the Federal Reserve System.
Loan production office.
(i) A loan production office is an office whose activities are limited to:
(A) soliciting loans on behalf of the bank, and in connection with such solicitation (a) assembling credit information; (b) making property inspections and appraisals; (c) securing title information; and (d) preparing applications for such loans (including making recommendations with respect to action thereon);
(B) soliciting investors to purchase loans from the bank;
(C) searching for investors to contract with the bank for the servicing of such loans; and
(D) engaging in other similar agent-type activities.
(ii) An office which accepts deposits, accepts loan repayments, approves loans or disburses funds is not a loan production office.
Place of business. The term "place of business" means a bona fide office or branch of the taxpayer the income from which is required to be included in the computation of the taxpayer's alternative entire net income. For example, a banking corporation organized under the laws of Great Britain has a branch in London and a branch in New York City. None of the income or expenses of the London branch are included in the computation of the taxpayer's alternative entire net income. Therefore, the London branch is not a place of business of the taxpayer.
Point-of-sale terminal. The term "point-of-sale terminal" means an electronic device, either on-line or off-line, that is not manned by bank employees, except for the training of non-bank employees or as provided in 19 RCNY § 3-01(b) "Automated Teller Machine" (ii). A point-of-sale terminal must be located in a store at a bona fide checkout counter, cashier station, customer convenience counter or other counter at which store functions are performed, or at a sales desk of other establishments. The function of a point-of-sale terminal is to transfer funds or record transfers of funds in connection with the sale of goods or services, but it may also be used to:
(i) accept deposits;
(ii) accept loan repayments;
(iii) make cash withdrawals; and
(iv) obtain funds pursuant to prearranged lines of credit.
Public accommodation office. A public accommodation office is an office that is adjunct and within 1,000 feet from the principal office or a branch of the bank of which it is an adjunct and is established, maintained and operated for public convenience and advantage. A public accommodation office may transact business in connection with the following functions:
(i) the acceptance of deposits of money, currency, checks and similar items;
(ii) the payment of withdrawals;
(iii) the cashing of checks, drafts and other similar items;
(iv) the receipt of moneys due to the bank;
(v) the issuance of cashier's checks, treasurer's checks, money orders and other similar items; and
(vi) the disbursement of funds pursuant to an existing loan agreement or extension of credit.
Representative office. A representative office is a service-type office of the bank. The activities of a representative office are limited to:
(i) soliciting new business;
(ii) researching;
(iii) servicing head office needs; and
(iv) acting as a liaison between the principal office and its customers.
Return. (Administrative Code, § 11-671(2)(b))
(i) The term "return" means a return of tax, but does not include a declaration of estimated tax. (See: 19 RCNY § 3-05 – Returns.)
(ii) An application for extension of time to file a return is not a return.
Subsidiary. (Administrative Code, § 11-638(d))
(i) The term "subsidiary" means a corporation over 50 percent of the voting stock of which is owned by the taxpayer.
(ii) The test of ownership is actual beneficial ownership, rather than mere record title as shown by the stock books of the issuing corporation. Actual beneficial ownership of stock does not mean indirect ownership or control of a corporation through a corporate structure consisting of several tiers and/or chains of corporations. A corporation will not be considered to be a subsidiary of a taxpayer merely because more than 50 percent of the shares of its voting stock is registered in the taxpayer's name, unless the taxpayer is the actual beneficial owner of such stock. However, a corporation will not be considered a subsidiary of a taxpayer if more than 50 percent of the shares of its voting stock is not registered in the taxpayer's name, unless the taxpayer submits proof that it is the actual beneficial owner of such stock.
Example 1: Corporation A is engaged in a stock brokerage business. Corporation A holds record title in street name to 60 percent of the voting stock of corporation X, a publicly traded corporation. Corporation A holds record title to this stock on behalf of 100 corporate customers, none of which owns more than one percent of the stock of Corporation X. These 100 corporations are the actual beneficial owners of the stock of Corporation X held in street name by Corporation A. Even though Corporation A is the record title holder of more than 50 percent of the voting stock of Corporation X, Corporation X is not a subsidiary of Corporation A because Corporation A is not the actual beneficial owner of the stock.
Example 2: Corporation C is the record title holder of 100 percent of the voting stock of Corporation D. Corporation C has the right to sell or pledge such stock. Corporation C receives all dividends paid by Corporation D. Corporation C enjoys the economic benefits, and bears the risk of economic loss, from the sale of such stock. Corporation C is the actual beneficial owner of Corporation D's voting stock. Corporation D is a subsidiary of Corporation C. Corporation B is the owner of 100 percent of the voting stock of Corporation C. Corporation B is not the actual beneficial owner of Corporation D's voting stock merely by virtue of the fact that, through its ownership of the voting stock of Corporation C, Corporation B has practical control of the activities of Corporation D. Corporation D is not a subsidiary of Corporation B.
(iii) A corporation is a subsidiary for purposes of the banking corporation tax law if the taxpayer is the actual beneficial owner of more than 50 percent of the shares of such corporation's voting stock, even though the taxpayer has conferred the right to vote such stock on others, by means of a proxy, voting trust agreement or otherwise.
(iv) In any case where the record holder of shares of voting stock of a corporation is not the actual beneficial owner of the stock, or where the right to vote such stock is not possessed by the record holder or by the actual beneficial owner of the stock, a full and complete statement of all relevant facts must be submitted with the return.
(v) A corporation will be treated as a subsidiary of a taxpayer only for that part of the taxable year during which the taxpayer is the owner of more than 50 percent of the shares of stock of such corporation which, during that period, entitle the holders to vote for the election of directors or trustees.
Subsidiary capital. (Administrative Code, 11-638(e))
(i) The term "subsidiary capital" means the total of:
(A) investment of the taxpayer in shares of stock of its subsidiaries; and
(B) the amount of indebtedness owed to the taxpayer by its subsidiaries, whether or not evidenced by a written instrument, on which interest is not claimed and deducted by the subsidiary for purposes of any tax imposed by Subchapter 2 or Part 4 of Subchapter 3 of Chapter 6 of Title 11 of the Administrative Code. Subsidiary capital does not include accounts receivable acquired in the ordinary course of trade or business for services rendered or for sales of property held primarily for sale to customers.
(ii) Each item of subsidiary capital must be reduced by any liabilities of the taxpayer (parent), payable by their terms on demand or not more than one year from the date incurred, other than loans or advances outstanding for more than a year as of any date during the year covered by the return which are attributable to that item of subsidiary capital. The reduction will be made, for example, in cases where the liabilities have been incurred in connection with the acquisition or holding of stock or securities of a subsidiary, or in the making of a loan to the subsidiary.
(iii) Subsidiary capital does not include stocks, bonds or other securities of a subsidiary held by the taxpayer for sale to customers in the regular course of the taxpayer's business. Indebtedness on which any interest is deducted by the subsidiary in computing any tax imposed on the subsidiary under Subchapter 2 or Part 4 of Subchapter 3 of Chapter 6 of Title 11 of the Administrative Code may not be included in the taxpayer's subsidiary capital.
Taxable year. (Administrative Code, § 11-638(b)) The term "taxable year" means the taxpayer's taxable year for Federal income tax purposes, or the part thereof during which the taxpayer is subject to the banking corporation tax. In the case of a return made for a fractional part of a year, "taxable year" means the period for which such return is made. A taxable year must be a calendar year or fiscal year ending during the calendar year. A taxable year shall not include more than 12 months except in the case of a 52 - 53 week period. (See: 19 RCNY § 3-02(a) – Accounting periods.)
Taxpayer. (Administrative Code, § 11-638(a))
(i) The term "taxpayer" means a corporation which is subject to the tax imposed by the banking corporation tax law. This includes a bank holding company which is doing business in a corporate or organized capacity in New York City and is included in a combined return filed pursuant to 19 RCNY § 3-05(b).
(ii) The term "taxpayer" also includes a corporation subject to the banking corporation tax law which continues to do business after it has been dissolved by the filing of a certificate of dissolution, by proclamation or otherwise. A dissolved corporation, the activities of which are limited to the liquidation of its business and affairs, the disposition of its assets (other than in the regular course of business), and the distribution of the proceeds, is not taxable under Part 4 of Subchapter 3 of Chapter 6 of Title 11 of the Administrative Code. (However, a corporation in liquidation is subject to the unincorporated business tax imposed by Chapter 5 of Title 11 of the Administrative Code.)
Voting stock. The term "voting stock" means shares of stock of a corporation, issued and outstanding, that entitle the holders thereof to vote for the election of the corporation's directors or trustees. The determination of whether or not particular shares of a corporation's stock entitle the holders of such shares to vote for the election of directors or trustees of the corporation depends on the actual legal situation with respect to voting rights, as it exists from time to time.
Example: A taxpayer owns all the common stock of a corporation, which in ordinary circumstances is the only class of stock entitled to vote for the election of directors. The corporation also has outstanding an issue of preferred stock the holders of which, in certain circumstances, are entitled to vote for the election of directors either together with or exclusive of the holders of the common stock. The preferred stock will be treated as voting stock if, and so long as, its holders are entitled to vote. The common stock will not be treated as voting stock if, and so long as, its holders are not entitled to vote.
(c) Corporations subject to tax.
(1) Corporations organized in New York State. (Administrative Code, § 11-639; § 11-640) The tax is imposed on every banking corporation organized under the laws of New York State for the privilege of doing business in a corporate or organized capacity in New York City.
(2) Corporations organized in other states or countries. (Administrative Code, § 11-639; § 11-640) The tax is imposed on every banking corporation organized under the laws of any other state or country for the privilege of doing business in a corporate or organized capacity in New York City.
(3) Corporations organized under the laws of the United States. (Administrative Code, § 11-639; § 11-640) The tax is imposed on every banking corporation organized under the laws of the United States for the privilege of doing business in a corporate or organized capacity in New York City.
(4) Taxability of bank holding companies. (Administrative Code, § 11-639; § 11-646(f)) The tax is imposed on every bank holding company organized under the laws of New York State which is included in a combined return pursuant to 19 RCNY § 3-05(b) for the privilege of doing business in a corporate or organized capacity in New York City. The tax is imposed on every other bank holding company which is included in a combined return pursuant to 19 RCNY § 3-05(b) for the privilege of doing business in a corporate or organized capacity in New York City.
(5) Change in classification. (Administrative Code, § 11-639; § 11-640(d))
(i) A corporation subject to the banking corporation tax under Part 4 of Subchapter 3 of Chapter 6 of Title 11 of the Administrative Code may, by reason of a change in the nature of its activities or a change in the ownership or control of its voting stock, cease to be subject to such tax and become taxable under another part of Chapter 6 of Title 11 or another chapter of Title 11. Conversely, a corporation subject to tax under another part of Chapter 6 of Title 11 or another chapter of Title 11 may, for the same reason, cease to be taxable thereunder and become subject to the banking corporation tax. The date on which any such change of classification becomes effective will be determined by the facts of each case.
(ii) A corporation which becomes subject to the banking corporation tax during one of its fiscal or calendar years by reason of a change in classification is treated in the same manner as a corporation which became subject to tax in New York City during such year. (See: 19 RCNY § 3-01(a)(1) – Nature of tax; and 19 RCNY § 3-01(c) – Corporations subject to tax.)
(iii) A corporation which ceases to be subject to the banking corporation tax during one of its fiscal or calendar years by reason of a change of classification is treated, insofar as that tax is concerned, in the same manner as a corporation which is dissolved or cease to be taxable in New York City during such year. (See: 19 RCNY § 3-02(c) of these regulations – Cessation periods.)
(iv) A bank holding company which does not make a combined return pursuant to 19 RCNY § 3-05(b) of these regulations is not subject to the banking corporation tax. That bank holding company may be subject to the general corporation tax pursuant to Subchapter 2 of Chapter 6 of Title 11 of the Administrative Code if the requirements set forth in that subchapter for the imposition of tax are met.
(v) A corporation which has made the election described in 19 RCNY § 3-01(b)(5)(x)(C) "Banking corporation" to be taxable under the general corporation tax law may become subject to the banking corporation tax upon the revocation of such election by the corporation. Such revocation must be for the entire taxable year.
(6) Banking corporations exempt from tax. (Administrative Code, § 11-640(c)) Any trust company all of whose capital stock is owned by 20 or more savings banks organized under New York State law is exempt from the banking corporation tax.
Both Banks A and B are commercial banks organized under the laws of New York State and subject to Article 3 of the New York State Banking Law. Corporations D, E and F are principally engaged in New York City in a business which might be lawfully conducted by Bank A or B. Corporation G is principally engaged in New Jersey in a business which might be lawfully conducted by Bank A or B. Corporation C is not principally engaged in a business which might be lawfully conducted by Bank A or B or by a national banking association or is so closely related to banking or managing or controlling banks as to be a proper incident thereto, as set forth in Section 4(c)(8) of the Federal Bank Holding Company Act of 1956. The bank holding company owns or controls, directly or indirectly:
100% of Bank A
60% of Bank B
100% of Corporation C
70% of Corporation D (100% of C x 70% of D)
80% of Corporation E (100% of A x 80% of E)
60% of Corporation F (60% of B 0 100% of F)
74% of Corporation G (100% of A x 80% of E x 70% of G) (60% of B x 100% of F x 30% of G)
Banks A and B are banking corporations because they are commercial banks organized under the laws of New York State. Corporations D, E and G are banking corporations because 65% or more of their voting stock is owned or controlled, directly or indirectly by the bank holding company and they are principally engaged in a business which might be lawfully conducted by a corporation subject to Article 3 of the New York State Banking Law. Although the bank holding company owns 100% of the voting stock of Corporation C, it is not a banking corporation because it is not principally engaged in a business which might be lawfully conducted by a corporation subject to Article 3 of the New York State Banking Law or by a national banking association or which is so closely related to banking or managing or controlling banks as to be a proper incident thereto, as set forth in Section 4(c)(8) of the Federal Bank Holding Company Act of 1956. Corporation F is a banking corporation because Bank B owns 100% of its voting stock and it is principally engaged in a business which might be lawfully conducted by a corporation subject to Article 3 of the New York State Banking Law.
Example 2: A savings and loan holding company registered under the Federal National Housing Act owns 100% of the voting stock of Corporation L, 80% of the voting stock of Corporation M and 100% of the voting stock of Savings and Loan Association N. This can be diagrammed as follows:
Corporation L is principally engaged in a business which might be lawfully conducted by a corporation subject to Article 3 of the New York State Banking Law and is therefore a banking corporation. Corporation M is principally engaged in a business which might be lawfully conducted by a savings bank but is not a business which might be lawfully conducted by a corporation subject to Article 3 of the New York State Banking Law or by a national banking association or is so closely related to banking or managing or controlling banks as to be a proper incident thereto, as set forth in Section 4(c)(8) of the Federal Bank Holding Company Act of 1956. Accordingly, Corporation M is not a banking corporation.
(B) Any corporation described in subparagraph (x)(A) of this definition which was subject to the tax imposed by Subchapter 2 of Chapter 6 of Title 11 of the Administrative Code (the general corporation tax) for its taxable year ending during 1984 may, on or before the due date for filing its return (determined with regard to extensions of time for filing) for its taxable year ending during 1985, make a one-time election to continue to be taxable under Subchapter 2. Such election shall continue to be in effect until revoked by the taxpayer. In no event shall such election or revocation be for a part of a taxable year. The election is made by the filing of a tax return pursuant to Subchapter 2 of Chapter 6 of Title 11 of the Administrative Code, and the revocation is made by the filing of a return pursuant to such Code.
(C) For purposes of this subparagraph, the phrase "principally engaged in a business" means that a corporation derives more than 50 percent of its gross receipts from such business during its taxable year for Federal income tax purposes. Gross receipts from various aspects of a corporation's business may be aggregated to determine what business the corporation is principally engaged in. For example, Corporation P derives 40 percent of its gross receipts from a business which might be lawfully conducted by a corporation subject to Article 3 of the New York State Banking Law, 40 percent of its gross receipts from a business which is so closely related to banking or managing or controlling banks as to be a proper incident thereto and 20 percent of its gross receipts from a business which may not be lawfully conducted by a corporation subject to Article 3 of the New York State Banking Law and is not so closely related to banking or managing or controlling banks as to be a proper incident thereto. Since corporation P derives more than 50 percent of its total gross receipts from a business which might be lawfully conducted by a corporation subject to Article 3 of the New York State Banking Law or is so closely related to banking or managing or controlling banks as to be a proper incident thereto, the "principally engaged in a business" requirement set forth in subparagraph (x)(A)(a) of this definition is met.
Bona fide office.
(i) A "bona fide office" is an office at which the taxpayer is carrying on its business in a regular and systematic manner and which is continuously maintained, occupied and used by one or more employees of the taxpayer. For a taxpayer to be carrying on its business in a regular and systematic manner, its business must be conducted through its own employees who are regularly in attendance at such office during normal business hours. The occasional consummation of a transaction does not constitute the carrying on of a business in a regular and systematic manner.
(ii) In determining whether the taxpayer has a bona fide office, consideration is given to such things as:
(A) the nature and location of the business;
(B) the nature of the activity engaged in at each location; and
(C) the regularity, continuity and permanency of the activity at each location.
Branch.
(i) A "branch" is a bona fide office, as defined in 19 RCNY § 3-01(b) "Bona fide office," which is used by the taxpayer on a regular and systematic basis to:
(A) approve loans (regardless of whether the approval of certain classes of loans, such as loans over a set dollar amount, requires review for final approval or final approval by another office of the taxpayer);
(B) accept loan repayments;
(C) disburse funds; and
(D) conduct one or more of the other functions of a banking business, such as: (a) paying withdrawals; (b) cashing checks, drafts and other similar items; (c) accepting deposits; (d) issuing cashier's checks, treasurer's checks, money orders or other similar items; (e) buying, selling, paying or collecting bills of exchange; (f) issuing letters of credit; (g) receiving money for transmission or transmitting the same by draft, check, cable or otherwise; or (h) exercising fiduciary powers.
(ii) The following do not constitute a branch:
(A) a loan production office;
(B) a representative office;
(C) a public accommodation office;
(D) an automated teller machine or point-of-sale terminal;
(E) a bona fide office, all of whose loans, pursuant to the taxpayer's business policies or practices, require on a regular and systematic basis review for final approval or final approval by another office or all of whose loans in fact receive on a regular and systematic basis review for final approval or final approval by another office;
(F) an office or any other facility of an agent or correspondent of the taxpayer; or
(G) any combination of the foregoing.
(iii) For purposes of this section, "approval" shall mean "final approval" and "final approval" shall have the same meaning as set forth in 19 RCNY § 3-04(f)(2)(iv)(D).
(iv) Example: In 1982, a New York City office of a German bank was established. The New York City office does not have authority to give final approval to loans over $50 million. Prior to 1985 and 1986, the New York City office was involved with loans of less than $50 million as well as loans in excess of $50 million and gave final approval to those loans of less than $50 million. In 1985, the New York City office did not give final approval to any loans since it was only involved with loans in excess of $50 million. The New York City office has accepted loan repayments, disbursed funds and conducted one or more of the other functions of a banking business since it was established. The New York City office is a branch because it has been used on a regular and systematic basis to conduct all the functions required to qualify as a branch even though it did not approve any loans in 1985.
Calendar year. The term "calendar year" means a period of 12 calendar months ending on December 31, or a period of less than 12 calendar months beginning on the date a taxpayer becomes subject to tax and ending on December 31. (See: 19 RCNY § 3-02(a)(2) – Calendar year taxpayers.)
Corporation. The term "corporation" includes associations and joint stock companies.
Doing business.
(i) The term "doing business" is used in a comprehensive sense and includes all activities which occupy the time or labor of people for profit. Every corporation organized for profit and carrying out any of the purposes of its organization is deemed to be doing business for purposes of the tax. In determining whether a corporation is doing business, it is immaterial whether its activities actually result in a profit or a loss.
(ii) Whether a corporation is doing business in New York City is determined by the facts in each case. Consideration is given to such factors as:
(A) the nature, continuity, frequency and regularity of the activities of the corporation in New York City;
(B) the purposes for which the corporation was organized;
(C) the location of its offices and other places of business;
(D) he employment in New York City of agents, officers and employees; and
(E) the location of the actual seat of management or control of the corporation.
(iii) Examples of activities of a corporation which would constitute doing business in New York City include the following:
(A) operating a branch in New York City;
(B) operating a loan production office in New York City;
(C) operating a representative office in New York City;
(D) operating a bona fide office in New York City.
(iv) A corporation will not be deemed to be doing business in New York City because of:
(A) the maintenance of cash balances with banks or trust companies in New York City;
(B) The ownership of shares of stock or securities kept in New York City in a safe deposit box, safe, vault or other receptacle rented for this purpose, or if pledged as collateral security, of if deposited in safekeeping or custody accounts with one or more banks or trust companies, or brokers who are members of a recognized securities exchange;
(C) the taking of any action by any such bank or trust company or broker, which is incidental to the rendering of safekeeping or custodian service to such corporation;
(D) the maintenance of an office in New York City by one or more officers or directors of the corporation who are not employees of the corporation if the corporation is not otherwise doing business in New York City;
(E) The keeping of books or records of a corporation in New York City, if such books or records are not kept by employees of such corporation and such corporation does not otherwise do business in New York City; or
(F) any combination of the foregoing activities.
(v) A corporation will not be deemed to be doing business in New York City if its activities in New York City are limited to such things as:
(A) the mere acquisition of one or more security interests in real or personal property located in New York City without otherwise doing business;
(B) the mere acquisition of title to property located in New York City through the foreclosure of a security interest without otherwise doing business; or
(C) the mere holding of meetings of the board of directors in New York City.
Fiscal year. The term "fiscal year" means any period not longer than 12 calendar months, or any shorter period beginning on the date the taxpayer becomes subject to tax and ending on the last day of any month other than December. (See: 19 RCNY § 3-02(a)(3) – Fiscal year taxpayers.) The term "fiscal year" also includes the 52-53 week accounting period if such period has been elected by the taxpayer. (See: 19 RCNY § 3-02(a)(4) – 52-53 week fiscal year taxpayers.)
International banking facility. (Administrative Code, § 11-638(c)) The term "international banking facility" (hereinafter referred to in these regulations as "IBF") means an international banking facility located in New York State. The term has the same meaning as is set forth in the New York State Banking Law or regulations promulgated thereunder or as is set forth in the laws of the United States or regulations of the Board of Governors of the Federal Reserve System.
Loan production office.
(i) A loan production office is an office whose activities are limited to:
(A) soliciting loans on behalf of the bank, and in connection with such solicitation (a) assembling credit information; (b) making property inspections and appraisals; (c) securing title information; and (d) preparing applications for such loans (including making recommendations with respect to action thereon);
(B) soliciting investors to purchase loans from the bank;
(C) searching for investors to contract with the bank for the servicing of such loans; and
(D) engaging in other similar agent-type activities.
(ii) An office which accepts deposits, accepts loan repayments, approves loans or disburses funds is not a loan production office.
Place of business. The term "place of business" means a bona fide office or branch of the taxpayer the income from which is required to be included in the computation of the taxpayer's alternative entire net income. For example, a banking corporation organized under the laws of Great Britain has a branch in London and a branch in New York City. None of the income or expenses of the London branch are included in the computation of the taxpayer's alternative entire net income. Therefore, the London branch is not a place of business of the taxpayer.
Point-of-sale terminal. The term "point-of-sale terminal" means an electronic device, either on-line or off-line, that is not manned by bank employees, except for the training of non-bank employees or as provided in 19 RCNY § 3-01(b) "Automated Teller Machine" (ii). A point-of-sale terminal must be located in a store at a bona fide checkout counter, cashier station, customer convenience counter or other counter at which store functions are performed, or at a sales desk of other establishments. The function of a point-of-sale terminal is to transfer funds or record transfers of funds in connection with the sale of goods or services, but it may also be used to:
(i) accept deposits;
(ii) accept loan repayments;
(iii) make cash withdrawals; and
(iv) obtain funds pursuant to prearranged lines of credit.
Public accommodation office. A public accommodation office is an office that is adjunct and within 1,000 feet from the principal office or a branch of the bank of which it is an adjunct and is established, maintained and operated for public convenience and advantage. A public accommodation office may transact business in connection with the following functions:
(i) the acceptance of deposits of money, currency, checks and similar items;
(ii) the payment of withdrawals;
(iii) the cashing of checks, drafts and other similar items;
(iv) the receipt of moneys due to the bank;
(v) the issuance of cashier's checks, treasurer's checks, money orders and other similar items; and
(vi) the disbursement of funds pursuant to an existing loan agreement or extension of credit.
Representative office. A representative office is a service-type office of the bank. The activities of a representative office are limited to:
(i) soliciting new business;
(ii) researching;
(iii) servicing head office needs; and
(iv) acting as a liaison between the principal office and its customers.
Return. (Administrative Code, § 11-671(2)(b))
(i) The term "return" means a return of tax, but does not include a declaration of estimated tax. (See: 19 RCNY § 3-05 – Returns.)
(ii) An application for extension of time to file a return is not a return.
Subsidiary. (Administrative Code, § 11-638(d))
(i) The term "subsidiary" means a corporation over 50 percent of the voting stock of which is owned by the taxpayer.
(ii) The test of ownership is actual beneficial ownership, rather than mere record title as shown by the stock books of the issuing corporation. Actual beneficial ownership of stock does not mean indirect ownership or control of a corporation through a corporate structure consisting of several tiers and/or chains of corporations. A corporation will not be considered to be a subsidiary of a taxpayer merely because more than 50 percent of the shares of its voting stock is registered in the taxpayer's name, unless the taxpayer is the actual beneficial owner of such stock. However, a corporation will not be considered a subsidiary of a taxpayer if more than 50 percent of the shares of its voting stock is not registered in the taxpayer's name, unless the taxpayer submits proof that it is the actual beneficial owner of such stock.
Example 1: Corporation A is engaged in a stock brokerage business. Corporation A holds record title in street name to 60 percent of the voting stock of corporation X, a publicly traded corporation. Corporation A holds record title to this stock on behalf of 100 corporate customers, none of which owns more than one percent of the stock of Corporation X. These 100 corporations are the actual beneficial owners of the stock of Corporation X held in street name by Corporation A. Even though Corporation A is the record title holder of more than 50 percent of the voting stock of Corporation X, Corporation X is not a subsidiary of Corporation A because Corporation A is not the actual beneficial owner of the stock.
Example 2: Corporation C is the record title holder of 100 percent of the voting stock of Corporation D. Corporation C has the right to sell or pledge such stock. Corporation C receives all dividends paid by Corporation D. Corporation C enjoys the economic benefits, and bears the risk of economic loss, from the sale of such stock. Corporation C is the actual beneficial owner of Corporation D's voting stock. Corporation D is a subsidiary of Corporation C. Corporation B is the owner of 100 percent of the voting stock of Corporation C. Corporation B is not the actual beneficial owner of Corporation D's voting stock merely by virtue of the fact that, through its ownership of the voting stock of Corporation C, Corporation B has practical control of the activities of Corporation D. Corporation D is not a subsidiary of Corporation B.
(iii) A corporation is a subsidiary for purposes of the banking corporation tax law if the taxpayer is the actual beneficial owner of more than 50 percent of the shares of such corporation's voting stock, even though the taxpayer has conferred the right to vote such stock on others, by means of a proxy, voting trust agreement or otherwise.
(iv) In any case where the record holder of shares of voting stock of a corporation is not the actual beneficial owner of the stock, or where the right to vote such stock is not possessed by the record holder or by the actual beneficial owner of the stock, a full and complete statement of all relevant facts must be submitted with the return.
(v) A corporation will be treated as a subsidiary of a taxpayer only for that part of the taxable year during which the taxpayer is the owner of more than 50 percent of the shares of stock of such corporation which, during that period, entitle the holders to vote for the election of directors or trustees.
Subsidiary capital. (Administrative Code, 11-638(e))
(i) The term "subsidiary capital" means the total of:
(A) investment of the taxpayer in shares of stock of its subsidiaries; and
(B) the amount of indebtedness owed to the taxpayer by its subsidiaries, whether or not evidenced by a written instrument, on which interest is not claimed and deducted by the subsidiary for purposes of any tax imposed by Subchapter 2 or Part 4 of Subchapter 3 of Chapter 6 of Title 11 of the Administrative Code. Subsidiary capital does not include accounts receivable acquired in the ordinary course of trade or business for services rendered or for sales of property held primarily for sale to customers.
(ii) Each item of subsidiary capital must be reduced by any liabilities of the taxpayer (parent), payable by their terms on demand or not more than one year from the date incurred, other than loans or advances outstanding for more than a year as of any date during the year covered by the return which are attributable to that item of subsidiary capital. The reduction will be made, for example, in cases where the liabilities have been incurred in connection with the acquisition or holding of stock or securities of a subsidiary, or in the making of a loan to the subsidiary.
(iii) Subsidiary capital does not include stocks, bonds or other securities of a subsidiary held by the taxpayer for sale to customers in the regular course of the taxpayer's business. Indebtedness on which any interest is deducted by the subsidiary in computing any tax imposed on the subsidiary under Subchapter 2 or Part 4 of Subchapter 3 of Chapter 6 of Title 11 of the Administrative Code may not be included in the taxpayer's subsidiary capital.
Taxable year. (Administrative Code, § 11-638(b)) The term "taxable year" means the taxpayer's taxable year for Federal income tax purposes, or the part thereof during which the taxpayer is subject to the banking corporation tax. In the case of a return made for a fractional part of a year, "taxable year" means the period for which such return is made. A taxable year must be a calendar year or fiscal year ending during the calendar year. A taxable year shall not include more than 12 months except in the case of a 52 - 53 week period. (See: 19 RCNY § 3-02(a) – Accounting periods.)
Taxpayer. (Administrative Code, § 11-638(a))
(i) The term "taxpayer" means a corporation which is subject to the tax imposed by the banking corporation tax law. This includes a bank holding company which is doing business in a corporate or organized capacity in New York City and is included in a combined return filed pursuant to 19 RCNY § 3-05(b).
(ii) The term "taxpayer" also includes a corporation subject to the banking corporation tax law which continues to do business after it has been dissolved by the filing of a certificate of dissolution, by proclamation or otherwise. A dissolved corporation, the activities of which are limited to the liquidation of its business and affairs, the disposition of its assets (other than in the regular course of business), and the distribution of the proceeds, is not taxable under Part 4 of Subchapter 3 of Chapter 6 of Title 11 of the Administrative Code. (However, a corporation in liquidation is subject to the unincorporated business tax imposed by Chapter 5 of Title 11 of the Administrative Code.)
Voting stock. The term "voting stock" means shares of stock of a corporation, issued and outstanding, that entitle the holders thereof to vote for the election of the corporation's directors or trustees. The determination of whether or not particular shares of a corporation's stock entitle the holders of such shares to vote for the election of directors or trustees of the corporation depends on the actual legal situation with respect to voting rights, as it exists from time to time.
Example: A taxpayer owns all the common stock of a corporation, which in ordinary circumstances is the only class of stock entitled to vote for the election of directors. The corporation also has outstanding an issue of preferred stock the holders of which, in certain circumstances, are entitled to vote for the election of directors either together with or exclusive of the holders of the common stock. The preferred stock will be treated as voting stock if, and so long as, its holders are entitled to vote. The common stock will not be treated as voting stock if, and so long as, its holders are not entitled to vote.
(c) Corporations subject to tax.
(1) Corporations organized in New York State. (Administrative Code, § 11-639; § 11-640) The tax is imposed on every banking corporation organized under the laws of New York State for the privilege of doing business in a corporate or organized capacity in New York City.
(2) Corporations organized in other states or countries. (Administrative Code, § 11-639; § 11-640) The tax is imposed on every banking corporation organized under the laws of any other state or country for the privilege of doing business in a corporate or organized capacity in New York City.
(3) Corporations organized under the laws of the United States. (Administrative Code, § 11-639; § 11-640) The tax is imposed on every banking corporation organized under the laws of the United States for the privilege of doing business in a corporate or organized capacity in New York City.
(4) Taxability of bank holding companies. (Administrative Code, § 11-639; § 11-646(f)) The tax is imposed on every bank holding company organized under the laws of New York State which is included in a combined return pursuant to 19 RCNY § 3-05(b) for the privilege of doing business in a corporate or organized capacity in New York City. The tax is imposed on every other bank holding company which is included in a combined return pursuant to 19 RCNY § 3-05(b) for the privilege of doing business in a corporate or organized capacity in New York City.
(5) Change in classification. (Administrative Code, § 11-639; § 11-640(d))
(i) A corporation subject to the banking corporation tax under Part 4 of Subchapter 3 of Chapter 6 of Title 11 of the Administrative Code may, by reason of a change in the nature of its activities or a change in the ownership or control of its voting stock, cease to be subject to such tax and become taxable under another part of Chapter 6 of Title 11 or another chapter of Title 11. Conversely, a corporation subject to tax under another part of Chapter 6 of Title 11 or another chapter of Title 11 may, for the same reason, cease to be taxable thereunder and become subject to the banking corporation tax. The date on which any such change of classification becomes effective will be determined by the facts of each case.
(ii) A corporation which becomes subject to the banking corporation tax during one of its fiscal or calendar years by reason of a change in classification is treated in the same manner as a corporation which became subject to tax in New York City during such year. (See: 19 RCNY § 3-01(a)(1) – Nature of tax; and 19 RCNY § 3-01(c) – Corporations subject to tax.)
(iii) A corporation which ceases to be subject to the banking corporation tax during one of its fiscal or calendar years by reason of a change of classification is treated, insofar as that tax is concerned, in the same manner as a corporation which is dissolved or cease to be taxable in New York City during such year. (See: 19 RCNY § 3-02(c) of these regulations – Cessation periods.)
(iv) A bank holding company which does not make a combined return pursuant to 19 RCNY § 3-05(b) of these regulations is not subject to the banking corporation tax. That bank holding company may be subject to the general corporation tax pursuant to Subchapter 2 of Chapter 6 of Title 11 of the Administrative Code if the requirements set forth in that subchapter for the imposition of tax are met.
(v) A corporation which has made the election described in 19 RCNY § 3-01(b)(5)(x)(C) "Banking corporation" to be taxable under the general corporation tax law may become subject to the banking corporation tax upon the revocation of such election by the corporation. Such revocation must be for the entire taxable year.
(6) Banking corporations exempt from tax. (Administrative Code, § 11-640(c)) Any trust company all of whose capital stock is owned by 20 or more savings banks organized under New York State law is exempt from the banking corporation tax.