Tax News

CCH (cch.taxgroup.com) reports:

A corporation that purchased manufacturing assets located in New York from an unrelated third-party corporation qualified for the refundable investment tax credit against New York corporate franchise (income) tax as a new business in New York. The taxpayer presented two scenarios under which the corporation might qualify for the credit as a new business.
A "new business" is defined, for purposes of the credit, as any corporation, except
(1) a corporation in which over 50% of the voting stock is owned or controlled, either directly or indirectly, by a taxpayer subject to tax under Article 9-A, 32, 33, or Sec. 183, 184, or 185 of Article 9;
(2) a corporation that is substantially similar in operation and ownership to a business entity (or entities) taxable, or previously taxable, under Article 9-A, 22, 32, 33, or Sec. 183, 184, or 185 of Article 9; or Article 23, or would have been subject to tax under Article 23 (as such article was in effect on January 1, 1980); or
(3) a corporation that has been subject to tax under Article 9-A for more than five taxable years.
Using the facts from the first scenario, the corporation in question was not substantially similar in operation and ownership to any other business entity currently or previously subject to tax in New York. Because the corporation was formed in 2007, it has not been subject to tax under Article 9-A for more than five taxable years. Furthermore, it was determined that more than 50% of the number of shares of stock entitling the stockholders to vote for the election of directors or trustees was not owned or controlled, directly or indirectly, by a taxpayer subject to the relevant portions of the Tax Law. Therefore, the corporation qualified as a new business and was eligible for a refund of the investment tax credit under the first scenario.
The second scenario used the same facts except that directors and officers of one of the parent corporation were not residents of New York. However, the residency of the parent corporation's directors and officers would not be a factor in determining whether that parent corporation would be subject to tax in New York under Article 9-A, so the corporation would still qualify for the refund of the investment tax credit.
TSB-A-08(4)C , New York Commissioner of Taxation and Finance, July 23, 2008, ¶406-129
Other References:
Explanations at ¶12-055