the taxpayer shall for purposes of computing allocation percentages compute payroll, receipts, and deposits percentages in accordance with the following rules:

(1) The taxpayer shall ascertain the percentage which eighty percent of the total wages, salaries and other personal service compensation during the taxable year of employees within the city, except wages, salaries and other personal service compensation of general executive officers, bears to the total wages, salaries and other personal service compensation during the taxable year of all the taxpayer's employees within and without the city, except wages, salaries and other personal service compensation of general executive officers.

(2) (A) The taxpayer shall ascertain the percentage which the receipts of the taxpayer arising during the taxable year from:

(i) loans (including 8 taxpayer's portion of a participation in a loan) and financing leases within the city, and all other business receipts earned within the city, bear to

(ii) the total amount of the taxpayer's receipts from loans (including a taxpayer's portion of a participation in a loan) and financing leases and all other business receipts within and without the city. (B) All interest from loans and financing leases is located greater portion of income producing activity related to the loan or financing lease occurred; provided, however:

where the

(i) In the case of a taxpayer described in paragraph one, two, three, four, five or seven of subdivision (a) of section R46-37.2 of this title, a loan or financing lease attributed by such taxpayer to a branch without the city shall be presumed to be properly so attributed provided that such presumption may be rebutted if the commissioner of finance demonstrates that the greater portion of income producing activity related to the loan or financing lease did not occur at such branch. Where such presumption has been rebutted, the loan or financing lease shall be presumed to be within the city if the taxpayer had a branch within the city at the time the loan or financing lease was made. The taxpayer may rebut such presumption by demonstrating that the greater portion of income producing activity related to the loan or financing lease did not occur within the city. In the case of a loan or financing lease which is recorded on the books of a place without the city which is not a branch, it shall be presumed that the greater portion of income producing activity related to such loan or financing lease occurred within the city if the taxpayer had a branch within the city at the time the loan or financing lease was made. The taxpayer may rebut such presumption by demonstrating that the greater portion of income producing activity related to the loan or financing lease did not occur within the city.

(ii) In the case of a taxpayer described in paragraph six or nine of subdivision (a) of section R46-37.2 of this title, a loan or financing lease attributed by such taxpayer to a bona fide office without the city shall be presumed to be properly so attributed provided that such presumption may be rebutted if the commissioner of finance demonstrates that the greater portion of income producing activity related to the loan or financing lease did not occur without the city.

(C) Receipts from lease transactions other than financing leases referred to in subparagraph (B) are located where the property subject to the lease is located.

(D) (i) Interest, and fees and penalties in the nature of interest, from bank, travel and entertainment card receivables are earned within the city if the card holder's domicile is in the city, and

(ii) Service charges and fees from such cards are earned within the city if the card is serviced in the city; and

(iii) Receipts from merchant discounts are earned within the city if the merchant is located within the city.

(E) Net gains and losses and other income from trading activities (including but not limited to foreign exchange, options and financial futures), and net gains and losses and other income from investment activities shall be attributed within the city if the greater portion of income producing activity related to the trading activities and investment activities occurred within the city.

(F) Fees or charges from the issuance of letters of credit, travelers checks and money orders are earned within the city if such letters of credit, travelers checks or money orders are issued within the city.

(G) All receipts from the performance of services not described above are earned within the city if the services are performed in the city. When 8 service is performed both within and without the city, the

receipts shall be allocated within and without the city in accordance with rules and regulations of the commissioner of finance.

(H) All other receipts not described in subparagraphs (B) through (G) of this paragraph shall be attributable within and without the city in accordance with rules and regulations issued by the commissioner of finance.

(3) The taxpayer shall ascertain the percentage which the average value of deposits maintained at branches within the city during the taxable year, bears to the average value of all the taxpayer's deposits maintained at branches within and without the city during the taxable

year.

(4) Each percentage computed pursuant to this subsection shall be computed on a cash or accrual basis according to the method of accounting used for the taxable year. The receipts percentage shall include only receipts which are included in alternative entire net income for the taxable year. The deposits and payroll percentages shall include only deposits and payroll the expenses of which are included in the computation of alternative entire net income for the taxable year. (5) For purposes of this section:

is

(A) The term "bona fide office" means an office at which the taxpayer carries on its business in a regular and systematic manner and which continuously maintained, occupied and used by employees of the taxpayer. (B) The term "branch" means a bona fide office which is used by the taxpayer on a regular and systematic basis to (i) approve loans (regardless of whether the approval of certain classes of loans requires review or final approval by another office of the taxpayer), (ii) accept loan repayments, (iii) disburse funds, and (iv) conduct one or more other functions of a banking business.

(6) If it shall appear to the commissioner of finance that the allocation percentage determined in subdivision (b), (c), or (d) of this section does not properly reflect the activity, business, income or assets of a taxpayer within the city, the commissioner of finance shall be authorized in his discretion to adjust it by (1) excluding one or more of the factors therein, (2) including one or more other factors, or (3) any other similar or different method calculated to effect a fair and proper allocation of the income or assets reasonably attributable to the city.

(7) The commissioner of finance from time to time shall publish all rulings of general public interest with respect to any application of the provisions of paragraph six of this subdivision.

(b) Allocation of entire net income.

(1) If a taxpayer's entire net income is derived from business carried on both within and without the city, the portion thereof which is derived from business carried on within the city shall be determined by multiplying its entire net income by the income allocation percentage determined as follows: add the percentages ascertained under paragraphs one, two and three of subdivision (a) of this section, plus an additional percentage equal to the receipts percentage ascertained under paragraph two of such subdivision and an additional percentage equal to the deposits percentage ascertained under paragraph three of such subdivision, and divide the result by the number of percentages SO added together.

(2) (A) In lieu of the modification provided for in subdivision (f) of section R46-37.3 of this title, (relating to a modification for the adjusted eligible net income of an international banking facility), a taxpayer may, in the manner prescribed by the commissioner of finance, modify on an annual basis its income allocation percentage in

elect to

the manner described in clauses (i), (ii) and (iii) below:

(i) wages, salaries and other personal service compensation properly attributable to the production of eligible gross income of the taxpayer's international banking facility shall not be included in the computation of wages, salaries and other personal service compensation of employees within the city,

(ii) receipts properly attributable to the production of eligible gross income of the taxpayer's international banking facility shall not be included in the computation of receipts within the city, and

(iii) deposits from foreign persons which are properly attributable to the production of eligible gross income of the taxpayer's international

EXPLANATION-Matter in italics is new; matter in brackets [ ] is old law

banking facility shall not be included in the computation of deposits maintained at branches within the city.

(B) For purposes of this paragraph, the term "eligible gross income" refers to such term as set out in subdivision (f) of section R46-37.3 of this title except that the term "foreign person" as defined in paragraph eight of such subdivision (f) shall not include a foreign branch of taxpayer and in no event shall transactions between the taxpayer's international banking facility and its foreign branches be considered.

the

(c) Allocation of alternative entire net income. If a taxpayer's alternative entire net income is derived from business carried on both within and without the city, the portion thereof which is derived from business carried on within the city shall be determined by multiplying its alternative entire net income by the alternative entire net income allocation percentage determined as follows:

(1) Recompute the payroll percentage under paragraph one of subdivision (a) of this section without giving consideration to the phrase "eighty percent of," add to the resulting percentage the percentages ascertained under paragraphs two and three of such subdivision, and vide the result by the number of percentages so added together.

di

(2) When an election has been made pursuant to paragraph two of subdivision (b) of this section (relating to international banking facilities) the taxpayer shall make the modifications described in such paragraph for purposes of its alternative entire net income allocation percentage.

(d) Allocation of taxable assets. If the taxpayer's taxable assets are derived from business carried on both within and without the city, the portion thereof which is derived from business carried on within the city shall be determined by multiplying its taxable assets by an asset allocation percentage determined in the same manner as the income allocation percentage under subdivision (b) of this section is determined when the election provided for in paragraph two of such subdivision has been made, except that the modifications described in clauses (i), (ii) and (iii) of subparagraph (A) of such paragraph shall not be made.

§ 43. The section heading and the opening paragraph of section R46-37.53 of such code, as amended by chapter eight hundred eighty-seven of the laws of nineteen hundred seventy-five, are amended to read as follows:

Computation of tax for taxable years beginning on or after January first, nineteen hundred seventy-five and before January first, nineteen hundred eighty-five. -For taxable years beginning on or after January first, nineteen hundred seventy-five and before January first, nineteen hundred eighty-five, the tax imposed by section R46-37. 1 shall be the greater of the following computations:

§ 44. Such code is amended by adding a new section R46-37.55 to read as follows:

SR46-37.55 Computation of tax for taxable years beginning on or after January first, nineteen hundred eighty-five. -For taxable years beginning on or after January first, nineteen hundred eighty-five, the tax imposed by section R46-37.1 shall be the greater of the following computations: (a) Basic tax. Nine percent of the taxpayer's entire net income, or the portion thereof allocated to the city, for the taxable year or part thereof.

(b) Alternative minimum tax. If the tax under subdivision (a) of this section is less than any of the following amounts, the tax shall be the larger of the following amounts:

re

(1) (1) Except in the case of a corporation organized under the laws of a country other than the United States, one-tenth of a mill upon each dollar of taxable assets, or the portion thereof allocated to the city. (ii) For the purposes of this subpart, the term "taxable assets" shall mean the average total value of those assets which are properly flected on a balance sheet the income or expenses of which are properly reflected (or would have been properly reflected if not fully depreciated or expensed or depreciated or expensed to a nominal amount) in the computation of alternative entire net income for the taxable year or the computation of the eligible net income of the taxpayer's international banking facility for the taxable year. Provided, however, taxable assets shall not include any amount of money or other property received from or attributable to amounts received from the federal deposit insurance corporation pursuant to subsection (c) of section thirteen of the federal deposit insurance act, as amended, or the federal savings and loan insurance corporation pursuant to paragraph one, two, three or

in

four of subsection (f) of section four hundred six of the federal national housing act, as amended. (iii) A taxpayer shall not be subject to the provisions of this paragraph for that portion of the taxable year (A) in which it was a "qualified institution" as defined in subparagraph (B) of paragraph five of subsection (f) of section four hundred six of the federal national housing act, as amended, or as defined in paragraph two of subsection (i) of section thirteen of the federal deposit insurance act, amended, and (B) in which it had outstanding net worth certificates issued in accordance with such paragraph five or issued in accordance with such subsection (i) provided it would have been exempt from any tax determined on the basis of the deposits held by it or the interest paid on such deposits pursuant to subparagraph (1) of such paragraph five or paragraph nine of such subsection (i).

as

(2) In the case of a corporation organized under the laws of a country other than the United States, two and six-tenths mills upon each dollar of such part of the taxpayer's issued capital stock on the last day of the taxable year, at its face value, but if such taxpayer has stock without par value, such stock shall be taken at its actual or market value, and not less than five dollars per share, as may be determined by the commissioner of finance, as the gross income of such taxpayer derived from business carried on within the city during such taxable year bears to its gross income derived from all business, both within and without the city during said year; except that if the period covered by the return is other than twelve months, the tax shall be prorated on the basis of the number of months or major portions thereof included in the return. For purposes of this paragraph, the term "gross income" shall have the same meaning as it has in the laws of the United States relating to federal income taxes.

(3) Three percent of the taxpayer's alternative entire net income, or portion thereof allocated to the city, for the taxable year, or part

thereof.

4) One

(445. ne hundred twenty-five dollar26-37.8 of such code is repealed and

two new subdivisions (f) and (g) are added to read as follows:

(f) (1) For purposes of this subdivision, the term "bank holding company" means any corporation subject to article three-A of the banking law, or registered under the federal bank holding company act of nineteen hundred fifty-six, 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.

(2) (1) Any banking corporation or bank holding company which is doing business in the city in a corporate or organized capacity, and

(A) which owns or controls, directly or indirectly, eighty percent or more of the voting stock of one or more banking corporations or bank holding companies, or

(B) whose voting stock is eighty percent or more owned or controlled, directly or indirectly, by a banking corporation or a bank holding company, shall

make a return on a combined basis under this subpart covering itself and such corporations described in clause (A) or (B) and shall set forth such information as the commissioner of finance may require unless the taxpayer or the commissioner of finance shows that the inclusion of such a corporation in the combined return fails to properly reflect the tax liability of such corporation under this subpart. Provided, however, that no banking corporation or bank holding company not a taxpayer shall be subject to the requirements of this subparagraph unless the commissioner of finance deems that the application of such requirements is necessary in order to properly reflect the tax liability under this subpart, because of intercompany transactions or some agreement, understand arrangement or transaction of the type referred to in subdiviof this section. (ii) In the discretion of the commissioner of finance, any banking corporation or bank holding company which is doing business in the city in a corporate or organized capacity, and

sion

(A) which owns or controls, directly or indirectly, sixty-five percent or more of the voting stock of one or more banking corporations or bank holding companies, or

EXPLANATION-Matter in italics is new; matter in brackets [] is old law

(B) whose voting stock is sixty-five percent or more owned or controlled, directly or indirectly, by a banking corporation or a bank holding company,

may

be required or permitted to make a return on a combined basis under this subpart covering itself and such corporations described in clause (A) or (B) and shall set forth such information as the commissioner of finance may require; provided, however, that no combined return shall be required or permitted unless the commissioner of finance deems such report necessary in order to properly reflect the tax liability under this subpart of any one or more of such banking corporations or bank holding companies.

(iii) In the discretion of the commissioner of finance, banking corporations or bank holding companies which are each sixty-five percent or more owned or controlled, directly or indirectly, by the same interest may be permitted or required to make a return on a combined basis under this subpart and shall set forth such information as the commissioner of finance may require, if at least one such banking corporation or bank holding company is doing business in the city in a corporate or organized capacity. No combined return shall be required or permitted unless the commissioner of finance deems such report necessary in order to properly reflect the tax liability under this subpart of any one or more of such banking corporations or bank holding companies.

(3) In the case of a combined return, the tax shall be measured by the combined entire net income, combined alternative entire net income or combined assets of all the corporations included in the return. The allocation percentage shall be computed based on the combined factors with respect to all the corporations included in the combined return. In computing combined entire net income and alternative entire net income intercorporate dividends and all other intercorporate transactions shall be eliminated and in computing combined assets intercorporate stockholdings and intercorporate bills, notes and accounts receivable and payable and other intercorporate indebtedness shall be eliminated.

(4) (i) In no event shall an item of income or expense of a corporation organized under the laws of a country other than the United States be included in a combined return unless it is includible in entire net income or alternative entire net income, as the case may be, nor shall an asset of such a corporation be included in a combined return unless it is included in taxable assets.

(ii) In no event shall a corporation organized under the laws of the United States, this state or any other state, be included in a combined return with a corporation organized under the laws of a country other than the United States.

(iii) In no event shall a corporation which has made an election pursuant to subdivision (d) of section R46-37.2 of this subpart to be subject to the tax imposed by part two of this title be included in a combined return for those taxable years for which it is subject to the tax imposed by part two of this title.

(5) Tax liability under this subpart may be deemed to be improperly reflected because of intercompany transactions or some agreement, understanding, arrangement or transaction referred to in subdivision (g) of

this section.

to

(g) In case it shall appear to the commissioner of finance that any agreement, understanding or arrangement exists between the taxpayer and any other corporation or any person or firm, whereby the activity, business, income or assets of the taxpayer within the city is improperly or inaccurately reflected, the commissioner of finance is authorized and empowered, in his discretion and in such manner as he may determine, adjust items of income or deductions in computing entire net income or alternative entire net income and to adjust assets, and to adjust wages, salaries and other personal service compensation, receipts or deposits in computing any allocation percentage, provided only that entire net income or alternative entire net income be adjusted accordingly and that any asset directly traceable to the elimination of any receipt be eliminated from assets so as to accurately determine the tax. If however, in the determination of the commissioner of finance, such adjustments do not, or cannot effectively provide for the accurate determination of the tax, the commissioner of finance shall be authorized to require the filing of a combined report by the taxpayer and any such other corporations. Where (1) any taxpayer conducts its activity or business under any agreement, arrangement or understanding in such manner as either directly or indirectly to benefit its members or stockholders, or any of them, or any person or persons directly or indirectly interested in such